Vol. 85 Friday, No. 40 February 28, 2020

Pages 11829–12206

OFFICE OF THE FEDERAL REGISTER

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Contents Federal Register Vol. 85, No. 40

Friday, February 28, 2020

Agency for International Development Children and Families Administration RULES NOTICES Acquisition Regulation: Agency Information Collection Activities; Proposals, Designation of Personal Services Contractors as Submissions, and Approvals, 11996–11997 Contracting Officers and Agreement Officers, 11859– Agency Information Collection Activities; Proposals, 11861 Submissions, and Approvals: Office of Refugee Resettlement Unaccompanied Refugee Agricultural Marketing Service Minors Program Application and Withdrawal of RULES Application or Declination of Placement Form, 11997 Decreased Assessment Rate: Personal Responsibility Education Program Performance Tart Cherries Grown in the States of Michigan, et al., Measures and Adulthood Preparation Subjects 11830–11832 Studies, 11995–11996

Agriculture Department Civil Rights Commission See Agricultural Marketing Service NOTICES See Animal and Plant Health Inspection Service Meetings; Sunshine Act, 11951 See Commodity Credit Corporation See Forest Service Coast Guard See Rural Business-Cooperative Service RULES See Rural Housing Service Special Local Regulation:, 11844–11846 See Rural Utilities Service Temporary Safety Zone: Blowfish Experiment; Juneau, AK, 11846–11848 Alcohol and Tobacco Tax and Trade Bureau PROPOSED RULES PROPOSED RULES Safety Zones: Establishment of the Verde Valley Viticultural Area, 11894– New Jersey Intracoastal Waterway, Atlantic City, NJ, 11900 11904–11906 Special Local Regulation: Animal and Plant Health Inspection Service Sail Grand Prix 2020 Race Event; San Francisco, CA, RULES 11900–11904 Establishment of Regulations for the Evaluation and Recognition of the Animal Health Status of Commerce Department Compartments, 11833–11836 See International Trade Administration See National Oceanic and Atmospheric Administration Antitrust Division See Patent and Trademark Office NOTICES Proposed Final Judgment and Competitive Impact Committee for Purchase From People Who Are Blind or Statement: Severely Disabled United States v. Olympus Growth Fund VI, L.P., et al., NOTICES 12017–12030 Guidance Documents, 11971–11972 Procurement List; Additions and Deletions, 11972–11974 Architectural and Transportation Barriers Compliance Board Commodity Credit Corporation NOTICES NOTICES Guidance Documents, 11949–11950 Future Competitive Grant Funds Availability for Higher Blends Infrastructure Incentive Program for Fiscal Year 2020, 11946–11947 Bureau of Consumer Financial Protection NOTICES Privacy Act; Systems of Records, 11974–11976 Commodity Futures Trading Commission PROPOSED RULES Centers for Disease Control and Prevention Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships with, Hedge NOTICES Funds and Private Equity Funds, 12120–12206 Agency Information Collection Activities; Proposals, Submissions, and Approvals, 11988–11995 Meetings: Comptroller of the Currency Clinical Laboratory Improvement Advisory Committee, PROPOSED RULES 11993 Prohibitions and Restrictions on Proprietary Trading and Disease, Disability, and Injury Prevention and Control Certain Interests in, and Relationships with, Hedge Special Emphasis Panel, 11992–11993 Funds and Private Equity Funds, 12120–12206

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Copyright Royalty Board Special Conditions: RULES The Boeing Company Model 777–9 Series; Overhead Ephemeral Recording and Digital Performance of Sound Flight Attendant Rest Compartment, 11836–11841 Recordings (Web V): PROPOSED RULES Determination of Royalty Rates and Terms, 11857–11859 Airworthiness Directives: NOTICES Airbus Helicopters, 11879–11881 Intent to Audit, 12031 ATR–GIE Avions de Transport Regional Airplanes, 11876–11879 Defense Department NOTICES RULES Airport Improvement Program Grant Assurances, 12048– Health Promotion, 11842 12050 Military Lending Act Limitations on Terms of Consumer Credit Extended to Service Members and Dependents, Federal Deposit Insurance Corporation 11842–11844 PROPOSED RULES NOTICES Prohibitions and Restrictions on Proprietary Trading and Agency Information Collection Activities; Proposals, Certain Interests in, and Relationships with, Hedge Submissions, and Approvals: Funds and Private Equity Funds, 12120–12206 Reporting Purchases from Sources Outside the United States, 11987–11988 Federal Emergency Management Agency Arms Sales, 11976–11980 NOTICES Agency Information Collection Activities; Proposals, Defense Nuclear Facilities Safety Board Submissions, and Approvals: NOTICES Debt Collection Financial Statement, 12001 Hearing, 11980–11981 Federal Energy Regulatory Commission Education Department PROPOSED RULES RULES Petition for Rulemaking: State Vocational Rehabilitation Services Program, 11848– Liquids Shippers Group, Airlines for America, and the 11857 National Propane Gas Association, 11890–11893 NOTICES NOTICES Agency Information Collection Activities; Proposals, Application: Submissions, and Approvals: Kaweah River Power Authority, Terminus Hydroelectric, Annual Protection and Advocacy of Individual Rights LLC, 11984 Program Performance Report, 11981–11982 Combined Filings, 11982–11984 Supplemented Complaint: Energy Department Complaint of Michael Mabee Related to Critical See Federal Energy Regulatory Commission Infrastructure Reliability Standard, 11983 Environmental Protection Agency Federal Maritime Commission PROPOSED RULES NOTICES Air Quality State Implementation Plans; Approvals and Agreements Filed, 11987 Promulgations: Louisiana; Infrastructure for the 2015 Ozone National Federal Motor Carrier Safety Administration Ambient Air Quality Standards, 11931–11937 NOTICES Louisiana; Withdrawal of Stage II Vapor Recovery Agency Information Collection Activities; Proposals, Systems Requirements, 11928–11931 Submissions, and Approvals: National Pollutant Discharge Elimination System Electronic Crime Prevention for Truckers, 12050–12051 Reporting Rule: Phase 2 Extension, 11909–11927 Federal Railroad Administration NOTICES NOTICES Agency Information Collection Activities; Proposals, Petition for Waiver of Compliance, 12051–12052 Submissions, and Approvals: NESHAP for Stationary Reciprocating Internal Federal Reserve System Combustion Engines, 11984–11985 PROPOSED RULES Water Quality Certification Regulations, 11985–11986 Prohibitions and Restrictions on Proprietary Trading and Environmental Impact Statements; Availability, etc.: Certain Interests in, and Relationships with, Hedge Weekly Receipt, 11986 Funds and Private Equity Funds, 12120–12206 Public Guidance Portal, 11986–11987 Fish and Wildlife Service Executive Office for Immigration Review NOTICES PROPOSED RULES Environmental Assessments; Availability, etc.: Executive Office for Immigration Review; Fee Review, Application for an Incidental Take Permit, Timber Road 11866–11876 II, III, and IV Wind Farms, Paulding County, OH, 12007–12009 Federal Aviation Administration RULES Food and Drug Administration Amendment of VHF Omnidirectional Range (VOR) Federal PROPOSED RULES Airway V–71 and Area Navigation Route T–285 Due to Laboratory Accreditation for Analyses of Foods, 11893– the Decommissioning of the Winner, SD, VOR, 11841 11894

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Forest Service Covered Merchandise Referral and Initiation of Scope NOTICES Inquiry: Environmental Impact Statements; Availability, etc.: Diamond Sawblades and Parts Thereof from the People’s Proposed East Smoky Panel Mine Project at Smoky Republic of China, 11951–11953 Canyon Mine, Caribou County, ID, 12014–12015 Determination of Sales at Less Than Fair Value: Wooden Cabinets and Vanities and Components Thereof General Services Administration from the People’s Republic of China, 11953–11962 NOTICES Determinations in the Less-Than-Fair-Value Investigations: Agency Information Collection Activities; Proposals, Forged Steel Fittings from India and the Republic of Submissions, and Approvals: Korea, 11965–11966 Reporting Purchases from Sources Outside the United States, 11987–11988 Senior Executive Service Performance Review Board, 11988 International Trade Commission NOTICES Health and Human Services Department Investigations; Determinations, Modifications, and Rulings, See Centers for Disease Control and Prevention etc.: See Children and Families Administration Certain Argon Plasma Coagulation System Probes, Their See Food and Drug Administration Components, and Other Argon Plasma Coagulation See Health Resources and Services Administration System Components for Use Therewith, 12016–12017 See National Institutes of Health Certain Toner Cartridges, Components Thereof, and See Substance Abuse and Mental Health Services Systems Containing Same, 12015–12016 Administration Justice Department Health Resources and Services Administration See Antitrust Division NOTICES See Executive Office for Immigration Review Charter Amendment: NOTICES National Advisory Council on the National Health Proposed Consent Decree: Service Corps, 11997–11998 United States v. George Gradel Co., Inc., et al., 12030– Homeland Security Department 12031 See Coast Guard See Federal Emergency Management Agency Land Management Bureau See U.S. Customs and Border Protection NOTICES RULES Alaska Native Claims Selction, 12011–12012, 12015 Disclosure of Records and Information Regulations; Environmental Impact Statements; Availability, etc.: Technical Amendment, 11829–11830 Farmington Mancos-Gallup Resource Plan Amendment; New Mexico, 12012–12014 Housing and Urban Development Department Proposed East Smoky Panel Mine Project at Smoky NOTICES Canyon Mine, Caribou County, ID, 12014–12015 Administrative Guidelines: Subsidy Layering Review for Project-Based Vouchers, 12001–12007 Library of Congress See Copyright Royalty Board Indian Affairs Bureau NOTICES Maritime Administration Environmental Impact Statements; Availability, etc.: NOTICES Farmington Mancos-Gallup Resource Plan Amendment; Request for Comments: New Mexico, 12012–12014 Inventory of U.S.-Flag Launch Barges, 12053–12054 Interior Department Requests for Administrative Waivers of the Coastwise Trade See Fish and Wildlife Service Laws: See Indian Affairs Bureau Vessel ALEMANDE (Motor Vessel), 12055–12056 See Land Management Bureau Vessel DOCKTALES (Motor Vessel), 12058–12059 NOTICES Vessel EPIPHANY (Sailing Catamaran), 12052–12053 Agency Information Collection Activities; Proposals, Vessel JUNO (Sailboat), 12057–12058 Submissions, and Approvals: Vessel KISKEEDEE (Sailboat), 12056–12057 Improving Customer Experience, 12010–12011 Vessel WATER LILY (Motor Vessel), 12054–12055 Guidance Documents, 12009–12010 National Aeronautics and Space Administration Internal Revenue Service NOTICES RULES Agency Information Collection Activities; Proposals, Base Erosion and Anti-Abuse Tax; Correction, 11841–11842 Submissions, and Approvals: International Trade Administration Reporting Purchases from Sources Outside the United States, 11987–11988 NOTICES Antidumping or Countervailing Duty Investigations, Orders, or Reviews: National Archives and Records Administration Wooden Cabinets and Vanities and Components Thereof NOTICES from the People’s Republic of China, 11962–11965 Agency Guidance; Portal, 12031–12032

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National Highway Traffic Safety Administration Requests for Applications: NOTICES Strategic Economic and Community Development Receipt of Petition for Decision of Inconsequential Program for Fiscal Year 2020, 11947–11949 Noncompliance: FCA US, LLC, 12059–12062 Rural Housing Service NOTICES National Institutes of Health Requests for Applications: NOTICES Strategic Economic and Community Development Meetings: Program for Fiscal Year 2020, 11947–11949 National Institute of Mental Health, 11999 National Institute on Alcohol Abuse and Alcoholism, Rural Utilities Service 11998 NOTICES National Institute on Drug Abuse, 11998–11999 Requests for Applications: Strategic Economic and Community Development National Oceanic and Atmospheric Administration Program for Fiscal Year 2020, 11947–11949 RULES Coastal Migratory Pelagic Resources of the Gulf of Mexico Securities and Exchange Commission and Atlantic Region: PROPOSED RULES 2019–2020 Closure of Commercial Run-Around Gillnet Management’s Discussion and Analysis, Selected Financial for King Mackerel, 11861–11862 Data, and Supplementary Financial Information, Fisheries of the Northeastern United States: 12068–12117 Atlantic Bluefish Fishery; Interim 2020 Recreational Prohibitions and Restrictions on Proprietary Trading and Measures, 11863–11865 Certain Interests in, and Relationships with, Hedge PROPOSED RULES Funds and Private Equity Funds, 12120–12206 Fisheries of the Caribbean, Gulf of Mexico, and South NOTICES Atlantic: Self-Regulatory Organizations; Proposed Rule Changes: Reef Fish Fishery of the Gulf of Mexico; Amendment 51, Nasdaq GEMX, LLC, 12037–12040 11937–11939 Nasdaq ISE, LLC, 12043–12046 Fisheries of the Exclusive Economic Zone off Alaska: Nasdaq MRX, LLC, 12040–12043 Modifying Seasonal Allocations of Pollock and Pacific Nasdaq PHLX, LLC, 12032–12035 Cod for Trawl Catcher Vessels in the Central and NYSE American LLC, 12035–12037 Western Gulf of Alaska, 11939–11945 NOTICES State Department Application: NOTICES Marine Mammals; File No. 23283, 11966–11967 Culturally Significant Objects Imported for Exhibition: Meetings: Caravans of Gold, Fragments in Time: Art, Culture, and Advisory Committee on Commercial Remote Sensing, Exchange across Medieval Saharan Africa, 12046– 11968 12047 Gulf of Mexico Fishery Management Council, 11969– Malangatana: Mozambique Modern, 12047 11970 Guidance Portal, 12047 Hydrographic Services Review Panel, 11966 Pacific Fishery Management Council, 11970 Substance Abuse and Mental Health Services U.S. Stakeholder Meeting on Pacific Bluefin Tuna Fishery Administration Management Framework, 11967–11968 Request for Applications: NOTICES Ocean Exploration Advisory Board, 11968–11969 Meetings: Center for Substance Abuse Treatment, 11999–12000 National Science Foundation NOTICES Surface Transportation Board Meetings: NOTICES Advisory Committee for Geosciences, 12032 Discontinuance of Service Exemption: Indiana and Ohio Railway Co., Warren County, OH, Patent and Trademark Office 12048 NOTICES Agency Information Collection Activities; Proposals, Transportation Department Submissions, and Approvals: See Federal Aviation Administration Law School Clinic Certification Program, 11971 See Federal Motor Carrier Safety Administration Secrecy and License to Export, 11970–11971 See Federal Railroad Administration See Maritime Administration Pension Benefit Guaranty Corporation See National Highway Traffic Safety Administration NOTICES PROPOSED RULES New Guidance Document Database, 12032 Defining Unfair or Deceptive Practices, 11881–11890 NOTICES Rural Business-Cooperative Service Regional Infrastructure Accelerator Program, 12062–12063 NOTICES Future Competitive Grant Funds Availability for Higher Treasury Department Blends Infrastructure Incentive Program for Fiscal Year See Alcohol and Tobacco Tax and Trade Bureau 2020, 11946–11947 See Comptroller of the Currency

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See Internal Revenue Service Separate Parts In This Issue See United States Mint Part II U.S. Customs and Border Protection Securities and Exchange Commission, 12068–12117 NOTICES Agency Information Collection Activities; Proposals, Part III Submissions, and Approvals: Commodity Futures Trading Commission, 12120–12206 United States-Caribbean Basin Trade Partnership Act, Federal Deposit Insurance Corporation, 12120–12206 12000 Federal Reserve System, 12120–12206 Securities and Exchange Commission, 12120–12206 United States Mint Treasury Department, Comptroller of the Currency, 12120– NOTICES 12206 Meetings: Citizens Coinage Advisory Committee, 12063–12064

Veterans Affairs Department Reader Aids PROPOSED RULES Consult the Reader Aids section at the end of this issue for Elimination of On-the-Job Training and Apprenticeship phone numbers, online resources, finding aids, and notice Trainee Certification, 11906–11909 of recently enacted public laws. NOTICES To subscribe to the Federal Register Table of Contents Agency Information Collection Activities; Proposals, electronic mailing list, go to https://public.govdelivery.com/ Submissions, and Approvals: accounts/USGPOOFR/subscriber/new, enter your e-mail Customer Satisfaction Surveys, 12064–12065 address, then follow the instructions to join, leave, or manage your subscription.

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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.

6 CFR 40 CFR 5...... 11829 Proposed Rules: 7 CFR 9...... 11909 930...... 11830 52 (2 documents) ...... 11928, 8 CFR 11931 122...... 11909 Proposed Rules: 123...... 11909 1003...... 11866 127...... 11909 1103...... 11866 403...... 11909 1208...... 11866 503...... 11909 1216...... 11866 1235...... 11866 48 CFR 1240...... 11866 7...... 11859 1244...... 11866 50 CFR 1245...... 11866 622...... 11937 9 CFR 648...... 11939 92...... 11833 Proposed Rules: 12 CFR 622...... 11861 Proposed Rules: 679...... 11863 44...... 12120 248...... 12120 351...... 12120 14 CFR 25...... 11836 71...... 11841 Proposed Rules: 39 (2 documents) ...... 11876, 11879 399...... 11881 17 CFR Proposed Rules: 75...... 12120 210...... 12068 229...... 12068 239...... 12068 240...... 12068 249...... 12068 255...... 12120 18 CFR Proposed Rules: 342...... 11890 343...... 11890 357...... 11890 21 CFR Proposed Rules: 1...... 11893 11...... 11893 16...... 11893 129...... 11893 26 CFR 1...... 11841 27 CFR Proposed Rules: 9...... 11894 32 CFR 85...... 11842 232...... 11842 33 CFR 100...... 11844 165...... 11846 Proposed Rules: 100...... 11900 165...... 11904 34 CFR 361...... 11848 37 CFR 380...... 11857 38 CFR Proposed Rules: 21...... 11906

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Rules and Regulations Federal Register Vol. 85, No. 40

Friday, February 28, 2020

This section of the FEDERAL REGISTER designate the appellate authority as the identified for elimination, and that the contains regulatory documents having general Associate General Counsel (General cost of planned regulations be prudently applicability and legal effect, most of which Law), this technical amendment updates managed and controlled through a are keyed to and codified in the Code of the regulations to reflect that the budgeting process.’’ Federal Regulations, which is published under appellate authority is the Office of The Office of Management and Budget 50 titles pursuant to 44 U.S.C. 1510. General Counsel or its designee. (OMB) has not designated this rule a significant regulatory action under The Code of Federal Regulations is sold by II. Regulatory History the Superintendent of Documents. section 3(f) of Executive Order 12866. DHS did not publish a notice of Accordingly, OMB has not reviewed it. proposed rulemaking for this rule. Because this rule is not a significant DEPARTMENT OF HOMELAND Under Title 5 of the United States Code regulatory action, this rule is exempt SECURITY (U.S.C.), Section 553(b)(A), this final from the requirements of Executive rule is exempt from notice and public Order 13771. See the OMB 6 CFR Part 5 comment rulemaking requirements Memorandum titled ‘‘Guidance [Docket No. DHS–2020–0003] because the change involves rules of Implementing Executive Order 13771, agency organization, procedure, or titled ‘Reducing Regulation and Disclosure of Records and Information practice. In addition, under 5 U.S.C. Controlling Regulatory Costs’ ’’ (April 5, Regulations; Technical Amendment 553(b)(B), an agency may waive the 2017). This rule involves non- notice and comment requirements if it substantive changes and internal agency AGENCY: DHS, Privacy Office. finds, for good cause, that notice and practices and procedures; it will not ACTION: Final rule. comment is impracticable, unnecessary, impose any additional costs on the or contrary to the public interest. DHS public. The benefit of the non- SUMMARY: The Department of Homeland finds that notice and comment is substantive change that updates internal Security (‘‘DHS’’) is updating its unnecessary under 5 U.S.C. 553(b)(B) agency procedures is increased clarity regulations related to the procedures for because the change of the named and accuracy of regulations for the disclosure of records information under appellate authority is an agency public. the Privacy Act. Specifically, DHS is procedural update that will have no updating its regulations to state that the substantive effect on the public. For the B. Small Entities DHS Office of the General Counsel or its same reasons, DHS finds that good Under the Regulatory Flexibility Act, designee is the authorized appeals cause exists under 5 U.S.C. 553(d) for 5 U.S.C. 601–612, DHS has considered authority with respect to requests made making this final rule effective whether this rule would have a under the Privacy Act. immediately upon publication. significant economic impact on a DATES: substantial number of small entities. This final rule is effective on III. Regulatory Analyses February 28, 2020. The term ‘‘small entities’’ comprises DHS considered numerous statutes FOR FURTHER INFORMATION CONTACT: For small businesses, not-for-profit information about this document call and executive orders related to organizations that are independently rulemaking when developing this rule. Jonathan R. Cantor, Chief Privacy owned and operated and are not Below are summarized analyses based Officer (Acting), telephone 202–343– dominant in their fields, and on these statutes or executive orders. 1717. governmental jurisdictions with A. Regulatory Planning and Review populations of less than 50,000. SUPPLEMENTARY INFORMATION: This rule is not preceded by a notice Executive Orders 12866 (Regulatory I. Discussion of the Rule of proposed rulemaking. Therefore, it is Planning and Review) and 13563 exempt from the requirements of the The Department of Homeland (Improving Regulation and Regulatory Regulatory Flexibility Act (5 U.S.C. Security (‘‘DHS’’) is updating its Review) direct agencies to assess the 601–612). The Regulatory Flexibility regulations to state that the DHS Office costs and benefits of available regulatory Act does not apply when notice and of the General Counsel or its designee is alternatives and, if regulation is comment rulemaking is not required. the authorized appeals authority with necessary, to select regulatory This rule consists of a technical respect to requests made under the approaches that maximize net benefits amendment to internal agency 1 Privacy Act. Pursuant to the Privacy (including potential economic, procedures and does not have any Act, DHS promulgated regulations environmental, public health and safety substantive effect on the regulated implementing procedures for processing effects, distributive impacts, and industry or small businesses. requests made by an individual equity). Executive Order 13563 regarding records or information emphasizes the importance of C. Collection of Information pertaining to that individual. See 5 quantifying both costs and benefits, of This rule calls for no new collection U.S.C. 552a(f); 6 CFR 5.20–5.36. The reducing costs, of harmonizing rules, of information under the Paperwork regulations provide for appeals within and of promoting flexibility. Executive Reduction Act of 1995, 44 U.S.C. 3501– the agency after initial adverse Order 13771 (Reducing Regulation and 3520. determinations. See 5 U.S.C. 552a(f)(4); Controlling Regulatory Costs) directs 33 CFR 5.24, 5.25, 5.26, 5.27. In all agencies to reduce regulation and D. Environment instances where these regulations control regulatory costs and provides DHS reviews proposed actions to that ‘‘for every one new regulation determine whether the National 1 See 5 U.S.C. 552a; 6 CFR 5.20–5.36. issued, at least two prior regulations be Environmental Policy Act (NEPA)

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applies to them and if so what degree of § 5.24 [Amended] Small businesses may request analysis is required. DHS Directive 023– ■ 2. In § 5.24, remove, ‘‘Associate information on complying with this 01 Rev. 01 (Directive) and Instruction General Counsel (General Law)’’ and regulation by contacting Richard Lower, Manual 023–01–001–01 Rev. 01 add, in its place, ‘‘DHS Office of the Marketing Order and Agreement (Instruction Manual) establish the General Counsel or its designee’’. Division, Specialty Crops Program, procedures that DHS and its AMS, USDA, 1400 Independence components use to comply with NEPA § 5.25 [Amended] Avenue SW, STOP 0237, Washington, and the Council on Environmental ■ 3. In § 5.25, amend paragraphs (a) and DC 20250–0237; Telephone: (202) 720– Quality (CEQ) regulations for (b) by removing, ‘‘Associate General 2491, Fax: (202)720–8938, or Email: implementing NEPA, 40 CFR parts 1500 Counsel (General Law)’’ and adding in [email protected]. through 1508. its place, ‘‘DHS Office of the General SUPPLEMENTARY INFORMATION: This The CEQ regulations allow federal Counsel or its designee’’. action, pursuant to 5 U.S.C. 553, agencies to establish, with CEQ review amends regulations issued to carry out and concurrence, categories of actions § 5.26 [Amended] a marketing order as defined in 7 CFR (‘‘categorical exclusions’’) which ■ 4. In § 5.26(c), remove ‘‘Associate 900.2(j). This rule is issued under experience has shown do not General Counsel (General Law)’’ and Marketing Agreement and Order No. individually or cumulatively have a add in its place, ‘‘DHS Office of the 930, both as amended (7 CFR part 930), significant effect on the human General Counsel or its designee’’. regulating the handling of tart cherries environment and, therefore, do not produced in the states of Michigan, New require an Environmental Assessment § 5.27 [Amended] York, Pennsylvania, Oregon, Utah, (EA) or Environmental Impact ■ 5. In § 5.27(c), remove ‘‘Associate Washington, and Wisconsin. Part 930 Statement (EIS). 40 CFR 1507.3(b)(2)(ii), General Counsel (General Law)’’ and (referred to as the ‘‘Order’’) is effective 1508.4. For an action to be categorically addin its place ‘‘DHS Office of the under the Agricultural Marketing excluded, it must satisfy each of the General Counsel or its designee’’. Agreement Act of 1937, as amended (7 following three conditions: (1) The U.S.C. 601–674), hereinafter referred to entire action clearly fits within one or Jonathan R. Cantor, as the ‘‘Act.’’ The Board locally more of the categorical exclusions; (2) Chief Privacy Officer (Acting), Department administers the Order and is comprised the action is not a piece of a larger of Homeland Security. of producers and handlers of tart action; and (3) no extraordinary [FR Doc. 2020–02943 Filed 2–27–20; 8:45 am] cherries operating within the circumstances exist that create the BILLING CODE 9110–04–P production area, and a public member. potential for a significant environmental The Department of Agriculture effect. Instruction Manual section (USDA) is issuing this rule in V.B(2)(a)–(c). DEPARTMENT OF AGRICULTURE conformance with Executive Orders 13563 and 13175. This action falls This rule is a technical amendment Agricultural Marketing Service that updates internal agency procedures. within a category of regulatory actions that the Office of Management and Specifically, the amendment updates 7 CFR Part 930 the designated appeals authority for Budget (OMB) exempted from Executive requests made under the Privacy Act. [Doc. No. AMS–SC–19–0091; SC19–930–3 Order 12866 review. Additionally, Therefore, it clearly fits within FR] because this rule does not meet the categorical exclusion A3(a) definition of a significant regulatory Tart Cherries Grown in the States of ‘‘Promulgation of rules . . . of a strictly action, it does not trigger the Michigan, et al.; Decreased administrative or procedural nature.’’ requirements contained in Executive Assessment Rate Instruction Manual, Appendix A, Table Order 13771. See OMB’s Memorandum titled ‘‘Interim Guidance Implementing 1. Furthermore, the rule is not part of a AGENCY: Agricultural Marketing Service, Section 2 of the Executive Order of larger action and presents no USDA. January 30, 2017, titled ‘Reducing extraordinary circumstances creating ACTION: Final rule. the potential for significant Regulation and Controlling Regulatory environmental impacts. Therefore, the SUMMARY: This rule implements a Costs’ ’’ (February 2, 2017). amendment is categorically excluded recommendation from the Cherry This rule has been reviewed under from further NEPA review. Industry Administrative Board (Board) Executive Order 12988, Civil Justice Reform. Under the Order now in effect, List of Subjects in 6 CFR Part 5 to decrease the assessment rate established for the 2019–20 and tart cherry handlers are subject to assessments. Funds to administer the Classified information, Courts, subsequent fiscal years. The assessment Order are derived from such Freedom of information, Government rate will remain in effect indefinitely assessments. It is intended that the employees, Privacy. unless modified, suspended, or terminated. assessment rate will be applicable to all For the reason stated in the preamble, assessable tart cherries for the 2019–20 DHS amends 6 CFR part 5 as follows: DATES: Effective March 30, 2020. crop year and continue until amended, FOR FURTHER INFORMATION CONTACT: suspended, or terminated. PART 5—DISCLOSURE OF RECORDS Jennie M. Varela, Marketing Specialist, The Act provides that administrative AND INFORMATION or Christian D. Nissen, Regional proceedings must be exhausted before Director, Southeast Marketing Field parties may file suit in court. Under ■ 1. The authority citation for part 5 Office, Marketing Order and Agreement section 608c(15)(A) of the Act, any continues to read as follows: Division, Specialty Crops Program, handler subject to an order may file Authority: 6 U.S.C. 101 et seq.; Pub. L. AMS, USDA; Telephone: (863) 324– with USDA a petition stating that the 107–296, 116 Stat. 2135; 5 U.S.C. 301. 3375, Fax: (863) 291–8614, or Email: order, any provision of the order, or any Subpart A also issued under 5 U.S.C. 552 [email protected] or obligation imposed in connection with Subpart B also issued under 5 U.S.C. 552a. [email protected]. the order is not in accordance with law

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and request a modification of the order utilize funds from the authorized Marketing orders issued pursuant to the or to be exempted therefrom. Such reserve to help cover its expenses. Act, and the rules issued thereunder, are handler is afforded the opportunity for The major expenditures unique in that they are brought about a hearing on the petition. After the recommended by the Board for the through group action of essentially hearing, USDA would rule on the 2019–20 year include $1,514,500 for small entities acting on their own petition. The Act provides that the research and promotion, $250,000 for behalf. district court of the United States in any salaries and wages, and $130,000 for There are approximately 400 district in which the handler is an administrative expenses. Budgeted producers of tart cherries in the inhabitant, or has his or her principal expenses for these items in 2018–19 regulated area and approximately 40 place of business, has jurisdiction to were $1,867,450, $275,000, and handlers of tart cherries who are subject review USDA’s ruling on the petition, $130,000, respectively. to regulation under the Order. Small provided an action is filed no later than The Board derived the recommended agricultural producers are defined by 20 days after the date of the entry of the assessment rate by considering the Small Business Administration ruling. anticipated expenses, an estimated crop (SBA) as those having annual receipts of This rule decreases the assessment of 230.74 million pounds of tart less than $1,000,000, and small rate from $0.0075, the rate that was cherries, and the amount of funds agricultural service firms have been established for the 2016–17 and available in the authorized reserve. defined as those whose annual receipts subsequent fiscal years, to $0.00575 per Income derived from handler are less than $30,000,000 (13 CFR pound of tart cherries handled for the assessments, calculated at $1,326,755 121.201). 2019–20 and subsequent fiscal years. (230.74 million pounds × $0.00575/ According to the National Under the marketing order, the Board pound), along with interest income and Agricultural Statistics Service (NASS) also recommends an allocation of funds from the Board’s authorized and Board data, the average annual assessments for operations and for reserve, should be adequate to cover grower price for tart cherries utilized for promotion activities. This action budgeted expenses of $1,956,500. Funds processing during the 2018–19 season decreases the portion of assessments in the reserve are estimated to be was approximately $0.196 per pound. allocated to research and promotion $81,553 at the end of the 2019–20 fiscal With total utilization at 288.8 million activities from $0.0065 to $0.005 per year. pounds for the 2018–19 season, the total pound of tart cherries and decreases the The assessment rate established in 2018–19 value of the crop utilized for portion allocated to administrative this rule will continue in effect processing is estimated at $56.6 million. expenses from $0.001 to $0.00075 per indefinitely unless modified, Dividing the crop value by the estimated pound of tart cherries. suspended, or terminated by USDA number of producers (400) yields an The Order provides authority for the upon recommendation and information estimated average receipt per producer Board, with the approval of USDA, to submitted by the Board or other of $141,500. This is well below the SBA formulate an annual budget of expenses available information. threshold for small producers. and collect assessments from handlers Although this assessment rate will be A free on board (FOB) price of $0.80 to administer the program. The in effect for an indefinite period, the per pound for frozen tart cherries was members are familiar with the Board’s Board will continue to meet prior to or reported by the Food Institute during needs and with the costs of goods and during each fiscal year to recommend a the 2018–19 season. Based on services in their local area and are thus budget of expenses and consider utilization, this price represents a good in a position to formulate an appropriate recommendations for modification of estimate of the price for processed budget and assessment rate. The the assessment rate. The dates and times cherries. Multiplying this FOB price by assessment rate is formulated and of Board meetings are available from the total utilization of 288.8 million pounds discussed in a public meeting. Thus, all Board or USDA. Board meetings are results in an estimated handler-level tart directly affected persons have an open to the public and interested cherry value of $231 million. Dividing opportunity to participate and provide persons may express their views at these this figure by the number of handlers input. meetings. USDA will evaluate Board (40) yields estimated average annual For the 2016–17 and subsequent fiscal recommendations and other available handler receipts of $5.8 million, which years, the Board recommended, and information to determine whether is below the SBA threshold for small USDA approved, an assessment rate that modification of the assessment rate is agricultural service firms. Assuming a would continue in effect from fiscal year needed. Further rulemaking will be normal distribution, the majority of to fiscal year unless modified, undertaken as necessary. The Board’s producers and handlers of tart cherries suspended, or terminated by USDA 2019–20 budget and those for may be classified as small entities. upon recommendation and information subsequent fiscal years will be reviewed This rule decreases the assessment submitted by the Board or other and, as appropriate, approved by USDA. rate collected from handlers for the information available to USDA. 2019–20 and subsequent fiscal years The Board met on September 12, Final Regulatory Flexibility Analysis from $0.0075 to $0.00575 per pound of 2019, and unanimously recommended Pursuant to requirements set forth in tart cherries, with $0.005 per pound 2019–20 expenditures of $1,956,500, the Regulatory Flexibility Act (RFA) (5 allocated to promotion and research and and an assessment rate of $0.00575 per U.S.C. 601–612), the Agricultural $0.00075 per pound allocated to pound of tart cherries, divided into Marketing Service (AMS) has administrative expenses. The Board $0.005 for promotional expenses and considered the economic impact of this unanimously recommended 2019–20 $0.00075 for administrative expenses. In rule on small entities. Accordingly, expenditures of $1,956,500, and an comparison, last year’s budgeted AMS has prepared the regulatory assessment rate of $0.00575 per pound expenditures were $2,374,450. The flexibility analysis. of tart cherries. The assessment rate of assessment rate of $0.00575 is $0.00175 The purpose of the RFA is to fit $0.00575 per pound is $0.00175 lower lower than the rate currently in effect. regulatory actions to the scale of than the 2018–19 rate. The volume of The Board recommended decreasing the businesses subject to such actions in assessable tart cherries for the 2019–20 assessment rate to reduce the order that small businesses will not be fiscal year is estimated at 230.74 assessment burden on handlers and unduly or disproportionately burdened. million. Thus, the $0.00575 rate should

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provide $1,326,755 in assessment the average grower price for the 2019– provided for interested persons to income (230.74 million pounds × 20 crop year should be approximately respond to the proposal. $0.00575/pound). Income derived from $0.20 per pound of tart cherries. No comments were received. handler assessments, along with interest Therefore, the estimated assessment Accordingly, no changes will be made income and funds from the Board’s revenue for the 2019–20 crop year as a to the proposed rule. authorized reserve, should be adequate percentage of total grower revenue to cover budgeted expenses. would be about 2.9 percent. A small business guide on complying The major expenditures This action decreases the assessment with fruit, vegetable, and specialty crop recommended by the Board for the obligation imposed on handlers. marketing agreements and orders may 2019–20 year include $1,514,500 for Assessments are applied uniformly on be viewed at: http://www.ams.usda.gov/ research and promotion, $250,000 for all handlers, and some of the costs may rules-regulations/moa/small-businesses. salaries and wages, and $130,000 for be passed on to producers. However, Any questions about the compliance administrative expenses. Budgeted decreasing the assessment rate reduces guide should be sent to Richard Lower expenses for these items in 2018–19 the burden on handlers and may also at the previously mentioned address in were $1,867,450, $275,000, and reduce the burden on producers. the FOR FURTHER INFORMATION CONTACT $130,000, respectively. The Board’s meeting was widely section. The Board recommended decreasing publicized throughout the tart cherry the assessment rate and utilizing funds industry. All interested persons were After consideration of all relevant from its authorized reserve in order to invited to attend the meeting and material presented, including the relieve the assessment burden on participate in Board deliberations on all information and recommendation handlers. This action will use the issues. Like all Board meetings, the submitted by the Board and other Board’s reserve balance and maintain it September 12, 2019, meeting was a available information, it is hereby found below the levels authorized under the public meeting, and all entities, both that this rule will tend to effectuate the Order. large and small, were able to express declared policy of the Act. Prior to arriving at this budget and views on this issue. assessment rate, the Board considered In accordance with the Paperwork List of Subjects in 7 CFR Part 930 information from the Board’s Executive Reduction Act of 1995 (44 U.S.C. Marketing agreements, Reporting and Committee (Committee). Alternative Chapter 35), the Order’s information recordkeeping requirements, Tart expenditure levels were discussed by collection requirements have been the Committee, which reviewed the previously approved by the OMB and cherries. relative value of various activities to the assigned OMB No. 0581–0177, Tart For the reasons set forth in the tart cherry industry. The Committee Cherries Grown in Michigan, New York, preamble, 7 CFR part 930 is amended as determined all program activities were Pennsylvania, Oregon, Utah, follows: adequately funded and essential to the Washington, and Wisconsin. No functionality of the Order; thus, no changes in those requirements are PART 930—TART CHERRIES GROWN alternate expenditure levels were necessary as a result of this action. IN THE STATES OF MICHIGAN, NEW deemed appropriate. Additionally, the Should any changes become necessary, YORK, PENNSYLVANIA, OREGON, Board discussed alternatives of they would be submitted to OMB for UTAH, WASHINGTON, AND maintaining the current assessment rate approval. WISCONSIN of $0.0075 per pound or reducing This rule imposes no additional reporting or recordkeeping requirements marketing expenditures to achieve a ■ 1. The authority citation for 7 CFR lower rate. However, the Board on either small or large tart cherry part 930 continues to read as follows: determined it would be appropriate to handlers. As with all Federal marketing reduce the assessment burden to order programs, reports and forms are Authority: 7 U.S.C. 601–674. handlers using some of the reserves periodically reviewed to reduce ■ 2. Section 930.200 is revised to read built up following recurring seasons information requirements and as follows: with large crops. The Board also duplication by industry and public determined the recommended sector agencies. As noted in the initial § 930.200 Assessment rate. promotion expenditures, which are regulatory flexibility analysis, USDA lower than in previous seasons, were has not identified any relevant Federal On and after October 1, 2019, the appropriate and further reduction might rules that duplicate, overlap, or conflict assessment rate imposed on handlers hinder sales growth. with this final rule. shall be $0.00575 per pound of tart Based on these discussions and AMS is committed to complying with cherries grown in the production area estimated deliveries, the recommended the E-Government Act, to promote the and utilized in the production of tart assessment rate of $0.00575 per pound use of the internet and other cherry products. Included in this rate is of tart cherries should provide information technologies to provide $0.005 per pound of tart cherries to $1,326,755 in assessment income. increased opportunities for citizen cover the cost of the research and Further, the Board recommended access to Government information and promotion program and $0.00075 per allocating $0.005 for promotional services, and for other purposes. pound of tart cherries to cover expenses and $0.00075 for A proposed rule concerning this administrative expenses. administrative expenses. The Board action was published in the Federal Dated: February 18, 2020. determined that assessment revenue, Register on November 26, 2019 (84 FR along with funds from the reserve and 65021). Copies of the proposed rule Bruce Summers, interest income, should be adequate to were also mailed or sent via email to all Administrator, Agricultural Marketing cover budgeted expenses for the 2019– tart cherry handlers. The proposal was Service. 20 fiscal year. made available through the internet by [FR Doc. 2020–03524 Filed 2–27–20; 8:45 am] A review of historical information and USDA and the Office of the Federal BILLING CODE 3410–02–P preliminary information pertaining to Register. A 30-day comment period the upcoming fiscal year indicates that ending December 26, 2019, was

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DEPARTMENT OF AGRICULTURE disease history, its animal health subject to several factors, including the practices and capabilities, and any effect timely submission of supporting Animal and Plant Health Inspection its import practices or relationship to information by the country requesting Service adjacent regions might have on disease the evaluation. Supporting information risk. required as part of the request is listed 9 CFR Part 92 When regionalization is not feasible, in § 92.2(d) of this final rule. The commenter asked how we plan to [Docket No. APHIS–2017–0105] compartmentalization is a means that may be used to preserve trade. Under conduct compartmentalization RIN 0579–AE43 compartmentalization, a country may evaluations. Specifically, the define and manage animal commenter asked whether APHIS will Establishment of Regulations for the subpopulations of distinct health status perform evaluations on each of the Evaluation and Recognition of the and under common biosecurity compartments proposed by the Animal Health Status of Compartments management within its territory, in country’s national competent authority, AGENCY: Animal and Plant Health accordance with the guidelines in the or will APHIS instead recognize the Inspection Service, USDA. World Organization for Animal Health competent authority’s evaluation and approval of compartments presented by ACTION: Final rule. (OIE) Terrestrial Animal Health Code, for the purpose of disease control and companies in that country. SUMMARY: We are establishing standards international trade. Unlike regionalization, where the to allow us to recognize compartments Compartmentalization is distinct from national competent authority of a for animal disease status, consistent regionalization, which involves the country provides oversight and with World Organization for Animal recognition of geographical zones of a programs to all entities within the Health international standards. Under country that can be identified and region, compartments are a function of this action, when a foreign government characterized by their level of risk for the individual company that controls submits a request for recognition of a different diseases, but the two are not the compartment. We anticipate a compartment, we will conduct a mutually exclusive. limited number of compartments per compartmentalization evaluation based On April 3, 2019, we published in the country, and therefore expect to on a list of factors that parallel those we Federal Register (84 FR 12955–12959, evaluate and approve the national use when conducting regionalization Docket No. APHIS–2017–0105) a competent authority’s program and all evaluations, and will provide for public proposal 1 to amend the regulations by individual compartment’s controlling notice of and comment on the risk establishing standards to allow us to company and compartment assessment. We are also adding recognize compartments for animal components. We may also consider developing a compartmentalization provisions for imposing import disease status, consistent with OIE systems approach if several restrictions or prohibitions when a international standards. compartments become approved in a compartment we have recognized as We solicited comments concerning country. This approach would be disease-free experiences an outbreak, our proposal for 60 days ending June 3, dependent on our assessment of the and for lifting those sanctions once the 2019. We received seven comments on ability of the national competent outbreak has been controlled. These the proposal. They were from a foreign authority of that country to administer standards for compartmentalization will government, meat and poultry trade and oversee a compartmentalization provide a means for preserving organizations, an organization international trade when regionalization program. representing poultry veterinarians, and A commenter asked if APHIS will is not feasible. the public. All responses were in favor conduct site visits to evaluate DATES: Effective March 30, 2020. of the proposed rule, though one compartments and what the role of the FOR FURTHER INFORMATION CONTACT: Dr. requested further information regarding requesting country’s government would Lisa Rochette, Staff Officer, issues largely related to implementation be in the evaluation process. Regionalization Evaluation Services, of the proposed regulations. The As one of the requirements for our Strategy and Policy, VS, APHIS, 920 comments and APHIS’ responses are evaluation of a country’s Main Campus Drive, Suite 200, Raleigh, discussed below. compartmentalization program, we will NC 27606; (919) 855–7276; Compartment Evaluation conduct an initial site visit to [email protected]. compartments and associated facilities The commenter asked how APHIS SUPPLEMENTARY INFORMATION: such as national competent authority will prioritize the compartmentalization offices and laboratories. We may also Background requests it receives. require additional site visits to approve Similar to regionalization evaluations, The regulations in 9 CFR part 92, compartments that become recognized APHIS will evaluate ‘‘Importation of Animals and Animal by the country’s national competent compartmentalization requests in the Products; Procedures for Requesting authority after our initial site visit, as order they are received and process Recognition of Regions’’ (referred to well as visits to confirm ongoing them with the resources available. below as the regulations), set forth the satisfactory maintenance of the The commenter wanted to know how process by which a foreign government compartmentalization program or the long it will take for APHIS to begin may request recognition of the animal status of an individual compartment. evaluating a compartmentalization health status of a region. In order to We intend to collaborate with the request after we receive it. conduct a valid evaluation of a region’s country’s national competent authority As with regionalization evaluations, animal health status and any risk that when conducting each compartment the timeframe to initiate and complete may be associated with the action evaluation. requested, it is important for the Animal a compartmentalization evaluation is The commenter asked what happens and Plant Health Inspection Service if APHIS does not approve a country’s 1 To view the proposed rule, the supporting (APHIS) of the U.S. Department of document, and the comments we received, go to compartment request. Agriculture to have pertinent http://www.regulations.gov/#!docketDetail; As with regionalization evaluations, information regarding the region, its D=APHIS-2017-0105. we will use a risk assessment framework

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to document compartmentalization the provided information is confidential INFORMATION CONTACT or on the evaluations. The risk assessment draws business information. Upon intake, Regulations.gov website (see ADDRESSES upon eight factors, listed in § 92.2, APHIS will review this information to above for instructions for accessing required for a country’s national ensure that the provided information is Regulations.gov). competent authority to effectively not information that the submitter APHIS is establishing standards to administer a compartmentalization would ordinarily disclose to the public. allow us to recognize compartments for program, as well as technical criteria an APHIS intends to protect confidential animal disease status, consistent with individual compartment must meet. If business information in accordance World Organization for Animal Health during the evaluation we find minor with legal and regulatory obligations international standards. Like our deficiencies in the country’s and practice. existing process for recognizing foreign compartmentalization program or in an Finally, the commenter asked if the regions for disease status, our process individual compartment, we may allow consultations and decisions resulting will include information requirements the requesting country’s national from compartmentalization requests for evaluating the animal health status competent authority and the company will be published on the APHIS website. of a compartment for which a market involved to correct the deficiencies. A list of countries requesting an access request has been submitted. However, if we find major deficiencies APHIS compartmentalization evaluation Under this rule, we will perform a risk in competent authority oversight or and a description of each compartment assessment to evaluate the animal company implementation of a requested will be available on the health status of a compartment. If after 3 compartment, we will not approve the APHIS website. If our evaluation of the conducting the evaluation, we deem the program or the compartment. information submitted indicates that a risk of importing animals or animal If we do not approve a request can be safely granted, we will products from that compartment to be compartmentalization program or post our evaluation and supporting acceptable, we will publish a Federal individual compartment, we may not documentation for public comment on Register notice announcing the draft a formal risk evaluation document, www.regulations.gov and announce the availability of the risk documentation but we will inform the requesting availability of these documents through for public review and comment. country of the reasons that the program a notice in the Federal Register. Once This rule will add or the compartment they have requested we review all comments we receive on compartmentalization as an option for does not meet APHIS’ criteria. the evaluation, we will make a final evaluating disease status, but not The commenter asked what the determination regarding the propose a specific implementation of procedure would be for restoring a compartmentalization request and this option. Compartmentalization may compartment’s status after a disease announce our decision in a follow-up be used when regionalization’s broader outbreak. Federal Register notice. We will also geographic requirements are more costly A livestock or poultry disease maintain a list of approved national or simply not feasible. The potential outbreak involving animals for which competent authority economic effects of imports based on a the compartment was approved compartmentalization programs on the compartmentalization approach depend constitutes a major noncompliance. If a aforementioned APHIS website. on the disease status evaluation specific Therefore, for the reasons given in the component 2 within a certified to the particular commodity and facility, proposed rule and in this document, we compartment is found to have a major and the expected volume of the are adopting the proposed rule as a final noncompliance, the entire compartment commodity imported under this option. rule, without change. is immediately suspended. To regain This final rule sets forth approved status, APHIS expects the Executive Orders 12866 and 13771 and compartmentalization as a means of country’s national competent authority Regulatory Flexibility Act minimizing trade disruptions and delineate the information requirements to investigate the noncompliance and This final rule has been determined to that will be used for the evaluation of submit a new request for APHIS to be not significant for the purposes of compartments. There are no costs or evaluate the compartment, as indicated Executive Order 12866 and, therefore, cost savings that will directly result in § 92.4. APHIS may elect to conduct has not been reviewed by the Office of from this rule. Only in the application its own evaluation, which may include Management and Budget. This final rule of compartmentalization might gains a site visit. Finally, a disease outbreak is not an Executive Order 13771 from related trade be realized. within the compartment involving regulatory action because this final rule The APHIS Administrator has animals other than those for which the is not significant under Executive Order determined that this action will not compartment is approved would be 12866. Further, APHIS considers this have a significant economic impact on subject to regulations and conditions for rule to be a deregulatory action under a substantial number of small entities. export pertaining to that disease and the Executive Order 13771 as the action is animals involved. intended to minimize trade disruptions Executive Order 12988 The commenter asked how APHIS and could thereby provide benefits to This final rule has been reviewed will protect the privacy of business and producers and consumers. under Executive Order 12988, Civil confidential proprietary information In accordance with the Regulatory Justice Reform. If this final rule is submitted with compartmentalization Flexibility Act, we have analyzed the adopted: (1) All State and local laws and requests, particularly considering that potential economic effects of this action regulations that are inconsistent with we intend to publish evaluations and on small entities. The analysis is this rule will be preempted; (2) no supporting documents for public summarized below. Copies of the full retroactive effect will be given to this comment. analysis are available by contacting the rule; and (3) administrative proceedings When providing information to person listed under FOR FURTHER will not be required before parties may APHIS, submitters must indicate that file suit in court challenging this rule. 3 The compartmentalization request list can be 2 A compartment is made up of at least two sites found at https://www.aphis.usda.gov/aphis/ Paperwork Reduction Act or facilities, known as components. For example, ourfocus/animalhealth/export/international- components of a compartment could include a feed standard-setting-activities-oie/regionalization/ct_ In accordance with section 3507(d) of mill, farm, hatchery, or egg depot. reg_request. the Paperwork Reduction Act of 1995

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(44 U.S.C. 3501 et seq.), the information region or a compartment.1 Such requests reported in wildlife for at least the past collection requirements included in this must be made in English and must be 10 years. final rule have already been approved sent to the Administrator, c/o Strategy (1) Scope of the evaluation being by the Office of Management and and Policy, VS, APHIS, 4700 River requested. Budget under control number 0579– Road, Unit 38, Riverdale, MD 20737– (2) Veterinary control and oversight. 0040. 1231. (Where possible, include a copy of (3) Disease history and vaccination the request and accompanying practices. E-Government Act Compliance information in electronic format.) (4) Disease notification. The Animal and Plant Health (b) Requests for recognition of the (5) Disease detection. Inspection Service is committed to animal health status of a region, other (6) Barriers to disease introduction. compliance with the E-Government Act than requests submitted in accordance (d) Requests for recognition of the to promote the use of the internet and with paragraph (c) of this section, must animal health status of a compartment other information technologies, to include, in English, the information in must include, in English, the provide increased opportunities for paragraphs (b)(1) through (8) of this information in paragraphs (d)(1) through citizen access to Government section about the region. More detailed (8) of this section about the information and services, and for other information regarding the specific types compartment. More detailed purposes. For information pertinent to of information that will enable APHIS to information regarding the specific types E-Government Act compliance related most expeditiously conduct an of information that will enable APHIS to to this final rule, please contact Mr. evaluation of the request is available at: most expeditiously conduct an Joseph Moxey, APHIS’ Information https://www.aphis.usda.gov/aphis/ evaluation of the request is available at: Collection Coordinator, at (301) 851– ourfocus/animalhealth/export/ https://www.aphis.usda.gov/aphis/ 2483. international-standard-setting-activities- ourfocus/animalhealth/export/ oie/regionalization/ct_reg_request or by international-standard-setting-activities- List of Subjects in 9 CFR Part 92 contacting the National Director, oie/regionalization/ct_reg_request or by Animal diseases, Imports, Livestock, Regionalization Evaluation Services, VS, contacting the National Director, Poultry and poultry products, Region, APHIS, 4700 River Road, Unit 38, Regionalization Evaluation Services, VS, Reporting and recordkeeping Riverdale, MD 20737. APHIS, 4700 River Road Unit 38, requirements. (1) Scope of the evaluation being Riverdale, MD 20737. Accordingly, we are amending 9 CFR requested. (1) Scope of the evaluation being part 92 as follows: (2) Veterinary control and oversight. requested. (3) Disease history and vaccination (2) Veterinary control and oversight of PART 92—IMPORTATION OF ANIMALS practices. the compartment. AND ANIMAL PRODUCTS: (4) Livestock demographics and (3) Disease history and vaccination PROCEDURES FOR REQUESTING traceability. practices. RECOGNITION OF REGIONS AND (5) Epidemiological separation from (4) Livestock or poultry commodity COMPARTMENTS potential sources of infection. movement and traceability. (6) Surveillance. (5) Epidemiologic separation of the ■ 1. The authority citation for part 92 (7) Diagnostic laboratory capabilities. compartment from potential sources of continues to read as follows: (8) Emergency preparedness and infection. response. (6) Surveillance. Authority: 7 U.S.C. 1622 and 8301–8317; (c) Requests for recognition that a 21 U.S.C. 136 and 136a; 31 U.S.C. 9701; 7 (7) Diagnostic laboratory capabilities. CFR 2.22, 2.80, and 371.4. region is historically free of a disease (8) Emergency preparedness and based on the amount of time that has ■ 2. The heading of part 92 is revised to response. elapsed since the disease last occurred read as set forth above. (e) A list of those regions for which an in a region, if it has ever occurred, must ■ 3. Section 92.1 is amended by adding APHIS recognition of their animal include, in English, the information in health status has been requested, the in alphabetical order a definition of paragraphs (c)(1) through (6) of this Compartment to read as follows: disease(s) under evaluation, and, if section about the region. More detailed available, the animal(s) or product(s) the § 92.1 Definitions. information regarding the specific types region wishes to export, is available at: * * * * * of information that will enable APHIS to https://www.aphis.usda.gov/aphis/ Compartment. Any defined animal most expeditiously conduct an ourfocus/animalhealth/export/ subpopulation contained in one or more evaluation of the request is available at: international-standard-setting-activities- establishments under a common https://www.aphis.usda.gov/aphis/ oie/regionalization/ct_reg_request. biosecurity management system for ourfocus/animalhealth/export/ (f) A list of countries that have which surveillance, control, and international-standard-setting-activities- requested an APHIS _ _ biosecurity measures have been applied oie/regionalization/ct reg request or by compartmentalization evaluation, and a with respect to a specific disease. contacting the National Director, description of the requested Regionalization Evaluation Services, VS, * * * * * compartment is available at: https:// APHIS, 4700 River Road, Unit 38, ■ www.aphis.usda.gov/aphis/ourfocus/ 4. Section 92.2 is revised to read as Riverdale, MD 20737. For a region to be follows: animalhealth/export/international- considered historically free of a disease, standard-setting-activities-oie/ § 92.2 Application for recognition of the the disease must not have been reported regionalization/ct_reg_request. animal health status of a region or a in domestic livestock for at least the (g) If, after review and evaluation of compartment. past 25 years and must not have been the information submitted in (a) The representative of the national accordance with paragraph (b), (c), or government(s) of any country or 1 Additionally, APHIS may choose to initiate an (d) of this section, APHIS believes the evaluation of the animal health status of a foreign countries who has the authority to make region or compartment on its own initiative. In such request can be safely granted, APHIS such a request may request that APHIS cases, APHIS will follow the same evaluation and will indicate its intent and make its recognize the animal health status of a notification procedures set forth in this section. evaluation available for public comment

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through a document published in the submitted to APHIS through other conditions contain the additional safety Federal Register. means. standards that the Administrator (h) APHIS will provide a period of (2) Prior to taking any action to relieve considers necessary to establish a level time during which the public may prohibitions or restrictions, APHIS will of safety equivalent to that established comment on its evaluation. During the make information regarding its by the existing airworthiness standards. comment period, the public will have reassessment of the region’s or DATES: Effective March 30, 2020. access to the information upon which compartment’s disease status available FOR FURTHER INFORMATION CONTACT: APHIS based its evaluation, as well as to the public for comment. APHIS will Shannon Lennon, Airframe and Cabin the evaluation itself. Once APHIS has announce the availability of this Safety Section, AIR–675, Transport reviewed all comments received, it will information by means of a notice in the Standards Branch, Policy and make a final determination regarding Federal Register. Innovation Division, Aircraft the request and will publish that (c) Determination. Based on the Certification Service, Federal Aviation determination in the Federal Register. reassessment conducted in accordance Administration, 2200 South 216th (i) If a region or compartment is with paragraph (b) of this section Street, Des Moines, Washington 98198; granted animal health status under the regarding the reassessment information, telephone and fax 206–231–3209; email provisions of this section, the APHIS will take one of the following [email protected]. representative of the national actions: SUPPLEMENTARY INFORMATION: government(s) of any country or (1) Publish a notice in the Federal countries who has the authority to make Register of its decision to reinstate the Background a regionalization or disease-free status of the region, portion On April 24, 2018, The Boeing compartmentalization request may be of the region, or compartment; Company applied for an amendment to required to submit additional (2) Publish a notice in the Federal Type Certificate No. T00001SE to information pertaining to animal health Register of its decision to continue the include the new Model 777–9 series status or allow APHIS to conduct prohibitions or restrictions on the airplane. The Boeing Model 777–9 additional information collection imports of animals and animal products series airplane, which is a derivative of activities in order for that region or from that region or compartment; or the 777–300ER currently approved compartment to maintain its animal (3) Publish another document in the under Type Certificate No. T00001SE, is health status. Federal Register for comment. a twin-engine, transport category (Approved by the Office of Management Done in Washington, DC, this 19th day of airplane with seating for up to 495 and Budget under control number February 2020. passengers depending upon airplane 0579–0040) Kevin Shea, configuration, and a maximum takeoff ■ 5. Section 92.4 is revised to read as Administrator, Animal and Plant Health weight of approximately 775,000 lbs. Inspection Service. follows: Type Certification Basis [FR Doc. 2020–03719 Filed 2–27–20; 8:45 am] § 92.4 Reestablishment of a region or BILLING CODE 3410–34–P Under the provisions of title 14, Code compartment’s disease-free status. of Federal Regulations (14 CFR) 21.101, This section applies to regions or Boeing must show that the Model 777– compartments that are designated under DEPARTMENT OF TRANSPORTATION 9 series airplane continues to meet the this subchapter as free of a specific applicable provisions of part 25, as animal disease and then experience an Federal Aviation Administration amended by amendments 25–1 through outbreak of that disease. 25–139, and parts 26, 34, and 36, and (a) Interim designation. If a region or 14 CFR Part 25 the regulations listed in Type Certificate a compartment recognized as free of a No. T00001SE or the applicable specified animal disease in this [Docket No. FAA–2019–0330; Special regulations in effect on the date of subchapter experiences an outbreak of Conditions No. 25–761–SC] application for the change, except for that disease, APHIS will take immediate Special Conditions: The Boeing earlier amendments as agreed upon by action to prohibit or restrict imports of Company Model 777–9 Series; the FAA. animals and animal products from the Overhead Flight Attendant Rest If the Administrator finds that the entire region, a portion of that region, or Compartment applicable airworthiness regulations the compartment. APHIS will inform (e.g., 14 CFR part 25) do not contain the public as soon as possible of the AGENCY: Federal Aviation adequate or appropriate safety standards prohibitions and restrictions by means Administration (FAA), DOT. for the Boeing Model 777–9 series of a notice in the Federal Register. ACTION: Final special conditions. airplane because of a novel or unusual (b) Reassessment of the disease design feature, special conditions are situation. (1) Following removal of SUMMARY: These special conditions are prescribed under the provisions of disease-free status from all or part of a issued for the Boeing Company (Boeing) § 21.16. region or a compartment, APHIS may Model 777–9 series airplane. This Special conditions are initially reassess the disease situation in that airplane will have a novel or unusual applicable to the model for which they region or compartment to determine design feature when compared to the are issued. Should the type certificate whether it is necessary to continue the state of technology envisioned in the for that model be amended later to interim prohibitions or restrictions. In airworthiness standards for transport include any other model that reassessing disease status, APHIS will category airplanes. This design feature incorporates the same novel or unusual take into consideration the standards of is associated with the installation of an design feature, these special conditions the World Organization for Animal overhead flight attendant rest (OFAR) would also apply to the other model Health (OIE) for reinstatement of compartment. The applicable under § 21.101. disease-free status, as well as all airworthiness regulations do not contain In addition to the applicable relevant information obtained through adequate or appropriate safety standards airworthiness regulations and special public comments or collected by or for this design feature. These special conditions, the Boeing Model 777–9

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series airplane must comply with the addition, a secondary evacuation route, ventilation conditions, in order to assess fuel vent and exhaust emission which opens directly into the main the performance of smoke detectors, the requirements of 14 CFR part 34 and the passenger seating area, will be available penetration of smoke from the OFAR to noise certification requirements of 14 as an alternate route for evacuating the cabin, and the capability of the CFR part 36. occupants of the compartment. The suppression system. Also, the current The FAA issues special conditions, as compartment will provide a smoke language has been used on similar defined in 14 CFR 11.19, in accordance detection system, an oxygen system, and special conditions, and these special with § 11.38, and they become part of occupant amenities. conditions permitted the use of the the type certification basis under The FAA’s design standards, similarity analysis that Boeing has § 21.101. including part § 25.853 (a), (e), and (h), requested. The text of this special do not adequately address the Boeing Novel or Unusual Design Features condition (i.e., the applicant must Model 777–9 series airplane OFAR conduct flight tests to show compliance The Boeing Model 777–9 series compartment due to its design, location, with this requirement) does not airplane will incorporate the following and use on the airplane. This eliminate the use of similarity analysis novel or unusual design features: compartment is novel in that it is to justify validity and applicability of This airplane will have an installation located in the overhead area of the previously generated flight test data in of an OFAR compartment. The OFAR passenger compartment and lieu of conducting a new flight test. compartment of the Boeing Model 777– crewmembers may occupy this Applicants may propose the use of flight 9 series airplane is novel and unusual compartment for crew rest purposes test certification data from a previously due to its design, location, and use on during flight. Due to the novel or certificated design. The FAA’s the airplane. It is located in the unusual features associated with the acceptance of the use of that data to overhead area of the passenger installation of this compartment, the determine compliance will depend compartment and crewmembers may FAA finds that special conditions are upon the comparison between the occupy this compartment for crew rest necessary to provide a level of safety previously certificated design and the purposes during flight. equal to that established by the proposed design in order to show that Discussion airworthiness regulations. the previously generated flight test data Boeing originally requested that is valid and applicable to represent the Boeing has previously installed Special Conditions No. 25–230–SC (68 certified OFAR compartments on Boeing performance of proposed design and FR 17513, April 9, 2003) for the OFAR will show compliance to the special Model 777 series airplanes in varied compartment on the Model 777 airplane locations, such as the main passenger condition. Insertion of the term, be made applicable to the Boeing Model analysis, in the conditions is seating area, the overhead space above 777–9 series airplane. However, after the main passenger cabin seating area, unnecessary based on previous the issuance of Special Conditions No. acceptance of the similarity approach and below the passenger cabin seating 25–230–SC, the FAA issued Special area within the cargo compartment. In described above. Furthermore, the Conditions No. 25–419–SC (76 FR addition of the term, analysis, changes each case, the Administrator determined 10482, February 25, 2011), for OFAR that the applicable regulations did not the meaning of the conditions, which compartments allowed to be occupied may subsequently result in confusion, provide all of the necessary during flight on Boeing Model 787 requirements because each installation and/or use of unintended compliance series airplanes, with changes to better approaches. Therefore, the FAA finds had novel or unusual features by virtue address oxygen systems and fire of its design, location, and use on the that no change to the special condition suppression. Those special conditions is warranted. airplane. reflected the methodology necessary to When the Administrator finds that the provide an equivalent level of safety for Applicability applicable airworthiness regulations do remote OFAR compartments, therefore not contain adequate or appropriate As discussed above, these special new special conditions were proposed conditions are applicable to the Boeing safety standards because of a novel or for these design features on Boeing unusual design feature, special Model 777–9 series airplane. Should Model 777–9 series airplanes. Boeing apply at a later date for a change conditions are prescribed under the The special conditions contain the to the type certificate to include another provisions of § 21.16. The special additional safety standards that the model incorporating the same novel or conditions contain safety standards that Administrator considers necessary to unusual design feature, these special the Administrator considers necessary establish a level of safety equivalent to conditions would apply to that model as to establish a level of safety equivalent that established by the existing well. to that established by the existing airworthiness standards. airworthiness standards. Conclusion For the Boeing Model 777–9 series Discussion of Comments airplane, the OFAR compartment is Notice of Proposed Special This action affects only certain novel located in the overhead space, above the Conditions No. 25–19–05–SC for the or unusual design features on one model main passenger cabin seating area, Boeing Model 777–9 series airplane was series of airplanes. It is not a rule of adjacent to Door 5. The OFAR published in the Federal Register on general applicability. compartment will contain six, eight, or August 19, 2019 (84 FR 42842). The List of Subjects in 14 CFR Part 25 ten private berths depending upon FAA received one comment, from customer configuration. Additionally, Boeing. Aircraft, Aviation safety, Reporting only crewmembers who have been Boeing requested that the FAA specify and recordkeeping requirements. trained in OFAR procedures will that analyses could be used in lieu of Authority Citation occupy this compartment, and do so flight tests to show compliance with only in flight, not during taxi, takeoff, or special conditions numbers 10, 11, 12e, The authority citation for these landing. Crewmembers will access the and 18b. The FAA does not agree with special conditions is as follows: OFAR compartment from the main deck the requested change. Flight testing is Authority: 49 U.S.C. 106(f), 106(g), 40113, by stairs through a vestibule. In necessary to establish in-flight 44701, 44702, 44704.

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The Special Conditions precludes anyone from being trapped during the process of evacuating an Accordingly, pursuant to the inside the OFAR compartment. If a incapacitated person(s). authority delegated to me by the manufacturer or operator installs a g. If an evacuation procedure involves Administrator, the following special locking mechanism on a door, it must be the evacuee stepping on seats, the seats conditions are issued as part of the type capable of being unlocked from the must not be damaged to the extent that certification basis for the Boeing Model outside without the aid of special tools. they would not be acceptable for 777–9 series airplane. The lock must not prevent opening from occupancy during an emergency the inside of the OFAR compartment at landing. Overhead Flight Attendant Rest (OFAR) any time. h. OFAR compartment emergency Special Conditions g. The means of opening doors and evacuation procedures—including 1. OFAR Compartment Occupancy. hatches to the OFAR compartment must procedures for emergency evacuation of Occupancy of the OFAR compartment is be simple and obvious. Crewmembers an incapacitated occupant from the limited to the total number of installed must be able to close OFAR OFAR compartment—must be bunks and seats in each compartment. compartment doors and hatches from established by the applicant. The An approved seat or berth—able to the main passenger cabin. Doors or applicant must transmit all of these withstand the maximum flight loads hatches that separate the OFAR procedures to each owner and operator when occupied for each occupant compartment from the main deck must for incorporation into its training permitted in the OFAR compartment— not adversely affect evacuation of programs and appropriate operational must be available. Maximum occupancy occupants on the main deck, for manuals. in the OFAR compartment is six, eight, example, by slowing evacuation by i. A limitation must be included in or ten crewmembers during flight encroaching into aisles, or causing the airplane flight manual, or other depending upon customer injury to those occupants during suitable means, to require that configuration. opening of doors, or while doors are crewmembers are trained in the use of a. Appropriate placards must be opened. the OFAR compartment evacuation located inside and outside each 2. Emergency Evacuation Routes. At routes. entrance to the OFAR compartment to least two emergency evacuation routes 3. Evacuation of Incapacitated indicate: must be available for occupants of the Person. A means must be available for (1) The maximum number of OFAR compartment to evacuate rapidly evacuating an incapacitated person occupants allowed during flight. to the main cabin. OFAR compartment (representative of a 95th percentile (2) Occupancy is restricted to doors must be able to close these male) from the OFAR compartment to crewmembers who are trained in the evacuation routes from the main the passenger cabin floor. evacuation procedures for the OFAR passenger cabin after evacuation. In Exit Signs and Placards. The compartment. addition– following exit signs and placards, (3) Occupancy is prohibited during a. These routes must be located with meeting the following criteria, must be taxi, take-off, and landing. sufficient separation within the OFAR placed in the OFAR compartment: (4) Smoking is prohibited in the compartment to minimize the a. At least one exit sign, located near OFAR compartment. possibility of an event either inside or each OFAR compartment outlet, (5) That stowage in the OFAR outside of the OFAR compartment meeting the emergency lighting compartment must be limited to rendering both routes inoperative. requirements of § 25.812(b)(1)(i). emergency equipment, airplane- b. The routes must be designed to (1) One allowable exception to the supplied equipment (e.g., bedding), and minimize the possibility of blockage, minimum area requirement of crew personal luggage; the stowage of which might result from fire, § 25.812(b)(1)(i) is an exit sign having a cargo and passenger baggage is not mechanical or structural failure, or reduced background area of no less than allowed. b. At least one ashtray must be located persons standing below or against the 5.3 square inches that is installed where on both the inside and the outside of OFAR compartment outlets. the material surrounding the exit sign is any entrance to the OFAR compartment. c. One of the two OFAR evacuation light in color (such as white, cream, or c. A limitation in the airplane flight routes must not be located where egress light beige). manual, or other means, must be from the OFAR compartment may be (2) If the material surrounding the exit established to restrict occupancy to impeded during times when normal sign is not light in color, a sign with a crewmembers that the pilot in command movement or occupancy is allowed or minimum of a one-inch-wide has determined to be trained in the evacuation by passengers occurs (for background border around the letters is emergency procedures for the OFAR example, the main aisle, cross aisle, or acceptable. compartment. galley complex). If an evacuation route (3) Another allowable exception d. A limitation in the airplane flight is in an area where normal movement of requirement of § 25.812(b)(1)(i) in the manual, or other means, must be passengers occurs, it must be OFAR compartment is a sign with a established to restrict occupancy to demonstrated that passengers would not symbol that the FAA has determined to crewmembers that have received impede egress to the main deck. be equivalent for use as an exit sign that training to be able to rapidly use the d. If low headroom is at or near the meets § 25.811(d). evacuation routes of the OFAR evacuation route, provisions must be b. An appropriate placard for general compartment. made to prevent or to protect occupants access should be located conspicuously e. A means must be in place for any of the OFAR compartment from head on or near each OFAR compartment door installed between the OFAR injury. door or hatch that defines the location compartment and the passenger cabin to e. Use of evacuation routes must not and the operating instructions for access be quickly opened from inside the depend on any powered device. to and operation of the outlet door or compartment, even when crowding f. If an OFAR compartment outlet is hatch. occurs at each side of the door. over an area of passenger seats, a c. Placards must be readable from a f. For all OFAR compartment doors maximum of five passengers may be distance of 30 inches under emergency installed, a means must be in place that displaced from their seats temporarily lighting conditions.

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d. The door handles, hatch handles, system must be powered in flight and locations of flight attendants throughout and operating-instruction placards after the shutdown or failure of all the main passenger compartment during required by Special Condition 4(b) of engines and auxiliary power units for a various phases of flight. these special conditions must be period of at least ten minutes. 11. Built-in fire suppression system. illuminated to at least 160 micro 8. Seatbelt Fasten Signal. A signal, The OFAR compartment must be lamberts under emergency lighting readily detectable by seated or standing designed such that fires within the conditions. occupants of the OFAR compartment, compartment can be controlled without 5. Emergency Illumination. A means must be in place to indicate when seat a crewmember having to enter the must be available, in the event of failure belts should be fastened. compartment (i.e., built-in fire of the aircraft’s main power system, and a. If the OFAR compartment has no suppression system), or the design of of the normal OFAR compartment seats, at least one means must be the access provisions must allow lighting system, for emergency provided to cover anticipated crewmembers equipped for firefighting illumination to be automatically turbulence (e.g., sufficient handholds). to have unrestricted access to the provided for the OFAR compartment. b. Seatbelt-type restraints must be compartment. The time for a a. This emergency illumination must provided for berths and must be crewmember on the main deck to react be powered independent of the main compatible for the sleeping position to the fire alarm, to don the firefighting lighting system. during cruise conditions. equipment, and to gain access must not b. The sources of general cabin c. A placard on each berth must exceed the time for the compartment to illumination of the OFAR may be require that these restraints be fastened become smoke-filled, making it difficult common to both the emergency and the when occupied. to locate the fire source. The acceptable main lighting systems, if the power d. If compliance with any of the other duration that the suppression capability supply to the emergency lighting system requirements of these special conditions of a built-in fire suppression system can is independent of the power supply to predicates a specific head position, a be maintained must be verified by the main lighting system. placard must identify that head certification flight-testing. c. The emergency illumination level position. 12. Hazardous Smoke and must be sufficient to allow occupants of 9. Protective Breathing Equipment Extinguishing Agent. The applicant the OFAR compartment to locate and (PBE). In lieu of the requirements must provide a means to prevent move to the main passenger cabin floor specified in § 25.1439(a) pertaining to hazardous quantities of smoke or by means of each evacuation route. PBE in isolated compartments, and to extinguishing agent originating in the d. The emergency illumination level provide a level of safety equivalent that OFAR compartment from entering the must be sufficient, with the privacy is provided to occupants of an isolated flight deck, passenger cabin, or any curtains in the closed position, for each galley, the following equipment must be other occupiable compartment. occupant of the OFAR compartment to provided in the OFAR compartment: a. Small quantities of smoke may locate a deployed oxygen mask required a. Two PBE devices suitable for penetrate from the OFAR compartment by Special Condition 13 of these special firefighting, or one PBE for each hand- into other occupied areas during the conditions. held fire extinguisher, whichever is one-minute smoke detection time. 6. Two-Way Voice Communications. greater. All PBE devices must be b. Firefighting procedures must A means must be available for two-way approved to Technical Standard Order ensure that crewmembers close all doors voice communications between (TSO)-C116 or equivalent. and hatches at the OFAR compartment crewmembers on the flight deck and b. At least one approved, hand-held outlets after evacuation of the occupants of the OFAR compartment. fire extinguisher appropriate for the compartment and during firefighting to a. Two-way communications must kinds of fires likely to occur. minimize smoke and extinguishing also be available between occupants of c. One flashlight. agent entering other occupiable the OFAR compartment and each flight Note: Additional PBE devices and fire compartments. attendant station in the passenger cabin extinguishers in specific locations, beyond c. Hazardous quantities of smoke may that is required per § 25.1423(g) to have the minimum numbers prescribed in Special not enter any occupied compartment a microphone for the public address Condition 9, may be required as a result of while a crewmember accesses an OFAR system. the egress analysis accomplished to satisfy compartment to manually fight a fire b. The public address system must be Special Condition 2(a) of these special there. The amount of smoke entrained able to communicate the relevant safety conditions. by a crewmember exiting the OFAR information to the crewmembers in the 10. Smoke and fire detection system. compartment is not considered a OFAR compartment (for example, fire in Smoke and fire detection system(s) must hazardous amount. flight, aircraft depressurization, and be provided that monitor each d. Smoke entering any occupiable preparation of the compartment for occupiable area within the OFAR compartment, when access to the OFAR landing). compartment, including those areas compartment is open for evacuation, 7. Emergency Alarm System. A means partitioned by curtains or doors. The must dissipate within five minutes after must be available for manual activation applicant must conduct flight tests to the access to the OFAR compartment is of an aural emergency alarm system, show compliance with this requirement. closed. audible during normal and emergency Each smoke or fire detection system(s) e. The applicant must conduct flight conditions that enable crewmembers on must provide: tests to show compliance with this the flight deck and at each pair of the a. A visual indication to the flight requirement. required floor-level emergency exits to deck within one minute after the start of 13. Supplemental Oxygen System. A alert occupants of the OFAR a fire. supplemental oxygen system within the compartment of an emergency. The use b. An aural warning in the OFAR OFAR compartment that supplies of a public address or crew interphone compartment. oxygen in the event of decompression system is acceptable, provided an c. An aural or visual warning in the must provide the following: adequate means of differentiating main passenger cabin. This warning a. At least one oxygen mask for each between normal and emergency must be readily detectable by a flight seat and berth in the OFAR communications is incorporated. The attendant, taking into consideration the compartment.

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b. If a destination area, such as a require that the curtain(s) remains open (4) In each section, exit signs meeting changing area, is provided in the OFAR when that section is unoccupied. The requirements of § 25.812(b)(1)(i), or compartment, an oxygen mask must be vestibule section adjacent to the shown to have an equivalent level of readily available for each occupant who stairway is not considered a private safety, must direct occupants to the can reasonably be expected to be in the section and, therefore, does not require primary stairway outlet. An exit sign destination area. The maximum number a placard. with reduced background area or a of required oxygen masks within the b. For each section of the OFAR symbolic exit sign, as described in destination area is limited to the compartment created by the installation Special Condition 4(a), may be used to placarded maximum occupancy of the of a curtain, the following requirements meet this requirement. OFAR compartment. of these special conditions must be met (5) Special Conditions 1 (no-smoking c. An oxygen mask must be readily with the curtain open or closed: placards), 5 (emergency illumination), 7 accessible to each occupant who can (1) No-smoking placard (Special (emergency alarm system), 8 (fasten- reasonably be expected to be moving Condition 1), seatbelt signal or return to seat signal as from the main cabin into the OFAR (2) Emergency illumination (Special applicable), 10 (smoke or fire detections compartment, moving around within Condition 5), system), and 13 (oxygen system) must the OFAR compartment, or moving from (3) Aural emergency alarm system be met with the door open or closed. the OFAR compartment to the main (Special Condition 7), (6) Special Condition 6 (two-way cabin. (4) Seatbelt-fasten signal or return-to- voice communication) and 9 d. The supplemental oxygen system seat signal as applicable (Special (Emergency firefighting and protective must provide an aural and visual alert Condition 8), equipment) must be met independently for each separate section except for to warn occupants of the OFAR (5) Smoke or fire detection system lavatories or other small areas that are compartment to don oxygen masks in requirement (Special Condition 10), and not intended to be occupied for the event of decompression. (6) Oxygen system (Special Condition (1) The aural and visual alerts must extended periods of time. 13). 15. Waste Disposal Receptacle. If a activate concurrently with deployment c. OFAR compartments that are of the oxygen masks in the passenger waste-disposal receptacle is fitted in the divided by curtains to the extent that OFAR compartment, it must be cabin. evacuation could be adversely affected (2) To compensate for sleeping equipped with an automatic fire must have exit signs directing occupants occupants, the aural alert must be heard extinguisher that meets the performance to the primary stairway outlet. The exit in each section of the OFAR requirements of § 25.854(b). signs must be provided in each compartment and must sound 16. OFAR Compartment Materials. separated section of the OFAR continuously for a minimum of five Materials (including finishes or compartment, except for curtained minutes or until a reset switch within decorative surfaces applied to the bunks, and must meet the requirements the OFAR compartment is activated. materials) of OFAR compartments must of § 25.812(b)(1)(i). An exit sign with (3) A visual alert that informs comply with flammability requirements reduced background area or a symbolic occupants that they must don an oxygen of § 25.853(a) as amended by exit sign, as described in Special mask must be visible in each section. Amendment 25–116. Seat cushions and e. A means must be in place by which Condition 4(a), may be used to meet this mattresses must comply with the oxygen masks in the OFAR requirement. flammability requirements of § 25.853(c) compartment can be manually deployed d. For OFAR compartments that are as amended by Amendment 25–116 and from the flight deck. divided using an installation of a rigid the test requirements of part 25, f. The applicant must establish partition with a door separating the appendix F, part II, or other equivalent approved procedures for OFAR sections, the following requirements of methods. occupants in the event of these special conditions must be met 17. OFAR Compartment Lavatory. A decompression. These procedures must with the door open or closed: lavatory within the OFAR compartment be provided to the operator for (1) A secondary evacuation route from must meet the same requirements as a incorporation into its training programs each section to the main deck is lavatory installed on the main deck and appropriate operational manuals. required, or alternatively, the applicant except with regard to Special Condition g. The supplemental oxygen system must show that any door between the 10 for smoke detection. for the OFAR compartment must meet sections precludes anyone from being 18. OFAR Compartment Stowage. the same 14 CFR part 25 regulations for trapped inside a section of the Each stowage compartment in the OFAR the supplemental oxygen system for the compartment. The applicant must compartment, except for under-seat passenger cabin occupants, except for consider removal of an incapacitated compartments for occupant the 10 percent additional masks occupant from within this area. A convenience, must be completely requirement of 14 CFR 25.1447(c)(1). secondary evacuation route from a small enclosed. All enclosed stowage h. The illumination level of the room designed for only one occupant for compartments within the OFAR normal OFAR compartment lighting a short time duration, such as a compartment that are not limited to system must automatically be sufficient changing area or lavatory, is not stowage of emergency equipment or for each occupant of the compartment to required, but the applicant must airplane-supplied equipment (e.g., locate a deployed oxygen mask. consider removal of an incapacitated bedding) must meet the design criteria 14. Divided OFAR Compartments. occupant from within such a small described in table 1 of these special The following requirements apply to room. conditions. The in-flight accessibility of OFAR compartments that are divided (2) Any door between the sections very large, enclosed, stowage into more than one section by the must be shown to be openable when compartments and the subsequent installation of curtains or partitions: crowded against, even when crowding impact on the crewmembers’ ability to a. A placard is required adjacent to occurs at each side of the door. effectively reach any part of the each curtain that visually divides or (3) No more than one door may be compartment with the contents of a separates the OFAR compartment into located between any seat or berth and hand-held fire-extinguishing system smaller sections. The placard must the primary stairway door. will require additional fire-protection

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considerations similar to those required for inaccessible compartments such as Class C cargo compartments.

TABLE 1—DESIGN CRITERIA FOR ENCLOSED STOWAGE COMPARTMENTS NOT LIMITED TO STOWAGE OF EMERGENCY OR AIRPLANE-SUPPLIED EQUIPMENT

Applicability of fire protection requirements by interior volume Fire protection features 25 cubic feet to less than 57 cubic Less than 25 cubic feet feet 57 Cubic feet to 200 cubic feet

Compliant Materials of Construc- Yes ...... Yes ...... Yes. tion a. Smoke or Fire Detectors b ...... No ...... Yes ...... Yes. Liner c ...... No ...... Conditional ...... Yes. Fire Location Detector d ...... No ...... Yes ...... Yes.

a. Materials of Construction: The § 25.855 for a Class B cargo DEPARTMENT OF THE TREASURY material used in constructing each compartment. enclosed stowage compartment must at d. Fire Location Detector: If an OFAR Internal Revenue Service least be fire resistant and must meet the compartment has enclosed stowage flammability standards established for compartments exceeding 25 ft3 interior 26 CFR Part 1 interior components (i.e., 14 CFR part volume that are located separately from [TD 9885] 25 Appendix F, Parts I, IV, and V) per the other stowage compartments’ central the requirements of § 25.853. For location, such as the entry to the OFAR RIN 1545–BO56 compartments less than 25 ft3 in interior compartment or other common area, Base Erosion and Anti-Abuse Tax; volume, the design must ensure the that OFAR compartment requires Correction ability to contain a fire likely to occur additional fire protection features and within the compartment under normal devices to assist a firefighter in AGENCY: Internal Revenue Service (IRS), use. determining the location of that fire. Treasury. b. Smoke or Fire Detectors: Enclosed Issued in Des Moines, Washington, on ACTION: Final regulations; correction. stowage compartments equal to or February 14, 2020. SUMMARY: exceeding 25 ft3 in interior volume must James E. Wilborn, This document contains be provided with a smoke or fire corrections to final regulations (TD Acting Manager, Transport Standards 9885) that were published in the detection system to ensure that a fire Branch, Policy and Innovation Division, can be detected within a one-minute Aircraft Certification Service. Federal Register on Friday, December 6, 2019. The final regulations implements detection time. The applicant must [FR Doc. 2020–03475 Filed 2–27–20; 8:45 am] the base erosion and anti-abuse tax, conduct flight tests to show compliance BILLING CODE 4910–13–P with this requirement. Each smoke or designed to prevent the reduction of tax fire detection system(s) must provide: liability by certain large corporate (1) A visual indication to the flight DEPARTMENT OF TRANSPORTATION taxpayers through certain payments deck within one minute after the start of made to foreign related parties and a fire. Federal Aviation Administration certain tax credits. (2) An aural warning in the OFAR DATES: This correction is effective on compartment. 14 CFR Part 71 February 28, 2020 and is applicable on December 6, 2019. (3) A warning in the main passenger [Docket No. FAA–2019–0799; Airspace cabin. This warning must be readily Docket No. 19–AGL–13] FOR FURTHER INFORMATION CONTACT: Concerning § 1.6038A–1, Brad detectable by a flight attendant, taking RIN 2120–AA66 into consideration the locations of flight McCormack or Anand Desai at (202) 317–6939 (not toll-free numbers). attendants throughout the main Amendment of VHF Omnidirectional SUPPLEMENTARY INFORMATION: passenger compartment during various Range (VOR) Federal Airway V–71 and phases of flight. Area Navigation Route T–285 Due to Background c. Stowage compartment liner. the Decommissioning of the Winner, The final regulations (TD 9885) that (1) If the material used in constructing SD, VOR are the subject of this correction are the stowage compartment meets the under section 1.6038A of the Internal flammability requirements of a liner for Correction Revenue Code. a Class B cargo compartment (§ 25.855 In rule document 2020–03280, at Amendment 25–116, and Appendix appearing on pages 10052 through Need for Correction F, part I, paragraph (a)(2)(ii)), then no 10053 in the issue of Friday, February As published the final regulations (TD liner is required for enclosed stowage 21, 2020 make the following correction. 9885) contain errors that may prove to compartments equal to or greater than § 71.1 [Corrected] be misleading and are in need of 25 ft3, but less than 57 ft3 in interior clarification. volume. On page 10053, in the table, on the ° ′ ″ (2) For all enclosed stowage final line, ‘‘(Lat. 44 26 24.30 N, long. Correction of Publication ° ′ ″ compartments equal to or greater than 98 18 39.89 W)’’ should read ‘‘(Lat. Accordingly, the final regulations (TD ° ′ ″ ° ′ ″ 57 ft3 in interior volume, but less than 44 26 24.30 N, long. 98 18 39.89 W)’’. 9885), that are subject of FR Doc. 2019– or equal to 200 ft3, a liner must be [FR Doc. C1–2020–03280 Filed 2–27–20; 8:45 am] 25744, published on December 6, 2019 provided that meets the requirements of BILLING CODE 1301–00–D (84 FR 66968), are corrected as follows:

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1. On page 66997, in the third Promotion and Disease Prevention’’ maximum of 36 percent, requires certain column, the last line from the bottom of (available at: https://www.esd.whs.mil/ disclosures, and provides other the last full paragraph, the language Portals/54/Documents/DD/issuances/ substantive consumer protections on ‘‘years beginning Monday’’ is corrected dodi/101010p.PDF?ver=2018-01-12- ‘‘consumer credit’’ extended to Service to read ‘‘years beginning on or after 113645-193). It is a general practice and members and their families. On July 22, Monday’’. goal of DoD to provide healthy 2015, the Department amended its 2. On page 67007, in the third environments for Service members, regulation primarily for the purpose of column, the second line of the second medical beneficiaries, civilian DoD extending the protections of the MLA to full paragraph, the language ‘‘taxable employees, and visitors on military a broader range of closed-end and open- years beginning Monday’’ is corrected to installations. end credit products (the July 2015 Final read ‘‘taxable years beginning on or after The rule also sets forth an outdated Rule). On August 26, 2016, the Monday’’. smoking policy on DoD property. Department issued the first set of However, since codification of this part, interpretations of that regulation in the Martin V. Franks, GSA issued a rule at title 41 CFR part form of questions and answers. On Chief, Publications and Regulations Branch, 102–74, ‘‘Facility Management’’ (70 FR December 14, 2017, the Department Legal Processing Division, Associate Chief issued a second set of interpretations of Counsel (Procedure and Administration). 67798, Nov. 8, 2005), which regulates smoking policies for the executive that regulation in the form of amended [FR Doc. 2020–03277 Filed 2–27–20; 8:45 am] branch of the government and questions and answers. The Department BILLING CODE 4830–01–P superseded this part. is now withdrawing the amended Part 85 should now be removed as its question and answer number 2 (Q&A content is either internal or obsolete. #2), published in the December 14, 2017 DEPARTMENT OF DEFENSE This rule is not significant under Interpretive Rule, which discussed when credit is extended for the purpose Office of the Secretary Executive Order (E.O.) 12866, ‘‘Regulatory Planning and Review,’’ of purchasing a motor vehicle or personal property and the creditor 32 CFR PART 85 therefore, the requirements of E.O. 13771, ‘‘Reducing Regulation and simultaneously extends credit in an [Docket ID: DOD–2019–OS–0111] Controlling Regulatory Costs’’ do not amount greater than the purchase price apply. of the motor vehicle or personal RIN 0790–AK25 property. In withdrawing this amended List of Subjects in 32 CFR Part 85 Health Promotion question and answer, the Department is Government employees, Health. reverting back to the original Q&A #2 AGENCY: Department of Defense. published in the August 26, 2016 ACTION: Final rule. PART 85—[REMOVED] Interpretive Rule. This will allow the Department to conduct additional SUMMARY: This final rule removes an ■ Accordingly, by the authority of 5 analysis on this matter. The Department unnecessary and outdated Department U.S.C. 301, 32 CFR part 85 is removed. is also adding a new question and of Defense (DoD) rule relating to a Dated: February 24, 2020. answer to address questions about the health promotion program. The majority Morgan E. Park, use of Individual Taxpayer of the content of this part includes Alternate OSD Federal Register Liaison Identification Numbers to identify internal DoD policy, which does not Officer, Department of Defense. covered borrowers in the Department’s database. require rulemaking. Additionally, since [FR Doc. 2020–04045 Filed 2–27–20; 8:45 am] this rule was codified, the General DATES: BILLING CODE 5001–06–P Effective Date: This interpretive Services Administration (GSA) issued a rule is effective February 28, 2020. rule that superseded the public-facing FOR FURTHER INFORMATION CONTACT: content of this part. Therefore, this part DEPARTMENT OF DEFENSE Andrew Cohen, 703–692–5286. can be removed from the CFR. SUPPLEMENTARY INFORMATION: DATES: This rule is effective on February Office of the Secretary 28, 2020. I. Background and Purpose FOR FURTHER INFORMATION CONTACT: 32 CFR Part 232 In July 2015, the Department of Donald Shell, MD, MA, Director, Defense (Department) issued a final [Docket ID: DOD–2013–OS–0133] 1 Disease Prevention, Disease rule (July 2015 Final Rule) amending Management and Population Health, RIN 0790–ZA14 its regulation implementing the Military 2 OASD (HA) Health Services Policy and Lending Act (MLA) primarily for the Oversight, Email: Donald.shell4civ@ Military Lending Act Limitations on purpose of extending the protections of mail.mil, Phone: (703) 681–1705. Terms of Consumer Credit Extended to the MLA to a broader range of closed- Service Members and Dependents end and open-end credit products, SUPPLEMENTARY INFORMATION: rather than the limited credit products This final rule removes an AGENCY: Under Secretary of Defense for that had been defined as ‘‘consumer unnecessary and outdated Department Personnel and Readiness, Department of credit.’’ 3 Among other amendments, the of Defense (DoD) regulation on a health Defense. July 2015 Final Rule modified promotion program, which was last ACTION: Interpretive rule. provisions relating to the optional updated August 30, 1988 (53 FR 33123). mechanism a creditor may use when SUMMARY: The DoD program continues to operate The Department of Defense assessing whether a consumer is a under the existing internal policies, the (Department) is amending its ‘‘covered borrower,’’ modified the General Services Administration (GSA) interpretive rule for the Military has since issued a rule that superseded Lending Act (the MLA). The MLA, as 1 80 FR 43560 (July 22, 2015). the public-facing content of this part. implemented by the Department, limits 2 10 U.S.C. 987. Internal policies are available in DoD the military annual percentage rate 3 32 CFR 232.3(b) as implemented in a final rule Instruction (DoDI) 1010.10, ‘‘Health (MAPR) that a creditor may charge to a published at 72 FR 50580 (Aug. 31, 2007).

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disclosures that a creditor must provide of an Individual Taxpayer Identification intended to finance the purchase of to a covered borrower, and implemented Number when an individual does not personal property, because the loan the enforcement provisions of the MLA. possess a Social Security Number to provides additional financing that is Subsequently, the Department conclusively determine if an individual unrelated to the purchase. To qualify for received requests to clarify its is covered borrower in the Department’s the purchase money exception from the interpretation of points raised in the MLA database for the purpose of safe definition of consumer credit, a loan July 2015 Final Rule. In an effort to harbor. must finance only the acquisition of assist industry in complying with the This amended interpretive rule does personal property. Any credit July 2015 Final Rule, the Department not change the regulation implementing transaction that provides purchase elected to answer these requests through the MLA, but merely states the money secured financing of personal an interpretive rule in the form of Department’s preexisting interpretations property along with additional ‘‘cash- questions and answers. The Department of an existing regulation. Therefore, out’’ financing is not eligible for the issued the first set of such under 5 U.S.C. 553(b)(A), this exception under § 232.3(f)(2)(iii) and interpretations on August 26, 2016 rulemaking is exempt from the notice must comply with the provisions set (August 26, 2016 Interpretive Rule).4 and comment requirements of the forth in the MLA regulation. The Department issued a second set of Administrative Procedure Act, and, 21. Does a creditor qualify for the safe such interpretations on December 14, pursuant to 5 U.S.C. 553(d)(2), this rule harbor set forth in 32 CFR 2017 (December 14, 2017 Interpretive is effective immediately upon 232.5(b)(2)(i)(A) if the creditor uses an Rule).5 publication in the Federal Register. Individual Taxpayer Identification The present interpretive rule amends Number (ITIN) to search the II. Interpretations of the Department and adds to those questions and Department’s database to conclusively answers. Subsequent to the publication The following questions and answers determine whether credit is offered or of the December 14, 2017 Interpretive represent official interpretations of the extended to a covered borrower, and Rule, the Department received several Department on issues related to 32 CFR thus may be subject to 10 U.S.C. 987 formal requests for the Department to part 232. For ease of reference, the and the requirements of 32 CFR withdraw the amended Q&A #2 from following terms are used throughout 232.5(b)? the December 14, 2017 Interpretive this document: MLA refers to the Answer: Yes. The Department Rule.6 One point raised in the requests Military Lending Act (codified at 10 recognizes that while all members of the for withdrawal was a concern that U.S.C. 987); MAPR refers to the military Armed Forces will have a Social creditors’ would be unable to annual percentage rate, as defined in 32 Security Number (SSN), a limited technically comply with the MLA if the CFR 232.3(p). population of dependents, who meet the purchase included products not In order to provide further guidance definition of a covered borrower in 32 expressly related to the purchase of the to industry and the public on the CFR 232.3(g), may not qualify for a SSN vehicle as described in the amended Department’s view of its existing due to their citizenship status. An ITIN Q&A #2 from the December 14, 2017 regulation, the Department is amending is a tax processing number issued by the Interpretive Rule, because § 232.8(f) of its guidance on one question and Federal government in lieu of a SSN. the regulation would prohibit creditors answer, and by adding one new ITINs are only available for certain from taking a security interest in the question and answer. nonresident and resident aliens, their vehicle in those circumstances and The numbering of this document spouses, and dependents who cannot creditors may not extend credit if they follows the numbering of the questions obtain a SSN and can be used in could not take a security interest in the and answers provided in the August 26, searches of the Department’s database.7 vehicle being purchased. The 2016 and December 14, 2017 Since all covered borrowers will have a Department finds merit in this concern Interpretive Rules. The text of the SSN or ITIN, the Defense Manpower and agrees additional analysis is amended and new questions and Data Center (DMDC) MLA database warranted. In withdrawing the amended answers follows: contains ITINs for covered borrowers Q&A #2, published on December 14, 2. Does credit that a creditor extends who are not eligible to obtain an SSN. 2017, because of unforeseen technical for the purpose of purchasing personal Therefore, for purposes of 32 CFR issues between the amended Q&A #2 property, which secures the credit, fall 232.5(b)(2)(i)(A), an ITIN is a ‘‘Social and 32 CFR 232.8(f), the Department, within the exception to ‘‘consumer Security number.’’ credit’’ under 32 CFR 232.3(f)(2)(iii) absent of additional analysis, takes no III. Regulatory Impact position on any of the arguments or where the creditor simultaneously assertions advanced as a basis for extends credit in an amount greater Executive Order 12866, ‘‘Regulatory withdrawing the amended Q&A #2 from than the purchase price? Planning and Review’’ and Executive the December 14, 2017 Interpretive Answer: No. Section 232.3(f)(1) Order 13563, ‘‘Improving Regulation Rule. In addition, the Department is defines ‘‘consumer credit’’ as credit and Regulatory Review’’ extended to a covered borrower adding Q&A #21 to its interpretations in Executive Orders 13563 and 12866 primarily for personal, family, or response to inquiries regarding the use direct agencies to assess all costs and household purposes that is subject to a benefits of available regulatory 4 finance charge or payable by written 81 FR 58840 (August 26, 2016). alternatives and, if regulation is 5 agreement in more than four 82 FR 58739 (December 14, 2017). necessary, to select regulatory 6 The Department received formal requests from installments. Section 232.3(f)(2) approaches that maximize net benefits the National Automobile Dealers Association/ provides a list of exceptions to (including potential economic, American Financial Services Association (January subparagraph (f)(1), including an 18, 2018), American Bankers Association (January environmental, public health and safety exception for any credit transaction that 19, 2018), Consumer Bankers Association (January effects, distributive impacts, and 30, 2018), National Association of Federally-Insured is expressly intended to finance the equity). Executive Order 13563 Credit Unions/Defense Credit Union Council purchase of personal property when the (January 31, 2018), National Independent Automobile Dealers Association (February 2, 2018), credit is secured by the property being 7 Internal Revenue Service, ‘‘Taxpayer and the Guaranteed Asset Protection Alliance purchased. A hybrid purchase money Identification Numbers (TIN)’’ (last updated May 2, (February 12, 2018). and cash advance loan is not expressly 2018).

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emphasizes the importance of ADDRESSES: To view documents determined that potential hazards quantifying both costs and benefits, mentioned in this preamble as being associated with the event will be a reducing costs, harmonizing rules, and available in the docket, go to https:// safety concern for anyone in the area. promoting flexibility. It has been www.regulations.gov, type USCG–2020– This rule is needed to ensure safety of determined that this rule is a significant 0108 in the ‘‘SEARCH’’ box and click life on navigable waters of the United regulatory action under Executive Order ‘‘SEARCH.’’ Click on Open Docket States during the event. 12866, and it has been reviewed by the Folder on the line associated with this IV. Discussion of the Rule Office of Management and Budget. It is rule. not a major rule under 5 U.S.C. 804. FOR FURTHER INFORMATION CONTACT: If This rule extablishes a special local regulation daily from 6 a.m. until 6 p.m. Executive Order 13771, ‘‘Reducing you have questions on this rule, call or email LCDR Pedro L. Mendoza, on Febuary 29, 2020 and March 1, 2020. Regulation and Controlling Regulatory The municipality of Salinas and the Costs’’ Waterways Management division, U.S. Coast Guard; telephone 787–691–7058, Caribbean Power Boat Association is This rule is exempt from the email [email protected]. sponsoring the Salinas Power Boat requirements of Executive Order 13771 Championship—a high speed power SUPPLEMENTARY INFORMATION: because it results in no more than de boat and personal water craft (PWC) minimis costs. I. Table of Abbreviations race in the waters near Salinas, Puerto Rico. Approximately 50 high speed CFR Code of Federal Regulations Public Law 96–511, ‘‘Paperwork boats and PWC’s are expected to Reduction Act’’ (44 U.S.C. Chapter 35) DHS Department of Homeland Security FR Federal Register participate in the races. This rule does not impose reporting NPRM Notice of proposed rulemaking The special local regulation and record keeping requirements under § Section encompasses certain waters of the the Paperwork Reduction Act of 1995. U.S.C. United States Code Municipality of Salinas, Puerto Rico in Bahia de Rincon, and will consist of one Dated: February 24, 2020. II. Background Information and large area in which there will be: One Aaron T. Siegel, Regulatory History race area for high-speed power boats, Alternate OSD Federal Register Liaison The Coast Guard is issuing this Officer, Department of Defense. once race area for PWC’s and a buffer temporary rule without prior notice and area. All persons and vessels, except [FR Doc. 2020–04041 Filed 2–27–20; 8:45 am] opportunity to comment pursuant to those persons and vessels participating BILLING CODE 5001–06–P authority under section 4(a) of the in the race or enforcing the special local Administrative Procedure Act (APA) (5 regulation, are prohibited from entering, U.S.C. 553(b)). This provision transiting through, anchoring in, or DEPARTMENT OF HOMELAND authorizes an agency to issue a rule remaining within the area. Persons and SECURITY without prior notice and opportunity to vessels may request authorization to comment when the agency for good Coast Guard enter, transit through, anchor in, or cause finds that those procedures are remain within the race area by ‘‘impracticable, unnecessary, or contrary 33 CFR Part 100 contacting the Captain of the Port San to the public interest.’’ Under 5 U.S.C. Juan by telephone at 787–289–2041, or [Docket Number USCG–2020–0108] 553(b)(B), the Coast Guard finds that a designated representative via VHF RIN 1625–AA08 good cause exists for not publishing a radio on channel 16. If authorization is notice of proposed rulemaking (NPRM) granted by the Captain of the Port San Special Local Regulation, Salinas with respect to this rule because it is Juan or a designated representative, all Power Boat Race; Bahia De Rincon, PR impracticable. The Coast Guard did not persons and vessels receiving such receive the necessary information to authorization must comply with the AGENCY: Coast Guard, DHS. publish notice for this event until instructions of the Captain of the Port ACTION: Temporary final rule. January 28, 2020, which is 32 days San Juan or a designated representative. before the event is scheduled to occur. SUMMARY: The Coast Guard is The Coast Guard will provide notice of establishing a special local regulation on Any delay in the effective date of this the regulated area by Broadcast Notice the waters of Bahia De Rincon, Puerto rule would be contrary to the public to Mariners, and on-scene designated Rico during the Salinas Power Boat interest because immediate action is representatives. needed to minimize potential danger to Race. Approximatly 50 high speed boats V. Regulatory Analyses and personal water crafts are expected the race participants, participating We developed this rule after to participate in the race. The special vessels, spectators and the general considering numerous statutes and local regulation is necessary to ensure public. It is impracticable to publish an Executive orders related to rulemaking. the safety to race participants, NPRM because we must establish this Below we summarize our analyses participant vessels, and the general special local regulation by Febuary 28, based on a number of these statutes and pubic during the event. The special 2020. Under 5 U.S.C. 553(d)(3), the Coast Executive orders, and we discuss First local regulation establishes a race area, Guard finds that good cause exists for Amendment rights of protestors. where all persons and vessels, except making this rule effective less than 30 those participating in the race, will be A. Regulatory Planning and Review days after publication in the Federal prohibited from entering, transiting Register for the same reasons listed Executive Orders 12866 and 13563 through, anchoring in, or remaining above. direct agencies to assess the costs and within unless authorized by the Captain benefits of available regulatory of the Port San Juan or a designated III. Legal Authority and Need for Rule alternatives and, if regulation is representatives. The Coast Guard is issuing this rule necessary, to select regulatory DATES: This rule is effective daily from under authority in 46 U.S.C. 70034 approaches that maximize net benefits. 6 a.m. until 6 p.m. on Febuary 29, 2020 (previously 33 U.S.C. 1231). The Executive Order 13771 directs agencies and March 1, 2020. Captain of the Port San Juan (COTP) has to control regulatory costs through a

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budgeting process. This rule has not who enforce, or otherwise determine implementing instructions, and been designated a ‘‘significant compliance with, Federal regulations to Environmental Planning COMDTINST regulatory action,’’ under Executive the Small Business and Agriculture 5090.1 (series), which guide the Coast Order 12866. Accordingly, this rule has Regulatory Enforcement Ombudsman Guard in complying with the National not been reviewed by the Office of and the Regional Small Business Environmental Policy Act of 1969 (42 Management and Budget (OMB), and Regulatory Fairness Boards. The U.S.C. 4321–4370f), and have pursuant to OMB guidance it is exempt Ombudsman evaluates these actions determined that this action is one of a from the requirements of Executive annually and rates each agency’s category of actions that do not Order 13771. responsiveness to small business. If you individually or cumulatively have a This regulatory action determination wish to comment on actions by significant effect on the human is based on: (1) The special local employees of the Coast Guard, call 1– environment. This rule involves regulation will be enforced for twelve 888–REG–FAIR (1–888–734–3247). The creation of a special local regulation in hours daily over a two day period; (2) Coast Guard will not retaliate against conjunction with a regatta or marine although persons and vessels will not be small entities that question or complain parade to ensure the safety of race able to enter, transit through anchor in, about this rule or any policy or action participants, participant vessels and the or remain within the race area, without of the Coast Guard. general public during the event. It is authorization from the Captain of the categorically excluded from further C. Collection of Information Port San Juan or a designated review under paragraph L61 of representative, they may operate in the This rule will not call for a new Appendix A, Table 1 of DHS Instruction surrounding area during the collection of information under the Manual 023–01–001–01, Rev. 1. A enforcement period; (3) persons and Paperwork Reduction Act of 1995 (44 Record of Environmental Consideration vessels may still enter, transit through, U.S.C. 3501–3520). supporting this determination is anchor in, or remain within the race available in the docket. For instructions area, during the enforcement period. If D. Federalism and Indian Tribal Governments on locating the docket, see the authorized by the Captain of the Port ADDRESSES section of this preamble. San Juan or a designated representative; A rule has implications for federalism and (4) the Coast Guard will provide under Executive Order 13132, G. Protest Activities advance notification of the special local Federalism, if it has a substantial direct The Coast Guard respects the First regulation to the local maritime effect on the States, on the relationship Amendment rights of protesters. community by Broadcast Notice to between the National Government and Protesters are asked to call or email the Mariners. the States, or on the distribution of person listed in the FOR FURTHER power and responsibilities among the B. Impact on Small Entities INFORMATION CONTACT section to various levels of government. We have coordinate protest activities so that your The Regulatory Flexibility Act of analyzed this rule under that Order and message can be received without 1980, 5 U.S.C. 601–612, as amended, have determined that it is consistent jeopardizing the safety or security of requires Federal agencies to consider with the fundamental federalism people, places or vessels. the potential impact of regulations on principles and preemption requirements small entities during rulemaking. The described in Executive Order 13132. List of Subjects in 33 CFR Part 100 term ‘‘small entities’’ comprises small Also, this rule does not have tribal Marine safety, Navigation (water), businesses, not-for-profit organizations implications under Executive Order Reporting and recordkeeping that are independently owned and 13175, Consultation and Coordination requirements, Waterways. operated and are not dominant in their with Indian Tribal Governments, ■ For the reasons discussed in the fields, and governmental jurisdictions because it does not have a substantial preamble, the Coast Guard amends 33 with populations of less than 50,000. direct effect on one or more Indian CFR part 100 as follows: The Coast Guard certifies under 5 U.S.C. tribes, on the relationship between the 605(b) that this rule will not have a Federal Government and Indian tribes, PART 100—SAFETY OF LIFE ON significant economic impact on a or on the distribution of power and NAVIGABLE WATERS substantial number of small entities. responsibilities between the Federal ■ While some owners or operators of Government and Indian tribes. 1. The authority citation for part 100 vessels intending to transit the special continues to read as follows: local regulation may be small entities, E. Unfunded Mandates Reform Act Authority: 46 U.S.C. 70041; 33 CFR 1.05– for the reasons stated in section V.A The Unfunded Mandates Reform Act 1. above, this rule will not have a of 1995 (2 U.S.C. 1531–1538) requires ■ 2. Add § 100.T07–0108 to read as significant economic impact on any Federal agencies to assess the effects of follows: vessel owner or operator. their discretionary regulatory actions. In Under section 213(a) of the Small particular, the Act addresses actions § 100.T07–0108 Special Local Regulation; Business Regulatory Enforcement that may result in the expenditure by a Salinas Power Boat Race; Salinas, PR. Fairness Act of 1996 (Pub. L. 104–121), State, local, or tribal government, in the (a) Regulated Area. The following we want to assist small entities in aggregate, or by the private sector of regulated area is established as a special understanding this rule. If the rule $100,000,000 (adjusted for inflation) or local regulation. All coordinates are would affect your small business, more in any one year. Though this rule North American Datum 1983. organization, or governmental will not result in such an expenditure, (1) Power Boat Race Area. All waters jurisdiction and you have questions we do discuss the effects of this rule of Bahia de Rincon Bay encompassed concerning its provisions or options for elsewhere in this preamble. within the following points: Starting at compliance, please call or email the Point 1 in position 17°58′32.6562″ N, person listed in the FOR FURTHER F. Environment 66°19′22.6986″ W; thence south to Point INFORMATION CONTACT section. We have analyzed this rule under 2 in position 17°58′25.7478″ N, Small businesses may send comments Department of Homeland Security 66°19′09.7242″ W; thence east to Point on the actions of Federal employees Directive 023–01, Rev. 1, associated 3 in position 17°15′21.8190″ N,

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66°18′35.7336″ W; thence north-east to navigable waters within a 50-yard days after publication in the Federal point 4 in position 17°57′21.5238″ N, radius of USCG Station Juneau. The Register. Delaying the effective date of 66°19′42.6138″ W; thence west- safety zone is needed to protect this rule would be impracticable northwest back to origin. personnel, vessels, and the marine because immediate action is needed to (b) Definition. The term ‘‘designated environment from potential hazards protect the public and Navy assets from representative’’ means Coast Guard created by a Navy test involving the potential safety hazards associated Patrol Commanders, including Coast remotely operated vehicles (ROVs) with with the operation. Guard cowswains, petty officers, and a tethered cable which could tangle in III. Legal Authority and Need for Rule other officers operating Coast Guard a boat’s prop. Entry of vessels or persons vessels, and Federal, State, and local into this zone is prohibited unless The Coast Guard is issuing this rule officers designated by or assisting the specifically authorized by the Captain of under authority in 46 U.S.C. 70034 Captain of the Port San Juan in the the Port Southeast Alaska. (previously 33 U.S.C. 1231). The enforcement of the regulated area. DATES: This rule is effective between Captain of the Port Southeast Alaska (c) Regulations. (1) Except for those 7:30 a.m. and 5 p.m. from February 25, (COTP) has determined that potential persons and vessels participating in the 2020, through February 29, 2020. For hazards associated with the Navy’s race or enforcing the special local the purposes of enforcement, actual operation starting February 25, 2020, regulation, all persons and vessels are notice will be used from February 19, will be a safety concern for anyone prohibited from entering, transiting 2020, through February 28, 2020. within a 50-yard radius of USCG Station through, anchoring in, or remaining Juneau. This rule is needed to protect ADDRESSES: To view documents within a 200-yard radius of the power personnel, vessels, and the marine mentioned in this preamble as being boat race area. Persons and vessels may environment in the navigable waters available in the docket, go to https:// request authorization to enter, transit within the safety zone while the Navy www.regulations.gov, type USCG–2020– through, anchor in, remain within the operation is in effect. 0106 in the ‘‘SEARCH’’ box and click regulated area by contacting the Captain ‘‘SEARCH.’’ Click on Open Docket IV. Discussion of the Rule of the Port San Juan by telephone at Folder on the line associated with this (787) 289–2041, or a designated This rule establishes a safety zone rule. representative via VHF radio on channel from 8 a.m. on February 25, 2020 until 16. If authorization is granted by the FOR FURTHER INFORMATION CONTACT: If 4 p.m. on February 29, 2020. The safety Captain of the Port San Juan or a you have questions on this rule, call or zone will cover all navigable water designated representative, all persons email LT Jesse Collins, Sector Juneau within 50 yards of USCG Station and vessels receiving such authorization Waterways Management Division, U.S. Juneau. The duration of the zone is must comply with the instructions of Coast Guard; telephone 907–463–2846, intended to protect personnel, vessels, the Captain of the Port San Juan or a email [email protected]. and the marine environment in these designated representative. SUPPLEMENTARY INFORMATION: navigable waters while the Navy operation is in effect. No vessel or (2) The Coast Guard will provide I. Table of Abbreviations notice of the regulated area by Broadcast person will be permitted to enter the Notice to Mariners, and on-scene CFR Code of Federal Regulations safety zone without obtaining designated representatives. DHS Department of Homeland Security permission from the COTP or a (d) Enforcement period. This rule will FR Federal Register designated representative. NPRM Notice of proposed rulemaking be enforced daily from 6 a.m. until 6 V. Regulatory Analyses p.m. on Feburary 29, 2020 and March 1, § Section 2020, unless sooner terminated by the U.S.C. United States Code We developed this rule after ROV Remotely Operated Vehicle Captain of the Port San Juan. considering numerous statutes and Executive orders related to rulemaking. Dated: February 14, 2020. II. Background Information and Regulatory History Below we summarize our analyses G.H. Magee, based on a number of these statutes and CAPT, U.S. Coast Guard, Alterante Captain The Coast Guard is issuing this Executive orders, and we discuss First of the Port. temporary rule without prior notice and Amendment rights of protestors. [FR Doc. 2020–03462 Filed 2–27–20; 8:45 am] opportunity to comment pursuant to A. Regulatory Planning and Review BILLING CODE 9110–04–P authority under section 4(a) of the Administrative Procedure Act (APA) (5 Executive Orders 12866 and 13563 U.S.C. 553(b)). This provision direct agencies to assess the costs and DEPARTMENT OF HOMELAND authorizes an agency to issue a rule benefits of available regulatory SECURITY without prior notice and opportunity to alternatives and, if regulation is comment when the agency for good necessary, to select regulatory Coast Guard cause finds that those procedures are approaches that maximize net benefits. ‘‘impracticable, unnecessary, or contrary Executive Order 13771 directs agencies 33 CFR Part 165 to the public interest.’’ Under 5 U.S.C. to control regulatory costs through a [Docket Number USCG–2020–0106] 553(b)(B), the Coast Guard finds that budgeting process. This rule has not good cause exists for not publishing a been designated a ‘‘significant RIN 1625–AA00 notice of proposed rulemaking (NPRM) regulatory action,’’ under Executive with respect to this rule because Temporary Safety Zone, Blowfish Order 12866. Accordingly, this rule has immediate action is needed to safeguard Experiment; Juneau, AK not been reviewed by the Office of the boating public. It is impracticable to Management and Budget (OMB), and AGENCY: Coast Guard, DHS. publish an NPRM because immediate pursuant to OMB guidance it is exempt ACTION: Temporary final rule. action is necessary to protect the public. from the requirements of Executive Under 5 U.S.C. 553(d)(3), the Coast Order 13771. SUMMARY: The Coast Guard is Guard finds that good cause exists for This regulatory action determination establishing a temporary safety zone for making this rule effective less than 30 is based on the size, location, duration,

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and time-of-day of the safety zone. Paperwork Reduction Act of 1995 (44 available in the docket. For instructions Vessel traffic will be able to safely U.S.C. 3501–3520). on locating the docket, see the transit around this safety zone, which ADDRESSES section of this preamble. D. Federalism and Indian Tribal would impact a small designated area of Governments G. Protest Activities the Gasineau Channel during a period of the year when vessel traffic is normally A rule has implications for federalism The Coast Guard respects the First low. Moreover, the Coast Guard would under Executive Order 13132, Amendment rights of protesters. issue a Broadcast Notice to Mariners via Federalism, if it has a substantial direct Protesters are asked to call or email the VHF–FM marine channel 16 about the effect on the States, on the relationship person listed in the FOR FURTHER zone, and the rule would allow vessels between the National Government and INFORMATION CONTACT section to to seek permission to enter the zone. the States, or on the distribution of coordinate protest activities so that your power and responsibilities among the message can be received without B. Impact on Small Entities various levels of government. We have jeopardizing the safety or security of The Regulatory Flexibility Act of analyzed this rule under that Order and people, places or vessels. 1980, 5 U.S.C. 601–612, as amended, have determined that it is consistent List of Subjects in 33 CFR Part 165 requires Federal agencies to consider with the fundamental federalism the potential impact of regulations on principles and preemption requirements Harbors, Marine safety, Navigation small entities during rulemaking. The described in Executive Order 13132. (water), Reporting and recordkeeping term ‘‘small entities’’ comprises small Also, this rule does not have tribal requirements, Security measures, businesses, not-for-profit organizations implications under Executive Order Waterways. that are independently owned and 13175, Consultation and Coordination For the reasons discussed in the operated and are not dominant in their with Indian Tribal Governments, preamble, the Coast Guard amends 33 fields, and governmental jurisdictions because it does not have a substantial CFR part 165 as follows: with populations of less than 50,000. direct effect on one or more Indian The Coast Guard certifies under 5 U.S.C. tribes, on the relationship between the PART 165—REGULATED NAVIGATION 605(b) that this rule will not have a Federal Government and Indian tribes, AREAS AND LIMITED ACCESS AREAS or on the distribution of power and significant economic impact on a ■ 1. The authority citation for part 165 responsibilities between the Federal substantial number of small entities. continues to read as follows: While some owners or operators of Government and Indian tribes. vessels intending to transit the safety Authority: 46 U.S.C. 70034, 70051; 33 CFR E. Unfunded Mandates Reform Act zone may be small entities, for the 1.05–1, 6.04–1, 6.04–6, and 160.5; The Unfunded Mandates Reform Act Department of Homeland Security Delegation reasons stated in section V.A above, this No. 0170.1. rule will not have a significant of 1995 (2 U.S.C. 1531–1538) requires economic impact on any vessel owner Federal agencies to assess the effects of ■ 2. Add § 165.T17–0106 to read as or operator. their discretionary regulatory actions. In follows: particular, the Act addresses actions Under section 213(a) of the Small § 165.T17–0106 Safety Zone for Blowfish Business Regulatory Enforcement that may result in the expenditure by a Experiment; Gastineau Channel, Juneau, Fairness Act of 1996 (Pub. L. 104–121), State, local, or tribal government, in the AK. we want to assist small entities in aggregate, or by the private sector of (a) Location. The following area is a understanding this rule. If the rule $100,000,000 (adjusted for inflation) or safety zone: The following area is a would affect your small business, more in any one year. Though this rule safety zone: the waters in Juneau Harbor organization, or governmental will not result in such an expenditure, within a 50 yard radius of the USCG jurisdiction and you have questions we do discuss the effects of this rule Station Juneau pier located at 58°17′57″ concerning its provisions or options for elsewhere in this preamble. N, 134°24′55″ W between 7:30 a.m. and compliance, please call or email the F. Environment 5:00 p.m. from February 25, 2020 person listed in the FOR FURTHER through February 29, 2020. INFORMATION CONTACT section. We have analyzed this rule under (b) Definitions. As used in this Small businesses may send comments Department of Homeland Security section: on the actions of Federal employees Directive 023–01, Rev. 1, associated (1) Captain of the Port (COTP) means who enforce, or otherwise determine implementing instructions, and the Commander, U.S. Coast Guard compliance with, Federal regulations to Environmental Planning COMDTINST Sector Juneau. the Small Business and Agriculture 5090.1 (series), which guide the Coast (2) Designated representative means Regulatory Enforcement Ombudsman Guard in complying with the National any Coast Guard commissioned, and the Regional Small Business Environmental Policy Act of 1969 (42 warrant, or petty officer who has been Regulatory Fairness Boards. The U.S.C. 4321–4370f), and have authorized by the Captain of the Port Ombudsman evaluates these actions determined that this action is one of a Southeast Alaska to assist in enforcing annually and rates each agency’s category of actions that do not the safety zone described in paragraph responsiveness to small business. If you individually or cumulatively have a (a) of this section. wish to comment on actions by significant effect on the human (c) Regulations. (1) Under the general employees of the Coast Guard, call 1– environment. This rule involves a safety safety zone regulations in subpart C of 888–REG–FAIR (1–888–734–3247). The zone lasting 7 hours per day that will this part, you may not enter the safety Coast Guard will not retaliate against prohibit entry within 50 yards of USCG zone described in paragraph (a) of this small entities that question or complain Station Juneau. It is categorically section unless authorized by the COTP about this rule or any policy or action excluded from further review under or the COTP’s designated representative. of the Coast Guard. paragraph L60(a) of Appendix A, Table All vessels underway within this safety 1 of DHS Instruction Manual 023–01– zone at the time it is activated are to C. Collection of Information 001–01, Rev. 1. A Record of depart the zone. This rule will not call for a new Environmental Consideration (2) To seek permission to enter, collection of information under the supporting this determination is contact the COTP or the COTP’s

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designated representative by telephone comments electronically. Information provide comments on identifying at 907–463–2980 or on Marine Band on using Regulations.gov, including regulations and guidance for repeal, Radio VHF–FM channel 16 (156.8 instructions for accessing agency replacement, or modification. After MHz). The Coast Guard vessels documents, submitting comments, and extending the closing date from August enforcing this section can be contacted viewing the docket, is available on the 21, 2017 to September 20, 2017, the on Marine Band Radio VHF–FM site under ‘‘How to use Rehabilitation Services Administration, channel 16 (156.8 MHz). Regulations.gov.’’ within the Office of Special Education (3) Those in the safety zone must • Postal Mail, Commercial Delivery, and Rehabilitative Services, received comply with all lawful orders or or Hand Delivery. If you mail or deliver 847 comments from the public. Of those directions given to them by the COTP or your comments about this notice of comments, and others received since the COTP’s designated representative. interpretation, address them to Carol September 2017, approximately 30 (d) Enforcement officials. The U.S. Dobak, U.S. Department of Education, included questions, suggestions, and Coast Guard may be assisted in the 400 Maryland Avenue SW, Room 5153, implementation concerns regarding the patrol and enforcement of the safety Potomac Center Plaza, Washington, DC statutory provision requiring States to zone by Federal, State, and local 20202–5108. provide pre-employment transition agencies. services. Privacy Note: The Department’s policy for The Rehabilitation Act of 1973, as (e) Enforcement. This safety zone may comments received from members of the be enforced during the period described public is to make these submissions available amended by title IV of the Workforce in paragraph (f) of this section. for public viewing in their entirety on the Innovation and Opportunity Act (f) Enforcement period. This section Federal eRulemaking Portal at (Rehabilitation Act), requires States to may be enforced from 7:30 a.m. on www.regulations.gov. Therefore, commenters reserve at least 15 percent of their VR February 25, 2020, until 5 p.m. on should be careful to include in their program allotments to provide, or February 29, 2020. comments only information that they wish to arrange for the provision of, pre- make publicly available. Dated: February 19, 2020. employment transition services to all students with disabilities in need of Stephen R. White, FOR FURTHER INFORMATION CONTACT: Carol Dobak, U.S. Department of such services who are eligible or Captain, U.S. Coast Guard, Captain of the potentially eligible for the VR program. Port Southeast Alaska. Education, 400 Maryland Avenue SW, Room 5153, Potomac Center Plaza, In response to the many questions and [FR Doc. 2020–03648 Filed 2–26–20; 8:45 am] comments about the allowable use of Washington, DC 20202–5108. BILLING CODE 9110–04–P the reserved funds for auxiliary aids and Telephone: (202) 245–7325. Email: services and other VR services listed in [email protected]. the Rehabilitation Act, the Department DEPARTMENT OF EDUCATION SUPPLEMENTARY INFORMATION: issues this notice of interpretation to: (1) Invitation to Comment Clarify current policy regarding the use 34 CFR Part 361 of Federal VR funds reserved for the We invite you to submit comments on [Docket ID ED–2019–OSERS–0140] provision of pre-employment transition this notice of interpretation. We will services to pay for auxiliary aids and State Vocational Rehabilitation consider these comments in services needed by all students with Services Program determining whether to take any future disabilities in order to access or action. participate in required pre-employment AGENCY: Office of Special Education and See ADDRESSES for instructions on transition services under section 113(b) Rehabilitative Services, U.S. Department how to submit comments. of the Rehabilitation Act, and (2) of Education. During and after the comment period, announce a change in policy with ACTION: Policy interpretation; request for you may inspect all public comments respect to additional VR services needed comments. about this interpretation by accessing by eligible students with disabilities Regulations.gov. You may also inspect that may be paid for with Federal VR SUMMARY: The U.S. Department of the comments in person in Room grant funds reserved for the provision of Education (Department) issues this 3W104, 400 Maryland Avenue SW, pre-employment transition services and interpretation to clarify current policy Washington, DC, between the hours of the circumstances under which those and announce a change in policy 8:30 a.m. and 4:00 p.m., Eastern time, funds may be used to pay for those regarding the use of Federal vocational Monday through Friday of each week additional VR services. rehabilitation (VR) funds reserved for except Federal holidays. If you want to pre-employment transition services. schedule time to inspect comments, Background DATES: This policy is effective February please contact the person listed under The amendments to the Rehabilitation 28, 2020. We must receive your FOR FURTHER INFORMATION CONTACT. Act made by title IV of the Workforce comments on or before March 30, 2020. Assistance to Individuals with Innovation and Opportunity Act ADDRESSES: Submit your comments Disabilities in Reviewing the Record: On (WIOA) place heightened emphasis on through the Federal eRulemaking Portal request, we will provide an appropriate the provision of services to students and or via postal mail, commercial delivery, accommodation or auxiliary aid to an youth with disabilities to ensure that or hand delivery. We will not accept individual with a disability who needs they have meaningful opportunities to comments submitted by fax or by email assistance to review the comments or receive the training and other services or those submitted after the comment other documents in the public record for they need to achieve employment period. To ensure that we do not receive this notice. If you want to schedule an outcomes in competitive integrated duplicate copies, please submit your appointment for this type of aid, please employment. The Rehabilitation Act, as comments only once. In addition, please contact the person listed under FOR amended by WIOA, expands not only include the Docket ID at the top of your FURTHER INFORMATION CONTACT. the population of students with comments. The Department published a request disabilities who may receive services • Federal eRulemaking Portal: Go to for comments in the Federal Register on under the VR program but also the kinds www.regulations.gov to submit your June 22, 2017, inviting the public to of services the designated State units

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(DSUs) may provide to these students Since implementation of the pre- aids and services needed by any student with disabilities who are transitioning employment transition services with a disability with a sensory or from school to postsecondary education requirements, the Department has communicative disorder who needs and employment. continued to receive comments from those services to access pre-employment Most notably, section 110(d)(1) of the DSUs and other stakeholders regarding: transition services, regardless of Rehabilitation Act and 34 CFR (1)The need for further clarification whether the student has applied or been 361.65(a)(3)(i) require States to reserve about the extent to which funds determined eligible for the VR program. at least 15 percent of their Federal VR reserved for the provision of pre- As public entities, defined in section grant for the provision of pre- employment transition services may be 12131 of the Americans with employment transition services. Section used to pay for auxiliary aids and Disabilities Act (ADA), and as recipients 113(a) of the Rehabilitation Act and 34 services; and (2) the ability of States to of Federal funds, DSUs must ensure that CFR 361.48(a) require DSUs for the VR reserve and expend at least 15 percent no qualified individual with a disability program to use the reserved funds to of their VR grant allotments on the is excluded from participation in or provide, or arrange for the provision of, provision of pre-employment transition denied the benefits of services, pre-employment transition services to services under the Department’s general programs, or activities on the basis of all students with disabilities in need of interpretation of the statutory the individual’s disability (section such services who are eligible or requirements related to the allowable 12132 of the ADA and section 504(a) of potentially eligible for services under use of funds. Specifically, DSUs and the Rehabilitation Act). Because section the VR program. stakeholders have asked if funds 113(a) of the Rehabilitation Act and 34 Section 113(b) of the Rehabilitation reserved for pre-employment transition CFR 361.48(a) make clear that pre- Act and 34 CFR 361.48(a)(2) list the five services may be used to cover the costs employment transition services must be required pre-employment transition of auxiliary aids and services provided provided to all students with disabilities services that DSUs, in collaboration directly to students with disabilities as who need them, this means that both with local educational agencies (LEAs), well as other VR services, such as eligible and potentially eligible students must make available to students with transportation, tuition for postsecondary with disabilities meet the essential disabilities in need of these services. education, rehabilitation technology, eligibility requirements 2 for pre- These services are— and job coaching. The Department employment transition services under • Job exploration counseling; addresses these concerns in this notice the VR program in accordance with • Work-based learning experiences, of interpretation. section 113(a) of the Rehabilitation Act and thus are considered qualified which may include in-school or after Policy Interpretation Clarification—Use individuals with disabilities for school opportunities, or experience of Reserved Funds for Providing purposes of title II of the ADA and outside the traditional school setting Auxiliary Aids and Services to All section 504 of the Rehabilitation Act (28 (including internships), that are Students With Disabilities Receiving CFR 35.104; 34 CFR 104.3(l)(4)). provided in an integrated environment Pre-Employment Transition Services to the maximum extent possible; Therefore, if any student with a • Counseling on opportunities for Subsequent to the publication of the disability requires an auxiliary aid or enrollment in comprehensive transition State Vocational Rehabilitation Services service to access or participate in any of or postsecondary educational programs program; State Supported Employment the pre-employment transition services at institutions of higher education; Services program; and Limitations on specified in section 113(b) of the • Workplace readiness training to Use of Subminimum Wage regulations Rehabilitation Act and 34 CFR develop social skills and independent in the Federal Register on August 19, 361.48(a)(2), the DSU must pay for such living; and 2016 (81 FR 55630) (August 2016 costs if no other public entity is • Instruction in self-advocacy, which regulations), it has been the required to provide such aids or may include peer mentoring. Department’s policy interpretation that services.3 Pre-employment transition services DSUs may use funds reserved for the represent the earliest set of services provision of pre-employment transition 2 It is important to note that potentially eligible available for students with disabilities services to pay for auxiliary aids and students with disabilities are eligible to receive pre- services for students with disabilities employment transition services pursuant to section under the VR program, are short-term in 113(a) of the Rehabilitation Act. As such, they are nature, and are designed to help with sensory and communicative considered qualified individuals under the ADA for students identify career interests. disorders who need such aids and the receipt of pre-employment transition services. It For purposes of this notice of services in order to access or participate should not be construed that these students with in pre-employment transition services disabilities have satisfied the eligibility interpretation, the Department focuses requirements of section 102(a) of the Rehabilitation its discussion on these five required pre- under section 113(b) of the Act for all other VR services provided under section employment transition services because Rehabilitation Act and 34 CFR 103 of the Rehabilitation Act. these are the only pre-employment 361.48(a)(2) (Rehabilitation Services 3 Please see 34 CFR 361.53(a) for the related Administration email to DSUs dated assurance that DSUs must include in the VR transition services that DSUs provide services portion of the Unified or Combined State directly to students with disabilities as December 28, 2016: https:// Plan. See also Section 101(a)(8)(A)(i) of the defined in section 7(37) of the www2.ed.gov/policy/speced/guid/rsa/ Rehabilitation Act. Because DSUs must conduct a Rehabilitation Act and 34 CFR supporting/dear-director-letter- search for comparable services and benefits only 1 auxiliary-aids-and-services-12-28- when providing VR services to eligible individuals, 361.5(c)(51). they need not conduct such a search when 2016.pdf). The Department made clear providing pre-employment transition services and 1 Section 113(c) of the Rehabilitation Act that DSUs may use the funds reserved auxiliary aids and services to students with describes services that are systemic in nature, i.e., under section 110(d)(1) of the disabilities who have not applied or been strategies the DSUs use in delivering pre- Rehabilitation Act and 34 CFR determined eligible for VR services, but they would employment transition services, and section 113(d) be required to do so for those students with describes the coordination activities for ensuring 361.65(a)(3)(i) to pay for any auxiliary disabilities who have been determined eligible that students with disabilities receive the pre- under the VR program pursuant to section 102(a)(1) employment transition services they need. This 113(c) and (d) of the Rehabilitation Act because of the Rehabilitation Act. In addition, rehabilitation notice of interpretation does not address the pre- they are not applicable to this interpretation (see technology, including telecommunications, sensory, employment transition services described in section also 34 CFR 361.48(a)(3) and (4)). Continued

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The ADA’s title II implementing computer on which it is installed, meets respect to those students with regulations define ‘‘auxiliary aids and the definition of ‘‘auxiliary aids and disabilities who have not yet been services’’ in 28 CFR 35.104. For services’’ for purposes of the ADA and determined eligible for the VR program purposes of the Department’s policy section 504 of the Rehabilitation Act (i.e., potentially eligible students with interpretation, auxiliary aids and and, as such, could be paid with funds disabilities), DSUs may use the funds services ensure equal access to reserved for the provision of pre- reserved under section 110(d)(1) of the information, materials, services, and employment transition services. The Rehabilitation Act and 34 CFR activities available to students with Department addresses computers and 361.65(a)(3)(i) only to pay for those pre- disabilities participating in pre- other rehabilitation technology in a later employment transition services set forth employment transition services. As discussion pertaining to section in section 113 and 34 CFR 361.48(a), as such, expenditures incurred for the 103(a)(14) of the Rehabilitation Act and well as for auxiliary aids and services purchase or acquisition of auxiliary aids 34 CFR 361.48(b)(17). needed to access or participate in pre- and services, including, for example, On the other hand, personal devices employment transition services, as interpreter and reader services under and services do not meet the definition described in Department guidance section 103(a)(10) of the Rehabilitation of auxiliary aids and services under the issued to date. Act and 34 CFR 361.48(b)(10) and (11), ADA or section 504 of the Rehabilitation Since the addition of the five required for students with disabilities needing Act. Personal devices and services pre-employment transition services, the such aids or services to access or include individually prescribed devices, VR program can be characterized as participate in pre-employment such as prescription eyeglasses or providing a continuum of services, with transition services specified in section hearing aids, readers for personal use or pre-employment transition services 113(b) of the Rehabilitation Act and 34 study, or services of a personal nature being most beneficial to students with CFR 361.48(a)(2) constitute an allowable (28 CFR 35.135 and 34 CFR disabilities in the early stages of pre-employment transition services cost. 104.44(d)(2)). If a student with a employment exploration. The Secretary This is true for both potentially eligible disability requires personal devices or is committed to ensuring that students and eligible students with disabilities. services or individually prescribed with disabilities are held to high Because auxiliary aids and services assistive technology, the VR agency expectations and have the resources and necessary for students with disabilities must determine whether the student supports needed to prepare them for to access or participate in pre- meets the eligibility criteria of section success in postsecondary education or employment transition services are an 102(a) of the Rehabilitation Act and, if careers. Therefore, we believe that these allowable cost, DSUs may use funds so, develop an IPE in partnership with services should be provided to the reserved for providing pre-employment the student pursuant to section 102(b) of broadest population of students with transition services to pay for those the Rehabilitation Act for the provision disabilities to ensure that as many auxiliary aids and services for any of those additional services (see also 34 students with disabilities as possible are student with a disability who needs CFR 361.42(a)(1) and 361.45). DSUs able to receive the services they need to them, regardless of whether they have must use funds reserved under prepare for postschool activities, applied and been determined eligible section110(d)(1) of the Rehabilitation including postsecondary education and for VR services. For example, for a Act and 34 CFR 361.65(a)(3)(i) to pay for employment. To that end, pre- student who is deaf, DSUs could only pre-employment transition services employment transition services purchase interpreter services or video- under section 113(b) and 34 CFR represent the earliest set of services based telecommunication products to 361.48(a)(2), auxiliary aids and services available for students with disabilities ensure access to information and needed by any student with a disability under the VR program. These are short- activities related to job exploration to access or participate in those services, term services designed to help students counseling or other pre-employment or other VR services necessary for an identify career interests. transition services. As another example, eligible student to receive pre- Transition services represent the next DSUs could purchase screen reader employment transition services as set of services on the continuum of VR software programs to enable a student discussed elsewhere in this notice of services available to eligible who is blind to access information on a interpretation. DSUs must pay for any individuals. Transition services, for computer during a work-based learning other additional VR services using non- eligible students 4 with disabilities, experience. DSUs could purchase the reserved VR funds. provide for further development and screen reader software for the student’s pursuit of career interests with Policy Interpretation—Use of Reserved personal laptop or for a laptop that postsecondary education, vocational Funds for Providing Certain Other VR would be available for other students training, job search, job placement, job Services for Eligible Students With needing the device. In these instances, retention, job follow-up, and job follow- Disabilities Receiving Pre-Employment it is important to note that the screen along services (section 103(a)(4), (5), Transition Services reader software for individuals who are and (15) of the Rehabilitation Act and blind or visually impaired, not the As explained here for purposes of this 34 CFR 361.48(b)(6), (12), and (18)). policy interpretation, which is separate Employment-related services to and other technological aids and devices, among and distinct from the policy clarification eligible individuals are next in the other VR services, are exempt under Section just described regarding auxiliary aids continuum of services. These services 101(a)(8)(A)(i) and 34 CFR 361.53(b)(5) from the and services, DSUs may use the funds typically are provided once eligible determination of comparable services and benefits. Therefore, DSUs need not conduct a search for reserved under section 110(d)(1) of the comparable services and benefits when providing Rehabilitation Act and 34 CFR 4 Although DSUs may provide transition and auxiliary aids and services to either eligible or 361.65(a)(3)(i) to pay for those pre- other VR services to youth with disabilities, as potentially eligible students with disabilities to the defined at section 7(42) of the Rehabilitation Act extent that these aids and services constitute employment transition services needed and 34 CFR 361.5(c)(58), the discussion in this ‘‘rehabilitation technology’’ as defined in Section by eligible students with disabilities, notice of interpretation focuses solely on students 7(32) of the Rehabilitation Act and 34 CFR plus any other VR service needed by with disabilities because pre-employment transition 361.5(c)(45), and are necessary for the student with those eligible students to benefit from services are only available to those individuals who a disability to participate in pre-employment meet the definition of a ‘‘student with a disability’’ transition services under section 113 of the pre-employment transition services in at section 7(37) of the Rehabilitation Act and 34 Rehabilitation Act. accordance with an approved IPE. With CFR 361.5(c)(51).

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students have identified their career provide young people with disabilities same flexibility. Section 103(a) of the interests, have further developed and with the opportunity to develop their Rehabilitation Act makes clear that all pursued their career interests through skills and to use supports, available VR services provided under that section postsecondary education and vocational through State VR programs to are provided under an approved IPE training offered through transition experience competitive integrated that is developed when an individual services, and are pursuing specific employment as they leave school and with a disability has applied and been employment outcomes. Employment- enter the workforce.’’ The intent of determined eligible for the VR program related services are identified in section Congress makes clear that the in accordance with section 102 of the 103(a) of the Rehabilitation Act and 34 ‘‘framework’’ for VR services includes Rehabilitation Act (see also 34 CFR CFR 361.48(b) and are intended to assist pre-employment transition services for 361.42 and 361.48(b)). the eligible individual with a disability all students with disabilities and other Section 102(b)(4)(A) of the in preparing for, securing, retaining, services and supports for eligible Rehabilitation Act and 34 CFR advancing in, or regaining an students with disabilities with an 361.46(a)(1) make clear that the IPE for employment outcome that is consistent approved IPE to develop their skills and a student with a disability need only with the individual’s unique strengths, experience success when they enter the contain a ‘‘description of the student’s resources, priorities, concerns, abilities, workforce. projected postschool employment capabilities, interests, and informed Section 110(d)(1) of the Rehabilitation outcome,’’ as opposed to a description choice. Act and 34 CFR 361.65(a)(3)(i) require of a specific employment outcome. While a continuum of services across each State to reserve at least 15 percent Despite this flexibility available to pre-employment transition services for of its Federal VR grant for the provision States, the Department has observed students with disabilities, and transition of pre-employment transition services to through monitoring that these IPEs for services and employment-related students with disabilities. With this students with disabilities are services for eligible individuals who statutory provision, coupled with the underutilized. Because DSUs can have IPEs, exists under the VR program, ‘‘Statement of the Managers to develop initial IPEs for eligible students the five required pre-employment Accompany the Workforce Innovation with disabilities that are more general in transition services are the only services and Opportunity Act,’’ the Department nature, DSUs are able to provide available to potentially eligible students interprets this requirement as meaning additional supports and services to with disabilities. that DSUs may use these reserved funds eligible students as necessary for In the preamble to the Department’s to pay for other VR services under students to benefit from pre- August 2016 regulations, the section 103(a) of the Rehabilitation Act employment transition services and Department made clear that the term and 34 CFR 361.48(b), in accordance activities and explore their career ‘‘potentially eligible’’ students with with an approved IPE, that are necessary interests and, subsequently, refine the disabilities, for purposes of receiving for an eligible student with a disability IPEs, through the amendment process pre-employment transition services, to participate in pre-employment under section 102(b)(3)(E) of the includes all students with disabilities transition services identified in section Rehabilitation Act and 34 CFR (81 FR 55630, 55631, and 55690–55691). 113(b) of the Rehabilitation Act. This 361.45(a)(6), to include a specific Students with disabilities do not need to means that, for eligible students with employment goal and the VR services apply and be determined eligible for the disabilities, DSUs may use the reserved necessary to achieve that goal, as VR program to receive pre-employment funds to pay for the pre-employment appropriate. Eligible students with transition services. However, these transition services and any other VR disabilities are able to access any other students may not receive any VR services necessary for the eligible VR services needed to participate in pre- services other than pre-employment student to benefit from those pre- employment transition services (as transition services until they apply, and employment transition services in discussed in more detail below) or other are determined eligible, for VR services, accordance with an approved IPE VR services that are unrelated to pre- and have an approved IPE (81 FR 55629 consistent with the requirements of employment transition services, none of at 55691). On the other hand, eligible section 103(a) of the Rehabilitation Act. which would be available to them students with disabilities, that is, those However, for those students with without approved IPEs. students who have applied and been disabilities who have not yet applied or This policy interpretation applies determined eligible for the VR program, been determined eligible for the VR only to those students with disabilities are able to receive any VR services, program (i.e., potentially eligible who have been determined eligible for including pre-employment transition students), the DSUs may use the services under the VR program and who services, necessary to assist them in reserved funds to pay only those costs have an approved IPE. We recognize achieving their employment outcome, incurred in providing the pre- that some eligible students with so long as those services are identified employment transition services disabilities may need certain VR on their IPEs in accordance with section identified in section 113 of the services under section 103(a) of the 103(a) of the Rehabilitation Act (81 FR Rehabilitation Act and 34 CFR Rehabilitation Act and 34 CFR 361.48(b) 55691). 361.48(a), as well as auxiliary aids and to fully benefit from pre-employment On May 21, 2014, the Congress of the services needed to access or participate transition services under section 113(b) United States released ‘‘Statement of the in pre-employment transition services, and 34 CFR 361.48(a)(2). Receiving Managers to Accompany the Workforce as described in guidance issued by the other VR services and supports, along Innovation and Opportunity Act.’’ In its Department to date. with the pre-employment transition statement, Congress made clear that the Although section 113 of the services, enables eligible students with title IV ‘‘. . . amendments established a Rehabilitation Act is unique in that it a disability to develop the skills to framework to ensure every young permits VR agencies to provide pre- experience competitive, integrated person with a disability, regardless of employment transition services to employment as they leave school and their level of disability, has the students with disabilities who have not enter the workforce. Therefore, the opportunity to experience competitive, yet been determined eligible for the VR Department believes that allowing the integrated employment. The pre- program, section 103(a) of the funds reserved under section 110(d)(1) employment transition services will Rehabilitation Act does not contain the and 34 CFR 361.65(a)(3)(i) to be used to

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pay for other VR services needed by employment transition services and, for additional services in section 103(a) eligible students with disabilities who thus, this interpretation, DSUs may still of the Rehabilitation Act and 34 CFR have IPEs to benefit from pre- provide those services in accordance 361.48(b), consistent with both the employment transition services is with the terms of the approved IPE. statutory purpose for these reserved consistent with the ‘‘Statement of the However, DSUs must provide those funds and fiscal requirements of the Managers to Accompany the Workforce additional VR services with other VR Uniform Guidance, provide DSUs with Innovation and Opportunity Act’’ and funds that were not reserved under significantly greater flexibility in with the statutory purpose for the section 110(d)(1) of the Rehabilitation delivering pre-employment transition reservation of these funds. Act and 34 CFR 361.65(a)(3)(i). services to eligible students with This interpretation regarding the use In an effort to explain the application disabilities than has been allowed under of the reserved funds for certain other of this interpretation to the services Department guidance issued to date, VR services that are necessary for an outlined in section 103(a) of the thereby increasing the availability of eligible student with a disability to Rehabilitation Act and 34 CFR pre-employment transition services to benefit from pre-employment transition 361.48(b), we discuss each of those VR these students. services also is consistent with the services in light of whether they are To the extent that a portion of the Office of Management and Budget’s within the nature, scope, and purpose of costs incurred for the additional VR Uniform Administrative Requirements, any of the pre-employment transition services fall outside the nature, scope, Cost Principles, and Audit services available under section 113(b) and purpose of pre-employment Requirements for Federal Awards and 34 CFR 361.48(a)(2) (i.e., are transition services, DSUs must pay that (Uniform Guidance), codified at 2 CFR necessary, reasonable, and allocable) portion with other VR program funds. part 200. Specifically, 2 CFR 200.403(a) and, thus, may be paid with the funds Assessment Services requires that costs paid from a Federal reserved under section 110(d)(1) of the award must be allowable, meaning that Rehabilitation Act and 34 CFR Section 103(a)(1) and 34 CFR they must be necessary, reasonable, and 361.65(a)(3)(i) if needed by an eligible 361.48(b)(2) permit DSUs to provide allocable to the award. Costs are student with a disability to benefit from assessment services to eligible reasonable if, in their nature and pre-employment transition services. In individuals to determine VR needs. amount, they do not exceed that which so doing, we also explain that certain These services are generally provided in would be incurred by a prudent person VR services outlined in section 103(a) of the very early stages of the VR process under the circumstances that existed at the Rehabilitation Act and 34 CFR with an eligible individual with a the time the decision was made to incur 361.48(b) fall outside the nature, scope, disability and, thus, are consistent with the cost (2 CFR 200.404). A cost is and purpose of pre-employment the nature, scope, and purpose of pre- allocable to a Federal cost objective if transition services and, thus, those employment transition services. As the services are assignable to that cost services are not reasonable or necessary stated in the preamble to the August objective in accordance with relative for an eligible student with a disability 2016 regulations (81 FR at 55685), VR benefits received (2 CFR 200.405(a)). to benefit from pre-employment services are provided on a continuum, These fiscal requirements not only transition services under section 113(b) with pre-employment transition services apply to costs incurred under the VR of the Rehabilitation Act and 34 CFR being the earliest set of services grant as a whole, but also to those costs 361.48(a)(2). Therefore, the costs for available for students with disabilities. incurred with the funds reserved under such services are not allocable to the Given that the purpose of assessment section 110(d)(1) of the Rehabilitation provision of pre-employment transition services under section 103(a)(1) and 34 Act and 34 CFR 361.65(a)(3)(i). In other services and may not be paid with the CFR 361.48(b)(2) is to determine the VR words, costs incurred with these funds reserved under section 110(d)(1) needs of individuals with disabilities, it reserved funds must be— and 34 CFR 361.65(a)(3)(i) for that is reasonable that an eligible student with a disability would need further • Necessary for the provision or receipt of purpose. Nothing in this interpretation pre-employment transition services; affects the DSU’s responsibility to assessment services while engaging in • Reasonable, that is, those that a prudent search for comparable services and any of the pre-employment transition person would agree are necessary for the benefits, when required by section services set forth at section 113(b) and provision or receipt of pre-employment 101(a)(8) of the Rehabilitation Act and 34 CFR 361.48(a)(2) to fully benefit from transition services; and 34 CFR 361.53, before providing any of those activities. • Allocable, that is, those that benefit the the VR services discussed herein. Counseling and Guidance provision or receipt of pre-employment Through this interpretation, the transition services. following VR services in section 103(a) Section 103(a)(2) and 34 CFR Under the Department’s of the Rehabilitation Act and 34 CFR 361.48(b)(3) permit DSUs to provide interpretation, the reserved funds may 361.48(b) fall within the nature, scope, counseling and guidance services to be used for costs associated with and purpose of pre-employment eligible individuals throughout the VR providing certain VR services to eligible transition services when needed by an process. These services are directly students with disabilities, in accordance eligible student with a disability, in connected with the nature, scope, and with approved IPEs, who need those accordance with an approved IPE, to purpose of two pre-employment services to benefit from pre-employment benefit from one or more of the pre- transition services, specifically job transition services, as well as the costs employment transition services exploration counseling (section associated with the pre-employment described in section 113(b) of the 113(b)(1) and 34 CFR 361.48(a)(2)(i)) transition services themselves. As such, Rehabilitation Act and 34 CFR and counseling on opportunities for these costs would be reasonable, 361.48(a)(2). As such, costs incurred in enrollment in comprehensive transition necessary, and allocable to the funds providing these other VR services are and other postsecondary education reserved under section 110(d)(1) of the allocable to the funds reserved under programs at institutions of higher Rehabilitation Act and 34 CFR section 110(d)(1) of the Rehabilitation education (section 113(b)(3) and 34 CFR 361.65(a)(3)(i). If eligible students with Act and 34 CFR 361.65(a)(3)(i). As 361.48(a)(2)(iii)). Given that counseling disabilities need additional VR services discussed here, the examples of when and guidance services are specifically that are not within the scope of pre- DSUs may use the reserved funds to pay listed among the pre-employment

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transition services at section 113(b) and clothing for a work-based learning sessions under section 113(b)(5) and 34 34 CFR 361.48(a)(2), these services experience under section 113(b)(2) and CFR 361.48(a)(2)(v)). It is also clearly fall within the nature, scope, and 34 CFR 361.48(a)(2)(ii) or the purchase reasonable that an eligible student with purpose of pre-employment transition of a talking alarm clock to participate in a disability could need transportation to services. Therefore, it is reasonable that workplace readiness training under participate in workplace readiness an eligible student with a disability section 113(b)(4) and 34 CFR training under section 113(b)(4) and 34 could need these services in order to 361.48(a)(2)(iv)). Therefore, to the extent CFR 361.48(a)(2)(iv) to learn how to benefit from pre-employment transition an eligible student with a disability travel independently in preparation for services activities. needs maintenance, in accordance with eventual employment. As such, to the an approved IPE, to benefit from pre- extent an eligible student with a Referral Services employment transition services, then disability needs transportation services Section 103(a)(3) and 34 CFR such maintenance services fall within in accordance with an approved IPE to 361.48(b)(4) permit DSUs to provide the nature, scope, and purpose of pre- participate in any of the pre- referral services to eligible individuals employment transition services. employment transition services, the with disabilities to secure needed However, we clarify that it is not transportation services clearly fall services from other agencies throughout reasonable to provide maintenance within the nature, scope, and purpose of the VR process. While these services are services to all eligible students with those pre-employment transition not directly connected to any particular disabilities in all circumstances with the services. We clarify that it is not pre-employment transition services use of the reserved funds under this reasonable to provide all types of activity described in section 113(b) and interpretation. DSUs must ensure the transportation services to all eligible 34 CFR 361.48(a)(2), section 113(a) of costs incurred for maintenance are students with disabilities with the use the Rehabilitation Act and 34 CFR allocable to the pre-employment of the reserved funds under this 361.48(a) make clear that the VR agency transition services that the eligible interpretation. As with the maintenance must provide, or arrange for the student with a disability is receiving, as services described earlier, DSUs must provision of, pre-employment transition opposed to other VR services that the ensure the costs incurred for services to students with disabilities in student may be receiving transportation services are allocable to need of such services. The simultaneously. For example, if the DSU the pre-employment transition services Rehabilitation Act clearly envisioned agreed to pay for the fee for the eligible that the eligible student with a disability circumstances in which the DSU itself student to take a college entrance test is receiving, as opposed to other VR would not be able to provide the pre- preparatory course, this VR service services that the eligible student may be employment transition services and would be beyond the nature, scope, and receiving simultaneously. For example, would need to reach agreements with purpose of all of the pre-employment if the DSU agreed to pay for a vehicle other entities to provide those services. transition services described in section modification to make it more accessible As such, it is reasonable that an eligible 113(b) and 34 CFR 361.48(a)(2) and, as for the eligible student with a disability student with a disability could need a such, would not be allocable to those while participating in pre-employment referral in order to participate in one or services. In this example, the DSU must transition services and other VR more of the pre-employment transition pay the costs incurred for maintenance counseling services, as well as a dual services set forth in section 113(b) of the with other VR program funds, not the enrollment program under the Rehabilitation Act and 34 CFR funds reserved under section 110(d)(1) Individuals with Disabilities Education 361.48(a)(2). In this circumstance, the and 34 CFR 361.65(a)(3)(i) for the Act, the DSU must determine whether a referral services under section 103(a)(3) provision of pre-employment transition prudent person would agree that the and 34 CFR 361.48(b)(4) for that eligible services. cost for the vehicle modification is student with a disability would fall reasonable as a cost associated with the Transportation squarely within the nature, scope, and pre-employment transition services the purpose of pre-employment transition Section 103(a)(8) and 34 CFR student is receiving and, if so, to what services. 361.48(b)(8) permit DSUs to provide extent the cost is allocable to the pre- transportation services, including Maintenance employment transition services activity. training in the use of public To make this determination, the DSU Section 103(a)(7) and 34 CFR transportation, to eligible individuals should take into account the duration of 361.48(b)(7) permit DSUs to provide with disabilities throughout the VR the pre-employment transition services maintenance to eligible individuals with process. As with the maintenance that the eligible student with a disability disabilities to cover additional costs services just described, DSUs must is participating in to determine whether, incurred while receiving VR services. provide transportation services only in or to what extent, the transportation cost DSUs may provide maintenance to combination with another VR service, in this circumstance would be allocable eligible individuals with disabilities such as pre-employment transition to the funds reserved under section throughout the VR process, including services. It is reasonable that an eligible 110(d)(1) and 34 CFR 361.65(a)(3)(i) or during the early stages in the continuum student with a disability who is whether this cost more appropriately of VR services. Maintenance is unique participating in pre-employment should be paid with other VR program from most other VR services listed in transition services could need funds. section 103(a) and 34 CFR 361.48(b) transportation services to benefit from because it must be provided in any of the pre-employment transition Personal Assistance Services combination with another VR service, services described in section 113(b) of Section 103(a)(9) and 34 CFR such as pre-employment transition the Rehabilitation Act and 34 CFR 361.48(b)(14) permit DSUs to provide services. It is reasonable that an eligible 361.48(a)(2) (e.g., to attend counseling personal assistance services to eligible student with a disability who is sessions under section 113(b)(1) and (3) individuals with disabilities when participating in pre-employment and 34 CFR 361.48(a)(2)(i) and (iii), needed to participate in another VR transition services could incur work-based learning experiences under service. As with maintenance and additional costs to participate in those section 113(b)(2) and 34 CFR transportation services just described, services (e.g., purchase of required 361.48(a)(2)(ii), or self-advocacy training DSUs may provide personal assistance

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services only in combination with Rehabilitation Technology discuss transition services separately in another VR service, such as pre- Section 103(a)(14) and 34 CFR a later section. This discussion focuses employment transition services. It is 361.48(b)(17) permit DSUs to provide solely on the pre-employment transition reasonable that an eligible student with eligible individuals with disabilities services available under section a disability, particularly a student with rehabilitation technology throughout the 103(a)(15) and 34 CFR 361.48(b)(18). As a significant disability, who is VR process when needed and identified with the orientation and mobility participating in pre-employment on an approved IPE. It is reasonable that services discussed above, these pre- transition services could need personal an eligible student with a disability, employment transition services are at assistance services in order to especially a student with a significant the core of the nature, scope, and participate in those services (e.g., disability, could need rehabilitation purpose of the pre-employment transition services provided under personal assistance services during a technology to benefit from pre- section 113(b) of the Rehabilitation Act work-based learning experience under employment transition services, and 34 CFR 361.48(a)(2). Therefore, it is section 113(b)(2) and 34 CFR particularly those involving work-based reasonable and allocable to pre- 361.48(a)(2)(ii)). Therefore, to the extent learning experiences under section employment transition services an eligible student with a disability 113(b)(2) and 34 CFR 361.48(a)(2)(ii), activities for a DSU to use funds needs personal assistance services, in workplace readiness training under reserved under section 110(d)(1) of the accordance with an approved IPE, to section 113(b)(4) and 34 CFR Rehabilitation Act and 34 CFR participate in pre-employment 361.48(a)(2)(iv), and self-advocacy 361.65(a)(3)(i) to pay for these services training under section 113(b)(5) and 34 transition services, such personal in the event an eligible student with a assistance services fall within the CFR 361.48(a)(2)(v). For example, an disability needs them, in accordance nature, scope, and purpose of pre- eligible student with a disability may with an approved IPE, to participate in employment transition services. We need an electronic device (that does not pre-employment transition services clarify that, as with the maintenance constitute an auxiliary aid or service as under section 113(b) and 34 CFR and transportation services just discussed elsewhere in this notice of 361.48(a)(2). described, only those personal interpretation) to participate in one of assistance services identified in an IPE the pre-employment transition services Family Services directly related to the eligible student training activities. In other words, Section 103(a)(19) and 34 CFR with a disability’s participation in pre- without the rehabilitation technology, 361.48(b)(9) permit the DSU to provide employment transition services are the eligible student with a disability services to family members of an allocable and, thus, could be paid with might not be able to participate in the eligible individual with a disability the reserved funds. DSUs must pay for pre-employment transition services when these services are necessary for all other personal assistance services activity. Under this circumstance, the the eligible individual to achieve an needed by the eligible student with rehabilitation technology falls within employment outcome. As with certain other VR program funds. the nature, scope, and purpose of pre- other services (i.e., maintenance, employment transition services under transportation, and personal assistance Rehabilitation Teaching & Orientation section 113(b) of the Rehabilitation Act services), services to the family, by their and Mobility Services and 34 CFR 361.48(a)(2) and, thus, is very nature, must be provided in allocable to those services. However, combination with another VR service, Section 103(a)(11) and 34 CFR DSUs must ensure that the costs such as pre-employment transition 361.48(b)(11) permit DSUs to provide incurred for the rehabilitation services. Given that pre-employment rehabilitation teaching services and technology are needed by the eligible transition services represent the earliest orientation and mobility services to student with a disability to participate set of services available to students with eligible individuals who are blind. in pre-employment transition services, disabilities under the VR program, it is These services, particularly the as opposed to other VR services the reasonable that a family member could orientation and mobility services, also eligible student might be participating need services to enable the eligible are offered as pre-employment in simultaneously. Pursuant to 2 CFR student with a disability to benefit from transition services, namely ‘‘workplace 200.403 through 200.405, the DSUs may pre-employment transition services. For readiness’’ training under section use the funds reserved under section example, the parent or guardian may 113(b)(4) of the Rehabilitation Act and 110(d)(1) of the Rehabilitation Act and need transportation services to 34 CFR 361.48(a)(2). Therefore, it is 34 CFR 361.65(a)(3)(i) to pay for the accompany the eligible student with a reasonable and allocable to pre- costs of rehabilitation technology that is disability to his or her pre-employment employment transition services reasonably allocable to the pre- transition services activities or the activities for a DSU to use funds employment transition services parent or guardian may need language reserved under section 110(d)(1) of the activities of the eligible student with a interpreter services in order to Rehabilitation Act and 34 CFR disability. The DSU must use other VR understand consent forms that he or she 361.65(a)(3)(i) to pay for these services funds to pay for the portion of the cost, might need to sign on behalf of the in the event an eligible student with a or the entire cost if applicable, that is underage eligible student with a disability needs them, in accordance not allocable to the pre-employment disability participating in pre- with an approved IPE, to benefit from transition services activities. employment transition services. In such pre-employment transition services. circumstances, the services to family Because these services actually Pre-Employment Transition Services members clearly fall within the nature, constitute workplace readiness training Under Section 103(a) scope, and purpose of the pre- under section 113(b)(4) and 34 CFR Section 103(a)(15) and 34 CFR employment transition services 361.48(a)(2)(iv), the services under 361.48(b)(18) permit DSUs to provide provided under section 113(b) of the section 103(a)(11) and 34 CFR transition services, including pre- Rehabilitation Act and 34 CFR 361.48(b)(11) clearly fall within the employment transition services, to 361.48(a)(2), thereby making the costs scope, nature, and purpose of pre- eligible students with disabilities. For incurred for such services allocable to employment transition services. purposes of this interpretation, we pre-employment transition services.

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Coaching Services services could be allocable to pre- student with a disability could need a Finally, with respect to those services employment transition services under book, tool, or other training material to in section 103(a) of the Rehabilitation the right set of facts; therefore, in these participate in pre-employment Act that fall within the nature, scope, circumstances, DSUs may pay these transition services, specifically a work- and purpose of pre-employment costs with the funds reserved under based learning experience under section transition services described in section section 110(d)(1) of the Rehabilitation 113(b)(2) and 34 CFR 361.48(a)(2)(ii). 113(b) and 34 CFR 361.48(a)(2), the Act and 34 CFR 361.65(a)(3)(i). While a DSU could use section 103(a)(7) Secretary notes that section 103(a) is not However, most aspects of the following of the Rehabilitation Act and 34 CFR an exhaustive list of services (34 CFR services fall outside the nature, scope, 361.48(b)(7) as the authority to pay for 361.48(b)(21)). DSUs may provide any and purpose of pre-employment the book, tool, or training material since transition services and, thus, are not service that an eligible individual needs it would be an additional cost incurred allocable to those services. In those to achieve an employment outcome in as a result of the participation in the more common circumstances, DSUs accordance with an approved IPE. In the pre-employment transition services, the may not use funds reserved under context of pre-employment transition DSU also could use the authority of section 110(d)(1) and 34 CFR services, one such service is coaching section 103(a)(5) and 34 CFR 361.65(a)(3)(i) to pay for those costs. services for eligible students with 361.48(b)(6) to pay the costs of the disabilities participating in work-based Vocational and Other Training Services service. To the extent the book, tool, or learning experiences under section Section 103(a)(5) and 34 CFR training material is necessary for the 113(b)(2) and 34 CFR 361.48(a)(2)(ii). 361.48(b)(6) permit DSUs to provide eligible student with a disability to These coaches perform similar functions vocational and other training services, participate in the work-based learning as job coaches do in supported including books, tools, and other experience under section 113(b)(2) and employment settings by assisting the training materials, for eligible 34 CFR 361.48(a)(2)(ii), such service and eligible student with a disability to individuals in accordance with an associated cost would be allocable to perform the tasks assigned during the approved IPE. This provision also pre-employment transition services. work-based learning experiences. While permits DSUs to pay for postsecondary Advanced Training these particular coaching services are education tuition, so long as maximum not specifically listed in section 103(a), efforts have been made to obtain grant Section 103(a)(18) and 34 CFR they would be considered allowable VR assistance. Before discussing these 361.48(b)(6) permit DSUs to encourage services under section 103(a) and 34 services, the Secretary notes that pre- eligible individuals to pursue advance CFR 361.48(b)(21) if needed by an employment transition services are training in the fields of science, eligible student with a disability, in intended to be an early set of technology, engineering, or mathematics accordance with an approved IPE, to exploration services for students with (including computer science), law, participate in pre-employment disabilities that are ‘‘designed to help medicine, or business. To the extent that transition services. Given that pre- students with disabilities to begin to a VR counselor or other provider of pre- employment transition services are identify career interests that will be employment transition services among the earliest sets of services further explored through additional discusses these postsecondary options available to students with disabilities, it [VR] services, such as transition while discussing all opportunities for is reasonable to expect that these services. Following the continuum, enrollment in comprehensive transition eligible students may need extra transition services represent the next set and other postsecondary education assistance through coaching services to of [VR] services available to students programs at institutions of higher participate in these activities. In such with disabilities. They are outcome- education under section 113(b)(3) and circumstances, these coaching services oriented and promote movement from 34 CFR 361.48(a)(2)(iii), the service clearly fall within the nature, scope, and school to post-school activities, purpose of pre-employment transition including postsecondary education, under section 103(a)(18) and 34 CFR services, particularly work-based vocational training, and competitive 361.48(b)(6) is squarely within the learning experiences under section integrated employment. As such, nature, scope, and purpose of pre- 113(b)(2) and 34 CFR 361.48(a)(2)(ii), transition services may include job- employment transition services. As and, thus, would be allocable to those related services, such as job search and such, the service is allocable to pre- services. placement assistance, job retention employment transition services and services, follow-up services, and follow- could be paid for with funds reserved Allocability of Certain Portions of VR along services based on the needs of the for that purpose. However, to the extent Services individual’’ (81 FR at 55685). Given the that the DSU encourages the advanced Next, the Secretary believes that the clear nature, scope, and purpose of pre- training under section 103(a)(18) by following VR services, set forth in employment transition services as a paying tuition at a postsecondary section 103(a) and 34 CFR 361.48(b), very early set of career interest and institution, such service is outside the have aspects of those services that fall exploration services for students with nature, scope, and purpose of pre- within the nature, scope, and purpose of disabilities, the services available under employment transition services and, pre-employment transition services section 103(a)(5) and 34 CFR thus, is not allocable to those services. when needed by an eligible student 361.48(b)(6) are predominately outside Once the eligible student has identified with a disability, in accordance with an that scope. In fact, most of the services this career path and started approved IPE, to benefit from one or fit squarely within the vocational postsecondary education, the service is more of the pre-employment transition training purpose of transition services one that enables the individual to services described in section 113(b) of for those individuals transitioning from transition from school to a specific the Rehabilitation Act and 34 CFR school to a specific employment employment outcome, as described at 361.48(a)(2). In the narrow outcome, as described by the 81 FR at 55685, not simply to explore circumstances described in this notice Department at 81 FR at 55685 and, thus, career interests through pre- of interpretation, costs incurred for are not allocable to pre-employment employment transition services certain portions of the following transition services. However, an eligible activities.

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VR Services Not Allocable to Pre- 361.48(a)(2). While it is possible that an Although the Department understands Employment Transition Services eligible student with a disability could that pre-employment transition services Lastly, the Secretary believes that the need such a service, it is not reasonable are available for all students with following VR services, set forth in to believe that the need was tied solely disabilities, not just those determined section 103(a) and 34 CFR 361.48(b), are to the student’s participation in pre- eligible for the VR program, this employment transition services. Rather, interpretation permitting the use of the not allocable to pre-employment it is most likely that the need is more reserved funds for certain VR services transition services in section 113(b) of general and associated with the eligible other than pre-employment transition the Rehabilitation Act and 34 CFR student with a disability’s VR program services is applicable only to those 361.48(a)(2) because they are beyond the as a whole, but not limited to the pre- students with disabilities who are nature, scope, and purpose of those employment transition services. As receiving pre-employment transition services. As such, these services are not such, the service is not allocable to pre- services, who have been determined allocable to pre-employment transition employment transition services and eligible for the VR program, and who services, meaning that DSUs may not DSUs must pay for the service with have an approved IPE. Under this use funds reserved under section other VR program funds. interpretation, DSUs may use the funds 110(d)(1) and 34 CFR 361.65(a)(3)(i) to reserved under section 110(d)(1) of the Employment-Related Services pay for those costs even if provided to Rehabilitation Act and 34 CFR eligible students with disabilities who Sections 103(a)(12), (13), (16), (17), 361.65(a)(3)(i) to pay for those pre- are also participating in pre- and (20) permit the DSU to provide employment transition services needed employment transition services. various employment-related services to by eligible students with disabilities in Transition Related Services eligible individuals (see also 34 CFR accordance with an approved IPE, plus 361.48(b)(13), (15), (16), (19), and (20)). any other VR service needed by eligible Sections 103(a)(4), (5), (15), and (18) These services are next in the students to benefit from pre- permit DSUs to provide eligible continuum of services, once eligible employment transition services. With individuals with a variety of transition- students have identified their career respect to those students with related services in accordance with an interests through pre-employment disabilities who have not yet been approved IPE (see also 34 CFR transition services and further determined eligible for the VR program 361.48(b)(6) and (12)). As discussed developed and pursued them through (i.e., potentially eligible students with earlier, pre-employment transition postsecondary education and vocational disabilities), DSUs may use the funds services represent the earliest set of training offered through transition reserved under section 110(d)(1) of the services available for students with services that assist them in transitioning Rehabilitation Act and 34 CFR disabilities. These are short-term from school to specific employment 361.65(a)(3)(i) only to pay for those pre- services designed to help students outcomes. These employment-related employment transition services set forth identify career interests. In contrast, services are well beyond the continuum in section 113 and 34 CFR 361.48(a), as transition services represent the next set of services available as pre-employment well as for auxiliary aids and services of services on the continuum of VR transition services and are directly tied needed by those students to access or services to eligible individuals. During to specific occupations. For this reason, participate in pre-employment the receipt of transition services, eligible these services are beyond the nature, transition services, as described in students with disabilities further scope, and purpose of pre-employment Department guidance issued to date. develop and pursue their career transition services described in section The Secretary believes this interests with postsecondary education, 113(b) and 34 CFR 361.48(a)(2). Thus, interpretation is consistent with the vocational training, job search, job they are not allocable to those services. ‘‘Statement of the Managers to placement, job retention, job follow-up, DSUs must use other VR program funds Accompany the Workforce Innovation and job follow-along services. By their to pay the costs associated with and Opportunity Act,’’ the statutory very nature, transition-related services providing these services. purpose for the reservation of these are beyond the nature, scope, and Conclusion Federal VR funds, and the fiscal purpose of pre-employment transition requirements of OMB’s Uniform services set forth at section 113(b) and Through this notice of interpretation, Guidance. 34 CFR 361.48(a)(2). For this reason, the Secretary clarifies that DSUs may Accessible Format: Individuals with these services, with narrow exceptions use VR funds reserved under section disabilities can obtain this document in described previously, are not allocable 110(d)(1) of the Rehabilitation Act and an accessible format (e.g., braille, large to pre-employment transition services. 34 CFR 361.65(a)(3)(i) to pay for print, audiotape, or compact disc) on As such, DSUs may not use funds auxiliary aids and services needed by all request to the program contact person reserved under section 110(d)(1) and 34 students with disabilities (i.e., both listed under FOR FURTHER INFORMATION CFR 361.65(a)(3)(i) to pay for these eligible and potentially eligible students CONTACT. costs. Rather, they must use other VR with disabilities) who have sensory and Electronic Access to This Document: program funds to pay these costs. communicative disorders to access or The official version of this document is participate in pre-employment the document published in the Federal Medical Services transition services. In addition, the Register. You may access the official Section 103(a)(6) and 34 CFR Secretary explains that DSUs may use edition of the Federal Register and the 361.48(b)(5) permit DSUs to provide the reserved funds to pay for pre- Code of Federal Regulations at certain medical services to eligible employment transition services needed www.govinfo.gov. At this site you can individuals, in accordance with an by eligible students with disabilities and view this document, as well as all other approved IPE, under certain certain other VR services in section documents of this Department circumstances. Medical services are 103(a) of the Rehabilitation Act and 34 published in the Federal Register, in beyond the nature, scope, and purpose CFR 361.48(b) needed by those eligible text or portable document format (PDF). of all the pre-employment transition students to benefit from pre- To use PDF you must have Adobe services described in section 113(b) of employment transition services in Acrobat Reader, which is available free the Rehabilitation Act and 34 CFR accordance with an approved IPE. at the site.

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You may also access documents of the FR 57833. The rates and terms in the 380.30 Definitions. Department published in the Federal proposed rule were the subject of a 380.31 Royalty fees for the public Register by using the article search settlement among SoundExchange, Inc. performance of sound recordings and for feature at: www.federalregister.gov. (‘‘SoundExchange’’), National Public ephemeral recordings. Radio, Inc. (‘‘NPR’’), and the 380.32 Terms for making payment of Specifically, through the advanced royalty fees and statements of account. search feature at this site, you can limit Corporation for Public Broadcasting your search to documents published by (‘‘CPB’’) (together, the ‘‘Settling Subpart D—Public Broadcasters the Department. Parties’’) of their interests related to Web V 1 royalty rates and terms for § 380.30 Definitions. Mark Schultz, certain internet transmissions by public For purposes of this subpart, the Delegated the authority to perform the broadcasters, NPR, American Public following definitions apply: functions and duties of the Assistant Media, Public Radio International, Authorized website is any website Secretary for the Office of Special Education and Rehabilitative Services. Public Radio Exchange, and certain operated by or on behalf of any Public other unnamed public radio stations for Broadcaster that is accessed by website [FR Doc. 2020–03208 Filed 2–27–20; 8:45 am] the period from January 1, 2021, Users through a Uniform Resource BILLING CODE 4000–01–P through December 31, 2025. Joint Locator (‘‘URL’’) owned by such Public Motion to Adopt Partial Settlement, Broadcaster and through which website Docket No. 19–CRB–0005–WR (2021– Performances are made by such Public LIBRARY OF CONGRESS 2025) (‘‘Web V’’). The Judges received Broadcaster. no comments on the proposed rule. CPB is the Corporation for Public Copyright Royalty Board The Judges ‘‘may decline to adopt the Broadcasting. agreement as a basis for statutory terms Music ATH is aggregate tuning hours 37 CFR Part 380 and rates for participants that are not of website Performances of sound [Docket No. 19–CRB–0005–WR (2021–2025) parties to the agreement,’’ only ‘‘if any recordings of musical works. (Web V)] participant [in the proceeding] objects to NPR is National Public Radio, Inc. the agreement and the [Judges] Originating Public Radio Station is a Determination of Royalty Rates and conclude, based on the record before noncommercial terrestrial radio Terms for Ephemeral Recording and them if one exists, that the agreement broadcast station that— Digital Performance of Sound does not provide a reasonable basis for (1) Is licensed as such by the Federal Recordings (Web V) setting statutory terms or rates.’’ 17 Communications Commission; U.S.C. 801(b)(7)(A)(ii). Because no Web (2) Originates programming and is not AGENCY: Copyright Royalty Board, V participant has objected to the solely a repeater station; Library of Congress. settlement, and the Judges find no basis (3) Is a member or affiliate of NPR, ACTION: Final rule. in the record to conclude that the American Public Media, Public Radio settlement does not provide a International, or Public Radio Exchange, SUMMARY: The Copyright Royalty Judges reasonable basis for setting statutory a member of the National Federation of publish a final rule governing the rates terms and rates, the Judges adopt the Community Broadcasters, or another and terms for the digital performances terms and rates as proposed. public radio station that is qualified to of sound recordings by certain public receive funding from CPB pursuant to radio stations and for the making of List of Subjects in 37 CFR Part 380 its criteria; ephemeral recordings necessary to Copyright, Digital audio (4) Qualifies as a ‘‘noncommercial facilitate those transmissions for the transmissions, Performance right, Sound webcaster’’ under 17 U.S.C. period commencing January 1, 2021, recordings. 114(f)(4)(E)(i); and and ending on December 31, 2025. (5) Either— Final Regulations DATES: Effective January 1, 2021. (i) Offers website Performances only ADDRESSES: Docket: For access to the For the reasons set forth in the as part of the mission that entitles it to docket to read submitted background preamble, the Copyright Royalty Judges be exempt from taxation under section documents go to eCRB, the Copyright amend 37 CFR part 380 as follows: 501 of the Internal Revenue Code of Royalty Board’s electronic filing and 1986 (26 U.S.C. 501); or PART 380—RATES AND TERMS FOR (ii) In the case of a governmental case management system, at https:// TRANSMISSIONS BY ELIGIBLE app.crb.gov/ and search for docket entity (including a Native American NONSUBSCRIPTION SERVICES AND Tribal governmental entity), is operated number 19–CRB–0005–WR (2021– NEW SUBSCRIPTION SERVICES AND 2025). exclusively for public purposes. FOR THE MAKING OF EPHEMERAL Person is a natural person, a FOR FURTHER INFORMATION CONTACT: REPRODUCTIONS TO FACILITATE corporation, a limited liability company, Anita Blaine, Program Specialist, by THOSE TRANSMISSIONS a partnership, a trust, a joint venture, telephone at (202) 707–0078 or email at ■ any governmental authority or any other [email protected]. 1. The authority citation for part 380 entity or organization. SUPPLEMENTARY INFORMATION: On continues to read as follows: Public Broadcasters are NPR, October 29, 2019, the Copyright Royalty Authority: 17 U.S.C. 112(e), 114(f), American Public Media, Public Radio Judges (Judges) published a proposed 804(b)(3). International, and Public Radio rule governing the rates and terms for ■ 2. Revise subpart D to read as follows: Exchange, and up to 530 Originating the digital performances of sound Public Radio Stations as named by CPB. Subpart D—Public Broadcasters recordings by certain public radio CPB shall notify SoundExchange stations and for the making of Sec. annually of the eligible Originating ephemeral recordings necessary to Public Radio Stations to be considered 1 Web V is short for Webcasting V. This facilitate those transmissions for the proceeding is the fifth since Congress enacted the Public Broadcasters per this definition period commencing January 1, 2021, compulsory sound recording performance license (subject to the numerical limitations set and ending on December 31, 2025. 84 for webcasting. forth in this definition). The number of

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Originating Public Radio Stations (2) 2022: 370,000,000; Collective shall be specific to that treated per this definition as Public (3) 2023: 380,000,000; Public Broadcaster only, and shall Broadcasters shall not exceed 530 for a (4) 2024: 390,000,000; and include, without limitation, termination given year without SoundExchange’s (5) 2025: 400,000,000. of that Public Broadcaster’s right to be express written approval, except that (b) Calculation of License Fee. It is treated as a Public Broadcaster per this CPB shall have the option to increase understood that the License Fee paragraph (e) upon written notice to the number of Originating Public Radio includes: CPB. The Collective and Copyright Stations that may be considered Public (1) An annual minimum fee for each Owners also shall have whatever rights Broadcasters as provided in § 380.31(c). Public Broadcaster for each year during may be available to them against that Side Channel is any internet-only the Term; Public Broadcaster under applicable program available on an Authorized (2) Additional usage fees for certain law. The Collective’s remedies for such website or an archived program on such Public Broadcasters; and a breach or failure by an individual (3) A discount that reflects the Authorized website that, in either case, Public Broadcaster shall not include administrative convenience to the conforms to all applicable requirements termination of the rights of other Public Collective (for purposes of this subpart, under 17 U.S.C. 114. Broadcasters to be treated as Public Term is the period January 1, 2021, the term ‘‘Collective’’ refers to Broadcasters per this paragraph (e), through December 31, 2025. SoundExchange, Inc.) of receiving except that if CPB fails to pay the Website is a site located on the World annual lump sum payments that cover License Fee or otherwise fails to Wide Web that can be located by a a large number of separate entities, as perform any of the material provisions website User through a principal URL. well as the protection from bad debt that of this subpart, or such a breach or Website Performances are all public arises from being paid in advance. failure by a Public Broadcaster results performances by means of digital audio (c) Increase in Public Broadcasters. If from CPB’s inducement, and CPB does transmissions of sound recordings, the total number of Originating Public not cure such breach or failure within including the transmission of any Radio Stations that wish to make 30 days after receiving notice thereof portion of any sound recording, made website Performances in any calendar from the Collective, then the Collective through an Authorized website in year exceeds the number of such may terminate the right of all Public accordance with all requirements of 17 Originating Public Radio Stations Broadcasters to be treated as Public U.S.C. 114, from servers used by a considered Public Broadcasters in the Broadcasters per this paragraph (e) upon Public Broadcaster (provided that the relevant year, and the excess Originating written notice to CPB. In such a case, a Public Broadcaster controls the content Public Radio Stations do not wish to prorated portion of the License Fee for of all materials transmitted by the pay royalties for such website the remainder of the Term (to the extent server), or by a contractor authorized Performances apart from this subpart, paid by CPB) shall, after deduction of pursuant to § 380.31(f), that consist of CPB may elect by written notice to the any damages payable to the Collective either the retransmission of a Public Collective to increase the number of by virtue of the breach or failure, be Broadcaster’s over-the-air terrestrial Originating Public Radio Stations credited to statutory royalty obligations radio programming or the digital considered Public Broadcasters in the of Public Broadcasters to the Collective transmission of nonsubscription Side relevant year effective as of the date of for the Term as specified by CPB. Channels that are programmed and the notice. To the extent of any such (f) Use of contractors. The right to rely controlled by the Public Broadcaster; elections, CPB shall make an additional on this subpart is limited to Public provided, however, that a Public payment to the Collective for each Broadcasters, except that a Public Broadcaster may limit access to an calendar year or part thereof it elects to Broadcaster may employ the services of Authorized website, or a portion have an additional Originating Public a third Person to provide the technical thereof, or any content made available Radio Station considered a Public services and equipment necessary to thereon or functionality thereof, solely Broadcaster, in the amount of the deliver website Performances on behalf to website Users who are contributing annual minimum fee applicable to of such Public Broadcaster, but only members of a Public Broadcaster. This Noncommercial Webcasters under through an Authorized website. Any term does not include digital audio subpart B of this part for each additional agreement between a Public Broadcaster transmissions made by any other means. Originating Public Radio Station per and any third Person for such services Website Users are all those who access year. Such payment shall accompany shall: or receive website Performances or who the notice electing to have an additional (1) Obligate such third Person to access any Authorized website. Originating Public Radio Station provide all such services in accordance considered a Public Broadcaster. with all applicable provisions of the § 380.31 Royalty fees for the public (d) Allocation between ephemeral statutory licenses and this subpart; performance of sound recordings and for recordings and performance royalty (2) Specify that such third Person ephemeral recordings. fees. The Collective must credit 5% of shall have no right to make website (a) Royalty rates. The total license fee all royalty payments as payment for Performances or any other performances for all website Performances by Public Ephemeral Recordings and credit the or Ephemeral Recordings on its own Broadcasters during each year of the remaining 95% to section 114 royalties. behalf or on behalf of any Person or Term, up to the total Music ATH set All Ephemeral Recordings that a entity other than a Public Broadcaster forth in paragraphs (a)(1) through (5) of Licensee makes which are necessary through the Public Broadcaster’s this section for the relevant calendar and commercially reasonable for making Authorized website by virtue of its year, and Ephemeral Recordings made noninteractive digital transmissions are services for the Public Broadcaster, by Public Broadcasters solely to included in the 5%. including in the case of Ephemeral facilitate such website Performances, (e) Effect of non-performance by any Recordings, pre-encoding or otherwise shall be $800,000 (the ‘‘License Fee’’), Public Broadcaster. In the event that any establishing a library of sound unless additional payments are required Public Broadcaster violates any of the recordings that it offers to a Public as described in paragraph (c) of this material provisions of 17 U.S.C. 112(e) Broadcaster or others for purposes of section. The total Music ATH limits are: or 114 or this subpart that it is required making performances, but instead must (1) 2021: 360,000,000; to perform, the remedies of the obtain all necessary licenses from the

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Collective, the copyright owner or Acquisition Regulation (AIDAR) to Appendix J 4(b)(3). Subsequent two-year another duly authorized Person, as the streamline the procedures for issuing class deviations were issued for the case may be; contracting officer and agreement officer permanent CCN warrant program in (3) Specify that such third Person warrants to U.S. Personal Services September 2016 and September 2018. shall have no right to grant any Contractors (US PSCs) and Cooperating USAID published a proposed rule in sublicenses under the statutory licenses; Country National Personal Services the Federal Register at 84 FR 27745 on and Contractors (CCN PSCs). June 14, 2019, to amend the AIDAR to (4) Provide that the Collective is an DATES: This final rule is effective March allow for the designation of US PSCs intended third-party beneficiary of all 30, 2020. and CCN PSCs as contracting officers such obligations with the right to FOR FURTHER INFORMATION CONTACT: and agreement officers. The proposed enforce a breach thereof against such Anne Sattgast, Telephone: 202–916– rule’s supplementary information third Person. 2623 or Email: [email protected]. contains additional background on the designation of US PSCs and CCN PSCs SUPPLEMENTARY INFORMATION: § 380.32 Terms for making payment of as contracting and agreement officers, royalty fees and statements of account. I. Background including more details on the (a) Payment to the Collective. CPB permanent CCN warrant program and an shall pay the License Fee to the The U.S. Agency for International Development (USAID) is located in analysis of the risks associated with Collective in five equal installments of designating non-U.S. citizens as $800,000 each, which shall be due offices in over 80 countries with programs in over 100 nations. USAID contracting and agreement officers. December 31, 2020, and annually This final rule amends the AIDAR to operates in a fluid environment thereafter through December 31, 2024. streamline the procedures for issuing responding to a myriad of crises such as (b) Reporting. CPB and Public contracting officer and agreement officer war, natural disasters, epidemics, as Broadcasters shall submit reports of use warrants to US PSCs and CCN PSCs. well as working towards its long term and other information concerning Thirteen respondents submitted mission of reducing poverty, website Performances as agreed upon comments related to the proposed rule. with the Collective. strengthening democratic governance, (c) Terms in general. Subject to the and helping people emerge from II. Discussion and Analysis provisions of this subpart, terms humanitarian crises and progress USAID reviewed and considered the governing late fees, distribution of beyond assistance. public comments before the issuance of royalties by the Collective, unclaimed The Agency’s warranted work force is this final rule. No changes were made to funds, record retention requirements, critical to managing these efforts. A the proposed rule as a result of the treatment of Licensees’ confidential shortage of warranted contracting/ comments. A discussion of the information, audit of royalty payments agreement officers requires that the comments is provided below. and distributions, and any definitions Agency be able to designate highly for applicable terms not defined in this qualified US Personal Services A. General Support for the Rule subpart shall be those set forth in Contractors (US PSCs) and Cooperating Comment: Eleven of the thirteen subpart A of this part. Country National Personal Services respondents expressed explicit support Contractors (CCN PSCs) as contracting/ Dated: February 10, 2020. for the proposed rule. For example, agreement officers in an expeditious Jesse M. Feder, several respondents stated that the rule manner. The delegation of limited helps PSCs and highlights their Chief Copyright Royalty Judge. contracting/agreement officer contributions to the Agency. Several Approved by: authorities to a select number of CCN other respondents noted that the current Carla D. Hayden, PSCs will also bolster the Agency to process for securing warrants for PSCs, Librarian of Congress. succeed in terms of building long-term, which requires an exception from AA/ [FR Doc. 2020–03305 Filed 2–27–20; 8:45 am] host country technical capacity to M, was difficult and cumbersome and BILLING CODE 1410–72–P materially assist the Missions with that the improvements in the proposed procurement responsibility. rule will result in a more efficient Currently, a US PSC can be process, allowing the Agency to issue designated as a contracting officer only AGENCY FOR INTERNATIONAL warrants to PSCs in a timely manner. when a deviation from AIDAR 701.603– DEVELOPMENT Others noted that this rule will help 70 is approved; and when the Assistant address a shortage of contracting officers 48 CFR Chapter 7 Administrator for the Bureau for and is a positive change for an Management (AA/M) approves an overburdened workforce. RIN 0412–AA94 exception in accordance with AIDAR Response: USAID agrees with these Appendix D 4(b)(3)e. U.S. Agency for International comments. PSCs are an important part Additionally, the Agency currently of the Agency’s workforce. Development Acquisition Regulation allows for the delegation of certain (AIDAR): Designation of Personal limited contracting officer authorities to B. Designating CCN PSCs as Contracting Services Contractors (PSCs) as highly qualified CCN PSCs. The CCN Officers Contracting Officers and Agreement warrant program ran as a pilot from Comment: One respondent was Officers 2011–2014. The program became concerned that the delegation of warrant AGENCY: U.S. Agency for International permanent in September 2014, when CCN PSCs would be in conflict with Development. USAID issued a two-year class deviation regulations relating to inherently ACTION: Final rule. from 48 CFR AIDAR 701.603–70. In governmental functions. conjunction with the approval of the Response: USAID CCN PSCs are able SUMMARY: The U.S. Agency for class deviation, the Assistant to perform inherently governmental International Development (USAID) is Administrator for the Bureau for functions under federal law and USAID issuing a final rule amending the Management (AA/M) approved a class policy. (48 CFR) FAR subpart 7.5 Agency for International Development exception to the limitations in AIDAR exempts PSCs from the restrictions on

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contracts for inherently governmental warrant was used. This review is functions related to novation, and functions. (48 CFR) FAR does not followed by periodic reviews conducted contractor name changes, which may be specify that contracting officers must be by the Bureau for Management, Office of a result of changes in a contractor’s U.S. citizen direct-hire employees of the Acquisition and Assistance, Evaluation business structure as governed under Federal government. Division, which is responsible for the applicable U.S. state law and other Comment: One respondent stated that program implementation. functions based on U.S. state laws, providing CCN warrants was an Comment: One respondent expressed functions related to small business inherent conflict, given that USAID is a desire for more information about the contracting matters, and those requiring distributing US taxpayer funds in a CCN warrant program, including extensive knowledge of specific U.S. foreign environment and the possibility information relating to the design, laws and government-wide policies not for corruption when approving scope, duration, and results of the specifically related to contracting. subcontracts. program, including information related Accordingly, the functions specified in Response: USAID has had a to the State Department’s program. items 5–7, 9–12, 18, 21–26, 29, 32, 50, permanent CCN warrant program in Response: This comment is outside 52–55, 62–63, 66 and 68–71 of (48 CFR) place for five years, and over that time the scope of the streamlined warrant FAR 42.302(a) are not redelegated to period, the program has been issuance procedures in the final rule. CCN PSC contracting officers. extensively reviewed on multiple The Agency provided some historical Comment: One respondent expressed occasions. This final rule streamlines information in the preamble of the concern that issuing warrants to PSCs warrant issuance procedures. The proposed rule to provide context for the would dilute the Agency’s position in Agency does not view the issuance of rule. However, the warrant program is advocating for increasing funding for administrative warrants with limited internal to the Agency and not direct-hire contracting staff. authorities to CCN PSCs as a conflict. contained in federal regulation. Response: USAID continues to Concerning the possibility for advocate strongly for more operational corruption, warranted CCN PSCs do not C. Recommendation of an Independent Ombudsman expense funding for direct-hire staff. provide subcontract approvals in The US PSC and CCN PSC warrant isolation, as the Agency’s procurement Comment: One respondent programs could not and are not systems have a built-in segregation of recommended an independent intended to be a permanent solution to duties, even for administrative Ombudsman to investigate complaints the shortage of direct-hire contracting contracting duties. When approving related to the behavior of CCN PSCs and staff. These warrant programs are subcontracts, the Contracting Officer’s their ability to manage US funds. significantly limited in scope and are Response: USAID agrees that an Representative (COR) initiates the only available to overseas Missions with independent Ombudsman is important process and provides technical a demonstrated need for additional to support the integrity of its clearance. The warranted CCN PSC then warranted individuals. The Agency does procurement system. The Agency has reviews and executes the COR’s request. not view the issuance of these warrants had a Personal Services Contractor This system applies to all staff, to PSCs as diluting the argument for Ombudsman since 2016. including US direct hires, US PSCs, and both a larger direct-hire acquisition CCN PSCs, and is an important risk D. Support for a ‘‘Limited’’ Program workforce and the funding necessary to mitigation measure against fraud, waste, support that workforce. and abuse in USAID’s procurement Comment: One respondent provided system. support of a limited program to provide E. Number of PSCs at USAID Missions Comment: Two respondents a temporary alternative solution to the direct-hire of full-time USAID Comment: One respondent expressed concerns relating to the commented on the number of PSCs with training, certification, and oversight of employees as contracting and agreement warrants and inquired if the positions CCN PSCs. officers, with appropriate limitations on noted in the preamble of the proposed Response: The Agency has built the scope of warrants issued to these stringent qualifications and oversight individuals. rule were a fixed number designated to measures into the warrant program to Response: USAID agrees that certain be filled or if they were the only ones mitigate risk. The current training, limitations on PSC warrants are that the Agency was able to fill. certification and experience appropriate. US PSCs must meet the Response: This comment is outside requirements for CCN PSCs to receive a same requirements as US direct hires to the scope of the streamlined warrant limited, administrative warrant exceed receive a warrant. The CCN PSC warrant issuance procedures in the rule. At the those required for US citizens to receive program has more stringent training, time of the issuance of the proposed a warrant to ensure that CCN PSCs certification, and experience rule, there were 21 PSCs with warrants. understand the complexities associated requirements than those required for US However, this is not a fixed number. with U.S. regulations and policies. CCN citizens and only allows for the The Agency only issues warrants to US PSCs are required to have a Federal delegation of limited contract PSCs and CCN PSCs when there is a Acquisition Certification—Contracting administration functions. Warranted demonstrated need for such warrants. (FAC–C) Level II certification along with CCN PSCs are not delegated authority to III. Regulatory Findings seven years of Agency experience, and make new awards or execute any at least five years of that experience actions or awards related to personal Executive Orders 12866, 13563, and must be in the area of acquisition and services contracts or public 13771 assistance. As noted in the preamble to international organizations (PIOs). The This final rule has been drafted in the proposed rule, the CCN warrant program also limits delegated authority accordance with Executive Orders program requires the CCN contracting for select contract administration (E.O.s) 12866 and 13563, which direct officer’s supervisor to closely and functions listed in (48 CFR) FAR agencies to assess all costs and benefits frequently monitor the CCN PSC’s work 42.302(a), specifically, the contracting of available regulatory alternatives and, and review performance and progress officer functions in which disputes or if regulation is necessary, to select every six months. The review includes possible legal challenges may arise due regulatory approaches that maximize an assessment of all actions where the to decisions of the contracting officer, net benefits (including potential

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economic, environmental, public health PART 701—FEDERAL ACQUISITION Authority: (Authority: Sec. 621, Pub. L. and safety effects, distributive impacts, REGULATION SYSTEM 87–195, 75 Stat. 445, (22 U.S.C. 2381) as and equality). E.O. 13563 emphasizes amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; and 3 CFR 1979 Comp., p. 435) the importance of quantifying both costs Subpart 701.6—Career Development, and benefits, of reducing costs, of Contracting Authority, and ■ 4. In appendix J to chapter 7, in harmonizing rules, and of promoting Responsibilities section 4 ‘‘Policy’’, revise paragraphs flexibility. USAID has reviewed the (b)(3)b. and (b)(4) and the authority ■ 2. Revise 701.603–70 to read as regulation to ensure its consistency with citation at the end of the appendix to follows: read as follows: the regulatory philosophy and principles set forth in E.O.s 12866 and 701.603–70 Designation of contracting Appendix J to Chapter 7—Direct USAID 13563 and finds that the benefits of officers. Contracts With a Cooperating Country issuing this rule outweigh any costs, A contracting officer represents the National and With a Third Country which the Agency assesses to be U.S. Government through the exercise of National for Personal Services Abroad minimal. The Office of Management and his/her delegated authority to negotiate, * * * * * Budget’s Office of Information and sign, and administer contracts on behalf 4. Policy Regulatory Affairs (OMB/OIRA) has of the U.S. Government. The contracting * * * * * determined that this regulatory action is officer’s duties are sensitive, (b) * * * ‘‘significant’’ and therefore subject to specialized, and responsible. To ensure (3) * * * the requirements of the E.O. and subject proper accountability, and to preclude b. They may not be delegated authority to to review by OMB. OMB/OIRA has possible security, conflict of interest, or sign obligating or subobligating documents jurisdiction problems, USAID except when a cooperating country national determined that this rule is not an personal services contractor is specifically ‘‘economically significant regulatory contracting officers must be U.S. citizen designated as a contracting officer or an action’’ under Section 3(f)(1) of E.O. direct-hire employees of the U.S. agreement officer in accordance with FAR 12866. This final rule is not subject to Government. However, Director, Bureau subpart 1.6 and the Agency’s applicable the requirements of E.O. 13771 because for Management, Office of Acquisition warrant program. this rule is related to agency and Assistance (M/OAA Director) may * * * * * also designate a U.S. Personal Services organization, management, or (4) Exceptions. The Assistant Contractor (USPSC) or a Cooperating Administrator, Bureau for Management (AA/ personnel. Country National Personal Services M) must approve exceptions to the Regulatory Flexibility Act Contractor (CCNPSC) as a contracting limitations in (b)(3). Approval of an officer with a specific level of warrant exception by the AA/M is not required when USAID certifies that this rule will not the Director, Bureau for Management, Office authority. To qualify for a designation as of Acquisition and Assistance (M/OAA have a significant economic impact on a contracting officer, an individual must Director) designates a cooperating country a substantial number of small entities. meet the requirements in FAR subpart national personal services contractor as a Consequently, the Agency has not 1.6 and the Agency’s applicable warrant contracting officer or an agreement officer. prepared a regulatory flexibility program. * * * * * analysis. ■ 3. In appendix D to chapter 7, in Authority: (Authority: Sec. 621, Pub. L. Small Business Regulatory Enforcement section 4 ‘‘Policy’’, revise paragraph 87–195, 75 Stat. 445, (22 U.S.C. 2381) as Fairness Act (b)(3)b. and add paragraph (b)(4) and amended; E.O. 12163, Sept. 29, 1979, 44 FR revise the authority citation at the end 56673; and 3 CFR 1979 Comp., p. 435) This is not a major rule under 5 U.S.C. of the appendix to read as follows: Mark Walther, 804(2), the Small Business Regulatory Acting Chief Acquisition Officer. Enforcement Fairness Act. Appendix D to Chapter 7—Direct USAID Contracts With a U.S. Citizen or [FR Doc. 2020–03408 Filed 2–27–20; 8:45 am] Paperwork Reduction Act a U.S. Resident Alien for Personal BILLING CODE 6116–01–P Services Abroad This rule does not contain information collection requirements, * * * * * DEPARTMENT OF COMMERCE and a submission to OMB under the 4. Policy Paperwork Reduction Act of 1995 (44 * * * * * National Oceanic and Atmospheric U.S.C. 3501 et seq.) is not required. (b) * * * Administration (3) * * * List of Subjects in 48 CFR Part 701 b. They may not be delegated authority to 50 CFR Part 622 sign obligating or subobligating documents Government procurement. except when specifically designated as a [Docket No. 160426363–7275–02] For the reasons stated in the contracting officer or an agreement officer in RTID 0648–XS021 accordance with FAR subpart 1.6 and the preamble, USAID amends 48 CFR Agency’s applicable warrant program. Chapter 7 as set forth below: Coastal Migratory Pelagic Resources * * * * * of the Gulf of Mexico and Atlantic ■ 1. The authority citation for 48 CFR (4) Exceptions. The Assistant Region; 2019–2020 Closure of part 701 continues to read as follows: Administrator, Bureau for Management (AA/ Commercial Run-Around Gillnet for M) must approve exceptions to the King Mackerel Authority: Sec. 621, Pub. L. 87–195, 75 limitations in (b)(3). Approval of an Stat. 445, (22 U.S.C. 2381) as amended; E.O. exception by the AA/M is not required when AGENCY: National Marine Fisheries 12163, Sept. 29, 1979, 44 FR 56673; and 3 the Director, Bureau for Management, Office Service (NMFS), National Oceanic and CFR 1979 Comp., p. 435. of Acquisition and Assistance (M/OAA Atmospheric Administration (NOAA), Director) designates a USPSC as a contracting Commerce. officer or an agreement officer. ACTION: Temporary rule; closure. * * * * *

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SUMMARY: NMFS implements an commercial quota (equivalent to the Classification accountability measure (AM) through commercial ACL) for Gulf king mackerel this temporary rule for commercial in the southern zone for vessels using The Regional Administrator for the harvest of king mackerel in the southern run-around gillnet gear to 530,043 lb NMFS Southeast Region has determined zone of the Gulf of Mexico (Gulf) (240,423 kg) for the 2019–2020 fishing this temporary rule is necessary for the exclusive economic zone (EEZ) using year, which extends through June 30, conservation and management of Gulf run-around gillnet gear. NMFS has 2020 (84 FR 61568, November 13, 2019; king mackerel and is consistent with the determined that the commercial annual 50 CFR 622.388(a)(1)(iii)). FMP, the Magnuson-Stevens Act, and catch limit (ACL) (equivalent to the Regulations at 50 CFR 622.8(b) and other applicable laws. commercial quota) for king mackerel 622.388(a)(1) require NMFS to close any This action is taken under 50 CFR using run-around gillnet gear in the component of the king mackerel 622.8(b) and 622.388(a)(1) and is southern zone of the Gulf EEZ has been commercial sector when its applicable exempt from review under Executive reached. Therefore, NMFS closes the quota has been reached, or is projected Order 12866. southern zone to commercial king to be reached, by filing a notification to These measures are exempt from the mackerel fishing using run-around that effect with the Office of the Federal procedures of the Regulatory Flexibility gillnet gear in the Gulf EEZ on February Register. NMFS has determined that for Act because the temporary rule is issued 25, 2020. This closure is necessary to the 2019–2020 fishing year, the adjusted without prior notice and opportunity for protect the Gulf king mackerel resource. Gulf king mackerel commercial quota public comment. DATES: The closure is effective from 12 for vessels using run-around gillnet gear p.m. local time on February 25, 2020, in the southern zone has been reached. This action responds to the best until 6 a.m. local time on January 19, Accordingly, commercial fishing using scientific information available. The 2021. such gear in the southern zone is closed NOAA Assistant Administrator for FOR FURTHER INFORMATION CONTACT: at 12 p.m. local time on February 25, Fisheries (AA) finds that the need to Kelli O’Donnell, NMFS Southeast 2020, until 6 a.m. local time on January immediately implement this action to Regional Office, telephone: 727–824– 19, 2021, the beginning of the next close the run-around gillnet component 5305, email: [email protected]. fishing season, i.e., the day after the of the commercial sector in the Gulf SUPPLEMENTARY INFORMATION: The 2021 Martin Luther King, Jr. Federal southern zone constitutes good cause to fishery for coastal migratory pelagic fish holiday. Vessel operators that have been waive the requirements to provide prior in the Gulf includes king mackerel, issued a Federal commercial permit to notice and opportunity for public Spanish mackerel, and cobia, and is harvest Gulf king mackerel using run- comment pursuant to the authority set managed under the Fishery around gillnet gear in the southern zone forth in 5 U.S.C. 553(b)(B), because prior Management Plan for the Coastal must have landed ashore and bartered, notice and opportunity for public Migratory Pelagic Resources of the Gulf traded, or sold such king mackerel prior comment on this temporary rule is of Mexico and Atlantic Region (FMP). to 12 p.m. local time on February 25, unnecessary and contrary to the public The FMP was prepared by the Gulf of 2020. interest. Such procedures are Mexico and South Atlantic Fishery Persons aboard a vessel using hook- unnecessary because the rule Management Councils and is and-line gear in the southern zone for implementing the commercial quota and implemented by NMFS under the which a Federal commercial permit for the associated AM has already been authority of the Magnuson-Stevens Gulf king mackerel has been issued, subject to notice and comment, and all Fishery Conservation and Management except persons aboard such a vessel also that remains is to notify the public of Act (Magnuson-Stevens Act) by issued a Federal commercial permit to the closure. Prior notice and regulations at 50 CFR part 622. All harvest Gulf king mackerel using run- opportunity for public comment is weights for Gulf migratory group king around gillnet gear, may fish for or contrary to the public interest, because mackerel (Gulf king mackerel) apply as retain Gulf king mackerel unless the any delay in the closure of the either round or gutted weight. southern zone commercial quota for commercial harvest could result in the The commercial fishery for Gulf king hook-and-line gear has been met and the commercial quota being exceeded. mackerel is divided into western, hook-and-line component of the There is a need to immediately northern, and southern zones. The commercial sector has been closed. In implement this action to protect the southern zone for Gulf king mackerel addition, as long as the recreational king mackerel resource, because the encompasses an area of the Gulf EEZ off sector for Gulf king mackerel is open (50 capacity of the fishing fleet allows for Collier and Monroe Counties in south CFR 622.384(e)(1)), a person aboard a rapid harvest of the quota. Prior notice Florida, which is the EEZ south of a line vessel that has a valid Federal and opportunity for public comment on extending due west from the boundary commercial gillnet permit for king this action would require time and of Lee and Collier Counties on the mackerel may continue to retain king would potentially result in a harvest Florida west coast, and south of a line mackerel under the recreational bag and well in excess of the established quota. extending due east from the boundary of possession limits set forth in 50 CFR Monroe and Miami-Dade Counties on 622.382(a)(1)(ii) and (a)(2). For the aforementioned reasons, the the Florida east coast (50 CFR During the commercial closure, Gulf AA also finds good cause to waive the 622.369(a)(1)(iii)). king mackerel harvested using run- 30-day delay in effectiveness under 5 The commercial ACL for Gulf king around gillnet gear in the southern zone U.S.C. 553(d)(3). mackerel is divided into separate ACLs may not be purchased or sold. This Authority: 16 U.S.C. 1801 et seq. for hook-and-line and run-around prohibition does not apply to Gulf king Dated: February 25, 2020. gillnet gear. The use of run-around mackerel harvested using run-around gillnets for king mackerel is restricted to gillnet gear in the southern zone that Karyl K. Brewster-Geisz, the Gulf southern zone. On November were harvested, landed ashore, and sold Acting Director, Office of Sustainable 13, 2019, as a result of an overage of the prior to the closure and were held in Fisheries, National Marine Fisheries Service. 2018–2019 commercial gillnet ACL, cold storage by a dealer or processor (50 [FR Doc. 2020–04092 Filed 2–25–20; 4:15 pm] NMFS reduced the 2019–2020 CFR 622.384(e)(2)). BILLING CODE 3510–22–P

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DEPARTMENT OF COMMERCE information (e.g., name, address, etc.), adjusted in nearly a decade, so confidential business information, or appropriate time was given to exploring National Oceanic and Atmospheric otherwise sensitive information alternatives, particularly in light of the Administration submitted voluntarily by the sender will magnitude of change necessary for 2020. be publicly accessible. NMFS will Based on projected recreational 50 CFR Part 648 accept anonymous comments (enter ‘‘N/ landings for the 2020 bluefish fishery A’’ in the required fields if you wish to [Docket No. 200214–0057] (13.27 million lb; 6,020 mt), the remain anonymous). Council’s Monitoring Committee RIN 0648–BJ57 FOR FURTHER INFORMATION CONTACT: determined that a 28.65-percent Cynthia Ferrio, Fishery Management reduction in recreational harvest is Fisheries of the Northeastern United Specialist, (978) 281–9180. States; Atlantic Bluefish Fishery; necessary to constrain catch to the SUPPLEMENTARY INFORMATION: The Mid- Interim 2020 Recreational Measures Council-recommended revised 2020 Atlantic Fishery Management Council recreational harvest limit (RHL) of 9.48 AGENCY: National Marine Fisheries and the Atlantic States Marine Fisheries million lb (4,301 mt). The Council and Service (NMFS), National Oceanic and Commission jointly manage the bluefish Board took final action in December Atmospheric Administration (NOAA), fishery under the Atlantic Bluefish 2019, and recommended a mode- Commerce. Fishery Management Plan (FMP). The specific reduction in bag limit from 15 August 2019 bluefish operational ACTION: Temporary rule; interim to 3 fish for private anglers and to 5 fish measures; request for comments. assessment incorporated revised Marine for for-hire vessels, with no changes to Recreational Information Program recreational seasons or size limits. SUMMARY: This temporary rule (MRIP) estimates and determined that implements interim recreational the bluefish stock is overfished with The 2020 bluefish fishing year began management measures for the 2020 overfishing not occurring. NMFS on January 1. Because of the previously Atlantic Bluefish Fishery to prevent notified the Council of the stock status mentioned timing issues associated with overfishing. This action is necessary to change on November 12, 2019, and the developing the revised 2020 bluefish constrain recreational harvest at the Council is developing a rebuilding plan. specifications and recreational start of the fishing year while final 2020 The final assessment results were not management measures, it was not measures are developed and available until fall 2019 and additional possible for the Council to provide implemented. These measures are analysis was required to respond to the analysis supporting its recommendation expected to help ensure the long-term new MRIP data and develop revised for recreational measures in time for the recovery and sustainability of the catch limits. As a result, it was not start of the fishing year. The Council is bluefish stock. possible to implement new finalizing this document, which it will DATES: Effective February 28, 2020, specifications and recreational submit to NMFS to complete formal through August 26, 2020. Comments management measures for the January 1, notice-and-comment rulemaking to must be received on or before March 30, 2020, start of the fishing year. To ensure finalize 2020 specifications and 2020. some measures were in place for the recreational measures by late spring. 2020 fishery, NMFS published status ADDRESSES: You may submit comments The action taken by the Board in quo interim specifications for 2020 (84 on this document, identified by NOAA– December 2019 was final, and states are FR 54041, October 9, 2019) with the NMFS–2020–0011, by either of the expected to put in place recreational expectation that they would be replaced following methods: management measures as expeditiously once final measures informed by the Electronic submission: Submit all as possible. However, many states assessment could be developed. electronic public comments via the require a public hearing and/or However, in light of the assessment Federal e-Rulemaking Portal. legislative process to finalize measures. results and stock status change, the 1. Go to www.regulations.gov/ As a result, many states have indicated interim measures for 2020 are no longer #!docketDetail;D=NOAA-NMFS-2020- that they will not be able to implement appropriate and are substantially more 0011, their own measures quickly. Some have liberal that what is necessary to 2. Click the ‘‘Comment Now!’’ icon, stated that their process will be sustainably manage the bluefish fishery complete the required fields, and accelerated if Federal measures are in and prevent overfishing for this 3. Enter or attach your comments. overfished stock. place first. The recreational bluefish —OR— In September 2019, the Council’s fishery is very active in a few southern Mail: Submit written comments to Scientific and Statistical Committee states early in the year. Recent data Michael Pentony, Regional (SSC) recommended a substantially shows that these states harvest a Administrator, National Marine reduced 2020 and 2021 acceptable substantial portion of their annual Fisheries Service, Greater Atlantic biological catch for bluefish. The bluefish catch between January and Region, 55 Great Republic Drive, Council and the Commission’s Bluefish April, comprising up to 29 percent of Gloucester, MA 01930–2276. Mark the Board jointly approved catch the coast-wide recreational bluefish outside of the envelope: ‘‘Comments on specifications for fishing years 2020 and catch for the year. If immediate action the Bluefish Interim Action.’’ 2021 at a joint meeting in October 2019. is not taken with interim measures, the Instructions: Comments sent by any The Council and Board delayed status quo Federal measures of a 15-fish other method, to any other address or decision-making on the 2020 bag limit will remain in place until final individual, or received after the end of recreational management measures until 2020 measures can be implemented. the comment period, may not be the joint December 2019 meeting. This Harvest will be relatively considered by NMFS. All comments delay was necessary to address the later unconstrained, which will greatly received are a part of the public record than normal specifications development increase the risk of overfishing on the and will generally be posted for public timing, and to analyze options designed already overfished stock, potentially viewing on www.regulations.gov to reduce recreational catch. harming its long-term health and without change. All personal identifying Recreational measures have not been recovery.

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Interim Management Measures While some changes resulting from may extend the interim measures for the revised MRIP data were expected, one additional period of not more than This action implements a reduction in the magnitude of the shift in stock status 186 days to maintain Federal the Federal bluefish recreational bag necessitating changes to the catch limits recreational measures until permanent limit from 15 to 3 fish for private anglers and recreational management measures rulemaking can be implemented. and to 5 fish for for-hire vessels. All was not. Because of unforeseen large However, the 180-day period provided other management measures, including management adjustments necessary to by this temporary rule should be recreational season and minimum fish address this change, the Council and sufficient as a stop gap until permanent size, remain unchanged. This action is Board chose to separate development of 2020 recreational management measures consistent with what the Council and catch specifications and recreational are finalized and an extension is not Board approved at the joint meeting in management measures. This delayed anticipated. December 2019 to constrain harvest to Council decision on recreational Classification the reduced 2020 RHL and prevent management measures until December overfishing. This bag limit reduction is 2019. Due to necessary analyses and The NMFS Assistant Administrator expected to effectively constrain process requirements for the Council to has determined that this temporary rule bluefish catch to prevent overfishing of formally submit its recommendation to is consistent with the criteria and the stock. Interim action is necessary to NMFS, the Council action will not be justifications for use of interim ensure these measures are in place as implemented until at least April 2020, measures in section 305(c) of the soon as possible in the fishing year while the fishing year began on January Magnuson-Stevens Act. NMFS has also while the proposed and final 1. Delayed implementation of these determined that this rule is consistent rulemaking of the Council- measures increases the risk of with the Atlantic Bluefish FMP, other recommended measures is completed. overfishing for the year. Higher harvest provisions of the Magnuson-Stevens This temporary rule has an effective will occur under the substantially less Act, and other applicable law. period limited by the Magnuson-Stevens restrictive status quo measures (i.e., The Assistant Administrator for Act to 180 days, with a potential higher quotas, more liberal recreational Fisheries, NOAA, finds good cause extension of an additional 186 days. The management measures) that are in place under 5 U.S.C. 553(b)(B) to waive prior Council-recommended action now, which will also reduce the notice and the opportunity for public containing revised 2020 specifications, effectiveness of the Council- comment because it would be contrary and the same recreational measures recommended measures, as they were to the public interest. Additionally, the implemented by this rule, is already in calculated to apply to the entire fishing need to implement these measures in a development and expected to be year. timely manner to reduce the risk of implemented in late spring. However, if These interim measures are intended overfishing the depleted bluefish resource constitutes good cause under the expected permanent rulemaking is to prevent overfishing in the Atlantic the authority contained in 5 U.S.C. not in place before the expiration of this bluefish fishery and avoid serious 553(d)(3) to waive the 30-day delay of rule (180 days following publication), damage to the already overfished fishery resource. Accelerating the effectiveness period for this rule. an extension of the interim measures for The bluefish fishing year began on 186 days will be considered. implementation of the Council and Board-recommended measures through January 1, 2020, and is operating under Justification for Interim Measures this expedited rulemaking is also an unrestrictive recreational bag limit of expected to allow several states to rely 15 fish. Although the Council already Section 305(c) of the Magnuson- on Federal measures, and accelerate the took final action to implement measures Stevens Act (16 U.S.C. 1855(c)) implementation of state management intended to constrain recreational catch authorizes the Secretary of Commerce to measures. Some states will be able to to a reduced RHL, it was not able to do implement interim measures to address forego public meetings or the legislative so until December 2019 given delayed overfishing. This action meets the 305(c) process as their state provisions for data available and time necessary to requirements for interim measures bluefish management allow for develop and analyze potential measures. because it is necessary to prevent instantaneous adoption of Federal These interim measures are necessary to overfishing on the bluefish stock which management measures as soon as they implement a restrictive recreational bag was recently declared overfished. As a become available. Therefore, avoiding limit as quickly as possible to prevent fishery with a significant recreational the serious conservation and overfishing on the overfished bluefish component, the bluefish fishery was management problem of subjecting the stock. Recent data shows that the substantially affected by the revised overfished bluefish stock to potential recreational bluefish fishery harvests up MRIP data and the 2019 operational overfishing conditions due to to 29 percent of the coast-wide assessment results. This assessment reasonably unforeseen circumstances recreational bluefish catch for the year found the stock to be overfished, and justifies these interim measures, and between January and April. If while it was not subject to overfishing outweighs the benefit of advance notice immediate action is not taken with in 2018 (the terminal year of the and comment. interim measures, the status quo Federal assessment), the new data suggests that measures of a 15-fish bag limit will this was the first year overfishing had Renewal of Interim Regulations remain in place until final 2020 not been occurring in several years. The Magnuson-Stevens Act limits measures can be implemented. Further Without changes to the current NMFS’ authority to implement interim delaying implementation of these management measures, expected measures for an initial period of 180 measures would increase the risk of recreational catch (17.3 million pounds; days, with a potential extension up to overfishing and be potentially harmful 7,849 metric tons) would exceed the an additional 186 days, if warranted. to the long-term sustainability of the Council-recommended acceptable The public has an opportunity to resource. Public comments will be biological catch recommendation for the comment on the initial recreational accepted on this temporary rule (see entire fishery (16.28 million pounds; management measures in this temporary DATES and ADDRESSES), and there will be 7,385 metric tons), with no allowance rule (see ADDRESSES). After considering opportunities for further comment and for catch from the commercial sector. public comments on this rule, NMFS public participation through the notice-

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and-comment rulemaking process as we This temporary rule is exempt from EEZ that is not fishing under a bluefish work to implement the permanent the procedures of the Regulatory commercial permit shall observe the management measures for 2020, already Flexibility Act because it is issued applicable recreational possession limit. in development by the Council. without opportunity for prior notice and The owner, operator, and crew of a These interim measures are being opportunity for public comment. charter or party boat issued a bluefish issued at the earliest possible date to This rule does not duplicate, conflict, commercial permit are not subject to the minimize the amount of time the 2020 or overlap with any existing Federal recreational possession limit when not recreational bluefish fishery is at risk of rules. carrying passengers for hire and when overfishing, and will only be effective This action would not establish any the crew size does not exceed five for a until permanent measures can be new reporting or record-keeping party boat and three for a charter boat. implemented. Unlike actions that requirements. (1) Private recreational vessels. Any require an adjustment period to comply List of Subjects in 50 CFR Part 648 person fishing from a vessel that is not with new rules, charter/party operators fishing under a bluefish commercial or Fisheries, Fishing, Reporting and will not have to purchase new charter/party vessel permit issued recordkeeping requirements. equipment or otherwise expend time or pursuant to § 648.4(a)(8), may land up to money to comply with these Dated: February 18, 2020. three bluefish per trip. management measures. Rather, Samuel D. Rauch III, (2) For-hire vessels. Anglers fishing complying with this rule simply means Deputy Assistant Administrator for onboard a for-hire vessel under a adhering to a reduced bag limit. These Regulatory Programs, National Marine bluefish charter/party vessel permit measures were discussed at multiple Fisheries Service. issued pursuant to § 648.4(a)(8), may public Council and Commission For the reasons set out in the land up to five bluefish per person per meetings throughout 2019 and are preamble, 50 CFR part 648 is amended trip. generally expected by the recreational as follows: fishing sector. (d) Pooling Catch. Bluefish harvested by vessels subject to the possession For all of the reasons outlined above, PART 648—FISHERIES OF THE limit with more than one person on NMFS finds it impracticable and NORTHEASTERN UNITED STATES contrary to the public interest to provide board may be pooled in one or more prior opportunity to comment on these ■ 1. The authority citation for part 648 containers. Compliance with the daily interim measures. Prior notice and continues to read as follows: possession limit will be determined by dividing the number of bluefish on opportunity for public comment, as well Authority: 16 U.S.C. 1801 et seq. as a 30-day delayed effectiveness would board by the number of persons on ■ 2. In § 648.164, suspend paragraphs board, other than the captain and the prevent the positive benefit to the (a) and (b), and add paragraphs (c) and resource that this rule is intended to crew. If there is a violation of the (d). possession limit on board a vessel provide, and undermines the purpose of The additions read as follows: this interim action. carrying more than one person, the This action is being taken pursuant to § 648.164 Bluefish possession violation shall be deemed to have been the 305(c) emergency action and interim restrictions. committed by the owner and operator of measures provision of the Magnuson- * * * * * the vessel. Stevens Act and is exempt from Office (c) Recreational possession limits. [FR Doc. 2020–03523 Filed 2–27–20; 8:45 am] of Management and Budget review. Any person fishing from a vessel in the BILLING CODE 3510–22–P

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Proposed Rules Federal Register Vol. 85, No. 40

Friday, February 28, 2020

This section of the FEDERAL REGISTER ADDRESSES: You may submit comments, address, etc.) voluntarily submitted by contains notices to the public of the proposed identified by EOIR Docket No. 18–0101, the commenter. issuance of rules and regulations. The by one of the following methods: If you want to submit personal purpose of these notices is to give interested • Federal eRulemaking Portal: http:// identifying information (such as your persons an opportunity to participate in the www.regulations.gov. Follow the name, address, etc.) as part of your rule making prior to the adoption of the final comment, but do not want it to be rules. instructions for submitting comments. Commenters should be aware that the posted online, you must include the electronic Federal Docket Management phrase ‘‘PERSONAL IDENTIFYING DEPARTMENT OF JUSTICE System will not accept comments after INFORMATION’’ in the first paragraph midnight Eastern Time on the last day of your comment and identify what Executive Office for Immigration of the comment period. information you want redacted. Review • Mail: Lauren Alder Reid, Assistant If you want to submit confidential Director, Office of Policy, Executive business information as part of your 8 CFR Parts 1003, 1103, 1208, 1216, Office for Immigration Review, 5107 comment, but do not want it to be 1235, 1240, 1244, and 1245 Leesburg Pike, Suite 2600, Falls Church, posted online, you must include the VA 22041. To ensure proper handling, phrase ‘‘CONFIDENTIAL BUSINESS [EOIR Docket No. 18–0101; A.G. Order No. INFORMATION’’ in the first paragraph 4641–2020] please reference EOIR Docket No. 18– 0101 on your correspondence. This of your comment. You also must RIN 1125–AA90 mailing address may also be used for prominently identify confidential paper, disk, or CD–ROM submissions. business information to be redacted Executive Office for Immigration within the comment. If a comment has • Hand Delivery/Courier: Lauren Review; Fee Review so much confidential business Alder Reid, Assistant Director, Office of information that it cannot be effectively AGENCY: Executive Office for Policy, Executive Office for Immigration redacted, all or part of that comment Immigration Review, Department of Review, 5107 Leesburg Pike, Suite 2600, may not be posted on http:// Justice. Falls Church, VA 22041. www.regulations.gov. ACTION: Notice of proposed rulemaking. FOR FURTHER INFORMATION CONTACT: Personal identifying information and SUMMARY: The Department of Justice’s Lauren Alder Reid, Assistant Director, confidential business information Executive Office for Immigration Office of Policy, Executive Office for identified as set forth above will be Review (‘‘EOIR’’) imposes fees, also Immigration Review, 5107 Leesburg placed in the agency’s public docket known as user charges, for the filing of Pike, Suite 2600, Falls Church, VA file, but not posted online. To inspect certain EOIR forms for applications for 22041, telephone (703) 305–0289 (not a the agency’s public docket file in relief, appeals filed with the Board of toll-free call). person, you must make an appointment Immigration Appeals (‘‘BIA’’), and SUPPLEMENTARY INFORMATION: with agency counsel. Please see the FOR motions to reopen or reconsider. When FURTHER INFORMATION CONTACT section I. Public Participation applicable, the current fee for EOIR above for agency counsel’s contact applications for relief is $100, and the Interested persons are invited to information. fee for motions or appeals is $110. EOIR participate in this rulemaking by II. Purpose and Summary of This last reviewed and updated these fees 33 submitting written data, views, or Proposed Rule years ago, in 1986. This proposed rule arguments on all aspects of this rule. (‘‘proposed rule’’ or ‘‘rule’’) would The Department of Justice A. Legal Authority increase the fees for those EOIR (‘‘Department’’ or ‘‘DOJ’’) also invites In 1988, Congress established the applications, appeals, and motions that comments that relate to the economic, Immigration Examinations Fee Account are subject to an EOIR-determined fee, environmental, or federalism effects that in the Treasury of the United States. See based on a fee review conducted by might result from this rule. Comments Public Law 100–459, sec. 209, 102 Stat. EOIR. This proposed rule would not that will provide the most assistance to 2186 (Oct. 1, 1988) (codified as affect the fees that have been established the Department in developing these amended at 8 U.S.C. 1356(m), (n)). by the Department of Homeland procedures will reference a specific Section 286(m) of the Immigration and Security (‘‘DHS’’) with respect to DHS portion of the rule, explain the reason Nationality Act (‘‘INA’’), 8 U.S.C. forms for applications that are filed or for any recommended change, and 1356(m), authorizes DOJ to charge fees submitted in EOIR proceedings. This include data, information, or authority for immigration adjudication and proposal does not affect the ability of that support such recommended change. naturalization services at a level to aliens to submit fee waiver requests, nor All submissions received should ‘‘ensure recovery of the full costs of does it add new fees. The proposed rule include the agency name and EOIR providing all such services, including also updates cross-references to DHS Docket No. 18–0101 for this rulemaking. the costs of similar services provided regulations regarding fees and makes a Please note that all comments received without charge to asylum applicants or technical change regarding requests are considered part of the public record other immigrants.’’ Prior to the under the Freedom of Information Act. and made available for public enactment of section 286(m), EOIR had DATES: Written comments must be inspection at http:// relied only on government-wide postmarked and electronic comments www.regulations.gov. Such information statutory authority under the must be submitted on or before March includes personal identifying Independent Offices Appropriations Act 30, 2020. information (such as your name, of 1952 (‘‘IOAA’’), 31 U.S.C. 9701, to

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charge fees, also referred to as user and the Secretary may charge fees for motions that may be filed in charges, to individuals who receive adjudication and naturalization services proceedings before either an special services from the agency. at a rate that would ensure recovery of immigration judge or the BIA. 8 CFR EOIR’s authority to charge user fees both the full cost of providing all such 1103.7(b). 1 first derived from title V of the IOAA. services, including similar services that These filings represent important Under the IOAA, ‘‘each service or thing may be provided without charge to forms of relief and procedural tools for of value provided by an agency . . . to certain categories of aliens, and any the parties in immigration proceedings a person. . . is to be self-sustaining to additional administrative costs before the OCIJ and the BIA. the extent possible.’’ 31 U.S.C. 9701(a).2 associated with the fees collected. All • To that end, ‘‘[t]he head of each agency adjudication fees that are designated in Aliens use the Forms EOIR–42A . . . may prescribe regulations regulations are deposited in the and EOIR–42B to apply for cancellation establishing the charge for a service or Immigration Examinations Fee Account of removal, which is a statutorily thing of value provided by the agency.’’ (‘‘IEFA’’) in the Treasury of the United provided relief from removal if they Id. at sec. 9701(b). Such fees must be States. Id. Deposits into the IEFA have relatively lengthy periods of ‘‘fair’’ and based on Government costs, ‘‘remain available until expended to the residence in the United States, the value of the service or thing Attorney General [or the Secretary] to depending on the alien’s status and provided to the recipient, the public reimburse any appropriation the amount whether the alien’s removal would policy or interest served, and other paid out of such appropriation for cause the alien’s citizen or resident relevant facts. Id. expenses in providing immigration family members particularly severe Circular No. A–25 Revised 3 sets adjudication and naturalization services hardships, in addition to other Federal policy regarding user fees and the collection, safeguarding and eligibility requirements. See INA 240A, assessed for Government services and accounting for fees deposited in and 8 U.S.C. 1229b. The Form EOIR–40 for the sale or use of Government goods funds reimbursed from the [IEFA].’’ INA allows eligible aliens to seek a similar or resources. Cf. Fed. Power Comm’n v. 286(n), 8 U.S.C. 1356(n). All other form of relief under prior law. New England Power Co., 415 U.S. 345, monies received in payment of fees and • Aliens use the Forms EOIR–26, 349–51 (1974) (favorably citing Circular administrative fines and penalties are to EOIR–29, and EOIR–45 for appeals to No. A–25 as a ‘‘proper construction’’ of be deposited into the Treasury as the BIA. Such forms, and other the IOAA). The Circular provides miscellaneous receipts, with exceptions procedural mechanisms like motions to guidance to executive branch agencies not relevant here, such as for certain reconsider,5 provide both aliens and the regarding the scope and type of nonimmigrant visa payments by Government with a tool to obtain activities subject to user fees and how residents of the Virgin Islands and appellate review and reconsideration of to set such user fees. It applies to all Guam. INA 286(c), 8 U.S.C. 1356(c). The decisions, in order to ensure the Federal activities that convey special Attorney General (and the Secretary correctness of agency decisions in all benefits to recipients beyond those under the Homeland Security Act of cases. See Ayuda, Inc. v. Attorney Gen., accruing to the general public. OMB 2002 (HSA)) have the authority to 848 F.2d 1297, 1301 (D.C. Cir. 1988) instructs agencies to ‘‘[r]eview the user promulgate regulations to carry out the (describing the public interest in the charges for agency programs provisions of section 286. INA 286(j), 8 ‘‘correctness of administrative biennially.’’ Circular No. A–25 Revised U.S.C. 1356(j). decisions’’). at sec. 8(e); see also 31 U.S.C. 902(a)(8). • As noted above, the IOAA authorizes B. Current Practice Finally, motions to reopen are an a Federal agency to charge user fees. 31 EOIR currently imposes a fee for eight ‘‘important safeguard’’ used ‘‘to ensure U.S.C. 9701. Section 286 of the INA, 8 distinct types of filings: Three a proper and lawful disposition’’ of U.S.C. 1356, contemplates the collection applications for relief in proceedings immigration proceedings. Dada v. of certain fees and fines by the Attorney before an immigration judge (all of Mukasey, 554 U.S. 1, 18 (2008). General and the Secretary of Homeland whom serve within the Office of the For individuals seeking relevant relief Security.4 In particular, section 286(m) Chief Immigration Judge (‘‘OCIJ’’)); three before the immigration courts, the fees contemplates that the Attorney General types of appeals to the BIA; and two are as follows:

Form/motion Title Fee

EOIR–40 ...... Application for Suspension of Deportation ...... $100 EOIR–42A ...... Application for Cancellation of Removal for Certain Permanent Residents ...... 100 EOIR–42B ...... Application for Cancellation of Removal and Adjustment of Status for Certain Nonpermanent Resi- 100 dents. Motion to Reopen ...... 110 Motion to Reconsider ...... 110

1 Public Law 82–137, 65 Stat. 268, 290 (1951). 2135, the Attorney General retained the same acts as the Attorney General determines are 2 Title 31 of the U.S. Code was codified by Public authorities and functions under the INA and all necessary to carry out the Attorney General’s Law 97–258, 96 Stat. 877 (1982). Title V of the other laws relating to the immigration and authorities under the immigration laws. INA IOAA, as amended, is codified at 31 U.S.C. 9701. naturalization of aliens as were exercised by EOIR, 103(g)(2), 8 U.S.C. 1103(g)(2). or by the Attorney General with respect to EOIR, 3 5 There is no assigned form for parties who wish Circular No. A–25 was published in 1959. prior to the effective date of the Homeland Security Circular No. A–25 Revised rescinded and replaced Act. INA 103(g)(1), 8 U.S.C. 1103(g)(1). The to file a motion to reopen or a motion to reconsider Circular No. A–25 and its accompanying Attorney General also retained authority to with either an immigration court or the BIA. The Transmittal Memoranda 1 and 2. See 58 FR 38142, promulgate regulations; prescribe bonds, reports, Forms EOIR–40, –42A, and –42B are only available 38144 (July 15, 1993). entries, and other papers; issue instructions; review in immigration court, while parties may file a 4 Following the creation of DHS by the Homeland administrative determinations in immigration motion to reopen or a motion to reconsider with Security Act of 2002, Public Law 107–296, 116 Stat. proceedings; delegate authority; and perform other either the immigration court or the BIA.

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For individuals who wish to file an appeal or relevant motion with the BIA, the fees are as follows:

Form/motion Title Fee

EOIR–26 ...... Notice of Appeal from a Decision of an Immigration Judge ...... $110 EOIR–29 ...... Notice of Appeal to the Board of Immigration Appeals from a Decision of a DHS Officer ...... 110 EOIR–45 ...... Notice of Appeal from a Decision of an Adjudicating Official in a Practitioner Disciplinary Case ...... 110 Motion to Reopen ...... 110 Motion to Reconsider ...... 110

EOIR does not require a fee in every which EOIR currently levies a fee (or multiple regulatory changes related to circumstance when a party files one of their precursors). 51 FR at 39993–94. the fees for applications that are the above-listed applications for relief, EOIR and INS acted in accordance with controlled by DHS, as currently codified appeals to the BIA, or motions. There the IOAA, 31 U.S.C. 9701, and OMB in 8 CFR 103.7 and proposed to be are certain circumstances when the Circular No. A–25, which the revised in 8 CFR 103.7 and a newly normal filing fee explicitly does not components described as ‘‘requir[ing] added 8 CFR part 106. See, e.g., 81 FR apply. See 8 CFR 1003.8(a)(2), Federal agencies to establish a fee 73292, 73328–31 (Oct. 24, 2016) (final 1003.24(b)(2). For example, a filing system in which a benefit or service rule revising the United States party need not pay the $110 fee for a provided to or for any person [is] self- Citizenship and Immigration Services Form EOIR–26 if the appeal is from an sustaining to the fullest extent.’’ Id. at (‘‘USCIS’’) fee schedule); 84 FR 62280 immigration judge’s custody bond 39993. The regulation predated the (Nov. 14, 2019) (proposed rule that decision. 8 CFR 1003.8(a)(2)(i). An alien statutory authority regarding the would revise and reorganize regulations in proceedings before an immigration collection of fees in the current version in 8 CFR chapter I related to fees). EOIR, court or the BIA may also apply for a fee of section 286(m) of the INA. however, has rarely taken any actions waiver, and immigration judges and the In the 1986 rule, EOIR increased the related to its fees in the intervening 33 BIA have the discretionary authority to fee for filing motions to reopen and years, even as its caseload and the costs waive a fee for an application for relief, motions to reconsider from $50 to the of adjudication have increased. After appeal, or motion upon a showing that current $110; the fee for filing an appeal Congress passed the Illegal Immigration the filing party is unable to pay. See 8 from any non-bond decision under the Reform and Immigrant Responsibility CFR 1003.8(a)(3), 1003.24(d), 1103.7(c).6 immigration laws in any type of Act of 1996,9 EOIR and the former INS These EOIR fees relate back to a final proceedings over which the BIA had jointly updated the fee schedule to rule that the former Immigration and appellate jurisdiction, then a Form I– account for the new Form EOIR–42, Naturalization Service (‘‘INS’’) and 290A, from $50 to the current $110; and Application for Cancellation of EOIR issued in 1986. 51 FR 39993 (Nov. the fee for an application for suspension Removal. 62 FR 10312 (Mar. 6, 1997) 7 4, 1986) (codified at 8 CFR 103.7). INS of deportation under section 244 of the (interim rule). EOIR set the fee at $100, conducted a study in May 1984 of the INA, then a Form I–256A, from $75 to the same as the application for ‘‘policies and practices for user $100. Id. EOIR and INS explained that suspension of deportation, which is a charges,’’ reviewed the costs and fees, these fees were set in accordance with closely related form of relief that and evaluated the principle of user the cost of providing each specific cancellation of removal replaced. Id. at charges prescribed by Congress in 31 benefit or service at that time. Id. 10336; see also Matter of Monreal- U.S.C. 9701 and the implementing However, EOIR and INS set the fees for Aguinaga, 23 I&N Dec. 56, 58 (BIA 2001) guidelines in OMB Circular A–25. 51 FR administrative appeals processes ‘‘at (en banc) (explaining that Congress 2895, 2895 (Jan. 22, 1986) (proposed less than full cost recovery recognizing replaced suspension of deportation with rule). Following those analyses, INS and long-standing public policy and the 8 cancellation of removal). In 2004, EOIR EOIR increased the fees for the interest served by these processes.’’ Id. published a rule reorganizing 8 CFR Since 1986, the former INS, and applications, motions, and appeals for 1103.7 to list EOIR forms separately subsequently DHS, have promulgated from DHS forms and to otherwise make 6 DHS recently proposed assessing a fee for Form the regulation clearer for the public, I–589, Application for Asylum and for Withholding 8 At the time, the U.S. Court of Appeals for the of Removal. See 84 FR 62280, 62318–20 (Nov. 14, D.C. Circuit affirmed that the Attorney General had including by listing separately the $100 2019). If a filing party uses Form I–589 only for a the authority under the IOAA to impose fees for fee for Forms EOIR–42A and EOIR–42B. request for withholding of removal under section these immigration services because the fees were 69 FR 44903 (July 28, 2004). The rule 241(b)(3) of the INA or protection from removal imposed for a ‘‘service or thing of value.’’ Ayuda, under the regulations implementing U.S. 848 F.2d at 1299–1301. The court explained that the did not change the required fee amounts obligations under Article 3 of the Convention appeals to the BIA and motions to reopen or for filing any EOIR forms, appeals, or Against Torture and Other Cruel, Inhuman or reconsider were ‘‘procedural devices that redound motions. Id. at 44904. Degrading Treatment or Punishment (CAT), then no to the obvious, substantial, and direct benefit of fee will be assessed. specific, identifiable individuals, individuals who C. Review of EOIR Fees 7 Following the passage of the HSA, which have themselves invoked those procedures,’’ id. at transferred the functions of the INS to the newly 1301, and cited with approval the district court’s EOIR determined that it was created DHS, the Attorney General reorganized the finding that the fees imposed were reasonable, id. necessary to conduct an updated regulations codified in title 8 of the Code of Federal at 1299 n.5; see also Ayuda, Inc. v. Attorney Gen., assessment of the costs for processing Regulations and transferred those parts involving 661 F. Supp. 33, 35–36 (D.D.C. 1987). The district EOIR’s administrative review functions to a new court had noted that the fees were the product of the forms and motions for which EOIR chapter V. See 68 FR 9824 (Feb. 28, 2003). The an ‘‘extensive agency-wide review, utilizing careful sets the applicable fees. See Circular No. current DHS regulation on fees remains at 8 CFR cost accounting and full public notice and A–25 Revised at sec. 8 (instructing 103.7, but the relevant regulation for EOIR on fees comment’’ and were no greater than the actual cost agencies to conduct biennial reviews). was moved to 8 CFR 1103.7. Id. at 9833. Note that of providing services or, in the case of appeals to DHS has proposed adjusting and reorganizing its the BIA and motions to reopen or reconsider BIA regulations on fees at proposed 8 CFR 103.7 and decisions, were set to an amount lower than cost 9 Public Law 104–208, div. C, 110 Stat. 3009–546 proposed 8 CFR part 106. See 84 FR 62280. recovery. Ayuda, 661 F. Supp. at 36 & n.9. (1996).

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Despite the instruction in the Chief for which EOIR levies a fee. The fees become more of a burden on the Financial Officers Act, 31 U.S.C. have remained static, not accounting for immigration adjudication system as 902(a)(8), for agencies’ Chief Financial inflation or any other intervening aliens overall have begun filing more of Officers to review user fees biennially, changes in EOIR’s processing costs. these fee-based forms and motions. In it has been 35 years since EOIR last EOIR is now proposing this rule to just FY 2018, the U.S. taxpayer conducted a thorough review of the remedy the failure to update the fees in subsidization for these filings was costs and appropriateness of the fees for past years. The mismatch between fees $44,379,247.10 the applications, appeals, and motions and the underlying costs of review has

FY 2018 FY 2018 Receipts Receipts FY 2018 U.S. taxpayer Form FY 2009 FY 2018 cost to agency fees charged 11 subsidization

EOIR–26 ...... 19,052 31,956 $31,158,697 $3,515,160 $27,643,537 EOIR–29 ...... 4,314 2,075 1,462,481 228,250 1,234,231 EOIR–40 ...... 206 158 48,566 15,800 32,766 EOIR–42A ...... 5,272 3,426 1,053,084 342,600 710,484 EOIR–42B ...... 16,327 30,421 10,954,602 3,042,100 7,912,502 Motion to Reconsider (OCIJ) ...... 747 2,442 339,975 268,620 71,355 Motion to Reopen (OCIJ) ...... 11,324 17,741 2,710,293 1,951,510 758,783 MTRs (BIA) 12 ...... 10,071 7,662 6,858,409 842,820 6,015,589

Total ...... 67,313 95,881 54,586,107 10,206,860 44,379,247

In the spring of 2018, EOIR conducted services to users, as well as associated applications, appeals, or motions (for a comprehensive study using activity- costs. OMB Circular A–25 Revised at which EOIR levies a fee) processed by based costing to determine the cost to secs. 5–6. Full costs include, but are not the agency and are therefore very EOIR for each type of application, limited to, an appropriate share of the difficult to quantify in a calculation of appeal, and motion for which EOIR following: cost for individual filings. With respect levies a fee under 8 CFR 1103.7(b).13 • Direct and indirect personnel costs, to non-salary benefits, EOIR excluded The study proceeded in three phases: (1) including salaries and fringe benefits, such benefits because not every Data collection, (2) process mapping, such as medical insurance and employee is eligible for, or takes and (3) activity-based costing. First, retirement; advantage of, these benefits; the non- • EOIR gathered survey data and Physical overhead, consulting, and salary costs to the Government and to consulted with staff in the OCIJ and the other indirect costs, including material the employee also vary drastically BIA to determine the appropriate staff and supply costs, utilities, insurance, depending on which combination of levels and time required to process and travel, and rents or imputed rents on benefits an employee selects. As such, adjudicate each application, appeal, or land, buildings, and equipment; • to avoid potential inaccuracies in the motion and studied data from the Office Management and supervisory costs; calculation of overhead and non-salary of Personnel Management (‘‘OPM’’) and and benefits, EOIR has decided to include the General Services Administration • Costs of enforcement, collection, only the currently known, quantified (‘‘GSA’’) to determine the average salary research, establishment of standards, costs in determining what is a sufficient rates for applicable staff levels, and regulation. Id. at sec. 6(d)(1). including both Federal employees and Congress has provided that DOJ may fee level under section 286(m) of the EOIR contractors. Second, EOIR set EOIR fees for providing adjudication INA. EOIR’s decision not to include developed step-by-step process maps, and naturalization services at a level overhead and non-salary benefits in the with assigned times and staff levels, for that will ensure recovery of the full calculation of actual costs also accounts how each application, appeal, or motion costs of providing all such services. See for the public interest in having non- is processed in the OCIJ and the BIA. INA 286(m), 8 U.S.C. 1356(m). parties bear some of the cost burden for These estimates were validated by staff In this fee study, however, for a filing documents associated with proper in the OCIJ and the BIA. Finally, EOIR variety of reasons, EOIR included only application of the law as it pertains to allocated the salary costs from the GSA direct salary costs and did not include the statutory right to appeal or apply for and OPM data to each step in the the overhead costs, cost of non-salary certain forms of relief. Further, EOIR did process, based on the time the step benefits, or costs that stem from not include in the cost evaluation the takes, the average salary of the processing corresponding applications many applications and associated responsible staff, and the percentage of or documents that may be filed in documents commonly appended to, or total cases in which the step occurs. conjunction with those items for which associated with, the forms (e.g., asylum OMB Circular A–25 Revised EOIR charges a fee. With regard to applications requiring processing and encourages Federal agencies to recover overhead costs, many of these costs adjudication following the processing the full cost of providing specific occur without respect to the number of and granting of a motion to reopen).

10 This cost to taxpayers was calculated by who is subject to the fee. The taxpayer Financial Accounting Standards 4, at 41 (July 31, comparing the actual processing costs, see infra, to subsidization, therefore, is greater than the number 1995) (specifically noting that activity-based costing the current filing fees. Form EOIR–45 is omitted provided in this chart. has ‘‘gained broad acceptance’’ and encouraging from the following table because no such forms 12 These numbers include both motions to reopen Federal agencies to study its potential for their were filed in FY 2018. and motions to reconsider filed at the Board level. operations), reprinted in FASAB Handbook of 11 Approximately 36% of these fees were not 13 Federal Accounting Standards and Other received due to fee waiver approvals. The impact Activity-based costing is the Federal of the waivers themselves is to provide a Accounting Standards Advisory Board’s preferred Pronouncements, as Amended (June 30, 2017), _ _ Government subsidy because the Government costing methodology. See Federal Accounting http://files.fasab.gov/pdffiles/2018 fasab absorbs required costs on behalf of an individual Standards Advisory Board, Statement of Federal handbook.pdf.

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The study demonstrated that the under 8 CFR 1103.7(b) currently have 1. OCIJ Applications and Motions applications, appeals, and motions the following processing costs for EOIR:

Average Current fee processing percentage of Form Current fee cost processing (to nearest $) cost

EOIR–40 ...... $100 $307 33 EOIR–42A ...... 100 307 33 EOIR–42B ...... 100 360 28 Motion to Reopen ...... 110 153 72 Motion to Reconsider ...... 110 140 79

2. BIA Appeals and Motions

Average Current fee processing percentage of Form Current fee cost processing (to nearest $) cost

EOIR–26 ...... $110 $975 11 EOIR–29 ...... 110 705 16 EOIR–45 ...... 110 677 16 Motion to Reopen ...... 110 895 12 Motion to Reconsider ...... 110 895 12

III. Provisions of the Proposed Rule IOAA and the public interest. The 1. Increase the fee for Form EOIR–26 The activity-based cost analysis proposed fees would help the from $110 to $975. demonstrates that EOIR’s processing Government recoup some of its costs 2. Increase the fee for Form EOIR–29 costs consistently exceed the assessed when possible and would also protect from $110 to $705. 14 fees for these EOIR applications for the public policy interests involved. 3. Increase the fee for Form EOIR–40 relief, appeals, and motions. Although EOIR’s calculation of fees accordingly from $100 to $305. factors in both the public interest in EOIR is an appropriated agency, EOIR 4. Increase the fee for Form EOIR–42A ensuring that the immigration courts are has determined that it is necessary to from $100 to $305. update the fees charged for these EOIR accessible to aliens seeking relief and the public interest in ensuring that U.S. 5. Increase the fee for Form EOIR–42B forms and motions to more accurately from $100 to $360. reflect the costs for EOIR’s adjudications taxpayers do not bear a disproportionate of these matters. At the same time, burden in funding the immigration 6. Increase the fee for Form EOIR–45 however, EOIR recognizes that these system.15 Consistent with past practice from $110 to $675. applications for relief, appeals, and of this and other agencies,16 EOIR has 7. Increase the fee for filing a motion motions represent statutorily provided rounded the proposed fees to the nearest to reopen or reconsider from 110 before relief and important procedural tools five-dollar increment for all but the both the OCIJ and the BIA to 145 if that serve the public interest and motions to reopen and reconsider before either motion is filed before the OCIJ, provide value to those who are parties the immigration courts. For those two and 895 if either motion is filed before to the proceedings by ensuring accurate motion types, the fee is a rounded the BIA. administrative proceedings. See Ayuda, average of actual costs, as the actual The table below includes, for each 848 F.2d at 1301. As DHS is the party costs of $153 and $140 were close form, the current fee, the proposed fee, opposite the alien in these proceedings, enough to provide one standard fee to and the fee collection difference EOIR’s hearings provide value to both prevent rejection of filings due to between the current and proposed fees aliens seeking relief and the Federal confusion over the differing amounts. based on FY 2018 form receipts. We also interests that DHS represents. Given that This is especially important because the include a column that notes what EOIR’s cost assessment did not include fee amounts for these motions before the today’s fee is in 1986 dollars. It is more overhead costs or costs of non-salary BIA are exactly the same based on meaningful to compare inflation- benefits (e.g., insurance), recovery of the actual costs. adjusted figures because the fees have processing costs reported herein is Accordingly, EOIR proposes the not been adjusted for inflation since appropriate to serve the objectives of the following fee changes: they were initially set in 1986.

Current fee Fee Form/motion Current fee (in 1986 Proposed fee FY 2018 Current fee Proposed fee assessment dollars) receipts assessments assessments difference

EOIR–26 ...... $110 $252.63 $975 $31,956 $3,515,160 $31,157,100 $27,641,940

14 While ability to pay is considered in justifying Cir. 1976). An agency may, however, take such into of removal or relief under CAT are requested, taxes, it is generally of ‘‘very limited value when consideration if it is in the public interest. without a request for asylum relief. assessing a fee which is supposedly related as 15 In making that calculation, EOIR determined 16 EOIR’s and USCIS’s current fees are all closely as reasonably possible to the cost of that fees that DHS has proposed for Form I–589, multiples of 5. See 8 CFR 103.7, 1103.7. DHS has servicing each individual recipient.’’ Nat’l Cable Application for Asylum and for Withholding of proposed a rule on fees that would likewise set fees Television Ass’n v. FCC, 554 F.2d 1094, 1109 (D.C. Removal, will not be assessed if only withholding in multiples of 5. See 84 FR 62280.

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Current fee Fee Form/motion Current fee (in 1986 Proposed fee FY 2018 Current fee Proposed fee assessment dollars) receipts assessments assessments difference

EOIR–29 ...... 110 252.63 705 2,075 228,250 1,462,875 1,234,625 EOIR–40 ...... 100 229.66 305 158 15,800 48,190 32,390 EOIR–42A ...... 100 229.66 305 3,426 342,600 1,044,930 702,330 EOIR–42B ...... 100 229.66 360 30,421 3,042,100 10,951,560 7,909,460 MTR OCIJ 17 ...... 110 252.63 145 20,183 2,220,130 2,926,535 706,405 MTR BIA 18 ...... 110 252.63 895 7,662 842,820 6,857,490 6,014,670 EOIR–45 ...... 110 252.63 675 0 0 0 0

These proposed fee changes are 1. OCIJ Proposed Fees reflected in the following charts:

Fee Fee Form/motion Title (current) (proposed)

EOIR–40 ...... Application for Suspension of Deportation ...... $100 $305 EOIR–42A ...... Application for Cancellation of Removal for Certain Permanent Resi- 100 305 dents. EOIR–42B ...... Application for Cancellation of Removal and Adjustment of Status for 100 360 Certain Nonpermanent Residents. Motion to Reopen ...... 110 145 Motion to Reconsider ...... 110 145

2. BIA Proposed Fees

Fee Fee Form/motion Title (current) (proposed)

EOIR–26 ...... Notice of Appeal from a Decision of an Immigration Judge ...... $110 $975 EOIR–29 ...... Notice of Appeal to the Board of Immigration Appeals from a Decision 110 705 of a DHS Officer. EOIR–45 ...... Notice of Appeal from a Decision of an Adjudicating Official in a Practi- 110 675 tioner Disciplinary Case. Motion to Reopen ...... 110 895 Motion to Reconsider ...... 110 895

These proposed changes would assign upon a showing that the filing party is regarding fees that currently cross- a different fee for a motion to reopen or unable to pay. See 8 CFR 1003.8(a)(3), reference 8 CFR 103.7—e.g., 8 CFR a motion to reconsider that is filed with 1003.24(d), 1103.7(c). 1003.8, 1003.24, and 1103.7—to make the immigration court in the OCIJ than The proposed rule also proposes changes conforming to DHS’s proposed for a motion to reopen or a motion to technical edits. First, it proposes rulemaking. reconsider that is filed with the BIA. updates to EOIR’s cross-references Second, the proposed rule provides Due to differences in the processing throughout 8 CFR chapter V to conform that, although DHS is proposing a 50 fee steps for these motions between the with DHS’s proposed revisions to 8 CFR for asylum applications, which are OCIJ and the BIA, and different staff 103.7 and proposed addition of 8 CFR submitted on DHS Form I–589, no fee costs across the components, these fee part 106, both regarding fees. See 84 FR would apply where an applicant differences more accurately reflect the 62280. DOJ uses forms for applications submits a Form I–589 for the sole substantially higher processing costs of published by DHS in immigration purpose of seeking withholding of a motion to reopen or a motion to proceedings, and per DOJ regulations, removal under section 241(b)(3) of the reconsider before the BIA while not the fees for those forms are governed by INA (8 U.S.C. 1231(b)(3)) or protection assigning an unduly high fee as a matter 8 CFR 103.7. See 8 CFR 1103.7(b)(4)(ii). from removal under the regulations of public policy on parties who wish to DHS currently lists fees for all of its implementing U.S. obligations under file a motion to reopen or a motion to applications in 8 CFR 103.7, including Article 3 of the Convention Against reconsider with the immigration courts. DHS applications that EOIR may also Torture and Other Cruel, Inhuman or adjudicate—e.g., Forms I–191, I–485, Degrading Treatment or Punishment Consistent with current practice, the Supplement A to Form I–485, I–601, I– (CAT)—or both—in a removal OCIJ and the BIA would continue to 821, and I–881. DHS is proposing to proceeding. See 84 FR at 62360–61 entertain requests for fee waivers and move most of those provisions to a new (proposed 8 CFR 106.2(a)(20)). The fees have the discretionary authority to 8 CFR part 106 and specifically to a new for applications published by DHS and waive a fee for an application or motion 8 CFR 106.2. See 84 FR at 62359–63. used in immigration proceedings are DOJ is not proposing any revisions to 8 governed by DHS regulations, and DOJ 17 These numbers include both motions to reopen CFR 1103.7(b)(4)(ii) in this rule that is not proposing any revisions to 8 CFR and motions to reconsider filed at the immigration court level. would change its longstanding use of 1103.7(b)(4)(ii) that would change its 18 These numbers include both motions to reopen DHS forms and fees. Rather, EOIR is longstanding use of DHS forms. See 8 and motions to reconsider filed at the Board level. proposing to revise its regulations CFR 1103.7(b)(4)(ii); 8 CFR 103.7;

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proposed 8 CFR 106.2. DHS does not consumers, individual industries, OPM and the GSA to determine the adjudicate applications for withholding government agencies, or geographic average salary rates for the applicable of removal under the INA or protection regions; or significant adverse effects on staff positions, including both Federal under the CAT regulations, and DHS competition, employment, investment, employees and EOIR contractors. has not proposed to charge a fee for productivity, innovation, or on the Second, in the process-mapping such applications. Rather, DHS ability of United States-based phase, EOIR developed step-by-step proposed to set a fee that applies to the companies to compete with foreign- process maps, with assigned times and extent an applicant files a Form I–589 based companies in domestic and staff positions, for each fee-based form for the purpose of seeking asylum. See export markets. or motion processed in the OCIJ and the 84 FR at 62360–61 (proposed 8 CFR D. Executive Orders 12866, 13563, and BIA. OCIJ and BIA experts validated any 106.2(a)(20)). Thus, in proceedings 13771 assumptions made during the process- before an immigration judge, a 50 fee mapping phase. would apply to a Form I–589 if the Executive Orders 12866 and 13563 Third, in the activity-based-costing applicant seeks asylum. The fee would direct agencies to assess all costs and phase, EOIR allocated the salary costs not apply if the applicant filed the Form benefits of available regulatory from the GSA and OPM data to each I–589 for the sole purpose of applying alternatives and, if regulation is step in the process, based on the amount for withholding of removal under the necessary, to select regulatory of time the step takes, the average salary INA or protection under the CAT. approaches that maximize net benefits of the responsible staff, and the Third, the proposed rule would (including potential economic, percentage of total cases in which the change 8 CFR 1103.7(d) to reflect the environmental, public health, and safety step occurs. As discussed above, EOIR proper regulation regarding requests effects, distributive impacts, and did not include other costs, such as the under the Freedom of Information Act. equity). Executive Order 13563 overhead costs for EOIR space that is The section, as currently drafted, emphasizes the importance of using the used for processing applications, fringe incorrectly refers to 28 CFR 16.11. best available methods to quantify costs benefits received by EOIR staff and Finally, the proposed rule would and benefits, reducing costs, contractors, interpreter costs, Federal make technical corrections to fee-related harmonizing rules, and promoting Records Center costs, non-EOIR citations to EOIR’s own regulations. flexibility. Executive Order 13771 government agency costs, or the costs directs agencies to reduce regulation and time to process any non-fee-based IV. Regulatory Requirements and control regulatory costs and, for all application that is submitted in qualifying regulations, to identify at A. Regulatory Flexibility Act conjunction with a motion to reopen or least two existing regulations for reconsider. See 8 CFR 1003.23(b)(3) The Department has reviewed this elimination. (‘‘Any motion to reopen for the purpose proposed regulation in accordance with This rule has been drafted in of acting on an application for relief the Regulatory Flexibility Act of 1980 (5 accordance with the principles of U.S.C. 601–612), as amended by the Executive Order 12866, section 1(b), and must be accompanied by the Small Business Regulatory Enforcement Executive Order 13563. The Department appropriate application for relief and all Fairness Act of 1996, Public Law 104– considers the proposed rule to be a supporting documents.’’). These costs 121, tit. II, 110 Stat. 847, and has ‘‘significant regulatory action’’ under were not included in the analysis determined that this rule would not section 3(f)(3) of Executive Order 12866 because they represent costs that are have a significant economic impact on because it materially alters user fees, but incurred regardless of processing fee- a substantial number of small entities. it is not an economically significant based motions or forms or because they The rule would not regulate ‘‘small action because the annual effect on the are not applicable in every adjudication entities’’ as that term is defined in 5 economy is less than $100 million of a fee-based motion or form, and DOJ U.S.C. 601(6). Only individuals, rather annually. Accordingly, the proposed did not employ a methodology to assign than entities, are responsible for paying regulation has been submitted to OMB such costs equitably to various motion the fees affected by this proposed rule, for review. This proposed rule would or form types. though they may pay the fee through a impose transfer payments between the EOIR used this methodology to representative. public and the Government and is not calculate an estimated cost for expected to impose any new cost processing each form or motion for B. Unfunded Mandates Reform Act of burdens that will need to be offset under which EOIR levies a fee. The results of 1995 Executive Order 13771. Thus, this the activity-based-costing analysis are as This rule will not result in the proposed rule is not expected to be follows: expenditure by State, local, and tribal subject to the requirements of Executive 1. EOIR–40, Application for Suspension governments, in the aggregate, or by the Order 13771. of Deportation private sector, of $100 million or more In the spring of 2018, EOIR conducted in any one year, and it will not a comprehensive study using activity- Staff level Total cost, by significantly or uniquely affect small based costing to determine the cost to staff level governments. Therefore, no actions were EOIR for each type of application, deemed necessary under the provisions appeal, and motion for which EOIR Immigration Judge ...... $277.51 Judicial Law Clerk ...... 17.78 of the Unfunded Mandates Reform Act levies a fee under 8 CFR 1103.7(b). Legal Assistant ...... 12.08 of 1995. EOIR’s methodology for conducting this Interpreter ...... 0.00 comprehensive study was as follows: C. Congressional Review Act First, in the survey-data phase, EOIR Total ...... 307.38 This rule is not a major rule as gathered survey data and consulted with defined by the Congressional Review OCIJ and BIA experts to determine the Total cost, by Act. 5 U.S.C. 804(2). This rule would appropriate staff positions involved and Process category process not result in an annual effect on the the average time required to process and category economy of $100 million or more; a adjudicate each fee-based form or major increase in costs or prices for motion. EOIR also researched data from Administrative ...... $12.08

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Total cost, by Total cost, by Staff level Total cost, by Process category process Process category process staff level category category Digital Image Processor ...... 7.75 IJ Prep Time ...... 77.66 Administrative ...... $7.99 In-Court Time ...... 149.58 IJ Prep Time ...... 38.95 Total ...... 704.81 Written Decisions ...... 68.06 Written Decisions ...... 105.83

Total ...... 307.38 Total ...... 152.77 Total cost, by Process category process category 2. EOIR–42A, Application for 5. Motion To Reconsider (OCIJ) Cancellation of Removal for Certain Initial Processing ...... $63.94 Permanent Residents Staff level Total cost, by Case Screening/Preparation 116.44 staff level Decision and Adjudication .... 453.71 Final Processing ...... 70.71 Total cost, by Immigration Judge ...... $90.76 Staff level staff level Judicial Law Clerk ...... 41.17 Total ...... 704.81 Legal Assistant ...... 7.99 Immigration Judge ...... $277.51 Judicial Law Clerk ...... 17.78 Total ...... 139.92 8. EOIR–45, Notice of Appeal From a Legal Assistant ...... 12.07 Decision of an Adjudicating Official in Interpreter ...... 0.00 a Practitioner Disciplinary Case Total cost, by Total ...... 307.38 Process category process Total cost, by category Staff level staff level

Total cost, by Administrative ...... $7.99 Legal Assistant (GS–08/09) $33.32 Process category process IJ Prep Time ...... 38.95 Admin Staff (LIE, LA, or SA; category In-Court Time ...... 0.00 GS–08/09) ...... 172.65 Written Decisions ...... 93.97 Attorney ...... 387.02 Administrative ...... $12.08 Board Member ...... 76.38 IJ Prep Time ...... 77.66 Total ...... 139.92 Digital Image Processor ...... 7.75 In-Court Time ...... 149.58 Written Decisions ...... 68.06 6. EOIR–26, Notice of Appeal From a Total ...... 677.11 Decision of an Immigration Judge Total ...... 307.38 Total cost, by Staff level Total cost, by Process category process 3. EOIR–42B, Application for staff level category Cancellation of Removal and Legal Assistant (GS–05/06/ Initial Processing ...... $115.10 Adjustment of Status for Certain 07) ...... $5.42 Nonpermanent Residents Decision and Adjudication .... 496.72 Legal Assistant (GS–08/09) 66.64 Final Processing ...... 65.30 Admin Staff (GS–08/09) ...... 198.23 Staff level Total cost, by Paralegal ...... 83.12 Total ...... 677.11 staff level Attorney ...... 537.52 Board Member ...... 76.38 9. Motion To Reopen/Reconsider (BIA) Immigration Judge ...... $315.74 Digital Image Processor ...... 7.75 Judicial Law Clerk ...... 32.27 Legal Assistant ...... 12.08 Total cost, by Total ...... 975.05 Staff level staff level Interpreter ...... 0.00 Legal Assistant (GS–05/06/ Total ...... 360.10 Total cost, by Process category process 07) ...... $5.42 category Legal Assistant (GS–08/09) 66.64 Total cost, by Admin Staff (LIE, LA, or SA; Process category process Initial Processing ...... $140.68 GS–08/09) ...... 118.30 category Case Screening/Preparation 116.44 Paralegal ...... 83.12 Decision and Adjudication .... 647.22 Attorney ...... 537.52 Administrative ...... $12.08 Final Processing ...... 70.71 Board Member ...... 76.38 IJ Prep Time ...... 74.91 Digital Image Processor ...... 7.75 In-Court Time ...... 149.58 Total ...... 975.05 Total ...... 895.12 Written Decisions ...... 123.52 7. EOIR–29, Notice of Appeal to the Total ...... 360.10 Board of Immigration Appeals From a Total cost, by Decision of a DHS Officer Process category process 4. Motion To Reopen (OCIJ) category Total cost, by Staff level Initial Processing ...... $60.75 Total cost, by staff level Staff level staff level Case Screening/Preparation 116.44 Legal Assistant (GS–05/06/ Decision and Adjudication .... 647.22 Immigration Judge ...... $103.61 07) ...... $5.42 Final Processing ...... 70.71 Judicial Law Clerk ...... 41.17 Legal Assistant (GS–08/09) 66.64 Total ...... 895.12 Legal Assistant ...... 7.99 Admin Staff (GS–08/09) ...... 121.49 Paralegal ...... 83.12 Total ...... 152.77 Attorney ...... 344.01 As discussed above, these estimated Board Member ...... 76.38 costs calculated from the study

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demonstrate that EOIR’s processing the proposed rule would cause 1003.8(a)(2)–(3), 1003.24(b)(2), (d), costs exceed the currently assessed fees applicants to pay approximately $47 1103.7(c). Therefore, the actual fee for every fee-based form or motion million in fee revenue beyond that collection that results from this processed by EOIR. Accordingly, the which would be expected if the filing proposed rule may in fact be lower than proposed rule would raise fees for these fees were not changed. Comparing stated above, which would result in a filings. current fee collection levels with fee lower cost to applicants than the To determine the economic impact of collections that would have been collection projections outlined in this the proposed rule, EOIR then compared generated by the proposed fees in cost analysis. current fee collection levels and the fee inflation-adjusted dollars 20 show that collections that would have been Though the proposed fees may seem the total revenue would have been generated by the proposed fees, as high as compared to the current fees, the applied to filings from FY 2018.19 In FY approximately $15.7 million, or a agency has not increased its fees since 2018, EOIR received more than 95,000 difference of approximately $9 million. 1986. Taken over the 33-year timespan applications, appeals, and motions for EOIR, however, does not require a fee in from 1986 to 2019, the proposed fee which EOIR levies a fee. If fees had been every circumstance when a party files increases would represent compound collected for each of those filings at the one of the affected forms or motions. annual growth rates ranging from 0.82 current fee levels, EOIR would have Instead, there are certain circumstances percent to 6.84 percent. As collected $6.7 million in revenue. If, when the normal filing fee does not demonstrated in the chart above, these instead, the aforementioned FY 2018 apply, and the proposed rule would not increases are marginal in terms of filings had been charged the fees impact immigration judges’ and the inflation-adjusted dollars. While EOIR proposed by this rule, fee revenue for BIA’s discretionary authority to waive a recognizes that the new fees will be that fiscal year would have been fee upon a showing that the filing party more burdensome, fee waivers are still approximately $53.7 million. In sum, is unable to pay. See 8 CFR possible for those who seek them.21

Compound annual growth Form/motion Current fee Proposed fee Percent rate since increase 1986 (percent)

EOIR–40 ...... $100 $305 205 3.33 EOIR–42A ...... 100 305 205 3.33 EOIR–42B ...... 100 360 260 3.84 MTR OCIJ ...... 110 145 32 0.82 EOIR–26 ...... 110 975 886 6.84 EOIR–29 ...... 110 705 641 5.79 EOIR–45 ...... 110 675 614 5.65 MTR BIA ...... 110 895 814 6.56

E. Executive Order 13132: Federalism G. Paperwork Reduction Act List of Subjects This rule will not have substantial This rule does not propose new 8 CFR Part 1003 direct effects on the States, on the ‘‘collection[s] of information’’ as that Administrative practice and relationship between the Federal term is defined under the Paperwork procedure, Aliens, Immigration, Legal Government and the States, or on the Reduction Act of 1995, Public Law 104– Services, Organization and functions distribution of power and 13, 109 Stat. 163 (codified at 44 U.S.C. (Government agencies). responsibilities among the various 3501–3521) (PRA), and its 8 CFR Part 1103 levels of government. Therefore, in implementing regulations, 5 CFR part accordance with section 6 of Executive 1320. There are no substantive changes Administrative practice and Order 13132, it is determined that this to the forms as a result of this procedure, Aliens, Immigration. rule would not have sufficient rulemaking; the only changes being 8 CFR Part 1208 federalism implications to warrant the proposed are revisions to the fee preparation of a federalism summary amounts for the existing forms for Administrative practice and impact statement. which EOIR sets the fees. The procedure, Aliens, Immigration, F. Executive Order 12988: Civil Justice Department will be coordinating Reporting and recordkeeping Reform separately regarding updates to the requirements. existing forms under the PRA. 8 CFR Part 1216 This rule meets the applicable standards set forth in sections 3(a) and Administrative practice and 3(b)(2) of Executive Order 12988. procedure, Aliens.

19 Data documenting the FY 2018 filings were historical-cpi-u-201901.pdf (last accessed August 5, the case is before the immigration court, aliens may obtained from the EOIR Database (EOIRDB) on 2019). file a fee waiver request via motion that August 7, 2019. 21 Aliens can request fee waivers by filing Form substantiates the filing party’s inability to pay the 20 This calculation was made by applying the EOIR–26A with the BIA. The form requires the fee. If such motion is not granted, the filing will not alien’s signature and reporting of assets and be deemed properly filed. 8 CFR 1003.24(d). While consumer price index from 1986 (109.6) to the real expenses, all of which the BIA will evaluate in its the immigration judge has discretion as to whether dollars calculation as compared to 2019 (252.9). discretion. If the fee waiver request does not to grant the motion, no such grant will occur if the Bureau of Labor Statistics, Historical Consumer support the waiving of the fee, and a payment does underlying application for relief is a DHS form and Price Index for All Urban Consumers, https:// not accompany the filing, the filing will not be DHS regulations prohibit such waiver. 8 CFR www.bls.gov/cpi/tables/supplemental-files/ deemed properly filed. 8 CFR 1003.8(a)(3). When 1103.7(c).

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8 CFR Part 1235 ■ c. Removing the citation ‘‘8 CFR PART 1208—PROCEDURES FOR Administrative practice and 103.7’’ and adding, in its place, the ASYLUM AND WITHHOLDING OF procedure, Aliens, Immigration, words ‘‘8 CFR 103.7 and 8 CFR part REMOVAL 106’’ in paragraph (b)(4)(ii); and Reporting and recordkeeping ■ 6. The authority for part 1208 ■ d. Revising paragraphs (b)(1) and (2), requirements. continues to read as follows: (b)(4)(i), and (d) to read as follows: 8 CFR Part 1240 Authority: 8 U.S.C. 1101, 1103, 1158, 1226, Administrative practice and § 1103.7 Fees. 1252, 1282; Title VII of Public Law 110–229. * * * * * procedure, Aliens. § 1208.7 [Amended] (b) Amounts of Fees—(1) Appeals. For 8 CFR Part 1244 ■ 7. Section 1208.7 is amended by filing an appeal to the Board of removing the citation ‘‘§ 103.7(c)’’ and Administrative practice and Immigration Appeals, when a fee is adding, in its place, the citation ‘‘8 CFR procedure, Immigration. required pursuant to 8 CFR 1003.8, as 106.3’’ in paragraph (c). 8 CFR Part 1245 follows: Aliens, Immigration, Reporting and Form EOIR–26. For filing an appeal from PART 1216—CONDITIONAL BASIS OF recordkeeping requirements. a decision of an immigration judge—$975. LAWFUL PERMANENT RESIDENCE Form EOIR–29. For filing an appeal from STATUS Authority and Issuance a decision of an officer of the Department of ■ Accordingly, for the reasons set forth Homeland Security—$705. 8. The authority for part 1216 Form EOIR–45. For filing an appeal from continues to read as follows: in the preamble, the Attorney General is a decision of an adjudicating official in a proposing to amend title 8, chapter V of practitioner disciplinary case—$675. Authority: 8 U.S.C. 1101, 1103, 1154, 1184, the Code of Federal Regulations as 1186a, 1186b, and 8 CFR part 2. (2) Motions. For filing a motion to follows: § 1216.4 [Amended] reopen or a motion to reconsider, when PART 1003—EXECUTIVE OFFICE FOR a fee is required pursuant to 8 CFR ■ 9. Section 1216.4 is amended by IMMIGRATION REVIEW 1003.8 or 1003.24, as follows: removing the citation ‘‘§ 103.7(b)’’ and adding, in its place, the citation ■ 1. The authority for part 1003 Motion to reopen or motion to reconsider ‘‘§ 106.2’’ in paragraph (a)(1). continues to read as follows: before the immigration court—$145. Motion to reopen or motion to reconsider § 1216.5 [Amended] Authority: 5 U.S.C. 301; 6 U.S.C. 521; 8 before the Board of Immigration Appeals— ■ U.S.C. 1101, 1103, 1154, 1155, 1158, 1182, $895. 10. Section 1216.5 is amended by removing the citation ‘‘§ 103.7(b)’’ and 1226, 1229, 1229a, 1229b, 1229c, 1231, * * * * * 1254a, 1255, 1324d, 1330, 1361, 1362; 28 adding, in its place, the citation U.S.C. 509, 510, 1746; sec. 2 Reorg. Plan No. (4) Applications for Relief—(i) Forms ‘‘§ 106.2’’ in paragraph (b). 2 of 1950; 3 CFR, 1949–1953 Comp., p. 1002; published by the Executive Office for section 203 of Pub. L. 105–100, 111 Stat. Immigration Review. Fees for § 1216.6 [Amended] 2196–200; sections 1506 and 1510 of Pub. L. applications for relief shall be paid in ■ 11. Section 1216.6 is amended by 106–386, 114 Stat. 1527–29, 1531–32; section accordance with 8 CFR 1003.8(b) and removing the citation ‘‘§ 103.7(b)(1)’’ 1505 of Pub. L. 106–554, 114 Stat. 2763A– 1003.24(c) as follows: 326 to –328. and adding, in its place, the citation Form EOIR–40. Application for Suspension ‘‘§ 106.2’’ in paragraph (a)(1). § 1003.8 [Amended] of Deportation—$305. ■ 2. Section 1003.8 is amended by Form EOIR–42A. Application for PART 1235—INSPECTION OF removing the citation ‘‘8 CFR 103.7(a)’’ Cancellation of Removal for Certain PERSONS APPLYING FOR ADMISSION Permanent Residents—$305. and adding, in its place, the citation ■ 12. The authority for part 1235 ‘‘§ 1103.7(b)’’ in paragraph (a)(4)(ii). Form EOIR–42B. Application for Cancellation of Removal and Adjustment of continues to read as follows: § 1003.24 [Amended] Status for Certain Nonpermanent Residents— Authority: 8 U.S.C. 1101 and note, 1103, ■ 3. Section 1003.24 is amended by $360. 1183, 1185 (pursuant to E.O. 13323, 69 FR 241, 3 CFR, 2003 Comp., p. 278), 1201, 1224, removing the citation ‘‘8 CFR 103.7’’ (ii) Forms published by the and adding, in its place, the words ‘‘8 1225, 1226, 1228, 1365a note, 1379, 1731–32; Department of Homeland Security. The Title VII of Public Law 110–229; 8 U.S.C. CFR 103.7 and 8 CFR part 106’’ in fees for applications published by the 1185 note (section 7209 of Pub. L. 108–458). paragraphs (a) and (c). Department of Homeland Security and used in immigration proceedings are § 1235.1 [Amended] PART 1103—APPEALS, RECORDS, governed by 8 CFR 106.2. Consistent ■ 13. Section 1235.1 is amended by: AND FEES with 8 CFR 106.2, no fee shall apply to ■ a. Removing the citation ■ 4. The authority for part 1103 a Form I–589 filed with an immigration ‘‘§ 103.7(b)(1)’’ and adding, in its place, continues to read as follows: judge for the sole purpose of seeking the citation ‘‘§ 103.7(d)’’ in paragraphs Authority: 8 U.S.C. 1101, 1103, 1304, 1356; withholding of removal under section (e)(1)(iii) and (e)(2); and 31 U.S.C. 9701; 28 U.S.C. 509, 510. 241(b)(3) of the Act or protection under ■ b. Removing the citation ■ the Convention Against Torture ‘‘§ 103.7(b)(1)’’ and adding, in its place, 5. Section 1103.7 is amended by: regulations. the citation ‘‘§ 103.7(d)’’ in paragraph ■ a. Removing the citation ‘‘8 CFR (f)(1). 103.7(a)(1)’’ and adding, in its place, the * * * * * citation ‘‘8 CFR 103.7(a)’’ in paragraph (d) Requests for records under the PART 1240—PROCEEDINGS TO (a)(3); Freedom of Information Act. Fees for DETERMINE REMOVABILITY OF ■ b. Removing the citation ‘‘8 CFR production or disclosure of records ALIENS IN THE UNITED STATES 103.7(a)(2)’’ and adding, in its place, the under 5 U.S.C. 552 may be waived or words ‘‘8 CFR 103.7(c) and 8 CFR reduced in accordance with 28 CFR ■ 14. The authority for part 1240 106.1’’ in paragraph (a)(3); 16.10. continues to read as follows:

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Authority: 8 U.S.C. 1103, 1158, 1182, § 1245.13 [Amended] DEPARTMENT OF TRANSPORTATION 1186a, 1186b, 1225, 1226, 1227, 1228, 1229a, ■ 1229b, 1229c, 1252 note, 1361, 1362; secs. 23. Section 1245.13 is amended by: Federal Aviation Administration 202 and 203, Pub. L. 105–100 (111 Stat. 2160, ■ a. Removing the citation 2193); sec. 902, Pub. L. 105–277 (112 Stat. ‘‘§ 103.7(b)(1)’’ and adding, in its place, 14 CFR Part 39 2681). the citation ‘‘§ 106.2’’ in paragraph [Docket No. FAA–2020–0102; Product § 1240.11 [Amended] (e)(1); Identifier 2019–NM–184–AD] ■ 15. Section 1240.11 is amended by: ■ b. Removing the citation RIN 2120–AA64 ■ a. Removing the words ‘‘§ 103.7(b)(1) ‘‘§ 103.7(b)(1)’’ and adding, in its place, of 8 CFR chapter I’’ and adding, in their the citation ‘‘§ 103.7(a)(2)’’ in paragraph Airworthiness Directives; ATR—GIE place, the words ‘‘§ 1103.7(b)(1) of this (e)(2); and Avions de Transport Re´gional chapter’’ in paragraph (f); and ■ Airplanes ■ b. Removing the citation ‘‘8 CFR c. Removing the citation 103.7(b)(1)’’ and adding, in its place, the ‘‘§ 103.7(b)(1)’’ and adding, in its place, AGENCY: Federal Aviation words ‘‘§ 1103.7(b)(4) of this chapter’’ in the citation ‘‘§ 106.2’’ in paragraphs (g), Administration (FAA), DOT. (j)(1), and (k)(1). paragraph (f). ACTION: Notice of proposed rulemaking § 1240.20 [Amended] § 1245.15 [Amended] (NPRM). ■ 16. Section 1240.20 is amended by ■ 24. Section 1245.15 is amended by: SUMMARY: The FAA proposes to removing the words ‘‘§ 103.7(b) of 8 CFR ■ a. Removing the words ‘‘§ 103.7(b)(1) supersede Airworthiness Directive (AD) chapter I’’ and adding, in their place, 2000–17–09, AD 2008–04–19 R1, and the words ‘‘§ 1103.7(b) of this chapter’’ of this chapter’’ and adding, in their place, the citation ‘‘8 CFR 106.2’’ in AD 2015–26–09; and to terminate all in paragraph (a). requirements of AD 2018–18–05, which paragraph (c)(2)(iv)(A); PART 1244—TEMPORARY applies to ATR—GIE Avions de ■ b. Removing the citation ‘‘§ 103.7(c)’’ Transport Re´gional Model ATR42–200, PROTECTED STATUS FOR and adding, in its place, the citation NATIONALS OF DESIGNATED STATES –300, and –320 airplanes. AD 2018–18– ‘‘§ 106.3’’ in paragraph (c)(2)(iv)(B); 05 requires updating the maintenance or ■ 17. The authority for part 1244 ■ c. Removing the citation inspection program, as applicable, to continues to read as follows: ‘‘§ 103.7(b)(1)’’ and adding, in its place, incorporate new or more restrictive Authority: 8 U.S.C. 1103, 1254, 1254a note, the citation ‘‘§ 106.2’’ in paragraph maintenance requirements and 8 CFR part 2. (h)(1); airworthiness limitations and terminates the relevant requirements of AD 2000– ■ § 1244.6 [Amended] d. Removing the citation 17–09, AD 2008–04–19 R1, and AD ■ 18. Section 1244.6 is amended by ‘‘§ 103.7(b)(1)’’ and adding, in its place, 2015–26–09. Since AD 2018–18–05 was removing the words ‘‘§ 103.7 of this the citation ‘‘§ 103.2(a)(2)’’ in paragraph issued, the FAA has determined that chapter’’ and adding, in their place, the (h)(2); and new or more restrictive airworthiness citation ‘‘8 CFR 106.2’’. ■ e. Removing the citation limitations are necessary. This proposed AD would require revising the existing § 1244.20 [Amended] ‘‘§ 103.7(b)(1)’’ and adding, in its place, the citation ‘‘§ 106.2’’ in paragraphs maintenance or inspection program, as ■ 19. Section 1244.20 is amended by (n)(1), and (t)(1). applicable, to incorporate new or more removing the citation ‘‘8 CFR 103.7(b)’’ restrictive airworthiness limitations, as and adding, in its place, the citation ‘‘8 § 1245.20 [Amended] specified in a European Union Aviation CFR 106.2’’ in paragraph (a). ■ 25. Section 1245.20 is amended by Safety Agency (EASA) AD, which will PART 1245—ADJUSTMENT OF removing the citation ‘‘§ 103.7(b)(1)’’ be incorporated by reference. The FAA is proposing this AD to address the STATUS TO THAT OF PERSON and adding, in its place, the citation unsafe condition on these products. ADMITTED FOR PERMANENT ‘‘§ 106.2’’ in paragraphs (d)(1), (f), and RESIDENCE (g). DATES: The FAA must receive comments on this proposed AD by April 13, 2020. ■ 20. The authority for part 1245 § 1245.21 [Amended] ADDRESSES: You may send comments, continues to read as follows: ■ 26. Section 1245.21 is amended by: using the procedures found in 14 CFR Authority: 8 U.S.C. 1101, 1103, 1182, 1255; 11.43 and 11.45, by any of the following section 202, Public Law 105–100, 111 Stat. ■ a. Removing the words ‘‘§ 103.7(b)(1) methods: 2160, 2193; section 902, Public Law 105–277, of this chapter’’ and adding, in their • Federal eRulemaking Portal: Go to 112 Stat. 2681; Title VII of Public Law 110– place, the citation ‘‘8 CFR 106.2’’ in https://www.regulations.gov. Follow the 229. paragraph (b)(2); and instructions for submitting comments. § 1245.7 [Amended] ■ b. Removing the citation ‘‘8 CFR • Fax: 202–493–2251. • ■ 21. Section 1245.7 is amended by 103.7(b)(1)’’ and adding, in its place, the Mail: U.S. Department of removing the words ‘‘§ 103.7 of this citation ‘‘8 CFR 106.2’’ in paragraphs (h) Transportation, Docket Operations, M– chapter’’ and adding, in their place, the and (i). 30, West Building Ground Floor, Room words ‘‘8 CFR 103.7 and 8 CFR 103.17’’ W12–140, 1200 New Jersey Avenue SE, Dated: February 19, 2020. in paragraph (a). Washington, DC 20590. William P. Barr, • Hand Delivery: U.S. Department of § 1245.10 [Amended] Attorney General. Transportation, Docket Operations, M– ■ 22. Section 1245.10 is amended by [FR Doc. 2020–03784 Filed 2–27–20; 8:45 am] 30, West Building Ground Floor, Room removing the words ‘‘§ 103.7(b)(1) of BILLING CODE 4410–30–P W12–140, 1200 New Jersey Avenue SE, this chapter’’ and adding, in their place, Washington, DC 20590, between 9 a.m. the citation ‘‘8 CFR 106.2’’ in paragraph and 5 p.m., Monday through Friday, (c). except Federal holidays.

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For the material identified in this Discussion MCAI’’), to correct an unsafe condition proposed AD that will be incorporated The FAA issued AD 2018–18–05, for all ATR—GIE Avions de Transport by reference (IBR), contact the EASA, Amendment 39–19384 (83 FR 44463, Re´gional Model ATR42–200, –300, and Konrad-Adenauer-Ufer 3, 50668 August 31, 2018) (‘‘AD 2018–18–05’’), –320 airplanes. EASA AD 2019–0256 Cologne, Germany; telephone +49 221 which applies to ATR—GIE Avions de supersedes EASA AD 2017–0221R1 89990 1000; email [email protected]; Transport Re´gional Model ATR42–200, (which corresponds to FAA AD 2018– internet www.easa.europa.eu. You may –300, and –320 airplanes. 18–05). find this IBR material on the EASA AD 2018–18–05 requires updating the This proposed AD was prompted by website at https://ad.easa.europa.eu. maintenance or inspection program, as a determination that new or more You may view this IBR material at the applicable, to incorporate new or more restrictive airworthiness limitations are FAA, Transport Standards Branch, 2200 restrictive maintenance requirements necessary. The FAA is proposing this South 216th St., Des Moines, WA. For and airworthiness limitations. The FAA AD to address reduced structural information on the availability of this issued AD 2018–18–05 to address integrity of the airplane. See the MCAI material at the FAA, call 206–231–3195. reduced structural integrity of the for additional background information. It is also available in the AD docket on airplane. Relationship Between Proposed AD and the internet at https:// AD 2018–18–05 specifies that AD 2018–18–05 www.regulations.gov by searching for accomplishing the revision required by This NPRM does not propose to and locating Docket No. FAA–2020– paragraph (g) of that AD terminates all 0102. supersede AD 2018–18–05. Rather, we requirements of AD 2000–17–09, have determined that it is more Examining the AD Docket Amendment 39–11883 (65 FR 53897, appropriate to address the changes in September 6, 2000); AD 2008–04–19 R1, You may examine the AD docket on the MCAI by proposing to require Amendment 39–16069 (74 FR 56713, revising the existing maintenance or the internet at https:// November 3, 2009) (‘‘AD 2008–04–19 www.regulations.gov by searching for inspection program, as applicable, to R1’’); and AD 2015–26–09, Amendment incorporate new or more restrictive and locating Docket No. FAA–2020– 39–18357 (81 FR 1483, January 13, 0102; or in person at Docket Operations airworthiness limitations. 2016) (‘‘AD 2015–26–09’’); for ATR— Accomplishment of the proposed between 9 a.m. and 5 p.m., Monday GIE Avions de Transport Re´gional through Friday, except Federal holidays. actions would then terminate all of the Model ATR42–200, –300, and –320 requirements of AD 2018–18–05. The AD docket contains this NPRM, the airplanes only. regulatory evaluation, any comments AD 2008–04–19 R1 also applies to Related IBR Material Under 1 CFR Part received, and other information. The ATR—GIE Avions de Transport 51 street address for Docket Operations is Re´gional Model ATR42–500 airplanes EASA AD 2019–0256 describes new listed above. Comments will be and Model ATR72 airplanes. The and more restrictive airworthiness available in the AD docket shortly after actions required by AD 2018–20–14, limitations for airplane structure and receipt. Amendment 39–19448 (83 FR 52123, systems. FOR FURTHER INFORMATION CONTACT: October 16, 2018) (‘‘AD 2018–20–14’’) This material is reasonably available Shahram Daneshmandi, Aerospace terminate all requirements of AD 2008– because the interested parties have Engineer, International Section, 14–19 R1 for Model ATR42–500 access to it through their normal course Transport Standards Branch, FAA, 2200 airplanes. The actions required by AD of business or by the means identified South 216th St., Des Moines, WA 98198; 2019–13–04, Amendment 39–19677 (84 in the ADDRESSES section. telephone and fax 206–231–3220; email FR 35028, July 22, 2019) terminate all FAA’s Determination and Requirements [email protected]. requirements of AD 2008–04–19 R1 for Model ATR72 airplanes. of This Proposed AD SUPPLEMENTARY INFORMATION: AD 2015–26–09 also applies to ATR— This product has been approved by Comments Invited GIE Avions de Transport Re´gional the aviation authority of another Model ATR42–500 airplanes. The country, and is approved for operation The FAA invites you to send any actions required by AD 2018–20–14 in the United States. Pursuant to a written relevant data, views, or terminate all requirements of AD 2015– bilateral agreement with the State of arguments about this proposal. Send 26–09 for Model ATR42–500 airplanes. Design Authority, the FAA has been your comments to an address listed This AD therefore proposes to notified of the unsafe condition under the ADDRESSES section. Include supersede AD 2000–17–09, AD 2008– described in the MCAI referenced ‘‘Docket No. FAA–2020–0102; Product 04–19 R1, and AD 2015–26–09; and to above. The FAA is proposing this AD Identifier 2019–NM–184–AD’’ at the terminate all requirements of AD 2018– because the agency evaluated all beginning of your comments. The FAA 18–05. pertinent information and determined specifically invites comments on the an unsafe condition exists and is likely Actions Since AD 2018–18–05 Was overall regulatory, economic, to exist or develop on other products of Issued environmental, and energy aspects of the same type design. this NPRM. The FAA will consider all Since AD 2018–18–05 was issued, the comments received by the closing date FAA has determined that new or more Proposed AD Requirements and may amend this NPRM based on restrictive airworthiness limitations are This proposed AD would require those comments. necessary. revising the existing maintenance or The FAA will post all comments The EASA, which is the Technical inspection program, as applicable, to received, without change, to https:// Agent for the Member States of the incorporate new or more restrictive www.regulations.gov, including any European Union, has issued EASA AD airworthiness limitations, which are personal information you provide. The 2019–0256, dated October 17, 2019 specified in EASA AD 2019–0256 FAA will also post a report (‘‘EASA AD 2019–0256’’) (also referred described previously, as incorporated by summarizing each substantive verbal to as the Mandatory Continuing reference. Any differences with EASA contact received about this NPRM. Airworthiness Information, or ‘‘the AD 2019–0256 are identified as

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exceptions in the regulatory text of this the FAA AD). However, the FAA is now procedures the Administrator finds AD. expanding the process to include MCAI necessary for safety in air commerce. This proposed AD would require ADs that specify the incorporation of This regulation is within the scope of revisions to certain operator airworthiness limitation documents. that authority because it addresses an maintenance documents to include new The previous format of the unsafe condition that is likely to exist or actions (e.g., inspections). Compliance airworthiness limitation ADs included a develop on products identified in this with these actions is required by 14 CFR paragraph that specified that no rulemaking action. 91.403(c). For airplanes that have been alternative actions (e.g., inspections), previously modified, altered, or repaired intervals, or critical design Regulatory Findings in the areas addressed by this proposed configuration control limitations The FAA has determined that this AD, the operator may not be able to (CDCCLs) may be used unless the proposed AD would not have federalism accomplish the actions described in the actions, intervals, and CDCCLs are implications under Executive Order revisions. In this situation, to comply approved as an alternative method of 13132. This proposed AD would not with 14 CFR 91.403(c), the operator compliance (AMOC) in accordance with have a substantial direct effect on the must request approval for an alternative the procedures specified in the AMOCs States, on the relationship between the method of compliance according to paragraph under ‘‘Other FAA national Government and the States, or paragraph (k)(1) of this proposed AD. Provisions.’’ This new format includes a on the distribution of power and Explanation of Required Compliance ‘‘New Provisions for Alternative responsibilities among the various Information Actions, Intervals, and CDCCLs’’ levels of government. paragraph that does not specifically For the reasons discussed above, I In the FAA’s ongoing efforts to refer to AMOCs, but operators may still certify this proposed regulation: improve the efficiency of the AD request an AMOC to use an alternative (1) Is not a ‘‘significant regulatory process, the FAA initially worked with action, interval, or CDCCL. action’’ under Executive Order 12866, Airbus and EASA to develop a process (2) Will not affect intrastate aviation to use certain EASA ADs as the primary Costs of Compliance in Alaska, and source of information for compliance The FAA estimates that this proposed (3) Will not have a significant with requirements for corresponding AD affects 33 airplanes of U.S. registry. economic impact, positive or negative, FAA ADs. The FAA has since The FAA estimates the following costs on a substantial number of small entities coordinated with other manufacturers to comply with this proposed AD: under the criteria of the Regulatory and civil aviation authorities (CAAs) to The FAA estimates the total cost per Flexibility Act. use this process. As a result, EASA AD operator for the retained actions from 2019–0256 will be incorporated by AD 2018–18–05 to be $7,650 (90 work- List of Subjects in 14 CFR Part 39 reference in the FAA final rule. This hours × $85 per work-hour). Air transportation, Aircraft, Aviation proposed AD would, therefore, require The FAA has determined that revising safety, Incorporation by reference, compliance with EASA AD 2019–0256 the maintenance or inspection program Safety. in its entirety, through that takes an average of 90 work-hours per The Proposed Amendment incorporation, except for any differences operator, although the agency identified as exceptions in the recognizes that this number may vary Accordingly, under the authority regulatory text of this proposed AD. from operator to operator. In the past, delegated to me by the Administrator, Using common terms that are the same the agency has estimated that this action the FAA proposes to amend 14 CFR part as the heading of a particular section in takes 1 work-hour per airplane. Since 39 as follows: the EASA AD does not mean that operators incorporate maintenance or operators need comply only with that inspection program changes for their PART 39—AIRWORTHINESS section. For example, where the AD affected fleet(s), the FAA has DIRECTIVES requirement refers to ‘‘all required determined that a per-operator estimate ■ 1. The authority citation for part 39 actions and compliance times,’’ is more accurate than a per-airplane continues to read as follows: compliance with this AD requirement is estimate. not limited to the section titled The FAA estimates the total cost per Authority: 49 U.S.C. 106(g), 40113, 44701. ‘‘Required Action(s) and Compliance operator for the new proposed actions to § 39.13 [Amended] Time(s)’’ in the EASA AD. be $7,650 (90 work-hours × $85 per ■ Service information specified in work-hour). 2. The FAA amends § 39.13 by EASA AD 2019–0256 that is required for removing Airworthiness Directive (AD) compliance with EASA AD 2019–0256 Authority for This Rulemaking 2000–17–09, Amendment 39–11883 (65 will be available on the internet at Title 49 of the United States Code FR 53897, September 6, 2000); AD https://www.regulations.gov by specifies the FAA’s authority to issue 2008–04–19 R1, Amendment 39–16069 searching for and locating Docket No. rules on aviation safety. Subtitle I, (74 FR 56713, November 3, 2009); and FAA–2020–0102 after the FAA final section 106, describes the authority of AD 2015–26–09, Amendment 39–18357 rule is published. the FAA Administrator. Subtitle VII: (81 FR 1483, January 13, 2016); and Aviation Programs, describes in more adding the following new AD: Airworthiness Limitation ADs Using detail the scope of the Agency’s ATR—GIE Avions de Transport Re´gional: the New Process authority. Docket No. FAA–2020–0102; Product The FAA’s new process, which uses The FAA is issuing this rulemaking Identifier 2019–NM–184–AD. MCAI ADs as the primary source of under the authority described in (a) Comments Due Date information for compliance with Subtitle VII, Part A, Subpart III, Section corresponding FAA ADs, has been 44701: ‘‘General requirements.’’ Under The FAA must receive comments by April 13, 2020. limited to certain MCAI ADs (primarily that section, Congress charges the FAA those with service bulletins as the with promoting safe flight of civil (b) Affected ADs primary source of information for aircraft in air commerce by prescribing (1) This AD replaces the ADs identified in accomplishing the actions required by regulations for practices, methods, and paragraphs (b)(1)(i) through (iii) of this AD.

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(i) AD 2000–17–09, Amendment 39–11883 paragraph (g) of this AD, no alternative on the internet at https:// (65 FR 53897, September 6, 2000). actions (e.g., inspections), intervals, and www.regulations.gov by searching for and (ii) AD 2008–04–19 R1, Amendment 39– CDCCLs are allowed except as specified in locating Docket No. FAA–2020–0102. 16069 (74 FR 56713, November 3, 2009). the provisions of the ‘‘Ref. Publications’’ (2) For more information about this AD, (iii) AD 2015–26–09, Amendment 39– section of EASA AD 2019–0256. contact Shahram Daneshmandi, Aerospace 18357 (81 FR 1483, January 13, 2016). Engineer, International Section, Transport (j) Terminating Action for AD 2018–18–05 (2) This AD affects AD 2018–18–05, Standards Branch, FAA, 2200 South 216th Amendment 39–19384 (83 FR 44463, August Accomplishing the maintenance or St., Des Moines, WA 98198; telephone and 31, 2018) (‘‘AD 2018–18–05’’). inspection program revision required by fax 206–231–3220; email paragraph (g) of this AD terminates the [email protected]. (c) Applicability requirements of AD 2018–18–05. This AD applies to all ATR—GIE Avions Issued on February 18, 2020. (k) Other FAA AD Provisions de Transport Re´gional Model ATR42–200, Gaetano A. Sciortino, –300, and –320 airplanes, certificated in any The following provisions also apply to this Deputy Director for Strategic Initiatives, category. AD: Compliance & Airworthiness Division, (1) Alternative Methods of Compliance Aircraft Certification Service. (d) Subject (AMOCs): The Manager, International [FR Doc. 2020–03547 Filed 2–27–20; 8:45 am] Air Transport Association (ATA) of Section, Transport Standards Branch, FAA, America Code 05, Time Limits/Maintenance has the authority to approve AMOCs for this BILLING CODE 4910–13–P Checks. AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR (e) Reason 39.19, send your request to your principal DEPARTMENT OF TRANSPORTATION This AD was prompted by a determination inspector or local Flight Standards District that new or more restrictive airworthiness Office, as appropriate. If sending information Federal Aviation Administration limitations are necessary. The FAA is issuing directly to the International Section, send it this AD to address reduced structural to the attention of the person identified in 14 CFR Part 39 integrity of the airplane. paragraph (l)(2) of this AD. Information may be emailed to: 9-ANM-116-AMOC- (f) Compliance [Docket No. FAA–2019–1099; Product [email protected]. Before using any Identifier 2018–SW–026–AD] Comply with this AD within the approved AMOC, notify your appropriate compliance times specified, unless already principal inspector, or lacking a principal RIN 2120–AA64 done. inspector, the manager of the local flight standards district office/certificate holding (g) Maintenance or Inspection Program Airworthiness Directives; Airbus district office. Revision Helicopters (2) Contacting the Manufacturer: For any Except as specified in paragraph (h) of this requirement in this AD to obtain instructions AGENCY: Federal Aviation AD: Comply with all required actions and from a manufacturer, the instructions must Administration (FAA), DOT. compliance times specified in, and in be accomplished using a method approved accordance with, European Union Aviation by the Manager, International Section, ACTION: Notice of proposed rulemaking Safety Agency (EASA) AD 2019–0256, dated Transport Standards Branch, FAA; or EASA; (NPRM). October 17, 2019 (‘‘EASA AD 2019–0256’’). or ATR—GIE Avions de Transport Re´gional’s SUMMARY: The FAA proposes to adopt a (h) Exceptions to EASA AD 2019–0256 EASA Design Organization Approval (DOA). If approved by the DOA, the approval must new airworthiness directive (AD) for (1) The requirements specified in include the DOA-authorized signature. Airbus Helicopters Model EC 155B and paragraphs (1) and (3) of EASA AD 2019– (3) Required for Compliance (RC): For any EC155B1 helicopters. This proposed AD 0256 do not apply to this AD. service information referenced in EASA AD would require modifying the wiring of (2) Where paragraph (2) of EASA AD 2019– 2019–0256 that contains RC procedures and the attitude and heading reference 0256 refers to its effective date, this AD tests: Except as required by paragraph (k)(2) requires using the effective date of this AD. system (AHRS) connector. This of this AD, RC procedures and tests must be proposed AD is prompted by a report of (3) Paragraph (4) of EASA AD 2019–0256 done to comply with this AD; any procedures specifies revising ‘‘the approved AMP’’ or tests that are not identified as RC are wiring of the AHRS contrary to within 12 months after its effective date, but recommended. Those procedures and tests approved design specifications. The this AD requires revising the existing that are not identified as RC may be deviated actions of this proposed AD are maintenance or inspection program, as from using accepted methods in accordance intended to address an unsafe condition applicable to incorporate the ‘‘limitations, with the operator’s maintenance or on these products. tasks and associated thresholds and inspection program without obtaining DATES: The FAA must receive comments intervals’’ specified in paragraph (4) of EASA approval of an AMOC, provided the AD 2019–0256 within 90 days after the procedures and tests identified as RC can be on this proposed AD by April 28, 2020. effective date of this AD. done and the airplane can be put back in an ADDRESSES: You may send comments by (4) The initial compliance time for doing airworthy condition. Any substitutions or any of the following methods: the tasks specified in paragraph (4) of EASA changes to procedures or tests identified as • Federal eRulemaking Docket: Go to AD 2019–0256 is at the applicable RC require approval of an AMOC. https://www.regulations.gov. Follow the ‘‘associated thresholds’’ specified in paragraph (4) of EASA AD 2019–0256, or (l) Related Information online instructions for sending your within 90 days after the effective date of this (1) For information about EASA AD 2019– comments electronically. AD, whichever occurs later. 0256, contact the EASA, Konrad-Adenauer- • Fax: 202–493–2251. (5) The provisions specified in paragraphs Ufer 3, 50668 Cologne, Germany; telephone • Mail: Send comments to the U.S. (5) and (6) of EASA AD 2019–0256 do not +49 221 89990 6017; email ADs@ Department of Transportation, Docket apply to this AD. easa.europa.eu; internet Operations, M–30, West Building (6) The ‘‘Remarks’’ section of EASA AD www.easa.europa.eu. You may find this Ground Floor, Room W12–140, 1200 2019–0256 does not apply to this AD. EASA AD on the EASA website at https:// New Jersey Avenue SE, Washington, DC ad.easa.europa.eu. You may view this (i) Provisions for Alternative Actions, 20590–0001. material at the FAA, Transport Standards • Intervals, and Critical Design Configuration Branch, 2200 South 216th St., Des Moines, Hand Delivery: Deliver to the Control Limitations (CDCCLs) WA. For information on the availability of ‘‘Mail’’ address between 9 a.m. and 5 After the maintenance or inspection this material at the FAA, call 206–231–3195. p.m., Monday through Friday, except program has been revised as required by This material may be found in the AD docket Federal holidays.

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Examining the AD Docket this proposal in light of the comments Revision 0, dated February 19, 2018. You may examine the AD docket on received. This service information specifies installing MOD 0722B51 by modifying the internet at https:// Discussion www.regulations.gov by searching for the wiring of connector 11 ALPHA to EASA, which is the Technical Agent and locating Docket No. FAA–2019– separate the flight/ground information for the Member States of the European 1099; or in person at Docket Operations so the left-hand landing gear flight Union, has issued EASA AD No. 2018– between 9 a.m. and 5 p.m., Monday information is also used by the 0069, dated March 26, 2018 (EASA AD through Friday, except Federal holidays. automatic pilot system as well as but 2018–0069), to correct an unsafe The AD docket contains this proposed separately from the right-hand landing condition for Airbus Helicopters Model AD, the European Aviation Safety gear flight information. This service EC 155 B and EC 155 B1 helicopters. Agency (EASA) AD, any comments information also specifies re-allocating EASA advises that the AHRS1 and received, and other information. The the electronic board output connections AHRS2 on Model EC 155-series street address for Docket Operations is by modifying the wiring of connector 11 listed above. Comments will be helicopters use the same flight/ground ALPHA. available in the AD docket shortly after signal contrary to the approved design This service information is reasonably receipt. specification, which requires the available because the interested parties For service information identified in AHRS1 and AHRS2 to use independent have access to it through their normal this proposed rule, contact Airbus signals to ensure redundancy. EASA course of business or by the means Helicopters, 2701 N. Forum Drive, states that if AHRS1 and AHRS2 both identified in the ADDRESSES section. Grand Prairie, TX 75052; telephone receive an incorrect ‘‘ground’’ status due Other Related Service Information 972–641–0000 or 800–232–0323; fax to a single failure while in flight, it will 972–641–3775; or at https:// generate an error in the computation of The FAA also reviewed Airbus www.airbus.com/helicopters/services/ the attitude and vertical speed and, as Helicopters ASB No. EC155–34A033, technical-support.html. You may review a result, an incorrect display of these Revision 0, dated July 19, 2017, and the referenced service information at the indications to the flight crew. EASA Airbus Helicopters ASB No. EC155– FAA, Office of the Regional Counsel, advises that this condition, if not 34A033, Revision 1, dated October 9, Southwest Region, 10101 Hillwood corrected, could lead to erroneous 2017. Revisions 0 and 1 of this service Pkwy, Room 6N–321, Fort Worth, TX attitude and vertical speed indications, information contain the same 76177. resulting in increased workload for the procedures for modifying the wiring as flight crew and reduced control of the Revision 2. However, Revision 1 FOR FURTHER INFORMATION CONTACT: helicopter during flight in instrument George Schwab, Aviation Safety clarifies the applicable helicopter meteorological conditions (IMC). configurations and updates the post- Engineer, Safety Management Section, Accordingly, EASA AD 2018–0069 Rotorcraft Standards Branch, FAA, modification testing procedures, and requires modifying the connection of Revision 2 clarifies the post- 10101 Hillwood Pkwy., Fort Worth, TX connector 11 ALPHA, and based on the 76177; telephone 817–222–5110; email modification test procedures and helicopter configuration, also modifying updates a figure. [email protected]. the wiring to connector 11 ALPHA. SUPPLEMENTARY INFORMATION: Proposed AD Requirements FAA’s Determination Comments Invited These helicopters have been approved This proposed AD would require, The FAA invites you to participate in by EASA and are approved for operation before further flight in IMC or within this rulemaking by submitting written in the United States. Pursuant to the 660 hours time-in-service (TIS), comments, data, or views. The FAA also FAA’s bilateral agreement with the whichever occurs first, modifying the invites comments relating to the European Union, EASA has notified the wiring at connector 11 ALPHA based on economic, environmental, energy, or FAA about the unsafe condition the helicopter configuration and in federalism impacts that might result described in its AD. The FAA is accordance with specified portions of from adopting the proposals in this proposing this AD after evaluating all the applicable ASB. document. The most helpful comments known relevant information and Differences Between This Proposed AD reference a specific portion of the determining that an unsafe condition is and the EASA AD proposal, explain the reason for any likely to exist or develop on other recommended change, and include helicopters of the same type designs. The compliance time for the EASA supporting data. To ensure the docket AD is within 7 or 12 months depending does not contain duplicate comments, Related Service Information Under 1 on helicopter configuration. The commenters should send only one copy CFR Part 51 compliance time for this proposed AD of written comments, or if comments are The FAA reviewed Airbus Helicopters would be before further flight in IMC or filed electronically, commenters should Alert Service Bulletin (ASB) No. EC155– within 660 hours TIS, whichever occurs submit only one time. 34A033, Revision 2, dated January 30, first. The FAA will file in the docket all 2018. This service information specifies Costs of Compliance comments received, as well as a report re-allocating the electronic board output summarizing each substantive public connections by modifying the wiring of The FAA estimates that this proposed contact with FAA personnel concerning connector 11 ALPHA for helicopters AD affects 17 helicopters of U.S. this proposed rulemaking. Before acting with modification (MOD) 0722B51 Registry. The FAA estimates that on this proposal, the FAA will consider installed and modifying the wiring to operators may incur the following costs all comments received on or before the connector 11 ALPHA for those in order to comply with this proposed closing date for comments. The FAA helicopters that also have a combined AD. Labor costs are estimated at $85 per will consider comments filed after the voice and flight data recording system work-hour. comment period has closed if it is (MOD 0731B89) installed. Modifying the wiring would take possible to do so without incurring The FAA also reviewed Airbus about 4 work-hours and parts would expense or delay. The FAA may change Helicopters ASB No. EC155–34A037, cost about $20 for an estimated cost of

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$360 per helicopter and $6,120 for the § 39.13 [Amended] operating any aircraft complying with this U.S. fleet. ■ 2. The FAA amends § 39.13 by adding AD through an AMOC. the following new airworthiness Authority for This Rulemaking (h) Additional Information directive (AD): (1) Airbus Helicopters Alert Service Title 49 of the United States Code Airbus Helicopters: Docket No. FAA–2019– Bulletin (ASB) No. EC155–34A033, Revision specifies the FAA’s authority to issue 1099; Product Identifier 2018–SW–026– 0, dated July 19, 2017, and Airbus rules on aviation safety. Subtitle I, AD. Helicopters ASB No. EC155–34A033, section 106, describes the authority of Revision 1, dated October 9, 2017, which are (a) Applicability the FAA Administrator. Subtitle VII: not incorporated by reference, contain Aviation Programs, describes in more This AD applies to Airbus Helicopters additional information about the subject of detail the scope of the Agency’s Model EC 155B and EC155B1 helicopters, this AD. For service information identified in certificated in any category. this AD, contact Airbus Helicopters, 2701 N. authority. Forum Drive, Grand Prairie, TX 75052; (b) Unsafe Condition The FAA is issuing this rulemaking telephone 972–641–0000 or 800–232–0323; under the authority described in This AD defines the unsafe condition as fax 972–641–3775; or at https:// Subtitle VII, Part A, Subpart III, Section incorrect wiring of an attitude and heading www.airbus.com/helicopters/services/ 44701: General requirements. Under reference system (AHRS). This condition technical-support.html. You may review the that section, Congress charges the FAA could result in the display of misleading referenced service information at the FAA, with promoting safe flight of civil attitude and vertical speed information, and Office of the Regional Counsel, Southwest subsequent loss of control of the helicopter aircraft in air commerce by prescribing Region, 10101 Hillwood Pkwy, Room 6N– in instrument meteorological conditions 321, Fort Worth, TX 76177. regulations for practices, methods, and (IMC). (2) The subject of this AD is addressed in procedures the Administrator finds (c) Comments Due Date European Aviation Safety Agency (EASA) AD necessary for safety in air commerce. No. 2018–0069, dated March 26, 2018. You This regulation is within the scope of The FAA must receive comments by April may view the EASA AD on the internet at that authority because it addresses an 28, 2020. https://www.regulations.gov in the AD unsafe condition that is likely to exist or (d) Compliance Docket. develop on products identified in this You are responsible for performing each (i) Subject rulemaking action. action required by this AD within the Joint Aircraft Service Component (JASC) Regulatory Findings specified compliance time unless it has Code: 3420, Attitude and Direction Data already been accomplished prior to that time. System. The FAA determined that this (e) Required Actions Issued in Fort Worth, Texas, on February proposed AD would not have federalism 14, 2020. implications under Executive Order Before further flight in IMC or within 660 hours time-in-service, whichever occurs first: Lance T. Gant, 13132. This proposed AD would not (1) For helicopters with wiring change have a substantial direct effect on the Director, Compliance & Airworthiness modification (MOD) 0722B51 installed, Division, Aircraft Certification Service. States, on the relationship between the modify the wiring of connector 11 ALPHA as [FR Doc. 2020–04043 Filed 2–27–20; 8:45 am] national Government and the States, or depicted in Figure 1 of Airbus Helicopters on the distribution of power and Alert Service Bulletin (ASB) No. EC155– BILLING CODE 4910–13–P responsibilities among the various 34A033, Revision 2, dated January 30, 2018 levels of government. (ASB EC155–34A033). If a combined voice and flight data recording system (MOD DEPARTMENT OF TRANSPORTATION For the reasons discussed, I certify 0731B89) is installed, also modify the wiring this proposed regulation: to connector 11 ALPHA as depicted in Figure Office of the Secretary (1) Is not a ‘‘significant regulatory 2 of ASB EC155–34A033. action’’ under Executive Order 12866, (2) For helicopters without wiring change 14 CFR Part 399 (2) Will not affect intrastate aviation MOD 0722B51 installed, modify the wiring of [Docket No. DOT–OST–2019–0182] in Alaska, and connector 11 ALPHA as depicted in Figure (3) Will not have a significant 1 and Figure 2 of Airbus Helicopters ASB No. RIN 2105–AE72 EC155–34A037, Revision 0, dated February economic impact, positive or negative, 19, 2018. on a substantial number of small entities Defining Unfair or Deceptive Practices under the criteria of the Regulatory (f) Special Flight Permits AGENCY: Office of the Secretary (OST), Flexibility Act. A special flight permit may be issued for U.S. Department of Transportation operation under visual flight rules only. List of Subjects in 14 CFR Part 39 (DOT). (g) Alternative Methods of Compliance ACTION: Notice of proposed rulemaking. Air transportation, Aircraft, Aviation (AMOCs) safety, Incorporation by reference, SUMMARY: The U.S. Department of (1) The Manager, Safety Management Safety. Section, Rotorcraft Standards Branch, FAA, Transportation (Department or DOT) is seeking comment in this Notice of The Proposed Amendment may approve AMOCs for this AD. Send your proposal to: George Schwab, Aviation Safety Proposed Rulemaking (NPRM) on a Accordingly, under the authority Engineer, Safety Management Section, proposal that would codify definitions delegated to me by the Administrator, Rotorcraft Standards Branch, FAA, 10101 for the terms ‘‘unfair’’ and ‘‘deceptive’’ the FAA proposes to amend 14 CFR part Hillwood Pkwy., Fort Worth, TX 76177; in the Department’s regulations 39 as follows: telephone 817–222–5110; email 9-ASW-FTW- implementing its aviation consumer [email protected]. protection statute. While codifying these PART 39—AIRWORTHINESS (2) For operations conducted under a 14 definitions into the Department’s DIRECTIVES CFR part 119 operating certificate or under 14 CFR part 91, subpart K, the FAA suggests regulations would be new, the proposed definitions of ‘‘unfair’’ and ‘‘deceptive’’ ■ 1. The authority citation for part 39 that you notify your principal inspector, or lacking a principal inspector, the manager of reflect the Department’s longstanding continues to read as follows: the local flight standards district office or interpretation of the terms. This Authority: 49 U.S.C. 106(g), 40113, 44701. certificate holding district office before proposal would also require the

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Department to articulate in future published on April 11, 2000 (65 FR from the public on existing regulations enforcement orders the basis for 19477–78), or you may visit and other agency actions that are good concluding that a practice is unfair or www.dot.gov/privacy. candidates for repeal, replacement, or deceptive where no existing regulation Docket. For access to the docket to modification.1 In response to the Notice, governs the practice in question, state read background documents or Airlines for America (A4A), an airline the basis for its conclusion that a comments received, go to https:// trade association, urged the Department practice is unfair or deceptive when it www.regulations.gov, or to the street to adopt policies defining unfairness issues discretionary aviation consumer address listed above. Follow the online and deception consistent with protection regulations, and apply formal instructions for accessing the docket. principles articulated in Federal Trade hearing procedures for discretionary FOR FURTHER INFORMATION CONTACT: Commission (FTC) and Federal court aviation consumer protection Robert Gorman, Senior Trial Attorney, precedent interpreting those terms.2 rulemakings. In addition, this proposal or Kimberly Graber, Deputy Assistant A4A stated that the Department has would codify the longstanding practice General Counsel, or Blane Workie, relied on the phrase ‘‘unfair and of the Department’s Office of Aviation Assistant General Counsel, Office of deceptive practice’’ to issue detailed Enforcement and Proceedings to offer Aviation Enforcement and Proceedings, regulations and to take enforcement airlines and ticket agents the U.S. Department of Transportation, 1200 action without sufficient evidence that opportunity to be heard and present New Jersey Ave. SE, Washington, DC the practice at issue was actually unfair relevant evidence before any 20590, 202–366–9342, 202–366–7152 or deceptive. With respect to determination is made on how to (fax); [email protected]; rulemaking, A4A stated that many of the resolve a matter involving a potential [email protected]; blane.workie@ Department’s past consumer protection unfair or deceptive practice. The dot.gov (email). rulemakings were not based on evidence proposal is intended to provide SUPPLEMENTARY INFORMATION: that the benefits of the rules outweighed regulated entities and other stakeholders their cost. More specifically, they with greater clarity and certainty about I. Introduction recommended that DOT issue new the Department’s interpretation of unfair A. The Department’s Unfair and regulations only where objective or deceptive practice in the context of Deceptive Practices Statute evidence shows that: (1) The regulation is necessary to prevent deceptive aviation consumer protection The Department’s authority to practices that are occurring or are rulemaking and enforcement actions. regulate unfair and deceptive practices reasonably likely to occur; (2) the DATES: Comments should be filed by in air transportation or the sale of air practice is causing or would cause April 28, 2020. Late-filed comments will transportation is found at 49 U.S.C. significant consumer harm if it did be considered to the extent practicable. 41712 (‘‘Section 41712’’) in conjunction occur; and (3) market forces are unlikely ADDRESSES: You may file comments with its rulemaking authority under 49 to provide a remedy to such consumer identified by docket number DOT–OST– U.S.C. 40113, which states that the harm. 2019–0182 by any of the following Department may take action that it With respect to enforcement, A4A methods: considers necessary to carry out this similarly claimed that the Department’s • Federal eRulemaking Portal: Go to part, including prescribing regulations. Office of Aviation Enforcement and https://www.regulations.gov and follow Section 41712 gives the Department the Proceedings (Enforcement Office) has the online instructions for submitting authority to investigate and decide aggressively pursued enforcement comments. whether an air carrier, foreign air action in cases involving minor • Mail: Docket Management Facility, carrier, or ticket agent is engaged in an infractions, inadvertent errors, or U.S. Department of Transportation, 1200 unfair or deceptive practice in air isolated incidents with little evidence of New Jersey Ave. SE, West Building transportation or the sale of air a ‘‘practice’’ or of significant consumer Ground Floor, Room W12–140, transportation. Under Section 41712, harm. A4A recommended that the Washington, DC 20590–0001. after notice and an opportunity for a Department should align its policies on • Hand Delivery or Courier: West hearing, the Department has the unfairness and deception with the Building Ground Floor, Room W12–140, authority to issue orders to stop an policies of the FTC, use evidence for its 1200 New Jersey Ave. SE, between 9:00 unfair or deceptive practice. A different determinations, and not merely a.m. and 5:00 p.m. ET, Monday through statute, 49 U.S.C. 46301, gives the speculate or assume that actual Friday, except Federal holidays. Department the authority to issue civil consumer harm took place. • Fax: (202) 493–2251. penalties for violations of Section 41712 Instructions: You must include the or for any regulation issued under the C. Clarification of Department agency name and docket number DOT– authority of Section 41712. Interpretation of Statutory Terms in OST–2019–0182 or the Regulatory Aviation Consumer Protection Rules B. Request for Regulatory Reform Identification Number (RIN) for the and Enforcement rulemaking at the beginning of your On February 24, 2017, President The Department has considered the comment. All comments received will Trump signed Executive Order 13777, issues raised by A4A. In addition, the be posted without change to https:// Enforcing the Regulatory Reform Department recently issued updated www.regulations.gov, including any Agenda, which requires each agency to procedural requirements for its personal information provided. establish a Regulatory Reform Task rulemaking and enforcement actions. Privacy Act: Anyone can search the Force to evaluate existing regulations, The Department’s recently issued electronic form of all comments and make recommendations for their updated policies and procedures received in any of our dockets by the repeal, replacement, or modification. As governing the development and name of the individual submitting the part of this process, the Department is issuance of regulations are set forth in comment (or signing the comment, if directed to seek input and assistance submitted on behalf of an association, from entities significantly affected by its 1 See Notice of Regulatory Review, available at 82 business, labor union, etc.). You may regulations. On October 1, 2017, the FR 45750. review DOT’s complete Privacy Act Department issued a Notice of 2 See Comment of A4A, Docket DOT–OST–2017– statement in the Federal Register Regulatory Reform seeking written input 0069–2753, available at www.regulations.gov.

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Subpart B of 49 CFR part 5 on acts or practices’’ in order to better have concurrent authority over ticket Administrative Rulemaking, Guidance, protect consumers.7 agents in the sale of air transportation. and Enforcement Procedures.3 Rules Section 5 grants the FTC broad 2. FTC’s Definitions of Unfair and issued under the authority of Section enforcement authority to address unfair Deceptive Practices 41712 must be consistent with the or deceptive acts or practices across a Department’s recently updated wide range of industries, but excludes The FTC Act does not specifically rulemaking procedures, including the the common carrier activities of air define ‘‘unfair or deceptive acts or policy that rules should be carriers and foreign air carriers from the practices,’’ but authorizes the FTC to straightforward and clear, incorporate FTC’s jurisdiction. In 1938, the same define such acts and practices through best practices for economic analyses, year that Congress amended the FTC enforcement and rulemaking. 15 U.S.C. and provide for appropriate public Act to proscribe unfair and deceptive 45; 15 U.S.C. 57a. participation. practices, Congress passed the Civil i. Unfairness Further, enforcement actions taken Aeronautics Act. Section 411 of the pursuant to Section 41712 should be Civil Aeronautics Act granted to the In December 1980, the FTC issued a consistent with Subpart D of 49 CFR Civil Aeronautics Authority (CAA) the Policy Statement to Congress, which part 5, which includes the Department’s exclusive power to prohibit unfair and articulated general principles drawn procedural requirements for deceptive practices in air transportation. from FTC decisions and rulemakings enforcement actions.4 As stated in the Section 41712 was previously codified that the Commission applies in preamble to the Department’s final rule as Section 411 but in 1994, as part of a enforcing its mandate to address 8 codifying these procedures, all comprehensive non-substantive unfairness under the FTC Act. These Department enforcement actions should reorganization of the Transportation principles were applied in FTC satisfy principles of due process and Code, Section 411 was re-codified as enforcement cases and rulemaking and 9 remain lawful, reasonable, and Section 41712. Neither Section 5 of the approved by reviewing Federal courts. consistent with Administration policy.5 FTC Act, nor Section 41712 (formerly The FTC explained that unjustified Consistent with the Department’s Section 411), specifically defines consumer injury is the primary focus of enforcement policies and procedures, ‘‘unfair or deceptive practices.’’ In 1940, the FTC Act. This concept contains enforcement orders finding violations of the CAA’s authority was transferred to three basic elements. An act or practice Section 41712 should explain the the Civil Aeronautics Board (CAB). In is unfair where it (1) causes or is likely specific factors considered and the basis 1952, Congress expanded the CAB’s to cause substantial injury to for concluding that a practice either authority to include unfair or deceptive consumers; (2) cannot be reasonably does or does not violate Section 41712. practices in the sale of air avoided by consumers; and (3) is not Similarly, the standards for unfairness transportation, not just air outweighed by countervailing benefits and deception should be specified and transportation itself. to consumers or to competition. The an explanation of how any prohibited or The Federal Aviation Act of 1958 FTC also considers public policy, as required actions meet those standards created the Federal Aviation established by statute, regulation, or should be provided for clarity and to Administration (FAA). This statute judicial decisions along with other ensure consistency with the statute. transferred safety authority to the FAA, evidence in determining whether an act but the CAB’s authority over unfair or or practice is unfair. II. Background deceptive practices remained intact. In ii. Congress Codifies FTC’s Approach to A. The FTC and the Department’s 1978, the Airline Deregulation Act Unfairness Statutes Regulating Unfair and (ADA) substantially deregulated the In 1994, Congress codified existing Deceptive Practices U.S. airline industry by prohibiting regulation of rates, routes, and services. case law defining the elements of The Department’s unfair and The ADA did not alter the CAB’s unfairness. Specifically, Congress deceptive practices statute, Section authority to prohibit unfair or deceptive enacted 15 U.S.C. 45(n), which states 41712, is closely modeled after Section practices, however. that the FTC shall have no enforcement 5 of the FTC Act, 15 U.S.C. 45 (‘‘Section Effective January 1, 1985, the CAB authority or rulemaking authority to 5’’). As originally enacted in 1914, was abolished, and the CAB’s authority declare an act or practice unfair unless Section 5 granted the FTC authority to to regulate unfair and deceptive it is likely to cause substantial injury to prohibit ‘‘unfair methods of practices was transferred to the consumers which is not reasonably competition’’ but did not address unfair Department. avoidable by consumers themselves and or deceptive practices. Some early not outweighed by countervailing Supreme Court cases held that Section 1. Jurisdiction of FTC and DOT benefits to consumers or to competition. 5’s prohibition on unfair methods of Section 41712 grants the Department Congress further provided in section competition required a showing of harm the authority to prohibit unfair or 45(n) that the FTC could rely on public to competitors and competition, but was deceptive practices, and jurisdiction policy, along with other evidence, for not focused on addressing harm to over air carriers and foreign air carriers making a determination of unfairness, consumers.6 In response, Congress lies exclusively with the Department amended Section 5 of the FTC Act in because those entities were carved out 8 Letter from the FTC to Hon. Wendell Ford and 1938 to proscribe ‘‘unfair or deceptive of FTC jurisdiction in Section 5. Hon. John Danforth, Committee on Commerce, Science and Transportation, United States Senate, However, the FTC’s general Section 5 Commission Statement of Policy on the Scope of 3 See Subpart B, ‘‘Rulemaking Procedures,’’ 49 authority to prohibit unfair and Consumer Unfairness Jurisdiction (December 17, CFR part 5, which was recently updated in a final deceptive practices applies to ticket 1980), Appended to International Harvester Co., rule published at 84 FR 71714 (December 27, 2019). agents in the sale of air transportation. 104 F.T.C. 949, 1070, 1073 (1984). 4 See Subpart D, ‘‘Enforcement Procedures,’’ 49 9 See, e.g., International Harvester, 104 F.T.C. 949 CFR part 5, which was recently updated in a final As a result, the Department and the FTC (1984); Credit Practices Rule, Statement of Basis rule published at 84 FR 71714 (December 27, 2019). and Purpose, 49 FR 7740 (1984) (‘‘Credit Practices 5 See 84 FR 71715. 7 Wheeler-Lea Act, Public Law 75–447, 3, 52 Stat. Rule SBP’’); Orkin Exterminating Co., Inc., 108 6 See, e.g., FTC v. Raladam Co., 283 U.S. 643, 649 111, 114 (1938), amending FTC Act § 5, 52 Stat. F.T.C. 263 (1986); aff’d, FTC v. Orkin, 849 F.2d (1931). 111, 114. 1354 (11th Cir. 1988).

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but public policy may not be the public policy as evidence to be rulemaking or enforcement action, as primary basis of its decision. considered with all other evidence, but further described below. public policy considerations may not iii. FTC’s Definition of Deception A. Defining Unfairness and Deception in serve as a primary basis for its Rulemaking and Enforcement In 1983, the FTC issued a Policy determination. Moreover, Section 18 of Proceedings Statement on Deception.10 Like the 1980 the FTC Act, 15 U.S.C. 57a, specifies Policy Statement on Unfairness, the particular procedures for the When the Department issued its 1983 Policy Statement clarified the promulgation of FTC rules that define existing aviation consumer protection general principles that the FTC applies with specificity acts or practices which rules, the Department followed the in enforcing its mandate to address are unfair or deceptive.13 Before issuing Administrative Procedure Act and deception under the FTC Act. As binding regulations defining specific related statutory and administrative explained in the policy statement, an act acts or practices to be unfair or requirements to ensure that these rules or practice is deceptive where: (1) A deceptive, the FTC must provide an are authorized by law and justified on representation, omission, or practice opportunity for an informal hearing, and a benefit-cost basis. However, more can misleads or is likely to mislead the provide in the rule’s statement of basis be done to better inform the public and consumer; (2) a consumer’s and purpose: (1) A statement as to the regulated entities how the Department interpretation of the representation, prevalence of the acts or practices determines what constitutes an unfair omission, or practice is considered treated by the rule; (2) a statement as to and deceptive practice when issuing reasonable under the circumstances; the manner and context in which such discretionary aviation consumer and (3) the misleading representation, acts or practices are unfair or deceptive; protection rulemakings under the omission, or practice is material. and (3) a statement as to the economic authority of Section 41712 and when Practices that have been found effects of the rule, taking into account issuing enforcement orders based on misleading or deceptive in specific the effect on small business and Section 41712 where there has not been cases include false oral or written consumers.14 a regulation that already specifies representations, misleading price There are no comparable statutory required or prohibited conduct. claims, sales of hazardous or requirements for rulemaking by the This proposed rule would define the systematically defective products or Department finding a practice to be terms ‘‘unfair’’ and ‘‘deceptive’’ for services without adequate disclosures, unfair or deceptive. Under 49 U.S.C. aviation consumer protection failure to disclose information regarding 40113, Congress granted the Secretary of enforcement or rulemaking actions pyramid sales, use of bait and switch Transportation the authority to take brought pursuant to Section 41712. techniques, failure to perform promised action that he or she considers First, it would define a practice as services, and failure to meet warranty necessary to carry out his or her ‘‘unfair’’ if it causes or is likely to cause obligations. statutory duties, including prescribing substantial injury, which is not Congress has not enacted the FTC’s regulations and issuing orders. Like reasonably avoidable, and the harm is 1983 Policy Statement on Deception other Federal agencies, the Department not outweighed by benefits to into law, unlike the FTC’s 1980 Policy is subject to the general provisions of consumers or competition. Second, the Statement on Unfairness, but the Policy the Administrative Procedure Act when proposed rule would define a practice Statement was adopted by the FTC in issuing regulations. The Department is as ‘‘deceptive’’ if it is likely to mislead formal adjudication, see In the Matter of also subject to the rulemaking a consumer acting reasonably under the Cliffdale Assocs., Inc., 103 F.T.C. 110, procedures found in Subpart B of 49 circumstances with respect to a material 174 (1984), and has been regularly cited CFR part 5. issue. Under the proposal, an issue is by Federal courts.11 ‘‘material’’ if it is likely to have affected III. Proposal for New Procedural the consumer’s conduct or decision 3. Rulemaking Authority of FTC and Requirements with respect to a product or service. DOT This rulemaking would codify the These definitions mirror the definitions The FTC enforces a broad range of Department’s definitions of ‘‘unfair’’ used by the FTC. consumer protection laws affecting most and ‘‘deceptive’’ when engaging in The Department has used its general of the country’s commercial entities, aviation consumer protection authority to prohibit unfair or deceptive with some exceptions such as airlines. rulemaking or enforcement action under practices of air carriers, foreign air The FTC Act prescribes several specific the authority of Section 41712. This carriers, and ticket agents to conduct statutory requirements for issuing rules rulemaking would also require the oversight in the area of airline privacy 15 prohibiting an act or practice as unfair Department to follow certain procedures and frequent flyer programs.16 Also, in or deceptive. As described above, to when engaging in aviation consumer the FAA Reauthorization Act of 2018, issue a rule defining an act or practice protection rulemaking and enforcement. Congress specified that the as unfair, FTC must first determine that For example, this rulemaking would Department’s authority to prohibit the act or practice is likely to cause require the Department to provide an unfair or deceptive practices covers air substantial injury to consumers which is explanation of how specific conduct ambulance providers and authorized the not reasonably avoidable by consumers meets the standard for an ‘‘unfair’’ or Department to investigate air ambulance themselves and not outweighed by ‘‘deceptive’’ practice when engaging in countervailing benefits to consumers or an aviation consumer protection 15 The Department considers the mishandling of to competition.12 The FTC may consider private consumer information by airlines or ticket 13 Section 18 rulemaking procedures apply to FTC agents to be an unfair or deceptive practice. See rules to define ‘‘unfair or deceptive acts or https://www.transportation.gov/individuals/ 10 FTC Policy Statement on Deception (Oct. 14, practices’’ prohibited under Section 5 of the FTC aviation-consumer-protection/privacy. 1983), 103 F.T.C. 174, 175 (1984) (appended to Act unless Congress grants the agency authority to 16 Section 408 of the FAA Modernization and Cliffdale Assocs., Inc., 103 F.T.C. 110 (1984)). issue rules under the Administrative Procedure Act Reform Act of 2012 authorized the Department to 11 See, e.g., FTC v. Pantron I Corp., 33 F.3d 1088 in a specific context. See, e.g., Children’s Online investigate complaints relating to frequent flyer (9th Cir. 1994), cert. denied, 514 U.S. 1083 (1995); Privacy Protection Act, 15 U.S.C. 6501–6508; programs. Public Law 112–95; 126 Stat. 87 (2012). Novartis Corp. v. FTC, 223 F.3d 783, 786 (D.C. Cir. Fairness to Contact Lens Consumers Act, 15 U.S.C. See also https://www.transportation.gov/ 2000). 7601–7610. individuals/aviation-consumer-protection/frequent- 12 15 U.S.C. 45(n). 14 15 U.S.C. 57a. flyer-programs.

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complaints.17 Because the Department conduct, or by finding that a single act where the Department proposes to has not issued specific regulations with reflects company policy and therefore declare specific practices to be unfair or respect to complex and specialized concluding that the policy is likely to deceptive. The addition of formal issues, including privacy, frequent flyer have affected more consumers than just hearing procedures is also consistent programs, and air ambulances, it relies the individual complainant). In general, with Section 41712(a), which requires on the general provisions of section the Department is of the view that proof notice and an opportunity for a hearing 41712. Are the general definitions of of a practice in the aviation consumer before a finding that an air carrier, unfairness and deception proposed in protection context requires more than a foreign air carrier, or ticket agent is this NPRM sufficient to provide the single isolated incident. On the other engaged in an unfair or deceptive regulated entities, consumers and other hand, even a single incident may be practice or unfair method of stakeholders sufficient notice of what indicative of a practice if it reflects competition. constitutes an unfair or deceptive company policy, training, or lack of The purpose of the formal hearing practice in these or other specialized training. The Department solicits would be to address disputed issues of subject areas? comment on the question of whether a fact through the presentation of The proposal makes clear that proof of definition of ‘‘practice’’ is necessary, testimony and written submissions in intent is not necessary to establish and if so, what the proposed definition front of a neutral administrative hearing unfairness or deception. In other words, should be. officer. The Department is proposing to the Department is not required to find This proposed rule would add a new allow interested parties to request a that an air carrier or ticket agent acted section 399.75 to 14 CFR 399 Subpart F formal hearing if one or more scientific, with the intent to cause harm before (Policies Relating to Rulemaking technical, economic or other factual finding a practice to be unfair to a Proceedings). The proposed rule would issues are in dispute. Interested parties consumer. Likewise, it is not necessary state that when the Department issues a would be permitted to make such a for the Department to find that an air new discretionary aviation consumer request to the Department’s General carrier, foreign air carrier, or ticket agent protection rulemaking declaring that a Counsel after the notice of proposed acted with the intent to deceive before specific practice in air transportation or rulemaking is filed, but before the end finding such a practice is deceptive. the sale of air transportation is unfair or of the comment period. In general, the These principles are reflected in Federal deceptive within the meaning of Section purpose of the formal hearing is to case law applying Section 5 of the FTC 41712, the Department shall employ the ensure that rules are based on facts and Act. In addition, under the FTC Act, definitions of ‘‘unfair’’ and ‘‘deceptive’’ not unfounded assumptions. The formal disseminating false advertisements, or that are set forth in new Section 399.79. hearing would provide an opportunity causing false advertisements to be These definitions are consistent with to explore complex or disputed factual disseminated, is an unfair or deceptive the Department’s past practice and are issues before proceeding beyond the act or practice. 15 U.S.C. 52. The FTC based on FTC case precedent and proposed rule stage. The Department Act, and its definition of ‘‘false policy. would use the developed factual record advertisement,’’ make no reference to of the formal hearing to determine intent to deceive. B. Establishing Procedures for Aviation whether the rulemaking should proceed Section 5 of the FTC Act prohibits Consumer Protection Rulemaking as originally proposed, be modified, or unfair ‘‘acts or practices’’ in or affecting Proceedings be terminated entirely. Under this proposal, for a formal commerce, while Section 41712 grants 1. Formal Hearing Procedures the Department authority over unfair or hearing to be granted, the interested deceptive practices in air transportation In this NPRM, the Department party would be required to make a or the sale of air transportation. The proposes to apply formal hearing plausible initial showing that the FTC Act and FTC regulations do not procedures for discretionary aviation rulemaking concerns one or more define ‘‘practice.’’ It is possible that a consumer protection rulemakings issued specific scientific, technical, economic, definition is not necessary in the FTC under the authority of Section 41712 or other factual issues that are in context because the FTC’s authority that are not defined as high-impact or dispute, that the ordinary notice and applies to specific acts, even if they do economically significant within the comment process is insufficient to not rise to the level of a practice. At meaning of the Department’s regulatory provide an adequately informed present, the Department does not procedures found in 49 CFR 5.17(a). judgment on the issue, and that believe that it is necessary to define Any such high-impact or economically resolution of the issue would have a ‘‘practice.’’ The Department’s rules with significant rulemakings are subject to material effect on the costs and benefits respect to unfairness or deception in air the special procedures outlined in 49 of the rule. Under the delegation of transportation or the sale of air CFR 5.17. authority to the General Counsel to transportation are always directed to The Department proposes to adopt conduct rulemakings on these matters practices of air carriers, foreign air formal hearing procedures for found in 49 CFR 1.27(n), the General carriers, and ticket agents, rather than to discretionary aviation consumer Counsel would be authorized to deny a individual acts. In the aviation protection rulemakings similar to the hearing, even if the interested party consumer protection enforcement formal hearing procedures that apply to makes the plausible initial showing context, when analyzing complaints, the high-impact and economically described above, so long as the General Department regularly seeks to determine significant rulemakings. These Counsel determines that the requested the extent to which one or more unfair procedures would allow interested hearing would not in fact advance the or deceptive acts actually reflects a parties to request a formal hearing consideration of the proposed rule, or broader ‘‘practice’’ (for example, by before the Department issues a final that the hearing would unreasonably investigating to determine whether aviation consumer protection rule. delay completion of the rulemaking. multiple consumers have been harmed These formal hearing procedures would The General Counsel would explain in at different times by the same repetitive not apply to rulemakings specifically writing the basis of that decision. mandated by Congress. Rather, they Under this proposal, if the 17 Public Law 115–254, 132 Stat. 3186, section would apply to discretionary aviation Department grants the request for a 419 (2018). consumer protection rulemakings, hearing, the Department would publish

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a notice, specifying the proposed rule at example, if the Department proposes a authority of Section 41712, or Section issue and the specific factual issues to final rule determining that a particular 41712 itself, the Department shall afford be considered in the hearing. The practice is unfair, the Department would the party the opportunity to present Department proposes that the rules for be required to explain how the practice evidence in support of its position. For conducting the formal hearing itself is likely to cause substantial injury, example, under current practice, the would be adopted from relevant which is not reasonably avoidable, and party is permitted to present evidence sections of the Administrative that the harm is not outweighed by tending to establish that: (1) The Procedure Act relating to hearings, or benefits to consumers or to competition. regulation at issue was not violated; (2) similar rules adopted by the Secretary. The Department’s explanation would the violation took place, but mitigating Also, the NPRM specifies that after provide its basis for reaching that circumstances apply; (3) the conduct at the formal hearing and after the record conclusion. Similarly, when proposing a issue was not unfair or deceptive (in is closed, the presiding hearing officer rulemaking finding a particular practice cases where a consumer protection would render a report containing deceptive, the Department would follow regulation does not already apply to the findings and conclusions addressing the the same practice of outlining the conduct at issue); and (4) consumer disputed issues of fact identified in the factors of deception and the basis for its harm was limited, or that the party has hearing notice. Interested participants in conclusion. taken steps to mitigate past or future the formal hearing would have the The Department solicits comment on consumer harm (for example, by issuing opportunity to file statements of the support needed for rulemakings compensation and/or refunds to affected agreement or objection in response to finding a practice unfair or deceptive. passengers, or by implementing the hearing officer’s report. The The proposed rule does not specifically innovative practices and procedures to Department would then consider the indicate the type or extent of evidence ensure that the violations will not record of the formal hearing and that would be necessary to support a recur). This list is intended to provide determine whether to terminate the finding of unfairness or deception. In examples, but not to be complete or rulemaking, proceed with it as many instances, the Department exhaustive. The Enforcement Office proposed, or modify the proposed rule. identifies issues that may be considers all information provided If the Department decides either to problematic and addresses them in an when determining whether a violation proceed with the rule as originally aviation consumer protection of aviation consumer rights took place proposed, or to terminate the rulemaking as an unfair or deceptive and, if a violation took place, the rulemaking, the Department would practice based on information in the appropriate civil penalty to seek for the explain those decisions in writing. If the Department’s consumer complaint violations at issue. The Department has Department decides to modify the database. In other instances, aviation incorporated the opportunity to present proposed rule in light of the formal consumer protection rulemaking is relevant evidence and mitigating hearing, then the Department would instituted in response to circumstances into its proposal. issue a new or supplemental NPRM, and recommendations from entities such as Paragraph 399.79(e) applies to explain its decision in the preamble to consumer advocates or advisory informal nonpublic investigations of that modified proposal. Finally, this committees. The Department envisions potential violations of aviation NPRM clarifies that the formal hearing that the formal hearing procedures consumer rights, which represent the procedures shall not impede or interfere described above will provide another overwhelming majority of the with the interagency rulemaking review means of gathering information, data, Enforcement Office’s enforcement process of the Office of Information and and evidence that may be helpful in efforts.18 These investigations typically Regulatory Affairs. The Department making these determinations. What type conclude with the Enforcement Office solicits input on whether the public and of evidence should be necessary to issuing a consent order, a warning letter, regulated entities find the Department’s demonstrate that a practice is unfair or or other appropriate disposition that utilization of this type of process for the deceptive to support the Department does not involve the filing of a promulgation of unfair and deceptive issuing a rule prohibiting that practice? complaint with an Administrative Law regulations to be helpful and, if so, how. How should the Department gather that Judge (ALJ). The Department is aware Further, if this process would not be information? During the rulemaking that paragraph 399.79(e) does not helpful, the Department solicits process, consumers may comment that a propose a formal ‘‘hearing’’ for the comment on what elements of these practice is harmful while regulated regulated entity to present evidence. proposed procedures should be entities may disagree. In those The Department is also aware that modified, and why. instances, how should the Department Section 41712(a) requires the 2. Explaining Findings of Unfairness determine whether a practice is Department to provide air carriers, and Deception harmful? foreign air carriers, and ticket agents with the opportunity for a ‘‘hearing’’ This proposal states that when the C. Establishing Procedures for Aviation before declaring that a practice is unfair Department issues a discretionary Consumer Protection Enforcement or deceptive. The Department is of the aviation consumer protection Proceedings rulemaking declaring a practice to be view that a hearing is not required in unfair or deceptive, it shall explain the 1. Providing Opportunity To Present the course of informal nonpublic basis for its conclusion that the practice Evidence investigations, because full hearings are is unfair or deceptive. The intent is to The Department is proposing to already available at a later stage. ensure that when issuing new aviation codify a longstanding practice of the 18 14 CFR part 305 sets forth additional rules of consumer protection regulations under Department with regard to aviation practice in informal nonpublic investigations. Part the authority of Section 41712, the consumer protection enforcement 305 does not explicitly state that regulated entities Department provides greater proceedings. Specifically, proposed have the opportunity to present mitigating transparency to the public and to paragraph 399.79(e) states that, before evidence, but the opportunity to present such evidence traditionally has been available to regulated entities about the reasons issuing an order finding that an air regulated entities during investigations by the supporting the Department’s finding carrier, foreign air carrier, or ticket agent Enforcement Office and prior to any determination that a practice is unfair or deceptive. For violated any regulation issued under the to take enforcement action.

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Specifically, where the Department and have not explained in detail how the complaint. Similarly, in another case, the regulated entity cannot agree on a practice is unfair and deceptive, because DOT Order 2018–2–18 (2018), a disposition of a dispute regarding a the underlying regulation was issued passenger missed the check-in deadline potential aviation consumer rights under the authority of Section 41712. for a multi-city itinerary and was violation, the Enforcement Office has informed his reservations for the ii. Current Practice for Enforcement of the option of filing a formal complaint remaining flights would be cancelled if ‘‘Standalone’’ Violations of Section with an ALJ.19 These procedures are set he did not change his reservation and 41712 forth in 14 CFR part 302, subpart D (14 pay the applicable fees. After outlining CFR 302.407–302.420), and they include The Department also has the authority the relevant facts, the Department the opportunity for a hearing before an to investigate and enforce where an air applied the standard for unfairness and ALJ. See 14 CFR 302.415. The carrier, foreign air carrier, or ticket agent found that the alleged practices were Department seeks comment on all may be engaging in conduct that does not unfair. In addition, using the FTC aspects of this proposal. not violate a specific consumer standard for deception, and noting that protection regulation, but which may the consumer was not actually deceived, 2. Explaining Findings of Unfairness nevertheless be unfair or deceptive to the Department also found that the and Deception consumers. These are potential airline’s practice at issue was not i. Current Practice for Enforcement of ‘‘standalone’’ violations of Section deceptive and the complaint was Regulations Issued Under Section 41712 41712 and such cases are infrequent. dismissed. When deciding whether to take Many of the Department’s aviation The Department has also issued enforcement action in these matters, the consumer protection regulations that are orders finding that violations of civil Department has relied on the FTC’s issued under the authority of Section rights laws constitute violations of approach to both unfairness and 41712 state that a violation of the rule Section 41712, without explaining in deception. Departmental orders issued amounts to an unfair and deceptive detail how the violations were either in cases where the Department declined practice. For example, the tarmac delay unfair or deceptive, e.g., DOT Order to take action have explicitly recited rule states that covered carriers must 2012–5–2 (2012); DOT Order 2011–11– FTC precedent in the course of adopt and adhere to contingency plans 2 (2011). The resulting consent orders explaining why the acts were not unfair reflect the unfair/deceptive providing various assurances to or deceptive. For example, in a case determination of the Department but do consumers in the event of a lengthy against a large airline, DOT Order 2016– not provide the underlying description tarmac delay.20 The rule explicitly states 12–11 (2016), a passenger filed a formal of how the relevant standard was met. that failure to comply with the required complaint alleging that the airline Department aviation consumer assurances is considered an unfair and improperly penalized him 60,000 protection enforcement orders should deceptive practice within the meaning frequent flyer miles when it wrongly provide valuable information for of Section 41712.21 Similarly, the accused him of manipulating the regulated entities; accordingly, this Department has issued regulations airline’s website to gain favorable rulemaking proposes that going forward, explicitly declaring that it is an unfair seating upgrades. The passenger was such orders would contain a more or deceptive practice within the flagged by the airline’s security detailed statement of the relevant meaning of Section 41712 to engage in department for engaging in suspicious standard and how the particular facts of certain types of post-purchase price activity on its website. While no 22 the case met the standard. increases. Other regulations issued regulation covered the airline’s under the authority of Section 41712 behavior, the Department applied the iii. Explaining Findings of Unfairness (e.g., the oversales/denied boarding standard articulated in the FTC’s Policy and Deception in Aviation Consumer compensation rule and the requirement Statement on Unfairness and relevant Protection Enforcement Proceedings that carriers issue and comply with a precedent and found that the harm of In this NPRM, we propose that when Customer Service Plan) do not losing miles, while substantial, could the Department issues an enforcement specifically declare that a violation of have been reasonably avoided by not order relying on Section 41712, and the regulation also constitutes a logging into the airline’s website in where no existing regulation governs the 23 violation of Section 41712. suspicious and unusual ways.24 The practice in question (where the In instances where an enforcement Department also found that it was not Department relies solely on the phrase action is based on regulations issued deceptive for the airline to fail to warn ‘‘unfair or deceptive’’ in Section 41712), under the authority of Section 41712, the passenger that he was subject to a then the enforcement order must the Department’s enforcement orders set penalty before imposing that penalty. articulate the Department’s basis for forth the relevant regulation or Applying the standard articulated in the concluding that the practice is unfair or regulations, describe the facts of the FTC’s Policy Statement on Deception deceptive, as defined in this rule. For case, including the problematic and relevant precedent, the Department example, if the Department issues an conduct, and identify the manner in reasoned that the passenger was not order declaring that a particular practice which the regulation has been violated. acting as a reasonable consumer would. is unfair, the Department would be In such orders, there is typically a The Department dismissed the formal required to explain that the practice is statement that a violation of the likely to cause substantial injury, which regulation is also considered an unfair 24 The airline presented evidence that in the 96 is not reasonably avoidable, and that the and deceptive practice in violation of hours prior to the flight, the passenger created 28 harm is not outweighed by benefits to Section 41712. In such cases, the orders bookings using fictitious names, while omitting the consumers or competition. The passenger’s frequent flyer number. This laborious process created temporary passenger name records Department would be required not only 19 Since 2014, the Enforcement Office has filed that took upgraded seats out of inventory. While the to recite these conclusions, but also to one formal complaint with an ALJ. See Docket passenger contended that he simply wanted to view DOT–OST–2014–0229. recite the basis for how it arrived at the available seating to see if upgraded seats were 20 those conclusions. The proposed rule 14 CFR 259.4(a). available, the airline presented evidence that its 21 14 CFR 259.4(f). website had a simple method to view available makes clear that when the conduct of an 22 14 CFR 399.88(a). seating that did not take seating out of inventory; air carrier, foreign air carrier, or ticket 23 14 CFR part 250; 14 CFR 259.5. he could have also simply called the airline. agent also violates a regulation that was

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issued under the authority of Section Regulatory Analyses and Notices a small business if it provides air transportation only with small aircraft 41712, then the explanation of A. Executive Order 13771 (Reducing (i.e., aircraft with up to 60 seats/18,000- unfairness or deception is not required. Regulation and Controlling Regulatory pound payload capacity). See 14 CFR Instead, by establishing a violation of Costs), Executive Order 12866 399.73. The Department does not expect the regulation, the Enforcement Office (Regulatory Planning and Review), has necessarily established a violation Executive Order 13563 (Improving this rule to have a significant economic of Section 41712. Nevertheless, the Regulation and Regulatory Review), and impact on a substantial number of small Department seeks comment on whether DOT Regulatory Policies and Procedures entities. However, we invite comment such an order should reiterate the on the potential impact of this This proposed rule is not a significant rulemaking on small entities. explanation of unfairness or deception regulatory action under section 3(f) of as well. E.O. 12866 (58 FR 51735, October 4, C. Executive Order 13132 (Federalism) The Department is undertaking this 1993), Regulatory Planning and Review, This NPRM has been analyzed in rulemaking because it is appropriate to as supplemented by E.O. 13563 (76 FR accordance with the principles and provide an explanation, in enforcement 3821, January 21, 2011), Improving Regulation and Regulatory Review. criteria contained in Executive Order orders, of the basis for concluding that 13132 (‘‘Federalism’’). This NPRM does a practice either does or does not violate Accordingly, the Office of Management and Budget (OMB) has not reviewed it not include any provision that: (1) Has Section 41712. Specifically, this substantial direct effects on the States, rulemaking proposes that enforcement under that Order. It is also not significant within the meaning of DOT the relationship between the national orders will identify the factors used to government and the States, or the determine whether a practice is unfair regulatory policies and procedures. This NPRM is issued in accordance with the distribution of power and or deceptive and will identify the facts Department’s rulemaking procedures responsibilities among the various and conduct relevant to each factor, so found in 49 CFR part 5 and DOT Order levels of government; (2) imposes that the rationale for the determination 2100.6. substantial direct compliance costs on is clear in the order. This is particularly The Department does not anticipate State and local governments; or (3) important in orders based on Section that this rulemaking will have an preempts State law. States are already 41712 alone, where there has not been economic impact on regulated entities. preempted from regulating in this area a regulation that already specifies This is primarily a rule of agency by the Airline Deregulation Act, 49 required or prohibited conduct. In cases procedure and interpretation. The U.S.C. 41713. Therefore, the involving conduct that violates a NPRM would clarify how the consultation and funding requirements regulation that was issued under the Department interprets the terms of Executive Order 13132 do not apply. authority of Section 41712, enforcement ‘‘unfair’’ and ‘‘deceptive,’’ and D. Executive Order 13175 orders should continue to identify the potentially require enhanced relevant facts and conduct that violates departmental procedures in analyzing, This NPRM has been analyzed in the regulation at issue. For example, in enforcing, and regulating in this area. accordance with the principles and a case involving a violation of the This rulemaking could impose a social criteria contained in Executive Order Department’s oversales rule, the specific cost on the public if increased 13175 (‘‘Consultation and Coordination facts and conduct at issue should be procedural requirements are adopted, as with Indian Tribal Governments’’). stated and the rationale for a the opportunity cost of these enhanced Because this NPRM does not determination that the oversales rule procedural requirements could translate significantly or uniquely affect the has been violated should be clear. into the Department performing fewer communities of the Indian Tribal However, this rulemaking is not enforcement and rulemaking actions. In governments or impose substantial proposing changes to enforcement addition, enhanced procedures would direct compliance costs on them, the likely lengthen the time needed to orders regarding violations of existing funding and consultation requirements complete these actions. However, the regulations. The new proposed of Executive Order 13175 do not apply. Department anticipates that these social requirement regarding explaining the costs would be outweighed by the E. Paperwork Reduction Act standards for unfairness and deception benefits associated with improved and that are stated in this rulemaking and The Paperwork Reduction Act of 1995 more transparent departmental decision (PRA) (44 U.S.C. 3501 et seq.) requires rely on FTC precedent are reflected in making, informed by enhanced analyses new proposed Section 399.79. that DOT consider the impact of and public participation. The paperwork and other information The proposed rule does not Department seeks comment on the costs, collection burdens imposed on the specifically indicate the type or extent benefits, and cost savings associated public and, under the provisions of PRA of evidence that would be necessary to with this rulemaking. section 3507(d), obtain approval from This proposed rule is not expected to support a finding of unfairness or the Office of Management and Budget be an E.O. 13771 regulatory action deceptiveness for standalone violations (OMB) for each collection of because this proposed rule is not of Section 41712. The Department information it conducts, sponsors, or significant under E.O. 12866. solicits comment on this question. requires through regulations. The DOT Finally, the Department seeks B. Regulatory Flexibility Act has determined there are no new comment on the benefits and costs of The Regulatory Flexibility Act (5 information collection requirements this rule. The Department’s description U.S.C. 601 et seq.) requires an agency to associated with this NPRM. of the benefits and costs are described review regulations to assess their impact F. Unfunded Mandates Reform Act immediately below in Section A of the on small entities unless the agency Regulatory Analyses and Notices determines that a rule is not expected to The Department has determined that section. have a significant economic impact on the requirements of Title II of the a substantial number of small entities. A Unfunded Mandates Reform Act of 1995 direct air carrier or foreign air carrier is do not apply to this rulemaking.

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G. National Environmental Policy Act of ‘‘unfair’’ and ‘‘deceptive’’ set forth in hearing in the Federal Register. The The Department has analyzed the § 399.79. notice shall specify the proposed rule at (b) Procedural requirements. When environmental impacts of this proposed issue and the specific factual issues to issuing a proposed regulation under action pursuant to the National be considered at the hearing. The scope paragraph (a) of this section that is Environmental Policy Act of 1969 of the hearing shall be limited to the defined as high impact or economically (NEPA) (42 U.S.C. 4321 et seq.) and has factual issues specified in the notice. significant within the meaning of 49 determined that it is categorically (6) Hearing process. (i) A formal CFR 5.17(a), the Department shall excluded pursuant to DOT Order hearing under this section shall be follow the procedural requirements set 5610.1C, Procedures for Considering conducted using procedures set forth in forth in 49 CFR 5.17. When issuing a Environmental Impacts (44 FR 56420, sections 556 and 557 of Title 5, United proposed regulation under paragraph (a) Oct. 1, 1979). Categorical exclusions are States Code, or similar procedures as of this section that is not defined as high actions identified in an agency’s NEPA approved by the Secretary, and impact or economically significant implementing procedures that do not interested parties shall have a within the meaning of 49 CFR 5.17(a), normally have a significant impact on reasonable opportunity to participate in unless the regulation is specifically the environment and therefore do not the hearing through the presentation of required by statute, the Department require either an environmental testimony and written submissions. shall follow the following procedural assessment (EA) or environmental (ii) The General Counsel shall arrange requirements: impact statement (EIS). See 40 CFR for an administrative judge or other (1) Request for a hearing. Following 1508.4. In analyzing the applicability of neutral administrative hearing officer to publication of a proposed regulation, a categorical exclusion, the agency must preside over the hearing and shall and before the close of the comment also consider whether extraordinary provide a reasonable opportunity to period, any interested party may file in circumstances are present that would question the presenters. the rulemaking docket a petition, warrant the preparation of an EA or EIS. (iii) After the formal hearing and after directed to the General Counsel, to hold Id. Paragraph 10.c.16.h of DOT Order the record of the hearing is closed, the a formal hearing on the proposed 5610.1D categorically excludes hearing officer shall render a report regulation. containing findings and conclusions ‘‘[a]ctions relating to consumer (2) Grant of petition for hearing. protection, including regulations.’’ addressing the disputed issues of fact Except as provided in paragraph (b)(3) identified in the hearing notice. Since this rulemaking relates the of this section, the petition shall be definition of unfair and deceptive (iv) Interested parties who granted if the petitioner makes a participated in the hearing shall be practices under Section 41712, the plausible prima facie showing that: Department’s central consumer given an opportunity to file statements (i) The proposed rule depends on of agreement or objection in response to protection statute, this is a consumer conclusions concerning one or more protection rulemaking. The Department the hearing officer’s report. The specific scientific, technical, economic, complete record of the hearing shall be does not anticipate any environmental or other factual issues that are genuinely impacts, and there are no extraordinary made part of the rulemaking record. in dispute or that may not satisfy the (7) Actions following hearing. (i) circumstances present in connection requirements of the Information Quality with this rulemaking. Following the completion of the formal Act; hearing process, the General Counsel (ii) The ordinary public comment List of Subjects in 14 CFR Part 399 shall consider the record of the hearing process is unlikely to provide an and shall make a reasoned Consumer protection, Policies, adequate examination of the issues to determination whether to terminate the Rulemaking proceedings, Enforcement, permit a fully informed judgment; and Unfair or deceptive practices. (iii) The resolution of the disputed rulemaking; to proceed with the For the reasons discussed in the factual issues would likely have a rulemaking as proposed; or to modify preamble, the Department proposes to material effect on the costs and benefits the proposed rule. amend 14 CFR part 399 as follows: of the proposed rule. (ii) If the General Counsel decides to (3) Denial of petition for hearing. A terminate the rulemaking, the General PART 399—STATEMENTS OF petition meeting the requirements of Counsel shall publish a notice in the GENERAL POLICY paragraph (b)(2) of this section may be Federal Register announcing the denied if the General Counsel decision and explaining the reasons for ■ 1. The authority citation for Part 399 determines that: the decision. is revised to read as follows: (i) The requested hearing would not (iii) If the General Counsel decides to Authority: 49 U.S.C. 41712, 40113(a). advance the consideration of the finalize the proposed rule without material modifications, the General ■ 2. Add § 399.75 to Subpart F to read proposed rule and the General Counsel’s Counsel shall explain the reasons for the as follows: ability to make the rulemaking determinations required by this section; decision and its responses to the hearing Subpart F—Policies Relating to or record in the preamble to the final rule. Rulemaking Proceedings (ii) The hearing would unreasonably (iv) If the General Counsel decides to delay completion of the rulemaking. modify the proposed rule in material § 399.75 Rulemakings relating to unfair (4) Explanation of denial. If a petition respects, the General Counsel shall and deceptive practices. is denied in whole or in part, the publish a new or supplemental Notice (a) General. When issuing a proposed General Counsel shall include a detailed of Proposed Rulemaking in the Federal or final regulation declaring a practice explanation of the factual basis for the Register explaining the General in air transportation or the sale of air denial including findings on each of the Counsel’s responses to and analysis of transportation to be unfair or deceptive relevant factors identified in paragraphs the hearing record, setting forth the to consumers under the authority of 49 (b)(2) or (b)(3) of this section. modifications to the proposed rule, and U.S.C. 41712(a), unless the regulation is (5) Hearing notice. If the General providing additional reasonable specifically required by statute, the Counsel grants the petition, the General opportunity for public comment on the Department shall employ the definitions Counsel shall publish a notice of the proposed modified rule.

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(8) The formal hearing procedures tending to establish that the conduct at ACTION: Withdrawal of advance notice of under this paragraph shall not impede issue was not unfair or deceptive as proposed rulemaking; denial of petition or interfere with the interagency review defined in paragraph (b); and for rulemaking. process of the Office of Information and (iii) Evidence tending to establish that Regulatory Affairs for the proposed consumer harm was limited, or that the SUMMARY: The Federal Energy rulemaking. air carrier, foreign air carrier, or ticket Regulatory Commission (Commission) is (c) Basis for rulemaking. When agent has taken steps to mitigate withdrawing its advance notice of issuing a proposed or final regulation consumer harm. proposed rulemaking (ANOPR) declaring a practice in air transportation (2) During this informal process, if the considering potential modifications to or the sale of air transportation to be Office of Aviation Enforcement and unfair or deceptive to consumers under Proceedings reaches agreement with the the Commission’s policies for evaluating the authority of 49 U.S.C. 41712(a), alleged violator to resolve the matter oil pipeline indexed rate changes and unless the regulation is specifically with the issuance of an order declaring certain additions to the annual reporting required by statute, the Department a practice in air transportation or the requirements in FERC Form No. 6, page shall articulate the basis for concluding sale of air transportation to be unfair or 700. Additionally, the Commission that the practice is unfair or deceptive deceptive to consumers under the denies the petition for rulemaking filed to consumers as defined in § 399.79. authority of 49 U.S.C. 41712(a), and by certain shippers seeking changes to ■ 3. Add § 399.79 to Subpart G to read when a regulation issued under the page 700 reporting requirements. as follows: authority of section 41712 does not DATES: The ANOPR published on apply to the practice at issue, then the Subpart G—Policies Relating to Department shall articulate in the order November 2, 2016, at 81 FR 76315 Enforcement the basis for concluding that the (2016) is withdrawn as of February 28, 2020. § 399.79 Policies relating to unfair and practice is unfair or deceptive to deceptive practices. consumers as defined in this section. FOR FURTHER INFORMATION CONTACT: (f) Formal Enforcement Proceedings. (a) Applicability. This policy shall When there are reasonable grounds to Adrianne Cook, (Technical apply to the Department’s aviation believe that an airline or ticket agent has Information), Office of Energy Market consumer protection actions pursuant to violated 49 U.S.C. 41712, and efforts to Regulation, 888 First Street NE, 49 U.S.C. 41712(a). (b) Definitions. (1) A practice is settle the matter have failed, the Office Washington, DC 20426, (202) 502– ‘‘unfair’’ to consumers if it causes or is of Aviation Enforcement and 8849. likely to cause substantial injury, which Proceedings may issue a notice Monil Patel, (Technical Information), is not reasonably avoidable, and the instituting an enforcement proceeding Office of Energy Market Regulation, before an administrative law judge. harm is not outweighed by benefits to 888 First Street NE, Washington, DC After the issues have been formulated, consumers or competition. 20426, (202) 502–8296 (2) A practice is ‘‘deceptive’’ to if the matter has not been resolved Andrew Knudsen, (Legal Information), consumers if it is likely to mislead a through pleadings or otherwise, the consumer, acting reasonably under the administrative law judge will give the Office of the General Counsel, 888 circumstances, with respect to a parties reasonable written notice of the First Street NE, Washington, DC material matter. A matter is material if time and place of the hearing as set forth 20426, (202) 502–6527. in 14 CFR 302.415. it is likely to have affected the SUPPLEMENTARY INFORMATION: consumer’s conduct or decision with Authority: 49 U.S.C. 41712; 49 U.S.C. 1. On October 20, 2016, the respect to a product or service. 40113(a). (c) Intent. Proof of intent is not Issued this 19h day of February 2020, in Commission issued an advance notice of necessary to establish unfairness or Washington, DC, under authority delegated proposed rulemaking (ANOPR) in deception for purposes of 49 U.S.C. in 49 CFR 1.27(n). Docket No. RM17–1 seeking comment 41712(a). Steven G. Bradbury, regarding potential modifications to the (d) Specific regulations prevail. Where General Counsel. Commission’s policies for evaluating oil an existing regulation applies to the [FR Doc. 2020–03836 Filed 2–27–20; 8:45 am] pipeline indexed rate changes and practice of an air carrier, foreign air BILLING CODE 4910–9X–P certain additions to the FERC Form No. carrier, or ticket agent, the terms of that 6, page 700 (page 700) annual reporting regulation apply rather than the general requirements.1 Prior to the ANOPR, on definitions set forth in this section. DEPARTMENT OF ENERGY April 20, 2015, certain shippers filed a (e) Informal Enforcement Proceedings. petition for rulemaking in Docket No. (1) Before any determination is made on Federal Energy Regulatory RM15–19 requesting that the how to resolve a matter involving a Commission Commission require oil pipelines to potential unfair or deceptive practice, provide additional information on page the U.S Department of Transportation’s 18 CFR Parts 342, 343, and 357 700. Office of Aviation Enforcement and Proceedings will provide an opportunity [Docket No. RM17–1–000; Docket No. 2. For the reasons set forth below, we RM15–19–000] for the alleged violator to be heard and exercise our discretion to withdraw the present relevant evidence, including but Petition for a Rulemaking of the ANOPR and to terminate the proceeding not limited to: Liquids Shippers Group, Airlines for in Docket No. RM17–1. We also deny (i) In cases where a specific regulation America, and the National Propane the shippers’ petition for rulemaking. applies, evidence tending to establish Gas Association; Revisions to that the regulation at issue was not Indexing Policies and Page 700 of violated and, if applicable, that FERC Form No. 6 mitigating circumstances apply; 1 Revisions to Indexing Policies and Page 700 of (ii) In cases where a specific AGENCY: Federal Energy Regulatory FERC Form No. 6, 81 FR 76315 (Nov. 2, 2016), 157 regulation does not apply, evidence Commission, DOE. FERC ¶ 61,047 (2016) (ANOPR).

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I. Background the Commission sought comment screen 10 in the Commission’s simplified 11 3. In 2015, the Liquids Shippers regarding potential modifications to its and streamlined indexing regime. Group,2 Airlines for America,3 and the policies for reviewing protests and Whereas this proposal would provide National Propane Gas Association 4 complaints against oil pipeline index some minimal benefit to shippers, under (collectively, the Joint Shippers) filed a rate filings. In addition, the Commission our simplified indexing regime, it sought comment regarding potential would impose considerable industry- petition for rulemaking in Docket No. 12 RM15–19 seeking to expand certain modifications to the data reporting wide cost upon pipelines. After annual filing requirements related to the requirements reflected on page 700. carefully weighing these factors, and considering other avenues available to summary cost of service contained on Initial comments were filed in January shippers, as discussed below, we page 700. Specifically, the Joint 2017 6 and reply comments were filed in reaffirm our earlier rejection of this Shippers requested that the Commission March 2017.7 require oil pipelines to disaggregate the proposal. 7. We also deny the Joint Shippers’ total company data currently reported II. Discussion request for supplemental page 700s that on page 700 and to file supplemental 5. Upon review of the record separately report crude oil and product page 700s containing summary cost of developed in this proceeding, we are pipeline system cost-of-service data. service for (a) crude and product After further consideration of this systems and (b) each ‘‘rate design’’ not persuaded to proceed with the proposal as part of the ANOPR segment. The Joint Shippers’ proposal changes considered in either the ANOPR or the Joint Shippers’ petition. proceeding, we conclude that imposing also requested that all interested parties such an annual cost-of-service reporting 6. Regarding the Joint Shippers’ be given access to the workpapers used obligation is unnecessary for the to prepare page 700. Staff held a petition, the Commission previously purposes of a preliminary screen in the technical conference on July 30, 2015, to identified concerns with the petition’s Commission’s simplified indexing discuss the Joint Shippers’ petition with proposal for (a) requiring supplemental regime. Segmentation of page 700 by the petitioners, pipelines, and interested page 700s for different rate design crude and product would apply to a parties. The Commission received segments 8 and (b) requiring pipelines to limited number of pipeline filers.13 subsequent comments in September provide page 700 workpapers to Furthermore, shippers can use the data 5 2015 and October 2015. shippers.9 We continue to believe that already on Form No. 6 14 and their 4. The October 2016 ANOPR resulted this information—which would from the Commission’s ongoing effectively require every oil pipeline 10 The Commission has stated that the total assessment of its oil pipeline policies, regulated by the Commission to file a company data on page 700 merely serves as a including evaluation of page 700 preliminary screening tool to evaluate pipeline rates detailed cost of service every year—is reporting requirements following the and that ‘‘[p]age 700 information alone is not unnecessary and inconsistent with the intended to show what a just and reasonable rate Joint Shippers’ petition. In the ANOPR, purposes of the page 700 preliminary should be.’’ Revisions to Page 700 of FERC Form No. 6, Order No. 783, 144 FERC ¶ 61,049, at P 4 2 Liquids Shippers Group consists of the (2013) (internal citations omitted). The level of the following crude oil or natural gas liquids producers: 6 Initial comments were filed by R. Gordon just and reasonable rate can be determined upon a Anadarko Energy Services Company, Apache Gooch, Delek Logistics Partners, LP, Kinder subsequent investigation, most likely at hearing Corporation, Cenovus Energy Marketing Services Morgan, Inc., Buckeye Partners, L.P., Suncor Energy before an administrative law judge. Ltd., ConocoPhillips Company, Devon Gas Services, Marketing Inc., NuStar Logistics, L.P. and NuStar 11 Indexing simplifies and streamlines ratemaking L.P., Encana Marketing (USA) Inc., Marathon Oil Pipeline Operating Partnership L.P., Shell Pipeline procedures by allowing a particular pipeline’s rates Company, Murphy Exploration and Production Company, LP, Enterprise Products Partners L.P., to deviate from its particular costs and by using a Company-USA, Noble Energy Inc., Pioneer Natural Magellan Midstream Partners L.P., The Texas broad industry-wide inflationary measure as Resources USA, Inc., and Statoil Marketing & Pipeline Association, Indicated Shippers, Marathon opposed to costly individual cost-of-service Trading (US) Inc. Pipe Line LLC, Plains All American, L.P., Colonial proceedings. Revisions to Oil Pipeline Regulations 3 Airlines for America is a trade association Pipeline Company, Enbridge Inc., Sinclair Oil Pursuant to Energy Policy Act of 1992, Order No. 561, FERC Stats. & Regs. ¶ 30,985, at 30,948 (1993), representing cargo and passenger airlines, including Corporation, the Liquids Shippers Group, AOPL, order on reh’g and clarification, Order No. 561–A, Alaska Airlines, Inc., American Airlines Group APV Shippers (Airlines for America, National (American Airlines and US Airways), Atlas Air, FERC Stats. & Regs. ¶ 31,000 (1994), aff’d sub nom. Propane Gas Association, and Valero Marketing and Inc., Delta Air Lines, Inc., Federal Express Ass’n of Oil Pipe Lines v. FERC, 83 F.3d 1424 (D.C. Supply Company), and the Canadian Association of Corporation, Hawaiian Airlines, JetBlue Airways Cir. 1996) (AOPL I). As the United States Court of Corp., Southwest Airlines Co., United Continental Petroleum Producers (CAPP). Appeals for the District of Columbia Circuit has Holdings, Inc., and United Parcel Service Co. 7 Reply comments were filed by Magellan explained, requiring an individualized cost-of- 4 The National Propane Gas Association is a Midstream Partners L.P., APV Shippers, Indicated service evaluation for each pipeline would be national trade association of the propane industry Shippers, the Liquid Shippers Group, the Canadian inconsistent with the simplification mandated by with a membership of approximately 3,000 Association of Petroleum Producers, AOPL the Energy Policy Act of 1992. Ass’n of Oil Pipe companies, including 38 affiliated state and Enbridge, Inc, Colonial Pipeline Company, and R. Lines v. FERC, 281 F.3d 239, 244 (D.C. Cir. 2002) regional associations representing members in all Gordon Gooch. (AOPL II). 50 states. 8 ANOPR, 157 FERC ¶ 61,047 at PP 31–33. 12 Moreover, the burden associated with 5 segmentation is not a one-time burden. In addition Comments and reply comments were filed by 9 Id. P 48. In the ANOPR, the Commission also to the annual record-keeping requirements, as the Association of Oil Pipe Lines (AOPL); Joint explained: ‘‘The current data on page 700 allows a pipelines add capacity, spin-off assets, and Shippers (National Propane Gas Association, shipper to compare (a) a pipeline’s revenues to its Airlines for America, a consortium of major air otherwise evolve, the pipelines would need to re- total cost of service and (b) changes to a pipeline’s evaluate their rate design segments. carriers, and Valero Energy and Supply); the total cost of service.’’ Id. This is the data needed Liquids Shippers (Anadarko Energy Services 13 Our decision to deny the Joint Shippers’ to challenge an index rate as well as for a cost-of- Company, Apache Corporation, Cenovus Energy request is supported by the fact that there are only service challenge. The Commission also noted that Marketing Services Ltd., ConocoPhillips Company, a limited number of page 700 filers (6.9 percent or requiring workpapers raised potential Devon Gas Services LP, Encana Marketing (USA) 15 total filers) that transport significant quantities Inc., Marathon Oil Company, Murphy Exploration confidentiality concerns, including ‘‘(a) shipper (greater than 10 percent of total pipeline capacity) and Production Company USA, Noble Energy Inc., information protected by section 15(13) of the ICA, of both crude oil and petroleum products as Pioneer Natural Resources USA Inc., and Statoil which prohibits disclosure of an individual reflected on Form No. 6, page 601. Marketing and Trading (US) Inc); Explorer Pipeline shipper’s movements and (b) the pipeline’s 14 Regarding cost-of-service complaints, Form No. Company; Magellan Midstream Partners LP; competitive business information.’’ Id. P 49. 6 already provides separate crude and product data Marathon Pipe Line LLC; Shell Pipeline Company Although we decline to require workpapers, we for several costs, transportation revenues, and LP; Plains Pipeline LP; SFPP L.P. (SFPP); NuStar note that page 700 includes additional data on lines throughput. Pages 302–303 of Form No. 6 include Logistics LP; Enterprise Products Partners LP; and 1–8 that provide significant detail regarding the separate crude and product cost data for salary and Buckeye Pipe Line Company, LP (Buckeye). pipeline’s cost of service. Continued

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knowledge of the pipeline system to to propose ways in which the data could cost-of-service complaints and, once support any cost-of-service complaints. nonetheless be useful,20 we conclude such a complaint is filed, an oil pipeline The record does not support imposing that the potential distortion caused by may be required to provide more this additional annual reporting such an ‘‘apples to oranges’’ comparison specific data than the contents of page requirement on pipelines. supports not imposing this 700 upon a shipper’s complaint against 8. We also decline to adopt the disaggregation of revenue and the pipeline’s rates.23 Furthermore, in proposal contemplated in the ANOPR throughput data as an annual, industry- responding to a cost-of-service that pipelines file supplemental page wide reporting requirement. These complaint, the Commission will 700s for non-contiguous and major rate issues are better addressed in individual consider arguments beyond the total design systems.15 As a general matter, cost-of-service complaint proceedings. company cost-of-service data on page such filings would not provide shippers 10. In declining to adopt these 700, and this more expansive evaluation with the information needed to evaluate additional reporting obligations on page could include claims by shippers that each pipeline system on a cost-of- 700, we seek to preserve the intent of the pipeline’s segments are obscuring service basis.16 However, despite the Energy Policy Act of 1992 to ensure over-recoveries. In such circumstances, providing limited benefits, these filings a simplified ratemaking regime. While the Commission will set such issues of would involve some of the same these changes to page 700 would require material fact for hearing.24 We believe complexity as full rate design pipelines to provide more cost-of- this approach more appropriately segmentation, requiring the pipeline to service information in their annual balances pipeline and shipper interests allocate costs to different parts of its filings, the Commission’s primary oil under our simplified indexing regime. system either by direct assignment or pipeline ratemaking regime is indexing, 11. We also decline to adopt the via some other allocation method.17 not cost of service.21 Since the Energy proposals in the ANOPR for modifying Given this additional complexity, we Policy Act of 1992, the Commission has the Commission’s policies for conclude that requiring these periodically expanded the information addressing protests and complaints supplemental page 700s filings would that pipelines must report on page against index rate increases. However, not be appropriate for the purposes of a 700,22 and we are concerned about the Commission discusses some preliminary screen in the Commission’s further expanding this reporting potential changes to these policies in simplified indexing ratemaking regime requirement in circumstances where, as our concurrent order in HollyFrontier.25 that relies upon industry-wide costs and here, we believe that it would provide 12. Accordingly, we exercise our not the pipeline’s individual cost of minimal benefits to shippers while discretion to withdraw the ANOPR and service. expanding the burden and complexity to terminate the proceeding in Docket 9. Finally, regarding the ANOPR’s under our indexing regime. Rather than No. RM17–1. Similarly, we also deny proposal to disaggregate revenue and imposing another additional annual the Joint Shippers’ petition for throughput data between cost and non- industry-wide reporting requirement, rulemaking. We continue to monitor cost based-rates,18 we find that this we prefer less burdensome and less and evaluate the Commission’s oil proposal would be overly complex, and complex options that are consistent pipeline policies, and value the therefore, not consistent the with the Energy Policy Act of 1992’s comments filed by participants in these Commission’s simplified and mandate for simplified rate regulation. proceedings. This input will be streamlined indexing regime. For example, as an alternative to considered in our ongoing effort to Furthermore, the ANOPR’s proposal to establishing an industry-wide reporting identify potential enhancements to our disaggregate revenue and throughput requirement, under the Commission’s regulatory policies and processes. data between cost and non-cost based current policies, shippers are able to file 23 See ConocoPhillips Co. v. SFPP, L.P., 137 FERC rates could lead to misleading ¶ 61,005 (2011) (upon a cost-of-service complaint, comparisons of the pipeline’s indexed system for which the rate base has not depreciated. In contrast, the cost-based rates may apply to older, requiring the pipeline to provide system-specific rates on one portion of the pipeline legacy parts of the system in which the rate base data prior to further investigation at hearing). system to the costs of the entire has depreciated. Id. at n.65. In acknowledging this Furthermore, if not available prior to the pipeline.19 Although the ANOPR sought mismatch, the Commission specifically stated that Commission’s investigation at hearing, the it did not intend to use the disaggregated revenues additional information sought by the Joint Shippers’ under the Commission’s indexing regime, which is petition becomes available at an investigatory hearing as part of the discovery process. wages, fuel and power, outside services, rentals, the primary regime for setting pipeline rates. Id. P 24 insurance, taxes, and depreciation. Pages 300–301 46. The Commission applies a flexible standard of Form No. 6 separate revenues associated with when deciding whether to set a cost-of-service 20 Id. crude transportation from revenues associated with complaint for hearing. See, e.g., Epsilon Trading 21 product transportation. AOPL II, 281 F.3d at 244. LLC v. Colonial Pipeline Co., 164 FERC ¶ 61,202, at 22 15 ANOPR, 157 FERC ¶ 61,047 at P 28 (defining As promulgated in 1994, page 700 included PP 5, 50–51 (2018) (setting for hearing a cost-of- major pipeline systems as ‘‘large pipeline systems only four lines: (1) Total costs, (2) revenues, (3) service complaint where pipeline’s page 700 (at least over 250 miles) that serve markets (either barrels, and (4) barrel-miles. Cost-of-Service showed revenues exceeding costs by 2.5 percent, Reporting and Filing Requirements for Oil origin or destination) different from the remainder but the complainants alleged reasonable grounds to Pipelines, Order No. 571, FERC Stats. & Regs. of the pipeline’s system’’ and ‘‘separate pipeline suggest that the cost components embedded in page ¶ 31,006, at 31,168–69 (1994), aff’d, AOPL I, 83 F.3d systems (even those below the 250-mile threshold) 700 were not accurate). 1424 (D.C. Cir. 1996). Page 700 subsequently 25 established by a final Commission order in a See HollyFrontier Ref. & Mktg. LLC v. SFPP, expanded to include depreciation expense, litigated rate case’’). L.P., v 170 FERC ¶ 61,133 (2020). Among other amortization of deferred earnings, rate base, rate of 16 Much like the total company data, the partial things, that order, explains that the substantially return, return on rate base, income tax allowance, exacerbate test (which was one of the issues segmentation proposals may commingle costs from and total cost of service. Revisions to and Electronic multiple rate design systems or from parts of the discussed in the ANOPR) is arguably inconsistent Filing of the FERC Form No. 6 and Related Uniform with the objectives of indexing, and proposes to system using different rate methodologies (such as Systems of Account, Order No. 620, FERC Stats. & eliminate the substantially exacerbate test and indexed, market-based, and settlement rates). Regs. ¶ 31,115 (2000), reh’g denied, Order No. 620– replace it with the percentage comparison test. We 17 See id. PP 35–42 (explaining how these A, 94 FERC ¶ 61,130 (2001). The third iteration of also plan to initiate a separate, generic proceeding proposals would require additional data on page page 700 added additional information regarding in which we will be requesting briefing from 700 to address allocation issues); AOPL Initial rate base, rate of return, return on trended original industry participants on (a) the proposal to process Comments, Docket No. RM17–1, Van Hoecke Decl. cost rate base, and income tax allowance. Revisions complaints against index rate increases using the at 25 (Jan. 18, 2017) (explaining allocation of costs). to Page 700 of FERC Form No. 6, Order No. 783, percentage comparison test and to eliminate the 18 ANOPR, 157 FERC ¶ 61,047 at PP 43–46. 144 FERC ¶ 61,049, at PP 29–40 (2013), reh’g substantially exacerbate test and (b) the use of the 19 For example, a contractual committed rate denied, Order No. 783–A, 148 FERC ¶ 61,235 10 percent threshold level when applying the could apply to the newer part of the pipeline (2014). percentage comparison test to complaints.

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By direction of the Commission. Issued: February 20, 2020. Commissioner Glick is dissenting with a Kimberly D. Bose, separate statement attached. Secretary. United States of America Federal Energy Regulatory Commission

Docket No.

Revisions to Indexing Policies and Page 700 of FERC Form No. 6 ...... RM17–1–000 Petition for a Rulemaking of the Liquids Shippers Group, Airlines for America, and the National Propane Gas Association ...... RM15–19–000

GLICK, Commissioner, dissenting: Commission’s regulations only require DEPARTMENT OF HEALTH AND I am dissenting from today’s order pipelines to report company-wide data, the HUMAN SERVICES withdrawing the Advance Notice of Proposed information currently available to shippers is Rulemaking (ANOPR) and denying shippers’ at best, a rough approximation of the costs Food and Drug Administration petition for rulemaking, because the underlying a particular shipper’s rates. Commission must do more to ensure In the ANOPR, the Commission proposed 21 CFR Parts 1, 11, 16, and 129 shippers and the Commission have the to require pipelines to report more granular information necessary to protect against data, so that shippers could use the [Docket No. FDA–2019–N–3325] unjust and reasonable oil pipeline rates.26 It information to compare the rate they are RIN 0910–AH31 is especially critical to provide shippers with being charged ‘‘with costs that are more adequate transparency into pipeline costs, closely associated with that particular given that the Commission has chosen to rely 31 Laboratory Accreditation for Analyses rate.’’ The Commission stated that this of Foods; Extension of Comment solely on shippers to ensure that pipeline information ‘‘would be useful both in the rates are just and reasonable, as required by evaluation of index filings . . . and for cost- Period 27 the Interstate Commerce Act (ICA). The of-service rate challenges to oil pipeline Commission has the statutory authority to AGENCY: Food and Drug Administration, rates.’’ 32 However, in today’s order, the HHS. initiate its own cost-of-service investigations Commission does a complete about-face, into pipeline rates but has for decades chosen ACTION: withdrawing its proposal on grounds that it Proposed rule; extension of not to do so.28 Instead of summarily is ‘‘unnecessary and inconsistent’’ with the comment period for the proposed rule terminating this proceeding, the Commission purposes of a ‘‘preliminary screen.’’ 33 The and for its information collection should have proceeded with a Notice of Commission fails to explain how the provisions. Proposed Rulemaking aimed at enhancing information currently available to shippers is pipelines’ data reporting requirements, so SUMMARY: adequate for purposes of monitoring and The Food and Drug that the information available to shippers and Administration (FDA or we) is the public is useful both in the evaluation of challenging the justness and reasonableness of oil pipeline rates, except to say that extending the comment period for the index filings and for cost-of-service rate proposed rule, and for the information challenges. shippers can use ‘‘their knowledge of the The Commission is responsible for pipeline system to support any cost-of- collection related to the proposed rule, 34 ensuring that the rates oil pipelines charge service complaints.’’ Moreover, while the entitled ‘‘Laboratory Accreditation for are just and reasonable. Through the ANOPR, Commission notes the potential cost impact Analyses of Foods’’ that appeared in the the Commission sought to enhance the this ANOPR proposal may have on oil Federal Register of November 4, 2019. transparency of information reported on pipeline companies, it appears to give scant We are taking this action in response to FERC Form No. 6, page 700, to ensure the consideration to the benefit this additional a request for an extension to allow public can effectively assess the information would have for ratepayers and interested persons additional time to the public. Absent greater transparency into reasonableness of oil pipeline rates and so consider the proposal. We also are the costs underlying a specific rate, shippers that the Commission can ‘‘better fulfill its taking this action to keep the comment statutory obligations under the ICA.’’ 29 As are left with no more than a pitiable choice the Commission explained, a pipeline’s costs between the rate charged and a costly fishing period for the information collection associated with providing one service may be expedition to obtain the information they provisions associated with the rule ‘‘fundamentally different’’ from the costs of need to challenge the rate in the first place. consistent with the comment period for providing another service.30 Because the In light of the Commission’s historic the proposed rule. practice of relying on shippers to challenge DATES: FDA is extending the comment 26 Revisions to Indexing Policies and Page 700 of rates rather than initiate its own period on the proposed rule published FERC Form No. 6, 170 FERC ¶ 61,134 (2020) investigations where the rates charged may November 4, 2019 (84 FR 59452). (Withdrawal Order). no longer be just and reasonable, it is Submit either electronic or written 27 49 App. U.S.C. 1(5) (1988). imperative that the Commission ensure comments on the proposed rule by April 28 As the Commission explained in Order No. shippers have access to the information they 561, the Commission retains the responsibility to need to carry out this essential check. In 6, 2020. Submit comments on ensure rates are just and reasonable under the ICA, today’s order, the Commission fails to fulfill information collection issues under the and for this reason it ‘‘will not promulgate an Paperwork Reduction Act of 1995 (PRA) explicit bar to Commission-initiated rate its last remaining responsibility to ensure oil investigations.’’ Revisions to Oil Pipeline pipeline rates remain just and reasonable. by April 6, 2020 (see the ‘‘Paperwork Regulations Pursuant to the Energy Policy Act of For these reasons, I respectfully dissent. Reduction Act of 1995’’ section). 1992, Order No. 561, FERC Stats. & Regs. ¶ 30,985, Richard Glick. ADDRESSES: You may submit comments at 30,967 (1993). Nonetheless, the Commission Commissioner. explained that, while it ‘‘believes it is advisable to as follows. Please note that late, retain the authority to investigate a rate on its own [FR Doc. 2020–04069 Filed 2–27–20; 8:45 am] untimely filed comments will not be motion, it should make clear that it does not BILLING CODE 6717–01–P considered. Electronic comments must contemplate invoking such authority except in the be submitted on or before April 6, 2020. most unusual circumstances.’’ Id. 31 The https://www.regulations.gov 29 Revisions to Indexing Policies and Page 700 of Id. FERC Form No. 6, 157 FERC ¶ 61,047, at P 5 (2016) 32 Id. electronic filing system will accept (ANOPR Order). 33 Withdrawal Order, 170 FERC ¶ 61,134 at P 6. comments until 11:59 p.m. Eastern Time 30 Id. P 27. 34 Id. P 7. at the end of April 6, 2020. Comments

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received by mail/hand delivery/courier information that you do not wish to be are subject to review by the Office of (for written/paper submissions) will be made publicly available, submit your Management and Budget (OMB) under considered timely if they are comments only as a written/paper the PRA (44 U.S.C. 3501–3521). postmarked or the delivery service submission. You should submit two FDA has received a request for a 30- acceptance receipt is on or before that copies total. One copy will include the day extension of the comment period on date. information you claim to be confidential the proposed rule to allow interested with a heading or cover note that states persons additional time to consider the Electronic Submissions ‘‘THIS DOCUMENT CONTAINS proposal. FDA has considered the Submit electronic comments in the CONFIDENTIAL INFORMATION.’’ The request and is granting the extension of following way: Agency will review this copy, including the comment period to allow interested • Federal eRulemaking Portal: the claimed confidential information, in persons additional opportunity to https://www.regulations.gov. Follow the its consideration of comments. The consider the proposal. We also are instructions for submitting comments. second copy, which will have the extending the comment period for the Comments submitted electronically, claimed confidential information information collection provisions to including attachments, to https:// redacted/blacked out, will be available make the comment period for the www.regulations.gov will be posted to for public viewing and posted on information collection provisions the the docket unchanged. Because your https://www.regulations.gov. Submit same as the comment period for the comment will be made public, you are both copies to the Dockets Management provisions of the proposed rule. To solely responsible for ensuring that your Staff. If you do not wish your name and clarify, FDA is requesting comment on comment does not include any contact information to be made publicly all issues raised by the proposed rule. confidential information that you or a available, you can provide this The Agency believes that this extension third party may not wish to be posted, information on the cover sheet and not allows adequate time for any interested such as medical information, your or in the body of your comments and you persons to fully consider the proposal anyone else’s Social Security number, or must identify this information as and submit comments. confidential business information, such ‘‘confidential.’’ Any information marked as a manufacturing process. Please note Dated: February 21, 2020. as ‘‘confidential’’ will not be disclosed Lowell J. Schiller, that if you include your name, contact except in accordance with 21 CFR 10.20 Principal Associate Commissioner for Policy. information, or other information that and other applicable disclosure law. For identifies you in the body of your more information about FDA’s posting [FR Doc. 2020–03944 Filed 2–27–20; 8:45 am] comments, that information will be of comments to public dockets, see 80 BILLING CODE 4164–01–P posted on https://www.regulations.gov. • FR 56469, September 18, 2015, or access If you want to submit a comment the information at: https:// with confidential information that you www.govinfo.gov/content/pkg/FR-2015- DEPARTMENT OF THE TREASURY do not wish to be made available to the 09-18/pdf/2015-23389.pdf. public, submit the comment as a Docket: For access to the docket to Alcohol and Tobacco Tax and Trade written/paper submission and in the read background documents or the Bureau manner detailed (see ‘‘Written/Paper electronic and written/paper comments Submissions’’ and ‘‘Instructions’’). received, go to https:// 27 CFR Part 9 Written/Paper Submissions www.regulations.gov and insert the [Docket No. TTB–2020–0002; Notice No. docket number, found in brackets in the 187] Submit written/paper submissions as heading of this document, into the follows: RIN 1513–AC54 ‘‘Search’’ box and follow the prompts • Mail/Hand delivery/Courier (for and/or go to the Dockets Management written/paper submissions): Dockets Proposed Establishment of the Verde Staff, 5630 Fishers Lane, Rm. 1061, Management Staff (HFA–305), Food and Valley Viticultural Area Rockville, MD 20852. Drug Administration, 5630 Fishers AGENCY: Alcohol and Tobacco Tax and Lane, Rm. 1061, Rockville, MD 20852. FOR FURTHER INFORMATION CONTACT: Trade Bureau, Treasury. • For written/paper comments Timothy McGrath, Staff Director, Food submitted to the Dockets Management and Feed Laboratory Operations, Office ACTION: Notice of proposed rulemaking. Staff, FDA will post your comment, as of Regulatory Affairs, Food and Drug SUMMARY: The Alcohol and Tobacco Tax well as any attachments, except for Administration, 12420 Parklawn Dr., and Trade Bureau (TTB) proposes to information submitted, marked and Rm. 3142, Rockville, MD 20857, 301– establish the approximately 200 square- identified, as confidential, if submitted 796–6591, email: timothy.mcgrath@ mile ‘‘Verde Valley’’ viticultural area in as detailed in ‘‘Instructions.’’ fda.hhs.gov. Yavapai County, Arizona. The proposed Instructions: All submissions received With regard to the information viticultural area is not located within, must include the Docket No. FDA– collection: Domini Bean, Office of nor does it contain, any other 2019–N–3325 for ‘‘Laboratory Operations, Food and Drug established viticultural area. TTB Accreditation for Analyses of Foods.’’ Administration, Three White Flint designates viticultural areas to allow Received comments, those filed in a North, 10A–12M, 11601 Landsdown St., vintners to better describe the origin of timely manner (see ADDRESSES), will be North Bethesda, MD 20852, 301–796– their wines and to allow consumers to placed in the docket and, except for 5733, email: [email protected]. better identify wines they may those submitted as ‘‘Confidential SUPPLEMENTARY INFORMATION: In the purchase. TTB invites comments on this Submissions,’’ publicly viewable at Federal Register of November 4, 2019 proposed addition to its regulations. https://www.regulations.gov or at the (84 FR 59452), we published a proposed Dockets Management Staff between 9 rule entitled ‘‘Laboratory Accreditation DATES: Comments must be received by a.m. and 4 p.m., Monday through for Analyses of Foods’’ with a 120-day April 28, 2020. Friday. comment period on the provisions of ADDRESSES: You may electronically • Confidential Submissions—To the proposed rule and on the submit comments to TTB on this submit a comment with confidential information collection provisions that proposal, and view copies of this

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document, its supporting materials, and part 9 of the regulations, and a name made to exclude as many public lands any comments TTB receives on it within and a delineated boundary, as from the proposed AVA as possible, Docket No. TTB–2020–0002 as posted established in part 9 of the regulations. including Montezuma’s Castle and on Regulations.gov (https:// These designations allow vintners and Montezuma’s Well National Monuments www.regulations.gov), the Federal e- consumers to attribute a given quality, and the Prescott and Coconino National rulemaking portal. Please see the reputation, or other characteristic of a Forests, approximately 33 percent of the ‘‘Public Participation’’ section of this wine made from grapes grown in an area land within the proposed Verde Valley document below for full details on how to the wine’s geographic origin. The AVA is still part of either the Prescott to comment on this proposal via establishment of AVAs allows vintners or Coconino National Forests. The Regulations.gov, U.S. mail, or hand to describe more accurately the origin of petition states that it was not practical delivery, and for full details on how to their wines to consumers and helps to draw a boundary that would exclude view or obtain copies of this document, consumers to identify wines they may all Federal land because several of the its supporting materials, and any purchase. Establishment of an AVA is vineyards within the proposed AVA are comments related to this proposal. neither an approval nor an endorsement ‘‘islands’’ of private land surrounded on FOR FURTHER INFORMATION CONTACT: by TTB of the wine produced in that all sides by Federal land. The petition Karen A. Thornton, Regulations and area. states that even with the amount of Federal land remaining within the Rulings Division, Alcohol and Tobacco Requirements Tax and Trade Bureau, 1310 G Street proposed AVA, there is still plenty of NW, Box 12, Washington, DC 20005; Section 4.25(e)(2) of the TTB privately owned land available for phone 202–453–1039, ext. 175. regulations (27 CFR 4.25(e)(2)) outlines vineyards within the proposed SUPPLEMENTARY INFORMATION: the procedure for proposing an AVA boundaries. and provides that any interested party The proposed AVA currently has 24 Background on Viticultural Areas may petition TTB to establish a grape- commercial vineyards, covering a total of approximately 125 acres. According TTB Authority growing region as an AVA. Section 9.12 of the TTB regulations (27 CFR 9.12) to the petition, several existing Section 105(e) of the Federal Alcohol prescribes standards for petitions for the vineyards are planning to expand by a Administration Act (FAA Act), 27 establishment or modification of AVAs. total of an estimated 40 acres in the near U.S.C. 205(e), authorizes the Secretary Petitions to establish an AVA must future. In addition, there are 11 wineries of the Treasury to prescribe regulations include the following: located within the proposed AVA. for the labeling of wine, distilled spirits, • Evidence that the area within the According to the petition, the and malt beverages. The FAA Act proposed AVA boundary is nationally distinguishing features of the proposed provides that these regulations should, or locally known by the AVA name Verde Valley AVA are its climate, soils, among other things, prohibit consumer specified in the petition; and topography. The petition also deception and the use of misleading • An explanation of the basis for included information about the geology statements on labels and ensure that defining the boundary of the proposed of the proposed AVA. However, because labels provide the consumer with AVA; the petition did not compare the geology adequate information as to the identity • A narrative description of the of the proposed AVA to that of the and quality of the product. The Alcohol features of the proposed AVA affecting surrounding regions and did not and Tobacco Tax and Trade Bureau viticulture, such as climate, geology, describe the effect geology has on (TTB) administers the FAA Act soils, physical features, and elevation, viticulture, TTB does not consider pursuant to section 1111(d) of the that make the proposed AVA distinctive geology to be a distinguishing feature of Homeland Security Act of 2002, and distinguish it from adjacent areas the proposed AVA. Unless otherwise codified at 6 U.S.C. 531(d). The outside the proposed AVA boundary; noted, all information and data Secretary has delegated the functions • The appropriate United States pertaining to the proposed AVA and duties in the administration and Geological Survey (USGS) map(s) contained in this proposed rule come enforcement of these provisions to the showing the location of the proposed from the petition for the proposed Verde TTB Administrator through Treasury AVA, with the boundary of the Valley AVA and its supporting exhibits. Order 120–01, dated December 10, 2013 proposed AVA clearly drawn thereon; Name Evidence (superseding Treasury Order 120–01, and dated January 24, 2003). • A detailed narrative description of The proposed Verde Valley AVA is Part 4 of the TTB regulations (27 CFR the proposed AVA boundary based on located within the larger valley of the part 4) authorizes TTB to establish USGS map markings. Verde River in central Arizona. definitive viticultural areas and regulate According to the petition, the region of Verde Valley Petition the use of their names as appellations of the proposed AVA has been referred to origin on wine labels and in wine TTB received a petition from the as ‘‘Verde Valley’’ since 1583, when the advertisements. Part 9 of the TTB Verde Valley Wine Consortium, on Spanish explorer Antonio de Espejo regulations (27 CFR part 9) sets forth behalf of the local grape growers and recorded his travels in the area. With standards for the preparation and winemakers, proposing to establish the the passing of the Homestead Act in submission of petitions for the approximately 200 square-mile ‘‘Verde 1862, which granted land in the area to establishment or modification of Valley’’ AVA in Yavapai County, settlers who were willing make American viticultural areas (AVAs) and Arizona. The petition notes that the productive use of the land, pioneers lists the approved AVAs. entire geological feature known as began moving to the region and settled ‘‘Verde Valley’’ encompasses the town of Camp Verde. Later, Fort Definition approximately 714 square miles, most of Verde was built to provide military Section 4.25(e)(1)(i) of the TTB which is National Forest land. The protection for the residents. regulations (27 CFR 4.25(e)(1)(i)) defines proposed AVA, however, encompasses a The petition included several a viticultural area for American wine as much smaller area and excludes much examples of written works that refer to a delimited grape-growing region having of the public lands that are unavailable the ‘‘Verde Valley.’’ An early geological distinguishing features, as described in for viticulture. Although an effort was study of the region, published in 1890,

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was entitled, ‘‘Thenardite, mirabilite, Boundary Evidence Climate glauberite, halite, and associates, of the The proposed Verde Valley AVA is 1 The petition included information on Verde Valley, Arizona Territory.’’ A located in Yavapai County, Arizona, the annual precipitation amounts, 1963 publication by the U.S. approximately 100 miles north of the Department of Interior was titled, temperatures in degrees Fahrenheit (F), Phoenix metropolitan area. The Verde 5 ‘‘Geology and Ground Water in the River flows through the center of the and growing degree day (GDD) Verde Valley–The Mongollon Rim valley from northwest to southeast, and accumulations within the proposed 2 Region, Arizona.’’ In 2012, the Lonely steep foothills rise up around the valley. Verde Valley AVA. Planet travel site included the Verde The northern boundary separates the Valley region in its Top 10 list of U.S. proposed AVA from the Coconino TABLE 1—AVERAGE ANNUAL travel destinations for 2013. The article National Forest. The northern boundary PRECIPITATION AMOUNTS notes, ‘‘Between Phoenix and the Grand primarily follows the 3,800-foot [2012–2017] Canyon, the Verde Valley is taking off elevation contour because, according to as Arizona’s go-to destination, and not the petition, the terrain becomes too Average just among the spa and crystal Sedona steep for cultivation above that Location annual 3 fans of years past.’’ Finally, an article elevation. The proposed eastern (direction from proposed precipitation about the wine industry in Arizona, AVA) amounts boundary follows a series of elevation (inches) published in a 2013 edition of the In contours to separate the proposed AVA Business magazine, states that the from extremely steep terrain, as well as Proposed AVA ...... 13.83 majority of Arizona’s wine grapes are from the public lands within the Fry Lake (North) ...... 29.40 grown in ‘‘the greater Willcox area and Coconino National Forest and Bar M Canyon (East) ...... 26.86 4 the Verde Valley.’’ Montezuma’s Well and Montezuma’s Baker Butte (South) ...... 27.88 The petition also included several Castle National Monuments. The Prescott (West) ...... 18.10 photographs of local businesses and proposed southern boundary follows organizations that use the term ‘‘Verde section lines on the U.S.G.S. Valley’’ in their names. For example, the Average annual rainfall amounts topographic maps because, according to within the proposed Verde Valley AVA Verde Valley Fire District, Verde Valley the petition, there were no other are significantly lower than in the Medical Center, and Verde Valley consistent features on the map to follow. Montessori School all serve the region The petition states that most of the land surrounding regions. Due to the low of the proposed AVA. The local south of the proposed boundary is rainfall amounts, vineyard owners newspaper, the Verde Independent, is uninhabited and is part of the Coconino within the proposed AVA must use published by Verde Valley Newspapers, National Forest. The proposed western irrigation to ensure adequate hydration Inc. A local hotel is named the Verde boundary primarily follows the 3,800- for their vines. The petition states that Valley Inn, and a ballet studio is named foot elevation contour, to exclude the there are sufficient sources of Verde Valley Ballet. Finally, the petition steeper terrain of the Black Hills range groundwater within the proposed AVA included a page from the local and the public lands within the Prescott for irrigation, and vineyard owners also telephone directory which lists several National Forest. employ water conservation methods other businesses that use ‘‘Verde such as drip irrigation and the use of Distinguishing Features Valley’’ in their names, such as Verde agriculturally approved reclaimed Valley Plumbing, Verde Valley RV The distinguishing features of the water. Resort and Campground, and Verde proposed Verde Valley AVA are its Valley Self Storage. climate, soils, and topography.

TABLE 2—TEMPERATURES [2012–2017]

Annual mean Maximum Minimum tempera- Annual growing Location temperature temperature ture degree days (direction from proposed AVA) (degrees F) (degrees F) (degrees F) accumulations

Proposed AVA ...... 64.1 117.0 12.0 5,580 Fry Lake (North) ...... 49.0 94.0 ¥11.0 1,797 Bar M Canyon (East) ...... 50.4 98.0 ¥10.0 1,727 Baker Butte (South) ...... 53.3 94.0 6.0 2,668 Prescott (West) ...... 57.7 104.0 2.0 3,544

Temperatures within the proposed photosynthesis. The warm daytime accumulations within the proposed Verde Valley AVA are warmer than in temperatures lead to high annual GDD AVA are best suited for growing warm- each of the surrounding regions and accumulations. According to the climate grapes such as Syrah, Cabernet provide suitable heat and sunlight for petition, the temperatures and GDD

1 Blake, W.P. Thenardite, mirabilite, glauberite, 3 Reid, Robert. Top 10 travel destinations for 5 See Albert J. Winkler, General Viticulture halite, and associates, of the Verde Valley, Arizona 2013. Lonely Planet. December 2012. https:// (Berkeley: University of California Press, 1974), Territory. (1890) American Journal of Science, vol. www.lonelyplanet.com/travel-tips-and-articles/ pages 61–64. In the Winkler climate classification 39, number 229, pp. 43–45. 77583. system, annual heat accumulation during the growing season, measured in annual GDDs, defines 2 Twenter, Floyd R., and Metzger, D.G. Geology 4 Stanton, Alison. Arizona’s Growing Wine climatic regions. One GDD accumulates for each and Ground Water in the Verde Valley–The Industry. In Business. October 2013, pp. 20–21. degree Fahrenheit that a day’s mean temperature is Mongollon Rim Region, Arizona. Washington: http://inbusinessphx.com/in-business/arizonas- above 50 degrees F, the minimum temperature Government Printing Office. 1963. growing-wine-industry. required for grapevine growth.

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Sauvignon, Petite Sirah, Zinfandel, temperatures in the proposed AVA are the surrounding regions. According to Malvasia Bianca, and Viognier. high during the daytime, cool nighttime the petition, such a significant drop in Finally, the petition included a air drains into the proposed AVA from nighttime temperatures delays grape discussion of the difference between the the surrounding higher elevations and ripening, lessens the respiration of daytime high temperatures and lowers the nighttime temperatures. As a acids, and increases phenolic nighttime low temperatures within the result, the difference between daytime development in the grapes. The proposed AVA and the surrounding high temperatures and nighttime low following tables show the mean diurnal regions. The petition referred to these temperatures within the proposed AVA temperature swings for each month temperature differences as ‘‘diurnal can exceed 30 degrees F, which is a during the growing season for the years temperature swings.’’ Although greater difference than found in any of 2014 to 2016.

TABLE 3—DIURNAL TEMPERATURE SWINGS FOR 2014 [Degrees F]

Location Month (direction from proposed AVA) April May June July August September

Within proposed AVA ...... 37.7 38.8 41.3 32.1 29.5 31.0 Fry Lake (North) ...... 28.3 30.0 35.4 27.7 23.7 24.1 Bar M Canyon (East) ...... 31.7 32.9 38.7 30.0 26.8 27.3 Baker Butte (South) ...... 19.7 20.9 23.2 21.9 18.7 16.2 Prescott (West) ...... 30.3 30.5 33.3 25.8 25.0 26.6

TABLE 4—DIURNAL TEMPERATURE SWINGS FOR 2015 [Degrees F]

Location Month (direction from proposed AVA) April May June July August September

Within proposed AVA ...... 37.3 33.0 38.0 32.2 34.4 33.9 Fry Lake (North) ...... 26.6 22.7 30.4 25.1 26.5 26.3 Bar M Canyon (East) ...... 33.0 30.6 35.7 28.0 29.4 30.4 Baker Butte (South) ...... 19.9 18.7 20.8 19.6 20.5 18.4 Prescott (West) ...... 30.2 26.1 31.2 24.6 26.1 28.7

TABLE 5—DIURNAL TEMPERATURE SWINGS FOR 2016 [Degrees F]

Location Month (direction from proposed AVA) April May June July August September

Within proposed AVA ...... 35.4 36.0 39.5 36.8 29.8 32.2 Fry Lake (North) ...... 24.9 26.6 32.7 29.2 24.4 25.0 Bar M Canyon (East) ...... 28.7 30.6 37.0 32.3 27.2 28.9 Baker Butte (South) ...... 18.5 19.5 23.1 22.1 18.0 16.7 Prescott (West) ...... 27.6 28.1 31.1 28.1 24.4 26.3

Soils although low calcium and magnesium east of the proposed AVA is comprised levels are common. Additionally, the of approximately 22 other defined soil The soils within the proposed Verde high bicarbonate levels in the series, most of which have the terms Valley AVA are primarily alluvial soils. groundwater of the proposed AVA have ‘‘stony’’ or ‘‘very stony’’ in their names. According to the petition, the majority been found to increase soil pH and To the west and southwest of the of the soils within the proposed AVA inhibit nutrient uptake in the vines. The proposed AVA, in the Black Hills, the are of the Altar, Mule, Cornville, petition states that these unfavorable soils are also typically stony. Major soil Anthony, Retriever, House Mountain, vineyard conditions can be mitigated series in these regions include Brolliar Cowan, and Arizo soil series. The through rootstock, varietal, and clonal very stony clay loam, Soldier cobbly composition of these soils ranges from selections that can tolerate and even loam, Lonti-Wineg, and Lynx. very fine sandy loam to gravelly loam benefit from these nutrient deficiencies. with silt and limestone. Traces of the To the north and east of the proposed Topography Supai, Verde, and Martin Limestone Verde Valley AVA, along the Mongollon The proposed Verde Valley AVA is formations can also be found throughout Rim, the soils are described in the located within the basin of the Verde the proposed AVA. petition as ‘‘stony.’’ The most prominent River. The petition describes the shape The petition states that the soils of the soil series in these two regions are of this basin as a ‘‘bowl with a crack in proposed AVA generally provide Brolliar stony loam and Siesta stony silt it to the south where the river flows out appropriate water drainage and have loam. According to the petition, the of the valley.’’ The edges of the ‘‘bowl’’ above-moderate levels of nutrients, remainder of the soil to the north and gently slope down towards the valley

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floor at angles of 2 to 15 percent. According to the petition, the using inversion fans and protective Elevations within the proposed AVA proposed Verde Valley AVA’s sprays and by planting late-budding range from approximately 3,000 feet to topography affects viticulture. Gentle varietals of grapes. 5,000 feet, although most of the slopes allow for easier vineyard proposed AVA is below 3,900 feet. management than steep slopes. Summary of Distinguishing Features The proposed AVA is surrounded on Furthermore, because the proposed The evidence provided in the petition all sides by higher elevations and AVA is lower than the surrounding indicates that the climate, soil, and steeper slopes. To the north and regions, cold air drains from the higher topography of the proposed Verde northeast of the proposed AVA, elevations into the proposed AVA elevations rise up to 8,000 feet along the during the spring and fall. As a result, Valley AVA distinguish it from the edge of the Mongollon Rim. To the west the risk of frost damage increases in the surrounding regions in each direction. and southwest of the proposed AVA are proposed AVA, particularly in The following table summarizes the the Black Mountains, which have steep vineyards adjacent to the river. The features of the proposed AVA and the slopes and elevations up to petition states that vineyard owners surrounding regions. approximately 7,800 feet. attempt to mitigate the risk of frost by

SUMMARY OF DISTINGUISHING FEATURES

Region Climate Soils Topography

Proposed Verde Valley AVA ...... Average of 13.83 inches of rain Alluvial soils composed of loams Gentle slopes with angles of 2 to annually; average GDD accu- ranging from very fine sandy 15 percent; elevations between mulations of 5,580; hot sum- loams to gravelly loams with silt 3,000 and 5,000 feet. mers and moderate winters; and limestone. growing season diurnal tem- perature swings of 30 degrees or higher. North ...... Higher annual rainfall amounts; Stony soils primarily of the Brollar Steep slopes with elevations up to lower GDD accumulations; stony loam and Siesta stony silt 8,000 feet. cooler summers and colder win- series. ters; smaller diurnal tempera- ture difference swings. East ...... Higher annual rainfall amounts; Stony soils primarily of the Brolliar Steep slopes with elevations up to lower GDD accumulations; stony loam and Siesta stony silt 8,000 feet. cooler summers and colder win- series. ters; smaller diurnal tempera- ture difference swings. South ...... Higher annual rainfall amounts; Stony soils primarily of the Brolliar Steep slopes with elevations up to lower GDD accumulations; very stony clay loam, Soldier 7,800 feet. cooler summers and moderate cobbly loam, Lonti-Wineg, and winters; smaller diurnal tem- Lynx series. perature difference swings. West ...... Higher annual rainfall amounts; Stony soils primarily of the Brolliar Steep slopes with elevations up to lower GDD accumulations; very stony clay loam, Soldier 7,800 feet. cooler summers and moderate cobbly loam, Lonti-Wineg, and winters; smaller diurnal tem- Lynx series. perature difference swings.

TTB Determination Impact on Current Wine Labels a brand name containing an AVA name Part 4 of the TTB regulations prohibits that was used as a brand name on a TTB concludes that the petition to label approved before July 7, 1986. See establish the approximately 200-square any label reference on a wine that indicates or implies an origin other than § 4.39(i)(2) of the TTB regulations (27 mile Verde Valley AVA merits CFR 4.39(i)(2)) for details. consideration and public comment, as the wine’s true place of origin. For a invited in this proposed rule. wine to be labeled with an AVA name, If TTB establishes this proposed AVA, at least 85 percent of the wine must be its name, ‘‘Verde Valley,’’ will be Boundary Description derived from grapes grown within the recognized as a name of viticultural area represented by that name, and the See the narrative description of the significance under § 4.39(i)(3) of the wine must meet the other conditions TTB regulations (27 CFR 4.39(i)(3)). The boundary of the petitioned-for AVA in listed in § 4.25(e)(3) of the TTB text of the proposed regulation clarifies the proposed regulatory text published regulations (27 CFR 4.25(e)(3)). If the this point. Consequently, if this at the end of this proposed rule. wine is not eligible for labeling with an proposed rule is adopted as a final rule, Maps AVA name and that name appears in the brand name, then the label is not in wine bottlers using the name ‘‘Verde The petitioner provided the required compliance and the bottler must change Valley’’ in a brand name, including a maps, and they are listed below in the the brand name and obtain approval of trademark, or in another label reference proposed regulatory text. You may also a new label. Similarly, if the AVA name as to the origin of the wine, would have view the proposed Verde Valley AVA appears in another reference on the to ensure that the product is eligible to boundary on the AVA Map Explorer on label in a misleading manner, the bottler use the AVA name as an appellation of the TTB website, at https://www.ttb.gov/ would have to obtain approval of a new origin. wine/ava-map-explorer. label. Different rules apply if a wine has

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Public Participation Please submit your comments by the and any electronic or mailed comments closing date shown above in this that TTB receives about this proposal by Comments Invited proposed rule. Your comments must appointment at the TTB Information TTB invites comments from interested reference Notice No. 187 and include Resource Center, 1310 G Street NW, members of the public on whether it your name and mailing address. Your Suite 400, Washington, DC 20005. You should establish the proposed AVA. comments also must be made in may also obtain copies at 20 cents per TTB is also interested in receiving English, be legible, and be written in 8.5- x 11-inch page. Please note that comments on the sufficiency and language acceptable for public TTB is unable to provide copies of accuracy of the name, boundary, soils, disclosure. TTB does not acknowledge USGS maps or any similarly-sized climate, and other required information receipt of comments, and TTB considers documents that may be included as part submitted in support of the petition. all comments as originals. of the AVA petition. Contact TTB’s Please provide any available specific In your comment, please clearly Regulations and Rulings Division at the information in support of your indicate if you are commenting on your above address, by email using the web comments. own behalf or on behalf of an form at https://www.ttb.gov/contact-rrd, Because of the potential impact of the association, business, or other entity. If or by telephone at 202–453–1039, ext. establishment of the proposed Verde you are commenting on behalf of an 175, to schedule an appointment or to Valley AVA on wine labels that include entity, your comment must include the request copies of comments or other the term ‘‘Verde Valley,’’ as discussed entity’s name, as well as your name and materials. position title. If you comment via above under Impact on Current Wine Regulatory Flexibility Act Labels, TTB is particularly interested in Regulations.gov, please enter the comments regarding whether there will entity’s name in the ‘‘Organization’’ TTB certifies that this proposed be a conflict between the proposed area blank of the online comment form. If regulation, if adopted, would not have name and currently used brand names. you comment via postal mail or hand a significant economic impact on a If a commenter believes that a conflict delivery/courier, please submit your substantial number of small entities. will arise, the comment should describe entity’s comment on letterhead. The proposed regulation imposes no the nature of that conflict, including any You may also write to the new reporting, recordkeeping, or other anticipated negative economic impact Administrator before the comment administrative requirement. Any benefit that approval of the proposed AVA will closing date to ask for a public hearing. derived from the use of an AVA name have on an existing viticultural The Administrator reserves the right to would be the result of a proprietor’s enterprise. TTB is also interested in determine whether to hold a public efforts and consumer acceptance of receiving suggestions for ways to avoid hearing. wines from that area. Therefore, no conflicts, for example, by adopting a Confidentiality regulatory flexibility analysis is modified or different name for the AVA. required. All submitted comments and Submitting Comments attachments are part of the public record Executive Order 12866 and subject to disclosure. Do not You may submit comments on this enclose any material in your comments It has been determined that this proposed rule by using one of the that you consider to be confidential or proposed rule is not a significant following three methods (please note inappropriate for public disclosure. regulatory action as defined by that TTB has a new address for Executive Order 12866 of September 30, comments submitted by U.S. Mail): Public Disclosure 1993. Therefore, no regulatory • Federal e-Rulemaking Portal: You TTB will post, and you may view, assessment is required. may send comments via the online copies of this proposed rule, selected Drafting Information comment form posted with this supporting materials, and any online or proposed rule within Docket No. TTB– mailed comments received about this Karen A. Thornton of the Regulations 2020–0002 on ‘‘Regulations.gov,’’ the proposal within Docket No. TTB–2020– and Rulings Division drafted this Federal e-rulemaking portal, at http:// 0002 on the Federal e-rulemaking proposed rule. www.regulations.gov. A direct link to portal, Regulations.gov, at https:// List of Subjects in 27 CFR Part 9 that docket is available under Notice www.regulations.gov. A direct link to No. 187 on the TTB website at https:// that docket is available on the TTB Wine. www.ttb.gov/wine/wine- website at https://www.ttb.gov/wine/ Proposed Regulatory Amendment rulemaking.shtml. Supplemental files wine-rulemaking.shtml under Notice may be attached to comments submitted No. 187. You may also reach the For the reasons discussed in the via Regulations.gov. For complete relevant docket through the preamble, TTB proposes to amend title instructions on how to use Regulations.gov search page at https:// 27, chapter I, part 9, Code of Federal Regulations.gov, visit the site and click www.regulations.gov. For information Regulations, as follows: on the ‘‘Help’’ tab. on how to use Regulations.gov, click on • U.S. Mail: You may send comments the site’s ‘‘Help’’ tab. PART 9—AMERICAN VITICULTURAL via postal mail to the Director, All posted comments will display the AREAS Regulations and Rulings Division, commenter’s name, organization (if Alcohol and Tobacco Tax and Trade any), city, and State, and, in the case of ■ 1. The authority citation for part 9 Bureau, 1310 G Street NW, Box 12, mailed comments, all address continues to read as follows: Washington, DC 20005. information, including email addresses. Authority: 27 U.S.C. 205. • Hand Delivery/Courier: You may TTB may omit voluminous attachments hand-carry your comments or have them or material that the Bureau considers Subpart C—Approved American hand-carried to the Alcohol and unsuitable for posting. Viticultural Areas Tobacco Tax and Trade Bureau, 1310 G You may also view copies of this Street NW, Suite 400, Washington, DC proposed rule, all related petitions, ■ 2. Subpart C is amended by adding 20005. maps and other supporting materials, §9.llto read as follows:

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§9.ll Verde Valley. Valley Road to its terminus at a (21) Proceed west along the southern (a) Name. The name of the viticultural structure on Deer Pass Ranch in Section boundaries of Sections 19, 13, 14, 15, area described in this section is ‘‘Verde 12, T16N/R4E; then 16, 17, and 18, T13N/R53, and Section Valley’’. For purposes of part 4 of this (9) Proceed south in a straight line to 13, T13N/R4E, to the intersection with chapter, ‘‘Verde Valley’’ is a term of the 3,800-foot elevation contour in the 3,800-foot elevation contour in viticultural significance. Section 12, T16/NR4E; then Section 13, T13N/R4E; then (b) Approved maps. The 9 United (10) Proceed south-southeasterly (22) Proceed northwesterly along the States Geological Survey (USGS) along the 3,800-foot elevation contour, 3,800-foot elevation contour, crossing 1:24,000 scale topographic maps used to crossing over the southwestern corner of over the Middle Verde and Cornville determine the boundary of the Verde the Sedona Quadrangle and onto the Quadrangles and onto the Cottonwood Valley viticultural area are titled: Lake Montezuma Quadrangle, to the Quadrangle, to the intersection of the (1) Camp Verde, Ariz., 1969; intersection of the contour line with an elevation contour with an unnamed (2) Clarkdale, Ariz., 1973; unnamed creek in Section 6, T15N/R5E; creek in Del Monte Gulch in Section 5, (3) Cornville, Ariz., 1968; then T15N/R3E; then (4) Cottonwood, Ariz., 1973; (11) Proceed southwesterly along the (23) Proceed westerly along the (5) Lake Montezuma, Ariz., 1969; unnamed creek until its intersection unnamed creek to its intersection with (6) Middle Verde, Ariz., 1969; with the 3,600-foot elevation contour in the 5,000-foot elevation contour in (7) Munds Draw, Ariz., 1973; Section 1, T15N/R4E; then Section 26, T16N/R2E; then (8) Page Springs, Ariz., 1969; and (12) Proceed southerly along the (24) Proceed northerly along the (9) Sedona, Ariz., 1969. 3,600-foor elevation contour, crossing 5,000-foot elevation contour, crossing (c) Boundary. The Verde Valley briefly onto the Cornville Quadrangle over the Clarkdale Quadrangle and onto viticultural area is located in Yavapai and then back onto the Lake Montezuma the Munds Draw Quadrangle, to the County, Arizona. The boundary of the Quadrangle, to the intersection of the intersection of the elevation contour Verde Valley viticultural area is as elevation contour with an unnamed with a pipeline in Section 4, T16N/R2E; described below: secondary highway known locally as then (1) The beginning point of the Cornville Road in Section 7, T15N/R5E; (25) Proceed southeasterly along the boundary is at the intersection of the then pipeline, crossing onto the Clarkdale 3,800-foot elevation contour and the (13) Proceed southeast along Cornville Quadrangle, and continuing northern boundary of Section 32, T17N/ Road to its intersection with the 3,600- northeasterly along the pipeline to its R3E, on the Clarkdale Quadrangle. From foot elevation contour in Section 20, intersection with the 3,800-foot the beginning point, proceed east along T15N/R5 E; then elevation contour in Section 32, T17N/ the northern boundary of Section 32 (14) Proceed easterly, then southerly, R3E; then until its intersection with the Verde along the elevation contour to its (26) Proceed northerly along the River; then intersection with the boundary of the 3,800-foot contour, returning to the (2) Proceed north along the Verde Montezuma Castle National Monument beginning point. River to its intersection with the in Section 36, T15N/R5E; then western boundary of Section 21, T17N/ (15) Proceed west, southeast, Signed: November 26, 2019. R3E; then southwest, and then east along the Mary G. Ryan, (3) Proceed north along the western boundary of the Montezuma Castle Acting Administrator. boundaries of Sections 21 and 16 to the National Monument to its intersection Approved: February 4, 2020. intersection with the 3,800-foot with range line separating R5E and R6E; Timothy E. Skud, elevation contour; then then (4) Proceed southerly then easterly (16) Proceed south along the R5E/R6E Deputy Assistant Secretary (Tax, Trade, and Tariff Policy). along the 3,800-foot elevation contour, range line, crossing onto the Camp crossing onto the Page Springs Verde Quadrangle, to the intersection of [FR Doc. 2020–04012 Filed 2–27–20; 8:45 am] Quadrangle, to its intersection with Bill the range line and the southeastern BILLING CODE 4810–31–P Gray Road in Section 18, T16N/R4E; corner of Section 12, T14N/R5E; then then (17) Proceed west along the southern (5) Proceed north along Bill Gray boundaries of Sections 12, 11, 10, and DEPARTMENT OF HOMELAND Road to its intersection with an 9 to the intersection of the southern SECURITY unnamed, unimproved road known boundary of Section 9 and the locally as Forest 761B Road in Section Montezuma Castle National Monument; Coast Guard 32, T17N/R4E; then then (6) Proceed east, then northeast, along (18) Proceed along the boundary of 33 CFR Part 100 Forest 761B Road to its intersection the Montezuma Castle National [Docket Number USCG–2020–0078] with Red Canyon Road in Section 26, Monument in a counterclockwise RIN 1625–AA08 T17N/R4E; then direction to the intersection of the (7) Proceed south along Red Canyon monument boundary and the 3,300-foot Special Local Regulation; Sail Grand Road to its intersection with U.S. elevation contour in Section 16, T14N/ Prix 2020 Race Event; San Francisco, Highway 89 Alt. in Section 35, T17N/ R5E; then CA R4E; then (19) Proceed southerly, then (8) Proceed east over U.S. Highway 89 southeasterly, along the 3,300-foot AGENCY: Coast Guard, DHS. Alt. in a straight line to and unnamed, elevation contour to its intersection ACTION: Notice of proposed rulemaking. unimproved road known locally as with the eastern boundary of Section 18, Angel Valley Road, and proceed T13N/R6E; then SUMMARY: The Coast Guard is proposing southeasterly along Angel Valley Road (20) Proceed south along the eastern to establish a temporary special local as it becomes a light-duty road, crossing boundary of Section 18 to its regulation in the navigable waters of over Oak Creek, and continuing along intersection with the southern boundary San Francisco Bay in San Francisco, CA the southernmost segment of Angel of Section 18; then in support of the San Francisco Sail

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Grand Prix 2020 official practice and Francisco, California. The Coast Guard May 3, 2020. The areas regulated by this race periods between April 30, 2020 and has not approved the Marine Event special local regulation will be east of May 3, 2020. This special local Permit and is still evaluating the the Golden Gate Bridge, south of regulation is necessary to ensure the application. If the permit is approved, Alcatraz Island, west of Treasure Island, safety of mariners transiting the area however, we anticipate that a special and in the vicinity of the city of San from the dangers of high-speed sailing local regulation may be necessary to Francisco waterfront. The Coast Guard activities associated with the Sail Grand ensure public safety during the practice proposes to establish an official practice Prix 2020 race event. This proposed and race periods. To provide adequate race area, an official race area, a temporary special local regulation will time for public input, we are proposing spectator area, and a no-loitering area. temporarily restrict vessel traffic this special local regulation prior to a Images of the four zones and adjacent to the city of San Francisco decision on the Marine Event Permit. enforcement dates and times of these waterfront in the vicinity of the Golden Prior to drafting this notice of proposed regulated areas may be found Gate Bridge and Alcatraz Island and proposed rulemaking, the Coast Guard in the docket. prohibit vessels and persons not solicited input from maritime The proposed special local regulation participating in the race event from stakeholders to better understand the would encompass all navigable waters entering the dedicated race and practice nature of commercial and recreational of the San Francisco Bay, from surface areas. We invite your comments on this activities on the Bay and how the to bottom, within the area formed by proposed rulemaking. proposed Sail Grand Prix 2020 race connecting the following latitude and DATES: Comments and related material event could impact such activities. The longitude points in the following order: must be received by the Coast Guard on Coast Guard participated in both a 37°48′18″ N, 122°27′44″ W; thence to or before March 30, 2020. navigation work group and monthly 37°48′30″ N, 122°27′56″ W; thence to ° ′ ″ ° ′ ″ ADDRESSES: You may submit comments public meeting of the local Harbor 37 49 18 N, 122 27 59 W; thence to Safety Committee (HSC) to meet with 37°49′34″ N, 122°25′36″ W; thence to identified by docket number USCG– ° ′ ″ ° ′ ″ 2020–0078 using the Federal stakeholders to obtain information and 37 49 10 N, 122 25 10 W; thence to gather feedback on notional approaches 37°48′45″ N, 122°25′10″ W; thence to eRulemaking Portal at https:// ° ′ ″ ° ′ ″ www.regulations.gov. See the ‘‘Public to enacting regulation in connection 37 48 42 N, 122 25 13 W and thence Participation and Request for with the Sail Grand Prix 2020 race along the shore to the point of Comments’’ portion of the event. Additionally, the Coast Guard has beginning. Located within this footprint, SUPPLEMENTARY INFORMATION section for taken feedback from the Sail Grand Prix there would be four separate regulated further instructions on submitting 2019 race event into consideration for areas: Zone ‘‘A’’, the Official Practice comments. the plans associated with the Sail Grand Box Area; Zone ‘‘B’’, the Official Race Prix 2020 race event. Box Area; Zone ‘‘C’’, the Spectator Area; FOR FURTHER INFORMATION CONTACT: If These regulations are needed to keep and Zone ‘‘D’’, the No Spectating or you have questions about this proposed persons and vessels away from the Loitering Area. rulemaking, call or email Lieutenant sailing race vessels, which exhibit Zone ‘‘A’’, the Official Practice Box Jennae Cotton, Waterways Management, unpredictable maneuverability and have Area, would encompass all navigable U.S. Coast Guard; telephone 415–399– a demonstrated likelihood during the waters of the San Francisco Bay, from 3585, email [email protected]. simulation of racing scenarios for surface to bottom, within the area SUPPLEMENTARY INFORMATION: capsizing. The special local regulation formed by connecting the following will help prevent injuries and property latitude and longitude points in the I. Table of Abbreviations damage that may be caused upon impact following order: 37°49′19″ N, 122°27′19″ COTP Captain of the Port San Francisco by these fast-moving vessels. The W; thence to 37°49′28″ N, 122°25′52″ W; CFR Code of Federal Regulations provisions of this temporary special thence to 37°48′49″ N, 122°25′45″ W; DHS Department of Homeland Security local regulation will not exempt racing thence to 37°48′42″ N, 122°27′00″ W; FR Federal Register ° ′ ″ ° ′ ″ NPRM Notice of proposed rulemaking vessels from any federal, state, or local thence to 37 48 51 N, 122 27 14 W PATCOM Patrol Commander laws or regulations, including Nautical and thence to the point of beginning. § Section Rules of the Road. The Coast Guard Only designated Sail Grand Prix 2020 U.S.C. United States Code proposes this rulemaking under race and support vessels would be authority in 46 U.S.C. 70034 (previously permitted to enter Zone ‘‘A’’. Zone ‘‘A’’ II. Background, Purpose, and Legal 33 U.S.C. 1231). would be used by the race and support Basis Under 33 CFR 100.35, the Coast vessels during the official practice On June 3, 2019, F50 League, LLC Guard District Commander has period on April 30th, 2020 and May 1st, notified the Coast Guard of an intention authority to promulgate certain special 2020. Zone ‘‘A’’, the Official Practice to conduct the ‘‘Sail Grand Prix 2020’’ local regulations deemed necessary to Box Area, will be enforced during the event in the San Francisco Bay. F50 ensure the safety of life on the navigable official practices from 11:30 a.m. to 5:30 League, LLC is a sailing league featuring waters immediately before, during, and p.m. on April 30, 2020 and May 1, 2020. world-class sailors racing 50-foot foiling immediately after an approved regatta. Excluding the public from entering catamarans. The season starts in Pursuant to 33 CFR 1.05–1(i), the Zone ‘‘A’’ is necessary to provide February 2020. The event will be held Commander of Coast Guard District 11 protection from the operation of the in six iconic cities throughout the has delegated to the COTP the high-speed sailing vessels within this world, traveling to the San Francisco responsibility of issuing such area. Bay in May 2020. In San Francisco, they regulations. Zone ‘‘B’’, the Official Race Box Area, propose to take advantage of the natural would be marked by 12 or more colored amphitheater that the central bay and III. Discussion of Proposed Rule visual markers. The position of these city waterfront provide. The COTP proposes to establish a markers would be confirmed via F50 League, LLC has applied for a special local regulation associated with Broadcast Notice to Mariners at least Marine Event Permit to hold the Sail the Sail Grand Prix 2020 race event from three days prior to the event. Only Grand Prix 2020 race event on the 11:30 a.m. to 5:30 p.m. on each of April designated Sail Grand Prix 2020 race, waters of the San Francisco Bay in San 30, 2020, May 1, 2020, May 2, 2020, and support, and VIP vessels would be

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permitted to enter Zone ‘‘B’’. Because of area. The regulatory text we are small entities during rulemaking. The the hazards posed by the sailing proposing appears at the end of this term ‘‘small entities’’ comprises small competition, excluding non-race vessel document. businesses, not-for-profit organizations traffic from Zone ‘‘B’’ is necessary to that are independently owned and IV. Regulatory Analyses provide protection from the operation of operated and are not dominant in their the high-speed sailing vessels within We developed this proposed rule after fields, and governmental jurisdictions this area. considering numerous statutes and with populations of less than 50,000. Zone ‘‘C’’, the Spectator Area, will Executive orders related to rulemaking. The Coast Guard certifies under 5 U.S.C. include specified parts of the waters Below we summarize our analyses 605(b) that this proposed rule will not immediately adjacent to racing Zone based on a number of these statutes and have a significant economic impact on ‘‘B’’ and will be defined by latitude and Executive orders, and we discuss First a substantial number of small entities. longitude points as per Broadcast Notice Amendment rights of protestors. This rule may affect owners and to Mariners. Zone ‘‘C’’ will be further A. Regulatory Planning and Review operators of commercial vessels and divided into three additional sub-areas: pleasure craft engaged in recreational Zone ‘‘C1 East’’, Zone ‘‘C1 West’’, and Executive Orders 12866 and 13563 activities and sightseeing. This special Zone ‘‘C2’’. Zone ‘‘C1 East’’ and Zone direct agencies to assess the costs and location regulation will not have a ‘‘C1 West’’ would be the general benefits of available regulatory significant economic impact on a spectator zones that are open to all alternatives and, if regulation is substantial number of small entities for vessel spectators. Zone ‘‘C2’’ will be a necessary, to select regulatory the reasons stated in section IV.A. separate designated spectator area or approaches that maximize net benefits. above. This special local regulation will areas marked by approximately four or Executive Order 13771 directs agencies be subject to enforcement for a limited more colored visual markers that will be to control regulatory costs through a duration. When the special local managed by marine event sponsor budgeting process. This NPRM has not regulation is in effect, vessel traffic can officials. The designation of Zone ‘‘C’’, been designated a ‘‘significant pass safely around the regulated area. to include Zone ‘‘C1 East’’, Zone ‘‘C1 regulatory action’’ under Executive The maritime public will be advised in West’’, and Zone ‘‘C2’’, will allow Order 12866. Accordingly, the NPRM advance of this special local regulation spectators to observe the Sail Grand Prix has not been reviewed by the Office of via Notice to Mariners. 2020 race event in a regulated area at a Management and Budget (OMB), and If you think that your business, safe distance from the sailing regatta pursuant to OMB guidance it is exempt organization, or governmental occurring in Zone ‘‘B’’. from the requirements of Executive jurisdiction qualifies as a small entity Zone ‘‘D’’ will be the No Spectating or Order 13771. and that this rule will have a significant Loitering Area. This zone will allow This regulatory action determination economic impact on it, please submit a vessels to transit in and out of marinas, is based on the size, location, and comment (see ADDRESSES) explaining piers, and vessel launching locations duration of the special local regulation. why you think it qualifies and how and along the San Francisco waterfront With this special local regulation, the to what degree this rule would throughout the duration of the Sail Coast Guard intends to maintain economically affect it. Grand Prix event. Additionally, this commercial access to the ports through Under section 213(a) of the Small zone keeps vessel traffic moving along an alternate vessel traffic management Business Regulatory Enforcement the northern boundary of the regulated scheme. The special local regulation is Fairness Act of 1996 (Pub. L. 104–121), area, reducing any impact of limited in duration, and is limited to a we want to assist small entities in recreational vessels on commercial narrowly tailored geographic area with understanding this proposed rule. If the shipping traffic. All vessels shall designated and adequate space for rule will affect your small business, maintain headway and shall not loiter transiting vessels to pass when organization, or governmental or anchor within the confines of Zone permitted by the COTP or a designated jurisdiction and you have questions ‘‘D’’. Mariners can transit Zone ‘‘D’’ representative. In addition, although concerning its provisions or options for during the Sail Grand Prix, decreasing this rule restricts access to the waters compliance, please call or email the the impact to the San Francisco encompassed by the special local person listed in the FOR FURTHER waterfront and vessel traffic lanes. All regulation, the effect of this rule will not INFORMATION CONTACT section. The Coast mariners must obey the direction of the be significant because the local Guard will not retaliate against small COTP or the COTP’s designated waterway users will be notified in entities that question or complain about representative while transiting Zone advance via public Notice to Mariners to this proposed rule or any policy or ‘‘D’’. ensure the special local regulation will action of the Coast Guard. Zones ‘‘B’’, ‘‘C’’, and ‘‘D’’ will be result in minimum impact. Therefore enforced at all times during the races, mariners will be able to plan ahead and C. Collection of Information from 11:30 a.m. to 5:30 p.m. on May 2, transit outside of the periods of This proposed rule will not call for a 2020 and May 3, 2020. enforcement of the special local new collection of information under the The duration of the establishment of regulation, and if they choose not to do Paperwork Reduction Act of 1995 (44 the proposed special local regulation is so, they will be able to transit around U.S.C. 3501–3520). intended to ensure the safety of vessels the northern side of the special local D. Federalism and Indian Tribal in these navigable waters before, during, regulation. The entities most likely to be Governments and after the scheduled practice and affected are commercial vessels and race periods. This proposed temporary pleasure craft engaged in recreational A rule has implications for federalism special local regulation will temporarily activities. under Executive Order 13132 restrict vessel traffic adjacent to the city (Federalism), if it has a substantial of San Francisco waterfront in the B. Impact on Small Entities direct effect on the States, on the vicinity of the Golden Gate Bridge and The Regulatory Flexibility Act of relationship between the national Alcatraz Island and prohibit vessels and 1980, 5 U.S.C. 601–612, as amended, government and the States, or on the persons not participating in the race requires Federal agencies to consider distribution of power and event from entering the established race the potential impact of regulations on responsibilities among the various

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levels of government. We have analyzed discovery of a significant environmental Authority: 46 U.S.C. 70041; 33 CFR 1.05– this proposed rule under that Order and impact from this proposed rule. 1. have determined that it is consistent G. Protest Activities ■ 2. Add § 100.35.T11–018 to read as with the fundamental federalism follows: principles and preemption requirements The Coast Guard respects the First described in Executive Order 13132. Amendment rights of protesters. § 100.35T11–018 Special Local Regulation; Also, this proposed rule does not have Protesters are asked to contact the Sail Grand Prix 2020 Race Event, San tribal implications under Executive person listed in the FOR FURTHER Francisco, CA Order 13175 (Consultation and INFORMATION CONTACT section to (a) Location. The following area is Coordination with Indian Tribal coordinate protest activities so that your subject to a temporary special local Governments) because it will not have message can be received without regulation: all navigable waters of the a substantial direct effect on one or jeopardizing the safety or security of San Francisco Bay, from surface to more Indian tribes, on the relationship people, places, or vessels. bottom, encompassed by a line between the Federal Government and connecting the following latitude and Indian tribes, or on the distribution of V. Public Participation and Request for longitude points in the following order: power and responsibilities between the Comments 37°48′18″ N, 122°27′44″ W; thence to Federal Government and Indian tribes. We view public participation as 37°48′30″ N, 122°27′56″ W; thence to If you believe this proposed rule has essential to effective rulemaking, and 37°49′18″ N, 122°27′59″ W; thence to implications for federalism or Indian will consider all comments and material 37°49′34″ N, 122°25′36″ W; thence to tribes, please call or email the person received during the comment period. 37°49′10″ N, 122°25′10″ W; thence to listed in the FOR FURTHER INFORMATION Your comment can help shape the 37°48′45″ N, 122°25′10″ W; thence to CONTACT section. outcome of this rulemaking. If you 37°48′42″ N, 122°25′13″ W and thence submit a comment, please include the along the shore to the point of E. Unfunded Mandates Reform Act docket number for this rulemaking, beginning. The Unfunded Mandates Reform Act indicate the specific section of this (b) Definitions. As used in this of 1995 (2 U.S.C. 1531–1538) requires document to which each comment section, Federal agencies to assess the effects of applies, and provide a reason for each (i) ‘‘Designated representative’’ means their discretionary regulatory actions. In suggestion or recommendation. a Coast Guard Patrol Commander or particular, the Act addresses actions We encourage you to submit ‘‘PATCOM’’, including a Coast Guard that may result in the expenditure by a comments through the Federal coxswain, petty officer, or other officer State, local, or tribal government, in the eRulemaking Portal at https:// on a Coast Guard vessel or a Federal, aggregate, or by the private sector of www.regulations.gov. If your material State, or local officer designated by or $100,000,000 (adjusted for inflation) or cannot be submitted using https:// assisting the Captain of the Port San more in any one year. Though this www.regulations.gov, call or email the Francisco (COTP) in the enforcement of proposed rule will not result in such an person in the FOR FURTHER INFORMATION the special local regulation. expenditure, we do discuss the effects of CONTACT section of this document for (ii) Zone ‘‘A’’ means the Official this rule elsewhere in this preamble. alternate instructions. Practice Box Area. This zone will encompass all navigable waters of the F. Environment We accept anonymous comments. All comments received will be posted San Francisco Bay, from surface to We have analyzed this proposed rule without change to https:// bottom, within the area formed by under Department of Homeland www.regulations.gov and will include connecting the following latitude and Security Directive 023–01, Rev. 1, any personal information you have longitude points in the following order: ° ′ ″ ° ′ ″ associated implementing instructions, provided. For more about privacy and 37 49 19 N, 122 27 19 W; thence to ° ′ ″ ° ′ ″ and Environmental Planning the docket, visit https:// 37 49 28 N, 122 25 52 W; thence to ° ′ ″ ° ′ ″ COMDTINST 5090.1 (series), which www.regulations.gov/privacyNotice. 37 48 49 N, 122 25 45 W; thence to ° ′ ″ ° ′ ″ guide the Coast Guard in complying Documents mentioned in this NPRM 37 48 42 N, 122 27 00 W; thence to ° ′ ″ ° ′ ″ with the National Environmental Policy as being available in the docket, and all 37 48 51 N, 122 27 14 W and thence Act of 1969 (42 U.S.C. 4321–4370f), and public comments, will be in our online to the point of beginning. have made a preliminary determination docket at https://www.regulations.gov (iii) Zone ‘‘B’’ means the Official Race that this action is one of a category of and can be viewed by following that Box Area, which will be marked by 12 actions that do not individually or website’s instructions. Additionally, if or more colored visual markers within cumulatively have a significant effect on you go to the online docket and sign up the special regulation area designated in the human environment. This proposed for email alerts, you will be notified paragraph (a). The position of these rule involves a special local regulation when comments are posted or a final markers will be specified via Broadcast that will create a regulated area, divided rule is published. Notice to Mariners at least three days into four zones, of limited size and prior to the event. duration that includes areas for vessel List of Subjects in 33 CFR Part 100 (iv) Zone ‘‘C’’ means the Spectator traffic to pass. Normally such actions Marine safety, Navigation (water), Area, which is within the special local are categorically excluded from further Reporting and recordkeeping regulation area designated in paragraph review under paragraph L61 of requirements, Waterways. (a) and outside of Zone ‘‘B’’, the Official Appendix A, Table 1 of DHS Instruction For the reasons discussed in the Race Box Area. Zone ‘‘C’’ will be Manual 023–01–001–01, Rev. 01. A preamble, the Coast Guard proposes to defined by latitude and longitude points preliminary Record of Environmental amend 33 CFR part 100 as follows: per Broadcast Notice to Mariners. Zone Consideration supporting this ‘‘C’’ will be further divided into three determination is available in the docket. PART 100—SAFETY OF LIFE ON additional sub-areas: Zone ‘‘C1 East’’, For instructions on locating this docket, NAVIGABLE WATERS Zone ‘‘C1 West’’, and Zone ‘‘C2’’. Zone see the ADDRESSES section of this ‘‘C1 East’’ and Zone ‘‘C1 West’’ will be preamble. We seek any comments or ■ 1. The authority citation for Part 100 the general spectator areas that are open information that may lead to the continues to read as follows: to all vessel spectators. Zone ‘‘C2’’

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means the separately designated first race event, the COTP will notify the SUPPLEMENTARY INFORMATION: spectator area or areas marked by maritime community of periods during I. Table of Abbreviations approximately four or more colored which these zones will be enforced via buoys that will be managed by marine Notice to Mariners and via the Coast CFR Code of Federal Regulations event sponsor officials. Vessels shall not Guard Boating Public Safety Notice. COTP Captain of the Port DHS Department of Homeland Security anchor within the confines of Zone ‘‘C’’. Dated: February 19, 2020. (v) Zone ‘‘D’’ means the No Spectating FR Federal Register NPRM Notice of proposed rulemaking or Loitering Area. This zone will allow Howard H. Wright, Captain, U.S. Coast Guard, Alternate Captain § Section vessels to transit in and out of marinas, U.S.C. United States Code piers, and vessel launch areas of the Port, San Francisco. throughout the duration of the Sail [FR Doc. 2020–03993 Filed 2–27–20; 8:45 am] II. Background, Purpose, and Legal Grand Prix. All vessels shall maintain BILLING CODE 9110–04–P Basis headway and shall not loiter or anchor The Stockton University Athletic within the confines of Zone ‘‘D’’. Department notified the Coast Guard DEPARTMENT OF HOMELAND Mariners can transit Zone ‘‘D’’ during that it will be conducting a rowing SECURITY the Sail Grand Prix 2020 event, competition from noon to 6:30 p.m. on decreasing the impact of the special Coast Guard April 4, 2020, and from 7:30 a.m. to 1:30 local regulation to the San Francisco p.m. on April 5, 2020. The competition ′ ′ waterfront. 33 CFR Part 165 will consist of rowing teams in 40 to 60 (c) Special Local Regulation. The racing shells on a 2000-meter course in following regulations apply between [Docket Number USCG–2020–0088] the New Jersey Intracoastal Waterways 11:30 a.m. and 5:30 p.m. on the Sail RIN 1625–AA00 of Atlantic City, New Jersey. The Grand Prix 2020 official practice and Captain of the Port Delaware Bay race days. Safety Zone; New Jersey Intracoastal (COTP) has determined that potential (i) Only support and race vessels will Waterway, Atlantic City, NJ hazards associated with this rowing be authorized by the COTP or event will be a safety concern for designated representative to enter Zone AGENCY: Coast Guard, DHS. participants and for vessels operating ‘‘A’’ during the official practice days. ACTION: Notice of proposed rulemaking. within the specified waters of the New Only support and race vessels will be Jersey Intracoastal Waterway. authorized by the COTP or designated SUMMARY: The Coast Guard is proposing The purpose of this rulemaking is to representative to enter Zone ‘‘B’’ during to establish a temporary safety zone for protect participants, spectators, and the race event. Vessel operators desiring certain navigable waters of the New transiting vessels on waters near the to enter or operate within Zone ‘‘B’’ Jersey Intracoastal Waterway. The safety regatta on the New Jersey Intracoastal must contact the COTP or a designated zone is needed to protect participants of Waterway before, during, and after the representative to obtain permission to the Stockton University–AC Double scheduled event. The Coast Guard is do so. Persons and vessels may request Duel Regatta on these navigable waters proposing this rulemaking under permission to transit Zone ‘‘B’’ on VHF– near Atlantic City, NJ, during the rowing authority 46 U.S.C. 70034 (previously 23A. competition on April 4, 2020, and April 33 U.S.C. 1231). (ii) Spectator vessels in Zone ‘‘C’’ 5, 2020. This proposed rulemaking must maneuver as directed by the COTP would prohibit non-participant persons III. Discussion of Proposed Rule or designated representative. When and vessels from entering, transiting The Coast Guard is proposing to hailed or signaled by the COTP or through, anchoring in, or remaining establish a temporary safety zone from designated representative by a within the safety zone unless authorized noon on April 4, 2020, until 2 p.m. on succession of sharp, short signals by by the Captain of the Port (COTP) April 5, 2020. The zone would be whistle or horn, the hailed vessel must Delaware Bay or a designated enforced from noon to 7 p.m. on April come to an immediate stop and comply representative. We invite your 4, 2020, and from 7 a.m. to 2 p.m. on with the lawful directions issued. comments on the proposed rulemaking. April 5, 2020. The safety zone would Failure to comply with a lawful DATES: Comments and related material cover all navigable waters of the New direction may result in additional must be received by the Coast Guard on Jersey Intracoastal Waterway within the operating restrictions, citation for failure or before March 16, 2020. polygon bounded by the following: Originating on the southwest portion at to comply, or both. ADDRESSES: You may submit comments approximate position latitude 39°20′57″ (iii) Spectator vessels in Zone ‘‘C’’ identified by docket number USCG– N, longitude 074°27′59″ W; thence must operate at safe speeds which will 2020–0088 using the Federal northeasterly along the shoreline to create minimal wake. eRulemaking Portal at https:// latitude 39°21′35″ N, longitude (iv) Vessels in Zone ‘‘D’’ shall www.regulations.gov. See the ‘‘Public 074°27′06″ W; thence east across the maintain headway and shall not loiter Participation and Request for mouth of Beach Thorofare to the or anchor within the confines of Zone Comments’’ portion of the ‘‘D’’. Vessels in Zone ‘‘D’’ must shoreline at latitude 39°21′41″ N, SUPPLEMENTARY INFORMATION section for maneuver as directed by the COTP or longitude 074°26′55″ W; thence east further instructions on submitting along the shoreline to latitude designated representative. comments. (v) Rafting and anchoring of vessels 39°21′42″N, longitude 074°26′51″ W; are prohibited within Zones ‘‘A’’, ‘‘B’’, FOR FURTHER INFORMATION CONTACT: If thence southeast across the New Jersey ‘‘C’’, and ‘‘D’’. you have questions about this proposed Intracoastal Waterway to the shoreline (d) Enforcement periods. This special rulemaking, call or email Petty Officer at latitude 39°21′43″ N, longitude local regulation will be enforced for the Thomas Welker, U.S. Coast Guard 074°26′41″ W; thence southwest along official practices and race events from Sector Delaware Bay, Waterways the shoreline to approximate position April 30, 2020 through May 3, 2020 Management Division; telephone 215– latitude 39°20′55″ N, longitude from 11:30 a.m. until 5:30 p.m. each 271–4814, email Thomas.J.Welker@ 074°27′57″ W; thence north to the point day. At least 24 hours in advance of the uscg.mil. of origin. The duration of the zone is

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intended to ensure the safety of will provide advance notification of the the States, or on the distribution of participants and vessels on these safety zone to the local maritime power and responsibilities among the navigable waters before, during, and community by Local Notice to Mariners, various levels of government. We have after the rowing event. No person or Broadcast Notice to Mariners, and on- analyzed this proposed rule under that vessel will be permitted to enter, transit scene actual notice from designated Order and have determined that it is through, anchor in, or remain within the representatives. consistent with the fundamental safety zone without obtaining federalism principles and preemption permission from the COTP Delaware B. Impact on Small Entities requirements described in Executive Bay or a designated representative. If the The Regulatory Flexibility Act of Order 13132. COTP Delaware Bay or a designated 1980, 5 U.S.C. 601–612, as amended, Also, this proposed rule does not have representative grants authorization to requires Federal agencies to consider tribal implications under Executive enter, transit through, anchor in, or the potential impact of regulations on Order 13175, Consultation and remain within the safety zone, all small entities during rulemaking. The Coordination with Indian Tribal persons and vessels receiving such term ‘‘small entities’’ comprises small Governments, because it does not have authorization must comply with the businesses, not-for-profit organizations a substantial direct effect on one or instructions of the COTP Delaware Bay that are independently owned and more Indian tribes, on the relationship or a designated representative. The operated and are not dominant in their between the Federal Government and regulatory text we are proposing appears fields, and governmental jurisdictions Indian tribes, or on the distribution of at the end of this document. with populations of less than 50,000. power and responsibilities between the The Coast Guard certifies under 5 U.S.C. Federal Government and Indian tribes. IV. Regulatory Analyses 605(b) that this proposed rule will not If you believe this proposed rule has We developed this proposed rule after have a significant economic impact on implications for federalism or Indian considering numerous statutes and a substantial number of small entities. tribes, please contact the person listed Executive orders related to rulemaking. While some owners or operators of in the FOR FURTHER INFORMATION Below we summarize our analyses vessels intending to transit the safety CONTACT section. based on a number of these statutes and zone may be small entities, for the E. Unfunded Mandates Reform Act Executive orders, and we discuss First reasons stated in section V.A above, this Amendment rights of protestors. proposed rule would not have a The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531–1538) requires A. Regulatory Planning and Review significant economic impact on any vessel owner or operator. Federal agencies to assess the effects of Executive Orders 12866 and 13563 If you think that your business, their discretionary regulatory actions. In direct agencies to assess the costs and organization, or governmental particular, the Act addresses actions benefits of available regulatory jurisdiction qualifies as a small entity that may result in the expenditure by a alternatives and, if regulation is and that this rule would have a State, local, or tribal government, in the necessary, to select regulatory significant economic impact on it, aggregate, or by the private sector of approaches that maximize net benefits. please submit a comment (see $100,000,000 (adjusted for inflation) or Executive Order 13771 directs agencies ADDRESSES) explaining why you think it more in any one year. Though this to control regulatory costs through a qualifies and how and to what degree proposed rule will not result in such an budgeting process. This NPRM has not this rule would economically affect it. expenditure, we do discuss the effects of been designated a ‘‘significant Under section 213(a) of the Small this rule elsewhere in this preamble. regulatory action,’’ under Executive Business Regulatory Enforcement F. Environment Order 12866. Accordingly, the NPRM Fairness Act of 1996 (Pub. L. 104–121), has not been reviewed by the Office of we want to assist small entities in We have analyzed this proposed rule Management and Budget (OMB), and understanding this proposed rule. If the under Department of Homeland pursuant to OMB guidance it is exempt rule would affect your small business, Security Directive 023–01, Rev. 1, from the requirements of Executive organization, or governmental associated implementing instructions, Order 13771. jurisdiction and you have questions and Environmental Planning The impact of this proposed rule is concerning its provisions or options for COMDTINST 5090.1 (series), which not significant for the following reasons: compliance, please contact the person guide the Coast Guard in complying (1) The enforcement periods will last listed in the FOR FURTHER INFORMATION with the National Environmental Policy seven hours each day of the 2-day event CONTACT section. The Coast Guard will Act of 1969 (42 U.S.C. 4321–4370f), and at a time of year when vessel traffic is not retaliate against small entities that have made a preliminary determination usually low; (2) although non- question or complain about this that this action is one of a category of participant persons and vessels may not proposed rule or any policy or action of actions that do not individually or enter, transit through, anchor in, or the Coast Guard. cumulatively have a significant effect on remain with the safety zone without the human environment. This proposed authorization from the COTP Delaware C. Collection of Information rule involves a safety zone lasting seven Bay or a designated representative, This proposed rule would not call for hours per day for two days that would surrounding channels within the New a new collection of information under prohibit entry within certain navigable Jersey Intracoastal Waterways will the Paperwork Reduction Act of 1995 waters during a rowing event. Normally remain unaffected. Persons and vessels (44 U.S.C. 3501–3520). such actions are categorically excluded will be able to operate in the from further review under paragraph surrounding area during the D. Federalism and Indian Tribal L60(a) of Appendix A, Table 1 of DHS enforcement period; (3) persons and Governments Instruction Manual 023–01–001–01, vessels will still be able to enter, transit A rule has implications for federalism Rev. 1. A preliminary Record of through, anchor in, or remain within the under Executive Order 13132, Environmental Consideration regulated area if authorized by the Federalism, if it has a substantial direct supporting this determination is COTP Delaware Bay or a designated effect on the States, on the relationship available in the docket. For instructions representative; and (4) the Coast Guard between the national government and on locating the docket, see the

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ADDRESSES section of this preamble. We PART 165—REGULATED NAVIGATION enforcement of the safety zone by seek any comments or information that AREAS AND LIMITED ACCESS AREAS Federal, State, and local agencies. may lead to the discovery of a (e) Enforcement period. This zone significant environmental impact from ■ 1. The authority citation for part 165 will be enforced from noon to this proposed rule. continues to read as follows: approximately 7 p.m. on April 4, 2020, and from approximately 7 a.m. to 2 G. Protest Activities Authority: 46 U.S.C. 70034, 70051; 33 CFR 1.05–1, 6.04–1, 6.04–6, and 160.5; p.m., or shortly before that, on April 5, The Coast Guard respects the First Department of Homeland Security Delegation 2020. Amendment rights of protesters. No. 0170.1. Dated: February 24, 2020. Protesters are asked to contact the ■ Scott E. Anderson, person listed in the FOR FURTHER 2. Add § 165.T05–0088 to read as INFORMATION CONTACT section to follows: Captain, U.S. Coast Guard, Captain of the Port Delaware Bay. coordinate protest activities so that your § 165.T05–0088 Safety Zone; New Jersey message can be received without Intracoastal Waterway, Atlantic City, NJ. [FR Doc. 2020–04087 Filed 2–27–20; 8:45 am] BILLING CODE 9110–04–P jeopardizing the safety or security of (a) Location. The following area is a people, places or vessels. safety zone: All navigable waters of the New Jersey Intracoastal Waterway in V. Public Participation and Request for DEPARTMENT OF VETERANS Atlantic City, NJ, within the polygon Comments AFFAIRS We view public participation as bounded by the following: Originating essential to effective rulemaking, and on the southwest portion at approximate 38 CFR Part 21 position latitude 39°20′57″ N, longitude will consider all comments and material ° ′ ″ RIN 2900–AQ61 received during the comment period. 074 27 59 W; thence northeasterly along the shoreline to latitude 39°21′35″ Your comment can help shape the Elimination of On-the-Job Training and N, longitude 074°27′06″ W; thence east outcome of this rulemaking. If you Apprenticeship Trainee Certification submit a comment, please include the across the mouth of Beach Thorofare to the shoreline at latitude 39°21′41″ N, AGENCY: Department of Veterans Affairs. docket number for this rulemaking, ° ′ ″ longitude 074 26 55 W; thence east ACTION: Proposed rule. indicate the specific section of this ° ′ ″ document to which each comment along the shoreline to latitude 39 21 42 ° ′ ″ SUMMARY: The Department of Veterans applies, and provide a reason for each N, longitude 074 26 51 W; thence southeast across the New Jersey Affairs (VA) proposes to amend its suggestion or recommendation. regulations that contain the We encourage you to submit Intracoastal Waterway to the shoreline ° ′ ″ requirements for certification of comments through the Federal at latitude 39 21 43 N, longitude ° ′ ″ attendance at on-the-job training and eRulemaking Portal at https:// 074 26 41 W; thence southwest along apprenticeship programs under the www.regulations.gov. If your material the shoreline to approximate position ° ′ ″ Veterans Apprenticeship and Labor cannot be submitted using https:// latitude 39 20 55 N, longitude ° ′ ″ Opportunity Reform Act (VALOR Act). www.regulations.gov, call or email the 074 27 57 W; thence north to the point Section 3 of this law eliminated the person in the FOR FURTHER INFORMATION of origin. requirement that trainees (veterans and CONTACT section of this document for (b) Definitions. As used in this other eligible persons who receive the alternate instructions. section, designated representative We accept anonymous comments. All means a Coast Guard Patrol training) certify attendance at on-the-job comments received will be posted Commander, including a Coast Guard or apprentice training prior to without change to https:// petty officer, warrant or commissioned disbursement of a training assistance www.regulations.gov and will include officer on board a Coast Guard vessel or allowance, thereby placing the any personal information you have on board a federal, state, or local law responsibility solely on the employer to provided. For more about privacy and enforcement vessel assisting the Captain certify attendance in on-the-job and submissions in response to this of the Port (COTP), Delaware Bay in the apprenticeship programs. Although it document, see DHS’s Correspondence enforcement of the safety zone. does not apply to chapter 30, we System of Records notice (84 FR 48645, (c) Regulations. (1) Under the general propose to eliminate the regulatory September 26, 2018). safety zone regulations in subpart C of trainee certification requirement for Documents mentioned in this NPRM this part, you may not enter the safety chapter-30 trainees as well. as being available in the docket, and all zone described in paragraph (a) of this DATES: Comments must be received on public comments, will be in our online section unless authorized by the COTP or before April 28, 2020. docket at https://www.regulations.gov or the COTP’s designated representative. ADDRESSES: Written comments may be and can be viewed by following that (2) To seek permission to enter or submitted through website’s instructions. Additionally, if remain in the zone, contact the COTP or www.Regulations.gov; by mail or hand- you go to the online docket and sign up the COTP’s representative via VHF–FM delivery to Director, Office of Regulation for email alerts, you will be notified channel 16 or 215–271–4807. Those in Policy and Management (00REG), when comments are posted or a final the safety zone must comply with all Department of Veterans Affairs, 810 rule is published. lawful orders or directions given to Vermont Avenue NW, Room 1064, them by the COTP or the COTP’s Washington, DC 20420; or by fax to List of Subjects in 33 CFR Part 165 designated representative. (202) 273–9026. Comments should Harbors, Marine safety, Navigation (3) This section applies to all vessels indicate that they are submitted in (water), Reporting and recordkeeping except those engaged in law response to ‘‘RIN 2900–AQ61— requirements, Security measures, enforcement, aids to navigation Elimination of On-the-Job Training and Waterways. servicing, and emergency response Apprenticeship Trainee Certification.’’ For the reasons discussed in the operations. Copies of comments received will be preamble, the Coast Guard is proposing (d) Enforcement. The U.S. Coast available for public inspection in the to amend 33 CFR part 165 as follows: Guard may be assisted in the patrol and Office of Regulation Policy and

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Management, Room 1064, between the from application to the provision of distributive impacts; and equity). hours of 8:00 a.m. and 4:30 p.m., educational assistance under chapter 30, Executive Order 13563 (Improving Monday through Friday (except VA previously promulgated 38 CFR Regulation and Regulatory Review) holidays). Please call (202) 461–4902 for 21.7140(c)(2)(ii) to require employer and emphasizes the importance of an appointment. (This is not a toll-free trainee certification for apprenticeship quantifying both costs and benefits, number.) In addition, during the and OJT programs under chapter 30. reducing costs, harmonizing rules, and comment period, comments may be (VA apparently interpreted sec. promoting flexibility. The Office of viewed online through the Federal 3034(a)(1) as not necessarily prohibiting Information and Regulatory Affairs has Docket Management System (FDMS) at VA from requiring dual certifications determined that this rule is not a www.Regulations.gov. but, rather, as not requiring VA to significant regulatory action under FOR FURTHER INFORMATION CONTACT: require dual certifications pursuant to Executive Order 12866. VA’s impact Cheryl Amitay, Chief, Policy and sec. 3680(c).) analysis can be found as a supporting Regulation Development Staff (225C), VA proposes to amend 38 CFR document at http:// Education Service, Department of 21.7140(c)(2)(ii) to eliminate the trainee www.regulations.gov, usually within 48 Veterans Affairs, 810 Vermont Ave. NW, certification requirement for hours after the rulemaking document is Washington, DC 20420, (202) 461–9700. apprenticeship and OJT programs under published. Additionally, a copy of the (This is not a toll-free telephone chapter 30. We are proposing to amend rulemaking and its impact analysis are number.) section 21.7140(c)(2) so that the available on VA’s website at http:// certification requirement would be SUPPLEMENTARY INFORMATION: Prior to www1.va.gov/orpm/, by following the consistent across all VA education and link for ‘‘VA Regulations Published the enactment of Public Law 115–89, training programs and with Congress’ 131 Stat. 1279, ‘‘Veterans From FY 2004 Through Fiscal Year to intent to reduce the administrative Date.’’ This proposed rule is expected to Apprenticeship and Labor Opportunity burden for trainees enrolled in Reform Act’’ (VALOR Act), 38 U.S.C. be an E.O. 13771 deregulatory action. apprenticeship and OJT programs. H.R. Details on the estimated cost savings of 3680(c) required that veterans and other Rep. No. 115–398, at 4. eligible persons pursuing approved this proposed rule can be found in the VA also proposes to amend the rule’s economic analysis. programs of on-the-job training (OJT) or authority citations for 38 CFR 21.4138(e) apprenticeship training (trainees) certify and 21.5133 to explain that 38 U.S.C. Regulatory Flexibility Act actual attendance and that training 3680(c) is an authority for these The Secretary hereby certifies that establishments certify that a trainee was regulations. Also, VA would add an this proposed rule would not have a enrolled in and pursuing a program of authority citation for § 21.7140(c)(2) to significant economic impact on a apprenticeship or other on-job training. explain that 38 U.S.C. 3034 and 3680(g) substantial number of small entities as VA implemented former section 3680(c) are the authority for this regulation. they are defined in the Regulatory in 38 CFR 21.4138(e)(2), 21.5133(b), and Finally, VA would add the Office of Flexibility Act (5 U.S.C. 601–612). This 21.7640(a)(3). VA also required dual Management and Budget (OMB) certification for chapter-30 information-collection control number rulemaking does not change VA’s policy apprenticeship and OJT programs in 38 for 38 CFR 21.4138, 21.5133, 21.7140, or provisions involving any small CFR 21.7140(c)(2). and 21.7640. entities. Therefore, pursuant to 5 U.S.C. Section 3 of Public Law 115–89 These proposed amendments would 605(b), the initial and final regulatory amended sec. 3680(c) to eliminate the necessitate revision of the current OMB flexibility analysis requirements of 5 trainee’s attendance certification approved collection of information, U.S.C. 603 and 604 do not apply. requirement. Consequently, only the OMB Control No. 2900–0178, VA Form Unfunded Mandates training establishment is required to 22–6553d–1, ‘‘Monthly Certification of certify the trainee’s OJT or On-The-Job and Apprenticeship The Unfunded Mandates Reform Act apprenticeship training. Congress Training.’’ Both the trainee and the of 1995 requires at 2 U.S.C. 1532 that eliminated the trainee certification training establishment must currently agencies prepare an assessment of requirement to ‘‘reduce the complete and sign the form reporting anticipated costs and benefits before administrative burden on veterans while the number of hours the trainee has issuing any rule that may result in the maintaining attendance certification’’ to worked and, if applicable, the date the expenditure by State, local, and tribal ‘‘ensure GI Bill benefits are only paid to trainee terminated training. Based on governments, in the aggregate, or by the individuals who are abiding by the this form, VA either continues a private sector, of $100 million or more benefit requirements.’’ H.R. Rep. No. trainee’s education benefits without (adjusted annually for inflation) in any 115–398, at 4 (2017). VA therefore changes or amends or terminates one year. This proposed rule would proposes to amend 38 CFR benefits. We propose to revise this have no such effect on State, local, and 21.4138(e)(2), 21.5133(b), and information collection to remove the tribal governments, or on the private 21.7640(a)(3) by removing references to trainee’s certification based on Public sector. the requirement for a trainee’s Law 115–89. Paperwork Reduction Act certification. Section 3034 of title 38, U.S.C., sets Executive Orders 12866, 13563, and The Paperwork Reduction Act of 1995 forth general provisions regarding the 13771 (at 44 U.S.C. 3507) requires that VA administration of the chapter 30 Executive Orders 12866 and 13563 consider the impact of paperwork and Montgomery GI Bill program. Section direct agencies to assess the costs and other information collection burdens 3034(a)(1) provides that the general benefits of available regulatory imposed on the public. Under 44 U.S.C. administration of educational benefits alternatives and, when regulation is 3507(a), an agency may not collect or provisions contained in chapter 36 necessary, to select regulatory sponsor the collection of information, apply to the chapter 30 program, except approaches that maximize net benefits nor may it impose an information for sec. 3680(c), among other provisions. (including potential economic, collection requirement unless it Although 38 U.S.C. 3034(a)(1) environmental, public health and safety displays a currently valid OMB control specifically excepts 38 U.S.C. 3680(c) effects, and other advantages; number. See also 5 CFR 1320.8(b)(3)(vi).

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This proposed rule includes Estimated number of respondents per approved this document on February provisions involving a revised month/year: 3,795 annually. 20, 2020, for publication. collection of information under the Estimated frequency of responses per Luvenia Potts, Paperwork Reduction Act of 1995 that month/year: 9 responses per requires approval by OMB. OMB assigns Regulation Development Coordinator, Office respondent. control numbers to collections of of Regulation Policy & Management, Office Estimated number of responses per of the Secretary, Department of Veterans information it approves. VA may not Affairs. conduct or sponsor, and a person is not month/year: 34,155 annually. For the reasons stated in the required to respond to, a collection of Estimated average burden per information unless it displays a preamble, VA proposes to amend 38 response: The estimated average burden CFR part 21 as follows: currently valid OMB control number. per response for OMB-approved Control The information collection requirement Number 2900–0178 (VA Form 22–6553d PART 21—VOCATIONAL in §§ 21.4138(e)(2), 21.5133(b), or 22–6553d–1), would be 10 minutes, REHABILITATION AND EDUCATION 21.7140(c)(2), and 21.7640(a)(3) is rather than 20 minutes when there were currently approved by OMB and has two respondents required for each form. Subpart D—Administration of been assigned OMB control number Educational Assistance Programs 2900–0178. Estimated total annual reporting and Title: Monthly Certification of On- recordkeeping burden: 5,693 hours. ■ 1. The authority citation for part 21, The-Job and Apprenticeship Training Estimated total annual respondent Subpart D continues to read as follows: (VA Form 22–6553d & 22–6553d–1). burden cost: $142,211. Authority: 10 U.S.C. 2141 note, ch. 1606; Summary of collection of information: This proposed rule would reduce the 38 U.S.C. 501(a), chs. 30, 32, 33, 34, 35, 36, The amended collection of information and as noted in specific sections. in proposed §§ 21.4138(e)(2), current annual respondent burden costs from $283,348 to $142,211, resulting in ■ 2. Amend § 21.4138 by: 21.5133(b), 21.7140(c)(2), and ■ 21.7640(a)(3) would require only the an information collection burden costs a. Revisig paragraph (e)(2)(ii); ■ b. Revising the authority citation for training establishment to complete and savings of $141,137. paragraph (e); and submit VA Form 22–6553d or 22– Catalog of Federal Domestic Assistance ■ c. Revising the information collection 6553d–1 to certify a trainee’s on-the-job approval at the end of the section. training or apprenticeship training. This The Catalog of Federal Domestic The revisions read as follows: proposed rule would eliminate the Assistance numbers and titles for the requirement for the trainee to complete programs affected by this document are § 21.4138 Certifications and release of payments. and submit this form to certify training. 64.027, Post-9/11 Veterans Educational The proposed amendment to Assistance; 64.028, Post-9/11 Veterans * * * * * §§ 21.4138(e)(2), 21.5133(b), (e) * * * Educational Assistance; 64.032, 21.7140(c)(2), and 21.7640(a)(3) would (2) * * * decrease the estimated annual number Montgomery GI Bill Selected Reserve; (ii) VA has received from the training of respondents and consequently reduce Reserve Educational Assistance establishment a certification of hours the estimated total annual reporting and Program; 64.117, Survivors and worked. recordkeeping burden. Dependents Educational Assistance; * * * * * The estimated annual burden for the 64.120, Post-Vietnam Era Veterans’ revised collection of information would Educational Assistance; 64.124, All- (Authority: 38 U.S.C. 5113, 3680(b), 3680(c), 3680(g)) be determined as follows: Volunteer Force Educational Assistance. Description of need for information * * * * * List of Subjects in 38 CFR—Part 21 and proposed use of information: There (The Office of Management and Budget has would be no change in the need for Administrative practice and approved the information collection information and proposed use of requirements in this section under control procedure, Armed forces, Civil rights, numbers 2900–0178 and 2900–0604) information collected for OMB- Claims, Colleges and universities, approved Control Number 2900–0178 Conflict of interests, Defense Subpart G—Post-Vietnam Era (VA Form 22–6553d or 22–6553d–1). Department, Education, Employment, Veterans’ Educational Assistance VA Form 22–6553d or 22–6553d–1 is Under 38 U.S.C. Chapter 32 used to report the number of hours the Grant programs—education, Grant programs—veterans, Health care, Loan trainee has worked and, if applicable, to ■ 3. The authority citation for part 21, Programs—education, Loan programs— report the date the trainee terminated Subpart G continues to read as follows: training. veterans, Manpower training programs, Reporting and recordkeeping Authority: 38 U.S.C. 501(a), chs. 32, 36, Description of likely respondents: The and as noted in specific sections. certifying officials at VA approved requirements, Schools, Travel and training establishments would be the transportation expenses, Veterans, ■ 4. Amend § 21.5133 by: ■ sole respondents as a result of the Vocational education, Vocational a. Revising paragraph (b)(2); ■ proposed rule. They are the only parties rehabilitation. b. Revising the information collection that would complete and sign VA Form approval at the end of the section; and. The Secretary of Veterans Affairs, or ■ c. Revising the authority citation at 22–6553d or 22–6553d–1 to certify a designee, approved this document and the end of the section. trainee’s on-the-job training or The revisions read as follows: apprenticeship training as the proposed authorized the undersigned to sign and rule, which would implement Public submit the document to the Office of the § 21.5133 Certifications and release of Law 115–89, would eliminate the Federal Register for publication payments. requirement that trainees also complete electronically as an official document of * * * * * and sign the form. This change, the Department of Veterans Affairs. (b) * * * therefore, would reduce the number of Pamela Powers, Chief of Staff, (2) VA has received from the training respondents. Department of Veterans Affairs, establishment a certification of hours

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worked. Generally, this certification will (Approved by the Office of Management and edited or withdrawn. EPA may publish be required monthly, resulting in Budget under control numbers 2900–0073 any comment received to its public monthly payments. and 2900–0178) docket. Do not submit electronically any [FR Doc. 2020–03884 Filed 2–27–20; 8:45 am] * * * * * information you consider to be BILLING CODE 8320–01–P Confidential Business Information (CBI) (Approved by the Office of Management and Budget under control numbers 2900–0178 or other information whose disclosure is and 2900–0465) restricted by statute. Multimedia ENVIRONMENTAL PROTECTION submissions (audio, video, etc.) must be (Authority: 38 U.S.C. 3680(c), 3680(g), 3689) AGENCY accompanied by a written comment. Subpart K—All Volunteer Force The written comment is considered the 40 CFR Parts 9, 122, 123, 127, 403, and official comment and should include Educational Assistance Program 503 (Montgomery GI Bill—Active Duty) discussion of all points you wish to [EPA–HQ–OECA–2019–0408; FRL–10005– make. EPA will generally not consider ■ 5. The authority citation for part 21, 21–OECA] comments or comment contents located Subpart K continues to read as follows: RIN 2020–AA52 outside of the primary submission (i.e., on the web, cloud, or other file sharing Authority: 38 U.S.C. 501(a), chs. 30, 36, and as noted in specific sections. NPDES Electronic Reporting Rule— system). For additional submission Phase 2 Extension methods, the full EPA public comment ■ 6. Amend § 21.7140 by: policy, information about CBI or ■ a. Revising paragraph (c)(2)(ii); AGENCY: Environmental Protection multimedia submissions, and general ■ b. Adding an authority citation for Agency (EPA). guidance on making effective paragraph (c)(2); and ACTION: Proposed rule. comments, please visit http:// ■ c. Revising the information collection www2.epa.gov/dockets/commenting- SUMMARY: EPA published the National epa-dockets. approval at the end of the section. Pollutant Discharge Elimination System The revisions and addition read as (NPDES) Electronic Reporting Rule FOR FURTHER INFORMATION CONTACT: For follows: (‘‘NPDES eRule’’) on 22 October 2015. additional information, please contact The 2015 rule required EPA and states Mr. Carey A. Johnston, Office of § 21.7140 Certifications and release of Compliance (mail code 2222A), payments. to modernize Clean Water Act (CWA) reporting. The NPDES eRule included a Environmental Protection Agency, 1200 * * * * * phased implementation schedule. In Pennsylvania Avenue NW, Washington, (c) * * * this notice, EPA proposes postponing DC 20460; telephone number: 202–566– (2) * * * the compliance deadlines for Phase 2 1014; or email: [email protected] (ii) VA has received from the training implementation by three years and (preferred). Also see the following establishment a certification of hours providing states with additional website for additional information worked. flexibility to request additional time as regarding the rulemaking: https:// www.epa.gov/compliance/npdes- (Authority: 38 U.S.C. 3034, 3680(g)) needed. Further, this notice proposes changes to the NPDES eRule that would ereporting. * * * * * clarify existing requirements and SUPPLEMENTARY INFORMATION: (The Office of Management and Budget has eliminate some duplicative or outdated Table of Contents approved the information collection reporting requirements. Taken together, provisions in this section under control these changes are designed to save the I. General Information numbers 2900–0178, 2900–0695, and 2900– II. Background 0698) NPDES authorized programs considerable resources, make reporting III. Changes to Phase 2 Compliance Deadlines Subpart L—Educational Assistance for easier for NPDES-regulated entities, IV. Alternative Phase 2 Compliance streamline permit renewals, ensure full Deadlines Members of the Selected Reserve V. Clarifying Edits for More Efficient exchange of NPDES program data ■ Implementation and 2019 NPDES 7. The authority citation for part 21, between states and EPA, enhance public Updates Rule Changes Subpart L continues to read as follows: transparency, improve environmental VI. Assistance to States To Implement Phase Authority: 10 U.S.C. ch. 1606; 38 U.S.C. decision-making, and protect human 2 501(a), 512, ch. 36, and as noted in specific health and the environment. VII. Statutory and Executive Order Reviews sections. DATES: Comments must be received on I. General Information ■ 8. Amend § 21.7640 by: or before April 28, 2020. Under the Paperwork Reduction Act (PRA), A. Does this action apply to me? ■ a. Revising paragraph (a)(3)(ii); and comments on the information collection ■ Entities potentially affected by this b. Revising the information collection provisions are best assured of approval at the end of the section. action include all NPDES-permitted consideration if the Office of facilities, whether covered by an The revisions read as follows: Management and Budget (OMB) individual permit or general permit, § 21.7640 Release of payments. receives a copy of your comments on or industrial users located in cities without before March 30, 2020. * * * * * approved local pretreatment programs, ADDRESSES: Submit your comments, facilities subject to EPA’s biosolids (a) * * * identified by Docket ID No. EPA–HQ– regulations, and governmental entities (3) * * * OECA–2019–0408, to the Federal that have received NPDES program (ii) VA has received certification by eRulemaking Portal: http:// authorization or are implementing the training establishment of the www.regulations.gov. Follow the online portions of the NPDES program in a reservist’s hours worked. instructions for submitting comments. cooperative agreement with EPA. These * * * * * Once submitted, comments cannot be entities include:

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Category Examples of regulated entities

Facilities seeking coverage under an individual Publicly-owned treatment works (POTW) facilities, treatment works treating domestic sewage NPDES permits, general permit, or subject to (TWTDS), municipalities, counties, stormwater management districts, state-operated facili- an NPDES inspection. ties, Federally-operated facilities, industrial facilities, construction sites, and concentrated animal feeding operations (CAFOs). Industrial users located in cities without ap- Industrial facilities discharging to POTWs and for which the designated pretreatment Control proved local pretreatment programs. Authority is EPA or the authorized state, tribe, or territory rather than an approved local pretreatment program. POTWs and other facilities subject to EPA’s Class I sludge management facilities (as defined in 40 CFR 503.9(c)), POTWs with a design biosolids regulations. flow rate equal to or greater than one million gallons per day, and POTWs that serve 10,000 people or more. State and territorial governments ...... States and territories that have received NPDES program authorization from EPA, that are im- plementing portions of the NPDES program in a cooperative agreement with EPA, or that operate NPDES-permitted facilities. Tribal governments ...... Tribes that have received NPDES program authorization from EPA, that are implementing por- tions of the NPDES program in a cooperative agreement with EPA, or that operate NPDES- permitted facilities. Federal governments ...... Federal facilities with a NPDES permit and EPA Regional Offices acting for those states, tribes, and territories that do not have NPDES program authorization or that do not have program authorization for a particular NPDES subprogram (e.g., biosolids or pretreatment).

This table is not intended to be an C. What is the agency’s authority for waters. EPA is promulgating this rule exhaustive list, but rather provides some taking this action? under CWA sections 402(b) and (c), examples of the types of entities which require each authorized state, Pursuant to the Clean Water Act potentially regulated by this action. tribe, or territory to ensure that permits (CWA), 33 U.S.C. 1251 et seq., EPA Other types of entities not listed in this meet certain substantive requirements, promulgated the NPDES eRule, which and provide EPA information from table may also be regulated. If you have added a new part to title 40 (40 CFR part questions regarding the applicability of point sources, industrial users, and 127) and made changes to existing authorized programs in order to ensure this proposed action to a particular NPDES regulations. The EPA entity, consult the person listed in the proper oversight. Finally, EPA is promulgated the NPDES eRule under promulgating this rule under the FOR FURTHER INFORMATION CONTACT authority of the CWA sections 101(f), section. authority of section 501, which 304(i), 308, 402, and 501. EPA is using authorizes EPA to prescribe such B. What action is the agency taking? the same authority to propose the regulations as are necessary to carry out changes in this notice. EPA notes that provisions of the Act. EPA published the National Pollutant the Congressional Declaration of Goals Discharge Elimination System (NPDES) and Policy of the CWA specifies in D. What are the incremental costs and Electronic Reporting Rule (‘‘NPDES section 101(f) that ‘‘It is the national benefits of this action? eRule’’) on 22 October 2015. The 2015 policy that to the maximum extent EPA identified only minimal rule required EPA and states to possible the procedures utilized for incremental costs of this proposed rule modernize Clean Water Act (CWA) implementing this chapter shall as the overall impact of these proposed reporting for municipalities, industries encourage the drastic minimization of changes would be to allow states to and other facilities. The rule divided paperwork and interagency decision more efficiently implement the NPDES implementation into two ‘‘Phases.’’ The procedures, and the best use of available eRule. EPA proposes postponing the manpower and funds, so as to prevent deadline for Phase 1 implementation compliance deadlines for Phase 2 needless duplication and unnecessary passed on December 21, 2016. The implementation by three years and delays at all levels of government.’’ deadline for Phase 2 is currently providing states with additional December 21, 2020. Some state Harnessing information technology flexibility to request an extension if authorized NPDES programs have that is now a common part of daily life more time is necessary but with no is an important step toward reaching the provided feedback to EPA on how to extension allowed beyond December 21, goals of the CWA. EPA is promulgating 2026. improve Phase 2 implementation of the this rule under the authority of CWA This rule also proposes changes to the NPDES eRule and, in particular, have section 304(i) that authorizes EPA to NPDES eRule that would clarify existing recommended changes to the schedule establish minimum procedural and requirements and eliminate some for Phase 2 implementation to allow other elements of state programs under duplicative or outdated reporting both EPA and states sufficient time to section 402, including reporting requirements. For example, EPA develop and implement the information requirements and procedures to make proposes to eliminate three data technology solutions necessary for information available to the public. In elements from the minimum set of electronic reporting of the Phase 2 data addition, EPA is promulgating this rule NPDES program data (Appendix A to 40 (see DCN 0001 to 0009). This notice under section 308 of the CWA. Section CFR part 127): Reportable proposes a change to the compliance 308 of the CWA authorizes EPA to Noncompliance Tracking, Reportable deadlines for Phase 2 implementation require access to information necessary Noncompliance Tracking Start Date, and and other changes to the NPDES eRule to carry out the objectives of the Act, Applicable Categorical Standards. This to allow for a smoother transition from including sections 301, 305, 306, 307, will reduce the costs to authorized paper to electronic reporting for the 311, 402, 404, 405, and 504. Section 402 NPDES programs in collecting, NPDES program. of the CWA establishes the NPDES managing, and sharing these data. EPA permit program for the control of the also anticipates that the clarifications discharge of pollutants into the nation’s contained in this proposed rule will

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help states avoid unnecessary provides an updated view of EPA’s Updates final rule. See February 12, implementation costs. For example, the progress in gathering information and 2019; 84 FR 3324. Taken together, these proposed changes would make clear deploying NPDES electronic reporting data standardizations and the that the electronic reporting tools for Phase 2 general permits and corresponding electronic reporting requirement for Notices of Termination program reports (see DCN 0015). requirements are designed to save the (NOTs) applies only to general permit EPA and states are now focusing on NPDES authorized programs covered facilities (see Table 1 to implementing Phase 2 of the NPDES considerable resources, make reporting Appendix A, 40 CFR part 127) and not eRule and also continuing to work on easier for NPDES-regulated entities, to individually permitted facilities. completing Phase 1 reporting deadlines. streamline permit renewals (as permit EPA and states are now gathering II. Background writers typically review previous information and deploying NPDES noncompliance events during permit EPA published the NPDES eRule on electronic reporting tools for Phase 2 renewal), improve the accuracy and 22 October 2015. The 2015 rule required reports. EPA and states are collaborating completeness of NPDES program data EPA and states to modernize Clean and sharing information through shared with EPA from authorized states, Water Act (CWA) reporting for multiple workgroups. The EPA-state ensure transparency of NPDES program municipalities, industries and other General Permit and Program Report data to the public, improve facilities. That rule replaced most paper- Technical Workgroup focuses on the environmental decision-making, and based NPDES reporting requirements EPA Regional and state general permits protect human health and the with electronic reporting. This rule and program reports that will use EPA’s environment. converted the following paper reports to NPDES Electronic Reporting Tool (NeT) Finally, in a separate rulemaking, EPA electronic: (1) Discharge Monitoring for Phase 2 data. has proposed to update the minimum Reports (DMRs); (2) general permit The EPA-state NPDES Noncompliance set of NPDES program data (Appendix reports (e.g., Notices of Intent to Report (NNCR) workgroup discusses A to 40 CFR part 127) for the municipal discharge in compliance with a general how to identify, categorize, sort, and separate storm sewer systems (MS4s) permit); and (3) other specified program display violations on the NNCR. This sector. See April 20, 2019; 84 FR 18200. reports. The NPDES eRule included a workgroup is discussing how best to These changes to the NPDES eRule will phased implementation schedule (40 implement the new NNCR regulations CFR 127.26). Most states and permittees in 40 CFR 123.45. EPA held three correct obsolete citations and current have successfully implemented Phase 1 listening sessions with the EPA-state inconsistencies with the newly of the NPDES eRule, which includes NNCR workgroup to discuss updated modified MS4 Phase II regulations. See electronic submission of DMRs and the language in 40 CFR 123.45. States December 8, 2016; 81 FR 89320. These Federal Biosolids Annual Report where provided feedback on how to clarify the updates would not change the burden EPA is the Regulatory Authority. category I noncompliance criteria for associated with complying with the The NPDES eRule requires EPA to enforcement order violations, permit NPDES eRule but, rather, the changes calculate electronic reporting effluent limit violations, and reporting would assist permitting authorities and participation rates for each authorized violations. EPA incorporated comments MS4 permittees in implementing NPDES program six months after the and other minor clarifying text and NPDES electronic reporting. Today’s deadline for conversion from paper to formatting issues from these workgroup proposal does not address those electronic submissions and annually discussions in this proposed rule. previously-proposed changes to the thereafter [see 40 CFR 127.26(j)]. The EPA received letters from authorized MS4 data elements. compliance deadlines for Phase 1 of the NPDES programs on how to improve III. Changes to Phase 2 Compliance NPDES eRule were 21 December 2016 Phase 2 implementation of the NPDES Deadlines and they included NPDES Data Groups eRule which recommended changes to No. 3 (Discharge Monitoring Reports or the schedule for Phase 2 This notice proposes to postpone the ‘‘DMRs’’) and No. 4 [Sewage Sludge/ implementation to allow both EPA and compliance deadlines for Phase 2 Biosolids Annual Program Reports, states sufficient time to develop and implementation of the NPDES eRule where EPA implements the biosolids implement the information technology from December 21, 2020, to December program (40 CFR part 503)]. EPA’s first solutions necessary for electronic 21, 2023 (see Table 1 to 40 CFR 127.16). three assessments have shown reporting of the Phase 2 data (see DCN EPA has received feedback from considerable progress in Phase 1 0001 to 0009). In response to the authorized NPDES programs on how to implementation (see DCN 0012—0014), feedback from the states in the letters improve Phase 2 implementation of the although more work needs to be done to and oral communications, this notice NPDES eRule. This state feedback, in achieve the full benefits of Phase 1. proposes changes to the NPDES eRule to particular, recommended changes to the Current tracking of Phase 1 allow for a smoother transition from schedule for Phase 2 implementation to implementation is available through the paper to electronic reporting for the allow both EPA and states sufficient ‘‘NPDES eRule Readiness Dashboard.’’ NPDES program. time to develop and implement the See: https://echo.epa.gov/trends/npdes- EPA collected these changes over the information technology solutions erule-dashboard-public. past few years as EPA and states began necessary for electronic reporting of the Electronic submission of all other implementing the NPDES eRule. These Phase 2 data (see DCN 0001 to 0009). reports and notices covered by the suggested changes are intended to One letter submitted by the Association NPDES eRule are part of Phase 2 clarify and streamline NPDES eRule of Clean Water Agencies (‘‘ACWA’’) implementation. See Table 1 to 40 CFR implementation. These changes also noted that, ‘‘the new deadline should 127.16. The online ‘‘NPDES eRule Phase update the required minimum set of take into consideration the resources 2 Implementation Dashboard’’ provides NPDES program data to include recent and time EPA will need to invest in an inventory of all general permits and changes to the NPDES program. EPA updating ICIS–NPDES, the resources program reports covered by the NPDES recently updated the NPDES permit and time EPA will need to invest to eRule. See: https://edap.epa.gov/public/ application regulations (40 CFR 122.21) complete work on the NPDES Electronic extensions/eRule_Phase2/eRule_ and the related forms with the 2019 Tool, known as ‘‘NeT,’’ and the Phase2.html. This dashboard also NPDES Applications and Program resources and time states will then need

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to complete their implementation of the requirements in 40 CFR parts 122, 403, noncompliance issues that might impact rule given the new information.’’ and 503: human health or the environment. • The reason for this proposal is to Low Erosivity Waivers (LEW)—40 However, EPA needs additional time allow EPA additional time to complete CFR 122.26(b)(15)(i)(C); to work with states on completing Phase • the development of electronic tools that No Exposure Certifications (NOE)— 1 reporting and how best to categorize the States may use to comply with the 40 CFR 122.26(g)(1)(iii); • and display non-compliance in the electronic reporting requirements. EPA Notice of Intent to discharge NNCR based on Phase 1 data. In had intended for these tools to be (NOI)—40 CFR 122.28(b)(2)(i); • addition, EPA is already working with available as an option for the states to Small Municipal Separate Storm states on reducing the level of use by December 2020, but EPA has Sewer System (MS4) Program Report— Significant Non-Compliance with experienced unexpected delays since 40 CFR 122.34(d)(3); NPDES requirements using the Phase 1 • Sewer Overflow/Bypass Event EPA promulgated the 2015 NPDES Rule. data as one of its National Compliance Report—40 CFR 122.41(l)(6)(i), These delays include the modernization Initiatives for 2020–2023.1 Therefore, 122.41(l)(7), 122.41(m)(3)(i), and of its pre-existing electronic reporting EPA is proposing to delay the public tool for the collection of DMRs (called 122.41(m)(3)(ii); • Medium or Large MS4 Program release date of the NNCR by one year, ‘‘NetDMR’’) and the switch from using to December 21, 2022. This date will a commercially license software Report—40 CFR 122.42(c); • CAFO Annual Report—40 CFR allow EPA and states to use the new platform to an open-source software NNCR as EPA is making decisions on its platform for general permits and 122.42(e)(4); • next round of National Compliance program reports (called ‘‘NPDES Notice of Terminations (NOT)—40 Initiatives. EPA solicits comment on Electronic Report Tool’’ or ‘‘NeT’’). The CFR 122.64(c); • this proposed NNCR publication date. NetDMR changes involved migrating Significant Industrial User tens of thousands of NetDMR users to Compliance Reports in Municipalities IV. Alternative Phase 2 Compliance the Agency’s Central Data Exchange Without Approved Pretreatment Deadlines (CDX) system for account management. Programs—40 CFR 403.12(e) and (h); • This simplified NetDMR account Pretreatment Program Report—40 In addition to changing the Phase 2 CFR 403.12(i); and compliance deadline, EPA is proposing management for EPA, states, and • NetDMR users. EPA made the switch to Biosolids Annual Report—40 CFR new regulatory provisions to create open-source software platform for NeT 503.18, 503.28, 503.48. additional flexibility for Phase 2 to lower its costs. EPA estimates that In addition to moving the compliance compliance deadlines in case they are these tools will be available by deadlines to December 21, 2023, EPA needed. These new provisions respond December 21, 2023 (see DCN 0017). EPA proposes to add a reference to the to the requests from ACWA and other has gathered basic information on all proposed alternative Phase 2 authorized NPDES programs for more general permits and program reports compliance deadlines provisions at 40 time to develop and implement the that will use NeT (see NPDES eRule CFR 127.24(e) or (f). This is discussed information technology solutions Phase 2 Implementation Dashboard). in more detail below. Other than the necessary for electronic reporting of the EPA expects to build the necessary NeT changes to the deadlines for complying Phase 2 data (see DCN 0001 to 0009). applications in order to meet the new with Phase 2 compliance deadlines and The EPA proposes a new regulatory Phase 2 compliance deadlines as it has the addition of the reference to the provision [40 CFR 127.24(e)] that would already deployed general permit alternative Phase 2 compliance allow authorized NPDES programs to electronic reporting tools for more than deadlines provisions, EPA is not request additional time beyond 27,000 facilities that are subject to proposing any changes to the December 21, 2023 to implement Phase federal or authorized state general requirements in these sections and will 2 of the NPDES eRule. Under this permits (approximately 55% of the not respond to any public comments on provision, an authorized NPDES estimated number of facilities that will issues other than the dates. program would send a request for EPA use NeT). An extension of the Phase 2 Finally, EPA regulations set the NNCR to review and approval. This request compliance deadlines will also assist publication date at December 21, 2021. would identify the facilities, general states who have experienced similar EPA originally picked this date as it permits, program reports, or data challenges in developing the needed time to develop this report and elements for which the authorized information technology infrastructure to that it was one year after the Phase 2 NPDES program needs additional time implement electronic reporting tools for compliance deadlines for electronic beyond December 21, 2023. For their general permit covered facilities. reporting. As previously noted, EPA and example, under this option a state could The following are the proposed states have made significant progress in seek approval from the EPA to postpone regulatory changes that EPA is implementing Phase 1 and EPA has held implementation of electronic reporting considering for the Phase 2 compliance frequent meetings with states on how to for a NPDES general permit until an deadlines: develop the NNCR. agreed-upon time after December 21, • Change the Phase 2 compliance EPA does not see the need to extend 2023, but no later than December 21, deadlines in Table 1 to 40 CFR 127.16 the NNCR publication compliance 2026. This waiver might be helpful if a from December 21, 2020, to December deadline for an additional three years, state has a permit or program report that 21, 2023 for general permit reports and as it has some Phase 1 data that can be is a lower priority for electronic program reports. incorporated into the NNCR. EPA plans reporting (e.g., a general permit that • Change the Phase 2 compliance to incorporate Phase 2 data into the provides coverage for 10 or fewer deadlines in the NPDES regulations in NNCR as these data become available. NPDES-regulated entities) and for which 40 CFR parts 122, 403, and 503. These The benefit of this approach would be electronic reporting tool development is provisions originated the reporting to give EPA, states, and the public a delayed. requirements. complete inventory of facilities with violations based on the most currently EPA proposes to change the Phase 2 1 See the following website for details: https:// compliance (deadline) date for the available set of NPDES program data. www.epa.gov/enforcement/fy2020-fy2023-national- following NPDES reporting This will help EPA and states identify compliance-initiatives.

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While states may make multiple compliance with the NPDES eRule [see also include two new data sharing requests for compliance deadline 40 CFR 127.27(d)(2)]. EPA would requirements related to NAICS codes extensions beyond December 21, 2023, update its website with each alternative and variance requests that were recently the proposed rule would not allow EPA Phase 2 compliance deadline request added to the NPDES application forms. to grant extensions beyond December and the corresponding Agency approval See the 2019 NPDES Applications and 21, 2026. Each alternative Phase 2 or denial notice. EPA would provide Program Updates Rule (February 12, compliance deadline request would updated information at: https:// 2019; 84 FR 3324). need to: www.epa.gov/compliance/npdes- • Be submitted to EPA by the ereporting. EPA would also update its A. Correct the Title for 40 CFR 123.45 Director, as defined in 40 CFR 122.2; website and online ‘‘NPDES eRule EPA proposes to delete ‘‘by the • Identify each general permit, Phase 2 Implementation Dashboard’’ to Director’’ in the title for this section. program report, and related data clearly identify the approved alternative EPA proposes this deletion as the elements covered by the request and the Phase 2 compliance deadlines for each NPDES eRule eliminated the previous corresponding alternative compliance facility, general permit report, program noncompliance reports that were deadline(s); report, and related data elements by authored by state NPDES programs and • Identify each facility covered by the authorized NPDES program. replace them with one noncompliance request and the corresponding EPA is also proposing a separate report (i.e., NPDES Noncompliance alternative compliance deadline(s) regulatory provision [40 CFR 127.24(f)] Report or ‘‘NNCR’’). The NNCR is (Note: This only applies if the request that would authorize EPA to, on its own authored by EPA rather than any state covers some but not all facilities initiative, allow for additional time for ‘‘Director.’’ covered by the relevant general permit one or more states to implement NPDES or program report requirement); electronic reporting beyond December B. Provide Greater Clarity and • Be submitted at least 120 days prior 21, 2023. Under this proposal, EPA Specificity for the NNCR Category I to the then-applicable compliance could establish an alternative Phase 2 Noncompliance Definitions deadline(s) in Table 1 to 40 CFR 127.16 compliance deadline for electronic The NPDES eRule also eliminated or a previously EPA approved reporting and data sharing for one or state noncompliance reporting [e.g., alternative compliance deadline; and more facilities, general permit reports, Quarterly Noncompliance Report • Provide a rationale for the delay program reports, and related data (QNCR), Annual Noncompliance Report and enough details (e.g., tasks, elements (see Table 2 to Appendix A to (ANCR)] and required EPA to produce a milestones, roles and responsibilities, 40 CFR part 127). Under the proposal, public inventory of NPDES violations necessary resources) to clearly describe EPA could set an alternative Phase 2 (called the NPDES Noncompliance how the program will successfully compliance deadline for up to three Report or ‘‘NNCR’’). The NPDES eRule implement electronic reporting for years but not beyond December 21, also revised and update the violation general permit, program report, and 2026. EPA would update its website and classification definitions to specifically related data elements covered by the online ‘‘NPDES eRule Phase 2 identify Category I violations with all request. Implementation Dashboard’’ to clearly other violations as Category II EPA would review each alternative identify the alternative Phase 2 violations. EPA proposes the following Phase 2 compliance deadline request to compliance deadlines for each facility, changes to the NNCR Category I determine if it provides enough detail to general permit report, program report, violation classification definitions, accurately assess if the state has a and related data elements by authorized which are listed at 40 CFR 123.45(a)(2). reasonable plan to deploy electronic NPDES program. Separately, EPA would EPA regulatory: reporting by the requested alternative provide notice to the one or more • Re-order the violation categories to Phase 2 compliance deadline. EPA authorized NPDES program covered by better match the order EPA previously would return alternative Phase 2 each alternative Phase 2 compliance used in the pre-2015 version of 123.45 compliance deadline requests with deadline through email or letters. This for the Category I noncompliance insufficient detail back to the Director notice would include a rationale for the definitions; within 30 days of receipt and provide delay and enough details (e.g., tasks, • Correct the label and definition recommendations. EPA would approve milestones, roles and responsibilities, used for violations of administrative or or deny each complete alternative Phase necessary resources) to clearly describe judicial enforcement orders; 2 compliance deadline request within how EPA would successfully implement • Correct the label for permit effluent 120 days of receipt of a sufficiently electronic reporting for general permit, limit violations; detailed request. EPA would provide program report, and related data • Clarify the definition of Category I notice to the authorized NPDES program elements covered by the extension. This noncompliance for reporting violations; of EPA’s approval or denial. The additional flexibility would also allow and authorized NPDES program could re- more time for EPA and authorized • Clarify the text in Appendix A to 40 apply if the initial request were denied NPDES programs to resolve any issues CFR 123.45 and update the formatting to by EPA. related to the sharing of Phase 2 data. correctly show labels and groups of Under the proposal, EPA could elect pollutants. to deny an alternative Phase 2 V. Clarifying Edits for More Efficient EPA solicited feedback from the EPA- compliance deadline request and then Implementation and 2019 NPDES state NNCR workgroup on these could continue to follow the procedure Updates Rule Changes proposed changes. EPA received in the existing rule for determining the The following are proposed clarifying feedback from states that it would be initial recipient of electronic NPDES edits to the 2015 NPDES eRule. These helpful to re-order the noncompliance information (see 40 CFR 127.27). EPA changes are based on EPA and state categories to better match the order EPA must become the initial recipient of experience over the past few years used prior to promulgating the 2015 electronic NPDES information from during NPDES eRule implementation. NPDES eRule. States also provided NPDES-regulated facilities if the state, These proposed changes are intended to feedback to EPA that several NNCR tribe, or territory does not consistently clarify and streamline NPDES eRule Category I definitions should be maintain electronic data transfers in implementation. The last two changes clarified and refined. States suggested

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that EPA change ‘‘Compliance schedule reporting violations relate to violations. These violations are already violations’’ to ‘‘Enforcement order ‘‘noncompliance which may endanger tracked with the ‘‘Violation Code’’ data violations,’’ as this category of health or the environment.’’ States also element. Deleting this sentence from the violations relates to violations of ‘‘any provided feedback that they would like descriptions for these four data elements requirement or condition in the ability to use their discretion to will eliminate any potential confusion administrative or judicial enforcement identify other reporting violations as as to whether the identified deficiency orders, other than compliance Category I violations. EPA notes that the automatically created an instance of construction violations and reporting NNCR already includes this flexibility non-compliance. violations.’’ This proposed change as the ‘‘Other violations’’ category D. Correct Data Element Name and would remove the word ‘‘permit’’ from includes, ‘‘any violation or group of Description and Reference for Biosolids this definition as these types of violations, which in the discretion of or Sewage Sludge—Land Application or violations are not related to permit the Director or EPA, are considered to Surface Disposal Deficiencies requirements. EPA is proposing to be of concern.’’ change the label ‘‘Effluent limits’’ to Finally, EPA proposes to clarify the EPA proposes to rename the ‘‘Permit effluent limits’’ as this category text in Appendix A to 40 CFR 123.45 ‘‘Biosolids or Sewage Sludge—Land of violations only relates to violations or and update the formatting to correctly Application or Surface Disposal effluent limits that are in NPDES show labels and groups of pollutants. Deficiencies’’ data element to ‘‘Biosolids permits. These proposed clarifications would fix or Sewage Sludge—Violations’’ and States also suggested deleting the an inaccurate reference and use the update the related data description. word ‘‘complete’’ in the ‘‘Reporting same wording from the ‘‘Violation EPA mislabeled the ‘‘Biosolids or violations’’ violation category. Some classifications’’ section of the NNCR. Sewage Sludge—Land Application or states indicated that this definition EPA intends no substantive change to Surface Disposal Deficiencies’’ data could be interpreted to mean that the the scope of Category I noncompliance element in the NPDES eRule. This submission of an incomplete report through these changes. element is part of the Federal biosolids could trigger Category I noncompliance annual report and allows NPDES- (e.g., failure to report one value on a C. Correct Appendix A Deficiency regulated entities to self-report DMR as opposed to the entire DMR). Descriptions To Match Current Practices violations on all regulated biosolids EPA proposes to delete the word of Authorized NPDES Programs management practices (i.e., land ‘‘complete’’ to make clear that a EPA proposes to delete the last application, surface disposal, and Category I reporting violation only sentence in the data description for the incineration) (see 22 October 2015; 80 occurs when an NPDES-regulated entity following four ‘deficiency’ data FR 64079). This change also makes clear fails to file an entire report within the elements in Appendix A to 40 CFR part that this data element tracks self- appropriate reporting period. 127: ‘‘The values for this data element reported violations for the three EPA is retaining in the NNCR the will distinguish between biosolids management practices identification of Category I reporting noncompliance and significant regulated under EPA’s Federal biosolids violations for facilities that do not noncompliance (SNC).’’ regulations (40 CFR part 503). EPA is provide the required data for an entire • Deficiencies Identified Through the also proposing to add the corresponding DMR but instead report a noncompliant Biosolids/Sewage Sludge Compliance CFR reference for the biosolids reason for not providing these data. An Monitoring incineration annual report (40 CFR example of this kind of noncompliance • Deficiencies Identified Through the 503.48). This change will help reduce is when a facility fails to conduct any MS4 Compliance Monitoring confusion with the data element sampling or analysis during the • Deficiencies Identified Through the ‘‘Deficiencies Identified Through the reporting period as required by its Pretreatment Compliance Monitoring Biosolids/Sewage Sludge Compliance NPDES permit. The facility would use • Deficiencies Identified Through the Monitoring;’’ these deficiencies are not the DMR form to report this Sewer Overflow/Bypass Compliance violations and do not affect compliance noncompliance to the authorized Monitoring status. NPDES program. These noncompliant EPA is also proposing to delete the E. Correct the Title of the ‘‘Sewer reasons at the DMR form level will regulation citation to 40 CFR 123.45 for Overflow/Bypass Event Report’’ in Table continue to be classified as Category I these four data elements. 1 of Appendix A and Table 1 of 40 CFR noncompliance reporting violations. EPA proposes to delete the last States also requested more clarity on sentence in the data description for the 127.16 the type of reporting violations that four ‘deficiency’ data elements as only EPA used an incorrect title in two would always trigger Category I violations affect compliance status. This sections of the NPDES eRule for the noncompliance. EPA is proposing to change would make clear that these four report that provides information on retain the 30-day grace period and list ‘deficiency’ data elements should not be sewer overflows and bypass events. EPA the reports that must be filed within 30 used to affect compliance status. These used the incorrect title, ‘‘Sewer days: (1) Final compliance schedule separate data elements mirror the Overflow Event Reports [40 CFR progress reports; (2) Discharge current inspection and violation 122.41(l)(6) and (7)],’’ at Table 1 to 40 Monitoring Reports [see 40 CFR identification practices of authorized CFR 127.16 and Table 1 to Appendix A, 122.41(l)(4)(i)], and (3) program reports NPDES programs. In general, EPA and 40 CFR part 127. The correct title is, [see 40 CFR 127.2(f)]. These reports are state inspectors document their findings ‘‘Sewer Overflow/Bypass Event Reports critical compliance monitoring made during inspections and note any [40 CFR 122.41(l)(4), (6), (7), and information and closely align with ‘deficiencies.’ EPA created four different 122.41(m)(3)].’’ EPA used the correct NPDES eRule (see Table 1 to 40 CFR ‘deficiency’ data elements to identify title in all other references to this report. 127.16). EPA is also retaining violations and track these instances of potential EPA is also proposing to make of the twenty-four reporting and five- noncompliance. The inspector’s conforming changes to the ‘‘Program day reporting NPDES requirements [see manager will typically review these area’’ column and the ‘‘Minimum 40 CFR 122.41(l)(6)] in the ‘‘Reporting ‘deficiencies’ and decide if any of them frequency’’ column in Table 1 violations’’ violation category as these warrant separate identification as (Appendix A 40 CFR part 127).

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F. Deletion of the Following Two Data facility. The first method is solely based notes, ‘‘Regions and states should also Elements: Reportable Noncompliance on production amounts provided by the conduct compliance monitoring Tracking and Reportable facility and the second method is a activities to locate industrial facilities Noncompliance Tracking Start Date manual designation process performed that have failed to obtain permit EPA proposes deleting the following by the authorized NPDES program. coverage or file a ‘no exposure • Method #1 (Based on Facility two data elements as these data are no certification’ under 40 CFR 122.26(g). Production Data)—CAAP identification longer used for EPA’s national NPDES Inspections of unpermitted industrial is automatic based on the comparison of program: stormwater facilities, including those permit application/NOI information • Reportable Noncompliance with ‘no exposure certification,’ will against the criteria used in EPA’s CAAP Tracking; and count toward the annual industrial NPDES regulations (see 40 CFR 3 • Reportable Noncompliance stormwater coverage goal of 10%.’’ 122.24(b)); and EPA provided a discussion of when Tracking Start Date. • Method #2 (Authorized NPDES EPA mistakenly included these two states must share data on unpermitted Program Designation)—Using a case-by- data elements in Appendix A. These facilities with EPA in the preamble to case approach the RA may designate the final rule (October 22, 2015; 80 FR two data elements are no longer needed any warm or cold-water aquatic animal 64078). to address unforeseen circumstances production facility as a concentrated This change would clarify that this when the authorized NPDES program aquatic animal production facility upon data element applies to unpermitted needs to turn off automatic violation determining that it is a significant facilities when states are required by detection by EPA’s NPDES data system. contributor of pollution to waters of the EPA regulations to share data about The current recommended approach to United States (see 40 CFR 122.24(c)). these unpermitted facilities with EPA. turn off compliance tracking in EPA’s The two methods are sequenced as This change would also update the NPDES data system is for EPA or follows. Facilities seeking NPDES regulatory citation for this data element authorized NPDES programs to use the permit coverage that acquire the CAAP to explicitly include certain Permit Compliance Tracking Status and status under Method #1 are not unpermitted facilities [e.g., certain DMR Non-Receipt data elements. See evaluated under Method #2 [i.e., unpermitted facilities subject to a CWA ‘‘NPDES Electronic Reporting Facility CAAP Status is set to ‘‘Yes NPDES inspection, facilities regulated Implementation Guidance for Tracking (Based on Facility Production Data)’’]. by the Federal biosolids regulation (40 Compliance and Major Designations,’’ Conversely, facilities seeking NPDES CFR part 503)]. This change would help 28 December 2016, https:// permit coverage that do not acquire EPA and states ensure that unpermitted www.epa.gov/compliance/data-entry- CAAP status under Method #1 can be facilities can be properly sorted into guidance-and-technical-papers. designated by the authorized NPDES their respective NPDES programs (e.g., G. Provide Greater Clarity for the program as a CAAP facility under industrial stormwater, construction ‘‘Facility Concentrated Aquatic Animal Method #2 [i.e., Facility CAAP Status is stormwater, CAFOs). EPA estimates that Production (CAAP) Status’’ Data set to ‘‘Yes (Authorized NPDES Program this change would only be a minor Element Name and Description Designation)’’]. The proposed changes increase in costs to states as most states would also require NPDES programs to already share these data for tracking EPA proposes to make changes to the share data with EPA on aquatic animal compliance with the CMS and other ‘‘Facility CAAP Status’’ data element production facilities that they inspect programmatic needs. For example, EPA name and description. States provided under Method #2 and found to not be uses this data element to mask facility feedback to EPA that the current name a CAAP facility [i.e., Facility CAAP information in public search tools for and description of this data element Status is set to ‘‘No (Authorized NPDES unpermitted Concentrated Animal could be interpreted to mean that this Program Determination)’’]. Feeding Operations (CAFOs) and data element applies to all NPDES- Animal Feeding Operations (AFOs) that regulated entities as the current data H. Provide Greater Clarity on the ‘Permit EPA or state inspectors found were not description provides ‘‘Yes’’ and ‘‘No’’ as Component’ Data Element With Respect discharging and do not require an example reference values. This to Unpermitted Facilities NPDES permit (see 22 October 2015; 80 interpretation implies that states would EPA proposes changes to the ‘‘Permit FR 64092). need to provide a ‘‘Yes’’ or ‘‘No’’ for all Component’’ data element description I. Provide Greater Clarity on the Notice NPDES-regulated entities. to clarify its applicability to The proposed changes would make of Termination (NOT) Electronic unpermitted facilities subject to NPDES Reporting Requirements clear that this data element only applies inspections. EPA proposes these to aquatic animal production facilities. changes as EPA’s regulations require EPA proposes to make changes to the The proposed change would ensure that authorized NPDES programs to have Notice of Termination (NOT) section in states do not need to share these data ‘‘inspection and surveillance procedures the NPDES regulations (40 CFR with EPA for facilities that do not have to determine, independent of 122.64(c)). The NPDES eRule made clear aquatic animal production (i.e., lower information supplied by regulated that the electronic reporting data entry burden for states). Moreover, persons, compliance or noncompliance requirement for NOTs only applied to the proposed changes would also with applicable program requirements.’’ general permit covered facilities (see provide the information necessary to See 40 CFR 123.26(b). EPA’s NPDES Table 1 to Appendix A, 40 CFR part distinguish between the two CAAP Compliance Monitoring Strategy (CMS) 127). This proposed language clarifies identification methods. EPA proposes to also provides compliance monitoring the electronic reporting requirement for change the name of this data element goals for authorized NPDES programs NOTs and helps ensure that the state from ‘‘Facility CAAP Designation’’ to and guidance regarding inspection of ‘‘Facility CAAP Status.’’ The proposed facilities without NPDES permit Compliance Monitoring Strategy, Memorandum from Lisa Lund, Director, Office of Compliance, July change from ‘‘Designation’’ to ‘‘Status’’ 2 coverage. For example, this document 21. See https://www.epa.gov/compliance/clean- makes clear that this data element tracks water-act-national-pollutant-discharge-elimination- both methods for identifying an aquatic 2 U.S. EPA, 2014. Issuance of Clean Water Act system-compliance-monitoring. animal production facility as a CAAP National Pollutant Discharge Elimination System 3 Ibid, Page 15.

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burden associated with implementing structures. EPA proposes to update the Appendix A as well as add new the NPDES eRule is minimized. data sharing requirements for both variance related data elements. These individual and general permit covered variances relate to the following J. Provide Greater Clarity on the facilities. This would ensure that there provisions in the CWA: ‘‘Applicable Effluent Limitations is consistent and complete reporting • Fundamentally different factors Guidelines’’ Data Element and Delete nationwide of industrial classification (FDFs) (CWA section 301(n)); the Duplicative Data Element, data, which are useful for regulatory • Non-conventional pollutants (CWA ‘‘Applicable Categorical Standards’’ decisions and program oversight. section 301(c) and (g)); EPA proposes to update the data • Water quality related effluent description for the ‘‘Applicable Effluent L. Requiring NAICS Code Data To limitations (CWA Section 302(b)(2)); Limitations Guidelines’’ data element to Match the 2019 NPDES Applications • Thermal discharges (CWA Section make clear that this data element and Program Updates Final Rule 316(a)); and applies to all NPDES-regulated entities EPA proposes to update the data • Discharges to marine waters (CWA and to clarify EPA’s expectation that the descriptions for the ‘‘NAICS Code’’ and Section 301(h))]. authorized NPDES program should ‘‘NAICS Code Primary Indicator’’ data EPA proposes to make conforming identify all applicable effluent elements. EPA is also proposing to add changes to the data element citations. limitations guidelines. Making these conforming regulatory citations to 40 EPA proposes to amend Table 2 to changes will also allow EPA to delete CFR 122.21(f)(3) and 122.28(b)(2)(ii) for Appendix A for these variance data the ‘‘Applicable Categorical Standards’’ these data elements. elements to include references to 40 data element. EPA is also proposing to EPA proposes these changes to CFR 123.41 (‘Sharing of Information’) make conforming changes to the conform to its updated NPDES permit for variances that do not expire (e.g., regulatory citation and ‘‘NPDES Data application regulations (see 12 February FDFs) as well as references to NPDES Group’’ columns in Table 2 (Appendix 2019; 84 FR 3324), which became permit application variance information A to 40 CFR part 127). effective on June 12, 2019. Since this sections at 40 CFR 122.21(f)(10) and This proposed change will help date, applicants for EPA-issued NPDES 122.21(j)(1)(ix). reduce the burden on states to create a permits are required to meet the new EPA proposes to include these revised duplicative data element, ‘‘Applicable application requirements. EPA proposes and new data elements in the minimum Categorical Standards.’’ This change to update each of the eight NPDES set of NPDES program data (Appendix will help ensure that EPA and states application forms to conform to the A to 40 CFR part 127) as these data have an accurate inventory of facilities February 12, 2019 final rule and would allow EPA and states to better that meet the applicability criteria of the improve clarity and usability. States that track variance requests and related one or more effluent guidelines as well are authorized to administer the NPDES statuses for the NPDES program. EPA as allow EPA to maintain an accurate program might require use of EPA’s recently updated the NPDES permit inventory of facilities that do not have application forms or might have application regulations (40 CFR 122.21) any applicable effluent guidelines. developed their own state-specific and the related forms with the 2019 Finally, these changes will also help application forms. In either case, the NPDES Applications and Program reduce state data sharing burden as the final NPDES Applications and Program Updates final rule. EPA proposes data description makes clear that the Updates Rule provides states up to one updating the data sharing requirements Control Authority can use pretreatment year to make conforming programmatic for both individual and general permit program report and the state can use the and regulatory changes, and up to two covered facilities. This would ensure NOI submissions to manage these data. years if statutory changes are needed. that there is consistent and complete The 2019 NPDES Applications and reporting nationwide of variance data. K. Provide Greater Clarity on the Program Updates Final Rule requires EPA is proposing to require states to ‘‘Receiving Waterbody Name for permit applications to include data on share these variance data with EPA Permitted Feature’’ Data Element Name the four-digit Standard Industrial when they approve NPDES permit and Description Classification (SIC) codes and the six- coverage. This approach will integrate EPA proposes to delete the word digit NAICS codes. Prior to this 2019 with the authorized NPDES program’s ‘‘Receiving’’ from the ‘‘Receiving rulemaking, EPA only required NPDES data collection and sharing activities. Waterbody Name for Permitted Feature’’ permit applications to include SIC code VI. Assistance to States To Implement data element name and update the data data. EPA is proposing to update the Phase 2 description. EPA is also proposing to data sharing requirements for both add conforming regulatory citations to individual and general permit covered EPA will continue to provide 40 CFR 122.21(f)(9) for this data element facilities. This would ensure that there technical assistance and support to as well as the ‘‘Source Water for Cooling is consistent and complete reporting authorized NPDES programs during the Purposes’’ data element. nationwide of industrial classification transition to electronic reporting. This EPA recently updated the NPDES data, which are useful for regulatory includes building electronic reporting regulations governing individual NPDES decisions and program oversight. EPA is tools for authorized NPDES programs permit applications (see 12 February proposing to require states to share that elect to use these tools and to 2019; 84 FR 3324). The Rule added 40 these NAICS code data with EPA when support the development of new data CFR 122.21(f)(9), requires individual they approve NPDES permit coverage. transfer protocols. Authorized NPDES permit applications to include the This will help lower the programs can request EPA’s assistance following cooling water information: implementation costs to states. for electronic reporting by submitting a ‘‘An indication of whether the facility request to [email protected]. uses cooling water and the source of the M. Add Variance Data Elements to EPA offers authorized programs cooling water.’’ EPA now proposes a Appendix A To Match the 2019 NPDES financial assistance through the conforming change to the data element Applications and Program Updates Exchange Network Grant Program. This in Appendix A. This proposed change Final Rule program provides funding to states, would also make clear that this data EPA proposes to make changes to territories, and federally recognized element is optional for other intake variance related data elements in Indian tribes to support the

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development of the National sharing would increase transparency control number. The OMB control Environmental Information Exchange and accountability and help EPA and numbers for the EPA’s regulations in 40 Network. The primary outcome authorized NPDES programs collaborate CFR are listed in 40 CFR part 9. expected from Exchange Network and measure progress in implementing Submit your comments on the assistance agreements is improved the 2015 NPDES eRule. This Agency’s need for this information, the access to, and exchange of, high-quality information collection would provide accuracy of the provided burden EPA with more timely, consistent, and environmental data from public and estimates and any suggested methods accurate inventory of all general permits private sector sources. More information for minimizing respondent burden to on this program is available at: https:// and program reports, the number of the EPA using the docket identified at www.epa.gov/exchangenetwork/ facilities that must electronically submit the beginning of this rule. You may also exchange-network-grant-program. reports, and the online location of state send your ICR-related comments to EPA will continue to work with electronic reporting tools. OMB’s Office of Information and authorized NPDES programs to Receiving current high-level data on Regulatory Affairs via email to OIRA_ implement NPDES electronic reporting. general permits and program reports is This includes the use of workgroups to critical to EPA’s ability to oversee and [email protected], Attention: help authorized NPDES programs share manage authorized NPDES programs. Desk Officer for the EPA. Since OMB is data with EPA and to provide Authorizing the burden under this ICR required to make a decision concerning recommendations on how EPA should will allow EPA to provide timely the ICR between 30 and 60 days after build the NNCR. Authorized NPDES assistance to authorized NPDES receipt, OMB must receive comments no programs can contact the person listed programs as they implementation the later than March 30, 2020. The EPA will in the FOR FURTHER INFORMATION NPDES eRule. The general permits and respond to any ICR-related comments in CONTACT section to learn how to join program reports inventory will help the final rule. promote efficiencies in NPDES eRule these workgroups. D. Regulatory Flexibility Act (RFA) implementation as states will be able to VII. Statutory and Executive Order use this information to identify other I certify that this action will not have Reviews states that have already developed a significant economic impact on a A. Executive Order 12866: Regulatory electronic reporting tools. Additionally, substantial number of small entities Planning and Review and Executive with the implementation of this under the RFA. This action will not Order 13563: Improving Regulation and information collection activity, impose any requirements on small Regulatory Review regulated entities would be able to entities. This action does not affect ensure that they are fully aware of the This action is not a significant small entities as the proposed changes compliance deadlines and electronic in this action only cover states, tribes, regulatory action and was therefore not reporting tools for their reporting submitted to the Office of Management and territories that have NPDES obligations. program authorization. The RFA defines and Budget (OMB) for review. Respondents/affected entities: This ‘‘small governmental jurisdiction’’ as ICR covers the 47 states and one U.S. B. Executive Order 13771: Reducing the government of a city, county, town, Territory authorized to implement the Regulations and Controlling Regulatory township, village, school district, or Costs NPDES program. Respondent’s obligation to respond: special district with a population of less This action is not an Executive Order EPA is taking this action pursuant to than 50,000 (5 U.S.C. 601(5)). For the 13771 regulatory action because this CWA sections 101(f), 304(i), 308, 402, purposes of the RFA, States and tribal action is not significant under Executive and 501. governments are not considered small Order 12866. Estimated number of respondents: governments. C. Paperwork Reduction Act This ICR covers the 48 authorized E. Unfunded Mandates Reform Act NPDES programs. (UMRA) The information collection activities Frequency of response: EPA estimates in this proposed rule have been that twelve authorized NPDES programs This action does not contain an submitted for approval to the Office of will provide updated information on unfunded mandate of $100 million or Management and Budget (OMB) under general permits and program reports more as described in UMRA, 2 U.S.C. the PRA. The Information Collection and the related electronic reporting 1531–1538, and does not significantly or Request (ICR) document that the EPA tools each month. Additionally, all 48 uniquely affect small governments. The prepared has been assigned EPA ICR authorized NPDES programs will proposed changes in this action help number [2617.01]. You can find a copy conduct an annual review and update of of the supporting statement for this ICR streamline the implementation of the EPA’s inventory. Finally, EPA estimates NPDES eRule and provide states with in the docket for this rule (see DCN that approximately 15 authorized 0016). It is briefly summarized here. more flexibility. EPA estimates that the NPDES programs will prepare and additional time and flexibility afforded EPA has primary responsibility for submit an alternative Phase 2 ensuring the CWA’s NPDES program is by the proposed changes will help lower compliance deadline request during the the implementation costs. effectively and consistently three-year period covered by the ICR. implemented nationwide, thus ensuring Total estimated burden: 416 hours F. Executive Order 13132: Federalism that public health and environmental (per year). Burden is defined at 5 CFR protection goals of the CWA are met. 1320.3(b). This action does not have federalism EPA is taking this action pursuant to Total estimated cost: $25,418 (per implications. It will not have substantial CWA sections 101(f), 304(i), 308, 402, year), includes $0 annualized capital or direct effects on the states, on the and 501. The accurate, complete, and operation & maintenance costs. relationship between the national timely information collected under this An agency may not conduct or government and the states, or on the ICR will help EPA and states more sponsor, and a person is not required to distribution of power and efficiently implement the 2015 NPDES respond to, a collection of information responsibilities among the various eRule. The improved information unless it displays a currently valid OMB levels of government.

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G. Executive Order 13175: Consultation Hazardous substances, Reporting and 40 CFR citation OMB control No. and Coordination With Indian Tribal recordkeeping requirements, Water Governments pollution control. ***** This action does not have tribal 40 CFR Part 123 implications as specified in Executive Order 13175. This action does not affect Environmental protection, NPDES Electronic Reporting small entities as the proposed changes Administrative practice and procedure, in this action only cover states, tribes, Confidential business information, and territories that have NPDES Hazardous substances, Indians-lands, ***** program authorization. Currently there Intergovernmental relations, Penalties, 127.24 ...... 2020–NEW are no tribal governments that are Reporting and recordkeeping requirements, Water pollution control. authorized for the NPDES program. ***** Thus, Executive Order 13175 does not 40 CFR Part 127 apply to this action. Environmental protection, * * * * * H. Executive Order 13045: Protection of Administrative practice and procedure, Children From Environmental Health Automatic data processing, Electronic PART 122—EPA ADMINISTERED Risks and Safety Risks data processing, Hazardous substances, PERMIT PROGRAMS: THE NATIONAL This action is not subject to Executive Intergovernmental relations, Reporting POLLUTANT DISCHARGE Order 13045 because it is not and recordkeeping requirements, ELIMINATION SYSTEM economically significant as defined in Sewage disposal, Waste treatment and ■ Executive Order 12866, and because the disposal, Water pollution control. 3. The authority citation for part 122 EPA does not believe the environmental continues to read as follows: 40 CFR Part 403 health or safety risks addressed by this Authority: The Clean Water Act, 33 U.S.C. action present a disproportionate risk to Environmental protection, 1251 et seq. children. The proposed changes in this Confidential business information, ■ 4. In § 122.26, revise paragraphs action only cover states, tribes, and Reporting and recordkeeping (b)(15)(i)(C) and (g)(1)(iii) to read as territories that have NPDES program requirements, Waste treatment and follows: authorization. disposal, Water pollution control. § 122.26 Storm water discharges I. Executive Order 13211: Actions 40 CFR Part 503 (applicable to State NPDES programs, see Concerning Regulations That § 123.25). Environmental protection, Reporting Significantly Affect Energy Supply, * * * * * and recordkeeping requirements, Distribution or Use (b) * * * Sewage disposal. This action is not subject to Executive (15) * * * Order 13211, because it is not a Dated: January 31, 2020. (i) * * * significant regulatory action under Andrew R. Wheeler, (C) As of December 21, 2023 or an Executive Order 12866. Administrator. EPA-approved alternative date (see 40 CFR 127.24(e) or (f)), all certifications J. National Technology Transfer and For the reasons set forth in the submitted in compliance with Advancement Act (NTTAA) preamble, EPA proposes to amend 40 paragraphs (b)(15)(i)(A) and (B) of this This rulemaking does not involve CFR parts 9, 122, 123, 127, 403, and 503 section must be submitted electronically technical standards. as follows: by the owner or operator to the Director or initial recipient, as defined in 40 CFR K. Executive Order 12898: Federal PART 9—OMB APPROVALS UNDER 127.2(b), in compliance with this Actions To Address Environmental THE PAPERWORK REDUCTION ACT section and 40 CFR part 3 (including, in Justice in Minority Populations and all cases, subpart D to part 3), § 122.22, Low-Income Populations ■ 1. The authority citation for part 9 and 40 CFR part 127. 40 CFR part 127 The EPA believes that this action does continues to read as follows: is not intended to undo existing not have disproportionately high and Authority: 7 U.S.C. 135 et seq., 136–136y; requirements for electronic reporting. adverse human health or environmental 15 U.S.C. 2001, 2003, 2005, 2006, 2601–2671; Prior to this date, and independent of 40 effects on minority populations, low- 21 U.S.C. 331j, 346a, 31 U.S.C. 9701; 33 CFR part 127, owners or operators may income populations and/or indigenous U.S.C. 1251 et seq., 1311, 1313d, 1314, 1318, be required to report electronically if peoples, as specified in Executive Order 1321, 1326, 1330, 1342, 1344, 1345 (d) and specified by a particular permit or if 12898 (59 FR 7629, February 16, 1994). (e), 1361; E.O. 11735, 38 FR 21243, 3 CFR, 1971–1975 Comp. p. 973; 42 U.S.C. 241, required to do so by state law. The proposed changes in this action 242b, 243, 246, 300f, 300g, 300g–1, 300g–2, * * * * * only cover states, tribes, and territories 300g–3, 300g–4, 300g–5, 300g–6, 300j–1, (g) * * * that have NPDES program authorization. 300j–2, 300j–3, 300j–4, 300j–9, 1857 et seq., (1) * * * List of Subjects 6901–6992k, 7401–7671q, 7542, 9601–9657, (iii) Submit the signed certification to 11023, 11048. the NPDES permitting authority once 40 CFR Part 9 ■ 2. In § 9.1, add the entry ‘‘127.24’’ in every five years. As of December 21, Environmental protection, Reporting numerical order under the undesignated 2023 or an EPA-approved alternative and recordkeeping requirements. center heading ‘‘NPDES Electronic date (see 40 CFR 127.24(e) or (f)), all Reporting’’ to read as follows: certifications submitted in compliance 40 CFR Part 122 with this section must be submitted Environmental protection, § 9.1 OMB approvals under the Paperwork electronically by the owner or operator Administrative practice and procedure, Reduction Act. to the Director or initial recipient, as Confidential business information, * * * * * defined in 40 CFR 127.2(b), in

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compliance with this section and 40 ■ 6. In § 122.34, revise paragraph (d)(3) events related to combined sewer CFR part 3 (including, in all cases, to read as follows: overflows, sanitary sewer overflows, or subpart D to part 3), § 122.22, and 40 bypass events, these reports must CFR part 127. 40 CFR part 127 is not § 122.34 Permit requirements for regulated include the data described above (with small MS4 permits. intended to undo existing requirements the exception of time of discovery) as for electronic reporting. Prior to this * * * * * well as the type of event (combined date, and independent of 40 CFR part (d) * * * sewer overflows, sanitary sewer 127, owners or operators may be (3) Reporting. Unless the permittee is overflows, or bypass events), type of required to report electronically if relying on another entity to satisfy its sewer overflow structure (e.g., manhole, specified by a particular permit or if NPDES permit obligations under combine sewer overflow outfall), required to do so by state law. § 122.35(a), the permittee must submit discharge volumes untreated by the annual reports to the NPDES permitting treatment works treating domestic * * * * * authority for its first permit term. For ■ sewage, types of human health and 5. In § 122.28, revise paragraph subsequent permit terms, the permittee (b)(2)(i) to read as follows: environmental impacts of the sewer must submit reports in year two and overflow event, and whether the § 122.28 General permits (applicable to four unless the NPDES permitting noncompliance was related to wet State NPDES programs, see § 123.25). authority requires more frequent weather. As of December 21, 2023 or an * * * * * reports. As of December 21, 2023 or an EPA-approved alternative date (see 40 (b) * * * EPA-approved alternative date (see 40 CFR 127.24(e) or (f)), all reports related (2) * * * (i) Except as provided in CFR 127.24(e) or (f)), all reports to combined sewer overflows, sanitary paragraphs (b)(2)(v) and (vi) of this submitted in compliance with this sewer overflows, or bypass events section, dischargers (or treatment works section must be submitted electronically submitted in compliance with this treating domestic sewage) seeking by the owner, operator, or the duly section must be submitted electronically coverage under a general permit shall authorized representative of the small by the permittee to the Director or initial submit to the Director a notice of intent MS4 to the NPDES permitting authority recipient, as defined in 40 CFR 127.2(b), to be covered by the general permit. A or initial recipient, as defined in 40 CFR in compliance with this section and 40 discharger (or treatment works treating 127.2(b), in compliance with this CFR part 3 (including, in all cases, domestic sewage) who fails to submit a section and 40 CFR part 3 (including, in subpart D to part 3), § 122.22, and 40 notice of intent in accordance with the all cases, subpart D to part 3), § 122.22, CFR part 127. 40 CFR part 127 is not terms of the permit is not authorized to and 40 CFR part 127. 40 CFR part 127 intended to undo existing requirements discharge, (or in the case of sludge is not intended to undo existing for electronic reporting. Prior to this disposal permit, to engage in a sludge requirements for electronic reporting. date, and independent of 40 CFR part use or disposal practice), under the Prior to this date, and independent of 40 127, permittees may be required to terms of the general permit unless the CFR part 127, the owner, operator, or electronically submit reports related to general permit, in accordance with the duly authorized representative of combined sewer overflows, sanitary paragraph (b)(2)(v), contains a provision the small MS4 may be required to report sewer overflows, or bypass events under that a notice of intent is not required or electronically if specified by a particular this section by a particular permit or if the Director notifies a discharger (or permit or if required to do so by state required to do so by state law. The treatment works treating domestic law. The report must include: Director may also require permittees to sewage) that it is covered by a general * * * * * electronically submit reports not related permit in accordance with paragraph ■ 7. In § 122.41, revise paragraphs to combined sewer overflows, sanitary (b)(2)(vi). A complete and timely, notice (l)(6)(i), (l)(7), (m)(3)(i) and (ii) to read sewer overflows, or bypass events under of intent (NOI), to be covered in as follows: this section. accordance with general permit § 122.41 Conditions applicable to all * * * * * requirements, fulfills the requirements permits (applicable to State programs, see (7) Other noncompliance. The for permit applications for purposes of § 123.25). permittee shall report all instances of §§ 122.6, 122.21, and 122.26. As of * * * * * noncompliance not reported under December 21, 2023 or an EPA-approved (l) * * * paragraphs (l)(4), (5), and (6) of this alternative date (see 40 CFR 127.24(e) or (6) * * * section, at the time monitoring reports (f)), all notices of intent submitted in (i) The permittee shall report any are submitted. The reports shall contain compliance with this section must be noncompliance which may endanger the information listed in paragraph submitted electronically by the health or the environment. Any (l)(6). For noncompliance events related discharger (or treatment works treating information shall be provided orally to combined sewer overflows, sanitary domestic sewage) to the Director or within 24 hours from the time the sewer overflows, or bypass events, these initial recipient, as defined in 40 CFR permittee becomes aware of the reports shall contain the information 127.2(b), in compliance with this circumstances. A report shall also be described in paragraph (l)(6) and the section and 40 CFR part 3 (including, in provided within 5 days of the time the applicable required data in appendix A all cases, subpart D to part 3), § 122.22, permittee becomes aware of the to 40 CFR part 127. As of December 21, and 40 CFR part 127. 40 CFR part 127 circumstances. The report shall contain 2023 or an EPA-approved alternative is not intended to undo existing a description of the noncompliance and date (see 40 CFR 127.24(e) or (f)), all requirements for electronic reporting. its cause; the period of noncompliance, reports related to combined sewer Prior to this date, and independent of 40 including exact dates and times), and if overflows, sanitary sewer overflows, or CFR part 127, discharger (or treatment the noncompliance has not been bypass events submitted in compliance works treating domestic sewage) may be corrected, the anticipated time it is with this section must be submitted required to report electronically if expected to continue; and steps taken or electronically by the permittee to the specified by a particular permit or if planned to reduce, eliminate, and Director or initial recipient, as defined required to do so by state law. prevent reoccurrence of the in 40 CFR 127.2(b), in compliance with * * * * * noncompliance. For noncompliance this section and 40 CFR part 3

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(including, in all cases, subpart D to part § 122.42 Additional conditions applicable authority. If requesting expedited permit 3), § 122.22, and 40 CFR part 127. 40 to specified categories of NPDES permits termination procedures, a permittee CFR part 127 is not intended to undo (applicable to State NPDES programs, see must certify in the NOT that it is not existing requirements for electronic § 123.25). subject to any pending State or Federal reporting. Prior to this date, and * * * * * enforcement actions including citizen independent of 40 CFR part 127, (c) Municipal separate storm sewer suits brought under State or Federal permittees may be required to systems. The operator of a large or law. As of December 21, 2023 or an electronically submit reports related to medium municipal separate storm EPA-approved alternative date (see 40 combined sewer overflows, sanitary sewer system or a municipal separate CFR 127.24(e) or (f)), all NOTs sewer overflows, or bypass events under storm sewer that has been designated by submitted by general permit covered this section by a particular permit or if the Director under § 122.26(a)(1)(v) must facilities in compliance with this required to do so by state law. The submit an annual report by the section must be submitted electronically Director may also require permittees to anniversary of the date of the issuance by the permittee to the Director or initial electronically submit reports not related of the permit for such system. As of recipient, as defined in 40 CFR 127.2(b), to combined sewer overflows, sanitary December 21, 2023 or an EPA-approved in compliance with this section and 40 sewer overflows, or bypass events under alternative date (see 40 CFR 127.24(e) or CFR part 3 (including, in all cases, this section. (f)), all reports submitted in compliance subpart D), § 122.22, and 40 CFR part with this section must be submitted 127. 40 CFR part 127 is not intended to * * * * * electronically by the owner, operator, or undo existing requirements for (m) * * * the duly authorized representative of electronic reporting. Prior to this date, the MS4 to the Director or initial (3) * * * (i) Anticipated bypass. If the and independent of 40 CFR part 127, the recipient, as defined in 40 CFR 127.2(b), permittee knows in advance of the need permittee may be required to report in compliance with this section and 40 for a bypass, it shall submit prior notice, electronically if specified by a particular CFR part 3 (including, in all cases, if possible, at least ten days before the permit or if required to do so by state subpart D to part 3), § 122.22, and 40 date of the bypass. As of December 21, law. 2023 or an EPA-approved alternative CFR part 127. 40 CFR part 127 is not date (see 40 CFR 127.24(e) or (f)), all intended to undo existing requirements PART 123—STATE PROGRAM notices submitted in compliance with for electronic reporting. Prior to this REQUIREMENTS this section must be submitted date, and independent of 40 CFR part electronically by the permittee to the 127, the owner, operator, or the duly ■ 10. The authority citation for part 123 Director or initial recipient, as defined authorized representative of the MS4 continues to read as follows: in 40 CFR 127.2(b), in compliance with may be required to report electronically Authority: Clean Water Act, 33 U.S.C. this section and 40 CFR part 3 if specified by a particular permit or if 1251 et seq. (including, in all cases, subpart D to part required to do so by state law. The ■ 11. In § 123.45: 3), § 122.22, and 40 CFR part 127. 40 report shall include: ■ a. Revise the section heading. CFR part 127 is not intended to undo * * * * * ■ b. Revise the introductory text. existing requirements for electronic (e) * * * ■ c. Revise paragraphs (a)(2)(i) through reporting. Prior to this date, and (4) Annual reporting requirements for (iv). independent of 40 CFR part 127, CAFOs. The permittee must submit an ■ d. Revise appendix A to § 123.45. permittees may be required to report annual report to the Director. As of The revisions read as follows: electronically if specified by a particular December 21, 2023 or an EPA-approved permit or if required to do so by state alternative date (see 40 CFR 127.24(e) or § 123.45 Noncompliance and program reporting. law. (f)), all annual reports submitted in As of December 21, 2022, EPA must (ii) Unanticipated bypass. The compliance with this section must be prepare public (quarterly and annual) permittee shall submit notice of an submitted electronically by the reports as set forth here from unanticipated bypass as required in permittee to the Director or initial information that is required to be paragraph (l)(6) of this section (24-hour recipient, as defined in 40 CFR 127.2(b), submitted by NPDES-regulated facilities notice). As of December 21, 2023 or an in compliance with this section and 40 and the State Director. EPA-approved alternative date (see 40 CFR part 3 (including, in all cases, CFR 127.24(e) or (f)), all notices subpart D to part 3), § 122.22, and 40 * * * * * submitted in compliance with this CFR part 127. 40 CFR part 127 is not (a) * * * section must be submitted electronically intended to undo existing requirements (2) * * * (i) Enforcement order violations. by the permittee to the Director or initial for electronic reporting. Prior to this These include violations of any recipient, as defined in 40 CFR 127.2(b), date, and independent of 40 CFR part requirement or condition in in compliance with this section and 40 127, the permittee may be required to administrative or judicial enforcement CFR part 3 (including, in all cases, report electronically if specified by a orders, other than compliance subpart D to part 3), § 122.22, and 40 particular permit or if required to do so construction violations and reporting CFR part 127. 40 CFR part 127 is not by state law. The annual report must violations. intended to undo existing requirements include: (ii) Compliance construction for electronic reporting. Prior to this * * * * * violations. These include failure to start date, and independent of 40 CFR part ■ 9. In § 122.64, revise paragraph (c) to construction, complete construction, or 127, permittees may be required to read as follows: achieve final compliance within 90 days report electronically if specified by a § 122.64 Termination of permits after the date established in a permit, particular permit or if required to do so (applicable to State programs, see § 123.25). administrative or judicial order, or by state law. * * * * * regulation. * * * * * (c) Permittees that wish to terminate (iii) Permit effluent limit violations. ■ 8. In § 122.42, revise paragraphs (c) their permit must submit a Notice of These include violations of permit and (e)(4) to read as follows: Termination (NOT) to their permitting effluent limits that exceed the ‘‘Criteria

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for Category I Permit Effluent Limit violations apply to all Group I and Group II • Potassium Violations’’ in appendix A to § 123.45. pollutants and are as follows: • Sulfur a. Criteria for Category I Violations of • Sulfate (iv) Reporting violations. These Monthly Average Permit Effluent Limits— • Total Alkalinity include failure to submit a required Magnitude and Frequency • Total Hardness report within 30 days after the date Violations of monthly average permit • Other Minerals established in a permit, administrative effluent limits which exceed or equal the or judicial order, or regulation. These product of the Technical Review Criteria Metals reports only include final compliance (TRC) times the permit effluent limit and • Aluminum occur two months in a six-month period. The • Cobalt schedule progress reports, Discharge • Monitoring Reports [see 40 CFR TRCs for the two groups of pollutants are as Iron follows: • Vanadium 122.41(l)(4)(i)], and program reports [see • Group I Pollutants (TRC) = 1.4 40 CFR 127.2(f)]. In addition, these • Group II Pollutants (TRC) = 1.2 Group II Pollutants violations also include any failure to The following is a listing of the Group I Metals (all forms) comply with the reporting requirements and Group II pollutants. • Other metals not specifically listed under at 40 CFR 122.41(l)(6). Group I Pollutants Group I * * * * * Oxygen Demand Inorganic Appendix A to § 123.45—Criteria for • Biochemical Oxygen Demand • Cyanide Category I Permit Effluent Limit • Chemical Oxygen Demand • Total Residual Chlorine Violations • Total Oxygen Demands • Total Organic Carbon Organics This appendix describes the criteria for • Other • All organics are Group II except those reporting Category I violations of NPDES specifically listed under Group I permit effluent limits in the NPDES Solids b. Criteria for Category I Violations of noncompliance report (NNCR) as specified • Total Suspended Solids (Residues) Monthly Average Permit Effluent Limits— under paragraph (a)(2)(iii) of this section. • Total Dissolved Solids (Residues) Chronic Violations of monthly average Any violation of an NPDES permit is a • Other violation of the Clean Water Act (CWA) for permit effluent limits which are exceeded in which the permittee is liable. As specified in Nutrients any four months in a six-month period. paragraph (a)(2) of this section, there are two • Inorganic Phosphorus Compounds categories of noncompliance, and the table • PART 127—NPDES ELECTRONIC Inorganic Nitrogen Compounds REPORTING below indicates the thresholds for violations • Other in Category I. An agency’s decision as to ■ what enforcement action, if any, should be Detergents and Oils 12. The authority citation for part 127 taken in such cases, shall be based on an • MBAS continues to read as follows: analysis of facts, legal requirements, policy, • NTA Authority: 33 U.S.C. 1251 et seq. and guidance. • Oil and Grease ■ • Other detergents or algicides 13. In § 127.16, revise the table in Violations of Permit Effluent Limits paragraph (a) to read as follows: The categorization of permit effluent limit Minerals violations depends upon the magnitude and/ • Calcium § 127.16 Implementation of electronic or frequency of the violation. Effluent • Chloride reporting requirements for NPDES violations shall be evaluated on a parameter- • Fluoride permittees, facilities, and entities subject to by-parameter and outfall-by-outfall basis. The • Magnesium this part [see § 127.1(a)]. criteria for Category I permit effluent limit • Sodium * * * * *

TABLE 1—COMPLIANCE DEADLINES FOR ELECTRONIC SUBMISSIONS OF NPDES INFORMATION

NPDES information Compliance deadlines for electronic submissions 1

General Permit Reports [Notices of Intent to discharge (NOIs); Notices of Termination (NOTs); December 21, 2023. No Exposure Certifications (NOEs); Low Erosivity Waivers (LEWs) and other Waivers] [40 CFR 122.26(b)(15), 122.28, and 122.64]. Discharge Monitoring Reports [40 CFR 122.41(l)(4)] ...... December 21, 2016. Biosolids Annual Program Reports [40 CFR part 503] ...... December 21, 2016 (when the Regional Ad- ministrator is the Director) 2 December 21, 2023 (when the state, tribe or territory is the authorized NPDES program).2 Concentrated Animal Feeding Operation (CAFO) Annual Program Reports [40 CFR December 21, 2023. 122.42(e)(4)]. Municipal Separate Storm Sewer System (MS4) Program Reports [40 CFR 122.34(d)(3) and December 21, 2023. 122.42(c)]. POTW Pretreatment Program Annual Reports [40 CFR 403.12(i)] ...... December 21, 2023. Significant Industrial User Compliance Reports in Municipalities Without Approved Pretreatment December 21, 2023. Programs [40 CFR 403.12(e) and (h)]. Sewer Overflow/Bypass Event Reports [40 CFR 122.41(l)(4), (6), (7), and 122.41(m)(3)] ...... December 21, 2023. CWA 316(b) Annual Reports [40 CFR part 125 subparts I, J, and N] ...... December 21, 2023. 1 EPA may approve an alternative compliance deadline for general permit reports and program reports in accordance with § 127.24(e) and (f). 2 Note: Director is defined in 40 CFR 122.2.

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* * * * * deadline in Table 1 to 40 CFR 127.16 or identify the alternative compliance ■ 14. In § 127.21, revise paragraph (b) to an alternative compliance deadline deadlines for each facility, general read as follows: previously approved by EPA; and permit report, program report, and (v) Provide a rationale for the delay related data elements by authorized § 127.21 Data to be reported electronically and enough details (e.g., tasks, to EPA by states, tribes, and territories. NPDES program. milestones, roles and responsibilities, ■ 16. In appendix A to part 127: * * * * * necessary resources) to clearly describe ■ a. In table 1: (b) States, tribes, and territories that how the program will successfully ■ i. Revise the entry ‘‘9’’. have received authorization from EPA to implement electronic reporting for ■ b. In table 2: implement the NPDES program must general permit, program report, and ■ i. Revise the entries ‘‘Permit electronically transfer these data, listed related data elements covered by the Component’’, ‘‘Applicable Effluent in § 127.21(a), to EPA within 40 days of request. Limitations Guidelines’’, ‘‘NAICS the completed activity or within 40 days (2) EPA will review each alternative Code’’, and ‘‘NAICS Code Primary of the receipt of a report from an NPDES compliance deadline request to see if it Indicator’’ under the ‘‘Basic Permit permittee, facility, or entity subject to provides enough detail to accurately Information’’ center heading. this part [see § 127.1(a)]. EPA may set an assess if the state has a reasonable plan ■ ii. Delete the ‘‘Reportable alternative compliance deadline for data to deploy electronic reporting by the Noncompliance Tracking’’ and sharing for one or more facilities, requested alternative compliance ‘‘Reportable Noncompliance Tracking general permit reports, program reports, deadline. EPA will return alternative Start Date’’ entries under the ‘‘Basic and related data elements (see 40 CFR compliance deadline requests with Permit Information’’ center heading. 127.24) provided this alternative insufficient detail back to the Director ■ iii. Revise the entry ‘‘Receiving compliance date does not extend within 30 days of receipt and provide Waterbody Name for Permitted Feature’’ beyond December 21, 2026. recommendations. EPA will approve or to ‘‘Waterbody Name for Permitted ■ 15. In § 127.24: deny each complete alternative Feature’’ and related description under ■ a. Revise the section heading. compliance deadline request within 120 the ‘‘Permitted Feature Information’’ ■ b. Add paragraphs (e) and (f). days of receipt. EPA will provide notice center heading. The revision and additions read as to the authorized NPDES program of ■ iv. Revise the center heading from follows: EPA’s approval or denial. The ‘‘Animal Feeding Operation Information § 127.24 Responsibilities regarding review authorized NPDES program may re- on NPDES Permit Application or Notice of waiver requests from NPDES permittees, apply if the initial request is denied by of Intent’’ to ‘‘Animal Feeding facilities, and entities subject to this part EPA. Operation Information.’’ [see § 127.1(a)] and alternative compliance (3) EPA will update its website after ■ v. Revise the entry ‘‘Facility CAAP deadlines. it approves a request to clearly identify Designation’’ to ‘‘Facility CAAP Status’’ * * * * * the approved alternative compliance and related description under the (e) A state, tribe, or territory that is deadlines for each facility, general proposed revised ‘‘Animal Feeding designated by EPA as the initial permit report, program report, and Operation Information’’ center heading. recipient [see §§ 127.2(b) and 127.27] for related data elements by authorized ■ vi. Delete the entry ‘‘Applicable an NPDES data group [as defined in NPDES program. EPA will also post Categorical Standards’’ under the § 127.2(c)] may submit a request to EPA each alternative compliance deadline ‘‘Pretreatment Information on NPDES to establish an alternative compliance request and the corresponding Agency Permit Application or Notice of Intent deadline for electronic reporting of one approval or denial notice after each (this includes permit application data or more general permit reports, program determination. EPA will provide required for all new and existing reports, and related data elements (see updated information at: https:// POTWs [40 CFR 122.21(j)(6)]’’ center Table 2 to appendix A). A State may www.epa.gov/compliance/npdes- heading. request to establish an alternative ereporting. ■ vii. Revise the entry ‘‘Source Water for compliance deadline for up to three (f) EPA may, as it deems appropriate, Cooling Purposes’’ under the ‘‘Cooling years beyond the currently-applicable establish an alternative compliance Water Intake Information on NPDES date but not beyond December 21, 2026. deadline for electronic reporting and Permit Application or Notice of Intent’’ It is the duty of the authorized NPDES data sharing for one or more facilities, center heading. program to re-apply for a new general permit reports, program reports, ■ viii. Revise the center heading from alternative compliance deadline. and related data elements (see Table 2 ‘‘CWA section 316(a) Thermal Variance (1) The alternative compliance to appendix A) in one or more states. Information on NPDES Permit deadline request shall: EPA may establish an alternative Application or Notice of Intent’’ to (i) Be submitted to EPA by the compliance deadline up to three years ‘‘NPDES Variance Information.’’ Director, as defined in 40 CFR 122.2; beyond the currently applicable date, ■ ix. Revise the entry ‘‘Thermal (ii) Identify each general permit, but in no event beyond December 21, Variance Request Type’’ to ‘‘Variance program report, and related data 2026. Separately, EPA will provide Type’’ and ‘‘Thermal Variance Granted elements covered by the request and the notice to the one or more authorized Date’’ to ‘‘Variance Action Date’’ and corresponding alternative compliance NPDES program covered by each related descriptions under the proposed deadline(s); alternative compliance deadline. This revised center heading ‘‘NPDES (iii) Identify each facility covered by notice will include a rationale for the Variance Information.’’ the request and the corresponding delay and enough details (e.g., tasks, ■ x. Add the following entries alternative compliance deadline(s) milestones, roles and responsibilities, ‘‘Variance Request Version’’, ‘‘Variance (Note: This only applies if the request necessary resources) to clearly describe Status’’, and ‘‘Variance Submission covers some but not all facilities subject how it will successfully implement Date’’ under the proposed revised center to the general permit or program report electronic reporting for general permit, heading ‘‘NPDES Variance requirement); program report, and related data Information.’’ (iv) Be submitted at least 120 days elements covered by the extension. EPA ■ xi. Revise the entries ‘‘Deficiencies prior to the applicable compliance will update its website to clearly Identified Through the Biosolids/

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Sewage Sludge Compliance Information (Program Data Generated Elements Specific to Sewage Sludge/ Monitoring’’, ‘‘Deficiencies Identified from Authorized NPDES Programs and Biosolids Annual Program Reports)’’ Through the MS4 Compliance EPA)’’ center heading. center heading. Monitoring’’, ‘‘Deficiencies Identified xii. Revise the entry ‘‘Biosolids or The revisions and additions read as Through the Pretreatment Compliance Sewage Sludge—Land Application or follows: Monitoring’’, and ‘‘Deficiencies Surface Disposal Deficiencies’’ to Identified Through the Sewer Overflow/ ‘‘Biosolids or Sewage Sludge- Appendix A to Part 127—Minimum Set Bypass Compliance Monitoring’’ under Violations’’ under the ‘‘Compliance of NPDES Data the ‘‘Compliance Monitoring Activity Monitoring Activity Information (Data * * * * * TABLE 1—DATA SOURCES AND REGULATORY CITATIONS 1

NPDES Data 3 Data group NPDES data group Program area provider Minimum frequency No. 2

******* 9 ...... Sewer Overflow/Bypass Sewer Overflows and By- NPDES Permittee ...... Within 5 days of the time the permittee becomes aware of the Event Reports [40 CFR pass Events. sewer overflow event (health or environment endangerment); 122.41(l)(4), (6), (7), Monitoring report frequency specific in permit (all other sewer and 122.41(m)(3)]. overflow and bypass events); At least 10-days before the date of the anticipated bypass; and Within 5-days of the time the permittee becomes aware of the unanticipated bypass.

******* 1 Entities regulated by a NPDES permit will comply with all reporting requirements in their respective NPDES permit. 2 Use the ‘‘NPDES Data Group Number’’ in this table and the ‘‘NPDES Data Group Number’’ column in Table 2 of this appendix to identify the source of the re- quired data entry. EPA notes that electronic systems may use additional data to facilitate electronic reporting as well as management and reporting of electronic data. For example, NPDES permittees may be required to enter their NPDES permit number (‘‘NPDES ID’’—NPDES Data Group 1 and 2) into the applicable electronic re- porting system in order to identify their permit and submit a Discharge Monitoring Report (DMR—NPDES Data Group 3). Additionally, NPDES regulated entities may be required to enter and submit data to update or correct erroneous data. For example, NPDES permittees may be required to enter new data regarding the Facility Individual First Name and Last Name (NPDES Data Group 1 and 2) with their DMR submission when there is a facility personnel change. 3 The applicable reporting frequency is specified in the NPDES permit or control mechanism, which may be more frequent than the minimum frequency specified in this table.

TABLE 2—REQUIRED NPDES PROGRAM DATA

NPDES data Data name Data description CWA, regulatory (40 CFR), or group No. other citation (see Table 1)

*******

Basic Permit Information

******* Permit Component ...... This will identify one or more applicable NPDES subprograms (e.g., 122.2, 122.21, 122.21(j)(6), 1, 2. pretreatment, CAFO, CSO, POTW, biosolids/sewage sludge, 122.21(q), 122.28(b)(2)(ii), stormwater) for the permit record. This field is only required when 123.26, 123.41(a), 123.43(d), the permit includes one or more NPDES subprograms. This data 403.10, and 501.19. element is also required for unpermitted facilities when the author- ized NPDES programs is required to share facility, inspection, viola- tion, or enforcement action data regarding these facilities with EPA’s national NPDES data system.

******* Applicable Effluent Limitations This data element will identify the one or more applicable effluent limi- 122.21, 122.21(j)(6), 122.21(q), 1, 2, and 7. Guidelines. tations guidelines and new source performance standards for the 122.44, 122.44(j), 122.28(b) facility by the corresponding 40 CFR part number (e.g., part 414— (2)(ii), 403.10(e), 403.10(f), Organic chemicals, plastics, and synthetic fibers point source cat- 403.12(i). egory, part 433—Metal Finishing point source category). For Cat- egorical Industrial Users (CIUs) this data element will track the one or more applicable categorical standards even when the CIU is subject to one or more local limits that are more stringent than the applicable categorical standards. This data element will also identify if there are no applicable effluent limitations guidelines, new source performance standards, or categorical standards for the facility (in- cluding Significant Industrial Users (SIUs)). This data element can be updated by the Control Authority for SIUs and CIUs through submission of the Pretreatment Program Reports [40 CFR 403.12(i)]. Additionally, the authorized NPDES program can auto- mate the creation of these data through submission of the Notices of Intent to discharge (NOI) [40 CFR 122.28(b)(2)(ii)].

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TABLE 2—REQUIRED NPDES PROGRAM DATA—Continued

NPDES data Data name Data description CWA, regulatory (40 CFR), or group No. other citation (see Table 1)

******* NAICS Code ...... The one or more six-digit North American Industry Classification Sys- 40 CFR 122.21(f)(3), 1, 2, and 7. tem (NAICS) codes/descriptions that represents the economic activ- 122.28(b)(2)(ii), EPA SIC/NAICS ity of the facility. This field is required to be shared with the U.S. Data Standard, Standard No. EPA when authorized NPDES programs approve NPDES permit EX000022.2, 6 January 2006, coverage after June 12, 2021 (i.e., two years after the effective Office of Management and date of the 2019 NPDES Applications and Program Updates Rule). Budget, Executive Office of the See February 12, 2019; 84 FR 3324. President, Final Decision on North American Industry Classi- fication System (62 FR 17288), 403.10(f). NAICS Code Primary Indicator ...... This data element will identify the primary economic activity, NAICS 40 CFR 122.21(f)(3), 1, 2, and 7. code, of the facility. This data element is required for electronic 122.28(b)(2)(ii), EPA SIC/NAICS data transfer between state and EPA systems. This field is required Data Standard, Standard No. to be shared with the U.S. EPA when authorized NPDES programs EX000022.2, 6 January 2006, approve NPDES permit coverage after June 12, 2021 (i.e., two Office of Management and years after the effective date of the 2019 NPDES Applications and Budget, Executive Office of the Program Updates Rule). See February 12, 2019; 84 FR 3324. President, Final Decision on North American Industry Classi- fication System (62 FR 17288), 403.10(f).

*******

Permitted Feature Information

******* Waterbody Name for Permitted The name of the waterbody that is or will likely receive the discharge 122.21, 122.21(f)(9), 1,2. Feature. from each permitted feature. If the permitted feature is a cooling 122.28(b)(2)(ii). water intake structure, this data element is the name of the source water. Authorized NPDES programs can also use this data element to identify the name of the source water for other intake structures that are permitted features.

*******

Animal Feeding Operation Information

Facility CAAP Status ...... The unique code/description to indicate whether the facility includes 122.21(i)(2), 122.24, 122.25, 1,2. Concentrated Aquatic Animal Production (CAAP) and the CAAP 122.28(b)(2)(ii). identification method [e.g., ‘‘Yes (Based on Facility Production Data)’’, ‘‘Yes (Authorized NPDES Program Designation)’’]. This field also applies when an authorized NPDES program has conducted an on-site inspection of an aquatic animal production facility and determined that the facility should not be regulated under the NPDES permit program [e.g., ‘‘No (Authorized NPDES Program Determination)’’]. This data element only applies to aquatic animal production facilities. This data element can be automatically gen- erated from production data that is provided by aquatic animal pro- duction facilities.

*******

Cooling Water Intake Information on NPDES Permit Application or Notice of Intent

******* Source Water for Cooling Purposes ***** 122.21(f)(9), 122.21(r), ***** 122.28(b)(2)(ii), 125.86, 125.95, 125.136, 401.14 and CWA sec- tion 316(b).

*******

NPDES Variance Information

Variance Type ...... The unique code(s)/description(s) that describes the type for each 122.21(f)(10), 122.21(j)(1)(ix), 1. variance request submitted by the NPDES-regulated entity [e.g., 122.28(b)(2)(ii), 123.41, subpart fundamentally different factors (CWA Section 301(n)), non-conven- H of 125 and CWA section tional pollutants (CWA Section 301(c) and (g)), water quality related 316(a). effluent limitations (CWA Section 302(b)(2)), thermal discharges (CWA Section 316(a)), discharges to marine waters (CWA Section 301(h))]. This field is required to be shared with the U.S. EPA when authorized NPDES programs approve NPDES permit coverage after June 12, 2021 (i.e., two years after the effective date of the 2019 NPDES Applications and Program Updates Rule). See Feb- ruary 12, 2019; 84 FR 3324.

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TABLE 2—REQUIRED NPDES PROGRAM DATA—Continued

NPDES data Data name Data description CWA, regulatory (40 CFR), or group No. other citation (see Table 1)

Variance Request Version ...... The unique code(s)/description(s) that describe whether each vari- 122.21(f)(10), 122.21(j)(1)(ix), 1. ance request from the NPDES-regulated entity is a new request, 122.28(b)(2)(ii), 123.41, subpart renewal, or a continuance for variances that do not expire. This H of 125 and CWA section field is required to be shared with the U.S. EPA when authorized 316(a). NPDES programs approve NPDES permit coverage after June 12, 2021 (i.e., two years after the effective date of the 2019 NPDES Applications and Program Updates Rule). See February 12, 2019; 84 FR 3324. Variance Status ...... The unique code(s)/description(s) that describes the status for each 122.21(f)(10), 122.21(j)(1)(ix), 1. the variance request submitted by the NPDES-regulated entity 122.28(b)(2)(ii), 123.41, subpart (e.g., pending, approved, denied, withdrawn by NPDES-regulated H of 125 and CWA section entity, terminated). This field is required to be shared with the U.S. 316(a). EPA when authorized NPDES programs approve NPDES permit coverage after June 12, 2021 (i.e., two years after the effective date of the 2019 NPDES Applications and Program Updates Rule). See February 12, 2019; 84 FR 3324. Variance Submission Date ...... This is the date for each variance request submitted by the NPDES- 122.21(f)(10), 122.21(j)(1)(ix), 1. regulated entity to the NPDES permitting authority. The date must 122.28(b)(2)(ii), 123.41, subpart be provided in YYYY–MM–DD format where YYYY is the year, MM H of 125 and CWA section is the month, and DD is the day. This field is required to be shared 316(a). with the U.S. EPA when authorized NPDES programs approve NPDES permit coverage after June 12, 2021 (i.e., two years after the effective date of the 2019 NPDES Applications and Program Updates Rule). See February 12, 2019; 84 FR 3324. Variance Action Date ...... This is the date for each variance request when the NPDES permit- 122.21(f)(10), 122.21(j)(1)(ix), 1. ting authority approves (grants, renews), denies, or terminates a 122.28(b)(2)(ii), 123.41, subpart variance request as well as the date when the NPDES-regulated H of 125 and CWA section entity withdraws the variance request. For variances that do not ex- 316(a). pire, entire the original action date. The date must be provided in YYYY–MM–DD format where YYYY is the year, MM is the month, and DD is the day. This field is required to be shared with the U.S. EPA when authorized NPDES programs approve NPDES permit coverage after June 12, 2021 (i.e., two years after the effective date of the 2019 NPDES Applications and Program Updates Rule). See February 12, 2019; 84 FR 3324. Public Notice of Section 316(a) Re- ***** ***** ***** quests.

*******

Compliance Monitoring Activity Information (Program Data Generated from Authorized NPDES Programs and EPA)

Deficiencies Identified Through the This is the unique code/description that that identifies each deficiency 123.26, 123.41(a), and CWA sec- 1. Biosolids/Sewage Sludge Compli- in the facility’s biosolids and sewage sludge program (40 CFR part tion 308. ance Monitoring. 503) for each compliance monitoring activity (e.g., inspections, au- dits) by the regulatory authority. This data element includes unique codes to identify when the facility failed to comply with any applica- ble permit requirements or enforcement actions. Deficiencies Identified Through the This is the unique code/description that that identifies each deficiency 123.26, 123.41(a), and CWA sec- 1. MS4 Compliance Monitoring. in the MS4’s program to control stormwater pollution for each com- tion 308. pliance monitoring activity (e.g., inspections, audits) by the regu- latory authority. This data element includes unique codes to identify when the MS4 failed to comply with any applicable permit require- ments or enforcement actions. Deficiencies Identified Through the This is the unique code/description that that identifies each deficiency 123.26, 123.41(a), 403.10, and 1. Pretreatment Compliance Moni- in the POTW’s authorized pretreatment program for each CWA section 308. toring. pretreatment compliance monitoring activity (e.g., inspections, au- dits) by the regulatory authority. These unique codes include: (1) Failure to enforce against pass through and/or interference; (2) fail- ure to submit required reports within 30 days; (3) failure to meet compliance schedule milestones within 90 days; (4) failure to issue/ reissue control mechanisms to 90% of SIUs within 6 months; (5) failure to inspect or sample 80% of SIUs within the past 12 months; and (6) failure to enforce standards and reporting requirements. Deficiencies Identified Through the This is the unique code/description that that identifies each deficiency 122.41(h), 122.41(l)(6) and (7), 1. Sewer Overflow/Bypass Compli- in the POTW’s control of combined sewer overflows, sanitary sewer 122.43, 123.26, 123.41(a), and ance Monitoring. overflows, or bypass events for each compliance monitoring activity CWA sections 308 and (e.g., inspections, audits) by the regulatory authority. This data ele- 402(q)(1). ment includes unique codes to identify when a POTW has failed to provide 24-hour notification to the NPDES permitting authority or failed to submit the Sewer Overflow/Bypass Event Report within the required 5-day period. This data element also includes unique codes to identify when the POTW failed to comply with any applica- ble long-term CSO control plan, permit requirements, or enforce- ment actions.

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TABLE 2—REQUIRED NPDES PROGRAM DATA—Continued

NPDES data Data name Data description CWA, regulatory (40 CFR), or group No. other citation (see Table 1)

*******

Compliance Monitoring Activity Information (Data Elements Specific to Sewage Sludge/Biosolids Annual Program Reports)

******* Biosolids or Sewage Sludge—Viola- This data element is applicable to facilities that use land application, 503.18, 503.28, 503.48 ...... 4. tions. active surface disposal site (e.g., monofills, surface impoundments, lagoons, waste piles, dedicated disposal sites, and dedicated bene- ficial use sites), and/or incineration. This data element uses one or more unique codes/descriptions to identify all violations. This in- cludes violations of additional or more stringent requirements (40 CFR 503.5), sampling and analysis requirements (40 CFR 503.8), land application requirements (40 CFR 503, Subpart B), surface disposal requirements (40 CFR 503, Subpart C), pathogen and vector attraction reduction requirements (40 CFR 503, Subpart D), and incineration requirements (40 CFR 503, Subpart E).

******* Notes: (1) The NPDES program authority may pre-populate these data elements and other data elements (e.g., Federal Registry System ID) in the NPDES elec- tronic reporting systems in order to create efficiencies and standardization. For example, the NPDES program authority may configure their electronic reporting sys- tem to automatically generate NPDES IDs for control mechanisms for new facilities reported on a Pretreatment Program Report [40 CFR 403.12(i)]. Additionally, the NPDES program authority can decide whether to allow NPDES regulated entities to override these pre-populated data. (2) The data elements in this table conform to EPA’s policy regarding the application requirements for renewal or reissuance of NPDES permits for discharges from municipal separate storm sewer systems (see 61 FR 41698; 6 August 1996). (3) The data elements in this table are also supported by the Office Management and Budget approved permit applications and forms for the NPDES program. (4) These data will allow EPA and the NPDES program authority to link facilities, compliance monitoring activities, compliance determinations, and enforcement ac- tions. For example, these data will provide several ways to make the following linkages: linking violations to enforcement actions and final orders; linking single event violations and compliance monitoring activities; linking program reports to DMRs; linking program reports to compliance monitoring activities; and linking enforcement activities and compliance monitoring activities.

PART 403—GENERAL reporting of flows. In cases where the mechanism or if required to do so by PRETREATMENT REGULATIONS FOR Pretreatment Standard requires state law. EXISTING AND NEW SOURCES OF compliance with a Best Management * * * * * POLLUTION Practice (or pollution prevention (h) Reporting requirements for alternative), the User shall submit Industrial Users not subject to ■ 17. The authority citation for part 403 documentation required by the Control categorical Pretreatment Standards. The continues to read as follows: Authority or the Pretreatment Standard Control Authority must require Authority: 33 U.S.C. 1251 et seq. necessary to determine the compliance appropriate reporting from those ■ 18. In § 403.12, revise paragraphs status of the User. At the discretion of Industrial Users with Discharges that are (e)(1), (h), and (i) to read as follows: the Control Authority and in not subject to categorical Pretreatment consideration of such factors as local Standards. Significant Non-categorical § 403.12 Reporting requirements for high or low flow rates, holidays, budget Industrial Users must submit to the POTW’s and industrial users. cycles, etc., the Control Authority may Control Authority at least once every six * * * * * modify the months during which the months (on dates specified by the (e) * * * (1) Any Industrial User above reports are to be submitted. For Control Authority) a description of the subject to a categorical Pretreatment Industrial Users for which EPA or the nature, concentration, and flow of the Standard (except a Non-Significant authorized state, tribe, or territory is the pollutants required to be reported by the Categorical User as defined in Control Authority, as of December 21, Control Authority. In cases where a § 403.3(v)(2)), after the compliance date local limit requires compliance with a 2023 or an EPA-approved alternative of such Pretreatment Standard, or, in the Best Management Practice or pollution date (see 40 CFR 127.24(e) or (f)), all case of a New Source, after prevention alternative, the User must reports submitted in compliance with commencement of the discharge into the submit documentation required by the this section must be submitted POTW, shall submit to the Control Control Authority to determine the Authority during the months of June electronically by the industrial user to compliance status of the User. These and December, unless required more the Control Authority or initial reports must be based on sampling and frequently in the Pretreatment Standard recipient, as defined in 40 CFR 127.2(b), analysis performed in the period or by the Control Authority or the in compliance with this section and 40 covered by the report, and in Approval Authority, a report indicating CFR part 3 (including, in all cases, accordance with the techniques the nature and concentration of subpart D to part 3), 40 CFR 122.22, and described in 40 CFR part 136 of this pollutants in the effluent which are 40 CFR part 127. 40 CFR part 127 is not chapter and amendments thereto. This limited by such categorical Pretreatment intended to undo existing requirements sampling and analysis may be Standards. In addition, this report shall for electronic reporting. Prior to this performed by the Control Authority in include a record of measured or date, and independent of 40 CFR part lieu of the significant non-categorical estimated average and maximum daily 127, the Industrial Users for which EPA Industrial User. For Industrial Users for flows for the reporting period for the or the authorized state, tribe, or territory which EPA or the authorized state, tribe, Discharge reported in paragraph (b)(4) of is the Control Authority may be or territory is the Control Authority, as this section except that the Control required to report electronically if of December 21, 2023 or an EPA- Authority may require more detailed specified by a particular control approved alternative date (see 40 CFR

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127.24(e) or (f)), all reports submitted in PART 503—STANDARDS FOR THE 19 of each year. As of December 21, compliance with this section must be USE OR DISPOSAL OF SEWAGE 2016, all reports submitted in submitted electronically by the SLUDGE compliance with this section must be industrial user to the Control Authority submitted electronically by the operator ■ 19. The authority citation for part 503 or initial recipient, as defined in 40 CFR to EPA when the Regional continues to read as follows: 127.2(b), in compliance with this Administrator is the Director in section and 40 CFR part 3 (including, in Authority: Sections 405(d) and (e) of the compliance with this section and 40 all cases, subpart D to part 3), 40 CFR Clean Water Act, as amended by Pub. L. 95– CFR part 3 (including, in all cases, 217, sec. 54(d), 91 Stat. 1591 (33 U.S.C. 122.22, and 40 CFR part 127. 40 CFR 1345(d) and (e)); and Pub. L. 100–4, title IV, subpart D to 40 CFR part 3), 40 CFR part 127 is not intended to undo sec. 406(a), (b), 101 Stat., 71, 72 (33 U.S.C. 122.22, and 40 CFR part 127. As of existing requirements for electronic 1251 et seq.). December 21, 2023, or an EPA-approved reporting. Prior to this date, and ■ 20. Revise § 503.18 to read as follows: alternative date (see 40 CFR 127.24(e) or independent of 40 CFR part 127, the (f)), all reports submitted in compliance Industrial Users for which EPA or the § 503.18 Reporting. with this section must be submitted authorized state, tribe, or territory is the Class I sludge management facilities, electronically in compliance with this Control Authority may be required to POTWs (as defined in § 501.2 of this section and 40 CFR part 3 (including, in report electronically if specified by a chapter) with a design flow rate equal to all cases, subpart D to 40 CFR part 3), particular control mechanism or if or greater than one million gallons per 40 CFR 122.22, and 40 CFR part 127. 40 required to do so by state law. day, and POTWs that serve 10,000 CFR part 127 is not intended to undo people or more shall submit a report on (i) Annual POTW reports. POTWs existing requirements for electronic February 19 of each year. As of with approved Pretreatment Programs reporting. Prior to the compliance December 21, 2016, all reports shall provide the Approval Authority deadlines for electronic reporting (see submitted in compliance with this Table 1 in 40 CFR 127.16), the Director with a report that briefly describes the section must be submitted electronically POTW’s program activities, including may also require operators to by the operator to EPA when the electronically submit annual reports activities of all participating agencies, if Regional Administrator is the Director under this section if required to do so more than one jurisdiction is involved in compliance with this section and 40 by state law. in the local program. The report CFR part 3 (including, in all cases, required by this section shall be subpart D to part 3), 40 CFR 122.22, and ■ 22. Revise § 503.48 to read as follows: submitted no later than one year after 40 CFR part 127. As of December 21, § 503.48 Reporting. approval of the POTW’s Pretreatment 2023, or an EPA-approved alternative Program, and at least annually date (see 40 CFR 127.24(e) or (f)), all Class I sludge management facilities, thereafter, and must include, at a reports submitted in compliance with POTWs (as defined in § 501.2 of this minimum, the applicable required data this section must be submitted chapter) with a design flow rate equal to in appendix A to 40 CFR part 127. The electronically in compliance with this or greater than one million gallons per report required by this section must also section and 40 CFR part 3 (including, in day, and POTWs that serve a population include a summary of changes to the all cases, subpart D to 40 CFR part 3), of 10,000 people or greater shall submit POTW’s pretreatment program that have 40 CFR 122.22, and 40 CFR part 127. 40 a report on February 19 of each year. As not been previously reported to the CFR part 127 is not intended to undo of December 21, 2016, all reports Approval Authority and any other existing requirements for electronic submitted in compliance with this relevant information requested by the reporting. Prior to the compliance section must be submitted electronically Approval Authority. As of December 21, deadlines for electronic reporting (see by the operator to EPA when the 2023 or an EPA-approved alternative Table 1 in 40 CFR 127.16), the Director Regional Administrator is the Director may also require operators to date (see 40 CFR 127.24(e) or (f)), all in compliance with this section and 40 electronically submit annual reports annual reports submitted in compliance CFR part 3 (including, in all cases, under this section if required to do so with this section must be submitted by state law. subpart D to 40 CFR part 3), 40 CFR electronically by the POTW (a) The information in § 503.17(a), 122.22, and 40 CFR part 127. As of Pretreatment Program to the Approval except the information in § 503.17 December 21, 2023, or an EPA-approved Authority or initial recipient, as defined (a)(3)(ii), (a)(4)(ii) and in (a)(5)(ii), for alternative date (see 40 CFR 127.24(e) or in 40 CFR 127.2(b), in compliance with the appropriate requirements on (f)), all reports submitted in compliance this section and 40 CFR part 3 February 19 of each year. with this section must be submitted (including, in all cases, subpart D to 40 (b) The information in electronically in compliance with this CFR part 3), 40 CFR 122.22, and 40 CFR § 503.17(a)(5)(ii)(A) through (a)(5)(ii)(G) section and 40 CFR part 3 (including, in part 127. 40 CFR part 127 is not on February 19th of each year when 90 all cases, subpart D to part 3), 40 CFR intended to undo existing requirements percent or more of any of the 122.22, and 40 CFR part 127. 40 CFR for electronic reporting. Prior to this cumulative pollutant loading rates in part 127 is not intended to undo date, and independent of 40 CFR part Table 2 of § 503.13 is reached at a land existing requirements for electronic 127, the Approval Authority may also application site. reporting. Prior to the compliance require POTW Pretreatment Programs to ■ 21. Revise § 503.28 to read as follows: deadlines for electronic reporting (see electronically submit annual reports § 503.28 Reporting. Table 1 in 40 CFR 127.16), the Director under this section if specified by a may also require operators to Class I sludge management facilities, particular permit or if required to do so POTWs (as defined in 40 CFR 501.2) electronically submit annual reports by state law. with a design flow rate equal to or under this section if required to do so * * * * * greater than one million gallons per day, by state law. and POTWs that serve 10,000 people or [FR Doc. 2020–02889 Filed 2–27–20; 8:45 am] more shall submit a report on February BILLING CODE 6560–50–P

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ENVIRONMENTAL PROTECTION Docket: The index to the docket for additional information on ozone, visit AGENCY this action is available electronically at https://www.epa.gov/ozone-pollution. www.regulations.gov and in hard copy Stage II Vapor Recovery is an air 40 CFR Part 52 at the EPA Region 6 Office, 1201 Elm pollution control technology for Street, Suite 500, Dallas, Texas. While automobiles. When an automobile or [EPA–R06–OAR–2019–0496; FRL–10005– all documents in the docket are listed in 72–Region 6] other vehicle is brought into a gas the index, some information may be station to be refueled, the empty portion Air Plan Approval; Louisiana; publicly available only at the hard copy of the gas tank on the vehicle contains Withdrawal of Stage II Vapor Recovery location (e.g., copyrighted material), and gasoline vapors, which are VOCs. When Systems Requirements some may not be publicly available at liquid gasoline is pumped into the either location (e.g., CBI). partially empty gas tank the vapors are AGENCY: Environmental Protection FOR FURTHER INFORMATION CONTACT: forced out of the tank as the tank fills Agency (EPA). Wendy Jacques, EPA Region 6 Office, with liquid gasoline. Where air ACTION: Proposed rule. Infrastructure & Ozone section, 1201 pollution control technology is not Elm Street, Suite 500, Dallas, TX 75270, used, these vapors are emitted into the SUMMARY: Pursuant to the Federal Clean 214–665–7395, [email protected]. Air Act (CAA or the Act), the air. In the atmosphere, these VOCs can, To inspect the hard copy materials, in the presence of sunlight, react with Environmental Protection Agency (EPA) please schedule an appointment with is proposing to approve a revision to the NOX and VOCs from other sources to Ms. Jacques or Mr. Bill Deese at 214– form ozone. The Stage II system consists Louisiana State Implementation Plan 665–7253. (SIP) submitted by the State of of special nozzles and coaxial hoses at SUPPLEMENTARY INFORMATION: Louisiana on May 30, 2019 that pertains each gas pump that capture vapor from Throughout this document ‘‘we,’’ ‘‘us,’’ to gasoline dispensing facilities (GDFs) the vehicle’s fuel tank and route them and ‘‘our’’ means the EPA. in the parishes of Ascension, East Baton to underground or aboveground storage tank(s) during the refueling process. Rouge, Iberville, Livingston, West Baton I. Background Onboard refueling vapor recovery Rouge, and Pointe Coupee. The SIP Ozone is a gas composed of three (ORVR) is another emission control revision proposed for approval would oxygen atoms. Ground-level ozone is system that can capture fuel vapors from remove from the SIP the requirement to generally not emitted directly from a vehicle gas tanks during refueling. As install Stage II vapor recovery systems vehicle’s exhaust or an industrial stated, Stage II vapor recovery systems and include the requirements for the smokestack but is created by a chemical are specifically installed at gasoline decommissioning of existing Stage II reaction between nitrogen oxides (NO ) X dispensing facilities and capture the equipment at GDFs in these areas. and volatile organic compounds (VOC) refueling fuel vapors at the gasoline DATES: Written comments must be in the presence of sunlight and high pump nozzle. The system carries the received on or before March 30, 2020. ambient temperatures. (VOC and NO X vapors back to the underground storage ADDRESSES: Submit your comments, emissions often are referred to as tank at the gasoline dispensing facility identified by Docket No. EPA–R06– ‘‘precursors’’ to ozone formation.) Thus, to prevent the vapors from escaping to OAR–2019–0496, at https:// ozone is known primarily as a the atmosphere. ORVR systems are www.regulations.gov/ or via email to summertime air pollutant. Motor carbon canisters installed directly on [email protected]. Follow the vehicle exhaust and industrial automobiles to capture the fuel vapors online instructions for submitting emissions, gasoline vapors, chemical evacuated from the gasoline tank before comments. Once submitted, comments solvents and natural sources emit NO X they reach the nozzle. The fuel vapors cannot be edited or removed from and/or VOC. Urban areas tend to have captured in the carbon canisters are Regulations.gov. The EPA may publish high concentrations of ground-level then combusted in the engine when the any comment received to its public ozone, but areas without significant automobile is in operation. docket. Do not submit electronically any industrial activity and with relatively information you consider to be low vehicular traffic are also subject to Stage II vapor recovery systems and Confidential Business Information (CBI) increased ozone levels because wind vehicle ORVR systems were initially or other information whose disclosure is carries ozone and its precursors both required by the 1990 Amendments restricted by statute. Multimedia hundreds of miles from their sources. In to the CAA. Under CAA Section submissions (audio, video, etc.) must be 1979, under section 109 of the CAA, the 182(b)(3) ozone nonattainment areas accompanied by a written comment. EPA established the primary and classified as moderate and above were The written comment is considered the secondary National Ambient Air Quality required to adopt Stage II requirements official comment and should include Standards (NAAQS) for ozone at 0.12 with the goal of the technology being discussion of all points you wish to parts per million (ppm) averaged over a implemented on all gas stations by make. The EPA will generally not 1-hour period (44 FR 8202, February 8, November 1994. CAA section 202(a)(6), consider comments or comment 1979). In 1997, we revised the primary requires an onboard system of capturing contents located outside of the primary and secondary NAAQS for ozone to set vehicle refueling emissions, commonly submission (i.e., on the web, cloud, or the acceptable level of ozone in the referred to as an ORVR system. In 1994, other file sharing system). For ambient air at 0.08 ppm, averaged over EPA promulgated ORVR standards (59 additional submission methods, please an 8-hour period (62 FR 38856, July 18, FR 16262 (April 6, 1994)). Section contact Wendy Jacques, 214–665–7395, 1997). In 2008, we further revised the 202(a)(6) of the CAA required that the [email protected]. For the full primary and secondary ozone NAAQS EPA’s ORVR standards apply to light- EPA public comment policy, to 0.075 ppm, averaged over an 8-hour duty vehicles manufactured beginning information about CBI or multimedia period (73 FR 16436, March 27, 2008). in the fourth model year after the model submissions, and general guidance on In 2015, we again revised the primary year in which the standards were making effective comments, please visit and secondary ozone NAAQS to 0.070 promulgated, and that ORVR systems https://www.epa.gov/dockets/ ppm, averaged over an 8-hour period provide a minimum evaporative commenting-epa-dockets. (73 FR 16436, March 27, 2008). For emission capture efficiency of 95

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percent.1 ORVR equipment has been Louisiana Stage II SIP (59 FR 14112 negligibly less than those from Stage II phased in for new light duty vehicles (March 25, 1994)) that required owners systems at GDFs, but that the air quality (passenger vehicles) beginning with and operators of GDFs to install and would not be negatively affected by the model year 1998 and starting with operate Stage II vapor recovery removal of Stage II equipment. Because model year 2001 for light-duty trucks equipment in the Louisiana 1-hour of these two demonstrations, Louisiana and most heavy-duty gasoline powered ozone nonattainment area. The Baton requested the withdrawal of Stage II vehicles. Since 2006, ORVR has been a Rouge ozone area was found to be vapor recovery systems requirements for required emissions control on nearly all attaining the 1-hour ozone NAAQS on the 6-Parish Area from the SIP. new gasoline-powered highway vehicles February 10, 2010 (75 FR 6570), and The revisions to the SIP describe the having less than 14,000 pounds gross was redesignated as attainment for the continued applicability of Stage II vehicle weight rating. CAA section 1997 8-hour ozone NAAQS on requirements until the operator of the 202(a)(6) provides discretionary November 20, 2011 (76 FR 7400) and GDF completes the decommissioning of authority to the Administrator, by rule, the 2008 8-hour ozone NAAQS on the Stage II system; the requirement of the ability to revise or waive the December 27, 2016, (81 FR 95051). the operator of the GDF to submit application of the Stage II requirements Under the 2015 ozone NAAQS, all of written notification to the Louisiana for areas classified as Serious, Severe, or Louisiana is designated as attainment/ Department of Environmental Quality Extreme for ozone, as appropriate, after unclassifiable (82 FR 54232 (November (LDEQ) of its intent to decommission such time as the Administrator 16, 2017) and 83 FR 25776 (June 4, Stage II equipment at least 30 calendar determines that onboard emissions 2018)). days prior to beginning any control systems are in widespread use The Stage II vapor recovery decommissioning activity; the throughout the motor vehicle fleet. requirements also apply to Pointe requirement that technicians that have On May 16, 2012, EPA issued a Coupee Parish despite EPA’s 1997 appropriate training and certification national rulemaking making the finding removal of Pointe Coupee Parish from may perform the Stage II that Stage II systems are in ‘‘widespread the Baton Rouge ozone area and Pointe decommissioning procedure; the use’’ and determined that emission Coupee’s attainment determination for requirement that the operator shall reductions from ORVR alone are the 1-hour ozone NAAQS. This was due notify LDEQ in writing no later than 10 essentially equal to and will soon to EPA’s prior inclusion of Point Coupee days after completion of all surpass the emission reductions Parish as part of the Baton Rouge 1-hour decommissioning activities; and the achieved by Stage II alone (see 77 FR ozone nonattainment area in 1991 and requirement for the GDF to maintain all 28772 at 28772). In the May 16, 2012 EPA’s approval of the Louisiana Stage II documents related to the action, we noted that each year, non- SIP in 1994 (59 FR 14112 (March 25, decommissioning onsite at least 4 years ORVR-equipped vehicles continue to be 1994)).2 and make such documents available replaced with ORVR-equipped vehicles To determine whether we can upon request. All decommissioning and Stage II and ORVR systems capture approve the SIP revision, we must activity must be completed within 30 the same VOC emissions and thus, are evaluate the impact of removing the days after the start date. Any existing redundant. Id. EPA also determined that Stage II vapor recovery requirements for GDF in Louisiana shall complete the ORVR systems are in widespread use the Baton Rouge ozone area which decommissioning of the Stage II and waived the Stage II requirement for includes the Louisiana parishes of equipment within 18 months of EPA’s GDFs if doing so did not interfere with Ascension, East Baton Rouge, Iberville, final approval of this proposed rule. The attaining or maintaining the ozone Livingston, and West Baton Rouge as revisions to the SIP also include a standards. Id. at 28776–287789. EPA well as Pointe Coupee. (We hereinafter demonstration that the removal of Stage also noted that any state currently refer to the parishes within the Baton II equipment in the 6-Parish Area is implementing Stage II vapor recovery Rouge ozone area and Pointe Coupee consistent with section 110(l) of the Act. Parish as ‘‘the 6-Parish Area.’’). programs may submit SIP revisions that III. EPA’s Evaluation of the Revision would allow for the phase-out of Stage II. Louisiana’s SIP Revision II vapor recovery systems including a EPA’s primary consideration for On May 30, 2019, Louisiana CAA section 110(l) analysis showing determining the approvability of submitted revisions to Title 33 of the that its removal did not interfere with Louisiana’s revisions to remove Stage II Louisiana Air Code, Part III, Chapter 21 attaining or maintaining the ozone vapor control requirements and provide (denoted LAC 33:III.2132) and for decommissioning of all Stage II standards. Id. The Baton Rouge ozone area, corresponding revisions to the equipment in the 6-Parish Area is consisting of Ascension, East Baton Louisiana Stage II Vapor Recovery SIP. whether these revisions comply with Rouge, Iberville, Livingston, and West In their SIP submittal, Louisiana section 110(l) of the Act. Section 110(l) Baton Rouge Parishes, was designated as demonstrated that emissions reductions requires that a revision to the SIP not nonattainment under the 1-hour ozone from ORVR systems are estimated to be interfere with any applicable NAAQS (56 FR 56694 (November 6, requirement concerning attainment and 2 In 1991, Pointe Coupee Parish originally was reasonable further progress (RFP), or 1991)), the 1997 8-hour ozone NAAQS included in the Baton Rouge 1-hour ozone (69 FR 23857 (April 30, 2004)) and the any other applicable requirement of the nonattainment area (56 FR 5694 (November 6, Act. The EPA can approve a SIP 2008 8-hour ozone NAAQS (77 FR 1991)). In 1997, we later removed Pointe Coupee 30088 (May 21, 2012)). The Baton Rouge Parish from the Baton Rouge ozone nonattainment revision that removes or modifies area because it was not part of the Baton Rouge control measures in the SIP once the ozone area was subject to Stage II under Consolidated Metropolitan Statistical Area (CMSA), the 1990 Clean Air Act Amendments as state makes a ‘‘noninterference’’ and since it was no longer part of the Baton Rouge demonstration that such removal or it was classified as Serious ozone area, we corrected its classification to nonattainment for the 1-hour NAAQS Marginal, redesignated Pointe Coupee Parish to modification will not interfere with for ozone. In 1994, EPA approved the attainment for the 1-hour ozone NAAQS, and attainment of the NAAQS, RFP or any approved the Maintenance Plan, all in the same other CAA requirement. Louisiana must Federal Register Notice at 62 FR 648 (January 6, 1 Unlike Stage II, which is a requirement only in 1997). The State, however, did not submit a SIP make a demonstration of ozone nonattainment areas, ORVR requirements revision to remove the Stage II requirement from the noninterference in the parishes of apply to vehicles everywhere. SIP until May 2019. Ascension, East Baton Rouge, Iberville,

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Livingston, Pointe Coupee, and West their SIP submittal that ozone formation approved maintenance plan for the five Baton Rouge in order to remove the has been found in past photochemical parishes estimates VOC emissions for Stage II requirements from its SIP. modeling exercises in the 6-Parish Area 2027 to be 140.8 tpd. Assuming a EPA has reviewed Louisiana’s to be driven by changes in NOX maximum increase of 0.09 tpd VOC due submittal, which specifically revised emissions, rather than VOC emissions. to removal of Stage II vapor recovery LAC 33:III.2132 subsections B–F and J, LDEQ indicated that ozone impacts requirements, the estimated VOC as well as the accompanying SIP were expected to be negligible from the emissions for 2027 would be 140.8 + narrative, and has concluded that increases in VOCs and included a 0.09 = 140.89 tpd. Should the VOC Louisiana’s May 30, 2019, SIP revision reference to a prior modeling analysis emissions reach the maximum estimate addresses the EPA’s Widespread Use for that LDEQ had contracted Environ and of 140.89 tpd, they would still be less Onboard Refueling Vapor Recovery and ERG to perform in 2013.5 The modeling than the 2011 base year emissions of Stage II Waiver (77 FR 28772) and is analysis reduced all man-made VOCs in consistent with EPA’s ‘‘Guidance on Louisiana by 30% in the 2017 Future 144.1 tpd and thus, a maximum increase Removing Stage II Gasoline Vapor Year modeling, which equated to a of 0.09 tpd VOC emissions is consistent Control Programs from State decrease of 45 tpd in the 6-Parish Area with the maintenance plan for the area Implementation Plans and Assessing subject to Stage II. Removal of 45 tpd and would not interfere with the Comparable Measures’’ (EPA–457/B– resulted in reductions of only 0 to 1 ppb attainment or maintenance of the 2008 12–001 (August 7, 2012)).3 In in the 2017 Future Year Design Value.6 NAAQS in the five parishes. accordance with EPA’s Guidance on We have reviewed this modeling and For Pointe Coupee Parish, we Removing Stage II, Louisiana submitted concur with LDEQ’s assessment in their approved a maintenance plan for the a demonstration that the Stage II referenced report, that the 6-Parish Area 1997 8-hour ozone standard on May 9, decommissioning will not interfere with typically responds to NOX emission 2013 (78 FR 27058). This maintenance attainment or maintenance of the ozone changes and not VOC emission plan demonstrates attainment through NAAQS, included the requirements for 7 changes. Given that (1) the projected 2014. The maintenance plan estimates the decommissioning of Stage II vapor increase in VOC emissions is extremely VOC emissions for 2014 as 7.66 tpd. recovery equipment, and included the small (<0.1 tpd) when compared to all Assuming a maximum increase of 0.09 analysis of VOC emission impacts from the anthropogenic VOC emissions in the tpd VOC due to removal of Stage II removal of Stage II controls at GDFs area and (2) ozone formation in the area located in the 6-Parish Area. Louisiana has been found to be predominantly vapor recovery requirements, the estimated VOC emissions for 2014 estimated using the guidance driven by changes in NOX emissions methodologies from the August 2012 rather than VOC emissions, we believe would be 7.66 + 0.09 = 7.75 tpd. Should guidance memo referenced above that that removal of Stage II vapor recovery the VOC emissions reach the maximum the VOC emissions would minimally systems would have a negligible impact estimate of 7.75 tpd, they would still be increase. LDEQ estimated the impact on on ozone levels. less than the 2002 base year emissions emissions from decommissioning Stage In addition, the removal of Stage II is of 8.63 tpd and thus, a maximum II in the 6-Parish Area by using EPA consistent with the current maintenance increase of 0.09 tpd VOC emissions is approved equations from the same 2012 plan for the Baton Rouge ozone area for consistent with the maintenance plan guidance, to assess compliance with the 2008 8-hour ozone NAAQS (83 FR and would not interfere with the CAA 110(l). The equations used were 24226 (May 25, 2018)) and the attainment or maintenance of the 1997 two values of Stage II vapor recovery maintenance plan for Pointe Coupee 8-hour NAAQS in this parish.9 system efficiencies (60 percent and 75 Parish (78 FR 27058 (May 9, 2013)). The For the 2015 ozone standard, all six approved, revised maintenance plan for percent), and two representative fleet parishes are designated attainment/ the redesignated Baton Rouge area age distributions (2010 and 2017). The unclassifiable. As noted above, we demonstrates attainment of the 2008 8- analyses indicated that by 2017, the believe that removal of Stage II vapor hour ozone NAAQS through 2027.8 This removal of Stage II vapor recovery recovery systems would have a systems would result in a minimal incorporated by reference into this action. See negligible impact on ozone levels and increase in VOC emissions that ranges the small increase is consistent with the from 0.02 to 0.09 tons per day (tpd) Docket number EPA–R06–OAR–2018–1111. 5 See LDEQ SIP pages 17 & 22. ENVIRON and 2008 ozone maintenance plan for the distributed over the 6-Parish Area. ERG, 2013. ‘‘Technical Support Document: Baton Rouge area and the 1997 8-hour This minimal increase in VOC Photochemical Modeling for the Louisiana 8-hour emissions from the 6-Parish Area is Ozone State Implementation Plan.’’ Prepared by maintenance plan for Pointe Coupee negligible when comparing the 0.02 to Environ International Corporation, Novato, CA, and Parish. Thus, approval of the SIP Eastern Research Group, Inc., Rancho Cordova, CA, revision would not interfere with any 0.09 tpd with the total amount of VOCs for the Louisiana Department of Environmental from all anthropogenic sources in the Quality, Baton Rouge, LA (August 2013); pdf pages applicable requirement concerning Baton Rouge ozone area. In the current 152–158. This document is in the docket as EPA– attainment and maintenance of any Baton Rouge ozone area maintenance R06–OAR–2019–0496. ozone standard and is compliant with 6 Id. and ‘‘EPA_Analysis_of_Environ_2013_ CAA section 110(l). plan, VOC emissions were calculated to Modeling_Report.xlsx’’ This document is in the be 145.5 tpd in 2011, and projected to docket as EPA–R06–OAR–2019–0496. be 141.2 tpd in 2022 and 140.8 tpd in 7 See. ‘‘Technical Support Document: 2011 base year emissions of 144.1 tpd. The State’s 2027 (83 FR 16017 at 16019, (April 13, Photochemical Modeling for the Louisiana 8-hour submittal, Federal Register actions, and TSD to that 4 Ozone State Implementation Plan.’’ Prepared by action, are incorporated by reference into this 2018)). In addition, LDEQ indicated in Environ International Corporation, Novato, CA, and action. See Docket number EPA–R06–OAR–2018– Eastern Research Group, Inc., Rancho Cordova, CA, 0111. 3 The guidance document is available at: https:// for the Louisiana Department of Environmental 9 In the approved maintenance plan, https:// www3.epa.gov/ttn/naaqs/aqmguide/collection/cp2/ Quality, Baton Rouge, LA (August 2013); pdf pages www.govinfo.gov/content/pkg/FR-2013-05-09/pdf/ 20120807_page_stage2_removal_guidance.pdf. 152–158. This document is in the docket as EPA– 2013-10832.pdf, the VOC emissions for 2014 are 4 EPA’s proposed approval of Baton Rouge 2008 R06–OAR–2019–0496. estimated to be 7.66 tpd, which are lower than the 8-hour ozone NAAQS maintenance plan: 83 FR 8 In the approved maintenance plan, https:// 2002 base year emissions of 8.63 tpd. The State’s 16017 (April 13, 2018); EPA’s final action: 83 FR www.govinfo.gov/content/pkg/FR-2018-05-25/pdf/ submittal, Federal Register actions, and TSD are 24226 (5/25/18). The State’s submittal, Federal 2018-11217.pdf, the VOC emissions for 2027 are incorporated by reference into this action. See Register actions, and TSD to that action, are estimated to be 140.8 tpd, which are lower than the Docket number EPA–R06–OAR–2007–0206.

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IV. Proposed Action • Is certified as not having a ENVIRONMENTAL PROTECTION The EPA is proposing to approve significant economic impact on a AGENCY revisions to the Louisiana SIP that substantial number of small entities 40 CFR Part 52 control emissions of VOCs and pertain under the Regulatory Flexibility Act (5 to the removal of Stage II vapor recovery U.S.C. 601 et seq.); [EPA–R06–OAR–2019–0211; FRL–10005– equipment submitted on May 30, 2019. • Does not contain any unfunded 69–Region 6] Specifically, we are proposing to mandate or significantly or uniquely Air Plan Approval; Louisiana; approve revisions to subsections B–F affect small governments, as described and J within LAC 33:III.2132 that Infrastructure for the 2015 Ozone in the Unfunded Mandates Reform Act National Ambient Air Quality remove from the SIP, the requirement of 1995 (Pub. L. 104–4); for Stage II from the six parishes of Standards • Does not have federalism Ascension, East Baton Rouge, Iberville, AGENCY: Environmental Protection Livingston, Pointe Coupee, and West implications as specified in Executive Agency (EPA). Order 13132 (64 FR 43255 (August 10, Baton Rouge and related revisions that ACTION: Proposed rule. address the removal of Stage II 1999)); equipment. We are proposing to find • Is not an economically significant SUMMARY: Pursuant to the Federal Clean that the SIP demonstrates that the regulatory action based on health or Air Act (CAA or Act), the EPA is removal of Stage II equipment in the six safety risks subject to Executive Order proposing to approve elements of two parishes meets section 110(l) of the Act. 13045 (62 FR 19885 (April 23, 1997)); State Implementation Plan (SIP) submittals from Louisiana for the 2015 V. Incorporation by Reference • Is not a significant regulatory action ozone (O3) National Ambient Air In this action, we are proposing to subject to Executive Order 13211 (66 FR Quality Standards (NAAQS). The include in a final rule regulatory text 28355 (May 22, 2001)); submittals address how the existing SIP that includes incorporation by • Is not subject to requirements of provides for the implementation, reference. In accordance with the section 12(d) of the National maintenance and enforcement of the requirements of 1 CFR 51.5, we are Technology Transfer and Advancement 2015 ozone NAAQS (infrastructure SIP proposing to incorporate by reference Act of 1995 (15 U.S.C. 272 note) because or i-SIP). The i-SIP ensures that the revisions to the Louisiana regulations as application of those requirements would Louisiana SIP is adequate to meet the described in the Proposed Action be inconsistent with the CAA; and state’s responsibilities under the CAA section above. We have made, and will for this NAAQS. • Does not provide EPA with the continue to make, these documents DATES: Written comments must be generally available electronically discretionary authority to address, as received on or before March 30, 2020. through www.regulations.gov and in appropriate, disproportionate human ADDRESSES: Submit your comments, hard copy at the EPA Region 6 office health or environmental effects, using identified by Docket Number EPA–R06– (please contact the person identified in practicable and legally permissible OAR–2019–0211, at http:// the FOR FURTHER INFORMATION CONTACT methods, under Executive Order 12898 www.regulations.gov or via email to section of this preamble for more (59 FR 7629 (February 16, 1994)). [email protected]. Follow the information). In addition, the SIP is not approved online instructions for submitting VI. Statutory and Executive Order to apply on any Indian reservation land comments. Once submitted, comments Reviews or in any other area where EPA or an cannot be edited or removed from Under the CAA, the Administrator is Indian tribe has demonstrated that a Regulations.gov. The EPA may publish required to approve a SIP submission tribe has jurisdiction. In those areas of any comment received to its public that complies with the provisions of the Indian country, the proposed rule does docket. Do not submit electronically any Act and applicable Federal regulations. not have tribal implications and will not information you consider to be 42 U.S.C. 7410(k); 40 CFR 52.02(a). impose substantial direct costs on tribal Confidential Business Information (CBI) Thus, in reviewing SIP submissions, the governments or preempt tribal law as or other information whose disclosure is EPA’s role is to approve state choices, specified by Executive Order 13175 (65 restricted by statute. Multimedia submissions (audio, video, etc.) must be provided that they meet the criteria of FR 67249 (November 9, 2000)). the CAA. Accordingly, this action accompanied by a written comment. merely proposes to approve state law as List of Subjects in 40 CFR Part 52 The written comment is considered the meeting Federal requirements and does official comment and should include not impose additional requirements Environmental protection, Air discussion of all points you wish to beyond those imposed by state law. For pollution control, Incorporation by make. The EPA will generally not that reason, this action: reference, Intergovernmental relations, consider comments or comment • Is not a ‘‘significant regulatory Ozone, Volatile organic compounds. contents located outside of the primary action’’ subject to review by the Office Authority: 42 U.S.C. 7401 et seq. submission (i.e., on the web, cloud, or of Management and Budget under other file sharing system). For Executive Orders 12866 (58 FR 51735 Dated: February 20, 2020. additional submission methods, please (October 4, 1993)) and 13563 (76 FR Kenley McQueen, contact Sherry Fuerst, 214–665–6454, 3821 (January 21, 2011)); Regional Administrator, Region 6. [email protected]. For the full EPA • Is not an Executive Order 13771 (82 [FR Doc. 2020–04064 Filed 2–27–20; 8:45 am] public comment policy, information FR 9339 (February 2, 2017)) regulatory BILLING CODE 6560–50–P about CBI or multimedia submissions, action because SIP approvals are and general guidance on making exempted under Executive Order 12866; effective comments, please visit http:// • Does not impose an information www2.epa.gov/dockets/commenting- collection burden under the provisions epa-dockets. of the Paperwork Reduction Act (44 Docket: The index to the docket for U.S.C. 3501 et seq.); this action is available electronically at

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www.regulations.gov and in hard copy addition, in the context of acting on requirements of the Act and other at the EPA Region 6, 1201 Elm Street, such infrastructure submissions, EPA related matters as needed to implement, Suite 500, Dallas, Texas. While all evaluates the submitting state’s SIP for maintain and enforce each of the documents in the docket are listed in facial compliance with statutory and NAAQS.4 the index, some information may be regulatory requirements, not for the The Louisiana Air Control Law found publicly available only at the hard copy state’s implementation of its SIP.2 The in the Louisiana Environmental Quality location (e.g., copyrighted material), and EPA has other CAA authority to address Act at Louisiana Revised Statutes some may not be publicly available at any issues concerning a state’s (Louisiana Revised Statutes 30:2054 (La either location (e.g., CBI). implementation of the rules, R.S. 30:2054)) provides the Secretary of FOR FURTHER INFORMATION CONTACT: regulations, consent orders, etc. that the Louisiana Department of Sherry Fuerst, 214–665–6454, comprise its SIP. Environmental Quality (LDEQ) with [email protected]. To inspect the The State of Louisiana’s i-SIP broad legal authority. The Secretary can hard copy materials, please schedule an certification, submitted on February 7, adopt emission standards and appointment with Ms. Fuerst or Mr. Bill 2019, and the certification submitted on compliance schedules which are Deese at 214–665–7253. November 8, 2019, intend to applicable to regulated entities; demonstrate how the existing Louisiana emission standards and limitations; and SUPPLEMENTARY INFORMATION: SIP meets the applicable CAA section any other measures necessary for Throughout this document wherever 110(a)(2) requirements for the 2015 attainment and maintenance of national ‘‘we,’’ ‘‘us,’’ or ‘‘our’’ is used, we mean ozone NAAQS. Our technical evaluation standards. The Secretary can also the EPA. of these submittals is provided in the enforce applicable laws, regulations, I. Background Technical Support Document (TSD) for standards and compliance schedules, this action.3 Under section 109 of the CAA, EPA and seek injunctive relief. This establishes NAAQS to protect human II. The EPA’s Evaluation of Louisiana’s authority has been employed in the past health and public welfare. On October i-SIP to adopt and submit multiple revisions to the Louisiana SIP. The approved SIP 26, 2015, the EPA revised the primary The State’s submissions on dated and secondary 8-hour ozone NAAQS for Louisiana is documented at 40 CFR February 7, 2019 and November 8, 2019 part 52.970, Subpart T.5 LDEQ’s air from 0.075 ppm to 0.070 ppm to provide are intended to demonstrate how the increased protection of public health quality rules and standards are codified existing Louisiana SIP meets the at Title 33, Part III of the Louisiana and the environment (80 FR 65291). The infrastructure requirements for the 2015 primary standards are set to protect Administrative Code (LAC 33:III). As ozone NAAQS. The February 7, 2019 detailed in our TSD, numerous parts of human health, while secondary submission addresses most elements standards are set to protect public the regulations codified into LAC 33:III pertaining to CAA section 110(a)(2) necessary for implementing and welfare. requirements for the 2015 ozone enforcing the NAAQS have been Whenever EPA promulgates a new or NAAQS, while the November 8, 2019 6 revised NAAQS, CAA section 110(a)(1) adopted into the SIP. submission focuses on Section The EPA is therefore proposing to requires states to make SIP submissions 110(a)(2)(D) requirements for the 2015 find that the Louisiana SIP meets the to provide for the implementation, ozone NAAQS. We are not evaluating or requirements of section 110(a)(2)(A) of maintenance, and enforcement of the proposing action on portions of the the CAA with respect to the 2015 ozone NAAQS. This particular type of SIP submissions pertaining to 110(a)(2)(D)(i) NAAQS. submission is commonly referred to as as described below. As mentioned in the (B) Ambient air quality monitoring/ an ‘‘infrastructure SIP’’ or ‘‘i-SIP’’. previous section, a detailed discussion data system: Section 110(a)(2)(B) of the These submissions must meet the of our evaluation can be found in the CAA requires SIPs to include provisions various requirements of CAA section TSD for this action, accessible through for establishment and operation of 110(a)(2), as applicable. Due to www.regulations.gov (Docket No. EPA– ambient air quality monitors, collecting ambiguity in some of the language of R06–OAR–2019–0211). Below is a and analyzing ambient air quality data, CAA section 110(a)(2), EPA believes summary of the EPA’s evaluation of the and making these data available to the that it is appropriate to interpret these Louisiana i-SIP for each applicable EPA upon request. provisions in the specific context of element of 110(a)(2)(A) through (M). La R.S. 30:2011(C)(1)(b) provides acting on infrastructure SIP (A) Emission limits and other control LDEQ with the authority to collect air measures: The CAA section 110(a)(2)(A) submissions. EPA has previously quality monitoring data, quality-assure requires the SIP to include enforceable provided comprehensive guidance on the results, and report the data. LAC the application of these provisions emission limits and other control measures, means or techniques through a guidance document for 4 The specific nonattainment area plan infrastructure SIP submissions and (including economic incentives such as requirements of CAA section 110(a)(2)(I) are subject through regional actions on fees, marketable permits, and auctions to the timing requirements of CAA section 172, not infrastructure submissions.1 We are of emissions rights), as well as the timing requirement of CAA section 110(a)(1). schedules and timetables for Thus, CAA section 110(a)(2)(A) does not require following that existing approach in that states submit regulations or emissions limits acting on these submissions. In compliance, as may be necessary or specifically for attaining the 2015 ozone NAAQS. appropriate to meet the applicable Those SIP provisions are due as part of each state’s 1 EPA explains and elaborates on these attainment plan, and will be addressed separately ambiguities and its approach to address them in its 2 See U.S. Court of Appeals for the Ninth Circuit from the requirements of CAA section 110(a)(2)(A). September 13, 2013, Infrastructure SIP Guidance decision in Montana Environmental Information In the context of an infrastructure SIP, the EPA is (available at https://www3.epa.gov/airquality/ Center v. EPA, No. 16–71933, 16–17 (August 30, not evaluating the existing SIP provisions for this urbanair/sipstatus/docs/Guidance_on_ 2018) (Potential problems with actual purpose. Instead, the EPA is only evaluating Infrastructure_SIP_Elements_Multipollutant_ implementation are ‘‘better addressed at a different whether the state’s SIP has basic structural FINAL_Sept_2013.pdf), as well as in numerous time’’ via specific provisions set forth in the Clean provisions for the implementation of the NAAQS. agency actions, including EPA’s prior action on Air Act). 5 http://www.ecfr.gov/cgi-bin/text-idx?SID= Louisiana’s infrastructure SIP to address the 2006 3 The TSD for this action can be accessed through 6e98cdf87e1b896da1b0a8cc2d2f69d6&mc= PM2.5, 2008 Pb, 2008 O3, 2010 NO2, 2010 SO2 and www.regulations.gov (Docket No. EPA–R06–OAR– true&node=sp40.3.52.t&rgn=div6. 6 2012 PM2.5 NAAQS (81 FR 68322, October 4, 2016). 2019–0211). See the TSD for additional information.

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33:III.709 outlines the procedures for measures described in subparagraph (D) Interstate transport, and interstate the measurement of concentrations of (A). As noted earlier, the Louisiana and international pollution abatement: the NAAQS. LDEQ maintains and Revised Statutes and implementing CAA section 110(a)(2)(D) has two operates a monitoring network to regulations in the Louisiana primary parts; section 110(a)(2)(D)(i) measure levels of the pollutants in Administrative Code (LAC 33:III and (ii). Section 110(a)(2)(D)(i) has four accordance with EPA regulations Chapters 1, 5–7, 9, 11, 13–15 and 21– sub-elements addressing interstate specifying siting and monitoring 23) provide authority for the LDEQ, and transport of emissions as described requirements. All monitoring data is its Secretary, to enforce the below. measured using EPA approved methods requirements of the LAC, and any Section 110(a)(2)(D)(i)(I): and is subject to the EPA quality regulations, permits, or final compliance Sub-element 1 requires the SIP must assurance requirements. LDEQ submits orders. These Louisiana Revised prohibit emissions within Louisiana all required data to EPA, consistent with Statutes and implementing regulations from contributing significantly to the EPA regulations. The monitoring in the Louisiana Administrative Code nonattainment of the NAAQS in other network plan was approved into the SIP also provide the LDEQ with general states, and; and it undergoes recurrent annual enforcement powers. Among other Sub-element 2 requires the SIP review by EPA.7 In addition, LDEQ things, the La R. S. grants authority to prohibit emissions within Louisiana conducts a recurrent assessment of its the LDEQ to file lawsuits to compel from interfering with the maintenance monitoring network every five years, as compliance with the statutes and of the NAAQS in other states. required by EPA rules. The most recent regulations; commence civil actions; Section 110(a)(2)(D)(i)(II): of these 5-year monitoring network conduct investigations of regulated Sub-element 3 requires the SIP must assessments was conducted by LDEQ entities; collect criminal and civil prohibit emissions within Louisiana from interfering with measures required and approved by EPA.8 The LDEQ penalties; develop and enforce rules and to prevent significant deterioration in website provides the monitor locations standards related to protection of air other states and; and posts past and current quality; issue compliance orders; pursue Sub-element 4 requires the SIP must concentrations of criteria pollutants criminal prosecutions; investigate, enter prohibit emissions within Louisiana measured in the State’s network of into remediation agreements; and issue from interfering with measures required monitors.9 emergency cease and desist orders. The to protect visibility in other states. In summary, Louisiana meets the LAC also provides additional CAA 110(a)(2)(D)(ii) requires that requirements to: Establish, operate, and enforcement authorities and funding states comply with the requirements maintain an ambient air monitoring mechanisms. listed in sections 126 of the CAA which network; collect and analyze the (2) Minor New Source Review. The is designed to aid in the abatement of monitoring data; and make the data SIP is required to include measures to interstate pollution and 115 of the CAA available to the EPA upon request. The regulate construction and modification which were designed to aid in the EPA is proposing to find that the current of minor stationary sources and minor abatement of international pollution. Louisiana SIP meets the requirements of modifications to major stationary Section 115 authorizes the CAA section 110(a)(2)(B) with respect to sources to protect the NAAQS. As Administrator to require a state to revise the 2015 ozone NAAQS. detailed in the TSD, the Louisiana its SIP under certain conditions to (C) Program for enforcement of minor NSR permitting requirements are alleviate international transport into control measures: The SIP must include approved as part of the SIP at 30 LAC 10 another country. Section 126(a) requires the following three elements: (1) A Chapter 5. new or modified sources to notify program providing for enforcement of (3) Prevention of Significant neighboring states of potential impacts the measures in CAA section Deterioration (PSD) permit program. from the source. Section 126(b) provides 110(a)(2)(A); (2) a minor new source The Louisiana PSD portion of the SIP that any state or political subdivision review (NSR) program for the regulation covers all NSR regulated pollutants as may petition the Administrator for a of new and modified minor stationary well as the requirements for the 2015 O3 11 finding that a major source or group of sources and minor modifications of new NAAQS. stationary sources emits or would emit major stationary sources as necessary to Based upon review of the SIP any air pollutant in violation of the protect the applicable NAAQS; and (3) submissions for the 2015 ozone NAAQS prohibition of section 110(a)(2)(D)(ii) a major stationary source permit and relevant statutory and regulatory after public hearing. CAA 126(b) and (c) program to meet the prevention of authorities and provisions referenced in could occur if (1) the Administrator has, significant deterioration (PSD) the submissions or referenced in the in response to a petition, made a finding permitting requirements of the CAA (for Louisiana SIP, the EPA is proposing to under section 126(b) that emissions areas designated as attainment or find that the requirements of CAA from a source or sources within the air unclassifiable for the NAAQS in section 110(a)(2)(C) are met. agency’s jurisdiction emit prohibited question). Each of these elements is 10 In specifically approving this i-SIP element, we amounts of air pollution relevant to the described in more detail in the TSD for note that EPA is not opening up for action any new or revised NAAQS for which the this action. provisions in the existing Louisiana minor NSR infrastructure SIP is being made; and (2) (1) Enforcement of SIP Measures. The program to the extent that it may be inconsistent state must provide a program for with EPA’s regulations governing this program. EPA under section 126(c), the Administrator enforcement of the necessary control has maintained that the CAA does not require that has required the source or sources to new infrastructure SIP submissions correct any cease construction, cease or reduce defects in existing EPA-approved provisions of operations, or comply with emissions 7 A copy of the 2019 Annual Air Monitoring minor NSR programs in order for EPA to approve Network Plan and EPA’s approval letter, October the infrastructure SIP for element C (e.g., 76 FR limitations and compliance schedule 21, 2019, are included in the docket for this 41076–41079, July 13, 2011). Louisiana submitted requirements for continued operation. proposed rulemaking. a SIP revision on April 20, 2011. The revision was At this time, we are proposing 8 A copy of LDEQ’s 2015 5-year ambient acted on and approved into the SIP on August 4, approval that the SIP meets the monitoring network assessment and EPA’s approval 2016 (81 FR 51341). The statutory requirements of letter, July 5, 2016, are included in the docket for section 110(a)(2)(C) provide for considerable requirements sub-element 3 of Section this proposed rulemaking. flexibility in designing minor NSR programs. 110(a)(2)(D)(i)(I). We are also proposing 9 See http://airquality.deq.louisiana.gov/. 11 As discussed further in the TSD. approval that the SIP meets the

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requirements in 110(a)(2)(D)(ii), for both out that portion of the plan. Both board on issues related to the CAA or the interstate and international subsections A and E of this action the Louisiana Air Quality Rules (La. R.S. pollution abatement provisions. We address the requirement that there is 30:2014.1). The members of the board or plan to act on the remaining sub- adequate authority and no legal body, or the head of an agency with elements of Section 110(a)(2)(D)(i)(I) in impediments to implement and enforce similar powers, are required to separate actions. the SIP. adequately disclose any potential For 110(a)(2)(D)(i)(II), Louisiana has The i-SIP submissions for the 2015 conflicts of interest. EPA-approved PSD SIP provisions ozone NAAQS describe the SIP Louisiana has not delegated any which will limit Louisiana emissions regulations governing the various authority to implement any of the from new major sources or major functions of personnel within the LDEQ, provisions of its plan to local modifications, which will help ensure including the administrative, technical governmental entities. The LDEQ acts as that Louisiana will not significantly support, planning, enforcement, and the primary air pollution control contribute to nonattainment or interfere permitting functions of the program. agency. with maintenance of the 2015 ozone The duties, powers and structure of Based upon review of the SIP NAAQS in other states in the future. As the LDEQ (described at La R.S. submissions for the 2015 ozone NAAQS we have approved the Louisiana 30:2011.F) provide that ‘‘the basic and relevant statutory and regulatory comprehensive PSD program, we personnel [* * *] shall be employed or authorities 12 and provisions referenced propose to approve that the current SIP provided by the department:’’ and the in the submissions or referenced in the meets CAA section 110(a)(2)(D)(i)(II) LDEQ may contract, employ, and Louisiana SIP, the EPA is proposing to sub-element 3 requirements. compensate such assistance on a full or find that the requirements of CAA CAA section 110(a)(2)(D)(ii) requires part-time basis as may be necessary to section 110(a)(2)(E) are met. that the SIP contain adequate provisions carry out the provisions of this Subtitle. (F) Stationary source monitoring insuring compliance with the applicable In addition, the State has the system: CAA section 110(a)(2)(F) requirements of section 126 (relating to Environmental Trust Fund, established requires that the SIP provide for the interstate pollution abatement) and at La R.S. 30:2015, which is used, in establishment of a system to monitor section 115 (relating to international part, to ‘‘defray the cost to the State of emissions from stationary sources and pollution abatement). As stated in their permitting, monitoring, * * * to submit periodic emission reports. submittal, Louisiana meets the section maintaining and administering the Element F requires the installation, 126 requirements as (1) they have a fully programs provided for under the maintenance, and replacement of approved PSD SIP (81 FR 74923, Louisiana Environmental Quality Act.’’ equipment, and the implementation of October 28, 2016), which includes There are Federal sources of funding other necessary steps, by owners or notification to neighboring air agencies for the implementation of the NAAQS, operators of stationary sources, to of potential impacts from each new or for example the CAA sections 103 and monitor emissions from such sources. modified major source, and (2) no 105 provide grant funds. The LDEQ The SIP shall also require periodic source or sources have been identified receives Federal funds on an annual reports on the nature and amounts of by the EPA as having any interstate basis, under sections 103 and 105 of the emissions and emissions-related data impacts under CAA section 126 in any Act, to support its air quality programs. from such sources and require that the pending action related to any air Fees collected for motor vehicle state correlate the source reports with pollutant. inspections, non-Title V permit emission limitations or standards programs, and other inspections, There are no findings under section established under the CAA. These 115 of the CAA against Louisiana with maintenance and renewals required of reports must be made available for respect to the 2015 ozone NAAQS. other air pollution sources also provide public inspection at reasonable times. Based upon our review of the SIP necessary funds to help implement the LAC 33:III Chapter 9 authorizes the submissions for the 2015 ozone NAAQS State’s air programs. Information on LDEQ to require persons engaged in and relevant statutory and regulatory permitting fees is provided in the operations which result in air pollution authorities and provisions referenced in discussion for 110(a)(2)(L) below. The to monitor or test emissions and to file the submissions or referenced in the Secretary has the power and duty ‘‘to reports containing information relating Louisiana SIP, the EPA is proposing to receive and budget duly appropriated to the nature and amount of emissions. find that the requirements of CAA monies and to accept, receive, and There are also SIP approved state section 110(a)(2)(D)(ii) are met. administer grants or other funds or gifts regulations pertaining to sampling and (E) Adequate authority, resources, from public and private agencies, testing and requirements for reporting of implementation, and oversight: CAA including the Federal government to emissions inventories (81 FR 4891 section 110(a)(2)(E) requires that the SIP carry out the provisions and purposes of (January 28, 2016)). In addition, SIP provide for the following: (1) Necessary this Subtitle.’’ (La R.S. 30:2011.D.10). approved rules establish general assurances that the state (and other The SIP approved rule at 33 LAC requirements for maintaining records entities within the state responsible for Chapter 1, section 101 describes the and reporting emissions.13 implementing the SIP) will have LDEQ as the State’s air pollution control The LDEQ uses this information, in adequate personnel, funding, and agency and describes its enforcement addition to information obtained from authority under state or local law to authority, referencing the 1983 other sources, to track progress towards implement the SIP, and that there are no Louisiana Environmental Quality Act maintaining the NAAQS, develop legal impediments to such (54 FR 9783, March 8, 1989). implementation; (2) compliance with As required by the CAA and the SIP, 12 Cited in the TSD. requirements relating to state boards as the majority of the members that 13 LAC 33:III Chapter 9 outlines the general required under section 128 of the CAA; compose any board or body which requirements for maintaining records and reporting. and (3) necessary assurances that the approves permits or enforcement orders There are also additional requirements provided in state has responsibility for ensuring must not derive any ‘‘significant the rules for each emission source, for example Chapter 13 outlines the emission standard for adequate implementation of any plan portion’’ of their income from persons Particulate Matter where there are additional provision for which it relies on local subject to permits and enforcement recording keeping requirements for abrasive governments or other entities to carry orders or persons who appear before the blasting. All chapters are noted in the TSD.

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control and maintenance strategies, new NAAQS, to attain and maintain a interested persons or groups in regard to identify sources and general emission NAAQS, to abate air pollution, to adopt matters of common interest in the field levels, and determine compliance with more effective methods of attaining a of air quality control (La. R.S. 30:2032). SIP approved regulations and additional NAAQS, and to respond to EPA SIP Furthermore, as found in LAC 33:III EPA requirements. The SIP requires this calls concerning NAAQS adoption or Chapter 5, the Louisiana PSD SIP rules information be made available to the implementation. mandate that the LDEQ provide for public. Provisions concerning the Based upon review of the public participation and notification handling of confidential data and infrastructure SIP submissions, the EPA regarding permitting applications to any proprietary business information are is proposing to find that the other state or local air pollution control included in the SIP approved requirements of CAA section agencies, local government officials of regulations. These rules specifically 110(a)(2)(H) are met. the city or county where the source will exclude from confidential treatment any (I) Nonattainment areas: The CAA be located, tribal authorities, and records concerning the nature and section 110(a)(2)(I) requires that in the Federal Land Manager (FLMs) whose amount of emissions reported by case of a plan or plan revision for areas lands may be affected by emissions from sources. designated as nonattainment areas, the source or modification (LAC Based upon review of the SIP states must meet applicable 33:III.509). Additionally, these rules submissions for the 2015 ozone NAAQS requirements of part D of the CAA, require the LDEQ to consult with FLMs and relevant statutory and regulatory relating to SIP requirements for regarding permit applications for authorities and provisions referenced in designated nonattainment areas. sources with the potential to impact the submissions or referenced in the The EPA does not expect Class I Federal Areas. The SIP also Louisiana SIP, the EPA is proposing to infrastructure SIP submissions to includes a commitment to consult find that the requirements of CAA address element I. The specific SIP continually with the FLMs on the section 110(a)(2)(F) are met. submissions for designated review and implementation of the (G) Emergency authority: CAA nonattainment areas, as required under visibility program. Louisiana works section 110(a)(2)(G) requires a CAA title I, part D, are subject to with the FLMs providing notification or demonstration that the state has the different submission schedules than early consultation with a new or those for CAA section 110 infrastructure authority to restrain any source from modifying source prior to the elements. Instead, the EPA will take causing imminent and substantial submission of a permit application and action on part D attainment plan SIP endangerment to public health or with PSD projects. Likewise, the State’s submissions through a separate welfare or the environment. The SIP Transportation Conformity SIP rules rulemaking process governed by the must include an adequate contingency (LAC 3:III Chapter 13) provide for requirements for nonattainment areas, plan to implement such authorities as interagency consultation, resolution of necessary. as described in part D.14 (J) Consultation with government conflicts, and public notification. La R.S. 30:2011.D.15 provides LDEQ (2) Public Notification: On January 10, officials, public notification, PSD and with the required authority to address 1980, the Governor submitted a SIP visibility protection: The SIP must meet environmental emergencies, and LDEQ revision to the ambient monitoring the following three CAA requirements: has contingency plans to implement the portion of the state implementation (1) Section 121, relating to interagency emergency episode provisions in the plan. The revision was included into the SIP. The LDEQ promulgated the consultation regarding certain CAA requirements; (2) section 127, relating to SIP on August 6, 1981 (46 FR 40005). ‘‘Prevention of Air Pollution Emergency This portion of the SIP includes Episodes,’’ which includes contingency public notification of NAAQS exceedances and related issues; (3) requirements for public notification of measures, and these provisions were information related to air quality approved into the SIP in 1989 (54 FR prevention of significant deterioration of air quality and (4) visibility protection. standards violations included in 40 CFR 9783, March 8, 1989). The episode part 51 in order to meet the criteria and contingency measures are (1) Interagency consultation: As discussed in detail in the TSD, both the requirements of Section 127 of the Act, found in LAC 33.III Chapter 56. requiring LDEQ to regularly notify the Louisiana has general emergency La R.S and LAC require a public hearing public of instances or areas in which powers to address any possible before the adoption of any regulations or any NAAQS are exceeded, advise the dangerous air pollution episode, if emission control requirements, and all public of the health hazards associated necessary, to protect the environment interested persons are given a with such exceedances, and enhance and public health. reasonable opportunity to review the public awareness of measures that can Based upon review of the action that is being proposed and to prevent such exceedances and ways in infrastructure SIP submissions, the EPA submit data or arguments, either orally which the public can participate in is proposing to find that the or in writing, and to examine witnesses efforts to improve air quality. In requirements of CAA section testifying at the hearing (La R.S. addition, as discussed for infrastructure 110(a)(2)(G) are met. 30:2011, LAC 33:III Chapter 5). This (H) Future SIP revisions: CAA means, among other things, that the SIP element B above, the LDEQ air section 110(a)(2)(H) requires that states revision public participation monitoring website provides air quality must have the authority to revise their requirements are met. data for each of the monitoring stations SIPs in response to changes in the In addition, the La R.S provides the in Louisiana; this data is provided NAAQS, availability of improved LDEQ the power and duty to establish instantaneously for certain pollutants, methods for attaining the NAAQS, or in cooperative agreements with local such as ozone. The website also response to an EPA finding that the SIP authorities, and consult with other provides information on the health is substantially inadequate to attain the states, the federal government and other effects of lead, ozone, particulate matter, 15 NAAQS. and other criteria pollutants. La R.S. 30:2011 authorizes the LDEQ 14 This infrastructure SIP rulemaking will not address the Louisiana program for provisions 15 Louisiana’s ambient air monitoring web page to revise the Louisiana SIP, as related to nonattainment areas, since EPA considers includes links to the air monitoring sites, list of necessary, to account for revisions of an evaluation of these provisions to be outside the monitoring sites mobile air monitoring lab existing NAAQS, establishment of a scope of infrastructure SIP actions. Continued

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(3) PSD: The PSD requirements for government and local authorities participation by local political this element are the same as those concerning matters of common interest subdivisions affected by the SIP. addressed under element (C) above. As in the field of air quality control, See the discussion for element (J) was mentioned earlier, the State has a thereby allowing the agency to make above for a description of the SIP’s PSD program, so this requirement has such submissions to the EPA. LAC public participation process, the been met. 33:III.509.L(1) states that ‘‘all estimates authority to advise and consult, and the (4) Visibility Protection: The of ambient concentrations required PSD SIP’s public participation Louisiana SIP requirements relating to under this Subsection shall be based on requirements. Additionally, the LDEQ visibility and regional haze do not applicable air quality models, databases, noted that La R.S. 30:2011(D)(21) also change when EPA establishes or revises and other requirements specified in requires initiation of cooperative action a NAAQS. Therefore, EPA believes that Appendix W of 40 CFR part 51’’. between local authorities and the LDEQ, there are no new visibility protection Based upon review of the SIP between one local authority and requirements for Louisiana due to the submissions for the 2015 ozone NAAQS another, or among any combination of revision of the 2015 ozone NAAQS, and and relevant statutory and regulatory local authorities and the LDEQ for consequently there are no newly authorities and provisions referenced in control of air pollution in areas having applicable visibility protection the submissions or referenced in the related air pollution problems that obligations pursuant to infrastructure Louisiana SIP, the EPA is proposing to overlap the boundaries of political element (J). find that the requirements of CAA subdivisions, and has authority to enter Based upon review of the SIP section 110(a)(2)(K) are met. into agreements and compacts with submissions for the 2015 ozone NAAQS (L) Permitting fees: The SIP must adjoining states and Indian tribes, where and relevant statutory and regulatory require each major stationary source to appropriate. The transportation authorities and provisions referenced in pay permitting fees to the permitting conformity component of the Louisiana the submissions or referenced in the authority, as a condition of any permit SIP requires that interagency Louisiana SIP, the EPA is proposing to required under CAA section 504, to consultation and opportunity for public find that the requirements of CAA cover the cost of reviewing and acting involvement be provided before making section 110(a)(2)(J) are met. upon any application for such a permit, transportation conformity (K) Air quality and modeling/data: and, if the permit is issued, the costs of determinations and before adopting Element K requires that the SIP provide implementing and enforcing the terms applicable SIP revisions on for performing air quality modeling to of the permit. The fee requirement transportation-related issues. (LAC predict the effects on ambient air quality applies until a fee program established 33:III.1434). from emissions of any NAAQS by the state pursuant to Title V of the Based upon review of the SIP pollutant, and for submission of such CAA, relating to operating permits, is submissions for the 2015 ozone NAAQS data to the EPA upon request. approved by the EPA. and relevant statutory and regulatory The LDEQ has the power and duty, authorities and provisions referenced in under La R.S. 30:2011 et seq. to employ The State has met this requirement as the submissions or referenced in the or provide scientific, technical, it has a fully developed fee system in Louisiana SIP, the EPA is proposing to administrative and operational services place which is outlined in LAC 33:III find that the requirements of CAA necessary to carry out the duties of the Chapter 2 and is approved as part of the section 110(a)(2)(M) are met. Department of Environmental Quality. SIP. See element (E) above for the The LDEQ may, by contract, secure description of the mandatory collection III. Proposed Action services as it may deem necessary to of permitting fees outlined in the SIP. The EPA is proposing to approve the carry out the duties of the Department Based upon review of the SIP February 7, 2019 submittal, and of Environmental Quality. Past submissions for the 2015 ozone NAAQS portions of the November 8, 2019 modeling and emissions reductions and relevant statutory and regulatory submittal for Louisiana pursuant to the measures have been submitted by the authorities and provisions referenced in requirements of CAA sections 110(a)(1) State and approved into the SIP. the submissions or referenced in the and (2) as applicable to the 2015 ozone Additionally, Louisiana has the ability Louisiana SIP, the EPA is proposing to NAAQS. Table 1 below outlines the to perform modeling for primary and find that the requirements of CAA specific actions the EPA is proposing to secondary NAAQS as necessary section 110(a)(2)(L) are met. approve. As mentioned earlier in this consistent with their SIP approved PSD (M) Consultation/participation by action, the EPA is not taking action on rules and with EPA issued guidance. affected local entities: CAA portions of CAA section 110(a)(2)(D)(i) The La R.S. authorizes and requires section 110(a)(2)(M) requires that the for Louisiana for the 2015 ozone LDEQ to cooperate with the federal SIP must provide for consultation and NAAQS.

TABLE 1—PROPOSED ACTION ON LOUISIANA INFRASTRUCTURE SIP SUBMITTALS FOR THE 2015 OZONE NAAQS UNDER CAA SECTION 110(a)(2)(A)–(M)

Element 2015 O3

(A): Emission limits and other control measures ...... A (B): Ambient air quality monitoring and data system ...... A (C)(i): Enforcement of SIP measures ...... A (C)(ii): PSD program for major sources and major modifications ...... A (C)(iii): Permitting program for minor sources and minor modifications ...... A (D)(i)(I): Prohibit emissions to other states which will (1) significantly contribute to nonattainment of the NAAQS, (2) interfere with maintenance of the NAAQS ...... NA

information, guidance documents and other https://www.deq.louisiana.gov/page/ambient-air- monitoring information. The page may be found: monitoring-program.

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TABLE 1—PROPOSED ACTION ON LOUISIANA INFRASTRUCTURE SIP SUBMITTALS FOR THE 2015 OZONE NAAQS UNDER CAA SECTION 110(a)(2)(A)–(M)—Continued

Element 2015 O3

(D)(i)(II): Prohibit emissions to other states which will (3) interfere with PSD requirements ...... A (D)(i)(II): Prohibit emissions to other states which will (4) interfere with visibility protection ...... NA (D)(ii): Interstate Pollution Abatement and International Air Pollution ...... A (E)(i): Adequate resources ...... A (E)(ii): State boards ...... A (E)(iii): Necessary assurances with respect to local agencies ...... A (F): Stationary source monitoring system ...... A (G): Emergency power ...... A (H): Future SIP revisions ...... A (I): Nonattainment area plan or plan revisions under part D ...... + (J)(i): Consultation with government officials ...... A (J)(ii): Public notification ...... A (J)(iii): PSD ...... A (J)(iv): Visibility protection ...... + (K): Air quality modeling and data ...... A (L): Permitting fees ...... A (M): Consultation and participation by affected local entities ...... A Key to Table: A—Approve; +—Not germane to infrastructure SIPs NA—No action. EPA will take future action in a separate rulemaking action.

Based upon our review of these of the Paperwork Reduction Act (44 impose substantial direct costs on tribal infrastructure SIP submissions and U.S.C. 3501 et seq.); governments or preempt tribal law as relevant statutory and regulatory • Is certified as not having a specified by Executive Order 13175 (65 authorities and provisions referenced in significant economic impact on a FR 67249, November 9, 2000). the State’s submissions or referenced in substantial number of small entities List of Subjects in 40 CFR Part 52 the Louisiana SIP, the EPA finds that under the Regulatory Flexibility Act (5 Louisiana has the infrastructure in place U.S.C. 601 et seq.); Environmental protection, Air to address required elements of CAA • Does not contain any unfunded pollution control, Ozone, Incorporation sections 110(a)(2)(A)–(C), (D)(i)(II) sub- mandate or significantly or uniquely by reference, Reporting and element 3, (D)(ii)–(H), and (J)–(M) to affect small governments, as described recordkeeping requirements. ensure that the 2015 ozone NAAQS is in the Unfunded Mandates Reform Act Authority: 42 U.S.C. 7401 et seq. implemented throughout the State of of 1995 (Pub. L. 104–4); • Dated: February 24, 2020. Louisiana. Does not have federalism implications as specified in Executive Kenley McQueen, IV. Statutory and Executive Order Order 13132 (64 FR 43255, August 10, Regional Administrator, Region 6. Reviews 1999); [FR Doc. 2020–04065 Filed 2–27–20; 8:45 am] • Under the CAA, the Administrator is Is not an economically significant BILLING CODE 6560–50–P required to approve SIP submissions regulatory action based on health or that comply with provisions of the Act safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997); DEPARTMENT OF COMMERCE and applicable Federal regulations. 42 • U.S.C. 7410(k); 40 CFR 52.02(a). Thus, Is not a significant regulatory action in reviewing SIP submissions, the EPA’s subject to Executive Order 13211 (66 FR National Oceanic and Atmospheric role is to approve state choices, 28355, May 22, 2001); Administration • Is not subject to requirements of provided that they meet the criteria of section 12(d) of the National the CAA. Accordingly, this action 50 CFR Part 622 Technology Transfer and Advancement merely proposes to approve state law as Act of 1995 (15 U.S.C. 272 note) because RIN 0648–BJ20 meeting Federal requirements and does application of those requirements would not impose additional requirements Fisheries of the Caribbean, Gulf of be inconsistent with the CAA; and Mexico, and South Atlantic; Reef Fish beyond those imposed by state law. For • Does not provide EPA with the Fishery of the Gulf of Mexico; that reason, this action: discretionary authority to address, as • Amendment 51 Is not a ‘‘significant regulatory appropriate, disproportionate human action’’ subject to review by the Office health or environmental effects, using AGENCY: National Marine Fisheries of Management and Budget under practicable and legally permissible Service (NMFS), National Oceanic and Executive Orders 12866 (58 FR 51735, methods, under Executive Order 12898 Atmospheric Administration (NOAA), October 4, 1993) and 13563 (76 FR 3821, (59 FR 7629, February 16, 1994). Commerce. January 21, 2011); In addition, the SIP is not approved • ACTION: Notice of availability; request Is not an Executive Order 13771 (82 to apply on any Indian reservation land for comments. FR 9339, February 2, 2017) regulatory or in any other area where EPA or an action because SIP approvals are Indian tribe has demonstrated that a SUMMARY: The Gulf of Mexico (Gulf) exempted under Executive Order 12866; tribe has jurisdiction. In those areas of Fishery Management Council (Council) • Does not impose an information Indian country, the proposed rule does has submitted Amendment 51 to the collection burden under the provisions not have tribal implications and will not Fishery Management Plan for the Reef

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Fish Resources of the Gulf of Mexico approval, or disapproval. The threshold (MSST) for gray snapper are (FMP) for review, approval, and Magnuson-Stevens Act also requires not specified in the FMP. implementation by NMFS. If approved that NMFS, upon receiving an FMP or Actions Contained in Amendment 51 by the Secretary of Commerce amendment, publish an announcement (Secretary), Amendment 51 would in the Federal Register notifying the Amendment 51 includes actions to set establish and modify status public that the FMP or amendment is the MSY, MSST, OY, and modify the determination criteria and harvest levels available for review and comment. MFMT, overfishing limit (OFL), for the gray snapper stock. The purposes The Council prepared the FMP being acceptable biological catch (ABC), ACL of Amendment 51 are to end overfishing revised by Amendment 51, and, if and ACT for the gray snapper stock in of gray snapper and achieve optimum approved, Amendment 51 would be the Gulf. Amendment 51 also updates yield (OY) for the stock. implemented by NMFS through the goals and objectives of the FMP. DATES: Written comments must be regulations at 50 CFR part 622 under the Maximum Sustainable Yield authority of the Magnuson-Stevens Act. received by April 28, 2020. SEDAR 51 could not estimate the ADDRESSES: You may submit comments Background actual MSY with the best scientific on Amendment 51 identified by information available. Therefore, the Gray snapper in the Gulf exclusive ‘‘NOAA–NMFS–2019–0116’’ by either Council considered alternatives for an economic zone (EEZ) are managed as a of the following methods: MSY proxy that uses the spawning • single stock with a stock annual catch Electronic Submission: Submit all potential ratio (SPR). The SPR is the limit (ACL), and a stock annual catch electronic public comments via the ratio of the average number of eggs per target (ACT). There is no allocation Federal e-Rulemaking Portal. Go to fish over its lifetime when the stock is between the commercial and www.regulations.gov/ fished compared to the same value recreational sectors. Gray snapper occur #!docketDetail;D=NOAA-NMFS-2019- when the stock is not fished. The SPR in estuaries and shelf waters of the Gulf, 0116, click the ‘‘Comment Now!’’ icon, assumes that a certain amount of fish and are particularly abundant off south complete the required fields, and enter must survive and spawn in order to and southwest Florida. or attach your comments. replenish the stock. Analyses of stocks • Mail: Submit all written comments Generally, the fishing season is open with various life histories suggest that, to Peter Hood, NMFS Southeast year-round, January 1 through December in general, MSY is most commonly Regional Office, 263 13th Avenue 31. However, accountability measures associated with the yield when fishing South, St. Petersburg, FL 33701. (AMs) for gray snapper specify that if at an F that corresponds to an SPR Instructions: Comments sent by any commercial and recreational landings between 30 and 40 percent. other method, to any other address or exceed the stock ACL in a fishing year, After reviewing the SEDAR 51 individual, or received after the end of then during the following fishing year if assessment, the SSC recommended that the comment period, may not be the stock ACL is reached or is projected the MSY proxy be set at the yield when considered by NMFS. All comments to be reached, the commercial and fishing at an F corresponding to 30 received are a part of the public record recreational sectors will be closed for percent SPR (F ), which is and will generally be posted for public 30%SPR the remainder of the fishing year. The consistent with the current MFMT viewing on www.regulations.gov gray snapper ACL and AMs were definition. However, the Council noted without change. All personal identifying implemented in 2012 (76 FR 82044; that the Gulf red snapper proxy is set at information (e.g., name, address), December 29, 2011) and the stock ACL the yield when fishing at an F confidential business information, or of 2.42 million lb (1.1 million kg), round corresponding to 26 percent SPR otherwise sensitive information weight, was not exceeded between 2012 (F ), which allows for a larger yield submitted voluntarily by the sender will 30%SPR and 2018. A preliminary review of the at a given stock size. After further be publicly accessible. NMFS will most recent landings data suggest the analyses and review, the SSC accept anonymous comments (enter ‘‘N/ ACL will also not be exceeded in 2019. determined that the yield when fishing A’’ in the required fields if you wish to However, landings in 2014 and 2016 did at F is scientifically acceptable as remain anonymous). 30%SPR exceed the ACLs proposed in a proxy for MSY, but maintained its Electronic copies of Amendment 51, Amendment 51. Unless stated previous recommendation of the more which includes an environmental otherwise, all weights in this notice are risk-averse MSY proxy using the yield assessment, a fishery impact statement, described in round weight. when fishing at F because of the a Regulatory Flexibility Act analysis, 30%SPR In 2018, the stock status of gray uncertainty in the SEDAR 51 and a regulatory impact review, may be snapper was evaluated for the first time assessment. obtained from www.regulations.gov or through a Southeast Data, Assessment, The Council selected the yield when the Southeast Regional Office website at and Review benchmark stock fishing at F for the MSY proxy. https://www.fisheries.noaa.gov/action/ 30%SPR assessment (SEDAR 51). SEDAR 51 was This proxy is consistent with the MSY amendment-51-establish-gray-snapper- completed and reviewed by the proxy used for red snapper, which has status-determination-criteria-and- Council’s Scientific and Statistical a similar life history to gray snapper. modify-annual-catch. Committee (SSC) in May 2018. The SSC The Council selected this proxy to FOR FURTHER INFORMATION CONTACT: accepted the gray snapper assessment as balance protection of the gray snapper Peter Hood, NMFS Southeast Regional the best scientific information available stock with the increase in social and Office, telephone: 727–824–5305, email: and determined that the stock is economic benefits for fishers targeting [email protected]. experiencing overfishing as of 2015 the species that is expected to result SUPPLEMENTARY INFORMATION: The because the fishing mortality rate (F) in from allowing more harvest. Magnuson-Stevens Fishery 2015 was greater than the maximum Conservation and Management Act fishing mortality threshold (MFMT). Status Determination Criteria (Magnuson-Stevens Act) requires each However, the SSC was not able to NMFS uses the MSST and MFMT to regional fishery management council to determine if the stock is overfished determine if a stock is overfished or submit any FMP or amendment to because the maximum sustainable yield undergoing overfishing, respectively. If NMFS for review and approval, partial (MSY) and minimum stock size the stock biomass falls below the MSST,

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then the stock is considered overfished Overfishing Limit, Acceptable Biological periods, whether specifically directed to and the Council would then need to Catch, Annual Catch Limit, and Annual Amendment 51 or the proposed rule, develop a rebuilding plan capable of Catch Target will be considered by NMFS in its returning the stock to a level that allows The current OFL, ABC, and ACL for decision to approve, partially approve, the stock to achieve MSY on a gray snapper were established in the or disapprove Amendment 51. continuing basis. In years when there is Generic ACL/AM Amendment using the Comments received after the comment a stock assessment, if fishing mortality Council’s ABC control rule for stocks periods will not be considered by NMFS exceeds the MFMT, a stock is that have not been assessed, but are in this decision. All comments received considered to be undergoing overfishing stable over time (76 FR 82044; by NMFS on Amendment 51 or the because this level of fishing mortality, if December 29, 2011). The OFL is equal proposed rule during their respective continued, would reduce the stock to 2.88 million lb (1.31 million kg), comment periods will be addressed in biomass to an overfished condition. In which is the mean plus 2.0 standard the final rule. years in which there is no assessment, deviations of the annual landings from Authority: 16 U.S.C. 1801 et seq. overfishing occurs if landings exceed 1998 through 2008. The ABC is equal to Dated: February 25, 2020. the OFL. 2.42 million lb (1.1 million kg), which Karyl K. Brewster-Geisz, Currently, the MFMT is equal to is the mean plus 1.0 standard deviation Acting Director, Office of Sustainable F30%SPR. Because the MSY proxy of the annual landings from 1998 Fisheries, National Marine Fisheries Service. through 2008. The ACL is equal the selected in Amendment 51 is the yield [FR Doc. 2020–04091 Filed 2–27–20; 8:45 am] ABC, and the ACT is 14 percent less when fishing at F30%SPR, the Council BILLING CODE 3510–22–P chose to modify the MFMT to be equal than the ACL at 2.08 million lb (0.9 million kg). to F30%SPR for consistency. Under this definition, projections from SEDAR 51 Amendment 51 would modify the DEPARTMENT OF COMMERCE suggest overfishing ended in 2017. OFL and ABC consistent with the projections from SEDAR 51 for the MSY National Oceanic and Atmospheric The MSST needs to be equal or less proxy selected by the Council and the Administration than the biomass (B) capable of SSC recommendations. The OFLs would producing MSY or MSY proxy (Bmsy (or be 2.58 million lb (1.17 million kg) for 50 CFR Part 679 MSY proxy)). The closer the MSST value is 2020, and 2.57 million lb (1.166 million to Bmsy (or MSY proxy), the more likely a kg) for 2021 and subsequent fishing [Docket No. 200219–0059] stock could be declared overfished due years. The ABCs would be 2.51 million RIN 0648–BJ35 to year-to-year fluctuations in stock lb (1.14 million kg) for 2020 and biomass, resulting in an unneeded subsequent years. The Council then Fisheries of the Exclusive Economic rebuilding plan. However, if MSST is used its ACL/ACT control rule to Zone Off Alaska; Modifying Seasonal set too low, then rebuilding the stock to determine that an 11 percent buffer Allocations of Pollock and Pacific Cod MSY levels could result in more between the ABCs and ACLs was for Trawl Catcher Vessels in the stringent management measures. appropriate to account for management Central and Western Gulf of Alaska Consistent with other reef fish stocks uncertainty. This results in Gulf gray with a defined MSST (gag, red grouper, snapper stock ACLs that would be 2.24 AGENCY: National Marine Fisheries red snapper, vermilion snapper, gray million lb (1.02 million), round weight, Service (NMFS), National Oceanic and triggerfish, greater amberjack, and for the 2020 fishing year. In 2021, and Atmospheric Administration (NOAA), hogfish), the Council selected the MSST subsequent fishing years, the ACL Commerce. for gray snapper as 0.50*BMSY(or MSY would be set at 2.23 million lb (1.01 ACTION: Proposed rule; request for proxy). The Council determined that million kg), round weight. comments. because the Magnuson-Stevens Act The gray snapper ACT is not currently SUMMARY: NMFS issues a proposed rule requires ACLs and AMs to prevent used for management purposes. to implement Amendment 109 to the overfishing, and that any overfishing be Therefore, the Council decided not to set an ACT through Amendment 51. Fishery Management Plan for ended immediately, it is unlikely that Groundfish of the Gulf of Alaska (GOA sustained overfishing would occur and Proposed Rule for Amendment 51 FMP) and to implement a regulatory cause a stock to fall below the MSST. amendment to the regulations governing Under this MSST, the result of SEDAR A proposed rule to implement Amendment 51 has been drafted. In pollock fishing in the Gulf of Alaska. 51 indicate that the gray snapper stock This proposed rule will reduce would not be overfished. accordance with the Magnuson-Stevens Act, NMFS is evaluating the proposed operational and management Optimum Yield rule for Amendment 51 to determine inefficiencies in the Central Gulf of whether it is consistent with the FMP, Alaska and Western Gulf of Alaska trawl The Council determined that the OY the Magnuson-Stevens Act, and other catcher vessel pollock and Pacific cod should be the yield when fishing at 90 applicable law. If that determination is fisheries by reducing regulatory time percent of FMSY (or MSY proxy). This value affirmative, NMFS will publish the gaps between the pollock seasons, and would allow for more harvest over the proposed rule in the Federal Register changing Gulf of Alaska Pacific cod long term and likely have greater social for public review and comment. seasonal apportionments to allow and economic benefits, although it greater harvest opportunities earlier in provides less protection to the stock Consideration of Public Comments the year. This action is intended to than other values considered (the yield The Council has submitted promote the goals and objectives of the when fishing at 50 and 75 percent of Amendment 51 for Secretarial review, Magnuson-Stevens Fishery FMSY (or MSY proxy)). However, as noted approval, and implementation. Conservation and Management Act, the previously, the ACLs and AM control Comments on Amendment 51 must be GOA FMP, and other applicable laws. yearly harvest and are designed to received by April 28, 2020. Comments DATES: Submit comments on or before prevent overfishing. received during the respective comment March 30, 2020.

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ADDRESSES: Submit your comments, may be implemented by NMFS only whether specifically directed to identified by docket number NOAA– after approval by the Secretary. Amendment 109, this proposed rule, or NMFS–2019–0125, by either of the The Council recommended both, will be considered by NMFS in the following methods: Amendment 109 to the GOA FMP approval/disapproval decision for • Federal e-Rulemaking Portal. Go to (Amendment 109) and a regulatory Amendment 109 and addressed in the www.regulations.gov/ amendment for pollock fisheries in the response to comments in the final rule. #!docketDetail;D=NOAA-NMFS-2019- Gulf of Alaska (GOA). This proposed II. Background 0125, click the ‘‘Comment Now!’’ icon, rule would implement Amendment 109 complete the required fields, and enter by changing CGOA and WGOA Pacific This proposed rule would modify the or attach your comments. cod seasonal apportionments to increase seasonal apportionment of pollock and • Mail: Submit written comments to the trawl catcher vessel (CV) sector’s A Pacific cod TAC in the CGOA and Glenn Merrill, Assistant Regional season total allowable catch (TAC) WGOA. The purpose of this action is to Administrator, Sustainable Fisheries while proportionally decreasing the reduce operational and management Division, Alaska Region NMFS. Mail sector’s B season TAC. This proposed inefficiencies in the CGOA and WGOA comments to P.O. Box 21668, Juneau, rule also would implement the trawl CV pollock and Pacific cod AK 99802–1668. Council’s regulatory amendment by fisheries by (1) reducing regulatory time Instructions: NMFS may not consider combining the Central Gulf of Alaska gaps between the pollock fishery A and comments if they are sent by any other (CGOA) and Western Gulf of Alaska B seasons and the C and D seasons, and method, to any other address or (WGOA) trawl CV pollock fishery A and (2) changing seasonal Pacific cod individual, or received after the end of B seasons into a single season apportionments in the GOA to allow the comment period ends. All (redesignated as the A season), and the greater harvest opportunities earlier in comments received are a part of the C and D seasons into a single season the year. Modifying the seasonal public record, and NMFS will post the (redesignated as the B season), and by allocations of pollock and Pacific cod comments for public viewing on changing the annual start date of the could allow the fisheries to more fully www.regulations.gov without change. redesignated pollock B season from harvest the TAC of GOA pollock and All personal identifying information August 25 to September 1. The Pacific cod, increase management (e.g., name, address), confidential proposed changes for pollock and flexibility, and potentially decrease PSC business information, or otherwise Pacific cod would only be applicable to while not redistributing fishing sensitive information submitted the CGOA and the WGOA, which are opportunities between management voluntarily by the sender will be comprised of NMFS statistical areas 610 areas or harvest sectors. The following publicly accessible. NMFS will accept (WGOA) and 620 and 630 (CGOA) (see sections describe (1) the affected anonymous comments (enter ‘‘N/A’’ in Figure 3 to part 679). This preamble fisheries participants and the current the required fields if you wish to remain uses the term ‘‘management area’’ to seasonal allocations of pollock and anonymous). refer to ‘‘statistical area’’ to avoid Pacific cod in the CGOA and WGOA, (2) Electronic copies of the draft confusion with State of Alaska the need for this action, and (3) this Environmental Assessment and the ‘‘statistical areas.’’ Also, the term proposed rule. Regulatory Impact Review (collectively ‘‘management area’’ is commonly used by harvesters and processors to refer to III. The Affected Fisheries Participants referred to as the ‘‘Analysis’’) prepared and Current Seasonal Allocations for this proposed rule may be obtained NMFS statistical areas. In from http://www.regulations.gov. recommending Amendment 109 and the A. Affected Fisheries Participants regulatory amendment, the Council FOR FURTHER INFORMATION CONTACT: intends to provide participants with an The trawl groundfish fisheries in the Joseph Krieger, 907–586–7228 or opportunity to increase fishery yield, GOA include fisheries for pollock, [email protected]. increase management flexibility, and sablefish, several rockfish species, SUPPLEMENTARY INFORMATION: potentially decrease prohibited species numerous flatfish species, Pacific cod, and other groundfish. Trawl gear I. Authority for Action catch (PSC) in the CGOA and WGOA while not redistributing fishing captures groundfish by towing a net NMFS manages the U.S. groundfish opportunities between management above or along the ocean floor. This fisheries of the Gulf of Alaska (GOA) areas or harvesting sectors. proposed rule would affect the trawl under the GOA FMP. The North Pacific A notice of availability (NOA) for fisheries for pollock and Pacific cod in Fishery Management Council (Council) Amendment 109 was published in the two specific areas of the GOA: (1) The prepared, and the Secretary of Federal Register on February 6, 2020, CGOA regulatory area (comprised of Commerce (Secretary) approved, the with comments invited through April 6, management areas 620 and 630), and (2) GOA FMP under the authority of the 2020. Comments submitted on this the WGOA regulatory area (comprised Magnuson-Stevens Fishery proposed rule by the end of the of management area 610). These specific Conservation and Management Act comment period (See DATES) will be areas are defined at § 679.2. This (Magnuson-Stevens Act), 16 U.S.C. 1801 considered by NMFS and addressed in proposed action would apply only to et seq. Regulations governing U.S. the response to comments in the final the federally permitted CVs using trawl fisheries and implementing the GOA rule. Comments submitted on this gear to harvest pollock or Pacific cod in FMP appear at 50 CFR parts 600 and proposed rule may address Amendment management areas 610, 620, and 630 of 679. The Council is authorized to 109 or this proposed rule. However, all the GOA. This action would not apply prepare and recommend a fishery comments addressing Amendment 109 to the Eastern GOA West Yakutat management plan (FMP) amendment for must be received by April 6, 2020, to be District (management area 640). the conservation and management of a considered in the approval/disapproval Regulations at § 679.4(k) require trawl fishery managed under the FMP. NMFS decision on Amendment 109. vessels participating in the GOA pollock conducts rulemaking to implement FMP Commenters do not need to submit the and Pacific cod fisheries to possess a amendments and regulatory same comments on both the NOA and License Limitation Program license amendments. FMP amendments and this proposed rule. All relevant written (LLP). Overall, 124 CV LLPs are regulations developed by the Council comments received by April 6, 2020, endorsed for GOA trawl fishing. Ninety-

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seven CV LLPs are endorsed for CGOA apportionments, and 36.59 percent of the rollover regulations are designed to trawl fishing and 78 CV LLPs are the C and D season apportionments. mitigate incentives for the fleet to endorsed for WGOA trawl fishing. Fifty- Over the same period, management area underharvest or overharvest the one LLPs are trawl-endorsed for both 620 went from 56.00 percent to 72.54 seasonal pollock apportionment in a areas. Table 4–1 in the Analysis shows percent of the A season apportionment, management area in order to influence the number of vessels that participated and from 66.00 percent to 85.39 percent the amount of pollock available in the in the 2018 federally managed GOA of the B season apportionment. For the subsequent season. C and D seasons, management area 620 pollock and Pacific cod fisheries, by GOA Pacific Cod season and gear type. went from 23.00 percent to 26.59 percent of the C and D season NMFS establishes annual WGOA and B. Current Seasonal Allocations of apportionments. Seasonal biomass CGOA Pacific cod TACs for the WGOA Pollock and Pacific Cod in the CGOA distributions for the WGOA and CGOA and CGOA and apportions these TACs and WGOA pollock regulatory areas are summarized across two seasons. NMFS apportions GOA Pollock in Table 2–1 in the Analysis. The 60 percent of the annual WGOA and CGOA Pacific cod TACs to the A season, The four pollock seasons for the seasonal biomass distribution aspect of annual harvest specifications is and apportions 40 percent of the annual CGOA and WGOA (management areas WGOA and CGOA Pacific cod TACs to 610, 620, and 630) are currently defined designed so that the pollock fleet is able to harvest fish where they are occurring, the B season. For vessels deploying in regulations at § 679.23(d)(2) as and not to allocate harvest opportunities trawl gear, the A season occurs from follows: to one area relative to another. January 20 through June 10, and the B A season—From 1200 hours, A.l.t., NMFS inseason managers monitor the season occurs from September 1 through January 20 to 1200 hours, A.l.t., catch of pollock and close the directed November 1. March 10 pollock fishery in each management Since the implementation of B season—From 1200 hours, A.l.t., area when they determine the seasonal Amendment 83 to the GOA FMP in March 10 to 1200 hours, A.l.t., May 31 apportionment will be taken. Because 2012 (76 FR 74670, December 1, 2011), C season—From 1200 hours, A.l.t., this process is based on many variable NMFS, after subtracting a set-aside for August 25 to 1200 hours, A.l.t., factors, sometimes catch exceeds the the jig gear sector, also allocates the October 1 seasonal apportionment and sometimes annual WGOA and CGOA Pacific cod D season—From 1200 hours, A.l.t., catch is less than the seasonal TACs among five sectors in the WGOA October 1 to 1200 hours, A.l.t., apportionment. and six sectors in the CGOA. Each November 1 NMFS’ objective is to allow for sector’s allocation is apportioned Through the annual harvest optimal harvest while avoiding an between the A and B seasons in each specifications process, NMFS overage of the seasonal apportionment area, and the ratio for each sector’s establishes pollock TACs for or the annual TAC. TAC that is not seasonal apportionment is not required management areas 610, 620, and 630 harvested in one area or season that to be a 60:40 percent ratio. However, for within the CGOA and the WGOA. These cannot be reallocated to a subsequent all gear (trawl and non-trawl) and TACs are established in proportion to season is not made available for later operational-type (CV and catcher/ the distribution of the pollock biomass harvest. TAC that remains at the end of processors (C/Ps)) sectors, the total of A in those areas as determined by the most the D season is not rolled over to the season sector apportionments in each recent NMFS surveys. In addition, the following calendar year. area equals 60 percent of the annual regulations at § 679.20(a)(5)(iv)(B) state After each management area’s Pacific cod TAC, and the total of B that 25 percent of the combined pollock overages or underages are accounted for, season sector apportionments in each TAC for the CGOA and WGOA is NMFS has the ability to reallocate, or area equals 40 percent of the annual allocated to each of the four seasons. ‘‘rollover,’’ pollock that is not harvested Pacific cod TAC. The seasonal apportionments are then in one season to the subsequent season Regulations at Section 679.20(a)(12)(i) further apportioned across management in the same or other management area(s) and Tables 2–2 and 2–3 in the Analysis areas (i.e., management area 610, 620, according to a prescribed series of steps show the seasonal percentage and 630) based on estimated biomass that are predicated on the area TAC allocations for each sector. These tables distribution throughout the year. The levels and seasonal apportionments illustrate that no sector, in isolation, most recent example of these allocations established in the annual harvest experiences a 60:40 percent seasonal is found in the 2019/2020 annual specifications and are described in TAC split. For example, the CGOA trawl harvest specifications for the GOA (84 detail in Section 2.1.1 in the Analysis. CV sector is currently allocated 21.1 FR 9416, March 14, 2019). Regulations at § 679.20(a)(5)(iv)(B) percent of the annual CGOA Pacific cod Over the last 15 years, the seasonal state that unharvested pollock may be TAC in the A season and 20.5 percent pollock biomass distribution has shifted added to a subsequent seasonal of the annual CGOA Pacific cod TAC in substantially, resulting in relatively allocation provided that the revised the B season. Those two figures are at smaller seasonal apportionments in seasonal apportionment does not exceed a 51:49 percent ratio to each other. The management area 610—most notably in 20 percent of the subsequent season’s WGOA trawl CV sector is allocated 27.7 the A and B seasons—while pollock apportionment for the percent of the annual WGOA Pacific cod substantially increasing seasonal management area. This provision also TAC in the A season TAC and 10.7 apportionments and annual TACs in states that any rollover of unharvested percent of the annual WGOA Pacific cod management area 620 and, to a lesser pollock is applied first to the TAC in the B season, which results in degree, management area 630. In 2003, subsequent season in the same a 72:28 percent seasonal ratio. The management area 610 received 25.00 management area, and only then may WGOA trawl CVs receive a relatively percent of the A and B season any remaining pollock be further greater proportion of their annual apportionments, and 47.00 percent of reallocated to other GOA management Pacific cod TAC allocation in the A the C and D season apportionments. In areas. The purpose of the rollover is to season, as they do not target Pacific cod 2018, management area 610 received help fishery participants harvest as in the fall (B season). The sectors that only 3.50 percent of the A and B season much of the TAC as possible. However, receive a small percentage of the annual

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TAC tend to be those that encounter between the C and D seasons. The time regulations at § 679.20(a)(5)(iv)(B) state Pacific cod as incidental catch that must gaps vary in length depending on the that unharvested pollock in one season be retained (as an Improved Retention/ pace of fishing and TAC utilization may be added to a subsequent seasonal Improved Utilization Program (IR/IU) during the A and C seasons. Table 4–8 allocation provided that the revised species) but do not conduct directed in Section 4.5.1.2 of the Analysis shows seasonal apportionment does not exceed fishing for Pacific cod. instances where fisheries were closed 20 percent of the subsequent season’s Regulations at § 679.20(a)(12)(ii) for up to 80 percent of a season when pollock apportionment for the describe the reallocation of sector the pollock TAC was taken quickly. In management area (see Section 2.1.1 in allocations ‘‘if [. . . NMFS] determines other cases, NMFS has closed directed the Analysis for more detail on rollover that a sector will be unable to harvest fishing for pollock toward the very end allocation procedures). The rollover the entire amount of Pacific cod of one season, and before another season limits are intended to prevent the allocated to [a] sector.’’ NMFS publishes has started, resulting in closures that concentration of annual fishing activity these reallocations as inseason actions lasted as little as one day. For example, in a given time and space so that it does in the Federal Register and posts them NMFS has closed the pollock C season not adversely affect Steller sea lions (see on the NMFS Alaska Region website as during the final four days of the season Section 3.4 in the Analysis for more Information Bulletins. Regulations at in management areas 610 and 630 on detail on effects to Steller sea lions). § 679.20(a)(12)(ii) also state that NMFS five occasions from 2012 through 2017. Because only a low percentage of a should take into account ‘‘the capability The Council and NMFS acknowledge seasonal apportionment can be rolled of a sector [. . .] to harvest the that these time gaps between seasons over to the following season, the cap on remaining Pacific cod TAC.’’ There are create operational inefficiencies and rollovers can result in unharvested TAC no set dates upon which reallocations increase costs compared to a continuous that cannot be caught in the subsequent should occur; NMFS relies on its fishery. For harvesters, operational season. Because the 20 percent rollover management expertise, as well as inefficiencies could include fuel costs to cap must be ‘‘filled’’ for the next season communication with the fleets about transit back and forth to fishing in the area where an underharvest their expected levels of activity or grounds, lost labor productivity (i.e., occurred before additional TAC may be encounter rates of Pacific cod. In more days to earn the same income), allocated to other areas, rollover practice, NMFS reallocates Pacific cod missed windows of good weather, between areas is less frequent but not that it projects will go unharvested by inability to fish during periods of high uncommon. In cases of severely a sector. The regulations provide a catch per unit effort (CPUE), or inability underharvested seasonal hierarchy that guides preference in to fish during periods of high pollock apportionments, rollover caps can result reallocations if there are competing roe content (and higher value product) in a situation where all areas receive the needs for additional TAC. The that can occur between the A and B maximum possible apportionment for regulations at § 679.20(a)(12)(ii)(B) state seasons. Processors also experience the following season, but an amount that NMFS should consider reallocation reduced productivity if labor and still remains that cannot be reallocated to CV sectors first, then reallocation to equipment are idled. A long time gap and is thus not available to be fished. the combined CV and C/P pot sector, between seasons could also erode the The Council determined, and NMFS and then to any of the other C/P sectors real-time knowledge of the fishing agrees, that combining the A/B and C/ (trawl and hook-and-line). NMFS grounds that skippers develop over the D pollock seasons better addresses the provides a record of inseason Pacific course of a continuous season. That purpose and need for the proposed cod TAC reallocations on its website. knowledge is often key to achieving action than increasing the amount of Since 2012, almost all inseason higher CPUE and minimizing bycatch of pollock that can be rolled over to reallocations of Pacific cod have non-target species and PSC. Section subsequent seasons. occurred during the B season, and most 4.6.1.1.1 of the Analysis describes these As described in Section 2.2 of the reallocations flowed from the trawl CV inefficiencies in greater detail. Analysis, options considered under sector; no reallocations have been made Harvesters acknowledge that ‘‘pulse’’ Alternative 2 included increasing the to the trawl CV sector. fishing can limit the ability of the fleet amount of unharvested pollock that may to avoid fishing during periods of higher be reallocated from one season to the IV. Need for This Action bycatch of species such as Chinook following season from 20 percent (status This proposed rule addresses salmon and halibut and can limit the quo) to either 25 percent (sub-option 1) concerns that arose from a series of ability of the fleet to fish during periods or 30 percent (sub-option 2). The discussion papers that were presented of lower bycatch. In contrast, combining Council’s recommendation to maintain to the Council in 2017, 2018, and 2019. seasons and reducing time gaps could the 20 percent rollover cap was The discussion papers examined the give the fleet more flexibility to avoid responsive to public testimony that amount of uncaught Pacific cod TAC in fishing in times of expected high underharvest in one season might all gear sectors during the WGOA and Chinook salmon PSC rates by providing continue into the following season, CGOA B season, options for changing a lower risk of running out of time to especially if the underharvest is due to WGOA and CGOA pollock and Pacific fully harvest a seasonal TAC. Section poor fishing conditions in the cod seasonal allocations with the goal of 3.3 of the Analysis describes bycatch underharvested area. As such, a higher improving efficiency in fishery rates in the pollock and Pacific cod rollover cap might increase the management, and whether delaying the fisheries and the factors that can result possibility of leaving fish stranded start of the WGOA and CGOA pollock in higher, or lower, bycatch of various because TAC cannot be rolled over to C season from August 25 to September species. other areas. This is further explained in 1 might provide operational benefits to In recommending regulatory changes Section 4.6.3 of the Analysis. vessels and processors that also engage for the WGOA and CGOA pollock In addition, this proposed rule would in salmon fisheries or groundfish fishery, the Council also sought to delay the start of the redesignated fisheries outside of the GOA. address a concern about the amount of pollock B season from August 25 to For the pollock fishery, status quo pollock TAC that may go unharvested in September 1 to provide operational management can result in time gaps a season because of existing restrictions benefits to vessels and processors that between the A and B seasons and on TAC rollover. As described above, also engage in salmon fisheries or

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groundfish fisheries outside of the GOA. The Council acknowledged the for pollock, economic opportunities A later pollock start date would changes that have occured in the B in—or trade-offs with—other fisheries, minimize the potential for the season Pacific cod fishery, resulting in and other individual vessel business redesignated pollock B season to unharvested Pacific TAC. To address decisions. These factors can be difficult overlap the end of salmon harvest and this concern, the Council recommended to predict with accuracy, with respect to reduce the operational challenges that Amendment 109 for Pacific cod this action, at this time. Additionally, can occur with harvesters and fisheries in the GOA. Proposed many constraints that dictate the timing processors that participate in both of regulations to implement Amendment and pace of the pollock fishery would these fisheries. Section 4.6.2.1 of the 109 would increase trawl CV allocations remain, even if seasons were combined Analysis describes the operational of Pacific cod TAC in the CGOA and and the fleet had more available TAC at inefficiencies and costs for harvesters WGOA during the A season while any given moment with which to and processors that can occur when proportionally decreasing trawl CV optimize its fishing. Those constraints processors cannot process peak allocations of Pacific cod TAC in the would be expected to prevent harvest capacities of pollock and salmon at the CGOA and WGOA during the B season. patterns from changing in a significantly same time, resulting in limited Specifically, 25.29364 percent of the different manner under the proposed deliveries of one species or the other. annual CGOA Pacific cod TAC would be rule than seen in the past. To address concerns related to allocated to the trawl CV sector during Finally, changing the start of the management inefficiencies in the GOA the A season and 16.29047 percent combined C/D season from August 25 to pollock fishery, the Council would be allocated to the B season. September 1 would not change recommended, and NMFS proposes, Additionally, 31.54 percent of the anticipated effects to the pollock stock regulations that would (1) combine the annual WGOA Pacific cod TAC would (as noted in Section 3.2.3 of the A and B season into a single season be allocated to the trawl CV sector Analysis), and therefore does not change (redesignated as the A season), combine during the A season and 6.86 percent anticipated impacts to prey availability the C and D season into a single season would be allocated to the B season. for Steller sea lions. (redesignated as the B season), and Options considered under Alternative For the Pacific cod fishery in the allocate pollock among the redesignated 3 explored shifting Pacific cod TAC CGOA and WGOA, the overall proposed A season and redesignated B season at from the B season to the A season in 5 change in seasonal allocation across all 50 percent to the A season and 50 percent increments relative to status sectors combined is a modest 4 percent quo. For example, the CGOA trawl CV percent to the B season, applicable to from the B season to the A season. This sector is currently allocated 21.14 management areas 610, 620, and 630; modest shift in seasonal allocation is percent of the total CGOA A season TAC and (2) change the start date of the not expected to result in an increase in and 20.45 percent of the total CGOA B redesignated B pollock season in the vessel participation, nor a change in the season TAC. Those two figures are at a GOA from August 25 to September 1, spatial distribution of the fishing vessels 51:49 percent ratio to each other. Option resulting in a redesignated B season that (as noted in Section 4.6.4. of the 1 sought a 5 percent change in relation runs from September 1 to November 1. Analysis). to the status quo ratio or, in other For the reasons outlined above, the In recent years, trawl CVs in the GOA words, a 56:44 percent ratio. Option 2 Pacific cod fishery only conduct Council and NFMS do not expect the results in a 61:39 percent ratio for implementation of Amendment 109 to directed fishing for B season Pacific cod CGOA trawl CVs, and Option 3 would in the CGOA. The WGOA trawl CV result in discernable spatial harvest have resulted in a 66:34 percent ratio. concentration or a decrease in temporal sector receives 10.7 percent of the total The same method applied to the WGOA annual WGOA Pacific cod TAC in the dispersion of harvest which would trawl CV sector (see Section 2.3 in the significantly affect prey availability for B season (see Table 2–2 in the Analysis), Analysis for more detail). but it goes largely unharvested by trawl Steller sea lions. The Council’s recommendation of In recommending Amendment 109, vessels except as incidental catch Alternative 3 Option 2 strikes a balance during the C and D seasons in the the Council has chosen a portion of each between responding to the purpose and action alternative for each of the GOA pollock trawl fishery. In the CGOA, need and considering effects to marine where the trawl CV fishery is CV pollock and Pacific cod fisheries. mammals. The Pacific cod seasons were This blended action will provide the prosecuted, harvest of Pacific cod in the initially established to mitigate concerns greatest improvements to operational B season lags A season harvest by a surrounding prey availability for Steller and management efficiency of all the significant margin in percentage terms. sea lions. While the Council concluded alternatives while not re-distributing Table 3–4 in the Analysis shows that that shifting a small amount of TAC allocations of pollock or Pacific cod harvest of CGOA B season Pacific cod from the B season to the A season meets between management areas or among TAC was typically below 50 percent and its purpose and need for action, the participants, which is a stated objective began to fall precipitously in the years Council stated that a precautionary in the purpose and need for this action. leading up to the 2018 reduction in approach is prudent given the potential ABC. While industry participants have effects on Steller sea lions (See Section V. This Proposed Rule reported that fish size and flesh quality 3.4.2 of the Analysis). can be better in the fall B season than In adopting its preferred alternatives, CGOA and WGOA Pollock Fishery in the late-winter A season due to the the Council considered effects of the This proposed rule would revise length of time removed from spawning proposed action on Steller sea lions. For § 679.20(a)(5)(iv)(B) to combine the activity, GOA Pacific cod do not tend to the CGOA and WGOA pollock trawl GOA Western and Central regulatory aggregate in the fall in a manner that fishery, Section 4.6.2 of the Analysis areas’ pollock A and B seasons into a lends itself to efficient harvest with explains that various factors affect single season (redesignated as the A trawl gear. As a result, a significant pollock harvest patterns, including but season) and combine C and D seasons portion of the GOA Pacific cod B season not limited to fish aggregation and into a single season (redesignated as the TAC is left unharvested by trawl CVs, quality (roe content), market B season). This proposed rule also while the A season TAC is more fully availability, encounter rates with PSC- would apportion 50 percent of the prosecuted by trawl CVs. limited species, high and low TAC years CGOA and WGOA pollock TAC to the

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redesignated A season and 50 percent to Regulatory Impact Review (RIR) operational and management efficiency the redesignated B season. These An RIR was prepared to assess the of the GOA pollock and Pacific cod proposed changes do not affect the costs and benefits of available regulatory trawl fisheries with the goal of relative amount of CGOA and WGOA alternatives. A copy of this analysis is improving efficiency in fishery pollock TAC apportioned to each season available from NMFS (see ADDRESSES). management and prosecution while because current regulations specify that NMFS is recommending Amendment providing additional value from the the TAC be evenly apportioned among 109 and the regulatory revisions in this fishery by allowing participants to focus each GOA pollock season. proposed rule based on those measures effort when target groundfish species are This proposed rule would revise that maximized net benefits to the available and of high product quality. § 679.23(d)(2) to change the dates of the Nation. Specific aspects of the economic The RIR determined that this action redesignated A season as January 20 analysis are discussed below. would provide harvesters and through May 31 and the dates of the processors that prosecute GOA pollock redesignated B season as September 1 Certification Under the Regulatory with flexibility to maximize yield by through November 1. This proposed Flexibility Act fishing when the resource is most revision effectively leaves the duration The Chief Counsel for Regulation of available and productive (e.g., of the redesignated A season unchanged the Department of Commerce certified aggregation or roe content). The from the duration of the current A and to the Chief Counsel for Advocacy of the flexibility provided by this action might B seasons, but shortens the duration of Small Business Administration (SBA) also allow harvesters to minimize PSC the redesignated B season (September 1 that this proposed rule, if adopted, in certain cases. Essentially, this action to November 1) from the duration of the would not have a significant economic provides an additional ‘‘tool’’ for current C and D seasons (August 25 to impact on a substantial number of small participants to optimize their November 1). entities. The factual basis for this participation to the extent possible. GOA Pacific Cod Fishery determination is as follows. With regard to directly regulated small entities operating in the GOA pollock This proposed rule would revise This proposed rule would directly regulate the owners and operators of and Pacific cod trawl fisheries, this § 679.20(a)(12)(i) to specify the new action is a beneficial action. The seasonal apportionments of Pacific cod certain trawl CVs that target GOA pollock and Pacific cod. Under the proposed action will not impose any TAC for the CV trawl sectors in the adverse economic impacts on any CGOA and the WGOA. Although the Regulatory Flexibility Act (RFA), businesses classified as primarily directly regulated small entities. This overall ratio of A and B seasonal proposed action, therefore, is not apportionments of Pacific cod for the engaged in commercial fishing are considered small entities if they have expected to have a significant economic trawl CV sector would be changed, this impact on a substantial number of proposed rule would not affect the combined annual gross receipts not in excess of $11.0 million for all affiliated directly regulated small entities. As a seasonal apportionments of Pacific cod result, an initial regulatory flexibility to any of the other sectors. The seasonal operations worldwide, regardless of the type of fishing operation—i.e., finfish or analysis is not required, and none has apportionment of Pacific cod will been prepared. remain unchanged for all other sectors shellfish (81 FR 4469; January 26, 2016). in the CGOA and the WGOA. In 2017, the most recent year for List of Subjects in 50 CFR Part 679 This proposed rule would also revise which ex-vessel revenue data are available, 68 CVs participated in GOA Alaska, Fisheries, Reporting and the tables at § 679.20(a)(12)(i)(A) and (B) recordkeeping requirements. to change the seasonal allowance of pollock or Pacific cod trawl fisheries. Of Pacific cod for trawl CVs in the WGOA those, 32 are classified as small entities Dated: February 20, 2020. and the CGOA. For both the CGOA and based on individual vessel revenue. The Samuel D. Rauch III, the WGOA, the A season allowance remaining 36 vessels would be Deputy Assistant Administrator for would increase by approximately 4 considered small entities based only on Regulatory Programs, National Marine percent while the B season allowance their individual vessel revenue. Fisheries Service. would decrease by approximately 4 However, analysis of directly regulated For reasons set out in the preamble, percent. entity revenue to determine entity size 50 CFR part 679 is proposed to be as measured against the commercial amended as follows: VI. Classification fishing threshold of $11.0 million must Pursuant to §§ 304(b)(1)(A) and 305(d) also consider ownership affiliations and PART 679—FISHERIES OF THE of the Magnuson-Stevens Act, the NMFS other contractual affiliations of the EXCLUSIVE ECONOMIC ZONE OFF Assistant Administrator has determined entities, worldwide. Of these 36 ALASKA that this proposed rule is consistent participating vessels, 16 are affiliated ■ with the Council’s regulatory with other vessels and their operating 1. The authority citation for 50 CFR amendment for GOA pollock, entities via affiliations with Central part 679 continues to read as follows: Amendment 109 to the GOA FMP, other GOA Rockfish Program cooperatives. Authority: 16 U.S.C. 773 et seq.; 1801 et provisions of the Magnuson-Stevens Additionally, the remaining 20 vessel seq.; 3631 et seq.; Pub. L. 108–447; Pub. L. Act, and other applicable law, subject to operations are affiliated via American 111–281. further consideration of comments Fisheries Act cooperatives. Thus these ■ 2. In § 679.20, revise paragraphs received during the public comment 36 operating entities are not considered (a)(5)(iv)(B), (a)(12)(i) introductory text, period. small entities for RFA purposes. There (a)(12)(i)(A)(3), and (a)(12)(i)(B)(4) to This proposed rule has been are also 43 inactive licenses that lack read as follows: determined to be not significant for the any recent associated revenue history purposes of Executive Order 12866. and the owners of these licenses are § 679.20 General Limitations. This proposed rule is not an considered potentially directly * * * * * Executive Order 13771 regulatory action regulated small entities. (a) * * * because this rule is not significant under The general purpose of this action, as (5) * * * Executive Order 12866. identified in the RIR, is to enhance the (iv) * * *

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(B) GOA Western and Central does not exceed 20 percent of the (12) * * * Regulatory Areas seasonal seasonal TAC apportionment for the (i) Seasonal allowances by sector. The apportionments. Each apportionment statistical area. The reapportionment of Western and Central GOA Pacific cod established under paragraph underharvest will be applied to the TACs will be seasonally apportioned to (a)(5)(iv)(A) of this section will be subsequent season within the same each sector such that 63.84 percent of divided into two seasonal statistical area up to the 20 percent limit the Western GOA TAC is apportioned to apportionments corresponding to the specified in this paragraph. Any two fishing seasons specified in the A season and 36.16 percent of the underharvest remaining beyond the 20 Western GOA TAC is apportioned to the § 679.23(d)(2) as follows: A Season, 50 percent limit may be further percent; and B Season, 50 percent. B season, and 64.16 percent of the apportioned to the subsequent season in Within any fishing year, underharvest or Central GOA TAC is apportioned to the the other statistical areas, in proportion overharvest of a seasonal apportionment A season and 35.84 percent of the to estimated biomass and in an amount may be added to or subtracted from Central GOA TAC is apportioned to the remaining seasonal apportionments in a no more than 20 percent of the seasonal B season, as specified in § 679.23(d)(3). TAC apportionment for the statistical manner to be determined by the (A) * * * Regional Administrator, provided that area. any revised seasonal apportionment * * * * *

Seasonal allowances Sector Gear type Operation type A season B season (in percent) (in percent)

******* (3) ...... Trawl ...... Catcher vessel ...... 31.54 6.86

*******

(B) * * *

Seasonal allowances Length overall in Sector Gear type Operation type feet A season B season (in percent) (in percent)

******* (4) ...... Trawl ...... Catcher vessel ...... Any ...... 25.29364 16.29047

*******

* * * * * directed fishing for pollock in the (ii) B season. From 1200 hours, A.l.t., ■ 3. In § 679.23, revise paragraph (d)(2) Western and Central Regulatory Areas is September 1 through 1200 hours, A.l.t., to read as follows: authorized only during the following November 1. two seasons: § 679.23 Seasons. * * * * * [FR Doc. 2020–03777 Filed 2–27–20; 8:45 am] * * * * * (i) A season. From 1200 hours, A.l.t., BILLING CODE 3510–22–P (d) * * * January 20 through 1200 hours, A.l.t., (2) Directed fishing for pollock. May 31; and Subject to other provisions of this part,

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Notices Federal Register Vol. 85, No. 40

Friday, February 28, 2020

This section of the FEDERAL REGISTER related to and/or offering sales Funds made available under HBIIP contains documents other than rules or incentives for the installation of fuel may only be used for infrastructure to proposed rules that are applicable to the pumps, related equipment, and support higher biofuel blend sales and public. Notices of hearings and investigations, infrastructure. use. committee meetings, agency decisions and Under the HBIIP, funds will be made rulings, delegations of authority, filing of Eligibility petitions and applications and agency directly available to assist transportation statements of organization and functions are fueling and biodiesel distribution Transportation fueling and biodiesel examples of documents appearing in this facilities with converting to higher distribution facilities may apply for this section. ethanol and biodiesel blend friendly program. Eligible entities would status by sharing the costs related to include: Retail fueling stations, and/or offering sales incentives for the convenience stores, hypermarket fueling DEPARTMENT OF AGRICULTURE installation of fuel pumps, related stations, fleet facilities, and similar equipment, and infrastructure. Cost- entities with equivalent capital Commodity Credit Corporation share grants and/or incentives will be investments. Consideration will also be made available for higher fuel ethanol/ given to biodiesel terminal operations Rural Business-Cooperative Service biodiesel blends such as ‘‘E15’’ and and home heating oil distribution ‘‘B20’’ (or higher), at vehicle fueling centers or equivalent entities. Announcement of Future Competitive locations, including, but not limited to, Grant Funds Availability for Higher The following information provides a local fueling stations, convenience general overview of the requirements for Blends Infrastructure Incentive stores (CS), hypermarket fueling stations Program (HBIIP) for Fiscal Year 2020 eligible applications. Application (HFS), and/or fleet facilities. requirements and other important AGENCY: Commodity Credit Corporation The Commodity Credit Corporation information will be provided in the and the Rural Business Cooperative (CCC) is an agency and instrumentality forthcoming NOFA and on the HBIIP Service, USDA. of the United States within the web page https://www.rd.usda.gov/ ACTION: Notice. Department of Agriculture and operates HBIIP. under the supervision of the Secretary SUMMARY: The Commodity Credit of Agriculture. Among the activities that Cost-Sharing or Matching Corporation (CCC) and the Rural section 5 of the CCC Charter Act Applicants will certify and Business-Cooperative Service (RBCS), a authorizes CCC to undertake are actions demonstrate that any required matching Rural Development agency of the United to: funds are available during the grant • States Department of Agriculture Make available materials and period and provide appropriate (USDA), intend to announce in a Notice facilities required in connection with documentation with the application. of Funding Availability (NOFA) the the production and marketing of There are a number of existing or availability of up to $100 million in agricultural commodities (other than prior and ongoing State-led programs competitive grants to eligible entities for tobacco) and and private sector efforts to help activities designed to expand the sales • Increase the domestic consumption provide funding for higher blend and use of renewable fuels under the of agricultural commodities (other than infrastructure. These programs may be Higher Blends Infrastructure Incentive tobacco) by expanding or aiding in the included as part of any matching Program (HBIIP). The purpose of this expansion of domestic markets or by contribution requirement. However, the notice is to alert prospective developing or aiding in the application must show how the HBIIP participants and stakeholders of the development of new and additional grant will add to the infrastructure that Agencies’ intentions to jointly publish a markets, marketing facilities, and uses fosters biofuel sales and use. HBIIP NOFA by mid-spring which will for such commodities. funds are intended to provide additional provide specific program information Under this authority, CCC will make incentives. and requirements. available up to $100 million in the form Eligible funds must be: FOR FURTHER INFORMATION CONTACT: of grants and/or sales incentives to • Anthony Crooks: telephone (202)205– eligible entities to assist with the Spent on eligible expenses during 9322, email: [email protected]. implementation of activities to expand the grant period. Persons with disabilities that require the infrastructure for renewable fuels • From eligible sources. alternative means for communication derived from agricultural products • Spent in advance or as a pro-rata should contact the U.S. Department of produced in the United States. HBIIP portion of grant funds being spent. Agriculture (USDA) Target Center at will be administered under the general • Provided either by the applicant or (202)720–2600 (voice). supervision of RBCS. a third party in the form of cash or an SUPPLEMENTARY INFORMATION: Applicants may enter into eligible in-kind contribution. arrangements with private entities such Eligible funds cannot include: Purpose of the HBIIP as, but not limited to, commercial • Employee’s and/or member’s time. The overall goal of HBIIP is to vendors of fuels, agricultural • increase the sales and use of higher commodity promotional organizations, Other Federal grant funds unless blends of ethanol and biodiesel. HBIIP Tribes, and other entities interested in provided by authorizing legislation. is intended to encourage a more the renewable fuels in order to secure • Cash or in-kind contributions comprehensive approach to marketing such non-Federal funds or in-kind donated outside the grant period. higher blend levels by sharing the costs contributions. • Over-valued in-kind contributions.

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Multiple Application Eligibility deadline date to begin the application All applicants are responsible for any Only one application may be process through Grants.gov. additional expenses incurred in submitted per applicant. However, an Grants.gov. Applications must preparing and submitting applications. application may include proposed include electronic signatures. Original ADDRESSES: Submit applications to the investments for more than one location. signatures may be required if funds are USDA Rural Development Area Office awarded. After electronically applying servicing the area where the project is Grant Period through Grants.gov, you will receive an located. A list of the USDA Rural An application must include no more automatic acknowledgement from Development Area Offices can be found than a one-year grant period, or it will Grants.gov that contains a Grants.gov listed by state at: http:// not be considered for funding. tracking number. www.rd.usda.gov/contact-us/state- offices. Application Evaluation Criteria Robert Stephenson, Executive Vice President, Commodity Credit FOR FURTHER INFORMATION CONTACT: For USDA will evaluate how the Corporation. more information, please contact your applications will increase the sale and Bette B. Brand, respective Rural Development State use of fuel using the evaluation criteria Administrator, Rural Business-Cooperative Office listed here: http:// specified in the NOFA and Grants.gov to Service. www.rd.usda.gov/browse-state A select the applications that best support [FR Doc. 2020–03831 Filed 2–27–20; 8:45 am] checklist of all required application the HBIIP goals. Information required in BILLING CODE 3410–05–P information for regional planning a proposal will be detailed in the priority can be found at: https:// forthcoming NOFA. www.rd.usda.gov/programs-services/ Process for Evaluation of Applications DEPARTMENT OF AGRICULTURE strategic-economic-and-community- and Award of Grants development. Rural Business-Cooperative Service For all other inquiries, contact Each application will be reviewed to Innovation Center Partnership Division determine whether the applicant is Rural Housing Service Regional Coordinators as follows: eligible and whether the application is • Midwest Region—Christine complete and sufficiently responsive to Rural Utilities Service Sorensen: 202–568–9832, the requirements specified in the NOFA. [email protected]. Notice of Solicitation of Applications • Priority Scoring Criteria (NOSA) for the Strategic Economic and Northeast Region—Angela Callie: Applications will be evaluated using Community Development Program for 202 568 9738, [email protected]. • the Priority Scoring Criteria listed in the Fiscal Year (FY) 2020 Southern Region—Greg Dale: (870) NOFA. Evaluators will base scores only 633–3055 Ext. 123, Gregory.Dale@ on the information provided or cross- AGENCY: Rural Business-Cooperative usda.gov. • referenced by page number in each Service, Rural Housing Service, and Western Region—Tim O’Connell: individual evaluation criterion. Rural Utilities Service, USDA. (503) 414–3396, Tim.Oconnell@ ACTION: Notice. usda.gov. Federal Funding Accountability and • National Office— Greg Batson, Transparency Act SUMMARY: Section 6401 of the Rural Development Innovation Center, Applicants must be registered in the Agricultural Act of 2018 (2018 Farm U.S. Department of Agriculture, Stop System for Award Management (SAM) Bill) enables the Secretary of 0793, 1400 Independence Avenue SW, prior to submitting an application; Agriculture to provide priority to Washington, DC 20250–0783, which can be obtained at no cost via a projects that support Strategic Economic Telephone: 573–239–2945. Email: toll-free request line at (866) 705–5711 and Community Investment plans. The [email protected]. 2018 Farm Bill re-authorized the or online at https://www.sam.gov/ SUPPLEMENTARY INFORMATION: This Strategic Economic and Community SAM/. Registration of a new entity in action has been reviewed and Development (SECD) priority, Section SAM requires an original, signed, and determined not to be a rule or regulation 6025 of the Agricultural Act of 2014 notarized letter stating that the as defined in Executive Order 12866, as (2014 Farm Bill) with some applicant is the authorized Entity amended by Executive Order 13258. Administrator, before the registration modifications. Until the rulemaking will be activated. All recipients of process is finalized to incorporate the I. Background Federal financial grant assistance are new changes, SECD will continue to Section 6401 of the 2018 Farm Bill re- required to report information about operate using the existing regulation. In authorized Section 6025 of the first-tier sub-awards and executive total FY 2020, the Agency implements SECD Agricultural Act of 2014 (2014 Farm compensation in accordance with 2 CFR through reserving funds from the Bill) with some modifications. The part 170. ‘‘underlying programs’’. This Notice provision provides priority to projects All applicants except those that are applies to applicants who will be that support strategic economic individuals, in accordance with 2 CFR submitting applications for the development or community investment part 25, must have a DUNS number, ‘‘underlying programs’’. This notice plans when applying for program funds which can be obtained at no cost via a establishes the above mentioned priority under the rural development mission toll-free request line at (866) 705–5711 effective upon the publication of this area. Until the rulemaking process is or online at http://fedgov.dnb.com/ notice. finalized to incorporate the new webform. DATES: To apply for SECD priority changes, SECD will continue to operate To use Grants.gov, you must already points in FY 2020, applicants must using the existing regulation. In FY have a DUNS number and you must also submit Form RD 1980–88, ‘‘Strategic 2020, the Agency will reserve funds be registered and maintain registration Economic and Community Development from the ‘‘underlying programs’’, using in SAM. We strongly recommend that (section 6025) Priority,’’ by 5:00 p.m. SECD regulation 7 CFR 1980, Subpart K. you do not wait until the application Eastern Time on June 30, 2020. This Notice provides applicants with

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eligible projects the opportunity to ‘‘underlying programs’’, using SECD • Rural Business Development Grants; apply for reserve funding in FY 2020. regulation 7 CFR 1980, Subpart K. see 7 CFR 4280, Subpart E Accordingly, the Agency is giving A. Statutory Authority regional planning priority through the II. Award Information following Rural Development programs: Type of Awards: Guaranteed loans, This priority is authorized under • Section 6401 of the 2018 Farm Bill. Community Facility Loans; see 7 CFR direct loans and grants. 1942, Subpart A B. Programs • Fire and Rescue and Other Small Fiscal Year Funds: FY 2020 Community Facilities Projects; see 7 appropriated funds. Section 6401 of the 2018 Farm Bill CFR 1942, Subpart C Available Funds: The amount of • authorizes any program under the Community Facilities Grants; see 7 funds available will depend on the Consolidated Farm and Rural CFR 3570, Subpart B • amount of funds the underlying Development Act (7 U.S.C. 2008v), as Community Programs Guaranteed programs have available during the determined by the Secretary, to give Loans; see 7 CFR 3575 • fiscal year. priority to an application that supports Water and Waste Disposal Programs Guaranteed Loans; see 7 CFR 1779 Regional Planning Priority the implementation of strategic • community investment plans. In FY Water and Waste Loans and Grants; see 7 CFR 1780 For FY 2020 applications, the 2020, the Agency implements SECD • Business and Industry Guaranteed following table specifies the percentage through reserving funds from the Loans; see 7 CFR 4279 of funds being reserved:

Percentage of funds Program reserved for SECD

Community Facility Loans ...... 10 Fire and Rescue and Other Small Community Facilities Projects ...... 10 Community Facilities Grant Program ...... 10 Community Programs Guaranteed Loans ...... 10 Water and Waste Disposal Programs Guaranteed Loans ...... 10 Water and Waste Loans ...... 5 Water and Waste Grants ...... 3 Business and Industry Guaranteed Loan ...... 5 Rural Business Development Grants ...... 5

Award Amounts: Guaranteed loans, The first criterion, as noted above, is RD 1980–88 and supporting direct loans and grants will be awarded that the project meets the applicable documentation. Form RD 1980–88 in amounts consistent with each eligibility requirements of the requests such information as (see 7 CFR applicable underlying program. underlying program for which the 1980.1015): Award Dates: Awards for applications applicant is applying. • Identification of whether the submitted in FY 2020 will be made on The second criterion is that the applicant includes a State, county, or before June 30, 2020. The agency will project is ‘‘carried out in a rural area’’ municipal, or tribal government; • return any reserved funds that are not as defined in 7 CFR 1980.1005. As Identification by name of the plan obligated by June 30, 2020 to the defined, this means either the entire being supported by the project, the date underlying program’s regular funding project is physically located in a rural the plan became effective and is to account, for obligation to all eligible area or all of the beneficiaries of the remain in effect, and a detailed projects in that program. service(s) provided through the project description of how the project directly must either reside in or be located in a supports one or more of the plan’s III. Eligibility Information objectives; rural area. Note that the definition of • A. Eligible Requirements ‘‘rural’’ varies among the underlying Sufficient information to show that the project will be carried out solely in To be considered for SECD priority programs and the Section 6025 regulation does not change those a rural area; and points, both the applicant and project • Identification of any current or definitions, therefore, the applicable must meet the eligibility requirements previous applications the applicant has program regulations as outlined in I.A. of the underlying program. These submitted for funds from the underlying should be reviewed as necessary. requirements vary among the programs. underlying programs and applicants The third criterion is that the project should refer to the regulations for those supports the implementation of a B. Cost Sharing or Matching programs, which are referenced in I. A. strategic economic development or Any and all cost sharing, matching, of this Notice. community investment plan on a multi- and cost participation requirements of The agency continues to make jurisdictional basis as defined in 7 CFR the applicable underlying program available additional priority for regional 1980.1005. apply to projects seeking SECD priority planning through the existing regulation In order to be considered for the points. The Section 6025 regulation without making any changes to the reserved funds from underlying does not change such requirements. applicant eligibility requirements of the programs in FY 2020, applicants (1) underlying programs. The regulation meet all requirements of the underlying C. Other Eligibility Requirements includes three criteria that a project program; (2) meet all requirements in Any and all other eligibility must meet in order to be considered for accordance with 7 CFR Subpart K (see requirements (beyond those identified priority points (see 7 CFR 1980.1010): 7 CFR 1980.1010); and (3) submit Form in III.A of this Notice) found in the

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underlying programs apply to underlying program apply to all projects race, color, national origin, religion, sex, applicants, their projects, and the receiving funding in response to this gender identity (including gender beneficiaries of those projects are Notice. expression), sexual orientation, unchanged by either this Notice or the Applicants who are selected for disability, age, marital status, family/ Section 6025 regulation. funding in FY 2020 in response to this parental status, income derived from a Notice (i.e., those applicants who public assistance program, political IV. Application Evaluation and submit Form RD 1980–88 and receive beliefs, or reprisal or retaliation for prior Selection for Underlying Programs funding from the underlying program’s civil rights activity, in any program or Funds funds) are required to submit activity conducted or funded by USDA All FY 2020 applications for information in accordance with 7 CFR (not all bases apply to all programs). underlying programs will be reviewed, 1980.1026. This information is on the Remedies and complaint filing evaluated, and scored based on the project’s measures, metrics, and deadlines vary by program or incident. underlying program’s scoring criteria. outcomes that the awardee would Persons with disabilities who require This Notice does not affect that process. already be submitting to the appropriate alternative means of communication for This Notice only affects the scoring of entity(ies) monitoring the program information (e.g., Braille, large SECD applications competing for an implementation of the plan. print, audiotape, American Sign Language, etc.) should contact the underlying program’s funds. VII. Additional Information responsible Agency or USDA’s TARGET A. Scoring of Applications Paperwork Reduction Act Center at (202) 720–2600 (voice and All eligible and complete applications In accordance with the Paperwork TTY) or contact USDA through the competing for an underlying program’s Reduction Act of 1995, the information Federal Relay Service at (800) 877–8339. funds will be evaluated and scored collection requirements contained in 7 Additionally, program information may based on the criteria of the applicable CFR part 1980, subpart K, have been be made available in languages other underlying program, whether or not the approved by OMB under OMB Control than English. applicant seeks regional planning Number 0570–0068. To file a program discrimination priority points. complaint, complete the USDA Program For applicants wishing to be National Environmental Policy Act Discrimination Complaint Form, AD– considered for the reserved funds in FY This document has been reviewed in 3027, found online at http:// 2020, the Agency will review, evaluate, accordance with 7 CFR part 1970, www.ascr.usda.gov/complaint_filing_ and score each Form RD 1980–88, based subpart A, ‘‘Environmental Policies.’’ It cust.html and at any USDA office or on the criteria specified in 7 CFR is the determination of the Agency that write a letter addressed to USDA and 1980.1020, to award the SECD priority this action does not constitute a major provide in the letter all of the points. Federal action significantly affecting the information requested in the form. To request a copy of the complaint form, B. Selection Process quality of the human environment, and, in accordance with the National call (866) 632–9992. Submit your The Agency will select the highest Environmental Policy Act of 1969, completed form or letter to USDA by: scoring applications competing for an Public Law 91–190, neither an (1) Mail: U.S. Department of underlying program’s funds based on Environmental Assessment nor an Agriculture, Office of the Assistant the award process for the underlying Environmental Impact Statement is Secretary for Civil Rights, 1400 program to determine which projects required. Independence Avenue SW, Washington, receive funds except that: DC 20250–9410; fax: (202) 690–7442; or • An application’s total score will be Federal Funding Accountability and email: [email protected]. determined in accordance with section Transparency Act Donald DJ LaVoy, IV.A. of this Notice and All applicants, in accordance with 2 • Deputy Under Secretary, Rural Development. To the extent provided by the CFR part 25, must have a DUNS underlying programs in this Notice, the number, which can be obtained at no [FR Doc. 2020–04031 Filed 2–27–20; 8:45 am] Agency will encourage awarding ‘‘SECD cost via a toll-free request line at 1–866– BILLING CODE 3410–XY–P priority’’ to qualifying applications. 705–5711 or online at http:// VI. Award Administration Information fedgov.dnb.com/webform. Similarly, all grant applicants must be registered in ARCHITECTURAL AND A. Award Notices the System for Award Management TRANSPORTATION BARRIERS The Agency will notify SECD (SAM) prior to submitting an COMPLIANCE BOARD application. Applicants may register for applicants who receive funding in a Notice of Guidance Documents manner consistent with award the SAM at http://www.sam.gov/SAM. notifications for the underlying All recipients of Federal financial grant AGENCY: Architectural and program. assistance are required to report Transportation Barriers Compliance information about first-tier sub-awards Board. B. Administrative and National Policy and executive total compensation in ACTION: Notice of guidance documents. Requirements accordance with 2 CFR part 170. Any and all additional requirements SUMMARY: We, the Architectural and Nondiscrimination Statement of the applicable underlying programs Transportation Barriers Compliance apply to projects receiving funding in In accordance with Federal civil Board (hereafter, ‘‘Access Board,’’ response to this Notice. Please see the rights law and U.S. Department of ‘‘Board,’’ or ‘‘we’’), are issuing this regulations for the applicable Agriculture (USDA) civil rights notice to announce that, pursuant to underlying program. regulations and policies, the USDA, its Executive Order 13891, we have Agencies, offices, and employees, and collected and listed all of our guidance C. Reporting Requirements institutions participating in or documents on our website which can be Any and all post-award reporting administering USDA programs are found at http://www.access-board.gov/ requirements contained in the prohibited from discriminating based on guidance.

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FOR FURTHER INFORMATION CONTACT: requires that telecommunications and ABA Standards in that they explain Christopher Kuczynski, (202) 272–0042, services and equipment be accessible to, requirements in the standards and [email protected]. and usable by, individuals with provide best practices but do not SUPPLEMENTARY INFORMATION: Executive disabilities where readily achievable. establish any new or additional Order 13891 requires each agency to The guidance documents listed on the requirements above what is specified in establish on its website ‘‘a single, Board’s website are divided into seven the standards. searchable, indexed database that separate categories. 4. Guidance on the ADA Accessibility contains or links all guidance 1. Guidance on the Americans With Guidelines for Transportation Vehicles documents in effect.’’ (84 FR 55235, Oct. Disabilities Act (ADA) Accessibility 9, 2019). In response, the Access Board Standards This guide provides technical has identified all of its guidance These guidance documents, while assistance, background, and rationale documents and co-located them at listed separately, together make up a for the ADA Accessibility Guidelines for https://www.access-board.gov/guidance. single guide to the ADA Standards. The Transportation Vehicles, 36 CFR part The Access Board is a small, guide is divided by chapters that 1192, and gives examples of how the independent federal agency dedicated to correspond to the applicable Chapters in accessibility guidelines can be applied promoting equality for people with the ADA Standards. In the beginning of in particular cases. disabilities through, among other things, the Guide to the ADA Accessibility developing and maintaining Standards, the Board notes that it 5. Guidance on Requirements for accessibility guidelines under the ‘‘explains requirements in the current Information and Communication Americans with Disabilities Act (ADA) editions of the ADA Standards issued by Technology (ICT) and the Architectural Barriers Act the DOJ and DOT. It was developed by (ABA). Under titles II and III of the the U.S. Access Board in cooperation These older guidance documents ADA, the Board develops and maintains with DOJ and DOT. It is important to provide technical assistance on the accessibility guidelines for buildings, use this guide along with a complete implementation of the original facilities, and transit vehicles. See 42 copy of the ADA Standards as it standards issued under Section 508 of U.S.C. 12204; see also 29 U.S.C explains, but does not contain or the Rehabilitation Act. While the Board 792(b)(3)(B) & (b)(10). These ADA reprint, the text of the ADA Standards.’’ has updated these standards recently, Accessibility Guidelines serve as the See https://www.access-board.gov/ we maintain this guide as there is still basis for standards issued by the guidelines-and-standards/buildings- legacy ICT to which the Original 508 departments of Justice (DOJ) and and-sites/about-the-ada-standards/ Standards are applicable. 36 CFR part Transportation (DOT) which enforce the guide-to-the-ada-standards/about-this- 1194, Appendix D. ADA. See, e.g., 42 U.S.C. 12134(c), guide. 12149(b), 12163, 12186(c). The ABA 6. Guidance on Public Rights-of-Way requires facilities designed, built, 2. Guidance on the Architectural altered, or leased with federal funds to Barriers Act (ABA) Accessibility This section includes multiple be accessible to people with disabilities. Standards documents and videos that provide technical assistance on providing access The Access Board maintains the This document is similar to the guide to public streets and sidewalks and accessibility guidelines upon which the on the ADA Standards in that it is ABA standards are based and enforces divided into multiple chapters that other elements of public rights-of-way. these standards through the correspond to the chapters of the ABA These materials clearly state that they investigation of complaints. In addition Standards. Similarly, this guide are only intended to provide technical to promulgating regulations, the Board explains current editions of the ABA assistance and are not binding as the is charged with developing advisory Standards issued by the Department of public rights-of-way rulemaking has not information and providing technical Defense, the General Services been completed. assistance on its regulations, titles II and Administration, and the U.S. Postal III of the ADA, and the ABA. See 29 7. Guidance on Prescription Drug Service, which are based on, and are Labels U.S.C. 792(b)(2); 42 U.S.C. 2131 et seq. substantively similar to, the Board’s and 12181 et seq. The majority of updated ABA Accessibility Guidelines This is advisory guidance on making Access Board guidance documents (2004).’’ See https://www.access- prescription drug container labels explain and illustrate requirements in board.gov/guidelines-and-standards/ accessible to people who are blind, the ADA or ABA Standards. These buildings-and-sites/about-the-aba- visually impaired, or elderly. Section guides are non-binding and simply help standards/guide-to-the-aba-standards/ 904 of the Food and Drug clarify the applicable standards and about-this-guide. Additionally, the Administration and Innovation Act provide clearly labeled Board provides a disclaimer which recommendations for optional best (Pub. L. 112–144, 126 Stat. 993) charged states ‘‘[i]t is important to use this guide the Access Board with convening a practices that exceed the minimum along with a complete copy of the ABA working group to develop best practices requirements. Standards as it explains, but does not for making information on prescription The Board also issues standards and contain or reprint, the text of the ABA drug container labels accessible. guidelines under Section 508 of the Standards.’’ Rehabilitation Act, 29 U.S.C. 794d, and However, these best practices are not Section 255 of the Communications Act. 3. Animations on the ADA and ABA mandatory and are not standards or Section 508 requires that information Standards accessibility guidelines of the Access and communication technology (ICT) The Access Board has created Board. Id. purchased, maintained, or used by the multiple short animations which David M. Capozzi, federal government be readily accessible provide a visual and audible illustration to, and usable by, individuals with of sections of the ADA and ABA Executive Director. disabilities. Section 255 of the Standards. These animations follow the [FR Doc. 2020–04058 Filed 2–27–20; 8:45 am] Communication Act, 47 U.S.C. 255, same structure of the guides on the ADA BILLING CODE 8150–01–P

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COMMISSION ON CIVIL RIGHTS II. Subcommittee Meeting: Roundtable 122, 155, Feb. 24, 2016). Effective to discuss business practices with August 22, 2016, section 421 of the Sunshine Act Meeting Notice employers and staff officials EAPA added section 517 to the Tariff AGENCY: United States. regarding workers with disabilities Act of 1930, as amended (the Act), at a variety of work sites in Vermont which establishes a formal process for ACTION: Notice of Commission • Opening Statements by roundtable CBP to investigate allegations of the subcommittee meeting. participants evasion of antidumping duty and/or • DATES: Wednesday March 3, 2020, Commissioner Questions countervailing duty orders. Section 12:00–1:30 p.m. ET. III. Adjourn Meeting 517(b)(4)(A) of the Act provides that if, during the course of an EAPA ADDRESSES: Meeting to take place by Dated: February 26, 2020. telephone. David Mussatt, investigation, CBP is unable to determine whether the merchandise at Supervisory Chief, Regional Programs Unit. FOR FURTHER INFORMATION CONTACT: issue is covered merchandise within the SUPPLEMENTARY INFORMATION: This [FR Doc. 2020–04234 Filed 2–26–20; 4:15 pm] meaning of section 517(a)(3) of the Act, business meeting is open to the public BILLING CODE P it shall refer the matter to Commerce to by telephone only: 1–800–353–6461, make such a determination. Section Conference ID 337–1130. Persons with 517(a)(3) of the Act defines covered disabilities who are requesting an DEPARTMENT OF COMMERCE merchandise as merchandise that is accommodation for the call should subject to an antidumping duty order International Trade Administration contact Pamela Dunston at (202) 376– issued under section 736 of the Act or 8105 or at [email protected] at least [A–570–900] a countervailing duty order issued three (3) business days before the under section 706 of the Act. Section scheduled date of the meeting. Diamond Sawblades and Parts Thereof 517(b)(4)(B) of the Act states that From the People’s Republic of China: Meeting Agenda Commerce, after receiving a covered Notice of Covered Merchandise merchandise referral from CBP, shall I. Approval of Agenda Referral and Initiation of Scope Inquiry determine whether the merchandise is II. Subcommittee Meeting: Roundtable covered merchandise and promptly to discuss business practices with AGENCY: Enforcement and Compliance, transmit its determination to CBP. The employers and staff officials International Trade Administration, Act does not establish a deadline within regarding workers with disabilities Department of Commerce. which Commerce must issue its at a variety of work sites in Virgina. SUMMARY: Pursuant to the Enforce and determination. • Opening Statements by roundtable Protect Act of 2015 (EAPA), the On December 17, 2019, Commerce participants Department of Commerce (Commerce) • received a covered merchandise referral Commissioner Questions received a covered merchandise referral from CBP regarding CBP EAPA III. Adjourn Meeting. from U.S. Customs and Border Investigation No. 7354,1 which concerns Dated: February 26, 2020. Protection (CBP) in connection with a the antidumping duty order on diamond CBP EAPA investigation concerning the David Mussatt, sawblades from China.2 CBP explained antidumping duty order on diamond Supervisory Chief, Regional Programs Unit. that the petitioner’s allegation involves sawblades and parts thereof (diamond [FR Doc. 2020–04233 Filed 2–26–20; 4:15 pm] diamond sawblades from China sawblades) from the People’s Republic BILLING CODE P transshipped through Canada in one of of China (China). In accordance with the two channels of transshipment EAPA, Commerce intends to determine below: COMMISSION ON CIVIL RIGHTS whether the merchandise subject to the referral is covered by the scope of this Channel 1: Produced and exported by Sunshine Act Meeting Notice order and promptly transmit its Protech Diamond Tools Inc. (Protech) determination to CBP. Commerce is and imported by Gogo International, AGENCY: United States Commission on Inc. (Gogo). Civil Rights. providing notice of the referral and inviting participation from interested Channel 2: Produced by Protech and ACTION: Notice of Commission parties. exported by Gogo. subcommittee meeting. CBP requested and obtained DATES: Applicable February 28, 2020. information from Gogo. CBP has DATES: Wednesday March 4, 2020, 1:00– FOR FURTHER INFORMATION CONTACT: requested that Commerce issue a 2:30 p.m. ET. Yang Jin Chun, AD/CVD Operations, determination as to whether the ADDRESSES: Meeting to take place by Office I, Enforcement and Compliance, following categories of diamond telephone. International Trade Administration, FOR FURTHER INFORMATION CONTACT: U.S. Department of Commerce, 1401 1 See CBP’s Letter, ‘‘Covered Merchandise SUPPLEMENTARY INFORMATION: This Constitution Avenue NW, Washington, Referral Request for EAPA Investigation 7354, DC 20230, telephone: (202) 482–5760. Imported by Gogo International, Inc., and business meeting is open to the public Concerning the Investigation of Evasion of the by telephone only: 1–800–353–6461, SUPPLEMENTARY INFORMATION: Antidumping Duty Order on Diamond Sawblades and Parts Thereof from the People’s Republic of Conference ID 601–0676. Persons with Background disabilities who are requesting an China (A–570–900),’’ dated December 17, 2019. On February 24, 2016, the Trade Commerce intends to make available this document accommodation for the call should and any supporting documents on Enforcement and contact Pamela Dunston at (202) 376– Facilitation and Trade Enforcement Act Compliance’s Antidumping Duty and 8105 or at [email protected] at least of 2015 was signed into law, which Countervailing Duty Centralized Electronic Service three (3) business days before the contains Title IV—Prevention of System (ACCESS) within five days of publication of Evasion of Antidumping and this notice. scheduled date of the meeting. 2 Countervailing Duty Orders (short title See Diamond Sawblades and Parts Thereof from Meeting Agenda the People’s Republic of China and the Republic of ‘‘Enforce and Protect Act of 2015’’ or Korea: Antidumping Duty Orders, 74 FR 57145 I. Approval of Agenda ‘‘EAPA’’) (Pub. L. 114–125, 130 Stat. (November 4, 2009) (order).

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sawblades exported through either one and, if appropriate, new factual Scope of the Order of the two channels are covered information and verification. For a complete description of the merchandise subject to the antidumping Specifically, Commerce will notify scope of the order, see the Appendix to duty order: parties on the segment-specific service this notice. Category 1: Core and segments both list for this segment of the proceeding of sourced from China; joined in Canada. a schedule for comments. In addition, Filing Requirements Category 2: Core sourced from China Commerce may request factual All submissions to Commerce must be and segments not sourced from China; information from any party to assist in filed electronically using ACCESS.6 An joined in Canada. making its determination, including electronically filed document must be Category 3: Segments sourced from soliciting information directly from received successfully in its entirety by China and core not sourced from Protech and Gogo to conduct our the time and date it is due. Documents China; joined in Canada. analysis, and may verify submissions of exempted from the electronic On February 20, 2020, Commerce factual information, if Commerce submission requirements must be filed published the affirmative final determines that such verification is manually (i.e., in paper form) with determination of the anti-circumvention appropriate. Commerce intends to issue Enforcement and Compliance’s APO/ inquiry on the antidumping duty order a final determination within 120 days of Dockets Unit, Room 18022, U.S. on diamond sawblades from China.3 In the publication of this notice (this Department of Commerce, 1401 the Final Determination, Commerce deadline may be extended if it is not Constitution Avenue NW, Washington, found that diamond sawblades practicable to complete the final DC 20230, and stamped with the date of produced in Canada by Protech with determination within 120 days) and will receipt by the applicable deadlines. cores and segments produced in China promptly transmit its final Letters of Appearance and APO and subsequently exported from Canada determination to CBP, in accordance by Protech to the United States were with section 517(b)(4)(B) of the Act. Interested parties that wish to circumventing the antidumping duty Commerce may consider conducting a participate in this segment of the order.4 The Final Determination covers separate anti-circumvention inquiry proceeding and be added to the public Category 1 exported through Channel 1. regarding the merchandise described in service list for this segment of the CBP’s covered merchandise referral, proceeding must file a letter of Notification to Interested Parties with the exception of the merchandise appearance in accordance with 19 CFR In accordance with 19 CFR already determined to have been 351.103(d)(1), with one exception: The 351.225(b), Commerce is hereby circumventing the order in the Final parties publicly identified by CBP in the notifying interested parties that it has Determination, if parties submit the covered merchandise referral received the covered merchandise necessary information addressing the (referenced above) are not required to referral referenced above and will begin criteria for an anti-circumvention submit a letter of appearance, and will a new segment of the proceeding by inquiry, in accordance with section 781 be added to the public service list for initiating a scope inquiry concerning the of the Act. Interested parties are this segment of the proceeding by merchandise covered under all requested to file such comments and Commerce. categories and exported through either information onto the record of this Within 24 hours of this notice being one of the two channels, with the proceeding within 30 days of the signed, Commerce placed a request for exception of Category 1 exported publication of this notice in the Federal an APO segment on the record 7 and through Channel 1, which is covered by Register. established an APO segment for use in the Final Determination. Based on our Interested parties that wish to this proceeding. Commerce intends to finding in the scope inquiry, we intend participate in the scope inquiry being place the business proprietary versions to notify CBP as to whether the initiated now, and receive notice of the of the documents contained in the merchandise subject to the referral is final determination, must submit their covered merchandise referral on the covered merchandise within the letters of appearance as discussed record of this proceeding in ACCESS meaning of section 517(a)(3) of the Act. below. Further, any party desiring within five days of publication of this We will inform CBP of our Final access to business proprietary notice. Determination which covers information in this segment of the Interested parties must submit merchandise under Category 1 exported proceeding must file an application for applications for disclosure under the through Channel 1. access to business proprietary APO in accordance with the procedures Additionally, Commerce intends to information under administrative outlined in Commerce’s regulations at provide interested parties with the protective order (APO), as discussed 19 CFR 351.305. Those procedures opportunity to participate in this below. apply to this segment of the proceeding, segment of the proceeding, including with one exception: APO applicants Finally, we note that scope inquiries through the submission of comments, representing the parties that have been initiated in response to a CBP covered 3 See Diamond Sawblades and Parts Thereof from merchandise referral are a new type of 6 See Antidumping and Countervailing Duty 5 the People’s Republic of China: Final Determination proceeding at Commerce. Commerce Proceedings: Electronic Filing Procedures; of Anti-Circumvention Inquiry, 85 FR 9737 intends to develop its practice and Administrative Protective Order Procedures, 76 FR (February 20, 2020) (Final Determination). procedures in this area as it gains more 39263 (July 6, 2011), as amended in Enforcement 4 Id., 85 FR at 9738–39. As explained in the Final experience. and Compliance; Change of Electronic Filing Determination, because Protech failed to cooperate System Name, 79 FR 69046 (November 20, 2014), with Commerce’s request for information in that for details of Commerce’s electronic filing anti-circumvention inquiry, Commerce found that 5 See Certain Hardwood Plywood from the requirements. Information on help using ACCESS Protech is not currently able to identify diamond People’s Republic of China: Notice of Covered can be found at https://access.trade.gov/help.aspx sawblades produced with non-Chinese origin cores Merchandise Referral and Initiation of Scope and a handbook can be found at https:// and/or non-Chinese origin segments. Accordingly, Inquiry, 85 FR 3024 (January 17, 2020); Diamond access.trade.gov/help/Handbook_on_Electronic_ Commerce did not implement a certification Sawblades and Parts Thereof from the People’s Filing_Procedures.pdf. process for Protech and is requiring cash deposits Republic of China: Notice of Covered Merchandise 7 See Memorandum, ‘‘Diamond Sawblades and on all entries of diamond sawblades produced and Referral and Initiation of Scope Inquiry, 85 FR 4947 Parts Thereof from the People’s Republic of China: exported by Protech in Canada. Id., 85 FR at 9739. (January 28, 2020). APO Request,’’ dated concurrently with this notice.

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identified by CBP as an importer in the requests by CBP, Commerce included to the November 14, 2019, Commerce covered merchandise referral customs case reference file the following published the Amended Preliminary (referenced above) are exempt from the HTSUS classification numbers: 8202.39.0040 Determination.2 The petitioner is the additional filing requirements for and 8202.39.0070 on January 22, 2015, and American Kitchen Cabinet Alliance. The 6804.21.0010 and 6804.21.0080 on January importers pursuant to 19 CFR 26, 2015.9 mandatory respondents in this 351.305(d). The tariff classification is provided for investigation are The Ancientree Dated: February 24, 2020. convenience and customs purposes; Cabinet Co., Ltd. (Ancientree), Dalian Jeffrey I. Kessler, however, the written description of the scope Meisen Woodworking Co., Ltd. of the order is dispositive. Assistant Secretary for Enforcement and (Meisen), and Rizhao Foremost Compliance. [FR Doc. 2020–04118 Filed 2–27–20; 8:45 am] Woodwork Manufacturing Co., Ltd. BILLING CODE 3510–DS–P (Foremost). Appendix A summary of the events that Scope of the Order occurred since Commerce published the The products covered by the order are all DEPARTMENT OF COMMERCE Amended Preliminary Determination, as finished circular sawblades, whether slotted International Trade Administration well as a full discussion of the issues or not, with a working part that is comprised raised by parties for this final of a diamond segment or segments, and parts [A–570–106] determination, are discussed in the thereof, regardless of specification or size, Issues and Decision Memorandum.3 The except as specifically excluded below. Wooden Cabinets and Vanities and Within the scope of the order are semi- Issues and Decision Memorandum is a finished diamond sawblades, including Components Thereof From the public document and is on file diamond sawblade cores and diamond People’s Republic of China: Final electronically via Enforcement and sawblade segments. Diamond sawblade cores Affirmative Determination of Sales at Compliance’s Antidumping and are circular steel plates, whether or not Less Than Fair Value Countervailing Duty Centralized attached to non-steel plates, with slots. Diamond sawblade cores are manufactured AGENCY: Enforcement and Compliance, Electronic Service System (ACCESS). principally, but not exclusively, from alloy International Trade Administration, ACCESS is available to registered users steel. A diamond sawblade segment consists Department of Commerce. at http://access.trade.gov, and to all of a mixture of diamonds (whether natural or SUMMARY: The Department of Commerce parties in the Central Records Unit, synthetic, and regardless of the quantity of Room B8024 of the main Commerce diamonds) and metal powders (including, (Commerce) determines that wooden cabinets and vanities and components building. In addition, a complete but not limited to, iron, cobalt, nickel, version of the Issues and Decision tungsten carbide) that are formed together thereof (wooden cabinets and vanities) into a solid shape (from generally, but not from the People’s Republic of China Memorandum is available at http:// limited to, a heating and pressing process). (China) are being, or are likely to be, enforcement.trade.gov/frn/index.html. Sawblades with diamonds directly sold in the United States at less than fair The signed and electronic versions of attached to the core with a resin or value (LTFV). The final weighted- the Issues and Decision Memorandum electroplated bond, which thereby do not average dumping margins are listed in are identical in content. contain a diamond segment, are not included within the scope of the order. Diamond the ‘‘Final Determination Margins’’ Period of Investigation sawblades and/or sawblade cores with a section of this notice. The period of investigation is July 1, thickness of less than 0.025 inches, or with DATES: Applicable February 28, 2020. a thickness greater than 1.1 inches, are 2018 through December 31, 2018. excluded from the scope of the order. FOR FURTHER INFORMATION CONTACT: Circular steel plates that have a cutting edge Kabir Archuletta, Rachel Greenberg, or Scope of the Investigation of non-diamond material, such as external Eliza Siordia, AD/CVD Operations, teeth that protrude from the outer diameter Office V, Enforcement and Compliance, The scope of the investigation covers of the plate, whether or not finished, are International Trade Administration, wooden cabinets and vanities from excluded from the scope of the order. U.S. Department of Commerce, 1401 China. For a complete description of the Diamond sawblade cores with a Rockwell C Constitution Avenue NW, Washington, scope of the investigation, see Appendix hardness of less than 25 are excluded from I. the scope of the order. Diamond sawblades DC 20230; telephone: (202) 482–2593, and/or diamond segment(s) with diamonds (202) 482–0652, or (202) 482–3878, Scope Comments that predominantly have a mesh size number respectively. greater than 240 (such as 250 or 260) are SUPPLEMENTARY INFORMATION: On October 2, 2019, Commerce issued excluded from the scope of the order. a Preliminary Scope Decision Merchandise subject to the order is Background typically imported under heading On October 9, 2019, Commerce Wooden Cabinets and Vanities and Components 8202.39.00.00 of the Harmonized Tariff Thereof from the People’s Republic of China: Schedule of the United States (HTSUS). published the Preliminary Preliminary Affirmative Determination of Sales at 1 When packaged together as a set for retail Determination in this investigation. On Less than Fair Value, Postponement of Final sale with an item that is separately classified Determination and Extension of Provisional under headings 8202 to 8205 of the HTSUS, 9 See Diamond Sawblades and Parts Thereof from Measures, 84 FR 56420 (October 22, 2019). diamond sawblades or parts thereof may be the People’s Republic of China: Final Results of 2 See Wooden Cabinets and Vanities and imported under heading 8206.00.00.00 of the Antidumping Duty Administrative Review; 2016– Components Thereof from the People’s Republic of HTSUS. On October 11, 2011, Commerce 2017, 83 FR 64331 (December 14, 2018) and China: Amended Preliminary Determination of included the 6804.21.00.00 HTSUS accompanying Issues and Decision Memorandum at Sales at Less Than Fair Value, 84 FR 61875 classification number to the customs case 3. (November 14, 2019) (Amended Preliminary 1 See Wooden Cabinets and Vanities and Determination). reference file, pursuant to a request by U.S. 3 8 Components Thereof from the People’s Republic of See Memorandum, ‘‘Wooden Cabinets and Customs and Border Protection. Pursuant to China: Preliminary Affirmative Determination of Vanities and Components Thereof from the People’s Sales at Less Than Fair Value, Postponement of Republic of China: Issues and Decision 8 See Diamond Sawblades and Parts Thereof from Final Determination and Extension of Provisional Memorandum for the Final Affirmative the Republic of Korea: Preliminary Results of Measures, 84 FR 54106 (October 9, 2019) Determination of Sales at Less Than Fair Value,’’ Antidumping Duty Administrative Review, 76 FR (Preliminary Determination), and accompanying dated concurrently with, and hereby adopted by, 76128 (December 6, 2011). Preliminary Decision Memorandum, as corrected by this notice (Issues and Decision Memorandum).

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Memorandum.4 Several interested Commerce did not verify the determination, we are also assigning the parties submitted case and rebuttal information submitted by Meisen.7 China-wide entity, as AFA, the rate of briefs concerning the scope of this 262.18 percent, which is the highest Changes Since the Preliminary investigation. For a summary of the petition rate.13 Determination product coverage comments and Separate Rates rebuttal comments submitted to the Based on our review and analysis of record for this final determination, and the comments received from parties, Generally, Commerce looks to section accompanying discussion and analysis minor corrections presented at 735(c)(5)(A) of the Act, which provides of all comments timely received, see the verification, and our verification instructions for calculating the all- Final Scope Decision Memorandum.5 findings, we have made certain changes others rate in a market economy Based on the comments received, to the margin calculations for antidumping duty (AD) investigation, Commerce is not modifying the scope Ancientree and Foremost. For a for guidance when calculating the rate language as it appeared in the discussion of these changes, see the for separate rate respondents that we Preliminary Determination. The scope ‘‘Changes Since the Preliminary did not individually examine in a non- in Appendix I remains unchanged from Determination’’ section of the Issues and market economy AD investigation. that which appeared in the Preliminary Decision Memorandum and the Final Section 735(c)(5)(A) of the Act states 8 Determination. Calculation Memoranda. that the estimated all-others rate shall be Adverse Facts Available an amount equal to the weighted Analysis of Comments Received average of the estimated weighted All issues raised in the case and In determining Meisen’s dumping average dumping margins established rebuttal briefs by parties in this margin, we find that the application of for exporters and producers investigation are discussed in the Issues facts available with an adverse inference individually investigated, excluding any is appropriate under sections and Decision Memorandum. A list of zero and de minimis margins, and any 776(a)(2)(A) through (C) and 776(b) of the issues that parties raised in the margins determined entirely on the the Act as discussed in the Issues and Issues and Decision Memorandum is basis of facts available.14 Decision Memorandum.9 Therefore, as attached to this notice as Appendix II. In this final determination, Commerce adverse facts available (AFA), we have has calculated rates for Ancientree and Verification assigned Meisen the rate of 262.18 Foremost that are not zero, de minimis, percent, which is the highest petition As provided in section 782(i) of the or based entirely on facts available. rate.10 Tariff Act of 1930, as amended (the Act), Thus, looking to section 735(c)(5)(A) of Commerce conducted verification of the For the reasons explained in the Preliminary Determination, we continue the Act for guidance, and consistent information submitted by Ancientree with our practice,15 based on publicly and Foremost for use in the final to find that the use of AFA, pursuant to sections 776(a) and (b) of the Act, is ranged sales data, we are assigning the determination. We used standard weighted-average of these mandatory verification procedures, including an warranted in determining the rate for 11 respondents’ rates as the rate for non- examination of relevant accounting the China-wide entity. In selecting the AFA rate for the China-wide entity, individually examined companies that records and original source documents have qualified for a separate rate, other provided by the respondents.6 Commerce’s practice is to select a rate that is sufficiently adverse to ensure that than Meisen, whose rate is based entirely on section 776 of the Act as 4 the uncooperative party does not obtain See Memorandum, ‘‘Certain Wooden Cabinets discussed above. and Vanities and Components Thereof from the a more favorable result by failing to People’s Republic of China: Scope Comments cooperate than if it had fully Final Determination Decision Memorandum for the Preliminary cooperated.12 For the final Determinations,’’ dated October 2, 2019 The final estimated weighted-average (Preliminary Scope Decision Memorandum). dumping margins are as follows: 5 See Memorandum, ‘‘Wooden Cabinets and Components Thereof from the People’s Republic of Vanities and Components Thereof from the People’s China,’’ dated January 10, 2020. 7 Republic of China: Final Scope Comments Decision See Commerce’s Letter, ‘‘Investigation of 2004), unchanged in Notice of Final Determination Memorandum,’’ dated concurrently with this notice Wooden Cabinets and Vanities and Components of Sales at Less Than Fair Value: Purified (Final Scope Decision Memorandum). Thereof from the People’s Republic of China: Carboxymethyl Cellulose from Finland, 70 FR Verification,’’ dated December 27, 2019. 6 See Memorandum, ‘‘Less-Than-Fair-Value 28279 (May 17, 2005). 8 Investigation of Wooden Cabinets and Vanities and See Memoranda, ‘‘Antidumping Duty 13 See Issues and Decision Memorandum at ‘‘Use Components Thereof from the People’s Republic of Investigation of Wooden Cabinets and Vanities and of Adverse Facts Available.’’ China: Verification of the Export Price Sales and Components Thereof from the People’s Republic of 14 See, e.g., Ball Bearings and Parts Thereof from Factors of Production Response of The Ancientree China: Final Analysis Memorandum for The France, Germany, Italy, Japan, and the United Cabinet Co., Ltd,’’ dated December 10, 2019; Ancientree Cabinet Co., Ltd.,’’ and ‘‘Antidumping Kingdom: Final Results of Antidumping Duty Memorandum, ‘‘Verification of the Responses of Duty Investigation of Wooden Cabinets and Vanities Administrative Reviews and Rescission of Reviews Foremost Worldwide Company Ltd. In the Less- and Components Thereof from the People’s in Part, 73 FR 52823, 52824 (September 11, 2008), Than-Fair-Value Investigation of Wooden Cabinets Republic of China: Final Analysis Memorandum for and accompanying Issues and Decision and Vanities and Components Thereof from the Rizhao Foremost Woodwork Manufacturing Memorandum at Comment 16. Company Ltd.,’’ both dated concurrently with this People’s Republic of China,’’ dated January 10, 15 See, e.g., Preliminary Determination of Sales at notice (collectively, Final Calculation Memoranda). 2020; Memorandum ‘‘Verification of the Responses Less Than Fair Value and Partial Affirmative 9 of Rizhao Foremost Woodwork Manufacturing Co. See Issues and Decision Memorandum at Determination of Critical Circumstances: Certain Ltd. in the Less-Than-Fair-Value Investigation of Comment 22. Polyester Staple Fiber from the People’s Republic of Wooden Cabinets and Vanities and Components 10 Id. China, 71 FR 77373, 77377 (December 26, 2006), Thereof from the People’s Republic of China,’’ 11 See Preliminary Determination, 84 FR at 54106. unchanged in Final Determination of Sales at Less dated January 10, 2020; and ‘‘Verification of the 12 See, e.g., Notice of Preliminary Determination Than Fair Value and Partial Affirmative Responses of Rizhao Foremost Woodwork of Sales at Less Than Fair Value and Postponement Determination of Critical Circumstances: Certain Manufacturing Co. Ltd. in the Less-Than-Fair-Value of Final Determination: Purified Carboxymethyl Polyester Staple Fiber from the People’s Republic of Investigation of Wooden Cabinets and Vanities and Cellulose from Finland, 69 FR 77216 (December 27, China, 72 FR 19690 (April 19, 2007).

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Estimated Cash deposit weighted- rate Exporter Producer average (adjusted for dumping margin subsidy offsets) (percent) (percent)

The Ancientree Cabinet Co., Ltd ...... The Ancientree Cabinet Co., Ltd ...... 4.37 0.00 Dalian Meisen Woodworking Co., Ltd ...... Dalian Meisen Woodworking Co., Ltd ...... 262.18 251.64 Foremost Worldwide Company Limited ...... Rizhao Foremost Woodwork Manufacturing Com- 101.46 90.92 pany, Ltd. Foremost Worldwide Company Limited ...... Henan AiDiJia Furniture Co., Ltd ...... 101.46 90.92 Foremost Worldwide Company Limited ...... Suzhou Weiye Furniture Co., Ltd ...... 101.46 90.92 Foremost Worldwide Company Limited ...... Changsha Minwan Furniture Manufacturing Co., 101.46 90.92 Ltd. ANHUI JIANLIAN WOOD PRODUCTS CO., LTD ... ANHUI JIANLIAN WOOD PRODUCTS CO., LTD .. 48.50 37.96 Anhui Swanch Cabinetry Co., Ltd ...... Anhui Swanch Cabinetry Co., Ltd ...... 48.50 37.96 ANHUI XINYUANDA CUPBOARD CO., LTD ...... ANHUI XINYUANDA CUPBOARD CO., LTD ...... 48.50 37.96 Beijing Oulu Jinxin International Trade Co., Ltd ...... Beijing Oulu Jinxin International Trade Co., Ltd ...... 48.50 37.96 Boloni Smart Home Decor (Beijing) Co., LTD ...... Boloni Smart Home Decor (Beijing) Co., LTD ...... 48.50 37.96 BRENTRIDGE HOLDING CO., LTD ...... ZHOUSHAN FOR-STRONG WOOD CO., LTD ...... 48.50 37.96 Caoxian Brothers Hengxin Wood Industry Co., Ltd Caoxian Brothers Hengxin Wood Industry Co., Ltd 48.50 37.96 Changyi Zhengheng Woodwork Co., Ltd ...... Changyi Zhengheng Woodwork Co., Ltd ...... 48.50 37.96 CHAOZHOU YAFENG BATHROOM EQUIPMENT CHAOZHOU YAFENG BATHROOM EQUIPMENT 48.50 37.96 CO., LTD. CO., LTD. China Friend Limited ...... Dongming Sanxin Wood Industry Co., Ltd ...... 48.50 37.96 Dalian Jiaye Wood Products Co., Ltd ...... Dalian Jiaye Wood Products Co., Ltd ...... 48.50 37.96 Dalian Xingsen Wooden Products Co., Ltd ...... Dalian Xingsen Wooden Products Co., Ltd ...... 48.50 37.96 Dandong City Anmin Wooden Products Group Co., Dandong City Anmin Wooden Products Group Co., 48.50 37.96 Ltd. Ltd. Dandong Laroyal Cabinetry Co., Ltd ...... Dandong Laroyal Cabinetry Co., Ltd ...... 48.50 37.96 DEHK LIMITED ...... DIAM DISPLAY (CHINA) CO., LTD ...... 48.50 37.96 Deqing China-Africa Foreign Trade Port Co., Ltd .... Suqian Welcomewood Products Co., Ltd ...... 48.50 37.96 Dewell Wooden Products Haian Co., Ltd ...... Dewell Wooden Products Haian Co., Ltd ...... 48.50 37.96 Dongguan American Parts Supplier Co., Ltd ...... Dongguan American Parts Supplier Co., Ltd ...... 48.50 37.96 Dongguan Niusaiqu Wood Industry Co., Ltd ...... Dongguan Niusaiqu Wood Industry Co., Ltd ...... 48.50 37.96 Dongguan Unique Life Furniture Co., Ltd. also Dongguan Unique Life Furniture Co., Ltd ...... 48.50 37.96 known as Unique Life Furniture Co., Ltd (trade name). Dorbest Ltd ...... Rui Feng Woodwork (Dongguan) Co., Ltd ...... 48.50 37.96 EZIDONE DISPLAY CORPORATION LTD ...... EZIDONE DISPLAY CORPORATION LTD ...... 48.50 37.96 EZIDONE DISPLAY CORPORATION LTD ...... EZIDONE DISPLAY INC ...... 48.50 37.96 Forcer International Limited ...... QUFU XINYU FURNITURE CO., LTD ...... 48.50 37.96 Forcer International Limited ...... LINYI RUNKANG CABINET CO., LTD ...... 48.50 37.96 Forcer International Limited ...... BEIJING OULU JINXIN INTERNATIONAL TRADE 48.50 37.96 CO., LTD. Foshan City Shunde District Refined Furniture Co., Foshan City Shunde District Refined Furniture Co., 48.50 37.96 Ltd. also known as Refined Furniture Co., Ltd. Ltd. also known as Refined Furniture Co., Ltd. (trade name). (trade name). Foshan Liansu building material Trading Co., Ltd .... Guangdong Lesso Home Furnishing Co., Ltd ...... 48.50 37.96 FOSHAN NANHAI HONGZHOU WOOD CO., LTD FOSHAN NANHAI HONGZHOU WOOD CO., LTD 48.50 37.96 Foshan Shunde Yajiasi Kitchen Cabinet Co., Ltd .... Foshan Shunde Yajiasi Kitchen Cabinet Co., Ltd ... 48.50 37.96 FOSHAN SOURCEVER (CN) CO., LIMITED ...... FOSHAN DIBIAO BATHROOM CO., LTD ...... 48.50 37.96 FOSHAN SOURCEVER (CN) CO., LIMITED ...... FOSHAN MK HOME FURISHING CO., LTD ...... 48.50 37.96 FOSHAN SOURCEVER (CN) CO., LIMITED ...... PROUDER INDUSTRIAL LIMITED ...... 48.50 37.96 FOSHAN SOURCEVER (CN) CO., LIMITED ...... FOSHAN DEMAX SANITARY WARE CO., LTD ..... 48.50 37.96 FOSHAN SOURCEVER (CN) CO., LIMITED ...... HEBEI SHUANGLI FURNITURE CO., LTD ...... 48.50 37.96 FOSHAN SOURCEVER (CN) CO., LIMITED ...... ZHANGZHOU GUOHUI INDUSTRIAL & TRADE 48.50 37.96 CO., LTD. FOSHAN SOURCEVER (CN) CO., LIMITED ...... SHOUGUANG FUSHI WOOD CO., LTD ...... 48.50 37.96 FOSHAN SOURCEVER (CN) CO., LIMITED ...... Foshan Virtu Bathroom Furniture Ltd ...... 48.50 37.96 FOSHAN SOURCEVER (CN) CO., LIMITED ...... Guangdong Purefine Kitchen & Bath Technology 48.50 37.96 Co., LTD. FOSHAN SOURCEVER (CN) CO., LIMITED ...... KAIPING HONGITARYWARE TECHNOLOGY LTD 48.50 37.96 Foshan Sourcever Company Limited ...... FOSHAN DIBIAO BATHROOM CO., LTD ...... 48.50 37.96 Foshan Sourcever Company Limited ...... FOSHAN MK HOME FURISHING CO., LTD ...... 48.50 37.96 Foshan Sourcever Company Limited ...... PROUDER INDUSTRIAL LIMITED ...... 48.50 37.96 Foshan Sourcever Company Limited ...... FOSHAN DEMAX SANITARY WARE CO., LTD ..... 48.50 37.96 Foshan Sourcever Company Limited ...... HEBEI SHUANGLI FURNITURE CO., LTD ...... 48.50 37.96 Foshan Sourcever Company Limited ...... ZHANGZHOU GUOHUI INDUSTRIAL & TRADE 48.50 37.96 CO., LTD. Foshan Sourcever Company Limited ...... SHOUGUANG FUSHI WOOD CO., LTD ...... 48.50 37.96 Foshan Sourcever Company Limited ...... Foshan Virtu Bathroom Furniture Ltd ...... 48.50 37.96 Foshan Sourcever Company Limited ...... Guangdong Purefine Kitchen & Bath Technology 48.50 37.96 Co., LTD. Foshan Sourcever Company Limited ...... KAIPING HONGITARYWARE TECHNOLOGY LTD 48.50 37.96 Foshan Xinzhongwei Economic & Trade Co., Ltd .... Foshan Lihong Furniture Sanitary Ware Co., Ltd ... 48.50 37.96

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Estimated Cash deposit weighted- rate Exporter Producer average (adjusted for dumping margin subsidy offsets) (percent) (percent)

FUJIAN DUSHI WOODEN INDUSTRY CO., LTD ... FUJIAN DUSHI WOODEN INDUSTRY CO., LTD .. 48.50 37.96 FUJIAN LEIFENG CABINETRY CO., LTD ...... FUJIAN LEIFENG CABINETRY CO., LTD ...... 48.50 37.96 Fujian Panda Home Furnishing Co., Ltd ...... Fujian Panda Home Furnishing Co., Ltd ...... 48.50 37.96 Fujian Senyi Kitchen Cabinet Co., Ltd ...... Fujian Senyi Kitchen Cabinet Co., Ltd ...... 48.50 37.96 Fuzhou Biquan Trading Co., Ltd ...... Biquan (Fujian) Group Co., Ltd ...... 48.50 37.96 Fuzhou CBM Import & Export Co., Ltd ...... Fuzhou CBM Import & Export Co., Ltd ...... 48.50 37.96 Fuzhou Desource Home De´cor Co., Ltd ...... Fuzhou Desource Home Decor Co., Ltd ...... 48.50 37.96 FUZHOU LIMIN STONE PRODUCTS CO., LTD ..... Fuzhou YST Cabinet Co., Ltd ...... 48.50 37.96 FUZHOU MASTONE IMPORT & EXPORT CO., Fuzhou Yuansentai Cabinet Co., Ltd ...... 48.50 37.96 LTD. Fuzhou Minlian Wood Industry Co., Ltd ...... Fuzhou Minlian Wood Industry Co., Ltd ...... 48.50 37.96 FUZHOU SUNRISING HOME DECO MANUFAC- FUZHOU SUNRISING HOME DECO MANUFAC- 48.50 37.96 TURING CO., LTD. TURING CO., LTD. FUZHOU XINRUI CABINET CO., LTD ...... FUZHOU XINRUI CABINET CO., LTD ...... 48.50 37.96 Gaomi City Haitian Wooden Ware Co., Ltd ...... Gaomi City Haitian Wooden Ware Co., Ltd ...... 48.50 37.96 GAOMI HONGTAI HOME FURNITURE CO., LTD .. GAOMI HONGTAI HOME FURNITURE CO., LTD 48.50 37.96 Guangde Bozhong Trade Company, Ltd ...... Guangde Bozhong Trade Company, Ltd ...... 48.50 37.96 GUANGDONG CACAR KITCHEN TECHNOLOGY GUANGDONG CACAR KITCHEN TECHNOLOGY 48.50 37.96 CO., LTD. CO., LTD. Guangdong G-Top Import and Export Co., Ltd ...... Foshan Shunde Rongao Furniture CO., LTD ...... 48.50 37.96 Guangzhou Nuolande Import and Export Co., Ltd ... Guangzhou Nuolande Import and Export Co., Ltd .. 48.50 37.96 Haiyang Kunlun Wood Co., Ltd ...... Haiyang Kunlun Wood Co., Ltd ...... 48.50 37.96 Hangzhou Bestcraft Sanitary Equipments Co., Ltd .. Hangzhou Bestcraft Sanitary Equipments Co., Ltd 48.50 37.96 Hangzhou Entop Houseware Co., Ltd ...... Jinhua Aonika Sanitary Ware Co., Ltd ...... 48.50 37.96 Hangzhou Entop Houseware Co., Ltd ...... Hangzhou Bestcraft Sanitary Equipments Co., Ltd 48.50 37.96 Hangzhou Hansen Sanitary Ware Co., Ltd ...... Hangzhou Hansen Sanitary Ware Co., Ltd ...... 48.50 37.96 Hangzhou Hoca Kitchen & Bath Products Co., Ltd .. Hangzhou Hoca Kitchen & Bath Products Co., Ltd 48.50 37.96 Hangzhou Home Dee Sanitary Ware Co., Ltd ...... Hangzhou Home Dee Sanitary Ware Co., Ltd ...... 48.50 37.96 Hangzhou Oulang Bathroom Equipment Co., Ltd .... Hangzhou Oulang Bathroom Equipment Co., Ltd ... 48.50 37.96 Hangzhou Royo Import & Export Co., Ltd ...... Jinhua Aonika Sanitary Ware Co., Ltd ...... 48.50 37.96 Hangzhou Royo Import & Export Co., Ltd ...... Hangzhou Yuxin Sanitary Ware Co., Ltd ...... 48.50 37.96 Hangzhou Royo Import & Export Co., Ltd ...... Hangzhou Fuyang Beautiful Sanitary Ware Co., Ltd 48.50 37.96 Hangzhou Sunlight Sanitary Co., Ltd ...... Hangzhou Sunlight Sanitary Co., Ltd ...... 48.50 37.96 Hangzhou Weinuo Sanitary Ware Co., Ltd ...... PINGHU AIPA SANITARY WARE CO., LTD ...... 48.50 37.96 Hangzhou Weinuo Sanitary Ware Co., Ltd ...... HANGZHOU QILONG SANITARY WARE CO., 48.50 37.96 LTD. Hangzhou Xinhai Sanitary Ware Co., Ltd ...... Hangzhou Xinhai Sanitary Ware Co., Ltd ...... 48.50 37.96 Hangzhou Yewlong Import & Export Co., Ltd ...... Hangzhou Yewlong Industry Co., Ltd ...... 48.50 37.96 Hangzhou Zhuangyu Import & Export Co., Ltd ...... Hangzhou Zhuangyu Import & Export Co., Ltd ...... 48.50 37.96 Henan Aotin Home Furnishing Co., Ltd ...... Henan Aotin Home Furnishing Co., Ltd ...... 48.50 37.96 Heyond Cabinet Co., Ltd ...... Heyond Cabinet Co., Ltd ...... 48.50 37.96 Homestar Corporation ...... Homestar Corporation ...... 48.50 37.96 HONG KONG JIAN CHENG TRADING CO., LIM- ZHONGSHAN YAYUE FURNITURE CO., LTD ...... 48.50 37.96 ITED. Xiamen Honglei Imp. & Exp. Co., Ltd. also known Changtai Guanjia Industry & Trade Company Co., 48.50 37.96 as Honglei (Xiamen) Stone Co., Ltd. Ltd. Xiamen Honglei Imp. & Exp. Co., Ltd. also known Zhangzhou Huihua Industry and Trade Co., Ltd ..... 48.50 37.96 as Honglei (Xiamen) Stone Co., Ltd. Xiamen Honglei Imp. & Exp. Co., Ltd. also known Fujian Xinanlong Wood Industry Co., Ltd ...... 48.50 37.96 as Honglei (Xiamen) Stone Co., Ltd. Honsoar New Building Material Co., Ltd ...... Shandong Honsoar Cabinet Materials Co., Ltd ...... 48.50 37.96 Hua Yin Trading Development Co., Ltd of Jiangmen Jianfa Wooden Co., Ltd ...... 48.50 37.96 City. Hua Yin Trading Development Co., Ltd of Jiangmen Heshan Yingmei Cabinets Co., Ltd ...... 48.50 37.96 City. Hua Yin Trading Development Co., Ltd of Jiangmen Hesha Feiqiu Cabinet Co., Ltd ...... 48.50 37.96 City. Huimin Hanlong Furniture Co., Ltd ...... Huimin Hanlong Furniture Co., Ltd ...... 48.50 37.96 HUISEN FURNITURE (LONG NAN) CO., LTD. also HUISEN FURNITURE (LONG NAN) CO., LTD. 48.50 37.96 known as HUISEN FURNITURE (LONGNAN) also known as HUISEN FURNITURE CO., LTD. (LONGNAN) CO., LTD. HUIZHOU MANDARIN FURNITURE CO., LTD ...... HUIZHOU MANDARIN FURNITURE CO., LTD ...... 48.50 37.96 Jiang Su Rongxin Cabinets Ltd ...... Jiang Su Rongxin Cabinets Ltd ...... 48.50 37.96 Jiangmen Kinwai Furniture Decoration Co., Ltd ...... Jiangmen Kinwai Furniture Decoration Co., Ltd ...... 48.50 37.96 Jiangmen Kinwai International Furniture Co., Ltd .... Jiangmen Kinwai International Furniture Co., Ltd ... 48.50 37.96 Jiangsu Beichen Wood Co., Ltd ...... Jiangsu Beichen Wood Co., Ltd ...... 48.50 37.96 Jiangsu Meijun Intelligent Home Co., Ltd ...... Jiangsu Meijun Intelligent Home Co., Ltd ...... 48.50 37.96 Jiangsu Pusite Furniture Co., Ltd ...... Jiangsu Pusite Furniture Co., Ltd ...... 48.50 37.96 Jiangsu Roc Furniture Industrial Co., Ltd ...... Jiangsu Roc Furniture Industrial Co., Ltd ...... 48.50 37.96 JIANGSU SUNWELL CABINETRY CO., LTD ...... JIANGSU SUNWELL CABINETRY CO., LTD ...... 48.50 37.96

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Estimated Cash deposit weighted- rate Exporter Producer average (adjusted for dumping margin subsidy offsets) (percent) (percent)

JIANGSU WEISEN HOUSEWARE CO., LTD ...... JIANGSU WEISEN HOUSEWARE CO., LTD ...... 48.50 37.96 Jiangsu Xiangsheng Bedtime Furniture Co., Ltd ...... Jiangsu Xiangsheng Bedtime Furniture Co., Ltd ..... 48.50 37.96 Jiayuan (Xiamen) Industrial Co., Ltd ...... Jiayuan (Xiamen) Industrial Co., Ltd ...... 48.50 37.96 JINJIANG PERFECT GENERATION IMP. & EXP. Homebi Technology Co., LTD ...... 48.50 37.96 CO., LTD. King’s Group Furniture (Enterprises) Co., Ltd ...... Zhongshan King’s Group Furniture (ENTER- 48.50 37.96 PRISES) Co., Ltd. KM Cabinetry Co., Limited ...... Zhongshan KM Cabinetry Co., Ltd ...... 48.50 37.96 Kunshan Baiyulan Furniture Co., Ltd ...... Kunshan Baiyulan Furniture Co., Ltd ...... 48.50 37.96 Kunshan Home Right Trade Corporation ...... Kunshan Fangs Furniture Co., Ltd ...... 48.50 37.96 LIANYUNGANG SUN RISE TECHNOLOGY CO., LIANYUNGANG SUN RISE TECHNOLOGY CO., 48.50 37.96 LTD. LTD. Linshu Meibang Furniture Co., Ltd ...... Linshu Meibang Furniture Co., Ltd ...... 48.50 37.96 Linyi Bomei Furniture Co., Ltd ...... Linyi Bomei Furniture Co., Ltd ...... 48.50 37.96 LINYI BONN FLOORING MANUFACTURING CO., LINYI BONN FLOORING MANUFACTURING CO., 48.50 37.96 LTD. LTD. Linyi Kaipu Furniture Co., Ltd ...... Linyi Kaipu Furniture Co., Ltd ...... 48.50 37.96 Linyi Runkang Cabinet Co., Ltd ...... Linyi Runkang Cabinet Co., Ltd ...... 48.50 37.96 Liu Shu Woods Product (Huizhou) Co., Ltd also Liu Shu Woods Product (Huizhou) Co., Ltd ...... 48.50 37.96 known as Liu Shu Wood Products Co., Ltd (trade name) and Liu Shu Woods Product Co., Ltd (trade name). Master Door & Cabinet Co., Ltd ...... Master Door & Cabinet Co., Ltd ...... 48.50 37.96 Masterwork Cabinetry Company Limited ...... Shandong Compete Wood Co., Ltd ...... 48.50 37.96 Masterwork Cabinetry Company Limited ...... Linyi Zhongsheng Jiaju Zhuangshi Co., Ltd ...... 48.50 37.96 MEILIN WOOD PRODUCTS(DALIAN)CO., LTD ..... MEILIN WOOD PRODUCTS(DALIAN)CO., LTD .... 48.50 37.96 Minhou Beite Home Decor Co., Ltd ...... Minhou Beite Home Decor Co., Ltd ...... 48.50 37.96 MJB Supply (Dalian) Co., Ltd ...... Mulin City Bamiantong Linyeju Jisen Wood ...... 48.50 37.96 MOREWOOD CABINETRY CO., LTD ...... MOREWOOD CABINETRY CO., LTD ...... 48.50 37.96 Nanjing Kaylang Co., Ltd ...... Nanjing Kaylang Co., Ltd ...... 48.50 37.96 Nantong Aershin Cabinets Co., Ltd ...... Nantong Aershin Cabinets Co., Ltd ...... 48.50 37.96 Nantong Ouming Wood Co., ...... Nantong Ouming Wood Co., ...... 48.50 37.96 Ltd., also known as Nantong Ouming Wood Indus- Ltd., also known as Nantong Ouming Wood Indus- try Co., Ltd. try Co., Ltd. NANTONG YANGZI FURNITURE CO., LTD ...... NANTONG YANGZI FURNITURE CO., LTD ...... 48.50 37.96 NINGBO KINGWOOD FURNITURE CO., LTD ...... NINGBO KINGWOOD FURNITURE CO., LTD ...... 48.50 37.96 NINGBO ROVSA HOME FURNISHING CO., LTD .. NINGBO ROVSA HOME FURNISHING CO., LTD 48.50 37.96 Ojans Company Limited ...... Foshan Shunde Ojans Intelligent Sanitary Ware 48.50 37.96 Co., Ltd. Oppein Home Group Inc...... Oppein Home Group Inc...... 48.50 37.96 PIZHOU OUYME IMPORT & EXPORT TRADE XUZHOU OUMEC WOOD-BASED PANEL CO., 48.50 37.96 CO., LTD. LTD. Pneuma Asia Sourcing & Trading Co. LIMITED ...... Dalian Tianxin Home Product Co., Ltd ...... 48.50 37.96 Pneuma Asia Sourcing & Trading Co. LIMITED ...... Qingdao Haiyan Drouot Household Co., Ltd ...... 48.50 37.96 Putian Jinggong Furniture Co., Ltd ...... Putian Jinggong Furniture Co., Ltd ...... 48.50 37.96 Qingdao Coomex Sources Co., Ltd. also known as Nantong Aershin Cabinets Co., Ltd ...... 48.50 37.96 Coomex Sources Co., Ltd. Qingdao Haiyan Drouot Household Co., Ltd ...... Qingdao Haiyan Drouot Household Co., Ltd ...... 48.50 37.96 Qingdao Liangmu Hongye Co., Ltd ...... Qingdao Liangmu Hongye Co., Ltd ...... 48.50 37.96 Qingdao Liangmu Jinshan Woodwork Co., Ltd ...... Qingdao Liangmu Jinshan Woodwork Co., Ltd ...... 48.50 37.96 Qingdao Northriver Wooden Resource Industry & Lankao Sanqiang Wooden Products Co., Ltd ...... 48.50 37.96 Trading Co., Ltd. Qingdao Northriver Wooden Resource Industry & Linyi Lanshan Chengxinli Woods Co., Ltd ...... 48.50 37.96 Trading Co., Ltd. Qingdao Northriver Wooden Resource Industry & Shouguang Shi Qifeng Woods Co., Ltd ...... 48.50 37.96 Trading Co., Ltd. Qingdao Northriver Wooden Resource Industry & Linyi Mingzhu Woods Co., Ltd ...... 48.50 37.96 Trading Co., Ltd. Qingdao Northriver Wooden Resource Industry & Yichun Senhai Woods Industry Co., Ltd ...... 48.50 37.96 Trading Co., Ltd. Qingdao Northriver Wooden Resource Industry & Linyi Jinde Arts & Crafts Co., Ltd ...... 48.50 37.96 Trading Co., Ltd. Qingdao Northriver Wooden Resource Industry & Qingdao Ruirong Woods Co., Ltd ...... 48.50 37.96 Trading Co., Ltd. Qingdao Shousheng Industry Co., Ltd ...... Qingdao Shousheng Industry Co., Ltd ...... 48.50 37.96 Qingdao Yimei Wood Work Co., Ltd ...... Qingdao Yimei Wood Work Co., Ltd ...... 48.50 37.96 QINGDAOHONGXINCHENGDA WOOD INDUS- QINGDAOHONGXINCHENGDA WOOD INDUS- 48.50 37.96 TRY CO., LTD. TRY CO., LTD. QUFU XINYU FURNITURE CO., LTD ...... QUFU XINYU FURNITURE CO., LTD ...... 48.50 37.96 Ronbow Hong Kong Limited ...... Wuxi Yusheng Kitchen-Bathroom ...... 48.50 37.96 Equipment Co., Ltd ......

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Estimated Cash deposit weighted- rate Exporter Producer average (adjusted for dumping margin subsidy offsets) (percent) (percent)

Sagarit Bathroom Manufacturer Limited ...... Shouguang Fushi Wood Co., Ltd ...... 48.50 37.96 Sagarit Bathroom Manufacturer Limited ...... Zhangzhou Guohui Industrial & Trade Co., Ltd ...... 48.50 37.96 Sagarit Bathroom Manufacturer Limited ...... Qingdao Runpeng Wood Industrial Co., Ltd ...... 48.50 37.96 Sankok Arts Co., Ltd ...... Sankok Arts Co., Ltd ...... 48.50 37.96 Senke Manufacturing Company ...... Qindao Yimei Wood Work Co., Ltd ...... 48.50 37.96 Senke Manufacturing Company ...... Linyi Kaipu Furniture Co., Ltd ...... 48.50 37.96 Senke Manufacturing Company ...... Shandon Honsoar Cabinetry Co., Ltd ...... 48.50 37.96 Senke Manufacturing Company ...... Huimin Hanlong Furniture Co, Ltd ...... 48.50 37.96 Shandong Cubic Alpha Timber Co., Ltd ...... Shandong Cubic Alpha Timber Co., Ltd ...... 48.50 37.96 Shandong Fusheng Wood Co., Ltd ...... Shandong Fusheng Wood Co., Ltd ...... 48.50 37.96 Shandong Huanmei Wood Co., Ltd ...... Shandong Huanmei Wood Co., Ltd ...... 48.50 37.96 SHANDONG JINGYAO HOME DECORATION SHANDONG JINGYAO HOME DECORATION 48.50 37.96 PRODUCTS CO., LTD. PRODUCTS CO., LTD. Shandong Longsen Woods Co., Ltd ...... Shandong Longsen Woods Co., Ltd ...... 48.50 37.96 Shandong Sanfortune Home and Furniture Co., Ltd Shandong Sanfortune Home and Furniture Co., Ltd 48.50 37.96 Shanghai Aiwood Home Supplies Co., Ltd ...... Jiangsu Gangxing Kitchen Cabinet Co., Ltd ...... 48.50 37.96 Shanghai Aiwood Home Supplies Co., Ltd ...... Shanghai Homebase SanSheng Household Prod- 48.50 37.96 uct Co., Ltd. Shanghai Baiyulan Furniture Co., Ltd ...... Kunshan Baiyulan Furniture Co., Ltd ...... 48.50 37.96 Shanghai Beautystar Cabinetry Co., Ltd ...... Jiangsu Sunwell Cabinetry Co., Ltd ...... 48.50 37.96 Shanghai Beautystar Cabinetry Co., Ltd ...... Nantong Jiegao Furniture Co., Ltd ...... 48.50 37.96 Shanghai Jiang Feng Furniture Co., Ltd ...... Shanghai Jiang Feng Furniture Co., Ltd ...... 48.50 37.96 SHANGHAI LINE KING INTERNATIONAL TRAD- SHANGHAI YAZHI WOODEN INDUSTRY CO., 48.50 37.96 ING CO., LTD. LTD. Shanghai Mebo Industry Co. Ltd ...... Shanghai Mebo Industry Co. Ltd ...... 48.50 37.96 Shanghai Qingzhou Woodenware Co., Ltd ...... Shanghai Qingzhou Woodenware Co., Ltd ...... 48.50 37.96 Shanghai S&M Trade Co., Ltd ...... Anhui GeLun Wood Industry Co., Ltd ...... 48.50 37.96 Shanghai S&M Trade Co., Ltd ...... Ning’an City Jiude Wood Co., Ltd ...... 48.50 37.96 Shanghai S&M Trade Co., Ltd ...... Muling City Bamiantong Forestry Bureau Jisen 48.50 37.96 Wood Co., Ltd. Shanghai S&M Trade Co., Ltd ...... Dalian Ruiyu Mountain Wood Co., Ltd ...... 48.50 37.96 Shanghai S&M Trade Co., Ltd ...... Linshu Meibang Furniture Co., Ltd ...... 48.50 37.96 Shanghai S&M Trade Co., Ltd ...... Jiamusi City Quanhong Wood Industry Co., Ltd ..... 48.50 37.96 Shanghai S&M Trade Co., Ltd ...... Kunshan Fangs Furniture Co., Ltd ...... 48.50 37.96 Shanghai S&M Trade Co., Ltd ...... Dalian Chunyao Wood Industry Co., Ltd ...... 48.50 37.96 Shanghai S&M Trade Co., Ltd ...... Anhui Juxin Wood Industry Co., Ltd ...... 48.50 37.96 Shanghai Wang Lei Industries- Taicang Branch ...... Shanghai Wang Lei Industries- Taicang Branch ..... 48.50 37.96 Shanghai Wen Bo Industries Co. Ltd ...... Shanghai Yinbo Manufacturing Co. Ltd ...... 48.50 37.96 Shanghai Wen Bo Industries Co. Ltd ...... Dalian Jiaye Wood Products Co., Ltd ...... 48.50 37.96 Shanghai Wen Bo Industries Co. Ltd ...... Shanghai Baiyulan Furniture Co., Ltd ...... 48.50 37.96 Shanghai Xietong (Group) Co., Ltd ...... Nantong Jiegao Furniture Co., Ltd ...... 48.50 37.96 Shanghai Xietong (Group) Co., Ltd ...... Jiangsu Senwei Smart Home Co., Ltd ...... 48.50 37.96 SHANGHAI ZIFENG INTERNATIONAL TRADING SHANDONG GAINVAST WOODEN PRODUCTS 48.50 37.96 CO., LTD. CO., LTD. SHANGHAI ZIFENG INTERNATIONAL TRADING SHANGHAI WENYI WOODEN CO., LTD ...... 48.50 37.96 CO., LTD. SHANGHAI ZIFENG INTERNATIONAL TRADING NAN TONG DI LIN FURNITURE CO., LTD ...... 48.50 37.96 CO., LTD. SHANGHAI ZIFENG INTERNATIONAL TRADING JIANGSU YANAN WOODEN CO., LTD ...... 48.50 37.96 CO., LTD. Sheen Lead International Trading (Shanghai) Co., SHANGHAI RUIYING FURNITURE CO., LTD ...... 48.50 37.96 Ltd. Shouguang Fushi Wood Co., Ltd ...... Shouguang Fushi Wood Co., Ltd ...... 48.50 37.96 Shouguang Honsoar Imp. & Exp. Trading Co., Ltd .. Shandong Honsoar Cabinet Materials Co., Ltd ...... 48.50 37.96 SHOUGUANG JIAXIU WOOD CO., LTD ...... SHOUGUANG JIAXIU WOOD CO., LTD ...... 48.50 37.96 SHOUGUANG JIAXIU WOOD CO., LTD ...... SHOUGUANG JIAXIU WOOD CO., LTD ...... 48.50 37.96 Shouguang Jinxiangyuan Home Furnishing Co., Ltd Shouguang Jinxiangyuan Home Furnishing Co., 48.50 37.96 Ltd. Shouguang Sanyang Wood Industry Co., Ltd ...... Shouguang Sanyang Wood Industry Co., Ltd ...... 48.50 37.96 Silver Stone Group Co., Ltd ...... QINGDAO FAMILY CRAFTS CO., LTD ...... 48.50 37.96 Silver Stone Group Co., Ltd ...... QingDao XiuZhen Furniture Co., Ltd ...... 48.50 37.96 Smart Gift International ...... Anhui GeLun Wood Industry Co., Ltd ...... 48.50 37.96 Smart Gift International ...... Ning’an City Jiude Wood Co., Ltd ...... 48.50 37.96 Smart Gift International ...... Muling City Bamiantong Forestry Bureau Jisen 48.50 37.96 Wood Co., Ltd. Smart Gift International ...... Dalian Ruiyu Mountain Wood Co., Ltd ...... 48.50 37.96 Smart Gift International ...... Jiamusi City Quanhong Wood Industry Co., Ltd ..... 48.50 37.96 Smart Gift International ...... Dalian Chunyao Wood Industry Co., Ltd ...... 48.50 37.96 SUNCO TIMBER(KUNSHAN) CO., LTD ...... SUNCO TIMBER(KUNSHAN) CO., LTD ...... 48.50 37.96 Supree (Fujian) Wood Co., Ltd ...... Supree (Fujian) Wood Co., Ltd ...... 48.50 37.96

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Estimated Cash deposit weighted- rate Exporter Producer average (adjusted for dumping margin subsidy offsets) (percent) (percent)

Supree (Fujian) Construction Materials Co., Ltd ...... Supree (Fujian) Construction Materials Co., Ltd ..... 48.50 37.96 SUZHOU BAOCHENG INDUSTRIES CO., LTD ...... WALLBEYOND (SHUYANG) HOME DECOR CO., 48.50 37.96 LTD. Suzhou Five Cubic Wood Co., Ltd ...... Suzhou Geda Office Equipment Manufacturing Co., 48.50 37.96 Ltd. Suzhou Oriental Dragon Import and Export Co., Lingbi Xianghe Wood Co., Ltd ...... 48.50 37.96 Ltd. also known as Suzhou Oriental Dragon Im- port and Export Corp., Ltd. Tai Yuan Trading Co., Ltd also known as Heshan Heshan Yingmei Cabinet Co., Ltd ...... 48.50 37.96 Tai Yuan Trading Co., Ltd. Taishan Changfa Wood Industry Co., Ltd ...... Taishan Changfa Wood Industry Co., Ltd ...... 48.50 37.96 TAISHAN HONGXIANG TRADING CO., LTD ...... Chang He Xing Wood Manufacturer Co., Ltd ...... 48.50 37.96 TAISHAN HONGXIANG TRADING CO., LTD ...... Heshan Yingmei Cabinets Co., Ltd ...... 48.50 37.96 TAISHAN HONGXIANG TRADING CO., LTD ...... Heshan Feiqiu Cabinet Co., Ltd ...... 48.50 37.96 TAISHAN HONGXIANG TRADING CO., LTD ...... Yuanwang Wood Product Factory Dajiang Taishan 48.50 37.96 TAISHAN HONGXIANG TRADING CO., LTD ...... Can-Am Cabinet Ltd ...... 48.50 37.96 Taishan Hongzhou Cabinet Co., Ltd ...... Taishan Hongzhou Cabinet Co., Ltd ...... 48.50 37.96 Taishan Jiahong Trade Co., Ltd ...... Taishan Dajiang Town Dutou Wood Furniture Fac- 48.50 37.96 tory. Taishan Jiahong Trade Co., Ltd ...... Foshan Nanhai Jinwei Cabinet Furniture Co., Ltd .. 48.50 37.96 Taishan Jiahong Trade Co., Ltd ...... Taishan Huali Kitchen Cabinet Co., Ltd ...... 48.50 37.96 Taishan Jiahong Trade Co., Ltd ...... Taishan Empire Wood Co., Ltd ...... 48.50 37.96 TAISHAN OVERSEA TRADING COMPANY LTD ... TAISHAN GANHUI STONE KITCHEN CO., LTD ... 48.50 37.96 TAISHAN OVERSEA TRADING COMPANY LTD ... Can-Am Cabinet Ltd ...... 48.50 37.96 TAISHAN OVERSEA TRADING COMPANY LTD ... TAISHAN QUANMEI KITCHEN WARE CO., LTD .. 48.50 37.96 TAISHAN OVERSEA TRADING COMPANY LTD ... TAISHAN JIAFU CABINET CO., LTD ...... 48.50 37.96 TAISHAN OVERSEA TRADING COMPANY LTD ... TAISHAN DAJIANG TOWN DUTOU FURNITURE 48.50 37.96 FACTORY. TAISHAN OVERSEA TRADING COMPANY LTD ... Feiteng Kitchen Cabinets Taishan Corporation ...... 48.50 37.96 Taizhou Overseas Int’l Ltd ...... Zhejiang Royal Home Co., Ltd ...... 48.50 37.96 TANGSHAN BAOZHU FURNITURE CO., LTD ...... TANGSHAN BAOZHU FURNITURE CO., LTD ...... 48.50 37.96 Tech Forest Cabinetry Co., Ltd ...... Tech Forest Cabinetry Co., Ltd ...... 48.50 37.96 The Frame Manufacturing Co. Ltd ...... HUIZHOU DIWEIXIN JIATINGYONGPIN CO., LTD 48.50 37.96 Top Goal International Group Ltd. (Hong Kong) ...... Dongguan City Top Goal Furniture Co., Ltd ...... 48.50 37.96 Tradewinds Furniture Ltd ...... Tradewinds Furniture Ltd ...... 48.50 37.96 Wa Fok Art Craft Furniture (MACAO) Co., Ltd ...... Zhongshan Huafu Art Craft Furniture Co., Ltd ...... 48.50 37.96 Weifang Fuxing Wood Co., Ltd ...... Weifang Fuxing Wood Co., Ltd ...... 48.50 37.96 WEIFANG KITCHINET CORPORATION ...... WEIFANG KITCHINET CORPORATION ...... 48.50 37.96 Weifang Lan Gu Wood Industry Co., Ltd ...... Weifang Lan Gu Wood Industry Co., Ltd ...... 48.50 37.96 Weifang Master Wood Industry Co., Ltd ...... Weifang Master Wood Industry Co., Ltd ...... 48.50 37.96 Weifang Yuanlin Woodenware Co., Ltd ...... Weifang Yuanlin Woodenware Co., Ltd ...... 48.50 37.96 Weihai Adornus Cabinetry Manufacturing Co., Ltd .. Weihai Adornus Cabinetry Manufacturing Co., Ltd 48.50 37.96 WEIHAI JARLIN CABINETRY MANUFACTURE WEIHAI JARLIN CABINETRY MANUFACTURE 48.50 37.96 CO., LTD. CO., LTD. Wellday International Company Limited also known Wellday International Company Limited also known 48.50 37.96 as Dongguan Wellday Household Co., Ltd. as Dongguan Wellday Household Co., Ltd. Wenzhou Youbo Industrial Co., Ltd ...... Wenzhou Youbo Industrial Co., Ltd ...... 48.50 37.96 Wuxi Yushea Furniture Co., Ltd ...... Wuxi Yushea Furniture Co., Ltd ...... 48.50 37.96 Wuxi Yusheng Kitchen-Bathroom Equipment Co., Wuxi Yusheng Kitchen-Bathroom Equipment Co., 48.50 37.96 Ltd. Ltd. Xiamen Adler Cabinetry Co., Ltd ...... Xiamen Adler Cabinetry Co., Ltd ...... 48.50 37.96 XIAMEN GOFOR STONE CO., LTD ...... KAICHENG (FUJIAN) KITCHEN CABINET CO., 48.50 37.96 LTD. XIAMEN GOLDEN HUANAN IMP. & EXP. CO., Changtai Guanjia Industrial Co., Ltd ...... 48.50 37.96 LTD. XIAMEN GOLDENHOME CO., LTD ...... XIAMEN GOLDENHOME CO., LTD ...... 48.50 37.96 XIAMEN KAICHENG TRADING LIMITED COM- KAICHENG (FUJIAN) KITCHEN CABINET CO., 48.50 37.96 PANY. LTD. Xiamen Sintop Display Fixtures Co., Ltd ...... Xiamen Sintop Display Fixtures Co., Ltd ...... 48.50 37.96 XINGZHI INTERNATIONAL TRADE LIMITED ...... XUZHOU YIHE WOOD CO., LTD ...... 48.50 37.96 XUZHOU JIA LI DUO IMPORT & EXPORT CO., XUZHOU OUMEC WOOD-BASED PANEL CO., 48.50 37.96 LTD. LTD. XUZHOU YIHE WOOD CO., LTD ...... XUZHOU YIHE WOOD CO., LTD ...... 48.50 37.96 YEKALON INDUSTRY, INC ...... DONGGUAN TODA FURNITURE CO., LTD ...... 48.50 37.96 YEKALON INDUSTRY, INC ...... GUANGZHOUSHI BAISEN DECORATIVE MATE- 48.50 37.96 RIALS COMPANY LIMITED. YEKALON INDUSTRY, INC ...... DONGGUAN FANYANUO FURNITURE CO., LTD 48.50 37.96 YEKALON INDUSTRY, INC ...... DONGGUANSHI ANKE BUILDING MATERIALS 48.50 37.96 CO., LTD. YEKALON INDUSTRY, INC ...... Oriental Chic Furniture Company Limited ...... 48.50 37.96

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Estimated Cash deposit weighted- rate Exporter Producer average (adjusted for dumping margin subsidy offsets) (percent) (percent)

YEKALON INDUSTRY, INC ...... DONGGUAN FRANCISS FURNITURE CO., LTD .. 48.50 37.96 YEKALON INDUSTRY, INC ...... SHANGHAI YUANYANG WOODEN CO., LTD ...... 48.50 37.96 Yi Sen Wood Industry Limited Company of Ning An Yi Sen Wood Industry Limited Company of Ning 48.50 37.96 City. An City. Yichun Dongmeng Wood Co., Ltd ...... Yichun Dongmeng Wood Co., Ltd ...... 48.50 37.96 Yichun Dongmeng Wood Co., Ltd ...... Qingdao Dimei Wood Co., Ltd ...... 48.50 37.96 Yichun Sunshine Wood Products Co., Ltd ...... Yichun Sunshine Wood Products Co., Ltd ...... 48.50 37.96 Yixing Pengjia Cabinetry Co. Ltd ...... Yixing Pengjia Cabinetry Co. Ltd ...... 48.50 37.96 Zhangjiagang Daye Hotel Furniture Co., Ltd ...... Zhangjiagang Daye Hotel Furniture Co., Ltd ...... 48.50 37.96 ZHANGJIAGANG PRO-FIXTURE CO., LTD ...... Zhangjiagang Yuanjiahe Home Furniture Co., Ltd .. 48.50 37.96 ZHANGZHOU CITY XIN JIA HUA FURNITURE ZHANGZHOU CITY XIN JIA HUA FURNITURE 48.50 37.96 CO., LTD. CO., LTD. Zhangzhou Guohui Industrial & Trade Co., Ltd ...... Zhangzhou Guohui Industrial & Trade Co., Ltd ...... 48.50 37.96 Zhangzhou OCA Furniture Co., Ltd ...... Zhangzhou OCA Furniture Co., Ltd ...... 48.50 37.96 Zhaoqing Centech Decorative Material Company Zhaoqing Centech Decorative Material Company 48.50 37.96 Ltd. Ltd. Zhejiang Jindi Holding Group Co., Ltd ...... Zhejiang Jindi Holding Group Co., Ltd ...... 48.50 37.96 Zhong Shan Shi Yicheng Furniture & Craftwork Co., Zhong Shan Shi Yicheng Furniture & Craftwork 48.50 37.96 Ltd. Co., Ltd. Zhong Shan Yue Qin Imp. & Exp. Co., Ltd ...... Zhongshan Jinpeng Furniture Co., Ltd ...... 48.50 37.96 Zhongshan City Shenwan Meiting Furniture Factory Zhongshan City Shenwan Meiting Furniture Fac- 48.50 37.96 tory. Zhongshan Fookyik Furniture Co., Ltd ...... Zhongshan Fookyik Furniture Co., Ltd ...... 48.50 37.96 ZHONGSHAN GAINWELL FURNITURE CO., LTD ZHONGSHAN GAINWELL FURNITURE CO., LTD 48.50 37.96 Zhongshan Guanda Furniture Manufacturing Co., Zhongshan Guanda Furniture Manufacturing Co., 48.50 37.96 Ltd also known as Guanda Furniture Co., Ltd. Ltd. ZHONGSHAN HENGFU FURNITURE COMPANY ZHONGSHAN HENGFU FURNITURE COMPANY 48.50 37.96 LIMITED. LIMITED. Zhongshan King’s Group Furniture (ENTER- Zhongshan King’s Group Furniture (ENTER- 48.50 37.96 PRISES) Co., Ltd. PRISES) Co., Ltd. Zhoushan For-strong Wood Co., Ltd ...... Zhoushan For-strong Wood Co., Ltd ...... 48.50 37.96 Zhoushan For-strong Wood Co., Ltd ...... Shanghai Wanmuda Furniture Co., Ltd ...... 48.50 37.96 Zhucheng Tonghe Woodworks Co., ltd ...... Zhucheng Tonghe Woodworks Co., ltd ...... 48.50 37.96 Zhuhai Seagull Kitchen and Bath Products Co., Ltd Zhuhai Seagull Kitchen and Bath Products Co., Ltd 48.50 37.96 ZIEL INTERNATIONAL CO., LIMITED ...... DONGGUAN FANG CHENG FURNITURE LTD ..... 48.50 37.96 ZIEL INTERNATIONAL CO., LIMITED ...... ZhongShan PRO-YEARN Crafts Product Co., Ltd .. 48.50 37.96 ZIEL INTERNATIONAL CO., LIMITED ...... FUJIAN NEWMARK INDUSTRIAL CO., LTD ...... 48.50 37.96 ZIEL INTERNATIONAL CO., LIMITED ...... Fuzhou Zhonghe Houseware CO., LTD ...... 48.50 37.96 ZIEL INTERNATIONAL CO., LIMITED ...... MING LIANG FURNITURE PRODUCT CO., LTD .. 48.50 37.96 ZIEL INTERNATIONAL CO., LIMITED ...... XIANJU JUNYANG HOUSEHOLD PRODUCTS 48.50 37.96 CO., LTD. ZIEL INTERNATIONAL CO., LIMITED ...... DongGuan HeTai Homewares CO., LTD ...... 48.50 37.96 ZIEL INTERNATIONAL CO., LIMITED ...... CHENG TONG HARDWARE RPODUCT LTD ...... 48.50 37.96 ZIEL INTERNATIONAL CO., LIMITED ...... Nantong Jon Ergonomic office Co., Ltd ...... 48.50 37.96 China-Wide Entity 16 ...... 262.18 251.64

Disclosure proceeding within five days of any Preliminary Determination notice in the We intend to disclose to parties the public announcement of this notice in Federal Register. calculations performed in this accordance with 19 CFR 351.224(b). Pursuant to section 735(c)(1)(B)(ii) of the Act, Commerce will instruct CBP to Continuation of Suspension of 17 16 Commerce preliminarily determined that Liquidation require a cash deposit equal to the BRENTRIDGE HOLDING CO., LTD., Harbin weighted-average amount by which Hongsen Wood Co., Ltd., SAICG International In accordance with section normal value exceeds U.S. price as Trading Co., Ltd, Shanghai East Best Foreign Trade 735(c)(1)(B) of the Act, we will instruct Co., Ltd., SHANGHAI TIMBER IMPORT & EXPORT follows: (1) The cash deposit rate for the CORP., and ZHONG SHAN KING YUANDUN U.S. Customs and Border Protection exporter/producer combination listed in WOOD PRODUCTS CO., LTD. also known as CHIN- (CBP) to continue to suspend the table above will be the rate SHU WOODEN LTD each failed to establish their liquidation of all entries of wooden identified for that combination in the eligibility for a separate rate and, therefore, we cabinets and vanities from China, as preliminarily determined that these companies are table; (2) for all combinations of China part of the China-wide entity. See Preliminary described in the ‘‘Scope of the exporters/producers of merchandise Decision Memorandum. We continue to find these Investigation’’ section, entered, or under consideration that have not entities, except for BRENTRIDGE HOLDING CO., withdrawn from warehouse, for received their own separate rate above, LTD., as ineligible for separate rate status for our consumption on or after October 9, final determination. See Issues and Decision Memorandum at Comment 3. For this final 2019, the date of publication of the 17 See Modification of Regulations Regarding the determination, except for BRENTRIDGE HOLDING Practice of Accepting Bonds During the Provisional CO., LTD., we continue to find that these companies, see the Issues and Decision Measures Period in Antidumping and companies are part of the China-wide entity. For Memorandum accompanying this notice at Countervailing Duty Investigations, 76 FR 61042 further discussion with respect to certain of these Comment 3. (October 3, 2011).

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the cash-deposit rate will be the cash or threatened with material injury, by Wooden cabinets and vanities and wooden deposit rate established for the China- reason of imports of wooden cabinets components are made substantially of wood wide entity; and (3) for all non-China and vanities for sale from China, or sales products, including solid wood and exporters of the merchandise under (or the likelihood of sales) for engineered wood products (including those made from wood particles, fibers, or other consideration which have not received importation, of wooden cabinets and wooden materials such as plywood, strand their own separate rate above, the cash- vanities from China. If the ITC board, block board, particle board, or deposit rate will be the cash deposit rate determines that such injury does not fiberboard), or bamboo. Wooden cabinets and applicable to the China exporter/ exist, this proceeding will be terminated vanities consist of a cabinet box (which producer combination that supplied that and all securities posted will be typically includes a top, bottom, sides, back, non-China exporter. These suspension refunded or canceled. If the ITC base blockers, ends/end panels, stretcher of liquidation instructions will remain determines that such injury does exist, rails, toe kicks, and/or shelves) and may or in effect until further notice. Commerce will issue an antidumping may not include a frame, door, drawers and/ or shelves. Subject merchandise includes We normally adjust AD cash deposit duty order directing CBP to assess, upon rates by the amount of export subsidies, wooden cabinets and vanities with or further instruction by Commerce, without wood veneers, wood, paper or other where appropriate. In the companion antidumping duties on all imports of the overlays, or laminates, with or without non- countervailing duty (CVD) investigation, subject merchandise entered, or wood components or trim such as metal, with respect to the mandatory withdrawn from warehouse, for marble, glass, plastic, or other resins, respondents individually examined in consumption on or after the effective whether or not surface finished or the CVD investigation, and the separate- date of the suspension of liquidation. unfinished, and whether or not completed. rate companies, we find that an export Wooden cabinets and vanities are covered subsidy adjustment of 10.54 percent to Notification Regarding Administrative by the investigation whether or not they are the cash deposit rate is warranted Protective Orders (APO) imported attached to, or in conjunction with, because this is the export subsidy rate faucets, metal plumbing, sinks and/or sink In the event that the ITC issues a final bowls, or countertops. If wooden cabinets or included in the CVD all-others rate to negative injury determination, this vanities are imported attached to, or in which the separate-rate companies are notice will serve as the only reminder conjunction with, such merchandise, only subject. As part of our determination in to parties subject to the APO of their the wooden cabinet or vanity is covered by this final determination to apply AFA responsibility concerning the the scope. the China-wide entity, Commerce has destruction of proprietary information Subject merchandise includes the adjusted the China-wide entity’s AD disclosed under APO in accordance following wooden component parts of cash deposit rate by the lowest export with 19 CFR 351.305(a)(3). Timely cabinets and vanities: (1) Wooden cabinet subsidy rate determined for any party in written notification of the return/ and vanity frames (2) wooden cabinet and vanity boxes (which typically include a top, the companion CVD proceeding, i.e., destruction of APO materials or 18 19 bottom, sides, back, base blockers, ends/end 10.54 percent. conversion to judicial protective order is panels, stretcher rails, toe kicks, and/or Pursuant to section 777A(f) of the Act, hereby requested. Failure to comply shelves), (3) wooden cabinet or vanity doors, we normally adjust cash deposit rates with the regulations and terms of an (4) wooden cabinet or vanity drawers and for estimated domestic subsidy pass- APO is a violation which is subject to drawer components (which typically include through, where appropriate. However, sanction. sides, backs, bottoms, and faces), (5) back in this case there is no basis to grant a panels and end panels, (6) and desks, domestic subsidy pass-through Notification to Importers shelves, and tables that are attached to or adjustment.20 This notice also serves as an initial incorporated in the subject merchandise. reminder to importers of their Subject merchandise includes all International Trade Commission responsibility under 19 CFR 351.402(f) unassembled, assembled and/or ‘‘ready to Notification assemble’’ (RTA) wooden cabinets and to file a certificate regarding the In accordance with section 735(d) of vanities, also commonly known as ‘‘flat reimbursement of antidumping duties packs,’’ except to the extent such the Act, we notified the International prior to liquidation. Failure to comply merchandise is already covered by the scope Trade Commission (ITC) of the final with this requirement could result in of antidumping and countervailing duty affirmative determination of sales at Commerce’s presumption that orders on Hardwood Plywood from the LTFV. As Commerce’s final reimbursement of antidumping duties People’s Republic of China. See Certain determination is affirmative, in occurred and the subsequent assessment Hardwood Plywood Products from the accordance with section 735(b)(2) of the of doubled antidumping duties. People’s Republic of China: Amended Final Act, the ITC will determine, within 45 Determination of Sales at Less Than Fair days, whether the domestic industry in Notification to Interested Parties Value, and Antidumping Duty Order, 83 FR the United States is materially injured, This determination is issued and 504 (January 4, 2018); Certain Hardwood Plywood Products from the People’s Republic published in accordance with sections of China: Countervailing Duty Order, 83 FR 18 See, e.g., Certain Passenger Vehicle and Light 735(d) and 777(i)(1) of the Act, and 19 513 (January 4, 2018). RTA wooden cabinets Truck Tires from the People’s Republic of China: CFR 351.210(c). and vanities are defined as cabinets or Preliminary Determination of Sales at Less Than Fair Value; Preliminary Affirmative Determination Dated: February 21, 2020. vanities packaged so that at the time of of Critical Circumstances; In Part and Jeffrey I. Kessler, importation they may include: (1) Wooden Postponement of Final Determination, 80 FR 4250 components required to assemble a cabinet or (January 27, 2015), and accompanying Issues and Assistant Secretary for Enforcement and vanity (including drawer faces and doors); Decision Memorandum at 35. Compliance. and (2) parts (e.g., screws, washers, dowels, 19 See Wooden Cabinets and Vanities and Appendix I nails, handles, knobs, adhesive glues) Components Thereof from the People’s Republic of required to assemble a cabinet or vanity. China: Final Affirmative Countervailing Duty Scope of the Investigation RTAs may enter the United States in one or Determination, dated concurrently with this notice, in multiple packages. and accompanying Issues and Decision The merchandise subject to this Memorandum. The final determination in this investigation consists of wooden cabinets Subject merchandise also includes wooden companion CVD proceeding is being issued on the and vanities that are for permanent cabinets and vanities and in-scope same day as this final AD determination. installation (including floor mounted, wall components that have been further processed 20 See Issues and Decision Memorandum at mounted, ceiling hung or by attachment of in a third country, including but not limited ‘‘Adjustment Under Section 777A(f) of the Act.’’ plumbing), and wooden components thereof. to one or more of the following: Trimming,

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cutting, notching, punching, drilling, subheadings are provided for convenience DEPARTMENT OF COMMERCE painting, staining, finishing, assembly, or any and customs purposes, the written other processing that would not otherwise description of the scope of this investigation International Trade Administration remove the merchandise from the scope of is dispositive. the investigation if performed in the country [C–570–107] of manufacture of the in-scope product. Appendix II Excluded from the scope of this Wooden Cabinets and Vanities and investigation, if entered separate from a Issues and Decision Memorandum Components Thereof From the wooden cabinet or vanity are: I. Summary People’s Republic of China: Final (1) Aftermarket accessory items which may II. Background Affirmative Countervailing Duty be added to or installed into an interior of a III. Period of Investigation Determination cabinet and which are not considered a IV. Scope of the Investigation structural or core component of a wooden V. Scope Comments AGENCY: Enforcement and Compliance, cabinet or vanity. Aftermarket accessory International Trade Administration, items may be made of wood, metal, plastic, VI. Use of Adverse Facts Available composite material, or a combination thereof VII. Changes Since the Preliminary Department of Commerce. that can be inserted into a cabinet and which Determination SUMMARY: The Department of Commerce are utilized in the function of organization/ VIII. Adjustments Under Section 777A(f) of (Commerce) determines that accessibility on the interior of a cabinet; and the Act countervailable subsidies are being include: IX. Adjustments to Cash Deposit Rates for • provided to producers and/or exporters Inserts or dividers which are placed into Export Subsidies of wooden cabinets and vanities and drawer boxes with the purpose of organizing X. Discussion of the Issues or dividing the internal portion of the drawer componets thereof (wooden cabinets General Comments into multiple areas for the purpose of and vanities) from the People’s Republic containing smaller items such as cutlery, Comment 1: Initiation of the Investigation of China (China). Comment 2: Respondent Selection utensils, bathroom essentials, etc.etc. DATES: Applicable February 28, 2020. • Round or oblong inserts that rotate Comment 3: Separate Rate Applicants FOR FURTHER INFORMATION CONTACT: internally in a cabinet for the purpose of Comment 4: Company Name for Supree accessibility to foodstuffs, dishware, general (Fujian) Wood Co., Ltd. (Supree) Justin Neuman or Benito Ballesteros, supplies, etc. Comment 5: Calculation of the Separate AD/CVD Operations, Office V, (2) Solid wooden accessories including Rate Assigned to Non-Selected Enforcement and Compliance, corbels and rosettes, which serve the primary Companies International Trade Administration, purpose of decoration and personalization. Surrogate Value (SV) Comments U.S. Department of Commerce, 1401 (3) Non-wooden cabinet hardware Comment 6: Surrogate Country Constitution Avenue NW, Washington, components including metal hinges, Comment 7: SVs for Birch and Poplar DC 20230; telephone: (202) 482–0486 or brackets, catches, locks, drawer slides, Comment 8: Calculation of Financial Ratios (202) 482–7425, respectively. fasteners (nails, screws, tacks, staples), handles, and knobs. Comment 9: Labor Rate Calculation SUPPLEMENTARY INFORMATION: Company-Specific Comments (4) Medicine cabinets that meet all of the Background following five criteria are excluded from the Ancientree scope: (1) Wall mounted; (2) assembled at the Comment 10: Whether to Apply AFA to On August 12, 2019, Commerce time of entry into the United States; (3) Ancientree published the Preliminary contain one or more mirrors; (4) be packaged Comment 11: Treatment of Jiangsu Hongjia Determination in this investigation.1 for retail sale at time of entry; and (5) have Wood Ltd. (Jiangsu Hongjia) as an The petitioner is the American Kitchen a maximum depth of seven inches. Affiliate Cabinet Alliance. In addition to the Also excluded from the scope of this Comment 12: SV Selections Government of China (GOC), the investigation are: Foremost (1) All products covered by the scope of mandatory respondents in this Comment 13: Combination Kits the antidumping duty order on Wooden investigation are The Ancientree Bedroom Furniture from the People’s Comment 14: Exempted Sales Cabinet Co., Ltd. (Ancientree), Dalian Republic of China. See Notice of Amended Comment 15: Early Payment Discounts Meisen Woodworking Co., Ltd. Final Determination of Sales at Less Than Comment 16: Section 301 Duties (Meisen), and Rizhao Foremost Fair Value and Antidumping Duty Order: Comment 17: Foremost’s U.S. Inland Woodwork Manufacturing Co., Ltd. Wooden Bedroom Furniture from the Freight Charges from the Port to the (Foremost). People’s Republic of China, 70 FR 329 Warehouse A summary of the events that (January 4, 2005). Comment 18: Foremost’s U.S. Inland occurred since Commerce published the (2) All products covered by the scope of Freight Charges to the Customer the antidumping and countervailing duty Preliminary Determination, as well as a Comment 19: FGI’s Acquisition Costs full discussion of the issues raised by orders on Hardwood Plywood from the Comment 20: Labor Hours People’s Republic of China. See Certain parties for this final determination, are Comment 21: Calculation and Programing Hardwood Plywood Products from the discussed in the Issues and Decision People’s Republic of China: Amended Final Revisions Memorandum, which is hereby adopted Determination of Sales at Less Than Fair Meisen by this notice.2 The Issues and Decision Value, and Antidumping Duty Order, 83 FR Comment 22: Total AFA for Meisen 504 (January 4, 2018); Certain Hardwood XI. Recommendation 1 See Wooden Cabinets and Vanities and Plywood Products from the People’s Republic [FR Doc. 2020–04121 Filed 2–27–20; 8:45 am] Components Thereof From the People’s Republic of of China: Countervailing Duty Order, 83 FR. China: Preliminary Affirmative Countervailing Duty BILLING CODE 3510–DS–P 513 (January 4, 2018). Determination, and Alignment of Final Imports of subject merchandise are Determination With Final Antidumping Duty classified under Harmonized Tariff Schedule Determination, 84 FR 39798 (August 12, 2019) of the United States (HTSUS) statistical (Preliminary Determination), and accompanying Preliminary Decision Memorandum. numbers 9403.40.9060 and 9403.60.8081. 2 See Memorandum, ‘‘Issues and Decision The subject component parts of wooden Memorandum for the Final Determination in the cabinets and vanities may be entered into the Countervailing Duty Investigation of Certain United States under HTSUS statistical Fabricated Structural Steel from the People’s number 9403.90.7080. Although the HTSUS Republic of China,’’ dated concurrently with, and

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Memorandum is a public document and Methodology rate. Commerce has also revised the is on file electronically via Enforcement Commerce conducted this total AFA rate. For a discussion of these and Compliance’s Antidumping and investigation in accordance with section changes, see the Issues and Decision Countervailing Duty Centralized 701 of the Tariff Act of 1930, as Memorandum and the Final Calculation Electronic Service System (ACCESS). amended (the Act). For each of the Memoranda.8 ACCESS is available to registered users subsidy programs found Final Determination at http://access.trade.gov, and to all countervailable, Commerce determines parties in the Central Records Unit, that there is a subsidy, i.e., a financial As noted above, we calculated Room B8024 of the main Commerce contribution by an ‘‘authority’’ that individual estimated subsidy rates for building. In addition, a complete gives rise to a benefit to the recipient, Ancientree, Foremost and Meisen, and version of the Issues and Decision and that the subsidy is specific.5 For a relied on AFA to assign subsidy rates to Memorandum can be accessed directly full description of the methodology AiDiJia and Deway, because they failed at http://enforcement.trade.gov/frn/ underlying our final determination, see to respond to Commerce’s requests for index.html. The signed and electronic the Issues and Decision Memorandum. information. versions of the Issues and Decision In accordance with section Memorandum are identical in content. Section 705(c)(5)(A)(i) of the Act 705(c)(1)(B)(i)(I) of the Act, we states that, for companies not Period of Investigation calculated individual estimated subsidy individually investigated, Commerce rates for Ancientree, Foremost and The period of investigation (POI) is will determine an all-others rate equal Meisen. Additionally, consistent with to the weighted-average countervailable July 1, 2018 through December 31, 2018. the Preliminary Determination, we subsidy rates established for exporters relied on adverse facts available (AFA) Scope of the Investigation and/or producers individually to assign subsidy rates to Henan AiDiJia The products covered by this investigated, excluding any zero and de Furniture Co., Ltd (AiDiJia) and Deway investigation are wooden cabinets and minimis countervailable subsidy rates, International Trade Co., Ltd (Deway), vanities from China. For a complete and any rates determined entirely under because they failed to respond to description of the scope of this section 776 of the Act. However, as we Commerce’s requests for information.6 investigation, see Appendix I. do not have publicly-ranged sales data Scope Comments Verification for all three of the participating As provided for under section 782(i) company respondents, we are using a Commerce issued a Preliminary Scope simple average of the calculated subsidy 3 of the Act, Commerce verified the Decision Memorandum. Several rates to establish the all-others rate. interested parties submitted case and information reported by Ancientree, rebuttal briefs concerning the scope of Foremost, and Meisen. We used Commerce determines the total this investigation. For a summary of the standard verification procedures, estimated net countervailable subsidy product coverage comments and including an examination of relevant rates to be the following: rebuttal comments submitted to the accounting records and original source record for this final determination, and documents provided by the Company Subsidy rate 7 (percent) accompanying discussion and analysis respondents. of all comments timely received, see the Changes Since the Preliminary The Ancientree Cabinet Co., Final Scope Decision Memorandum.4 Determination Ltd 9 ...... 13.33 Based on the comments received, Dalian Meisen Woodworking Based on our review and analysis of Co., Ltd 10 ...... 18.27 Commerce is not modifying the scope the comments received from parties, language as it appeared in the minor corrections presented at Preliminary Determination. The scope 8 See Memorandum, ‘‘Countervailing Duty verification, and our verification Investigation of Wooden Cabinets and Vanities and in Appendix I remains unchanged from findings, we made certain changes to that which appeared in the Preliminary Components Thereof from the People’s Republic of the subsidy rate calculations for the China: Ancientree Final Determination Calculation Determination. respondents. As a result of the changes Memorandum,’’ dated concurrently with this to the respondents’ calculated rates, notice; Memorandum, ‘‘Countervailing Duty Analysis of Subsidy Programs and Investigation of Wooden Cabinets and Vanities and Comments Received Commerce has revised the all-others Components Thereof from the People’s Republic of The subsidy programs under China: Foremost Final Determination Calculation 5 See sections 771(5)(B) and (D) of the Act Memorandum,’’ dated concurrently with this investigation, and the issues raised in regarding financial contribution; section 771(5)(E) notice; and Memorandum, ‘‘Countervailing Duty the case and rebuttal briefs submitted by of the Act regarding benefit; and section 771(5A) of Investigation of Wooden Cabinets and Vanities and parties in this investigation, are the Act regarding specificity. Components Thereof from the People’s Republic of discussed in the Issues and Decision 6 See Preliminary Determination PDM at 10–11 China: Meisen Final Determination Calculation Memorandum. A list of the issues that (noting that Commerce relied on AFA to assign a Memorandum,’’ dated concurrently with this notice subsidy rate to Deway, because it failed to respond (collectively, Final Calculation Memoranda). parties raised is attached to this notice to our quantity and value questionnaire, and also 9 As discussed in the Preliminary Decision as Appendix II. relied on AFA to assign a subsidy rate to AiDiJia, Memorandum, Commerce has found the following because it failed to respond to our full companies to be cross-owned with Ancientree: hereby adopted by, this notice (Issues and Decision questionnaire). Jiangsu Hongjia Wood Co., Ltd., Jiangsu Hongjia Memorandum). 7 See Memorandum, ‘‘Verification of the Wood Co., Ltd. Shanghai Branch, and Shanghai 3 See Memorandum, ‘‘Certain Wooden Cabinets Questionnaire Responses of Dalian Meisen Hongjia Wood Co., Ltd. and Vanities and Components Thereof from the Woodworking Co., Ltd.,’’ dated January 3, 2020; 10 As discussed in the Preliminary Decision People’s Republic of China: Scope Comments Memorandum, ‘‘Countervailing Duty Investigation Memorandum, Commerce has found the following Decision Memorandum for the Preliminary of Wooden Cabinets and Vanities and Components company to be cross-owned with Dalian Meisen: Determinations,’’ dated October 2, 2019 Thereof from the People’s Republic of China: Dalian Hechang Technology Development Co., Ltd. (Preliminary Scope Decision Memorandum). Verification of the Questionnaire Responses of The 11 As discussed in the Preliminary Decision 4 See Memorandum, ‘‘Wooden Cabinets and Ancientree Cabinet Co., Ltd.,’’ dated January 7, Memorandum, Commerce has found the following Vanities and Components Thereof from the People’s 2020; and Memorandum, ‘‘Verification of the companies to be cross-owned with Rizhao Republic of China: Final Scope Comments Decision Questionnaire Responses of Rizhao Foremost Foremost: Foremost Worldwide Co., Ltd., and Memorandum,’’ dated concurrently with this notice Woodwork Manufacturing Co., Ltd.,’’ dated January Rizhao Foremost Landbridge Wood Industries Co., (Final Scope Decision Memorandum). 7, 2020. Ltd.

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Subsidy rate material injury, by reason of imports of wooden cabinets and vanities with or Company (percent) wooden cabinets and vanities from without wood veneers, wood, paper or other China no later than 45 days after our overlays, or laminates, with or without non- Rizhao Foremost Woodwork final determination. If the ITC wood components or trim such as metal, marble, glass, plastic, or other resins, Manufacturing Company determines that material injury or threat Ltd 11 ...... 31.18 whether or not surface finished or Deway International Trade of material injury does not exist, the unfinished, and whether or not completed. Co., Ltd ...... 293.45 proceeding will be terminated and all Wooden cabinets and vanities are covered Henan AiDiJia Furniture Co., cash deposits will be refunded. If the by the investigation whether or not they are Ltd ...... 293.45 ITC determines that such injury does imported attached to, or in conjunction with, All Others ...... 20.93 exist, Commerce will issue a CVD order faucets, metal plumbing, sinks and/or sink directing CBP to assess, upon further bowls, or countertops. If wooden cabinets or instruction by Commerce, vanities are imported attached to, or in Disclosure conjunction with, such merchandise, only countervailing duties on all imports of We intend to disclose to parties the the wooden cabinet or vanity is covered by the subject merchandise entered, or calculations performed in this the scope. withdrawn from warehouse, for proceeding within five days of any Subject merchandise includes the consumption on or after the effective public announcement of this notice in following wooden component parts of date of the suspension of liquidation, as cabinets and vanities: (1) Wooden cabinet accordance with 19 CFR 351.224(b). discussed above in the ‘‘Continuation of and vanity frames (2) wooden cabinet and Continuation of Suspension of Suspension of Liquidation’’ section. vanity boxes (which typically include a top, Liquidation bottom, sides, back, base blockers, ends/end Notification Regarding Administrative panels, stretcher rails, toe kicks, and/or As a result of our Preliminary Protective Order (APO) shelves), (3) wooden cabinet or vanity doors, Determination and pursuant to sections (4) wooden cabinet or vanity drawers and In the event that the ITC issues a final 703(d)(1)(B) and (d)(2) of the Act, drawer components (which typically include negative injury determination, this Commerce instructed U.S. Customs and sides, backs, bottoms, and faces), (5) back notice will serve as the only reminder Border Protection (CBP) to suspend panels and end panels, (6) and desks, to parties subject to the APO of their liquidation of entries of subject shelves, and tables that are attached to or responsibility concerning the incorporated in the subject merchandise. merchandise entered, or withdrawn destruction of proprietary information Subject merchandise includes all from warehouse, for consumption on or disclosed under APO in accordance unassembled, assembled and/or ‘‘ready to after August 12, 2019, the date of with 19 CFR 351.305(a)(3). Timely assemble’’ (RTA) wooden cabinets and publication of the Preliminary written notification of the return/ vanities, also commonly known as ‘‘flat Determination in the Federal Register. packs,’’ except to the extent such destruction of APO materials or In accordance with section 703(d) of the merchandise is already covered by the scope conversion to judicial protective order is Act, we issued instructions to CBP to of antidumping and countervailing duty hereby requested. Failure to comply discontinue the suspension of orders on Hardwood Plywood from the with the regulations and terms of an liquidation for subject merchandise People’s Republic of China. See Certain APO is a violation which is subject to Hardwood Plywood Products from the entered, or withdrawn from warehouse, sanction. People’s Republic of China: Amended Final on or after December 9, 2019, but to Determination of Sales at Less Than Fair continue the suspension of liquidation Notification to Interested Parties Value, and Antidumping Duty Order, 83 FR of all entries from August 12, 2019 This determination is issued and 504 (January 4, 2018); Certain Hardwood through December 8, 2019. published pursuant to sections 705(d) Plywood Products from the People’s Republic If the U.S. International Trade and 777(i) of the Act, and 19 CFR of China: Countervailing Duty Order, 83 FR 513 (January 4, 2018). RTA wooden cabinets Commission (ITC) issues a final 351.210(c). affirmative injury determination, we and vanities are defined as cabinets or intend to issue a countervailing duty Dated: February 21, 2020. vanities packaged so that at the time of Jeffrey I. Kessler, importation they may include: (1) Wooden (CVD) order, reinstate the suspension of components required to assemble a cabinet or Assistant Secretary for Enforcement and liquidation under section 706(a) of the vanity (including drawer faces and doors); Compliance. Act, and require a cash deposit of and (2) parts (e.g., screws, washers, dowels, estimated countervailing duties for Appendix I nails, handles, knobs, adhesive glues) entries of subject merchandise in the required to assemble a cabinet or vanity. amounts indicated above. If the ITC Scope of the Investigation RTAs may enter the United States in one or determines that material injury, or The merchandise subject to this in multiple packages. threat of material injury, does not exist, investigation consists of wooden cabinets Subject merchandise also includes wooden this proceeding will be terminated and and vanities that are for permanent cabinets and vanities and in-scope installation (including floor mounted, wall components that have been further processed all estimated duties deposited or mounted, ceiling hung or by attachment of in a third country, including but not limited securities posted as a result of the plumbing), and wooden components thereof. to one or more of the following: trimming, suspension of liquidation will be Wooden cabinets and vanities and wooden cutting, notching, punching, drilling, refunded or canceled. components are made substantially of wood painting, staining, finishing, assembly, or any products, including solid wood and other processing that would not otherwise ITC Notification engineered wood products (including those remove the merchandise from the scope of In accordance with section 705(d) of made from wood particles, fibers, or other the investigation if performed in the country the Act, we will notify the ITC of our wooden materials such as plywood, strand of manufacture of the in-scope product. determination. Because the final board, block board, particle board, or Excluded from the scope of this determination in this proceeding is fiberboard), or bamboo. Wooden cabinets and investigation, if entered separate from a affirmative, in accordance with section vanities consist of a cabinet box (which wooden cabinet or vanity are: typically includes a top, bottom, sides, back, (1) Aftermarket accessory items which may 705(b) of the Act, the ITC will make its base blockers, ends/end panels, stretcher be added to or installed into an interior of a final determination as to whether the rails, toe kicks, and/or shelves) and may or cabinet and which are not considered a domestic industry in the United States may not include a frame, door, drawers and/ structural or core component of a wooden is materially injured, or threatened with or shelves. Subject merchandise includes cabinet or vanity. Aftermarket accessory

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items may be made of wood, metal, plastic, VII. Analysis of Programs determinations are due no later than composite material, or a combination thereof VIII. Analysis of Comments March 31, 2020. that can be inserted into a cabinet and which Comment 1: Initiation of the Investigation are utilized in the function of organization/ Comment 2: Whether Commerce Should Postponement of Preliminary accessibility on the interior of a cabinet; and Apply AFA to the Provision of Determinations Electricity for Less than Adequate include: Section 733(b)(1)(A) of the Tariff Act • Inserts or dividers which are placed into Remuneration (LTAR) Program drawer boxes with the purpose of organizing Comment 3: Whether Commerce Should of 1930, as amended (the Act), requires or dividing the internal portion of the drawer Apply AFA to Find the Export Buyer’s Commerce to issue the preliminary into multiple areas for the purpose of Credit (EBC) Program Countervailable determination in an LTFV investigation containing smaller items such as cutlery, Comment 4: Whether the Policy Loans to within 140 days after the date on which utensils, bathroom essentials, etc. the Wooden Cabinet and Vanity Industry Commerce initiated the investigation. • Round or oblong inserts that rotate Program Is Countervailable However, section 733(c)(1) of the Act internally in a cabinet for the purpose of Comment 5: Whether Land Prices in permits Commerce to postpone the accessibility to foodstuffs, dishware, general Thailand Provide a Suitable Benchmark for Land Prices in China preliminary determination until no later supplies, etc. than 190 days after the date on which (2) Solid wooden accessories including Comment 6: Whether Commerce Should corbels and rosettes, which serve the primary Apply AFA to the Provision of Inputs for Commerce initiated the investigation if: purpose of decoration and personalization. LTAR (A) The petitioner makes a timely (3) Non-wooden cabinet hardware Comment 7: Whether Commerce Should request for a postponement; or (B) components including metal hinges, Apply AFA to Self-Reported Subsidies Commerce concludes that the parties brackets, catches, locks, drawer slides, Comment 8: Whether Commerce Should concerned are cooperating, that the fasteners (nails, screws, tacks, staples), Adjust Its Plywood Benchmark investigation is extraordinarily Comment 9: Whether Commerce Should handles, and knobs. complicated, and that additional time is (4) Medicine cabinets that meet all of the Apply AFA to Meisen Comment 10: Whether Commerce Should necessary to make a preliminary following five criteria are excluded from the determination. Under 19 CFR scope: (1) Wall mounted; (2) assembled at the Continue to Find that Meisen Was time of entry into the United States; (3) Uncreditworthy 351.205(e), the petitioner must submit a contain one or more mirrors; (4) be packaged Comment 11: Whether Commerce Should request for postponement 25 days or for retail sale at time of entry; and (5) have Countervail Subsidies Received by more before the scheduled date of the a maximum depth of seven inches. Foremost’s Tolling Companies preliminary determination and must Also excluded from the scope of this Comment 12: Whether Commerce Should state the reasons for the request. Continue to Find that Foremost Was investigation are: Commerce will grant the request unless (1) All products covered by the scope of Uncreditworthy IX. Recommendation it finds compelling reasons to deny the the antidumping duty order on Wooden request. Bedroom Furniture from the People’s [FR Doc. 2020–04120 Filed 2–27–20; 8:45 am] On February 5, 2020, the petitioners 2 Republic of China. See Notice of Amended BILLING CODE 3510–DS–P Final Determination of Sales at Less Than submitted timely requests that Fair Value and Antidumping Duty Order: Commerce postpone the preliminary determinations in these LTFV Wooden Bedroom Furniture from the DEPARTMENT OF COMMERCE People’s Republic of China, 70 FR 329 investigations.3 The petitioners request (January 4, 2005). International Trade Administration postponement because ‘‘based on the (2) All products covered by the scope of complexity of the process for selecting the antidumping and countervailing duty [A–533–891, A–580–904] mandatory respondents in this orders on Hardwood Plywood from the investigation, Commerce will not have Forged Steel Fittings From India and People’s Republic of China. See Certain complete questionnaire responses and Hardwood Plywood Products from the the Republic of Korea: Postponement sufficient information to issue People’s Republic of China: Amended Final of Preliminary Determinations in the preliminary determinations if the Determination of Sales at Less Than Fair Less-Than-Fair-Value Investigations Value, and Antidumping Duty Order, 83 FR deadlines are not extended.’’ 4 504 (January 4, 2018); Certain Hardwood AGENCY: Enforcement and Compliance, For the reasons stated above and Plywood Products from the People’s Republic International Trade Administration, because there are no compelling reasons of China: Countervailing Duty Order, 83 FR. Department of Commerce. to deny the request, Commerce, in 513 (January 4, 2018). DATES: Applicable February 28, 2020. accordance with section 733(c)(1)(A) of Imports of subject merchandise are the Act, is postponing the deadline for classified under Harmonized Tariff Schedule FOR FURTHER INFORMATION CONTACT: Caitlin Monks at (202) 482–2670, AD/ the preliminary determinations by 50 of the United States (HTSUS) statistical days (i.e., 190 days after the date on numbers 9403.40.9060 and 9403.60.8081. CVD Operations, Office VII, The subject component parts of wooden Enforcement and Compliance, which these investigations were cabinets and vanities may be entered into the International Trade Administration, initiated). As a result, Commerce will United States under HTSUS statistical U.S. Department of Commerce, 1401 issue its preliminary determinations no number 9403.90.7080. Although the HTSUS Constitution Avenue NW, Washington, later than May 20, 2020. In accordance subheadings are provided for convenience DC 20230. with section 735(a)(1) of the Act and 19 and customs purposes, the written CFR 351.210(b)(1), the deadline for the description of the scope of this investigation SUPPLEMENTARY INFORMATION: is dispositive. Background Value Investigations, 84 FR 64265 (November 21, Appendix II 2019). On November 12, 2019, the 2 The petitioners are Bonney Forge Corporation List of Topics Discussed in the Issues and Department of Commerce (Commerce) and the United Steel, Paper and Forestry, Rubber Decision Memorandum initiated less-than-fair-value (LTFV) Manufacturing, Energy, Allied Industrial and investigations of imports of forged steel Service Workers International Union (USW). I. Summary 3 See Petitioner’s Letters, ‘‘Forged Steel Fittings II. Background fittings from India and the Republic of from India: Request for Extension of Preliminary 1 III. Scope of the Investigation Korea. Currently, the preliminary Determination,’’ and ‘‘Forged Steel Fittings from IV. Scope Comments Korea: Request for Extension of Preliminary V. Use of Adverse Facts Available 1 See Forged Steel Fittings from India and the Determination,’’ both dated February 5, 2020. VI. Subsidies Valuation Information Republic of Korea: Initiation of Less-Than-Fair- 4 Id.

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final determinations of these of Coast Survey, NOAA (N/CS), 1315 Pacific and elsewhere, including investigations will continue to be 75 East-West Highway, SSMC3 #6413, stakeholder use of navigation services days after the date of the preliminary Silver Spring, Maryland 20910; email: data, products and services, flooding, determinations, unless postponed at a [email protected] and inundation and sea level rise, later date. [email protected]; telephone: hydrographic survey and nautical 240–533–0064. charting, the National Spatial Reference Notification to Interested Parties SUPPLEMENTARY INFORMATION: The System (NSRS), legislative priorities and This notice is issued and published meeting is open to the public. To other topics. Navigation services pursuant to section 733(c)(2) of the Act receive meeting updates and inform the include the data, products, and services and 19 CFR 351.205(f)(1). participant list, please sign up as noted provided by the NOAA programs and Dated: February 25, 2020. above, or you can email your name, activities that undertake geodetic Jeffrey I. Kessler, organization and email address contact. observations, gravity modeling, Seating will be available on a first-come, shoreline mapping, bathymetric Assistant Secretary for Enforcement and mapping, hydrographic surveying, Compliance. first-served basis. Public comment is encouraged on the topics of the HSRP nautical charting, tide and water level [FR Doc. 2020–04122 Filed 2–27–20; 8:45 am] observations, current observations, BILLING CODE 3510–DS–P meeting and there are public comment periods scheduled each day noted in the marine modeling, and related topics. agenda. Each individual or group This suite of NOAA products and services support safe and efficient DEPARTMENT OF COMMERCE making verbal or written comments will be limited to one comment per public navigation, resilient coasts and National Oceanic and Atmospheric comment period and a total time of five communities, and the nationwide Administration Hydrographic Services (5) minutes, will be recorded and positioning information infrastructure to Review Panel Meeting transcribed, and comments will become support America’s commerce. The Panel part of the meeting record. For those not will hear from state and federal AGENCY: National Ocean Service, onsite, comments can be submitted in agencies, non-federal organizations and National Oceanic and Atmospheric associations, local, regional and national writing via email prior to the meeting or Administration (NOAA), Department of stakeholders and partners about their by email during the meeting. Public Commerce. missions and use of NOAA’s navigation comments are encouraged and services, the value these services bring, ACTION: Notice of open public meeting individuals or groups who would like to and what improvements could be made. and request for comments. submit advance written statements Other administrative matters may be should email their comments to SUMMARY: The Hydrographic Services considered. The agenda and speakers [email protected], Review Panel (HSRP) will hold a are subject to change, please refer to the [email protected] and meeting that will be open to the public, website for the most updated [email protected]. The April 28–30, 2020, in Oahu, Hawaii. information. Public comments are requested in HSRP will provide webinar capability. Special Accommodations: This advance and/or during the meeting. Pre-registration is required to access the meeting is physically accessible to Information about the HSRP meeting, webinar: https://register.gotowebinar. people with disabilities. Please direct agenda, presentations, webinar com/rt/6546237546550851853. requests for sign language interpretation registration, and background documents The Hydrographic Services Review or other auxiliary aids to will be posted and updated online. To Panel (HSRP) is a Federal Advisory [email protected] by March promote zero waste, all meeting Committee established to advise the 31, 2020. documents will be available for Under Secretary of Commerce for Elizabeth I. Kretovic, downloading the week prior to the Oceans and Atmosphere, the NOAA Deputy Hydrographer, Office of Coast Survey, meeting at: https:// Administrator, on matters related to the responsibilities and authorities set forth National Ocean Service, National Oceanic www.nauticalcharts.noaa.gov/hsrp/ and Atmospheric Administration. hsrp.htm and https:// in section 303 of the Hydrographic [FR Doc. 2020–03892 Filed 2–27–20; 8:45 am] www.nauticalcharts.noaa.gov/hsrp/ Services Improvement Act of 1998, as BILLING CODE 3510–JE–P meetings.htm. amended, and such other appropriate matters that the Under Secretary refers DATES: The meeting is two and a half to the Panel for review and advice. The days during April 28–30, 2020, in Oahu, charter, issue papers with DEPARTMENT OF COMMERCE HI. The agenda, speakers and times are recommendations, and other National Oceanic and Atmospheric subject to change. The draft agenda will information are located online at: Administration be posted online in January 2020 and https://www.nauticalcharts.noaa.gov/ the meeting location will be announced hsrp/CharterBylawsHSIAStatute.htm. [RTID 0648–XR098] in April 2020. For updates, please check Past recommendations and issue online, sign up for emails, or contact the papers are at: https:// Marine Mammals; File No. 23283 organizers. To receive the meeting www.nauticalcharts.noaa.gov/hsrp/ AGENCY: National Marine Fisheries announcements by email including the recommendations.htm. Service (NMFS), National Oceanic and agenda, venue, and to inform the Past HSRP public meeting summary Atmospheric Administration (NOAA), attendance estimate, please sign up reports, agendas, presentations, Commerce. below or email: https:// transcripts, and other information is ACTION: Notice; receipt of application. docs.google.com/forms/d/1SHBr5gDqp available online at: https:// _ BHildSGbymFgMqckHLmKEry7bLi0L www.nauticalcharts.noaa.gov/hsrp/ SUMMARY: Notice is hereby given that N1SQ/edit?vc=0&c=0&w=1. meetings.htm. NMFS’ Marine Mammal Laboratory, FOR FURTHER INFORMATION CONTACT: Matters to be Considered: The panel is 7600 Sand Point Way NE, Building 4, Lynne Mersfelder-Lewis, HSRP program convening on issues relevant to NOAA’s Seattle, WA 98115 (Responsible Party: manager, National Ocean Service, Office navigation services, Hawaii and the John Bengtson, Ph.D.), has applied in

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due form for a permit to conduct unintentional mortality. Unlimited objectives and a management research on northern fur seals numbers of samples may be salvaged framework. (Callorhinus ursinus). from dead animals, received, and/or DATES: The meeting will be held April DATES: Written, telefaxed, or email exported for analysis. Take activities 23, 2020, from 9 a.m. to 4:30 p.m. PST, comments must be received on or before involve ground survey, aerial survey, or until business concludes. March 30, 2020. observation, photograph/video, capture/ ADDRESSES: The meeting will be held in ADDRESSES: The application and related handling, and collection of scat/spew. Procedures to be performed on handled Room 3400 at the Glenn M. Anderson documents are available for review by Federal Building, 501 W Ocean Blvd., selecting ‘‘Records Open for Public animals include: Administration of drugs and anesthesia, stomach lavage, Long Beach, California 90802. Please Comment’’ from the ‘‘Features’’ box on notify Eric Poncelet (meeting facilitator), the Applications and Permits for external and internal instrumentation, marking, measuring, restraint, biological at [email protected] or (415) Protected Species (APPS) home page, 697–0566 by April 9, 2020, if you plan https://apps.nmfs.noaa.gov, and then sampling and swabs, stable isotopes and serial blood samples, ultrasound, and to attend. If interested members of the selecting File No. 23283 from the list of public cannot reasonably attend the available applications. weighing. Up to 150 Western Steller sea lions (Eumetopias jubatus) and 200 meeting in person, NMFS may provide These documents are also available for a teleconference phone line or upon written request or by appointment Aleutian Islands and Pribilof Island stock harbor seals (Phoca vitulina) may webinar for such members if a request in the Permits and Conservation is made to the meeting facilitator; Division, Office of Protected Resources, be incidentally disturbed annually in Alaska. 36,500 California sea lions however, participation by NMFS, 1315 East-West Highway, Room teleconference or webinar may be 13705, Silver Spring, MD 20910; phone (Zalophus californianus) may be incidentally disturbed annually in limited in a reasonable manner to (301) 427–8401; fax (301) 713–0376. facilitate discussion. See Written comments on this application California. The requested duration of SUPPLEMENTARY INFORMATION for should be submitted to the Chief, this permit is 5 years from June 1, 2020 additional information on attendance, Permits and Conservation Division, at to May 31, 2025. participation instructions, and meeting the address listed above. Comments may In compliance with the National materials. also be submitted by facsimile to (301) Environmental Policy Act of 1969 (42 713–0376, or by email to U.S.C. 4321 et seq.), an initial FOR FURTHER INFORMATION CONTACT: [email protected]. Please determination has been made that the Celia Barroso, West Coast Region, include the File No. in the subject line activity proposed is categorically NMFS, at [email protected], or at of the email comment. excluded from the requirement to (562) 432–1850. Those individuals requesting a public prepare an environmental assessment or SUPPLEMENTARY INFORMATION: hearing should submit a written request environmental impact statement. Stakeholders have expressed an to the Chief, Permits and Conservation Concurrent with the publication of interest in developing management Division at the address listed above. The this notice in the Federal Register, objectives and a long-term management request should set forth the specific NMFS is forwarding copies of the framework for PBF. In September 2018, reasons why a hearing on this application to the Marine Mammal the Pacific Fishery Management Council application would be appropriate. Commission and its Committee of (PFMC) recommended that its Highly FOR FURTHER INFORMATION CONTACT: Sara Scientific Advisors. Migratory Species Management Team Young or Shasta McClenahan, (301) Dated: February 24, 2020. develop a long-term management 427–8401. Julia Marie Harrison, strategy for PBF (see the PFMC’s SUPPLEMENTARY INFORMATION: The Chief, Permits and Conservation Division, ‘‘September 2018 Decision Summary subject permit is requested under the Office of Protected Resources, National Document’’ at https:// authority of the Marine Mammal Marine Fisheries Service. www.pcouncil.org/wp-content/uploads/ _ _ _ Protection Act of 1972, as amended [FR Doc. 2020–04080 Filed 2–27–20; 8:45 am] 2018/09/0918 Decision Summary (MMPA; 16 U.S.C. 1361 et seq.), the BILLING CODE 3510–22–P DocumentV2.pdf). On May 2, 2019, regulations governing the taking and NMFS held a stakeholder meeting in importing of marine mammals (50 CFR which participants discussed potential part 216), and the Fur Seal Act of 1966, DEPARTMENT OF COMMERCE management objectives and strategies to as amended (16 U.S.C. 1151 et seq.). achieve those objectives for the The applicant requests a research National Oceanic and Atmospheric domestic commercial PBF fishery (see permit to investigate population status Administration the NMFS report to the June PFMC and trends, demographics, health and meeting at https://www.pcouncil.org/ disease, and foraging ecology of [RTID 0648–XW019] wp-content/uploads/2019/06/J2b_Sup_ _ _ northern fur seals. Up to 38,491 U.S. Stakeholder Meeting on Pacific NMFS Rpt3 JUN2019BB.pdf). The northern fur seals may be taken Bluefin Tuna Fishery Management upcoming meeting scheduled for April annually from the California stock at Framework; Meeting Announcement 23, 2020, is intended to follow up the San Miguel Island and the Farallon discussion from the 2019 stakeholder Islands in California, including 1,580 by AGENCY: National Marine Fisheries meeting as well as provide an capture and handle, 36,900 by Service (NMFS), National Oceanic and opportunity for early comments on how incidental disturbance and 11 by Atmospheric Administration (NOAA), to implement a new Inter-American unintentional mortality. Up to 375,431 Commerce. Tropical Tuna Commission (IATTC) northern fur seals may be taken ACTION: Notice of public meeting. resolution on PBF conservation and annually from the Eastern Pacific stock management for 2021–2022 that NMFS at the Pribilof Islands and Bogoslof SUMMARY: NMFS is holding a meeting to anticipates the IATTC will adopt at its Island in Alaska, including 18,200 by discuss the future management of the annual meeting in August 2020. In order capture and handle, 357,220 by U.S. West Coast Pacific bluefin tuna to facilitate discussion, NMFS strongly incidental disturbance, and 11 by (PBF) fishery, including management encourages in-person participation at

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the meeting location described in the Federal Advisory Committee Act, 5 agenda will be posted on the ADDRESSES section if possible. NMFS U.S.C. App. 2 (FACA) and its Commercial Remote Sensing Regulatory will email attendance instructions and implementing regulations, see 41 CFR Affairs Office at https:// background materials to the meeting 102–3.150, notice is hereby given of the www.nesdis.noaa.gov/CRSRA/ participants who notify the meeting meeting of ACCRES. ACCRES was accresMeetings.html . facilitator as described in the ADDRESSES established by the Secretary of ACCRES expects that public section. Commerce (Secretary) on May 21, 2002, statements presented at its meetings will to advise the Secretary of Commerce not be repetitive of previously- PBF U.S. Stakeholder Meeting Topics through the Under Secretary of submitted oral or written statements. In The PBF U.S. stakeholder meeting Commerce for Oceans and Atmosphere general, each individual or group topics will include, but are not limited on matters relating to the U.S. making an oral presentation may be to, the following: commercial remote sensing space limited to a total time of five minutes. (1) An overview of international industry and on the National Oceanic Written comments sent to NOAA/ management of PBF and current and Atmospheric Administration’s NESDIS/CRSRA on or before March 12, management of the U.S. PBF fishery; activities to carry out the 2020 will be provided to Committee and, responsibilities of the Department of members in advance of the meeting. (2) Potential management options for Commerce set forth in the National and Comments received too close to the 2021–2022 and in the long-term. Commercial Space Programs Act of 2010 meeting date will normally be provided (51 U.S.C. 60101 et seq.). Special Accommodations to Committee members at the meeting. The meeting location is physically Purpose of the Meeting and Matters To Stephen M. Volz, accessible to people with disabilities. Be Considered Assistant Administrator for Satellite and Requests for sign language The meeting will be open to the Information Services. interpretation or other auxiliary aids public pursuant to Section 10(a)(1) of [FR Doc. 2020–04059 Filed 2–27–20; 8:45 am] should be directed to Celia Barroso, at the FACA. During the meeting, the BILLING CODE 3510–HR–P [email protected] or (562) 432– Committee will receive updates on 1850, by April 2, 2020. NOAA’s Commercial Remote Sensing DEPARTMENT OF COMMERCE Authority: 16 U.S.C. 951 et seq., 16 U.S.C. Regulatory Affairs activities and discuss 1801 et seq., 16 U.S.C. 6901 et seq. updates to the commercial remote sensing regulatory regime. The National Oceanic and Atmospheric Dated: February 25, 2020. Committee will be available to receive Administration Karyl K. Brewster-Geisz, public comments on its activities. Acting Director, Office of Sustainable Ocean Exploration Advisory Board Fisheries, National Marine Fisheries Service. Special Accommodations AGENCY: Office of Ocean Exploration [FR Doc. 2020–04095 Filed 2–27–20; 8:45 am] The meeting is physically accessible and Research (OER), National Oceanic BILLING CODE 3510–22–P to people with disabilities. Requests for and Atmospheric Administration special accommodations may be (NOAA), Department of Commerce directed to Tashaun Pierre, NOAA/ (DOC). DEPARTMENT OF COMMERCE NESDIS/CRSRA, 1335 East West ACTION: Solicitation of Applications. Highway, G–101, Silver Spring, National Oceanic and Atmospheric Maryland 20910; (301) 713–7047 or SUMMARY: NOAA is soliciting Administration [email protected]. applications to fill up to six Meeting of the Advisory Committee on Additional Information and Public membership vacancies on the Ocean Commercial Remote Sensing Comments Exploration Advisory Board (OEAB). The new OEAB members will serve In accordance with 41 CFR 102– ACTION: Notice of meeting. initial three-year terms, renewable once. 3.140(b), the meeting room is sufficient DATES: Application materials must be to accommodate advisory committee SUMMARY: The Advisory Committee on received no later than March 30, 2020. Commercial Remote Sensing members, agency staff, and a reasonable ADDRESSES: Submit application (‘‘ACCRES’’ or ‘‘the Committee’’) will number of interested members of the materials to Christa Rabenold via mail meet March 18, 2020. public. However, to avoid overcrowding should an unexpected number of or email. Mail: NOAA/OER, 1315 East DATES: The meeting is scheduled as West Highway, SSMC3 Rm 10310, follows: March 18, 2020, 9 a.m.–4 p.m. members of the public attend the meeting, ACCRES invites interested Silver Spring, MD, 20910; Email: There will be a one hour lunch break [email protected]. from 12 p.m.–1 p.m. members of the public to RSVP through the following link: https://forms.gle/ FOR FURTHER INFORMATION CONTACT: ADDRESSES: The meeting will be held at sfvLt8Rfj7e8C2WNA directly to Tashaun David McKinnie, OEAB Designated the George Washington University’s Pierre at (301) 713–7047, or by email at Federal Officer, NOAA/OER, 7600 Sand Elliott School of International Relations [email protected], by March 13, Point Way NE, Seattle, WA 98115; 206– located at 1957 E Street NW, Room 505, 2020. Any member of the public 526–6950; [email protected]. Washington, DC 20052. wishing further information concerning SUPPLEMENTARY INFORMATION: NOAA is FOR FURTHER INFORMATION CONTACT: the meeting or who wishes to submit soliciting applications to fill up to six Tashaun Pierre, NOAA/NESDIS/ oral or written comments should contact vacancies on the OEAB with individuals CRSRA, 1335 East West Highway, G– Tahara Dawkins, Designated Federal demonstrating expertise in areas 101, Silver Spring, Maryland 20910; Officer for ACCRES, NOAA/NESDIS/ relevant to the statutory purpose of the (301) 713–7047 or Tashaun.pierre@ CRSRA, 1335 East West Highway, G– OEAB and the ocean exploration act noaa.gov. 101, Silver Spring, Maryland 20910; established under 33 U.S.C. 3401 et seq. SUPPLEMENTARY INFORMATION: As (301) 713–3385 or tahara.dawkins@ The new OEAB members will serve required by Section 10(a)(2) of the noaa.gov. Copies of the draft meeting initial three-year terms, renewable once.

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The purpose of the OEAB is to advise • Promotes technological innovation FOR FURTHER INFORMATION CONTACT: Dr. the NOAA Administrator on matters to advance ocean exploration; Matt Freeman, Economist, Gulf of pertaining to ocean exploration. The • Provides public access to data and Mexico Fishery Management Council; OEAB functions as an advisory body in information; [email protected], accordance with the Federal Advisory • Encourages the next generation of telephone: (813) 348–1630. The Committee Act (FACA), as amended, 5 ocean explorers, scientists, and Council’s website, www.gulfcouncil.org U.S.C. App., with the exception of engineers; and, also has details on the meeting location, • section 14. It reports to the NOAA Expands the national ocean proposed agenda, webinar listen-in Administrator, as directed by 33 U.S.C. exploration program through access, and other materials. partnerships. 3405. SUPPLEMENTARY INFORMATION: The For more information about OER, The OEAB consists of approximately following items are on the agenda, please visit https:// ten members, including a chair and co- though agenda items may be addressed chair(s), designated by the NOAA oceanexplorer.noaa.gov. Applications: An application is out of order (changes will be noted on Administrator in accordance with FACA the Council’s website when possible.) requirements and the terms of the required to be considered for OEAB approved OEAB Charter. membership. To apply, please submit Tuesday, March 24, 2020 (1) your full name, title, institutional The OEAB was established: Meeting will begin with adoption of affiliation, and contact information (1) To advise the Administrator on agenda, approval of minutes from the (mailing address, email address, priority areas for survey and discovery; March 21, 2019 meeting; and, a review telephone and fax numbers); (2) a short (2) To assist the program in the of the scope of work with its members. description of your qualifications development of a five-year strategic plan National Marine Fisheries Service relative to the statutory purpose of the for the fields of ocean, marine, and (NMFS) will provide the AP with OEAB and the ocean exploration act Great Lakes science, exploration, and updated stock assessments, 2018 + established under 33 U.S.C. 3401 et seq.; discovery; preliminary 2019 Gulf shrimp fishery (3) a resume or curriculum vitae (3) To annually review the quality and effort and landings, the preliminary (maximum length four pages); and (4) a effectiveness of the proposal review 2019 Royal Red index, and the cover letter stating your interest in process established under section biological review of the Texas closure. serving on the OEAB and highlighting 12003(a)(4); and NMFS will also discuss the 2019 final specific areas of expertise relevant to the (4) To provide other assistance and rule on modifications to skimmer trawl purpose of the OEAB. advice as requested by the turtle excluder device (TED) regulations. Administrator. Dated: February 10, 2020. Gulf Council staff will review Shrimp OEAB members are appointed as David Holst, Fishery Management Plans (FMP) special government employees (SGEs) Chief Financial Officer/Administrative Objectives. The AP will discuss first- and will be subject to the ethical Officer, Office of Oceanic and Atmospheric hand accounts of changes in the shrimp standards applicable to SGEs. Members Research, National Oceanic and Atmospheric fishery environment, trends in sales of are reimbursed for actual and reasonable Administration. state shrimp licenses, and any other expenses incurred in performing such [FR Doc. 2020–04125 Filed 2–27–20; 8:45 am] business items. duties but will not be reimbursed for BILLING CODE 3510–KA–P —Meeting Adjourns their time. All OEAB members serve at The meeting will be broadcast via the discretion of the NOAA DEPARTMENT OF COMMERCE webinar. You may register for the listen- Administrator. in access by visiting The OEAB meets three to four times National Oceanic and Atmospheric www.gulfcouncil.org and clicking on the each year, exclusive of subcommittee, Administration AP meeting on the calendar. task force, and working group meetings. The Agenda is subject to change, and As a Federal Advisory Committee, the RIN 0648–XA057 the latest version along with other OEAB’s membership is required to be meeting materials will be posted on balanced in terms of viewpoints Gulf of Mexico Fishery Management Council; Public Meeting www.gulfcouncil.org as they become represented and the functions to be available. performed as well as including the AGENCY: National Marine Fisheries Although other non-emergency issues interests of geographic regions of the Service (NMFS), National Oceanic and not on the agenda may come before the country and the diverse sectors of our Atmospheric Administration (NOAA), group for discussion, in accordance society. Commerce. with the Magnuson-Stevens Fishery For more information about the ACTION: Notice of a public meeting. Conservation and Management Act OEAB, please visit https:// (Magnuson-Stevens Act), those issues oeab.noaa.gov. SUMMARY: The Gulf of Mexico Fishery may not be the subject of formal action Although the OEAB reports directly to Management Council will hold a one- during this meeting. Actions will be the NOAA Administrator, OER, which day meeting of its Shrimp Advisory restricted to those issues specifically is part of the NOAA Office of Oceanic Panel (AP). identified in this notice and any issues and Atmospheric Research, provides DATES: The meeting will convene on arising after publication of this notice staffing and other support for the OEAB. Tuesday, March 24, 2020, 8:30 a.m.–3 that require emergency action under OER’s mission is to explore the ocean p.m., EDT. For agenda details, see section 305(c) of the Magnuson-Stevens for national benefit. SUPPLEMENTARY INFORMATION. Act, provided the public has been OER: ADDRESSES: The meeting will be held at notified of the Council’s intent to take • Explores the ocean to make the Gulf Council Headquarters office. action to address the emergency. discoveries of scientific, economic, and Council address: Gulf of Mexico cultural value, with priority given to the Fishery Management Council, 4107 W Special Accommodations U.S. Exclusive Economic Zone and Spruce Street, Suite 200, Tampa, FL This meeting is physically accessible Extended Continental Shelf; 33607; telephone: (813) 348–1630. to people with disabilities. Requests for

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sign language interpretation or other Requirements: PC-based attendees are DEPARTMENT OF COMMERCE auxiliary aids should be directed to required to use Windows® 10, 8; Mac®- Kathy Pereira at the Gulf Council office based attendees are required to use Mac United States Patent and Trademark (see ADDRESSES), at least 5 working days OS® X 10.5 or newer; Mobile attendees Office prior to the meeting. are required to use iPhone®, iPad®, AndroidTM phone or Android tablet (see Submission for OMB Review; Authority: 16 U.S.C. 1801 et seq. Comment Request; Secrecy and the RingCentral mobile apps in your app Dated: February 25, 2020. License To Export store). You may send an email to Mr. Tracey L. Thompson, Kris Kleinschmidt (kris.kleinschmidt@ The United States Patent and Acting Deputy Director, Office of Sustainable Fisheries, National Marine Fisheries Service. noaa.gov) or contact him at (503) 820– Trademark Office (USPTO) will submit 2280, extension 412 for technical to the Office of Management and Budget [FR Doc. 2020–04140 Filed 2–27–20; 8:45 am] assistance. (OMB) for clearance the following BILLING CODE 3510–22–P Council Address: Pacific Fishery proposal for collection of information Management Council, 7700 NE under the provisions of the Paperwork DEPARTMENT OF COMMERCE Ambassador Place, Suite 101, Portland, Reduction Act of 1995. OR 97220–1384. Agency: United States Patent and National Oceanic and Atmospheric Trademark Office, Department of Administration FOR FURTHER INFORMATION CONTACT: Commerce. Todd Phillips, Staff Officer; telephone: Title: Secrecy and License to Export. RIN 0648–XA056 (503) 820–2426; email: todd.phillips@ OMB Control Number: 0651–0034. Form Number(s): There are no forms Pacific Fishery Management Council; noaa.gov. in this information collection. Public Meeting SUPPLEMENTARY INFORMATION: The Type of Request: Revision of a AGENCY: National Marine Fisheries primary purpose of the GMT webinar is currently approved information Service (NMFS), National Oceanic and to prepare for the Pacific Council’s collection. Atmospheric Administration (NOAA), March 2020 agenda items. The GMT Number of Respondents: 4,434. Commerce. will discuss items related to groundfish Average Hours per Response: The ACTION: Notice of public meeting management and administrative Pacific USPTO estimates that it will take the (webinar). Council agenda items. A detailed public from 30 minutes (0.50 hours) to agenda for the webinar will be available 4 hours to gather the necessary SUMMARY: The Pacific Fishery on the Pacific Council’s website prior to information, prepare the appropriate Management Council (Pacific Council) the meeting. The GMT may also address document, and submit the information will convene a webinar meeting of its other assignments relating to groundfish to the USPTO. Groundfish Management Team (GMT) to management. No management actions Burden Hours: 2,798 hours. discuss items on the Pacific Council’s will be decided by the GMT. Hourly Cost Burden: $1,225,524. March 2020 meeting agenda. The Non-hourly Cost Burden: $788,287. meeting is open to the public. Although non-emergency issues not Needs and Uses: contained in the meeting agenda may be DATES: The webinar meeting will be In the interest of national security, discussed, those issues may not be the held Tuesday, March 24, 2020, from 1 patent laws and regulations place subject of formal action during this p.m. to 4 p.m., Pacific Daylight Time. certain limitations on the disclosure of meeting. Action will be restricted to The scheduled ending time for the GMT information contained in patents and webinar is an estimate, the meeting will those issues specifically listed in this patent applications and on the filing of adjourn when business for the day is notice and any issues arising after applications for patents in foreign completed. publication of this notice that require countries. emergency action under Section 305(c) The filing of a patent application is ADDRESSES: This meeting will be held of the Magnuson-Stevens Fishery considered a request for a foreign filing via webinar. A public listening station Conservation and Management Act, license. However, in some instances an is available at the Pacific Council office provided the public has been notified of applicant may need a license for filing (address below). To attend the webinar the GMT’s intent to take final action to patent applications in foreign countries (1) join the meeting by using this link: address the emergency. prior to a filing in the USPTO or sooner https://meetings.ringcentral.com/join, than the anticipated licensing of a (2) enter the Meeting ID, 5038202426, Special Accommodations pending patent application. and click JOIN, (3) you will be The public listening station is Responses to this information prompted to either download the collection are necessary to obtain a RingCentral meetings application or join physically accessible to people with disabilities. Requests for sign language permit to disclose, modify, or rescind a the meeting without a download via secrecy order; to obtain general or group interpretation or other auxiliary aids your web browser, and (4) enter your permits; to obtain foreign filing licenses, should be directed to Mr. Kris name and click JOIN. NOTE: We require including retroactive foreign filing Kleinschmidt, (503) 820–2412, all participants to use a telephone or licenses; to expedite the handling of a [email protected], at least 10 cell phone to participate. (1) You must license; or to change the scope of a days prior to the meeting date. use your telephone for the audio portion license. of the meeting by dialing the TOLL Authority: 16 U.S.C. 1801 et seq. Affected Public: Individuals or number provided on your screen Dated: February 25, 2020. households; private sector. followed by the meeting ID and Frequency: On occasion. participant ID, also provided on the Tracey L. Thompson, Respondent’s Obligation: Required to screen. (2) Once connected, you will be Acting Deputy Director, Office of Sustainable obtain or retain benefits. in the meeting, seeing other participants Fisheries, National Marine Fisheries Service. OMB Desk Officer: Nicholas A. Fraser, and a shared screen, if applicable. [FR Doc. 2020–04143 Filed 2–27–20; 8:45 am] email: Nicholas_A._Fraser@ Technical Information and System BILLING CODE 3510–22–P omb.eop.gov.

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Once submitted, the request will be hours to gather the necessary fax to 202–395–5167, marked to the publicly available in electronic format information, prepare the appropriate attention of Nicholas A. Fraser. through reginfo.gov. Follow the documents, and submit the information Kimberly Hardy, instructions to view Department of to the USPTO. Commerce information collections Information Collections Officer, Office of the Burden Hours: 690 hours. Chief Administrative Officer, United States currently under review by OMB. Patent and Trademark Office. Further information can be obtained Hourly Cost Burden: $145,213. by: Non-Hourly Cost Burden: $1,721. [FR Doc. 2020–04135 Filed 2–27–20; 8:45 am] • Email: InformationCollection@ Needs and Uses: The USPTO Office of BILLING CODE 3510–16–P uspto.gov. Include ‘‘0651–0034 Enrollment and Discipline (OED) uses information request’’ in the subject line the information in this information of the message. collection to determine whether the COMMITTEE FOR PURCHASE FROM • Mail: Kimberly Hardy, Office of the applicants are of good moral character PEOPLE WHO ARE BLIND OR Chief Administrative Officer, United and reputation as well as whether said SEVERELY DISABLED States Patent and Trademark Office, applicants have the necessary legal, P.O. Box 1450, Alexandria, VA 22313– scientific, and technical qualifications Notice of Availability 1450. required for admittance to the Law Written comments and School Clinic Certification Program. The AGENCY: Committee for Purchase From recommendations for the proposed USPTO uses student-applicant People Who Are Blind or Severely information collection should be sent on information to determine whether an Disabled. or before March 30, 2020 to Nicholas A. applicant may be admitted to, or an Fraser, OMB Desk Officer, via email to existing student-practitioner may ACTION: Notice of availability. _ _ Nicholas A. [email protected], or by remain in, the Law School Clinic fax to 202–395–5167, marked to the Certification Program. Information SUMMARY: Pursuant to Executive Order attention of Nicholas A. Fraser. collected from applications submitted 13891 and OMB Memorandum M–20– by law schools for admission into the 02, the U.S. AbilityOne Commission Kimberly Hardy, (Commission) is announcing the Information Collections Officer, Office of the program is used to evaluate those law schools and determine whether they are February 28, 2020, launch of a single, Chief Administrative Officer, United States searchable, indexed database containing Patent and Trademark Office. qualified to be admitted as member law schools into the Law School Clinic all Commission guidance documents [FR Doc. 2020–04134 Filed 2–27–20; 8:45 am] currently in effect. BILLING CODE 3510–16–P Certification Program. These qualifications are reevaluated through DATES: Applicable February 28, 2020. the law schools’ provision of reports as ADDRESSES: www.abilityone.gov/ DEPARTMENT OF COMMERCE well as their completion of the required biennial reapplication process. guidance. Patent and Trademark Office Affected Public: Individuals or FOR FURTHER INFORMATION CONTACT: households; private sector. Brian Hoey, 703.603.2114, Submission for OMB Review; [email protected]. Comment Request; Law School Clinic Frequency: On occasion. Certification Program Respondent’s Obligation: Required to SUPPLEMENTARY INFORMATION: Section 3 obtain or retain benefits. of Executive Order 13891 requires each The United States Patent and OMB Desk Officer: Nicholas A. Fraser, federal agency to ‘‘establish or maintain Trademark Office (USPTO) will submit _ _ on its website a single, searchable, to the Office of Management and Budget email: Nicholas A. Fraser@ omb.eop.gov. indexed database that contains or links (OMB) for clearance the following to all guidance documents in effect from proposal for collection of information Once submitted, the request will be such agency or component.’’ Exec. under the provisions of the Paperwork publicly available in electronic format Order No. 13,891, 84 FR 55,235 (Oct. 15, Reduction Act of 1995. through reginfo.gov. Follow the 2019). Agency: United States Patent and instructions to view Department of Trademark Office, Department of Commerce information collections OMB Memorandum M–20–02 further Commerce. currently under review by OMB. requires agencies to ‘‘send to the Federal Register a notice announcing Title: Law School Clinic Certification Further information can be obtained the existence of the new guidance portal Program. by: and explaining that all guidance OMB Control Number: 0651–0081. • Form Number(s): (SB = Specimen Email: InformationCollection@ documents remaining in effect are Book, LS = Law School) uspto.gov. Include ‘‘0651–0081 contained on the new guidance portal.’’ information request’’ in the subject line • PTO/SB/419: (Certification and OMB Memorandum M–20–02, Guidance of the message. Request to Make Special Under the Implementing Executive Order 13891, • Law School Program) Mail: Kimberly Hardy, Office of the titled ‘‘Promoting the Rule of Law • PTO–158LS: (Application for Limited Chief Administrative Officer, United Through Improved Agency Guidance Recognition in USPTO Law School States Patent and Trademark Office, Documents’’ (Oct. 31, 2019). Program) P.O. Box 1450, Alexandria, VA 22313– In compliance with the above, the Type of Request: Revision of a 1450. Commission is announcing the currently approved information Written comments and availability of a single, searchable, collection. recommendations for the proposed indexed database containing all Number of Respondents: 812. information collection should be sent on Commission guidance documents Average Hours per Response: The or before March 30, 2020 to Nicholas A. currently in effect, which may be USPTO estimates that it will take the Fraser, OMB Desk Officer, via email to accessed at www.abilityone.gov/ public from 30 minutes (0.5 hours) to 40 [email protected], or by guidance on or after February 28, 2020.

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(Authority: E.O. 13891; OMB Memorandum substantial number of small entities. that the products and service listed below are M–20–02.) The major factors considered for this no longer suitable for procurement by the Federal Government under 41 U.S.C. 8501– Patricia Briscoe, certification were: 8506 and 41 CFR 51–2.4. Deputy Director, Business Operations (Pricing 1. The action will not result in any and Information Management). additional reporting, recordkeeping or Regulatory Flexibility Act Certification other compliance requirements for small [FR Doc. 2020–04112 Filed 2–27–20; 8:45 am] entities other than the small I certify that the following action will not BILLING CODE 6353–01–P organizations that will furnish the have a significant impact on a substantial products to the Government. number of small entities. The major factors considered for this certification were: COMMITTEE FOR PURCHASE FROM 2. The action will result in authorizing small entities to furnish the 1. The action will not result in additional PEOPLE WHO ARE BLIND OR reporting, recordkeeping or other compliance SEVERELY DISABLED products to the Government. 3. There are no known regulatory requirements for small entities. 2. The action may result in authorizing Procurement List; Additions and alternatives which would accomplish small entities to furnish the products and Deletions the objectives of the Javits-Wagner- O’Day Act (41 U.S.C. 8501–8506) in service to the Government. AGENCY: Committee for Purchase From connection with the products proposed 3. There are no known regulatory People Who Are Blind or Severely for addition to the Procurement List. alternatives which would accomplish the Disabled. objectives of the Javits-Wagner-O’Day Act (41 ACTION: Additions to and Deletions from End of Certification U.S.C. 8501–8506) in connection with the the Procurement List. Accordingly, the following products products and service deleted from the are added to the Procurement List: Procurement List. SUMMARY: This action adds products to the Procurement List that will be Products End of Certification furnished by nonprofit agencies NSNs—Product Names: Accordingly, the following products and employing persons who are blind or 7530–00–NIB–1274—Surface Safe Sign service are deleted from the Procurement Label, Removable, Laser/Inkjet, White, List: have other severe disabilities, and ″ ″ deletes products and a service from the 3–1/2 x 5 , 15 Sheets 7530–00–NIB–1275—Surface Safe Sign Products Procurement List previously furnished ″ Label, Removable, Laser/Inkjet, White, 5 NSN—Product Name: by such agencies. ″ x 7 , 15 Sheets 3990CAAA9243—Pallet, Demo, Sideboard, DATES: 7530–00–NIB–1276—Surface Safe Sign Date added to and deleted from 30″ x 44’’ the Procurement List: March 29, 2020. Label, Removable, Laser/Inkjet, White, 7″ x 10″, 15 Sheets Mandatory Source of Supply: Bona Vista ADDRESSES: Committee for Purchase 7530–00–NIB–1277—Surface Safe Sign Programs, Inc., Kokomo, IN From People Who Are Blind or Severely Label, Removable, Laser/Inkjet, White, 8″ Contracting Activity: W39Z STK REC ACCT– Disabled, 1401 S Clark Street, Suite 715, x 8″, 15 Sheets CRANE AAP, CRANE, IN Arlington, Virginia 22202–4149. 7530–00–NIB–1220—Labels, Self- NSNs—Product Names: FOR FURTHER INFORMATION CONTACT: Laminating, Laser/Inkjet, White, 2–5/16″ 8125–00–NIB–0041—Spray Bottle, ″ Michael R. Jurkowski, Telephone: (703) x 3–5/16 , 25 Sheets BioRenewables Restroom Cleaner, Silk 603–2117, Fax: (703) 603–0655, or email 7530–00–NIB–1223—Labels, Self- Screened, 8 oz, 12/BX Laminating, Laser/Inkjet, White, 1–1/32″ [email protected]. 8125–00–NIB–0024—Tribase multi x 3–1/2″, 25 Sheets SUPPLEMENTARY INFORMATION: This 7530–00–NIB–1278—Business Cards, purpose silk screened 8oz bottle, 12/BX notice is published pursuant to 41 Uncoated, Two-Sided Printing, White, 2″ 8125–00–NIB–0025—Glass cleaner silk U.S.C. 8503(a)(2) and 41 CFR 51–2.3. Its x 3–1/2″, 200 Cards screened 8oz bottle, 12/BX purpose is to provide interested persons 7530–00–NIB–1287—Business Cards, 8125–00–NIB–0026—Neutral Disinfectant an opportunity to submit comments on Uncoated, Two-Sided Printing, White, 2″ silk screened 8oz bottle, 12/BX ″ the proposed actions. x 3–1/2 , 1000 Cards 8125–00–NIB–0027—Industrial cleaner 7530–00–NIB–1279—Tent Cards, silk screened 8oz bottle, 12/BX Additions Uncoated, Embossed, Two-Sided Mandatory Source of Supply: VisionCorps, ″ ″ Printing, White, 3–1/2 x 11 , 50 Cards Lancaster, PA On 1/3/2020, the Committee for 7530–00–NIB–1280—Tent Cards, Contracting Activity: CENTRAL OFFICE, Purchase From People Who Are Blind Uncoated, Embossed, Two-Sided or Severely Disabled published notice of Printing, White, 2–1/2″ x 8–1/2″, 100 WASHINGTON, DC proposed additions to the Procurement Cards Services List. This notice is published pursuant 7530–00–NIB–1270—Name Badge, Laser/ to 41 U.S.C. 8503 (a)(2) and 41 CFR 51– Inkjet, 2–1/3″ x 3–3/8″, White, 50 Sheets Service Type: Janitorial/Custodial 2.3. Mandatory Source of Supply: North Central Mandatory for: Veterans Administration After consideration of the material Sight Services, Inc., Williamsport, PA Medical Center: 2600 M. L. King, Jr. presented to it concerning capability of Mandatory For: Total Government Parkway, Des Moines, IA Requirement Mandatory Source of Supply: Goodwill qualified nonprofit agencies to provide Contracting Activity: FEDERAL the products and impact of the Solutions, Inc., Johnston, IA ACQUISITION SERVICE, GSA/FAS Contracting Activity: VETERANS AFFAIRS, additions on the current or most recent ADMIN SVCS ACQUISITION BR(2 contractors, the Committee has DEPARTMENT OF, NAC determined that the products listed Deletions Patricia Briscoe, below are suitable for procurement by On 1/17/2020 and 1/24/2020, the Deputy Director, Business Operations (Pricing the Federal Government under 41 U.S.C. Committee for Purchase From People Who and Information Management). 8501–8506 and 41 CFR 51–2.4. Are Blind or Severely Disabled published [FR Doc. 2020–04114 Filed 2–27–20; 8:45 am] notice of proposed deletions from the Regulatory Flexibility Act Certification BILLING CODE 6353–01–P Procurement List. I certify that the following action will After consideration of the relevant matter not have a significant impact on a presented, the Committee has determined

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COMMITTEE FOR PURCHASE FROM Extension, Handle, Telescoping, Mandatory for: Auburn Field Office-BoR: ′ ′ PEOPLE WHO ARE BLIND OR Aluminum, 5 to 10 L Auburn Field Office, Auburn, CA SEVERELY DISABLED Mandatory Source of Supply: Arizona Contracting Activity: OFFICE OF POLICY, Industries for the Blind, Phoenix, AZ MANAGEMENT, AND BUDGET, NBC Procurement List; Proposed Addition Contracting Activity: GSA/FSS GREATER ACQUISITION SERVICES DIVISION SOUTHWEST ACQUISITI, FORT and Deletions Service Type: Janitorial/Custodial WORTH, TX Mandatory for: National Weather Service: Los AGENCY: Committee for Purchase From Services Angeles International Airport, Los Angeles, CA People Who Are Blind or Severely Service Type: Form/Publication Storage & Disabled. Contracting Activity: COMMERCE, Distribution DEPARTMENT OF, COMMERCE, ACTION: Proposed addition to and Mandatory for: Department of Agriculture, DEPARTMENT OF deletions from the Procurement List. Landover, MD Contracting Activity: AGRICULTURE, Service Type: Food Service Attendant Mandatory for: Tucson Air National National SUMMARY: The Committee is proposing DEPARTMENT OF, PROCUREMENT OPERATIONS DIVISION Guard Base: Arizona National Guard, to add a service to the Procurement List Tucson, AZ Service Type: Mailing Services that will be furnished by nonprofit Contracting Activity: DEPT OF THE AIR Mandatory for: Bureau of Public Debt: 200 agencies employing persons who are FORCE, FA7014 AFDW PK Third Street, Parkersburg, WV blind or have other severe disabilities, Mandatory Source of Supply: SW Resources, Service Type: Grounds Maintenance and deletes a product and services Inc., Parkersburg, WV Mandatory for: Defense Finance and previously furnished by such agencies. Contracting Activity: TREASURY, Accounting Service: Building 951, San DATES: Comments must be received on DEPARTMENT OF THE, DEPT OF Bernadino, CA TREAS/ Mandatory Source of Supply: Lincoln or before: March 29, 2020. Training Center and Rehabilitation ADDRESSES: Committee for Purchase Service Type: Grounds Maintenance Mandatory for: Social Security Workshop, South El Monte, CA From People Who Are Blind or Severely Administration: 300 North Greene Street, Contracting Activity: DEPT OF THE ARMY, Disabled, 1401 S Clark Street, Suite 715, Metro West Complex, Baltimore, MD W40M RHCO–ATLANTIC USAHCA Arlington, Virginia 22202–4149. Mandatory Source of Supply: The Arc Service Type: Janitorial/Custodial FOR FURTHER INFORMATION CONTACT: For Baltimore, Inc., Baltimore, MD Mandatory for: U.S. Coast Guard, Ketchikan, further information or to submit Contracting Activity: SOCIAL SECURITY AK comments contact: Michael R. ADMINISTRATION, SOCIAL SECURITY Service Type: Janitorial/Custodial Jurkowski, Telephone: (703) 603–2117, ADMINISTRATION Mandatory for: Veterans Affairs: Greater Los Angeles Healthcare System, East Los Fax: (703) 603–0655, or email Service Type: Janitorial/Custodial Mandatory for: Defense Logistics Agency: Angeles, CA [email protected]. Depot, Somerville, NJ Mandatory Source of Supply: Job Options, SUPPLEMENTARY INFORMATION: This Contracting Activity: DEFENSE LOGISTICS Inc., San Diego, CA notice is published pursuant to 41 AGENCY, DLA SUPPORT SERVICES— Contracting Activity: VETERANS AFFAIRS, U.S.C. 8503(a)(2) and 41 CFR 51–2.3. Its DSS DEPARTMENT OF, NAC purpose is to provide interested persons Service Type: Janitorial/Custodial Service Type: Laundry Service an opportunity to submit comments on Mandatory for: Agriculture Cotton Annex: Mandatory for: Everett Naval Station, Everett, the proposed actions. 14th and Independence Avenue, WA Washington, DC Mandatory Source of Supply: Northwest Additions Mandatory Source of Supply: Melwood Center, Seattle, WA Contracting Activity: DEPT OF THE NAVY, If the Committee approves the Horticultural Training Center, Inc., Upper Marlboro, MD U S FLEET FORCES COMMAND proposed additions, the entities of the Contracting Activity: DEPT OF THE NAVY, Service Type: Janitorial/Custodial Federal Government identified in this U S FLEET FORCES COMMAND Mandatory for: GSA, Warehouses: notice will be required to procure the Service Type: File Maintenance WA0815KA, WA0816KA, WA0817KA, service listed below from nonprofit Mandatory for: VA Medical Center, WA0821KA, WA0822KA, WA0823KA, agencies employing persons who are Northport, NY WA0824KA, WA0825KA, WA0831KA, blind or have other severe disabilities. Mandatory Source of Supply: The Corporate WA0832KA, Auburn, WA The following service is proposed for Source, Inc., Garden City, NY Mandatory Source of Supply: Northwest addition to the Procurement List for Contracting Activity: VETERANS AFFAIRS, Center, Seattle, WA production by the nonprofit agencies DEPARTMENT OF, NAC Contracting Activity: GENERAL SERVICES listed: Service Type: Mailing Services ADMINISTRATION, FPDS AGENCY Mandatory for: Various Government COORDINATOR Service Agencies in the DC Metro Area Service Type: Grounds Maintenance Service Type: Mess Attendant Service Contracting Activity: COMMITTEE FOR Mandatory for: Lewiston Levee Parkway, Nez Mandatory for: U.S. Air Force, Dyess Air PURCHASE FROM PEOPLE WHO ARE Perce County, ID Force Base, TX BLIND OR SEVERELY DISABLED, Mandatory Source of Supply: Opportunities Mandatory Source of Supply: Work Services CONTRACTING Unlimited, Inc.—Deleted, Lewiston, ID Corporation, Wichita Falls, TX Service Type: Metal Machining Contracting Activity: DEPT OF THE ARMY, Contracting Activity: DEPT OF THE AIR Mandatory Source of Supply: ServiceSource, W40M RHCO–ATLANTIC USAHCA FORCE, Air Force Nonappropriated Inc., Oakton, VA Service Type: Janitorial/Custodial Funds Purchasing Office, San Antonio, Contracting Activity: COMMERCE, Mandatory for: Airport Building: 9120 NE TX DEPARTMENT OF, COMMERCE, 47th, Portland, OR DEPARTMENT OF Mandatory Source of Supply: Relay Deletions Service Type: Microfilm Stripping Resources, Portland, OR The following product and services Mandatory Source of Supply: Navigations, Contracting Activity: ENERGY, are proposed for deletion from the Incorporated, Battle Creek, MI DEPARTMENT OF, HEADQUARTERS Procurement List: Contracting Activity: DEFENSE LOGISTICS PROCUREMENT SERVICES AGENCY, DLA SUPPORT SERVICES— Service Type: Janitorial/Custodial Product DSS Mandatory for: Social Security NSN—Product Name: 7920–00–926–5146— Service Type: Grounds Maintenance Administration Building: 175 East 100

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North, Provo, UT AGRICULTURAL RESEARCH SERVICE Goodwill Industries, Washington, DC Contracting Activity: GENERAL SERVICES Service Type: Operation of Self Service Contracting Activity: Government Printing ADMINISTRATION, FPDS AGENCY Supply Store Office COORDINATOR Mandatory for: U.S. Army Space & Missile Patricia Briscoe, Service Type: Grounds Maintenance Defense Command, Arlington, VA Mandatory for: Naval Station, Treasure Mandatory Source of Supply: ServiceSource, Deputy Director, Business Operations (Pricing Island, CA Inc., Oakton, VA and Information Management). Contracting Activity: DEPT OF THE NAVY, Contracting Activity: DEPT OF THE ARMY, [FR Doc. 2020–04115 Filed 2–27–20; 8:45 am] U.S. FLEET FORCES COMMAND W40M RHCO–ATLANTIC USAHCA BILLING CODE 6353–01–P Service Type: Mailing Services Service Type: Repair of Toolbox & Rollaway Mandatory for: Government Printing Office: Repair 710 North Capitol & H Street NW, Mandatory for: Robins Air Force Base, Robins BUREAU OF CONSUMER FINANCIAL Washington, DC AFB, GA Mandatory Source of Supply: MVLE, Inc., Contracting Activity: DEPT OF THE AIR PROTECTION Springfield, VA FORCE, FA8501 AFSC PZIO [Docket No CFPB–2020–0011] Contracting Activity: Government Printing Service Type: Laundry Service Office Mandatory for: Bangor Naval Subase BOQ & Privacy Act of 1974; System of Service Type: Janitorial/Custodial BEQ, Bremerton, WA Records Mandatory for: U.S. Army Reserve Center: Mandatory for: Puget Sound Naval Shipyard: 360 West California Avenue, Memphis, Galley and Bachelor Officers’ Quarters AGENCY: Bureau of Consumer Financial TN (BOQ), Bremerton, WA Protection. Mandatory Source of Supply: Shelby Mandatory Source of Supply: Northwest ACTION: Notice of a new system of Residential and Vocational Services, Center, Seattle, WA records. Inc.—Deleted, Memphis, TN Contracting Activity: DEPT OF THE NAVY, Contracting Activity: DEPT OF THE ARMY, NAVSUP FLT LOG CTR PUGET SOUND SUMMARY: In accordance with the W40M RHCO–ATLANTIC USAHCA Service Type: Administrative Services Privacy Act of 1974, as amended, the Service Type: Facility Support Services Mandatory for: Department of Energy: 1000 Bureau of Consumer Financial Mandatory for: Internal Revenue Service: Independence Avenue SW, Forrestal Protection, hereinto referred to as the Martinsburg Computing Center, Building, Washington, DC Consumer Financial Protection Bureau Kearneysville, KW Mandatory Source of Supply: Didlake, Inc., (Bureau), gives notice of the Service Type: Janitorial/Custodial Manassas, VA Mandatory for: Federal Complex: 1500 East Contracting Activity: ENERGY, establishment of a Privacy Act System Bannister Road and 9240 Troost, Kansas DEPARTMENT OF, HEADQUARTERS of Records. The Federal Document City, MO PROCUREMENT SERVICES Management System (FDMS) provides Mandatory Source of Supply: JobOne, Service Type: Vehicle Maintenance Services the Bureau with the ability to Independence, MO Mandatory for: Aberdeen Proving Ground, electronically access and manage its Contracting Activity: GENERAL SERVICES Aberdeen, MD rulemaking dockets and other dockets ADMINISTRATION, FPDS AGENCY Mandatory Source of Supply: Alliance, Inc., related to documents published in the COORDINATOR Baltimore, MD Federal Register requesting public Service Type: Janitorial/Custodial Contracting Activity: FEDERAL comment, including public comments Mandatory for: U.S. Post Office and ACQUISITION SERVICE, GSA/FTS or supporting materials and allows the Courthouse Dubuque, IA ACQUISITION SERVICES DIVISION Contracting Activity: GENERAL SERVICES public to find and review such materials Service Type: Janitorial/Custodial on Regulations.gov. ADMINISTRATION, FPDS AGENCY Mandatory for: U.S. Geological Survey: COORDINATOR Klamath Field Station, 2795 Anderson DATES: Comments must be received no Service Type: Janitorial/Custodial Ave., Suite 106, Klamath Falls, OR later than March 30, 2020. The new Mandatory for: Lock and Dam 19, Keokuk, IA Mandatory Source of Supply: Klamath system of records will be effective on Contracting Activity: DEPT OF THE ARMY, County Mental Health—Deleted, February 28, 2020, with the exception of W07V ENDIST ROCK ISLAND Klamath Falls, OR the routine uses. The routine uses will Service Type: Janitorial/Custodial Contracting Activity: OFFICE OF POLICY, not be effective until March 30, 2020, Mandatory for: U.S. Army Reserve Center: MANAGEMENT, AND BUDGET, NBC pending public comment. General J. Summer Jones, Wheeling, WV ACQUISITION SERVICES DIVISION ADDRESSES: You may submit comments, Contracting Activity: DEPT OF THE ARMY, Service Type: Parts Sorting—Hardware/Small W40M RHCO–ATLANTIC USAHCA Handtool&Denumbering, Parts Sorting— identified by Docket No. CFPB–2020– 0011, by any of the following methods: Service Type: Administrative Services Denumbering of Common Handheld • Mandatory for: Internal Revenue Service, Tools Federal eRulemaking Portal: http:// Constellation Centre Building, Oxon Mandatory for: Robins Air Force Base, Robins www.regulations.gov. Follow the Hill, MD AFB, GA instructions for submitting comments. Mandatory Source of Supply: Melwood Contracting Activity: DEPT OF THE AIR • Mail/Hand Delivery/Courier: Horticultural Training Center, Inc., FORCE, FA8501 AFSC PZIO Tannaz Haddadi, Acting Chief Privacy Upper Marlboro, MD Service Type: Laundry Service Officer, Consumer Financial Protection Contracting Activity: INTERNAL REVENUE Mandatory for: U.S. Army, Asymmetric Bureau, 1700 G Street NW, Washington, SERVICE, DEPT OF TREAS/INTERNAL Warfare Training Center, Fort A.P. Hill, DC 20552. REVENUE SERVICE VA All submissions must include the Service Type: Grounds Maintenance Mandatory Source of Supply: Rappahannock agency name and docket number for this Mandatory for: Veterans Affairs Medical Goodwill Industries, Inc., notice. In general, all comments Center, Salisbury, NC Fredericksburg, VA Contracting Activity: VETERANS AFFAIRS, Contracting Activity: DEPT OF THE ARMY, received will be posted without change DEPARTMENT OF, NAC W6QK ACC–APG DIR to http://www.regulations.gov. In Service Type: Grounds Maintenance Service Type: Janitorial/Custodial addition, comments will be available for Mandatory for: USDA–ARS–SEFTNRL, Mandatory for: Government Printing Office: public inspection and copying at 1700 Byron, GA 7701 Southern Drive, Springbelt G Street NW, Washington, DC 20552 on Contracting Activity: AGRICULTURAL Warehouse, Springfield, VA official business days between the hours RESEARCH SERVICE, DEPT OF AGRIC/ Mandatory Source of Supply: Davis Memorial of 10 a.m. and 5 p.m. Eastern Time. You

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can make an appointment to inspect Third-Party Service Provider: General (1) Appropriate agencies, entities, and comments by telephoning (202) 435– Services Administration, 1800 F Street persons when (a) the Bureau suspects or 9169. All comments, including NW, Washington, DC 20405. has confirmed that there has been a attachments and other supporting breach of the system of records; (b) the SYSTEM MANAGER(S): materials, will become part of the public Bureau has determined that as a result record and subject to public disclosure. Associate Executive Secretariat, of the suspected or confirmed breach You should submit only information Bureau of Consumer Financial there is a risk of harm to individuals, that you wish to make available Protection, 1700 G Street NW, the Bureau (including its information publicly. Washington, DC 20552; (202) 435–9169. systems, programs, and operations), the FOR FURTHER INFORMATION CONTACT: AUTHORITY FOR MAINTENANCE OF THE SYSTEM: Federal Government, or national Tannaz Haddadi, Acting Chief Privacy Public Law 111–203, title X, sections security; and (c) the disclosure made to Officer, (202) 435–7058. If you require 1013, 1021, 1022, codified at 12 U.S.C. such agencies, entities, and persons is this document in an alternative 5492, 5511, 5512. reasonably necessary to assist in electronic format, please contact CFPB_ connection with the Bureau’s efforts to PURPOSE(S) OF THE SYSTEM: [email protected]. respond to the suspected or confirmed The purpose of this system of records breach or to prevent, minimize, or SUPPLEMENTARY INFORMATION: The Dodd- is to maintain and organize comments remedy such harm; Frank Wall Street Reform and Consumer submitted to the Bureau in response to (2) Another Federal agency or Federal Protection Act, Public Law 111–203, Bureau documents published in the entity, when the Bureau determines that title X, established the Bureau. The Federal Register requesting public information from this system of records Bureau will maintain the records comment. It permits the Bureau to is reasonably necessary to assist the covered by this notice. The system of identify submitters in order to recipient agency or entity in (a) records described in this notice, potentially communicate with them as responding to a suspected or confirmed ‘‘CFPB.028—Federal Document appropriate and necessary, such as breach or (b) preventing, minimizing, or Management System’’ will collect seeking clarification, providing a direct remedying the risk of harm to information to enable the Bureau to response if warranted, or other such individuals, the recipient agency or electronically access and manage its needs associated with a rulemaking or entity (including its information rulemaking dockets, or other dockets, notice process. The system also systems, programs, and operations), the related to documents published in the provides the public with a central Federal Government, or national Federal Register requesting public online location, via security, resulting from a suspected or comment, including public comments www.Regulations.gov, to search, view, confirmed breach. or supporting materials and allows the download, and comment on Bureau public to find and review such materials (3) Another Federal or State agency to: documents published in the Federal (a) Permit a decision as to access, on Regulations.gov. Register requesting public comment and The report of a new system of records amendment or correction of records to view other comments the Bureau may has been submitted to the Committee on be made in consultation with or by that have received. Oversight and Reform of the House of agency, or (b) verify the identity of an Representatives, the Committee on CATEGORIES OF INDIVIDUALS COVERED BY THE individual or the accuracy of Homeland Security and Governmental SYSTEM: information submitted by an individual Affairs of the Senate, and the Office of This system covers individuals who who has requested access to or Management and Budget, pursuant to provide personal information while amendment or correction of records; OMB Circular A–108, ‘‘Federal Agency submitting a public comment, (4) The Office of the President in Responsibilities for Review, Reporting, potentially including attachments, to a response to an inquiry from that office and Publication under the Privacy Act’’ Bureau docket. made at the request of the subject of a (December 23, 2016),1 and the Privacy record or a third party on that person’s CATEGORIES OF RECORDS IN THE SYSTEM: Act, 5 U.S.C. 552a(r). behalf; The system of records entitled Information submitted by public (5) Congressional offices in response ‘‘CFPB.028—Federal Docket comment may include full name, to an inquiry made at the request of the Management System’’ is published in its affiliated organization, postal address, individual to whom the record pertains; entirety below. email address, phone and fax number, (6) Contractors, agents, or other and name of any individual serving as authorized individuals performing work SYSTEM NAME AND NUMBER: a representative for the individual on a contract, service, cooperative CFPB.028—Federal Docket submitting the comment. agreement, job, or other activity on Management System. behalf of the Bureau or Federal RECORD SOURCE CATEGORIES: Government and who have a need to SECURITY CLASSIFICATION: Information in this system is posted access the information in the This system does not contain any by the Bureau or submitted by performance of their duties or activities; classified information or data. individuals and organizations who file (7) The U.S. Department of Justice public comments, including supporting SYSTEM LOCATION: (DOJ) for its use in providing legal materials, in response to Bureau Primary location: Bureau of Consumer advice to the Bureau or in representing documents published in the Federal the Bureau in a proceeding before a Financial Protection, 1700 G Street NW, Register requesting public comment. Washington, DC 20552. court, adjudicative body, or other ROUTINE USES OF RECORDS MAINTAINED IN THE administrative body, where the use of 1 Although pursuant to section 1017(a)(4)(E) of SYSTEM, INCLUDING CATEGORIES OF USERS AND such information by the DOJ is deemed the Consumer Financial Protection Act, Public Law THE PURPOSES OF SUCH USES: by the Bureau to be relevant and 111–203, the Bureau is not required to comply with These records may be disclosed, necessary to the advice or proceeding, OMB-issued guidance, it voluntarily follows OMB and in the case of a proceeding, such privacy-related guidance as a best practice and to consistent with the Bureau’s Disclosure facilitate cooperation and collaboration with other of Records and Information Rules, proceeding names as a party in interest: agencies. promulgated at 12 CFR part 1070, to: (a) The Bureau;

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(b) Any employee of the Bureau in his Name of the individual or entity NOTIFICATION PROCEDURES: or her official capacity; submitting a comment or supporting An individual seeking notification (c) Any employee of the Bureau in his material, Contact Information submitted whether any record contained in this or her individual capacity where DOJ in or as part of a comment, Agency, system of records pertains to him or her has agreed to represent the employee; or Docket Type, Docket Sub-Type, Agency (d) The United States, where the may inquire in writing in accordance Docket ID, Docket Title, Docket with instructions in 12 CFR 1070.50 et Bureau determines that litigation is Category, Document Type, CFR Part, likely to affect the Bureau or any of its seq. Address such requests to: Chief Date Comment Received, and Federal Privacy Officer, Consumer Financial components; Register Published Date. (8) A grand jury pursuant either to a Protection Bureau, 1700 G Street NW, Federal or State grand jury subpoena, or POLICIES AND PRACTICES FOR RETENTION AND Washington, DC 20552. to a prosecution request that such DISPOSAL OF RECORDS: record be released for the purpose of its Dockets are considered permanent EXEMPTIONS PROMULGATED FOR THE SYSTEM: introduction to a grand jury, where the records and transferred to the National None. subpoena or request has been Archives and Records Administration specifically approved by a court. In after fifteen years. Individual comments HISTORY: on rulemaking are temporary records those cases where the Federal This is a new system of records. Government is not a party to the that are destroyed after being uploaded proceeding, records may be disclosed if into the FDMS and validated. Hard Dated: January 24, 2020. a subpoena has been signed by a judge; copies of comments that are mailed to Kate Fulton, (9) A court, magistrate, or the Bureau are transferred to an offsite Senior Agency Official for Privacy, Bureau administrative tribunal in the course of location for destruction after they are of Consumer Financial Protection. an administrative proceeding or judicial scanned, uploaded to the FDMS, and [FR Doc. 2020–02629 Filed 2–27–20; 8:45 am] proceeding, including disclosures to validated. BILLING CODE 4810–AM–P opposing counsel or witnesses ADMINISTRATIVE, TECHNICAL, AND PHYSICAL (including expert witnesses) in the SAFEGUARDS: course of discovery or other pre-hearing Access to electronic records is exchanges of information, litigation, or restricted to authorized personnel who DEPARTMENT OF DEFENSE settlement negotiations, where relevant have been issued non-transferrable Office of the Secretary or potentially relevant to a proceeding, access codes and passwords. Hard or in connection with criminal law copies of records received directly by proceedings; the Bureau are properly safeguarded and [Transmittal No. 20–0D] (10) Appropriate Federal, State, local, maintained in controlled access storage foreign, tribal, or self-regulatory Arms Sales Notification on-site at the Bureau or at an offsite organizations or agencies responsible for location before destruction. investigating, prosecuting, enforcing, AGENCY: Defense Security Cooperation implementing, issuing, or carrying out a RECORD ACCESS PROCEDURES: Agency, Department of Defense. statute, rule, regulation, order, policy, or An individual seeking access to any ACTION: Arms sales notice. license if the information may be record pertaining to him or her relevant to a potential violation of civil contained in this system of records may SUMMARY: The Department of Defense is or criminal law, rule, regulation, order, inquire in writing in accordance with publishing the unclassified text of an policy, or license; instructions in 12 CFR 1070.50 et seq. arms sales notification. (11) The public or certain Address such requests to: Chief Privacy stakeholders in the form of Bureau Officer, Bureau of Consumer Financial FOR FURTHER INFORMATION CONTACT: documents, including final rules or Protection, 1700 G Street NW, Karma Job at [email protected] reports, that use, consider, or discuss Washington, DC 20552. Instructions are or (703) 697–8976. comments received by the Bureau; or also provided on the Bureau website: SUPPLEMENTARY INFORMATION: This (12) The General Services https://www.consumerfinance.gov/foia- 36(b)(5)(C) arms sales notification is Administration (GSA) for its use in requests/submit-request/. published to fulfill the requirements of management of the e-Rulemaking section 155 of Public Law 104–164 Program. CONTESTING RECORD PROCEDURES: dated July 21, 1996. The following is a An individual seeking to contest the POLICIES AND PRACTICES FOR STORAGE OF copy of a letter to the Speaker of the content of any record pertaining to him RECORDS: House of Representatives, and or her contained in this system of Records are maintained in paper and Transmittal 20–0D. records may inquire in writing in electronic media. accordance with instructions in 12 CFR Dated: February 25, 2020. POLICIES AND PRACTICES FOR RETRIEVAL OF 1070.50 et seq. Address such requests Aaron T. Siegel, RECORDS: to: Chief Privacy Officer, Consumer Alternate OSD Federal Register Liaison Records are retrievable by a variety of Financial Protection Bureau, 1700 G Officer, Department of Defense. fields including, but not limited to, Street NW, Washington, DC 20552. BILLING CODE 5001–06–P

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Transmittal No. 20-0D (CONUS) detachment PEACE CARVIN II support. The estimated total cost was (F-16) based at Luke Air Force Base $251 million. REPORT OF ENHANCEMENT OR This transmittal reports the extension UPGRADE OF SENSITIVITY OF (AFB) for a five-year period. It included 80 CATM-9M Captive Air Training of the PEACE CARVIN II detachment at TECHNOLOGY OR CAPABILITY (SEC. Luke Air Force Base for an additional 36(B)(5)(C), AECA) Missiles, jet fuel, containers, publications and technical three and a half years (3.5 years). It (i) Prospective Purchaser: Republic of documentation, tactics manuals and includes the following non-MDE items: Singapore academic instruction, maintenance, eight (8) CATM-9M Captive Air (ii) Sec. 36(b)(1), AECA Transmittal Training Missiles, jet fuel, containers, clothing and individual equipment, No.: 14-16 publications and technical execution and support of CONUS Date: June 16, 2014 documentation, tactics manuals and Military Department: Air Force exercise deployments, airlift and aerial academic instruction, maintenance, (iii) Description: On June 16, 2014, refueling, support equipment, spare and clothing and individual equipment, Congress was notified by Congressional repair parts, repair and return, execution and support of CONUS Notification Transmittal Number 14-16, personnel training and training exercise deployments, airlift and aerial of the possible sale under Section equipment, U.S. Government and refueling, support equipment, spare and 36(b)(1) of the Arms Export Control Act, contractor technical and logistics repair parts, repair and return, to the Government of Singapore of support services, and other related personnel training and training follow-on support and services for elements of logistical and program equipment, U.S. Government and Singapore’s Continental United States contractor technical and logistics

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support services, and other related friendly country that is an important ACTION: Arms sales notice. elements of logistical and program force for economic progress in Southeast support. The estimated additional non- Asia. The continuation of this training SUMMARY: The Department of Defense is MDE cost is $200 million, increasing the program will enable Singapore to publishing the unclassified text of a total program value to $451 million. develop mission-ready and experienced section 36(b)(1) arms sales notification. (iv) Significance: This notification is F-16 pilots and enhance operational being provided for an additional 3.5 interoperability with U.S. forces. FOR FURTHER INFORMATION CONTACT: years of training for the PEACE CARVIN (vi) Sensitivity of Technology: The Karma Job at [email protected] II detachment at Luke Air Force Base, Sensitivity of Technology statement or (703) 697–8976. AZ. Continued training will maintain contained in the original notification SUPPLEMENTARY INFORMATION: This the decades-long U.S.-Singapore applies to items reported here. 36(b)(1) arms sales notification is partnership. By maintaining this (vii) Date Report Delivered to published to fulfill the requirements of relationship, the U.S. ensures it will Congress: February 11, 2020 section 155 of Public Law 104–164 have a well-trained and more [FR Doc. 2020–04144 Filed 2–27–20; 8:45 am] interoperable partner to contribute to dated July 21, 1996. The following is a BILLING CODE 5001–06–C regional stability in Southeast Asia. copy of a letter to the Speaker of the Additionally, Singapore will have the House of Representatives, Transmittal ability to deploy to other regions to DEPARTMENT OF DEFENSE 20–02, Policy Justification and support U.S. and Singapore goals as Sensitivity of Technology. they have demonstrated numerous times Office of the Secretary Dated: February 25, 2020. with other aircraft deployments in [Transmittal No. 20–02] Aaron T. Siegel, support of coalition operations. Alternate OSD Federal Register Liaison (v) Justification: This proposed sale Arms Sales Notification will support the foreign policy and Officer, Department of Defense. national security of the United States by AGENCY: Defense Security Cooperation helping to improve the security of a Agency, Department of Defense.

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BILLING CODE 5001–03–P (iii) Description and Quantity or support and test equipment, Transmittal No. 20-02 Quantities of Articles or Services under publications and technical Consideration for Purchase: documentation, personnel training and Notice of Proposed Issuance of Letter of Major Defense Equipment (MDE): training equipment, U.S. Government Offer Pursuant to Section 36(b)(1) of the Up to two hundred (200) AGM-158C, and contractor representatives technical Arms Export Control Act, as amended Long Range Anti-Ship Missiles assistance, engineering and logistics (i) Prospective Purchaser: Government (LRASMs) support services, and other related of Australia Up to eleven (11) ATM-158C LRASMs elements of logistics support. Telemetry Variant (Inert) (ii) Total Estimated Value: (iv) Military Department: Navy (AT-P- ANT) Major Defense Equipment * .. $690 million Non-MDE: Other ...... $300 million Also included are DATM-158C (v) Prior Related Cases, if any: None LRASM, Captive Air Training Missiles (vi) Sales Commission, Fee, etc., Paid, Total ...... $990 million (CATM-158C LRASM), containers, Offered, or Agreed to be Paid: None

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(vii) Sensitivity of Technology Transmittal No. 20–02 Board (DNFSB) will hold a Public Contained in the Defense Article or Notice of Proposed Issuance of Letter of Hearing regarding the status of the Defense Services Proposed to be Sold: Offer Pursuant to Section 36(b)(1) of the Savannah River Site (SRS). The purpose See Attached Annex. Arms Export Control Act of this Public Hearing is to gather (viii) Date Report Delivered to information and discuss Department of Congress: February 7, 2020 Annex Energy (DOE) and National Nuclear * As defined in Section 47(6) of the Item No. vii Security Administration (NNSA) actions that could impact the safety posture of Arms Export Control Act. (vii) Sensitivity of Technology: 1. The AGM-158C, Long Range Anti- particular operations at SRS. POLICY JUSTIFICATION Ship Missile (LRASM) system is DATES: The Public Hearing will be held Australia—Long Range Anti-Ship classified SECRET. The LRASM is a on March 19, 2020, from 3:00 p.m. to Missiles (LRASMs) non-nuclear tactical weapon system. It 9:30 p.m. ADDRESSES: The Public Hearing will be The Government of Australia has provides a day, night, and adverse weather, standoff air-to-surface held in the Etherredge Center at the requested to buy up to two hundred University of South Carolina Aiken. The (200) AGM-158C, Long Range Anti-Ship capability and is an effective AntiSurface Warfare missile. The Etherredge Center is located at 340 Missiles (LRASMs); and up to eleven LRASM incorporates components, Scholar Loop, Aiken, South Carolina (11) ATM-158C LRASM Telemetry software, and technical design 29801. Variant (Inert). Also included are information that are considered DATM-158C LRASM, Captive Air FOR FURTHER INFORMATION CONTACT: Tara sensitive. The following components Training Missiles (CATM-158C Tadlock, Manager of Board Operations, being conveyed by the proposed sale LRASM), containers, support and test Defense Nuclear Facilities Safety Board, that are considered sensitive include: equipment, publications and technical 625 Indiana Avenue NW, Suite 700, documentation, personnel training and a. RF Seeker Washington, DC 20004–2901, (800) 788– b. GPS/INS System training equipment, U.S. Government 4016. This is a toll-free number. c. Datalink SUPPLEMENTARY INFORMATION: This and contractor representatives technical d. Warhead assistance, engineering and logistics Public Hearing will be composed of four e. IR Seeker sessions. In Session 1, Board Members support services, and other related 2. These elements are essential to the elements of logistics support. The total will address DOE’s past actions and ability of the LRASM missile to future plans for addressing estimated cost is $990 million. selectively engage hostile targets under This proposed sale will support the Recommendation 2012–1 regarding a wide range of operations, tactical and Building 235–F. The Board’s objective foreign policy and national security environmental conditions. objectives of the United States. Australia for this session is to gather information 3. If a technologically advanced related to the proposed changes to is one of our most important allies in adversary were to obtain knowledge of the Western Pacific. The strategic DOE’s Implementation Plan and the specific hardware and software deactivation strategy, the actions and location of this political and economic elements, the information could be used power contributes significantly to steps for deactivation of Building 235– to develop countermeasures, which F, and the plans for decommissioning, ensuring peace and economic stability might reduce weapon system including the end state of Building 235– in the region. effectiveness or be used in the F. Australia intends to use the missiles development of a system with similar or In Session 2, Board Members will on its F–18 aircraft and will provide advanced capabilities. address Federal oversight and technical enhanced capabilities in defense of 4. A determination has been made staffing needs. The Board will pay critical sea-lanes. The proposed sale of that Australia can provide substantially particular attention to the adequacy of the missiles and support will increase the same degree of protection for the current Office of Environmental the Australian Navy’s maritime sensitive technology being released as Management (EM) and NNSA staffing to partnership potential and align its the U.S. Government. This proposed conduct oversight missions. This will capabilities with existing regional sale is necessary to further the U.S. include discussions of shortages in both baselines. This is Australia’s first foreign policy and national security facility representative positions for purchase of the missiles. Australia will objectives outlined in the Policy existing facilities and engineering not have any difficulty absorbing these Justification. positions with regard to personnel who 5. All defense articles and services weapons into its armed forces. review safety bases and perform safety listed on this transmittal have been The proposed sale of this equipment system oversight, and the subsequent authorized for release and export to the and support will not alter the basic approach of delegating inherently Government of Australia. military balance in the region. federal functions to the contractor as a The prime contractor will be [FR Doc. 2020–04142 Filed 2–27–20; 8:45 am] substitute for federal oversight. Session Lockheed Martin, Orlando, Florida. BILLING CODE 5001–06–C 2 will also include discussions of future There are no known offset agreements technical staffing needs as new site proposed in connection with this missions, such as Savannah River potential sale. DEFENSE NUCLEAR FACILITIES Plutonium Production Facility Implementation of this proposed sale SAFETY BOARD operations and Surplus Plutonium will require annual trips to Australia blend-down, ramp up. involving U.S. Government and Notice of Public Hearing In Session 3, Board Members will contractor representatives for technical AGENCY: Defense Nuclear Facilities address the safety poster of the reviews, support, and oversight for Safety Board. Savannah River Tritium Enterprise approximately five years. ACTION: Notice of Public Hearing. (SRTE) facilities. The Board’s objective There will be no adverse impact on for this session is to discuss the SRTE U.S. defense readiness as a result of this SUMMARY: Notice is hereby given that safety basis, completed improvements, proposed sale. the Defense Nuclear Facilities Safety and ongoing and planned actions to

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address the high radiological dose Dated: February 25, 2020. 3506(c)(2)(A)), provides the general consequences to the workers for Bruce Hamilton, public and Federal agencies with an accident scenarios. In particular, the Chairman. opportunity to comment on proposed, Board will focus on the ongoing actions [FR Doc. 2020–04133 Filed 2–27–20; 8:45 am] revised, and continuing collections of at the SRTE that DOE cited as a basis to BILLING CODE 3670–01–P information. This helps the Department not accept Board Recommendation assess the impact of its information 2019–2. collection requirements and minimize In Sessions 1, 2, and 3, the DNFSB the public’s reporting burden. It also DEPARTMENT OF EDUCATION helps the public understand the Technical Director will offer testimony Department’s information collection presenting the perspective of the DNFSB [Docket No.: ED–2020–SCC–0041] requirements and provide the requested Staff. Participants representing DOE and Agency Information Collection data in the desired format. ED is NNSA will be announced at https:// Activities; Comment Request; RSA– soliciting comments on the proposed www.dnfsb.gov as soon as possible. 509, Annual Protection and Advocacy information collection request (ICR) that In Session 4, Board Members will of Individual Rights Program is described below. The Department of hear testimony from interested members Performance Report Education is especially interested in of the public. Persons interested in public comment addressing the speaking during Session 4 are AGENCY: Office of Special Education and following issues: (1) Is this collection encouraged to pre-register by submitting Rehabilitative Services (OSERS), necessary to the proper functions of the a request in writing to the Board’s Department of Education (ED). Department; (2) will this information be address listed above, emailing hearing@ ACTION: Notice. processed and used in a timely manner; dnfsb.gov, or calling the Office of the (3) is the estimate of burden accurate; SUMMARY: General Counsel at (202) 694–7062 or In accordance with the (4) how might the Department enhance (800) 788–4016 prior to close of Paperwork Reduction Act of 1995, ED is the quality, utility, and clarity of the business on March 17, 2020. The Board proposing an extension of an existing information to be collected; and (5) how information collection. asks that commenters describe the might the Department minimize the nature and scope of their oral DATES: Interested persons are invited to burden of this collection on the presentations. Those who pre-register submit comments on or before April 28, respondents, including through the use will be scheduled to speak first. 2020. of information technology. Please note Individual oral comments may be ADDRESSES: To access and review all the that written comments received in limited by the time available, depending documents related to the information response to this notice will be on the number of persons who register. collection listed in this notice, please considered public records. Title of Collection: RSA–509, Annual At the beginning of the hearing, the use http://www.regulations.gov by Protection and Advocacy of Individual Board will post a list of speakers at the searching the Docket ID number ED– 2020–SCC–0041. Comments submitted Rights Program Performance Report. entrance to the hearing room. Anyone in response to this notice should be OMB Control Number: 1820–0627. who wishes to comment or provide submitted electronically through the Type of Review: An extension of an technical information or data may do so Federal eRulemaking Portal at http:// existing information collection. in writing, either in lieu of, or in www.regulations.gov by selecting the Respondents/Affected Public: State, addition to, making an oral Docket ID number or via postal mail, Local, and Tribal Governments. presentation. The Board Members may commercial delivery, or hand delivery. Total Estimated Number of Annual question presenters to the extent If the regulations.gov site is not Responses: 57. deemed appropriate. Written comments available to the public for any reason, Total Estimated Number of Annual and documents will be accepted at the ED will temporarily accept comments at Burden Hours: 912. hearing or may be sent to the Board’s Abstract: The Annual Protection and [email protected]. Please include the Advocacy of Individual Rights (PAIR) Washington, DC office. The Board will docket ID number and the title of the Program Performance Report (Form hold the hearing record open until April information collection request when RSA–509) will be used to analyze and 20, 2020, for the receipt of additional requesting documents or submitting evaluate the PAIR Program administered materials. Additional details, including comments. Please note that comments by eligible systems in states. These the detailed agenda for the hearing, are submitted by fax or email and those systems provide services to eligible available at https://www.dnfsb.gov. submitted after the comment period will individuals with disabilities to protect The hearing will be presented live not be accepted. Written requests for their legal and human rights. RSA uses through internet video streaming. A link information or comments submitted by the form to meet specific data collection to the presentation will be available on postal mail or delivery should be requirements of Section 509 of the the Board’s website, and a recording addressed to the Director of the Strategic Rehabilitation Act of 1973, as amended will be posted soon after. A transcript of Collections and Clearance Governance (the Act), and its implementing federal these sessions and the associated and Strategy Division, U.S. Department regulations at 34 CFR part 381. PAIR correspondence will be made available of Education, 400 Maryland Ave. SW, programs must report annually using on the Board’s website. The Board LBJ, Room 6W–208D, Washington, DC the RSA–509, which is due on or before specifically reserves its right to further 20202–4537. December 30 each year. schedule and otherwise regulate the FOR FURTHER INFORMATION CONTACT: For The collection of information through course of the hearing, to recess, specific questions related to collection Form RSA–509 has enabled RSA to reconvene, postpone, or adjourn the activities, please contact Samuel Pierre, furnish the President and Congress with hearing, conduct further reviews, and 202–245–6488. data on the provision of protection and otherwise exercise its authority under SUPPLEMENTARY INFORMATION: The advocacy services and has helped to the Atomic Energy Act of 1954, as Department of Education (ED), in establish a sound basis for future amended. accordance with the Paperwork funding requests. Data from the form Authority: 42 U.S.C. 2286b(a). Reduction Act of 1995 (PRA) (44 U.S.C. have been used to evaluate the

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effectiveness of eligible systems within NA, Inc., ENGIE Portfolio Management, Description: Baseline eTariff Filing: individual states in meeting annual LLC, ENGIE Resources LLC, ENGIE Western Energy Imbalance Service priorities and objectives. These data also Retail, LLC, Plymouth Rock Energy, Tariff to be effective 2/1/2021. have been used to indicate trends in the LLC. Filed Date: 2/21/20. provision of services from year-to-year. Description: Notice of Change in Accession Number: 20200221–5114. The respondents to the RSA–509 is Status of the ENGIE MBR Sellers. Comments Due: 5 p.m. ET 3/13/20. the protection and advocacy system in Filed Date: 2/21/20. Docket Numbers: ER20–1060–000. each state. These organizations are Accession Number: 20200221–5218. Applicants: Southwest Power Pool, private not-for-profit organizations. RSA Comments Due: 5 p.m. ET 3/13/20. Inc. included the respondents and the Docket Numbers: ER19–2276–003. Description: Baseline eTariff Filing: national organization that represents Applicants: New York Independent Western Energy Imbalance Service Rate them (National Disability Rights System Operator, Inc. Schedule Tariff to be effective 2/1/2021. Network (NDRN)) in the initial Description: Compliance filing: Filed Date: 2/21/20. development of this collection of Compliance re: 1/23/20 Order Accession Number: 20200221–5118. information in an effort to ensure that Distributed Energy Resourcess to be Comments Due: 5 p.m. ET 3/13/20. the information requested could be effective 12/31/9998. Docket Numbers: ER20–1061–000. provided with minimal burden to the Filed Date: 2/24/20. Applicants: Turquoise Nevada LLC. respondents. Accession Number: 20200224–5087. Description: § 205(d) Rate Filing: The collection of information through Comments Due: 5 p.m. ET 3/16/20. Turquoise Nevada LLC First Form RSA–509 has enabled RSA to Docket Numbers: ER19–2747–002. Amendment to Shared Facilities furnish the President and Congress with Agreement to be effective 2/22/2020. data on the provision of protection and Applicants: Southwest Power Pool, Inc. Filed Date: 2/21/20. advocacy services and has helped to Accession Number: 20200221–5135. establish a sound basis for future Description: Tariff Amendment: 3593 Frontier Windpower II GIA—Deficiency Comments Due: 5 p.m. ET 3/13/20. funding requests. Data from the form Docket Numbers: ER20–1062–000. have been used to evaluate the Response to be effective 8/23/2019. Filed Date: 2/24/20. Applicants: Garden Wind, LLC. effectiveness of eligible systems within Description: Baseline eTariff Filing: individual states in meeting annual Accession Number: 20200224–5010. Comments Due: 5 p.m. ET 3/16/20. Reactive Power Compensation Filing to priorities and objectives. These data also be effective 4/24/2020. Docket Numbers: ER19–2748–002. have been used to indicate trends in the Filed Date: 2/24/20. Applicants: Southwest Power Pool, provision of services from year-to-year. Accession Number: 20200224–5009. The respondents to the RSA–509 is Inc. Comments Due: 5 p.m. ET 3/16/20. Description: Tariff Amendment: 3595 the protection and advocacy system in Docket Numbers: ER20–1065–000. each state. These organizations are Skeleton Creek Wind, LLC GIA— Deficiency Response to be effective 8/ Applicants: PJM Interconnection, private not-for-profit organizations. RSA L.L.C. included the respondents and the 23/2019. Filed Date: 2/24/20. Description: § 205(d) Rate Filing: national organization that represents Amendment to WMPA, SA No. 3255; them (National Disability Rights Accession Number: 20200224–5015. Comments Due: 5 p.m. ET 3/16/20. Queue No. W4–073 (consent and Network (NDRN)) in the initial amend) to be effective 11/2/2016. development of this collection of Docket Numbers: ER19–2773–002. Filed Date: 2/24/20. information in an effort to ensure that Applicants: Southwest Power Pool, Accession Number: 20200224–5056. the information requested could be Inc. Comments Due: 5 p.m. ET 3/16/20. provided with minimal burden to the Description: Tariff Amendment: 3594 Docket Numbers: ER20–1066–000. respondents. Wheatbelt Wind, LLC GIA—Deficiency Applicants: AEP Texas Inc. Dated: February 25, 2020. Response to be effective 8/23/2019. Description: § 205(d) Rate Filing: Kate Mullan, Filed Date: 2/24/20. AEPTX—Monte Alto Windpower GIA to Accession Number: 20200224–5030. PRA Coordinator, Strategic Collections and be effective 2/13/2020. Clearance, Governance and Strategy Division, Comments Due: 5 p.m. ET 3/16/20. Filed Date: 2/24/20. Office of Chief Data Officer. Docket Numbers: ER19–2813–002. Accession Number: 20200224–5063. [FR Doc. 2020–04123 Filed 2–27–20; 8:45 am] Applicants: Southwest Power Pool, Comments Due: 5 p.m. ET 3/16/20. BILLING CODE 4000–01–P Inc. Docket Numbers: ER20–1067–000. Description: Tariff Amendment: Applicants: Diamond State 3597SO Chilocco Wind Farm GIA— Generation Partners, LLC. DEPARTMENT OF ENERGY Deficiency Response to be effective 9/6/ Description: § 205(d) Rate Filing: 2019. Amendment of Diamond State MBR Federal Energy Regulatory Filed Date: 2/24/20. Tariff to be effective 2/25/2020. Commission Accession Number: 20200224–5031. Filed Date: 2/24/20. Comments Due: 5 p.m. ET 3/16/20. Accession Number: 20200224–5088. Combined Notice of Filings #1 Docket Numbers: ER20–807–000. Comments Due: 5 p.m. ET 3/16/20. Take notice that the Commission Applicants: Ruff Solar LLC. Take notice that the Commission received the following electric rate Description: Supplement to January received the following electric securities filings: 15, 2020 Ruff Solar LLC tariff filing. filings: Docket Numbers: ER19–828–001; Filed Date: 2/24/20. Docket Numbers: ES20–17–000. ER11–4535–001; ER16–2271–002; Accession Number: 20200224–5033. Applicants: Trans Bay Cable LLC. ER16–581–003; ER16–582–003; ER17– Comments Due: 5 p.m. ET 3/16/20. Description: Application Under 1370–002. Docket Numbers: ER20–1059–000. Section 204 of the Federal Power Act for Applicants: Solomon Forks Wind Applicants: Southwest Power Pool, Authorization to Issue Securities of Project, LLC, ENGIE Energy Marketing Inc. Trans Bay Cable LLC.

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Filed Date: 2/21/20. DEPARTMENT OF ENERGY Dated: February 24, 2020. Accession Number: 20200221–5223. Kimberly D. Bose, Federal Energy Regulatory Secretary. Comments Due: 5 p.m. ET 3/13/20. Commission [FR Doc. 2020–04126 Filed 2–27–20; 8:45 am] Take notice that the Commission [Docket No. EL20–21–000] BILLING CODE 6717–01–P received the following foreign utility company status filings: Complaint of Michael Mabee Related to Critical Infrastructure Reliability DEPARTMENT OF ENERGY Docket Numbers: FC20–4–000. Standard; Notice of Supplemented Applicants: Energy Center Caguas Complaint Federal Energy Regulatory LLC. Commission Take notice that on February 19, 2020, Description: Notice of Self- pursuant to section 215(d) of the Federal Combined Notice of Filings Certification of Foreign Utility Company Power Act, 16 U.S.C. 824o(d) and Rule Status. 206 of the Federal Energy Regulatory Take notice that the Commission has received the following Natural Gas Filed Date: 2/21/20. Commission’s (Commission) Rules of Practice and Procedure, 18 CFR 385.206 Pipeline Rate and Refund Report filings: Accession Number: 20200221–5136. (2019), Michael Mabee, (Complainant) Docket Numbers: RP20–533–000. Comments Due: 5 p.m. ET 3/13/20. filed supplemental information and Applicants: Equitrans, L.P. Description: § 4(d) Rate Filing: Take notice that the Commission additional recommendations for the Negotiated Rate Agreement—Arsenal received the following electric record, as a supplement to the formal complaint filed on January 30, 2020, as Correction to be effective 2/1/2020. reliability filings: more fully explained in the supplement Filed Date: 2/20/20. Docket Numbers: RD20–4–000. to the complaint. Accession Number: 20200220–5000. Comments Due: 5 p.m. ET 3/3/20. Applicants: North American Electric Complainant certifies that copies of Reliability Corporation. the Complaint were served on the Docket Numbers: RP20–534–000. contacts as listed on the Commission’s Applicants: Iroquois Gas Description: Application of the North list of Corporate Officials. Transmission System, L.P. American Electric Reliability Any person desiring to intervene or to Description: § 4(d) Rate Filing: 022020 Corporation for approval of proposed protest this filing must file in Negotiated Rates—Mercuria Energy Reliability Standards developed accordance with Rules 211 and 214 of America, LLC R–7540–02 to be effective Standards Alignment with Registration. the Commission’s Rules of Practice and 3/1/2020. Filed Date: 2/21/20. Procedure (18 CFR 385.211, 385.214). Filed Date: 2/20/20. Protests will be considered by the Accession Number: 20200220–5003. Accession Number: 20200221–5221. Commission in determining the Comments Due: 5 p.m. ET 3/3/20. Comments Due: 5 p.m. ET 3/23/20. appropriate action to be taken, but will Docket Numbers: RP20–535–000. not serve to make protestants parties to The filings are accessible in the Applicants: Kern River Gas the proceeding. Any person wishing to Commission’s eLibrary system by Transmission Company. become a party must file a notice of Description: § 4(d) Rate Filing: 2020 clicking on the links or querying the intervention or motion to intervene, as docket number. Permanent Release RRI to Morgan appropriate. All interventions, or Stanley to be effective 4/1/2020. Any person desiring to intervene or protests must be filed on or before the Filed Date: 2/20/20. protest in any of the above proceedings comment date. Accession Number: 20200220–5013. must file in accordance with Rules 211 The Commission encourages Comments Due: 5 p.m. ET 3/3/20. and 214 of the Commission’s electronic submission of protests and interventions in lieu of paper using the Docket Numbers: RP20–536–000. Regulations (18 CFR 385.211 and Applicants: Anadarko Energy Services 385.214) on or before 5:00 p.m. Eastern eFiling link at http://www.ferc.gov. Persons unable to file electronically Company, Sequent Energy Management, time on the specified comment date. L.P. Protests may be considered, but should submit an original and 5 copies of the protest or intervention to the Description: Petition to Amend intervention is necessary to become a Temporary Waivers of Capacity Release party to the proceeding. Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC Regulations and Policies, et al. of eFiling is encouraged. More detailed 20426. Anadarko Energy Services Company, et information relating to filing This filing is accessible on-line at al. under RP20–536. requirements, interventions, protests, http://www.ferc.gov, using the eLibrary Filed Date: 2/19/20. service, and qualifying facilities filings link and is available for electronic Accession Number: 20200219–5163. can be found at: http://www.ferc.gov/ review in the Commission’s Public Comments Due: 5 p.m. ET 2/26/20. docs-filing/efiling/filing-req.pdf. For Reference Room in Washington, DC. Docket Numbers: RP20–537–000. other information, call (866) 208–3676 There is an ‘‘eSubscription’’ link on the Applicants: Natural Gas Pipeline (toll free). For TTY, call (202) 502–8659. website that enables subscribers to Company of America. receive email notification when a Description: § 4(d) Rate Filing: Dated: February 24, 2020. document is added to a subscribed Amendment to a Negotiated Rate Kimberly D. Bose, docket(s). For assistance with any FERC Filing—Macquarie to be effective Secretary. Online service, please email 4/1/2020. [FR Doc. 2020–04127 Filed 2–27–20; 8:45 am] [email protected], or call Filed Date: 2/21/20. BILLING CODE 6717–01–P (866) 208–3676 (toll free). For TTY, call Accession Number: 20200221–5000. (202) 502–8659. Comments Due: 5 p.m. ET 3/4/20. Comment Date: 5:00 Eastern Time on Docket Numbers: RP20–538–000. March 10, 2020. Applicants: ANR Pipeline Company.

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Description: § 4(d) Rate Filing: Dated: February 24, 2020. 208–3676 (toll free), or (202) 502–8659 Housekeeping Early 2020 to be effective Kimberly D. Bose, (TTY). In lieu of electronic filing, please 3/23/2020. Secretary. send a paper copy to: Secretary, Federal Filed Date: 2/21/20. [FR Doc. 2020–04129 Filed 2–27–20; 8:45 am] Energy Regulatory Commission, 888 Accession Number: 20200221–5030. BILLING CODE 6717–01–P First Street NE, Washington, DC 20426. Comments Due: 5 p.m. ET 3/4/20. The first page of any filing should include docket number P–3947–015. Docket Numbers: RP20–539–000. DEPARTMENT OF ENERGY Applicants: Midship Pipeline Dated: February 24, 2020. Company, LLC. Federal Energy Regulatory Kimberly D. Bose, Description: Compliance filing Commission Secretary. Baseline Compliance Filing CP17–458 [FR Doc. 2020–04130 Filed 2–27–20; 8:45 am] [Project No. 3947–015] to be effective 4/1/2020. BILLING CODE 6717–01–P Filed Date: 2/21/20. Kaweah River Power Authority, Accession Number: 20200221–5067. Terminus Hydroelectric, LLC; Notice of Comments Due: 5 p.m. ET 3/4/20. Application for Transfer of License and ENVIRONMENTAL PROTECTION Docket Numbers: RP20–540–000. Soliciting Comments, Motions To AGENCY Intervene, and Protests Applicants: Columbia Gulf [EPA–HQ–OECA–2013–0340; FRL—10005– Transmission, LLC. On February 4, 2020, Kaweah River 24–OMS] Description: Compliance filing TRA Power Authority (transferor) and 2020 Waiver. Terminus Hydroelectric, LLC Information Collection Request Filed Date: 2/21/20. (transferee) filed an application for the Submitted to OMB for Review and Accession Number: 20200221–5099. transfer of license of the Terminus Approval; Comment Request; NESHAP Comments Due: 5 p.m. ET 3/4/20. Power Project No. 3947. The project is for Stationary Reciprocating Internal Combustion Engines (Renewal) Docket Numbers: RP20–541–000. located on the Kaweah River in Tulare Applicants: Eastern Shore Natural Gas County, California and uses surplus AGENCY: Environmental Protection Company. water from the U.S. Army Corps of Agency (EPA). Engineer’s Terminus Dam. Description: § 4(d) Rate Filing: ACTION: Notice. Negotiated Rate—DCRC—April 1, 2020 The applicants seek Commission to be effective 4/1/2020. approval to transfer the license for the SUMMARY: The Environmental Protection Terminus Power Project from the Filed Date: 2/21/20. Agency (EPA) has submitted an transferor to the transferee. information collection request (ICR), Accession Number: 20200221–5106. Applicants Contact: For transferor: Comments Due: 5 p.m. ET 3/4/20. NESHAP for Stationary Reciprocating Mark Larsen, Kaweah River Power Internal Combustion Engines (EPA ICR Docket Numbers: RP20–542–000. Authority, 2975 N Farmersville Blvd., Number 1975.11, OMB Control Number Applicants: Rockies Express Pipeline Farmersville, CA 93223, Phone: (559) 2060–0548), to the Office of LLC. 747–5601, Email: [email protected] Management and Budget (OMB) for Description: Annual Fuel and Lost & Copy to: Andrew McClure, Minasian review and approval in accordance with Unaccounted Reimbursement Law Firm, 1681 Bird St., Oroville, CA the Paperwork Reduction Act. This is a Percentages and Power Cost Charges of 95965, Phone: (530) 533–2885, Email: proposed extension of the ICR, which is Rockies Express Pipeline LLC under [email protected]. currently approved through April 30, RP20–542. For transferee: Joshua E. Adrian, 2020. Public comments were previously Filed Date: 2/21/20. Donald H. Clarke, Duncan, Weinberg, requested, via the Federal Register, on Accession Number: 20200221–5197. Genzer & Pembroke, P.C., 1667 K Street May 6, 2019 during a 60-day comment Comments Due: 5 p.m. ET 3/4/20. NW, Suite 700, Washington, DC 20006, period. This notice allows for an Phone: (202) 467–6370, Email: jea@ The filings are accessible in the additional 30 days for public comments. dwgp.com, [email protected]. A fuller description of the ICR is given Commission’s eLibrary system by FERC Contact: Anumzziatta below, including its estimated burden clicking on the links or querying the Purchiaroni, (202) 502–6191, and cost to the public. An agency may docket number. [email protected]. Any person desiring to intervene or Deadline for filing comments, motions neither conduct nor sponsor, and a protest in any of the above proceedings to intervene, and protests: 30 days from person is not required to respond to, a must file in accordance with Rules 211 the date that the Commission issues this collection of information unless it and 214 of the Commission’s notice. The Commission strongly displays a currently valid OMB control Regulations (18 CFR 385.211 and encourages electronic filing. Please file number. 385.214) on or before 5:00 p.m. Eastern comments, motions to intervene, and DATES: Additional comments may be time on the specified date(s). Protests protests using the Commission’s eFiling submitted on or before March 30, 2020. may be considered, but intervention is system at http://www.ferc.gov/docs- ADDRESSES: Submit your comments, necessary to become a party to the filing/efiling.asp. Commenters can referencing Docket ID Number EPA– proceeding. submit brief comments up to 6,000 HQ–OECA–2013–0340, to: (1) EPA eFiling is encouraged. More detailed characters, without prior registration, online using www.regulations.gov (our information relating to filing using the eComment system at http:// preferred method), or by email to requirements, interventions, protests, www.ferc.gov/docs-filing/ [email protected], or by mail to: EPA service, and qualifying facilities filings ecomment.asp. You must include your Docket Center, Environmental can be found at: http://www.ferc.gov/ name and contact information at the end Protection Agency, Mail Code 28221T, docs-filing/efiling/filing-req.pdf. For of your comments. For assistance, 1200 Pennsylvania Ave. NW, other information, call (866) 208–3676 please contact FERC Online Support at Washington, DC 20460; and (2) OMB via (toll free). For TTY, call (202) 502–8659. [email protected], (866) email to [email protected].

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Address comments to OMB Desk Officer compliance, and are required of all and Budget (OMB) for review and for EPA. affected facilities subject to NESHAP. approval in accordance with the EPA’s policy is that all comments Form Numbers: None. Paperwork Reduction Act (PRA). This is received will be included in the public Respondents/affected entities: a proposed revision of an ICR, which is docket without change, including any Owners or operators of stationary currently approved through February personal information provided, unless reciprocating internal combustion 29, 2020. Public comments were the comment includes profanity, threats, engines (RICE). previously requested via the Federal information claimed to be Confidential Respondent’s obligation to respond: Register on November 27, 2019 during Business Information (CBI), or other Mandatory (40 CFR part 63, subpart a 60-day comment period. This notice information whose disclosure is ZZZZ). allows for an additional 30 days for restricted by statute. Estimated number of respondents: public comments. A fuller description 910,177 (total). of the ICR is given below, including its FOR FURTHER INFORMATION CONTACT: Frequency of response: Initially, estimated burden and cost to the public. Patrick Yellin, Monitoring, Assistance, quarterly, semiannually, and annually. An agency may not conduct or sponsor and Media Programs Division, Office of Total estimated burden: 3,620,000 and a person is not required to respond Compliance, Mail Code 2227A, hours (per year). Burden is defined at 5 to a collection of information unless it Environmental Protection Agency, 1200 CFR 1320.3(b). displays a currently valid OMB control Pennsylvania Ave. NW, Washington, DC Total estimated cost: $461,000,000 number. 20460; telephone number: (202) 564– (per year), which includes $41,700,000 DATES: Additional comments may be 2970; fax number: (202) 564–0050; in annualized capital/startup and/or submitted on or before March 30, 2020. email address: [email protected]. operation & maintenance costs. ADDRESSES: Submit your comments, SUPPLEMENTARY INFORMATION: Changes in the Estimates: There is an referencing Docket ID Number EPA– Supporting documents, which explain adjustment increase in the total HQ–OW–2019–0566, to (1) EPA online in detail the information that the EPA estimated burden as currently identified using www.regulations.gov (our will be collecting, are available in the in the OMB Inventory of Approved preferred method), or by mail to: EPA public docket for this ICR. The docket Burdens. The increase in burden from Docket Center, Environmental can be viewed online at the most recently approved ICR is due Protection Agency, Mail Code 28221T, www.regulations.gov, or in person at the to an increase in the number of 1200 Pennsylvania Ave. NW, EPA Docket Center, WJC West, Room respondents. EPA estimates a linear Washington, DC 20460, and (2) OMB via 3334, 1301 Constitution Ave. NW, growth in the industry sector with an email to [email protected]. Washington, DC. The telephone number additional of 1,284 new sources per year Address comments to OMB Desk Officer for the Docket Center is 202–566–1744. that become subject to the NESHAP, for EPA. For additional information about EPA’s plus there is another 755,430 EPA’s policy is that all comments public docket, visit: http:// respondents which are responsible for received will be included in the public www.epa.gov/dockets. only recordkeeping requirements. The docket without change including any Abstract: The National Emission capital/startup and operation and personal information provided, unless Standards for Hazardous Air Pollutants maintenance (O&M) costs have the comment includes profanity, threats, (NESHAP) for Stationary Reciprocating increased compared with the costs in information claimed to be Confidential Internal Combustion Engines (40 CFR the previous ICR due to an increase in Business Information (CBI) or other part 63, subpart ZZZZ) apply to owners the number of existing sources operating information whose disclosure is and operators of a stationary portable CO monitors. restricted by statute. reciprocating internal combustion Courtney Kerwin, FOR FURTHER INFORMATION CONTACT: engines (RICE) at either a major or area Director, Regulatory Support Division. Lauren Kasparek, Oceans, Wetlands, source of hazardous air pollutant (HAP) and Communities Division, Office of [FR Doc. 2020–04062 Filed 2–27–20; 8:45 am] emissions, except if the stationary RICE Wetlands, Oceans, and Watersheds, (MC is being tested at a stationary RICE test BILLING CODE 6560–50–P 4504T), Environmental Protection cell/stand. A stationary RICE is any Agency, 1200 Pennsylvania Ave. NW, internal combustion engine which uses ENVIRONMENTAL PROTECTION Washington, DC 20460; telephone reciprocating motion to convert heat AGENCY number: (202) 564–3351; email address: energy into mechanical work and which [email protected]. is not mobile. New facilities include [EPA–HQ–OW–2019–0566; FRL–10005–90– SUPPLEMENTARY INFORMATION: those that commenced construction, OMS] Supporting documents, which explain modification or reconstruction after the in detail the information that the EPA date of proposal. This information is Information Collection Request Submitted to OMB for Review and will be collecting, are available in the being collected to assure compliance public docket for this ICR. The docket with 40 CFR part 63, subpart ZZZZ. Approval; Comment Request; Water Quality Certification Regulations can be viewed online at In general, all NESHAP standards (Renewal) www.regulations.gov or in person at the require initial notifications, EPA Docket Center, WJC West, Room performance tests, and periodic reports AGENCY: Environmental Protection 3334, 1301 Constitution Ave. NW, by the owners/operators of the affected Agency (EPA). Washington, DC. The telephone number facilities. They are also required to ACTION: Notice. for the Docket Center is 202–566–1744. maintain records of the occurrence and For additional information about EPA’s duration of any startup, shutdown, or SUMMARY: The Environmental Protection public docket, visit http://www.epa.gov/ malfunction in the operation of an Agency (EPA) has submitted an dockets. affected facility, or any period during information collection request (ICR), Abstract: This ICR describes the cost which the monitoring system is Water Quality Certification Regulations and burden associated with 40 CFR 121, inoperative. These notifications, reports, (EPA ICR No. 2603.03, OMB Control No. the regulations that implement Clean and records are essential in determining 2040–0295) to the Office of Management Water Act (CWA) section 401. Under

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section 401, a federal agency may not of respondents, and number of Bakersfield to Palmdale Section Draft issue a permit or license that may result responses compared with the ICR Environmental Impact Report/ in any discharge into waters of the currently approved by OMB due to Environmental Impact Statement, United States unless the certifying refinements in how the estimates are Comment Period Ends: 04/13/2020, authority where the discharge would calculated. See the Supporting Contact: Dan McKell 916–501–8320 originate issues a section 401 water Statement in the docket for more EIS No. 20200056, Final, USACE, CT, quality certification verifying that the information on the changes in estimates. New Haven Harbor Connecticut, discharge will comply with certain Navigation Improvement Project, water quality requirements or waives Courtney Kerwin, Final Integrated Feasibility Report the certification requirement. CWA Director, Regulatory Support Division. and Environmental Impact Statement, section 401 requires project proponents [FR Doc. 2020–04063 Filed 2–27–20; 8:45 am] Review Period Ends: 03/30/2020, to submit project specific information to BILLING CODE 6560–50–P Contact: Todd Randall 978–318–8518 certifying authorities. Certifying EIS No. 20200057, Final, FHWA, NH, I– authorities may act on project specific 93 Exit 4A, Contact: Jamison S. Sikora information by either granting, granting ENVIRONMENTAL PROTECTION 603–410–4870, Pursuant to 23 U.S.C. with conditions, denying, or waiving AGENCY 139(n)(2), FHWA has issued a single section 401 certification. CWA section [ER–FRL–9049–6] FEIS and ROD. Therefore, the 30-day 401 requires certifying authorities to wait/review period under NEPA does submit information to the relevant Environmental Impact Statements; not apply to this action. federal licensing or permitting agency to Notice of Availability Dated: February 25, 2020. indicate the action taken on a request Cindy S. Barger, for certification. If the certifying Weekly receipt of Environmental Impact authority fails or refuses to act on a Statements filed February 17, 2020, 10 Director, NEPA Compliance Division, Office of Federal Activities. request for certification, within a a.m. EST through February 24, 2020, reasonable period of time (which shall 10 a.m. EST pursuant to 40 CFR [FR Doc. 2020–04107 Filed 2–27–20; 8:45 am] not exceed one year) after receipt of 1506.9. BILLING CODE 6560–50–P such request, the certification Responsible Agency: Office of Federal requirements of this subsection shall be Activities, General Information 202– 564–5632 or https://www.epa.gov/ ENVIRONMENTAL PROTECTION waived with respect to such Federal AGENCY application. The EPA is also responsible nepa/. for providing notification to certain Section 309(a) of the Clean Air Act [FRL–10005–84–OP] neighboring or downstream states and requires that EPA make public its tribes affected by a discharge from a comments on EISs issued by other Notice of Public Guidance Portal Federal agencies. EPA’s comment letters federally licensed or permitted project AGENCY: Environmental Protection under section 401(a)(2). Information on EISs are available at: https:// cdxnodengn.epa.gov/cdx-enepa-public/ Agency (EPA). collected directly collected by the EPA ACTION: Notice of availability. under section 401 in support of the action/eis/search. section 402 permit program is already EIS No. 20200050, Final, BLM, USFS, SUMMARY: The Environmental Protection captured under an existing ICR (OMB ID, Proposed East Smoky Panel Mine Agency (EPA) is announcing the Control Number 2040–0004, EPA ICR Project at Smoky Canyon Mine, availability of a web portal that allows Number 0229.23) and therefore is not Review Period Ends: 04/28/2020, the public to search for agency guidance included in this analysis. Contact: Kyle Free 208–478–6352 documents. The purpose of this portal is Form Numbers: None. EIS No. 20200051, Final, USAF, WI, to increase transparency of EPA Respondents/affected entities: United States Air Force F–35A guidance documents and to provide a Applicants (Project Proponents) for Operational Beddown Air National mechanism for the public to request certain federal licenses and permits; Guard, Review Period Ends: 03/30/ modification or withdrawal of such Certifying Authorities including states, 2020, Contact: Ramon Ortiz 240–612– documents. territories, and authorized tribes. 7042 Respondent’s obligation to respond: EIS No. 20200052, Draft, BR, BPA, DATES: This web portal is available on Project Proponents: Required to obtain USACE, OR, Columbia River System or about February 28, 2020. or retain a benefit (33 U.S.C. 1341). Operations,Comment Period Ends: 04/ ADDRESSES: The web portal is available Certifying Authorities: Not mandatory. 13/2020, Contact: Rebecca Weiss 800– via the internet at https://epa.gov/ Estimated number of respondents: 290–5033 guidance. 97,119 (total). EIS No. 20200053, Final Supplement, FOR FURTHER INFORMATION CONTACT: Frequency of response: Per Federal BR, CA, Final Supplement to the Final Mary Manibusan, Office of Policy Application. Environmental Impact Statement/ (1803A), Environmental Protection Total estimated burden: 1,067,000 Environmental Impact Report for Los Agency, 1200 Pennsylvania Ave NW, hours (per year). Burden is defined at 5 Vaqueros Reservoir Expansion, Contra Washington, DC 20460; telephone CFR 1320.03(b). Costa County, California, Review number: (202) 564–7267; fax number: Total estimated cost: $64 million (per Period Ends: 03/30/2020, Contact: (202) 564–8601; email address: year), includes $8 million annualized Jamie LeFevre 916–802–4880 [email protected]. capital or operation & maintenance EIS No. 20200054, Draft, BIA, BLM, NM, SUPPLEMENTARY INFORMATION: costs. Farmington Mancos-Gallup Resource Changes in the Estimates: There is an Management Plan Amendment and I. General Information increase of 739,000 hours in the total Environmental Impact Statement, estimated respondent burden compared Comment Period Ends: 05/28/2020, A. Background with the ICR currently approved by Contact: Jillian Aragon 505–564–7722 On October 9, 2019, the President OMB. There is an increase in the total EIS No. 20200055, Draft, CHSRA, CA, signed Executive Order (E.O.) 13891, estimated respondent burden, number California High-Speed Rail: ‘‘Promoting the Rule of Law Through

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Improved Agency Guidance of the date this notice appears in the burden to: Office of Information and Documents.’’ E.O. 13891 provides that Federal Register. Copies of agreements Regulatory Affairs of OMB, Attention: agencies shall develop a central web are available through the Commission’s Desk Officer for GSA, Room 10236, portal for interested parties to review website (www.fmc.gov) or by contacting NEOB, Washington, DC 20503 or at active guidance documents and provide the Office of Agreements at (202)–523– [email protected]. a means for requesting their 5793 or [email protected]. Additionally submit a copy to GSA by modification or withdrawal. Agreement No.: 201333. any of the following methods: Agreement Name: North Carolina- • Federal eRulemaking Portal: This B. EPA Guidance Portal Virginia Port Terminal Cooperative website provides the ability to type Today’s notice provides Working Agreement. short comments directly into the announcement of public access to the Parties: North Carolina State Port comment field or attach a file for EPA Guidance Portal, allowing for the Authority; Virginia Port Authority; and lengthier comments. Go to http:// search of active guidance documents as Virginia International Terminals, LLC. www.regulations.gov and follow the defined under E.O. 13891. Guidance Filing Party: David Monroe; GKG Law. instructions on the site. documents listed on the EPA Guidance Synopsis: The Agreement authorizes • Mail: General Services Portal do not construe any obligations or the parties to discuss and agree on Administration, Regulatory Secretariat binding requirements on regulated matters relating to their respective Division (MVCB), 1800 F Street NW, parties, nor threat of enforcement action operations, and joint or cooperative Washington, DC 20405. ATTN: Lois if the regulated public does not comply. operations at common-use facilities, Mandell/IC 9000–0161, Reporting The EPA Guidance Portal comports with including inland intermodal facilities. Purchases from Sources Outside the all statutory and Federal web policies. The parties request expedited review. United States. Information available about each Proposed Effective Date: 4/9/2020. Instructions: All items submitted guidance document listed on the EPA Location: https://www2.fmc.gov/ must cite Information Collection 9000– Guidance Portal includes: FMC.Agreements.Web/Public/ 0161, Reporting Purchases from Sources • A concise name for the guidance AgreementHistory/27474. Outside the United States. Comments document; Dated: February 25, 2020. received generally will be posted • The date on which the guidance Rachel Dickon, without change to http:// document was issued; Secretary. www.regulations.gov, including any • The date on which the guidance [FR Doc. 2020–04090 Filed 2–27–20; 8:45 am] personal and/or business confidential document was posted to the web portal information provided. To confirm BILLING CODE 6731–AA–P • An agency unique identifier; receipt of your comment(s), please • A hyperlink to the guidance check www.regulations.gov, document; approximately two to three days after DEPARTMENT OF DEFENSE • The general topic addressed by the submission to verify posting (except guidance document; and allow 30 days for posting of comments • GENERAL SERVICES A summary of the guidance ADMINISTRATION submitted by mail). document’s content. FOR FURTHER INFORMATION CONTACT: EPA intends to augment its list of NATIONAL AERONAUTICS AND Zenaida Delgado, Procurement Analyst, guidance documents on the EPA SPACE ADMINISTRATION at telephone 202–969–7207, or Guidance Portal as additional such [email protected]. documents become available that the [OMB Control No. 9000–0161; Docket No. SUPPLEMENTARY INFORMATION: agency may cite, use, or rely upon. 2019–0003; Sequence No. 34] A. OMB Control Number, Title, and Similarly, should EPA determine that a Submission for OMB Review; any Associated Form(s): 9000–0161, guidance document should be modified Reporting Purchases From Sources Reporting Purchases from Sources or withdrawn, these documents shall be Outside the United States Outside the United States. updated or removed as appropriate. Dated: February 21, 2020. AGENCY: Department of Defense (DOD), B. Need and Uses Andrew R. Wheeler, General Services Administration (GSA), This clearance covers the information Administrator. and National Aeronautics and Space that offerors must submit to comply Administration (NASA). [FR Doc. 2020–04034 Filed 2–27–20; 8:45 am] with the Federal Acquisition Regulation ACTION: Notice. BILLING CODE 6560–50–P (FAR) provision 52.225–18, Place of Manufacture. This provision requires SUMMARY: Under the provisions of the offerors of manufactured end products Paperwork Reduction Act, the to provide information as to whether the FEDERAL MARITIME COMMISSION Regulatory Secretariat Division has offered end products are predominantly submitted to the Office of Management Notice of Agreements Filed manufactured in the United States or and Budget (OMB) a request to review outside the United States. The Commission hereby gives notice and approve a revision and renewal of Contracting officers use the of the filing of the following agreements a previously approved information information as the basis for entry into under the Shipping Act of 1984. collection requirement regarding the Federal Procurement Data System Interested parties may submit reporting purchases from sources for further data on the rationale for comments, relevant information, or outside the United States. purchasing foreign manufactured items. documents regarding the agreements to DATES: Submit comments on or before The data is necessary for analysis of the the Secretary by email at Secretary@ March 30, 2020. application of the Buy American statute fmc.gov, or by mail, Federal Maritime ADDRESSES: Submit comments regarding and the trade agreements. Commission, Washington, DC 20573. this burden estimate or any other aspect Comments will be most helpful to the of this collection of information, C. Annual Burden Commission if received within 12 days including suggestions for reducing this Respondents: 30,740.

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Total Annual Responses: 2,908,096. FOR FURTHER INFORMATION CONTACT: Ms. DEPARTMENT OF HEALTH AND Total Burden Hours: 29,081. Shonna James, Director, Executive HUMAN SERVICES D. Public Comment Resources HR Services Center, Office of Human Resources Management, General Centers for Disease Control and A. A 60-day notice was published in Services Administration, 1800 F Street Prevention the Federal Register at 84 FR 68455, on NW, Washington, DC 20405, 202–230– [60Day–20–20IT; Docket No. CDC–2020– December 16, 2019. One comment was 7005. 0022] received; however, it did not change the estimate of the burden. SUPPLEMENTARY INFORMATION: Section Proposed Data Collection Submitted Comment: The commenter expressed 4314 (c) (1) through (5) of title 5 U.S.C for Public Comment and support for the collection of data and requires each agency to establish, in Recommendations stated that it should be maintained and accordance with regulation prescribed enhanced given its essential role in by the Office of Personnel Management, AGENCY: Centers for Disease Control and informing policy decisions surrounding one or more SES performance review Prevention (CDC), Department of Health procurement and trade policy. board(s). The board is responsible for and Human Services (HHS). Response: This comment supports the making recommendations to the ACTION: Notice with comment period. collection of information as necessary appointing and awarding authority on SUMMARY: The Centers for Disease for the proper performance of the the performance appraisal ratings and Control and Prevention (CDC), as part of functions of Federal Government performance awards for employees in its continuing effort to reduce public acquisitions. It did not express an the Senior Executive Service. burden and maximize the utility of opinion on whether the stated number government information, invites the of burden hours is accurate for what The following have been designated general public and other Federal they believe to be the actual number of as members of the Performance Review agencies the opportunity to comment on hours an offeror expends to comply Board of GSA: a proposed and/or continuing with the provision. • Allison Azevedo, Acting Deputy information collection, as required by Obtaining Copies: Requesters may Commissioner, Public Buildings the Paperwork Reduction Act of 1995. obtain a copy of the information Service. This notice invites comment on a collection documents from the General • Allison Brigati, Deputy proposed information collection project Services Administration, Regulatory Administrator—PRB Chair. titled Understanding Long-term Secretariat Division (MVCB), 1800 F Respiratory Morbidity in Former Street NW, Washington, DC 20405, • Giancarlo Brizzi, Regional Styrene-Exposed Workers. The purpose telephone 202–501–4755. Please cite Commissioner, Public Buildings of the interviews and medical testing is OMB Control No. 9000–0161, Reporting Service, Greater Southwest Region. to determine the prevalence of Purchases from Sources Outside the • Tiffany Hixson, Regional respiratory symptoms and lung function United States, in all correspondence. Commissioner, Federal Acquisition abnormalities among a cohort of former Dated: February 25, 2020. Service, Northwest, Arctic Region. styrene-exposed workers with different Janet Fry, • Thomas Howder, Deputy exposure levels to evaluate the long- Director, Federal Acquisition Policy Division, Commissioner, Federal Acquisition term impacts of styrene exposure on the Office of Governmentwide Acquisition Policy, Service. respiratory system. Office of Acquisition Policy, Office of • DATES: CDC must receive written Governmentwide Policy. Merrick Krause, Acting Chief comments on or before April 28, 2020. [FR Doc. 2020–04110 Filed 2–27–20; 8:45 am] Human Capital Officer, Office of Human Resources Management. ADDRESSES: You may submit comments, BILLING CODE 6820–EP–P identified by Docket No. CDC–2020– • Jeffrey Lau, Regional 0022 by any of the following methods: Commissioner, Federal Acquisition • Federal eRulemaking Portal: GENERAL SERVICES Service, Northeast and Caribbean ADMINISTRATION Regulations.gov. Follow the instructions Region. for submitting comments. [Notice–CX–2020–01; Docket No. 2020– • Jessica Salmoiraghi, Associate • Mail: Jeffrey M. Zirger, Information 0002; Sequence No. 8] Administrator for Governmentwide Collection Review Office, Centers for Policy. Disease Control and Prevention, 1600 Office of Human Resources Clifton Road NE, MS–D74, Atlanta, • Jack St. John, General Counsel. Management; SES Performance Georgia 30329. Review Board Dated: February 21, 2020. Instructions: All submissions received must include the agency name and AGENCY: Office of Human Resources Emily W. Murphy, Management (OHRM), General Services Administrator, General Services Docket Number. CDC will post, without Administration (GSA). Administration. change, all relevant comments to Regulations.gov. ACTION: Notice. [FR Doc. 2020–04105 Filed 2–27–20; 8:45 am] BILLING CODE 6820–FM–P Please note: Submit all Federal comments SUMMARY: Notice is hereby given of the through the Federal eRulemaking portal appointment of new members to the (regulations.gov) or by U.S. mail to the General Services Administration Senior address listed above. Executive Service Performance Review FOR FURTHER INFORMATION CONTACT: To Board. The Performance Review Board request more information on the assures consistency, stability, and proposed project or to obtain a copy of objectivity in the performance appraisal the information collection plan and process. instruments, contact Jeffrey M. Zirger, DATES: Applicable: February 28, 2020. Information Collection Review Office,

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Centers for Disease Control and 5. Assess information collection costs. that workers previously exposed to high Prevention, 1600 Clifton Road NE, MS– concentrations of styrene (≥5 ppm), Proposed Project D74, Atlanta, Georgia 30329; phone: even those with short tenure (<1 year), 404–639–7570; Email: [email protected]. Understanding Long-term Respiratory will have a higher prevalence of SUPPLEMENTARY INFORMATION: Under the Morbidity in Former Styrene-Exposed respiratory symptoms and lung function Paperwork Reduction Act of 1995 (PRA) Workers—New—National Institute for abnormalities compared with workers (44 U.S.C. 3501–3520), Federal agencies Occupational Safety and Health exposed to low concentration of styrene must obtain approval from the Office of (NIOSH), Centers for Disease Control (<5 ppm). and Prevention (CDC). Management and Budget (OMB) for each We will conduct face-to-face collection of information they conduct Background and Brief Description interviews with members of a cohort of or sponsor. In addition, the PRA also Styrene is used in the production of workers from two reinforced plastic requires Federal agencies to provide a automobile parts, boats, computer boatbuilding plants that closed in 1989 60-day notice in the Federal Register housings, food containers, wind energy and 1993. The purpose of the interviews concerning each proposed collection of components, and many other products. is to collect demographic information, information, including each new An estimated 90,000 U.S. workers are detailed job history during and after the proposed collection, each proposed potentially exposed to styrene at more worker’s tenure at the boatbuilding extension of existing collection of than 5,000 U.S. manufacturing plants. plant, upper and lower respiratory information, and each reinstatement of Occupational exposure to styrene has symptoms, physician diagnoses of previously approved information been associated with deleterious health respiratory diseases, cigarette smoking collection before submitting the effects, including changes in color history, and medication use. A NIOSH collection to the OMB for approval. To vision, mucous membrane irritation, employee will conduct the interviews. comply with this requirement, we are hearing loss, and neurocognitive We will also conduct several lung publishing this notice of a proposed impairment. Workplace exposure to function tests including: Exhaled nitric data collection as described below. styrene has also been associated with oxide, impulse oscillometry, multiple- The OMB is particularly interested in cases of non-malignant respiratory breath washout, spirometry, comments that will help: disease (NMRD), including COPD and bronchodilator reversibility testing, and 1. Evaluate whether the proposed obliterative bronchiolitis. However, high-resolution computed tomography collection of information is necessary little is understood about the long-term (HRCT) scan. for the proper performance of the respiratory effects on styrene-exposed The purpose of the lung function functions of the agency, including workers. NIOSH is requesting a three whether the information will have year OMB approval. testing is to identify small and large practical utility; The goal of this project is to airway abnormalities that are consistent 2. Evaluate the accuracy of the understand the prevalence of long-term with NMRD. With the exception of the agency’s estimate of the burden of the respiratory morbidity in styrene- HRCT scans, NIOSH technicians will proposed collection of information, exposed workers. The objectives of the perform the lung function testing. An including the validity of the proposed study are: (1) To characterize accredited imaging center will be hired methodology and assumptions used; work exposures by acquiring job to perform the HRCT scans. We will 3. Enhance the quality, utility, and histories and comparing with historical collect blood to analyze for biomarkers clarity of the information to be exposure levels obtained from a past associated with lung injury caused by collected; and industrial hygiene survey, (2) to obliterative bronchiolitis. A NIOSH 4. Minimize the burden of the examine prevalence of respiratory phlebotomist will collect the blood collection of information on those who morbidity by duration and level of samples. Finally, we will assess cohort are to respond, including through the styrene exposure and other members for color vision abnormalities use of appropriate automated, characteristics, (3) to apply research using the Lanthony D–15 Color Test. electronic, mechanical, or other biomarkers of lung injury to a styrene- Color vision assessment will be technological collection techniques or exposed workforce, and (4) to describe completed by a NIOSH technician. The other forms of information technology, the prevalence of color vision total estimated burden hours are 1,449. e.g., permitting electronic submissions impairment with the presence of There are no costs to respondents other of responses. respiratory morbidity. Our hypothesis is than their time.

ESTIMATED ANNUALIZED BURDEN HOURS

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

Boatbuilder Cohort Members ...... Questionnaire and medical survey 676 1 15/60 169 consent form. Boatbuilder Cohort Members ...... Questionnaire ...... 676 1 45/60 507 Boatbuilder Cohort Members ...... Exhaled Nitric Oxide—no form ...... 676 1 5/60 56 Boatbuilder Cohort Members ...... Impulse Oscillometry—no form ...... 676 1 10/60 113 Boatbuilder Cohort Members ...... Spirometry—no form ...... 676 1 10/60 113 Boatbuilder Cohort Members ...... Bronchodilator Test—no form ...... 50 1 20/60 17 Boatbuilder Cohort Members ...... Multiple-Breath Washout—no form .. 676 1 30/60 338 Boatbuilder Cohort Members ...... Color vision test—no form ...... 676 1 5/60 56 Boatbuilder Cohort Members ...... Blood test—no form ...... 676 1 5/60 56 Boatbuilder Cohort Members ...... HRCT consent form ...... 70 1 5/60 6 Boatbuilder Cohort Members ...... HRCT Imaging—no form ...... 70 1 15/60 18

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ESTIMATED ANNUALIZED BURDEN HOURS—Continued

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

Total ...... 1,449

Jeffrey M. Zirger, Clifton Road NE, MS–D74, Atlanta, 4. Minimize the burden of the Lead, Information Collection Review Office, Georgia 30329. collection of information on those who Office of Scientific Integrity, Office of Science, Instructions: All submissions received are to respond, including through the Centers for Disease Control and Prevention. must include the agency name and use of appropriate automated, [FR Doc. 2020–04081 Filed 2–27–20; 8:45 am] Docket Number. CDC will post, without electronic, mechanical, or other BILLING CODE 4163–18–P change, all relevant comments to technological collection techniques or Regulations.gov. other forms of information technology, Please Note: Submit all comments through e.g., permitting electronic submissions DEPARTMENT OF HEALTH AND the Federal eRulemaking portal of responses. HUMAN SERVICES (regulations.gov) or by U.S. mail to the 5. Assess information collection costs. address listed above. Centers for Disease Control and Proposed Project Prevention FOR FURTHER INFORMATION CONTACT: To request more information on the Delta impact Cooperative Agreement [60Day–20–20JC; Docket No. CDC–2020– proposed project or to obtain a copy of Evaluation Data Collection 0023] the information collection plan and Instruments—New—National Center for instruments, contact Jeffrey M. Zirger, Injury Prevention and Control (NCIPC), Proposed Data Collection Submitted Information Collection Review Office, Centers for Disease Control and for Public Comment and Centers for Disease Control and Prevention (CDC). Recommendations Prevention, 1600 Clifton Road NE, MS– Background and Brief Description D74, Atlanta, Georgia 30329; phone: AGENCY: Centers for Disease Control and 404–639–7570; Email: [email protected]. The Centers for Disease Control and Prevention (CDC), Department of Health Prevention (CDC) seeks OMB approval and Human Services (HHS). SUPPLEMENTARY INFORMATION: Under the Paperwork Reduction Act of 1995 (PRA) for three years for a new information ACTION: Notice with comment period. (44 U.S.C. 3501–3520), Federal agencies collection request to collect information from all 10 recipients (State Domestic SUMMARY: The Centers for Disease must obtain approval from the Office of Management and Budget (OMB) for each Violence Coalitions) and all 17 Control and Prevention (CDC), as part of subrecipients (Coordinated Community its continuing effort to reduce public collection of information they conduct or sponsor. In addition, the PRA also Response teams) funded through CDC’s burden and maximize the utility of Domestic Violence Prevention government information, invites the requires Federal agencies to provide a 60-day notice in the Federal Register Enhancements and Leadership Through general public and other Federal Alliances (DELTA) Impact Program agencies the opportunity to comment on concerning each proposed collection of information, including each new cooperative agreement (NOFO CDC– a proposed and/or continuing RFA–CE18–1801). CDC will collect information collection, as required by proposed collection, each proposed extension of existing collection of information from DELTA Impact the Paperwork Reduction Act of 1995. recipients as part of its program This notice invites comment on a information, and each reinstatement of previously approved information evaluation to assess the implementation proposed information collection project and impact of the NOFO and further titled ‘‘Delta Impact Cooperative collection before submitting the collection to the OMB for approval. To understand the facilitators, barriers, and Agreement Evaluation Data Collection critical factors to implement specific Instruments’’, to collect information comply with this requirement, we are publishing this notice of a proposed violence prevention strategies and from recipients related to program conduct program evaluation activities. evaluation activities for cooperative data collection as described below. The OMB is particularly interested in The findings from this data collection agreement CDC–RFA–CE18–1801: will be used for implementing and Domestic Violence Prevention comments that will help: 1. Evaluate whether the proposed evaluating DELTA Impact prevention Enhancement and Leadership Through efforts, and will inform technical Alliances (DELTA) Impact. collection of information is necessary for the proper performance of the assistance provided to recipients to DATES: Written comments must be functions of the agency, including assist them in achieving the goals of the received on or before April 28, 2020. whether the information will have DELTA Impact program. This data ADDRESSES: You may submit comments, practical utility; collection will supplement other data to identified by Docket No. CDC–2020– 2. Evaluate the accuracy of the highlight recipient and subrecipients’ 0023 by any of the following methods: agency’s estimate of the burden of the experiences implementing their primary • Federal eRulemaking Portal: proposed collection of information, prevention efforts to prevent intimate Regulations.gov. Follow the instructions including the validity of the partner violence and their related for submitting comments. methodology and assumptions used; program evaluation activities. CDC • Mail: Jeffrey M. Zirger, Information 3. Enhance the quality, utility, and requests approval for 47 burden hours Collection Review Office, Centers for clarity of the information to be annually. There is no cost to Disease Control and Prevention, 1600 collected; and respondents other than their time.

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ESTIMATED ANNUALIZED BURDEN HOURS

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

DELTA Impact Program Recipients Key Informant Interview—Project 10 1 1 10 State Domestic Violence Coali- Lead (Att. 3). tions. Key Informant Interview—Evaluator 10 1 45/60 8 (Att. 4). Subrecipient Survey (Att. 5) ...... 17 1 30/60 9 Prevention Infrastructure Assess- 10 2 1 20 ment (Att. 6).

Total ...... 47

Jeffrey M. Zirger, ADDRESSES: You may submit comments, The OMB is particularly interested in Lead, Information Collection Review Office, identified by Docket No. CDC–2020– comments that will help: Office of Scientific Integrity, Office of Science, 0025 by any of the following methods: 1. Evaluate whether the proposed Centers for Disease Control and Prevention. • Federal eRulemaking Portal: collection of information is necessary [FR Doc. 2020–04082 Filed 2–27–20; 8:45 am] Regulations.gov. Follow the instructions for the proper performance of the BILLING CODE 4163–18–P for submitting comments. functions of the agency, including • Mail: Jeffrey M. Zirger, Information whether the information will have Collection Review Office, Centers for practical utility; DEPARTMENT OF HEALTH AND Disease Control and Prevention, 1600 2. Evaluate the accuracy of the HUMAN SERVICES Clifton Road NE, MS–D74, Atlanta, agency’s estimate of the burden of the Georgia 30329. proposed collection of information, Centers for Disease Control and Instructions: All submissions received including the validity of the Prevention must include the agency name and methodology and assumptions used; [60Day–20–20JE; Docket No. CDC–2020– Docket Number. CDC will post, without 3. Enhance the quality, utility, and 0025] change, all relevant comments to clarity of the information to be Regulations.gov. collected; and Proposed Data Collection Submitted Please note: Submit all comments through 4. Minimize the burden of the for Public Comment and collection of information on those who Recommendations the Federal eRulemaking portal (regulations.gov) or by U.S. mail to the are to respond, including through the AGENCY: Centers for Disease Control and address listed above. use of appropriate automated, Prevention (CDC), Department of Health electronic, mechanical, or other FOR FURTHER INFORMATION CONTACT: To and Human Services (HHS). technological collection techniques or request more information on the ACTION: Notice with comment period. other forms of information technology, proposed project or to obtain a copy of e.g., permitting electronic submissions SUMMARY: The Centers for Disease the information collection plan and of responses. Control and Prevention (CDC), as part of instruments, contact Jeffrey M. Zirger, 5. Assess information collection costs. its continuing effort to reduce public Information Collection Review Office, burden and maximize the utility of Centers for Disease Control and Proposed Project government information, invites the Prevention, 1600 Clifton Road NE, MS– Distribution of Traceable Opioid general public and other Federal D74, Atlanta, Georgia 30329; phone: Material* Kits (TOM Kits*) across U.S. agencies the opportunity to comment on 404–639–7570; Email: [email protected]. Laboratories—NEW—National Center a proposed and/or continuing SUPPLEMENTARY INFORMATION: Under the for Environmental Health (NCEH), information collection, as required by Paperwork Reduction Act of 1995 (PRA) Centers for Disease Control and the Paperwork Reduction Act of 1995. (44 U.S.C. 3501–3520), Federal agencies Prevention (CDC). This notice invites comment on a must obtain approval from the Office of proposed information collection project Management and Budget (OMB) for each Background and Brief Description titled ‘‘Distribution of Traceable Opioid collection of information they conduct For the first time in U.S. history, a Material* Kits (TOM Kits*) across U.S. or sponsor. In addition, the PRA also drug class has been declared a national Laboratories.’’ CDC will use a brief web- requires Federal agencies to provide a public health emergency; each day more based survey to collect information from 60-day notice in the Federal Register than 140 Americans die from drug laboratories submitting requests for concerning each proposed collection of overdoses, 91 specifically because of TOM Kits*. CDC will use this information, including each new opioids. Since 2013, there have been information to prioritize which proposed collection, each proposed significant increases in overdose deaths laboratories will receive kits when extension of existing collection of involving synthetic opioids— quantities are limited. information, and each reinstatement of particularly those involving illicitly- * TRACEABLE OPIOID MATERIAL, previously approved information manufactured fentanyl. The U.S. Drug TOM KITS, and the TOM KITS logo are collection before submitting the Enforcement Administration (DEA) marks of the U.S. Department of Health collection to the OMB for approval. To estimates that 75 percent of all opioid and Human Services. comply with this requirement, we are identifications are illicit fentanyls. DATES: CDC must receive written publishing this notice of a proposed Laboratories are routinely asked to comments on or before April 28, 2020. data collection as described below. confirm which fentanyl or other opioids

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are involved in an overdose or information collection, titled current DEA registration, must comply encountered by first responders, as it is ‘‘Distribution of Traceable Opioid with respective state and local critical to identify and classify the types Material* Kits (TOM Kits*) across U.S. regulations, and must submit requests of drugs involved in an overdose, how Laboratories,’’ under the Health and directly to the respective vendor. often they are involved, and how that Human Services (HHS) Secretary’s As the number of laboratories involvement may change over time. By Public Health Emergency Paperwork requesting TOM Kits* is high, the understanding which drugs are present, Reduction Act (PHE PRA) Waiver appropriate prevention and response mechanism for the period from 03/20/ information collection will be used to activities can be implemented. 2019 to 05/10/2019. From 05/10/2019, prioritize which laboratories will The Centers for Disease Control and CDC continued distributing kits using a receive kits when quantities are limited. Prevention (CDC) is leading the generic information collection (GenIC) The brief six-minute web-based survey development of Traceable Opioid under ‘‘Generic Clearance for the will allow the CDC to (1) determine Material* Kits (TOM Kits*) to support Collection of Qualitative Feedback on what service the recipient laboratory detection of emerging opioids. CDC Agency Service Delivery’’ (OMB Control performs and the volume of samples the maintains the contents of the TOM Kits* No. 0923–0047; expiration date 01/31/ laboratory processes, and to (2) based on new needs identified, in part, 2022). To continue this collection, the equitably distribute TOM Kits* based on through DEA Emerging Threat Reports. CDC is currently requesting a three-year the analysis techniques, matrix, and The DEA 2018 mid-year data indicate PRA clearance for a new information sample size used by the recipient that fentanyl and fentanyl-related collection request (ICR) under the same laboratory. compounds account for approximately title. The annual number of respondents 75 percent of their opioid CDC is currently distributing a identifications. These kits are reference product line of TOM Kits*. Examples of (n=1,200) was based on the number of materials and do not eliminate the need products in this line include the: (1) 2019 requests. The total time burden to meet analytical method requirements Opioid Certified Reference Material Kit requested is 120 hours per year. There of other federal agencies. TOM Kits* are (Opioid CRM Kit); and (2) Fentanyl is no burden on the respondents other not intended for diagnostic use. The kits Analog Screening Kit (FAS Kit). than their time. are free to laboratories in the public, Respondent laboratories requesting the *TRACEABLE OPIOID MATERIAL, private, clinical, law enforcement, TOM Kits* can be from any sector TOM KITS, and the TOM KITS logo are research, and public health domains. (academic, public, or private), must be marks of the U.S. Department of Health To equitably distribute these TOM located in the U.S., must have a and Human Services. Kits*, the CDC conducted an emergency verifiable business address, must have a

ESTIMATED ANNUALIZED BURDEN HOURS

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

Federal Laboratories ...... TOM Kits* Questions .... 400 1 6/60 40 State, Local, and Tribal Government Labora- TOM Kits* Questions .... 400 1 6/60 40 tories. Private or Not-for-Profit Institutions ...... TOM Kits* Questions .... 400 1 6/60 40

Total ...... 120

Jeffrey M. Zirger, as amended, and the Determination of Place: Embassy Suites Buckhead, Lead, Information Collection Review Office, the Director, Strategic Business 3285 Peachtree Road NE, Atlanta, Office of Scientific Integrity, Office of Science, Initiatives Unit, Office of the Chief Georgia 30305. Centers for Disease Control and Prevention. Operating Officer, CDC, pursuant to Agenda: To review and evaluate grant [FR Doc. 2020–04083 Filed 2–27–20; 8:45 am] Public Law 92–463. The grant applications. BILLING CODE 4163–18–P applications and the discussions could disclose confidential trade secrets or For Further Information Contact: commercial property such as patentable Kimberly Leeks, Ph.D., M.P.H., DEPARTMENT OF HEALTH AND material, and personal information Scientific Review Official, National HUMAN SERVICES concerning individuals associated with Center for Injury Prevention and the grant applications, the disclosure of Control, CDC, 4770 Buford Highway NE, Centers for Disease Control and which would constitute a clearly Building 106, MS S106–9, Atlanta, Prevention unwarranted invasion of personal Georgia 30341, Telephone (770) 488– 6562, [email protected]. Notice of Closed Meeting privacy. Name of Committee: Disease, The Director, Strategic Business Pursuant to section 10(d) of the Disability, and Injury Prevention and Initiatives Unit, Office of the Chief Federal Advisory Committee Act, as Control Special Emphasis Panel (SEP)— Operating Officer, Centers for Disease amended, notice is hereby given of the RFA–CE–20–001, Evaluating Practiced- Control and Prevention, has been following meeting. based Programs, Policies, and Practices delegated the authority to sign Federal The meeting will be closed to the from CDC’s Rape Prevention Education Register notices pertaining to public in accordance with the Program. announcements of meetings and other provisions set forth in sections Date: April 29–30, 2020. committee management activities, for 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Time: 8:30 a.m.–5:30 p.m., EDT. both the Centers for Disease Control and

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Prevention and the Agency for Toxic Medicare and Medicaid Services (CMS). will be included in the meeting’s Substances and Disease Registry. The advice and guidance pertain to Summary Report. general issues related to improvement in The CLIAC meeting materials will be Kalwant Smagh, clinical laboratory quality and made available to the Committee and Director, Strategic Business Initiatives Unit, laboratory medicine practice and the public in electronic format (PDF) on Office of the Chief Operating Officer, Centers specific questions related to possible the internet instead of by printed copy. for Disease Control and Prevention. revision of the Clinical Laboratory Check the CLIAC website on the day of [FR Doc. 2020–04098 Filed 2–27–20; 8:45 am] Improvement Amendment (CLIA) the meeting for materials: www.cdc.gov/ BILLING CODE 4163–18–P standards. Examples include providing cliac. guidance on studies designed to Matters to be Considered: The agenda improve safety, effectiveness, efficiency, will include agency updates from CDC, DEPARTMENT OF HEALTH AND timeliness, equity, and patient- CMS, and FDA. Presentations and HUMAN SERVICES centeredness of laboratory services; discussions will focus on an update on Centers for Disease Control and revisions to the standards under which CLIAC recommendations; an update on Prevention clinical laboratories are regulated; the the Genetic Testing Reference Materials impact of proposed revisions to the Coordination Program (GeT–RM); an Clinical Laboratory Improvement standards on medical and laboratory update of the December 2019 CDC’s Advisory Committee (CLIAC) practice; and the modification of the Board of Scientific Counselors, Deputy standards and provision of non- Director for Infectious Diseases meeting; AGENCY: Centers for Disease Control and regulatory guidelines to accommodate a report from the Office of the National Prevention (CDC), Department of Health technological advances, such as new Coordinator for Health Information and Human Services (HHS). test methods, the electronic Technology (ONC) Health Information ACTION: Notice of meeting. transmission of laboratory information, Technology Advisory Committee; the and mechanisms to improve the laboratory response to the COVID–19 SUMMARY: In accordance with the integration of public health and clinical coronavirus disease outbreak; and Federal Advisory Committee Act, the laboratory practices. technological advances in digital CDC announces the following meeting All people attending the CLIAC imaging. Agenda items are subject to for the Clinical Laboratory Improvement meeting in-person are required to change as priorities dictate. Advisory Committee (CLIAC). This register for the meeting online at least The Director, Strategic Business meeting is open to the public, limited five business days in advance for U.S. Initiatives Unit, Office of the Chief only by the space available. The meeting citizens and at least 10 business days in Operating Officer, Centers for Disease room accommodates approximately 100 advance for international registrants. Control and Prevention, has been people. The public is also welcome to Register at: www.cdc.gov/cliac. Register delegated the authority to sign Federal view the meeting by webcast. Check the by scrolling down and clicking the Register notices pertaining to CLIAC website on the day of the ‘‘Register for this Meeting’’ button and announcements of meetings and other meeting for the webcast link completing all forms according to the committee management activities, for www.cdc.gov/cliac. instructions given. Please complete all both the Centers for Disease Control and DATES: The meeting will be held on the required fields before submitting Prevention and the Agency for Toxic April 16, 2020, 8:30 a.m. to 5:00 p.m., your registration and submit no later Substances and Disease Registry. EDT and April 17, 2020, 8:30 a.m. to than April 8, 2020, for U.S. registrants Kalwant Smagh, 11:30 a.m., EDT. and April 1, 2020, for international registrants. Director, Strategic Business Initiatives Unit, ADDRESSES: Food and Drug Office of the Chief Operating Officer, Centers Administration (FDA), White Oak It is the policy of CLIAC to accept written public comments and provide a for Disease Control and Prevention. Campus, 10903 New Hampshire [FR Doc. 2020–04068 Filed 2–27–20; 8:45 am] Avenue, Building 31, Great Room, brief period for oral public comments on agenda items. Public comment periods BILLING CODE 4163–18–P Silver Spring, Maryland 20993 and via for each agenda item are scheduled webcast at www.cdc.gov/cliac. immediately prior to the Committee FOR FURTHER INFORMATION CONTACT: discussion period for that item. In DEPARTMENT OF HEALTH AND Nancy Anderson, MMSc, MT(ASCP), general, each individual or group HUMAN SERVICES Senior Advisor for Clinical Laboratories, requesting to make oral comments will Division of Laboratory Systems, Center Centers for Disease Control and be limited to a total time of five minutes Prevention for Surveillance, Epidemiology and (unless otherwise indicated). To assure Laboratory Services, Office of Public adequate time is scheduled for public [60Day–20–0493; Docket No. CDC–2020– Health Scientific Services, Centers for comments, speakers should notify the 0015] Disease Control and Prevention, 1600 contact person below at least 5 business Clifton Road NE, Mailstop V24–3, days prior to the meeting date. For Proposed Data Collection Submitted Atlanta, Georgia 30329–4018, telephone individuals or groups unable to attend for Public Comment and (404) 498–2741; [email protected]. the meeting, CLIAC accepts written Recommendations SUPPLEMENTARY INFORMATION: comments until the date of the meeting AGENCY: Centers for Disease Control and Purpose: This Committee is charged (unless otherwise stated). However, it is Prevention (CDC), Department of Health with providing scientific and technical requested that comments be submitted and Human Services (HHS). advice and guidance to the Secretary of at least 5 business days prior to the ACTION: Notice with comment period. Health and Human Services (HHS); the meeting date so that the comments may Assistant Secretary for Health; the be made available to the Committee for SUMMARY: The Centers for Disease Director, Centers for Disease Control their consideration and public Control and Prevention (CDC), as part of and Prevention; the Commissioner, distribution. Written comments should its continuing effort to reduce public Food and Drug Administration (FDA); be provided to the contact person at the burden and maximize the utility of and the Administrator, Centers for mailing or email address below, and government information, invites the

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general public and other Federal 60-day notice in the Federal Register OMB approval for the 2017 YRBS and agencies the opportunity to comment on concerning each proposed collection of 2019 YRBS expired September 30, 2019 a proposed and/or continuing information, including each new (OMB Control No. 0920–0493). CDC information collection, as required by proposed collection, each proposed seeks a three-year approval to conduct the Paperwork Reduction Act of 1995. extension of existing collection of the YRBS in Spring 2021 and Spring This notice invites comment on a information, and each reinstatement of 2023. Minor changes incorporated into proposed information collection project previously approved information this reinstatement request include: An titled 2021 and 2023 National Youth collection before submitting the updated title for the information Risk Behavior Surveys (YRBS). CDC is collection to the OMB for approval. To collection to accurately reflect the years requesting a three-year approval to comply with this requirement, we are in which the survey will be conducted, reinstate, with changes, the data publishing this notice of a proposed minor changes to the data collection collection for the national YRBS, a data collection as described below. instrument, and the use of a tablet-based biennially school-based survey of high The OMB is particularly interested in data collection methodology starting in school students in the United States. comments that will help: 2023. DATES: CDC must receive written 1. Evaluate whether the proposed The YRBS assesses priority health risk comments on or before April 28, 2020. collection of information is necessary behaviors related to the major ADDRESSES: You may submit comments, for the proper performance of the preventable causes of mortality, identified by Docket No. CDC–2020– functions of the agency, including morbidity, and social problems among 0015 by any of the following methods: whether the information will have both youth and young adults in the • Federal eRulemaking Portal: practical utility; United States. Data on health risk Regulations.gov. Follow the instructions 2. Evaluate the accuracy of the behaviors of adolescents are the focus of for submitting comments. agency’s estimate of the burden of the approximately 65 national health • Mail: Jeffrey M. Zirger, Information proposed collection of information, objectives in Healthy People 2030, an Collection Review Office, Centers for including the validity of the initiative of the U.S. Department of Disease Control and Prevention, 1600 methodology and assumptions used; Health and Human Services (HHS). The Clifton Road NE, MS–D74, Atlanta, 3. Enhance the quality, utility, and YRBS provides data to measure 13 of Georgia 30329. clarity of the information to be the proposed health objectives and one Instructions: All submissions received collected; and of the Leading Health Indicators must include the agency name and 4. Minimize the burden of the currently under public comment to Docket Number. CDC will post, without collection of information on those who establish Healthy People 2030 change, all relevant comments to are to respond, including through the objectives. In addition, the YRBS can Regulations.gov. use of appropriate automated, identify racial and ethnic disparities in electronic, mechanical, or other Please note: Submit all comments through health risk behaviors. No other national the Federal eRulemaking portal technological collection techniques or source of data measures as many of the (regulations.gov) or by U.S. mail to the other forms of information technology, Healthy People 2030 objectives address listed above. e.g., permitting electronic submissions addressing adolescent health risk of responses. behaviors as the YRBS. The data also FOR FURTHER INFORMATION CONTACT: To 5. Assess information collection costs. request more information on the will have significant implications for proposed project or to obtain a copy of Proposed Project policy and program development for the information collection plan and 2021 and 2023 National Youth Risk school health programs nationwide. instruments, contact Jeffrey M. Zirger, Behavior Surveys (OMB Contrtol No. In Spring 2021 and Spring 2023, the Information Collection Review Office, 0920–0493)—Reinstatement with YRBS will be conducted among Centers for Disease Control and change—National Center for HIV/AIDS, nationally representative samples of Prevention, 1600 Clifton Road NE, MS– Viral Hepatitis, STD, and TB Prevention students attending public and private D74, Atlanta, Georgia 30329; phone: (NCHHSTP), Centers for Disease Control schools in grades 9–12. Information 404–639–7570; Email: [email protected]. and Prevention (CDC). supporting the YRBS also will be SUPPLEMENTARY INFORMATION: Under the collected from state-, district-, and Paperwork Reduction Act of 1995 (PRA) Background and Brief Description school-level administrators and (44 U.S.C. 3501–3520), Federal agencies The purpose of this request is to teachers. The table below reports the must obtain approval from the Office of obtain OMB approval to reinstate with number of respondents annualized over Management and Budget (OMB) for each change, the data collection for the the three-year project period. There are collection of information they conduct National Youth Risk Behavior Survey no costs to respondents except their or sponsor. In addition, the PRA also (YRBS), a school-based survey that has time. The total estimated annualized requires Federal agencies to provide a been conducted biennially since 1991. burden hours are 6,259.

ESTIMATED ANNUALIZED BURDEN HOURS

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

State Administrators ...... State-level Recruitment Script for the Youth 17 1 30/60 9 Risk Behavior Survey. District Administrators...... District-level Recruitment Script for the 80 1 30/60 40 Youth Risk Behavior Survey. School Administrators...... District-level Recruitment Script for the 133 1 30/60 67 Youth Risk Behavior Survey.

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ESTIMATED ANNUALIZED BURDEN HOURS—Continued

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

Teachers ...... Data Collection Checklist for the Youth Risk 440 1 15/60 110 Behavior Survey. Students ...... Youth Risk Behavior Survey ...... 8,045 1 45/60 6,034

Total ...... 6,259

Jeffrey M. Zirger, Administration for Children and The data collection for the Adulthood Lead, Information Collection Review Office, Families (ACF) request a revision to a Preparation Subjects Study is complete. Office of Scientific Integrity, Office of Science, currently approved information This notice is specific to a request for an Centers for Disease Control and Prevention. collection (OMB No. 0970–0497; extension of data collection activities for [FR Doc. 2020–04084 Filed 2–27–20; 8:45 am] expiration date: 04/30/2020). The the Performance Measures Study only. BILLING CODE 4163–18–P purpose of the request is to make The Performance Measures Study adaptions to the participant entry and component includes collection and exit surveys, and continue the ongoing analysis of performance measure data DEPARTMENT OF HEALTH AND data collection of the performance from State PREP (SPREP), Tribal PREP HUMAN SERVICES measures from PREP grantees. (TPREP), Competitive PREP (CPREP), DATES: Comments due within 60 days of and Personal Responsibility Education Administration for Children and publication. In compliance with the Families Innovative Strategies (PREIS) grantees. requirements of Section 3506(c)(2)(A) of Data will be used to determine if PREP Proposed Information Collection the Paperwork Reduction Act of 1995, and PREIS grantees are meeting Activity; Personal Responsibility the Administration for Children and performance benchmarks related to the Education Program (PREP) Families is soliciting public comment program’s mission and priorities. Performance Measures and Adulthood on the specific aspects of the information collection described above. This request includes the Preparation Subjects (PMAPS) development of adapted participant ADDRESSES: Copies of the proposed Studies—Data Collection Related to entry and exit surveys for middle school collection of information can be the Performance Measures Study— students (6th, 7th, and 8th grade youth) obtained and comments may be Extension (OMB #0970–0497). that exclude the most sensitive forwarded by emailing questions pertaining to sexual behavior. AGENCY: Office of Planning, Research, [email protected]. This is because some of the PREP and Evaluation; Administration for Alternatively, copies can also be middle school curricula do not include Children and Families; HHS. obtained by writing to the topics on sexual behavior, i.e., focus ACTION: Request for public comment. Administration for Children and Families, Office of Planning, Research, only on healthy relationship education. SUMMARY: A goal of the Performance and Evaluation, 330 C Street SW, The adapted surveys will be used by all Measures and Adulthood Preparation Washington, DC 20201, Attn: OPRE grantees that serve middle school youth. Subjects (PMAPS) studies is to collect, Reports Clearance Officer. All requests, In addition, some minor edits have been analyze, and report on performance emailed or written, should be identified made to the high school surveys. measure data for the Personal by the title of the information collection. Respondents: Performance Responsibility Education Program SUPPLEMENTARY INFORMATION: measurement data collection (PREP) programs. The Office of Description: The PMAPS studies instruments will be administered to Planning, Research, and Evaluation consist of two components: The individuals representing SPREP, TPREP, (OPRE) and the Family and Youth Performance Measures Study and the CPREP, and PREIS grantees, their sub- Services Bureau (FYSB) in the Adulthood Preparation Subjects Study. awardees, and program participants.

ANNUAL BURDEN ESTIMATES

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

PREP Participant Entry Survey ...... 319,673 106,558 1 0.15 15,984 PREP Participant Exit Survey ...... 291,624 97,208 1 0.13333 12,961 Performance Reporting System Data Form—State grant- ees ...... 153 51 2 18 1,836 Performance Reporting System Data Form—TPREP grantees ...... 28 9 2 18 324 Performance Reporting System Data Form—CPREP grantees ...... 75 25 2 14 700 Performance Reporting System Data Form—PREIS grant- ees ...... 38 13 2 14 364 Performance Reporting System Data Form—State sub- awardees ...... 987 329 2 14 9,212

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ANNUAL BURDEN ESTIMATES—Continued

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

Performance Reporting System Data Form—TPREP sub- awardees ...... 85 28 2 14 784 Performance Reporting System Data Form—CPREP sub- awardees ...... 110 37 2 12 888 Performance Reporting System Data Form—PREIS sub- awardees ...... 66 22 2 12 528

Estimated Total Annual Burden ACTION: Request for public comment. Washington, DC 20201, Attn: ACF Hours: 43,581. Reports Clearance Officer. All requests, Comments: The Department SUMMARY: Form ACF–196T is used by emailed or written, should be identified specifically requests comments on (a) tribes to report expenditures for the by the title of the information collection. whether the proposed collection of Tribal Temporary Assistance for Needy SUPPLEMENTARY INFORMATION: information is necessary for the proper Families (TANF) grant. The performance of the functions of the Administration for Children and Description: Tribes use Form ACF– agency, including whether the Families (ACF) will use the financial 196T to report expenditures for the information shall have practical utility; data provided by tribes to estimate Tribal TANF grant. Authority to collect (b) the accuracy of the agency’s estimate quarterly funding needs, calculate and report this information is found in of the burden of the proposed collection award amounts, and assess compliance the Personal Responsibility and Work of information; (c) the quality, utility, with statutory and regulatory Opportunity Reconciliation Act of 1996, and clarity of the information to be requirements. ACF is requesting an Public Law 104–193. Tribal entities collected; and (d) ways to minimize the extension with no changes to the form with approved tribal plans for burden of the collection of information and minor updates to the instructions. implementation of the TANF program are required under Section 412(h) of the on respondents, including through the DATES: Comments due within 30 days of use of automated collection techniques Social Security Act to report financial publication. OMB is required to make a data. Form ACF–196T provides for the or other forms of information decision concerning the collection of technology. Consideration will be given collection of data regarding federal information between 30 and 60 days expenditures. Failure to collect this data to comments and suggestions submitted after publication of this document in the within 60 days of this publication. would seriously compromise ACF’s Federal Register. Therefore, a comment ability to monitor expenditures. This Authority: Sec. 50503, Pub. L. 115–123. is best assured of having its full effect information is also used to estimate Mary B. Jones, if OMB receives it within 30 days of outlays and may be used to prepare ACF publication. ACF/OPRE Certifying Officer. budget submissions to Congress. [FR Doc. 2020–04085 Filed 2–27–20; 8:45 am] ADDRESSES: Written comments and Financial management of the program BILLING CODE 4184–37–P recommendations for the proposed would be seriously compromised if the information collection should be sent expenditure data were not collected. 45 directly to the following: Office of CFR part 286 subpart E requires the DEPARTMENT OF HEALTH AND Management and Budget, Paperwork strictest controls on funding HUMAN SERVICES Reduction Project, Email: OIRA_ requirements, which necessitates review [email protected], Attn: of documentation in support of tribal Administration for Children and Desk Officer for the Administration for expenditures for reimbursement. Families Children and Families. Comments received from previous efforts to implement a similar Tribal Submission for OMB Review; Form Copies of the proposed collection may be obtained by emailing infocollection@ TANF Report Form ACF–196T were ACF–196T, Tribal TANF Financial used to guide ACF in the development Report (OMB #0970–0345) acf.hhs.gov. Alternatively, copies can also be obtained by writing to the of the product presented with this AGENCY: Office of Family Assistance; Administration for Children and submittal. Administration for Children and Families, Office of Planning, Research, Respondents: All Tribal TANF Families; HHS. and Evaluation, 330 C Street SW, Agencies.

ANNUAL BURDEN ESTIMATES

Number of Average Form Total number responses per burden hours Annual burden of respondents respondent per response hours

ACF–196T ...... 75 4 1.5 450

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Estimated Total Annual Burden ACTION: Request for public comment. obtained and comments may be Hours: 450. forwarded by emailing infocollection@ SUMMARY: The Office of Refugee acf.hhs.gov. Alternatively, copies can Authority: U.S.C. Section 402 of the Social Resettlement (ORR) is requesting a 3- Security Act (42 U.S.C. 602). also be obtained by writing to the year extension of the application and Administration for Children and Mary B. Jones, Withdrawal of Application or Families, Office of Planning, Research ACF/OPRE Certifying Officer. Declination of Placement Form for the and Evaluation (OPRE), 330 C Street Unaccompanied Refugee Minors (URM) [FR Doc. 2020–04067 Filed 2–27–20; 8:45 am] SW, Washington, DC 20201, Attn: ACF Program. Proposed revisions to each Reports Clearance Officer. All requests, BILLING CODE 4184–36–P instrument are minimal. These forms emailed or written, should be identified were previously approved under OMB by the title of the information collection. #0970–0498, expiration 7/31/2020. ORR DEPARTMENT OF HEALTH AND SUPPLEMENTARY INFORMATION: is currently seeking a new OMB number HUMAN SERVICES Description: The URM Program specific to these forms, as they were Application is completed on behalf of Administration for Children and previously approved as part of another unaccompanied children in the United information collection package for Families States who are applying for entry into ORR’s Unaccompanied Alien Children’s the URM Program. The application Proposed Information Collection program. includes biographical data and Activity; Office of Refugee DATES: Comments due within 60 days of information on the child’s needs to Resettlement Unaccompanied Refugee publication. In compliance with the support placement efforts. The Minors Program Application and requirements of Section 3506(c)(2)(A) of Withdrawal of Application or Withdrawal of Application or the Paperwork Reduction Act of 1995, Declination of Placement Form is Declination of Placement Form the Administration for Children and completed when a child is no longer (Previous OMB #0970–0498) Families is soliciting public comment interested in entering the URM program. on the specific aspects of the Respondents: Case managers, AGENCY: Office of Refugee Resettlement; information collection described above. attorneys, or other representatives Administration for Children and ADDRESSES: Copies of the proposed working with unaccompanied children Families; HHS. collection of information can be who are eligible for the URM Program.

ANNUAL BURDEN ESTIMATES

Total number Total number of responses Average Total burden Annual Instrument of respondents per burden hours hours burden respondent per response hours

Unaccompanied Refugee Minors Program Application ...... 350 3 1.50 1,575 525 Withdrawal of Application or Declination of Placement Form ...... 30 3 0.20 18 6

Estimated Total Annual Burden DEPARTMENT OF HEALTH AND phone (301) 443–3609; or email Hours: 531. HUMAN SERVICES [email protected]. Comments: The Department SUPPLEMENTARY INFORMATION: Health Resources and Service specifically requests comments on: (a) The NACNHSC consults, advises, and Administration Whether the proposed collection of makes annual recommendations to the Secretary of HHS and the Administrator, information is necessary for the proper Charter Amendment National Advisory HRSA, with respect to their NHSC performance of the functions of the Council on the National Health Service related responsibilities under Subpart II, agency, including whether the Corps information shall have practical utility; Part D of Title III of the PHS Act (42 (b) the accuracy of the agency’s estimate AGENCY: Health Resources and Service U.S.C. 254d–254k), as amended, to of the burden of the proposed collection Administration (HRSA), Department of designate areas of the United States with of information; (c) the quality, utility, Health and Human Services (HHS). health professional shortages and assign NHSC clinicians to improve the delivery and clarity of the information to be ACTION: Notice. collected; and (d) ways to minimize the of health services in health professional burden of the collection of information shortage areas. SUMMARY: In accordance with the The amended charter for NACNHSC on respondents, including through the Federal Advisory Committee Act was approved on February 20, 2020, use of automated collection techniques (FACA), HHS is hereby giving notice which will also stand as the filing date. or other forms of information that the National Advisory Council on NACNHSC is exempt from Section 14 of technology. Consideration will be given the National Health Service Corps the FACA, as stated in section 337(c) of to comments and suggestions submitted (NACNHSC) Charter is amended. The the Public Health Service (PHS) Act. within 60 days of this publication. effective date is February 20, 2020. This amended charter will remain in Authority: 8 U.S.C. 1522(d). FOR FURTHER INFORMATION CONTACT: effect until amended or section 337 of Diane Fabiyi-King, Designated Federal the PHS Act is repealed by law. Mary B. Jones, Official (DFO), Division of National A copy of the NACNHSC amended ACF/OPRE Certifying Officer. Health Service Corps (NHSC), HRSA. charter is available on the NACNHSC [FR Doc. 2020–04136 Filed 2–27–20; 8:45 am] Address: 5600 Fishers Lane, Room website at https://nhsc.hrsa.gov/nac- BILLING CODE 4184–45–P 14N110, Rockville, Maryland 20857; charter.html. A copy of the amended

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charter also can be obtained by Contact Person: Luis Espinoza, Ph.D., Name of Committee: National Institute on accessing the FACA database that is Scientific Review Officer, Extramural Project Drug Abuse Special Emphasis Panel; Avenir maintained by the Committee Review Branch, Office of Extramural Award Program for Research on Substance Management Secretariat under the Activities, National Institute on Alcohol Abuse and HIV/AIDS (DP2). Abuse and Alcoholism, 6700B Rockledge Date: March 13, 2020. General Services Administration. The Drive, Room 2109, Bethesda, MD 20892, Time: 8:00 a.m. to 5:00 p.m. website address for the FACA database (301) 443–8599, [email protected]. Agenda: To review and evaluate grant is http://www.facadatabase.gov/. Name of Committee: National Institute on applications. Place: Courtyard by Marriott, 5520 Maria G. Button, Alcohol Abuse and Alcoholism Special Wisconsin Avenue, Chevy Chase, MD 20815. Executive Secretariat. Emphasis Panel; Investigational New Drug (IND)-Enabling Development of Medications Contact Person: Hiromi Ono, Ph.D., [FR Doc. 2020–04088 Filed 2–27–20; 8:45 am] to Treat Alcohol Use Disorder and Alcohol- Scientific Review Officer, Office of BILLING CODE 4165–15–P Related Disorders Review Group. Extramural Affairs, National Institute on Date: March 31, 2020. Drug Abuse, National Institutes of Health, Time: 1:00 p.m. to 3:00 p.m. 6001 Executive Boulevard, Room 4238, MSC DEPARTMENT OF HEALTH AND Agenda: To review and evaluate grant 9550, Bethesda, MD 20892, 301–402–6020, HUMAN SERVICES applications. [email protected]. Place: National Institute of Health, This notice is being published less than 15 National Institutes of Health National Institute on Alcohol Abuse and days prior to the meeting due to the timing Alcoholism, 6700B Rockledge Drive, Room limitations imposed by the review and National Institute on Alcohol Abuse 2114, Rockville, MD 20817, (Telephone funding cycle. and Alcoholism; Notice of Closed Conference Call). Name of Committee: National Institute on Meetings Contact Person: Ranga Srinivas, Ph.D., Drug Abuse Special Emphasis Panel; SEP II: Chief, Extramural Project Review Branch, Medications Development. Pursuant to section 10(d) of the National Institute on Alcohol Abuse and Date: March 19, 2020. Federal Advisory Committee Act, as Alcoholism, National Institutes of Health, Time: 1:00 p.m. to 2:30 p.m. amended, notice is hereby given of the 6700 B Rockledge Drive, Room 2114, Agenda: To review and evaluate grant following meetings. Bethesda, MD 20892, (301) 451–2067, applications. The meetings will be closed to the [email protected]. Place: National Institutes of Health, public in accordance with the (Catalogue of Federal Domestic Assistance Neuroscience Center Building, 6001 provisions set forth in sections Program Nos. 93.271, Alcohol Research Executive Boulevard, Room 4236, Rockville, 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Career Development Awards for Scientists MD 20852, (Telephone Conference Call). Contact Person: Ivan K. Navarro, Ph.D., as amended. The grant applications and and Clinicians; 93.272, Alcohol National Research Service Awards for Research Scientific Review Officer, Office of the discussions could disclose Training; 93.273, Alcohol Research Programs; Extramural Policy and Review, Division of confidential trade secrets or commercial 93.891, Alcohol Research Center Grants; Extramural Research, National Institute on property such as patentable material, 93.701, ARRA Related Biomedical Research Drug Abuse, NIH, 6001 Executive Boulevard, and personal information concerning and Research Support Awards., National Room 4242, MSC 9550, Bethesda, MD 20892, individuals associated with the grant Institutes of Health, HHS) 301–827–5833 [email protected]. applications, the disclosure of which Dated: February 24, 2020. Name of Committee: National Institute on Drug Abuse Special Emphasis Panel; NIDA would constitute a clearly unwarranted Melanie J. Pantoja, invasion of personal privacy. SEP for Medications Development. Program Analyst, Office of Federal Advisory Date: March 19, 2020. Name of Committee: National Institute on Committee Policy. Time: 2:30 p.m. to 5:00 p.m. Alcohol Abuse and Alcoholism Special [FR Doc. 2020–04066 Filed 2–27–20; 8:45 am] Agenda: To review and evaluate grant Emphasis Panel NIAAA Review BILLING CODE 4140–01–P applications. Subcommittee Member Conflict Panel. Place: National Institutes of Health, Date: March 23, 2020. Neuroscience Center Building, 6001 Time: 11:00 a.m. to 1:00 p.m. DEPARTMENT OF HEALTH AND Executive Boulevard, Room 4236, Rockville, Agenda: To review and evaluate grant MD 20852, (Telephone Conference Call). applications. HUMAN SERVICES Contact Person: Ivan K. Navarro, Ph.D., Place: National Institutes of Health, Scientific Review Officer, Office of National Institute on Alcohol Abuse and National Institutes of Health Extramural Policy and Review, Division of Alcoholism, 6700B Rockledge Drive, Room Extramural Research, National Institute on 2114, Bethesda, MD 20817, (Telephone National Institute on Drug Abuse; Drug Abuse, NIH, 6001 Executive Boulevard, Conference Call). Notice of Closed Meetings Contact Person: Ranga Srinivas, Ph.D., Room 4242, MSC 9550, Bethesda, MD 20892, Chief, Extramural Project Review Branch, Pursuant to section 10(d) of the 301–827–5833, [email protected]. National Institute on Alcohol Abuse and Federal Advisory Committee Act, as Name of Committee: National Institute on Alcoholism, National Institutes of Health, amended, notice is hereby given of the Drug Abuse Special Emphasis Panel; 6700 B Rockledge Drive, Room 2114, following meetings. Modeling HIV Neuropathology Using Bethesda, MD 20892, (301) 451–2067, Microglia from Human iPSC and Cerebral [email protected]. The meetings will be closed to the Organoids (R01 Clinical Trial Not Allowed). public in accordance with the Name of Committee: National Institute on Date: March 25, 2020. Alcohol Abuse and Alcoholism Special provisions set forth in sections Time: 12:00 p.m. to 4:30 p.m. Emphasis Panel; NIAAA Review 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Agenda: To review and evaluate grant Subcommittee Member Conflict Panel. as amended. The grant applications and applications. Date: March 27, 2020. the discussions could disclose Place: National Institutes of Health, Time: 1:00 p.m. to 4:00 p.m. confidential trade secrets or commercial Neuroscience Center Building, 6001 Agenda: To review and evaluate grant property such as patentable material, Executive Boulevard, Rockville, MD 20852, (Telephone Conference Call). applications. and personal information concerning Place: National Institute of Health, Contact Person: Gerald L. McLaughlin, National Institute on Alcohol Abuse and individuals associated with the grant Ph.D., Scientific Review Officer, Office of Alcoholism, 6700B Rockledge Drive, Room applications, the disclosure of which Extramural Policy and Review, National 2109, Rockville, MD 20817, (Telephone would constitute a clearly unwarranted Institute on Drug Abuse, National Institutes Conference Call). invasion of personal privacy. of Health, 6001 Executive Boulevard, Room

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4235 MSC 9550, Bethesda, MD 20892–9550, Contact Person: Aileen Schulte, Ph.D., Place: National Institutes of Health, 6001 301–827–5819, [email protected]. Scientific Review Officer, Division of Executive Boulevard, Rockville, MD 20852, Name of Committee: National Institute on Extramural Activities, National Institute of (Telephone Conference Call). Drug Abuse Special Emphasis Panel; Avenir Mental Health, NIH, Neuroscience Center, Contact Person: Rebecca Steiner Garcia, Award Program for Genetics or Epigenetics of 6001 Executive Blvd., Room 6140, MSC 9608, Ph.D., Scientific Review Officer, Division of Substance Use Disorders (DP1 Clinical Trial Bethesda, MD 20892–9608, 301–443–1225, Extramural Activities, National Institute of Optional). [email protected]. Mental Health, NIH, Neuroscience Center, Date: March 26, 2020. This notice is being published less than 15 6001 Executive Blvd., Room 6149, MSC 9608, Time: 8:00 a.m. to 5:00 p.m. days prior to the meeting due to the timing Bethesda, MD 20892–9608, 301–443–4525, Agenda: To review and evaluate grant limitations imposed by the review and [email protected]. applications. funding cycle. (Catalogue of Federal Domestic Assistance Place: Hilton Washington/Rockville, 1750 Name of Committee: National Institute of Program Nos. 93.242, Mental Health Research Rockville Pike, Rockville, MD 20852. Mental Health Special Emphasis Panel; Grants, National Institutes of Health, HHS) Contact Person: Ivan K. Navarro, Ph.D., BRAIN Initiative; Data Archives, Integration, Dated: February 24, 2020. Scientific Review Officer, Office of and Standards. Extramural Policy and Review, Division of Date: March 20, 2020. Melanie J. Pantoja, Extramural Research, National Institute on Time: 1:00 p.m. to 5:30 p.m. Program Analyst, Office of Federal Advisory Drug Abuse, NIH, 6001 Executive Boulevard, Agenda: To review and evaluate grant Committee Policy. Room 4242, MSC 9550, Bethesda, MD 20892, applications. [FR Doc. 2020–04061 Filed 2–27–20; 8:45 am] 301–827–5833, [email protected]. Place: National Institutes of Health, 6001 BILLING CODE 4140–01–P (Catalogue of Federal Domestic Assistance Executive Boulevard, Rockville, MD 20852, Program Nos. 93.277, Drug Abuse Scientist (Telephone Conference Call). Development Award for Clinicians, Scientist Contact Person: Vinod Charles, Ph.D., DEPARTMENT OF HEALTH AND Scientific Review Officer, Division of Development Awards, and Research Scientist HUMAN SERVICES Awards; 93.278, Drug Abuse National Extramural Activities, National Institute of Mental Health, NIH, Neuroscience Center, Research Service Awards for Research Substance Abuse and Mental Health Training; 93.279, Drug Abuse and Addiction 6001 Executive Blvd., Room 6151, MSC 9606, Research Programs, National Institutes of Bethesda, MD 20892–9606, 301–443–1606, Services Administration Health, HHS) [email protected]. Center for Substance Abuse Dated: February 24, 2020. Name of Committee: National Institute of Mental Health Special Emphasis Panel; Treatment; Notice of Meeting Tyeshia M. Roberson, BRAIN Initiative: Secondary Analysis and Program Analyst, Office of Federal Advisory Pursuant to Public Law 92–463, Archiving of BRAIN Initiative Data. notice is hereby given that the Committee Policy. Date: March 24, 2020. [FR Doc. 2020–04060 Filed 2–27–20; 8:45 am] Time: 2:00 p.m. to 5:00 p.m. Substance Abuse and Mental Health Services Administration’s (SAMHSA) BILLING CODE 4140–01–P Agenda: To review and evaluate grant applications. Center for Substance Abuse Treatment Place: National Institutes of Health, 6001 (CSAT) National Advisory Council DEPARTMENT OF HEALTH AND Executive Boulevard, Rockville, MD 20852, (NAC) will meet on March 26, 2020, HUMAN SERVICES (Telephone Conference Call). 1:00 p.m.–5:00 p.m. (EDT). Contact Person: Vinod Charles, Ph.D., The meeting is open to the public and National Institutes of Health Scientific Review Officer, Division of will include consideration of the Extramural Activities, National Institute of minutes from the SAMHSA CSAT NAC National Institute of Mental Health; Mental Health, NIH, Neuroscience Center, meeting of August 21, 2019; budget 6001 Executive Blvd., Room 6151, MSC 9606, Notice of Closed Meetings Bethesda, MD 20892–9606, 301–443–1606, update; DATA wavier update; State Opioid Response update; Substance Pursuant to section 10(d) of the [email protected]. Abuse Prevention and Treatment Block Federal Advisory Committee Act, as Name of Committee: National Institute of Grant update; discretionary portfolio amended, notice is hereby given of the Mental Health Special Emphasis Panel; update; discussion on Tip 63; and a following meetings. BRAIN Initiative: Tools to Facilitate High- The meetings will be closed to the Throughput Microconnectivity Analysis discussion on Technology Transfer (R01). public in accordance with the Centers Program Peer Support. Date: March 26, 2020. The meeting will be held via WebEx provisions set forth in sections Time: 12:00 p.m. to 3:00 p.m. and telephone only, and not in person. 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., Agenda: To review and evaluate grant Interested persons may present data, as amended. The grant applications and applications. information, or views, orally or in the discussions could disclose Place: National Institutes of Health, 6001 writing, on issues pending before the confidential trade secrets or commercial Executive Boulevard, Rockville, MD 20852, Council. Written submissions should be property such as patentable material, (Telephone Conference Call). forwarded to the contact person on or and personal information concerning Contact Person: Erin E. Gray, Ph.D., before March 20, 2020. Oral individuals associated with the grant Scientific Review Officer, Division of Extramural Activities, National Institute of presentations from the public will be applications, the disclosure of which Mental Health, National Institutes of Health, scheduled at the conclusion of the would constitute a clearly unwarranted 6001 Executive Boulevard, NSC 6152B, meeting. Individuals interested in invasion of personal privacy. Bethesda, MD 20892, 301–402–8152, making oral presentations must notify Name of Committee: National Institute of [email protected]. the contact person on or before March Mental Health Special Emphasis Panel; Name of Committee: National Institute of 20, 2020. Up to five minutes may be Research Training. Mental Health Special Emphasis Panel; allotted for each presentation. Date: March 11, 2020. Computational Approaches for Validating Registration is required to participate Time: 10:00 a.m. to 11:00 a.m. Dimensional Constructs of Relevance to Agenda: To review and evaluate grant Psychopathology (R01). during this meeting. To attend virtually, applications. Date: March 30, 2020. or to obtain the call-in number and Place: National Institutes of Health, 6001 Time: 12:00 p.m. to 5:00 p.m. access code, submit written or brief oral Executive Boulevard, Rockville, MD 20852, Agenda: To review and evaluate grant comments, or request special (Telephone Conference Call). applications. accommodations for persons with

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disabilities, please register on-line at DATES: Comments are encouraged and mechanical, or other technological http://snacregister.samhsa.gov/ must be submitted (no later than April collection techniques or other forms of MeetingList.aspx, or communicate with 28, 2020) to be assured of consideration. information technology, e.g., permitting the CSAT National Advisory Council ADDRESSES: Written comments and/or electronic submission of responses. The Designated Federal Officer; Tracy Goss suggestions regarding the item(s) comments that are submitted will be (see contact information below). contained in this notice must include summarized and included in the request Meeting information and a roster of the OMB Control Number 1651–0083 in for approval. All comments will become Council members may be obtained by the subject line and the agency name. a matter of public record. accessing the SAMHSA Committee To avoid duplicate submissions, please Overview of This Information website at http://www.samhsa.gov/ use only one of the following methods Collection about-us/advisory-councils/csat- to submit comments: national-advisory-council or by (1) Email. Submit comments to: CBP_ Title: United States-Caribbean Basin contacting the CSAT National Advisory [email protected]. Trade Partnership Act. Council Designated Federal Officer; (2) Mail. Submit written comments to OMB Number: 1651–0083. Tracy Goss (see contact information CBP Paperwork Reduction Act Officer, Form Number: CBP Form 450. below). U.S. Customs and Border Protection, Council Name: SAMHSA’s Center for Office of Trade, Regulations and Abstract: The provisions of the United Substance Abuse Treatment National Rulings, Economic Impact Analysis States-Caribbean Basin Trade Advisory Council. Branch, 90 K Street NE, 10th Floor, Partnership Act (CBTPA) were adopted Date/Time/Type: March 26, 2020, Washington, DC 20229–1177. by the U.S. with the enactment of the Trade and Development Act of 2000 1:00 p.m.–5:00 p.m. EDT, Open. FOR FURTHER INFORMATION CONTACT: (Pub. L.106–200). The objective of the Place: SAMHSA, 5600 Fishers Lane, Requests for additional PRA information CBTPA is to expand trade benefits to Rockville, Maryland 20857. should be directed to Seth Renkema, countries in the Caribbean Basin. For Contact: Tracy Goss, Designated Chief, Economic Impact Analysis preferential duty treatment under Federal Officer, CSAT National Branch, U.S. Customs and Border CBTPA, CBP requires under 19 CFR Advisory Council, 5600 Fishers Lane, Protection, Office of Trade, Regulations 10.234 and 10.236 that importers have Rockville, Maryland 20857 (mail). and Rulings, 90 K Street NE, 10th Floor, a CBTPA Certification of Origin (CBP Telephone: (240) 276–0759. Washington, DC 20229–1177, Form 450) in their possession at the Telephone number 202–325–0056 or via Fax: (240) 276–2252. time of the claim and that importers email [email protected]. Please Email: [email protected]. provide it to CBP upon request. CBP note that the contact information Dated: 25 February 2020. Form 450 collects data such as contact provided here is solely for questions information for the exporter, importer Carlos Castillo, regarding this notice. Individuals and producer, and information about Committee Management Officer, SAMHSA. seeking information about other CBP the goods being claimed. [FR Doc. 2020–04138 Filed 2–27–20; 8:45 am] programs should contact the CBP BILLING CODE 4162–20–P National Customer Service Center at This collection of information is 877–227–5511, (TTY) 1–800–877–8339, provided for by 19 CFR 10.224. CBP or CBP website at https://www.cbp. Form 450 is accessible at https:// gov/. www.cbp.gov/newsroom/publications/ DEPARTMENT OF HOMELAND forms?title=450&=Apply. SUPPLEMENTARY INFORMATION: SECURITY CBP invites the general public and other Current Actions: This submission is being made to extend the expiration U.S. Customs and Border Protection Federal agencies to comment on the proposed and/or continuing information date with no change to the estimated burden hours. There are no changes to [1651–0083] collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 CBP Form 450 or to the data collected Agency Information Collection et seq.). This process is conducted in on this form. Activities: United States-Caribbean accordance with 5 CFR 1320.8. Written Type of Review: Extension without Basin Trade Partnership Act (CBTPA) comments and suggestions from the change. public and affected agencies should Affected Public: Businesses. AGENCY: U.S. Customs and Border address one or more of the following Estimated Number of Respondents: Protection (CBP), Department of four points: (1) Whether the proposed 15. Homeland Security. collection of information is necessary Estimated Number of Responses per ACTION: 60-Day notice and request for for the proper performance of the Respondent: 286. comments; extension of an existing functions of the agency, including collection of information. whether the information will have Estimated Total Annual Responses: practical utility; (2) the accuracy of the 4,292. SUMMARY: The Department of Homeland agency’s estimate of the burden of the Estimated Time per Response: 2 Security, U.S. Customs and Border proposed collection of information, hours. Protection will be submitting the including the validity of the Estimated Total Annual Burden following information collection request methodology and assumptions used; (3) Hours: 8,584. to the Office of Management and Budget suggestions to enhance the quality, (OMB) for review and approval in utility, and clarity of the information to Dated: February 24, 2020. accordance with the Paperwork be collected; and (4) suggestions to Seth D. Renkema, Reduction Act of 1995 (PRA). The minimize the burden of the collection of Branch Chief, Economic Impact Analysis information collection is published in information on those who are to Branch, U.S. Customs and Border Protection. the Federal Register to obtain comments respond, including through the use of [FR Doc. 2020–04048 Filed 2–27–20; 8:45 am] from the public and affected agencies. appropriate automated, electronic, BILLING CODE P

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DEPARTMENT OF HOMELAND Office of the Chief Financial Officer, at Estimated Number of Responses: 300. SECURITY (540) 504–1613. Estimated Total Annual Burden SUPPLEMENTARY INFORMATION: Under the Hours: 225. Federal Emergency Management Debt Collection Act as amended (31 Estimated Total Annual Respondent Agency U.S.C. 3701, et seq.), the Federal Claims Cost: $8,206. [Docket ID: FEMA–2019–0004; OMB No. Collection Standards (31 CFR parts 900– Estimated Respondents’ Operation 1660–0011] 904), and the Department of Homeland and Maintenance Costs: $0. Security (DHS) regulations (6 CFR Part Estimated Respondents’ Capital and Agency Information Collection 11); the Administrator of the Federal Start-Up Costs: $0. Activities: Proposed Collection; Emergency Management Agency Estimated Total Annual Cost to the Comment Request; Submission for (FEMA) is: (1) Required to attempt Federal Government: $41,661. OMB Review; Comment Request; Debt collection of all debts owed to the Comments Collection Financial Statement United States arising out of activities of the FEMA; and (2) for debts not Comments may be submitted as AGENCY: Federal Emergency exceeding $100,000, authorized to indicated in the ADDRESSES caption Management Agency, DHS. compromise such debts or terminate above. Comments are solicited to (a) ACTION: Notice and request for collection action completely where it evaluate whether the proposed data comments. appears that no person is liable for such collection is necessary for the proper debt or has the present or prospective performance of the agency, including SUMMARY: The Federal Emergency financial ability to pay a significant sum whether the information shall have Management Agency, as part of its or that the cost of collecting such debt practical utility; (b) evaluate the continuing effort to reduce paperwork is likely to exceed the amount of the accuracy of the agency’s estimate of the and respondent burden, invites the recovery (31 U.S.C. 3711(a)(2)). burden of the proposed collection of general public to take this opportunity This proposed information collection information, including the validity of to comment on a reinstatement, without previously published in the Federal the methodology and assumptions used; change, of a previously approved Register on July 19, 2019 at 84 FR 34918 (c) enhance the quality, utility, and information collection for which with a 60-day public comment period. clarity of the information to be approval has expired. In accordance No comments were received. This collected; and (d) minimize the burden with the Paperwork Reduction Act of information collection expired on June of the collection of information on those 1995, this notice seeks comments on the 30, 2019. FEMA is requesting a who are to respond, including through collection of information related to reinstatement, without change, of a the use of appropriate automated, disaster program accounts and debts previously approved information electronic, mechanical, or other owed to FEMA by individuals. collection for which approval has technological collection techniques or DATES: Comments must be submitted on expired. The purpose of this notice is to other forms of information technology, or before April 28, 2020. notify the public that FEMA will submit e.g., permitting electronic submission of ADDRESSES: To avoid duplicate the information collection abstracted responses. submissions to the docket, please use below to the Office of Management and Maile Arthur, only one of the following means to Budget for review and clearance. submit comments: Acting Records Management Branch Chief, Collection of Information (1) Online. Submit comments at Office of the Chief Administrative Officer, Title: Debt Collection Financial Mission Support, Federal Emergency www.regulations.gov under Docket ID Management Agency, Department of FEMA–XXXX–XXXX. Follow the Statement. Homeland Security. Type of information collection: instructions for submitting comments. [FR Doc. 2020–04128 Filed 2–27–20; 8:45 am] (2) Mail. Submit written comments to Reinstatement, without change, of a BILLING CODE 9111–19–P Docket Manager, Office of Chief previously approved information Counsel, DHS/FEMA, 500 C Street SW, collection for which approval has 8NE, Washington, DC 20472–3100. expired. All submissions received must OMB Number: 1660–0011. DEPARTMENT OF HOUSING AND include the agency name and Docket ID. Form Titles and Numbers: Debt URBAN DEVELOPMENT Regardless of the method used for Collection Financial Statement, FEMA [Docket No. FR–6201–N–01] submitting comments or material, all form 127–0–1. Abstract: FEMA Form 127–0–1 is submissions will be posted, without Administrative Guidelines: Subsidy used to collect information provided change, to the Federal eRulemaking Layering Review for Project-Based voluntarily by the debtor to evaluate the Portal at http://www.regulations.gov, Vouchers debtor’s financial abilities to determine and will include any personal if they qualify for a payment plan and AGENCY: Office of the Assistant information you provide. Therefore, set repayment terms or determine a Secretary for Public and Indian submitting this information makes it compromise to write-off a debt in part Housing, HUD. public. You may wish to read the or in full. Financial information Privacy Act notice that is available via ACTION: Notice. obtained is essential to evaluate the the link in the footer of debtor’s ability for the payment of the SUMMARY: This notice provides updated www.regulations.gov. debt in part or in full. Debt may be a Administrative Guidelines (Guidelines) FOR FURTHER INFORMATION CONTACT: You recoupment of an ineligible disaster and requirements for Project-Based may contact the Information assistance payment or improper Voucher (PBV) Subsidy Layering Management Division for copies of the payment to an employee. Reviews (SLRs), to include new PBV proposed collection of information at Affected Public: Individuals or Housing Assistance Payments (HAP) email address: FEMA-Information- households. contract terms provisions, as amended [email protected] Estimated Number of Respondents: by the Housing Opportunity Through or Zita Zduoba, FEMA Finance Center, 300. Modernization Act of 2016 (HOTMA),

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and SLR requirements for Mixed- sources of funding (i.e., a PBV HAP- will include forms of governmental Finance projects that may or may not assisted project under contract for 10 assistance other than PBVs, the PHA include PBV assistance. This notice also years which then receives a tax credit must request an SLR. PHAs request an provides transparency on HUD’s award to address rehabilitation needs). SLR through their local HUD Field expectations regarding cash flow, debt PBV regulations define existing housing Office or, if eligible, through a coverage ratios, net operating income, as units that already exist on the participating HCA. A list of and operating expense trending proposal selection date that participating HCAs is posted and requirements. substantially comply with Housing updated periodically on the Housing FOR FURTHER INFORMATION CONTACT: Quality Standards (HQS) on that date. Voucher Financial Management Miguel A. Fontanez Sanchez, Director, (The units must fully comply with the Division (FMD) website, found at: HQS before execution of the HAP https://www.hud.gov/program_offices/ Housing Voucher Financial _ _ Management Division, telephone contract.) In addition, no SLR is public indian housing/programs/hcv/ number 202–402–4212 or Belinda Bly, required when PBV is the only fmd. The participating HCA may charge Supervisor, Urban Revitalization governmental assistance provided to a a fee to perform the SLR, which the Division, telephone number 202–402– project. PHA may pay using Administrative Fees 4104 (neither are toll-free numbers). Pursuant to 24 CFR 983.55, public or Administrative Fee reserves. Addresses for both: c/o Office of Public housing agencies (PHAs) must submit a The PHA is responsible for collecting and Indian Housing, Department of request for an SLR for a proposed PBV all required documentation for the SLR Housing and Urban Development, 451 project when the project includes other from the project owner. A list of all the 7th Street SW, Washington, DC 20410. governmental assistance. HUD can required documentation is included in Individuals with speech or hearing perform the SLRs in all cases; however, Appendix A. If after the initial impairments may access this number HUD has also delegated authority to submission new information becomes through TTY by calling the Federal participating Housing Credit Agencies available, the PHA is responsible for Relay Service at 800–877–8339 (this is (HCAs) as defined herein when the submitting updated information to HUD a toll-free number). other governmental assistance includes or the HCA. The PHA maintains a Low-Income Housing Tax Credits project file with a complete set of the SUPPLEMENTARY INFORMATION: (LIHTC).2 required documents. As part of the I. Background project selection process and II. Subsidy Layering Review In support of HUD’s mission to create application for PBVs, the project owner quality affordable housing, HUD A. Definitions must disclose all HUD and/or other provides funding assistance to Housing Credit Agency: For purposes Federal, State, or local governmental incentivize affordable housing of this notice, an HCA is a state housing assistance committed to the project, as development. Subsidy layering reviews finance agency or other state agency well as other governmental assistance, (SLRs) are undertaken to ensure the defined by section 42 of the Internal using Form HUD 2880 (even if no other amount of assistance provided by HUD Revenue Code of 1986. HCAs are governmental assistance is received or is is not more than necessary to make the sometimes referred to by other names, anticipated). If PBV is the only PBV project feasible in consideration of such as State Housing Finance Agencies governmental assistance, an SLR is not required. Whether the PHA or HCA all other governmental assistance. SLRs or State Housing Corporation. A performs the SLR, the PHA must prevent excessive public assistance that participating jurisdiction under HUD’s confirm that no form of disclosed could result when a development HOME Investment Partnerships program assistance renders the project ineligible proposes combining (layering) the HAP (see 24 CFR part 92) may also serve as for PBV assistance and does not violate subsidy from the PBV program with an HCA. 24 CFR 983.54. other public assistance from Federal, Mixed-finance development: Development or modernization of The PHA must inform the owner if State, or local agencies, including any information changes during the assistance through tax concessions or public housing pursuant to 24 CFR 905 Subpart F, where public housing units application process, either by the credits. addition or deletion of other SLRs for PBV assistance are required are owned by an entity other than a PHA. governmental assistance, the project pursuant to Section 8(o)(13) of the U.S. owner must provide revised information Housing Act of 1937 (42 U.S.C. Other government assistance: Any loan, grant, guarantee, insurance, to correct the earlier submissions to 1437f(o)(13)); section 2835(a)(1)(M)(i) of reflect the new information. If at any the Housing and Economic Recovery payment, rebate, subsidy, tax credit, tax benefit, or any other form of direct or time (either during the application Act of 2008 (HERA); and section 102 of process, after AHAP execution, or after the Department of Housing and Urban indirect assistance from the federal government, a state, or a unit of general HAP execution) the owner receives Development Reform Act of 1989. SLRs supplemental HUD or new are only for proposed PBV new local government, or any agency or instrumentality thereof. governmental assistance for the project construction and rehabilitation projects that results in an increase in project prior to the execution of an Agreement B. Requesting a SLR for a PBV Award financing in an amount equal to or to Enter into Housing Assistance When a PHA selects a project that is greater than 10 percent of the approved Payments Contract (AHAP). either new construction or SLR development budget, the owner SLR requirements are not applicable must submit such changes to the PHA to existing housing.1 Specifically, an rehabilitation, as defined in 24 CFR 983.3, for a PBV award, and the project and the PHA must notify HUD or the SLR is not required for a project already HCA.3 The AHAP requires that the subject to a PBV HAP contract, even if 2 Pursuant to the Housing and Community owner disclose to the PHA information that project is recapitalized with outside Development Act of 1992 (Pub. L. 102–550, regarding any related assistance from approved October 28, 1992), as amended by the the Federal government, a State, or a 1 Section 2835(a)(1)(F) of Housing and Economic Multifamily Housing Property Disposition Reform Recovery Act of 2008 (Pub. L. 110–289), enacted Act of 1994 (Pub. L. 103–233, approved April 4, unit of general local government, or any July 30, 2008, does not require subsidy layering 1994) added a ‘‘Subsidy Layering Review’’ review for existing housing. provision at 42 U.S.C. 3545. 3 24 CFR 4.11.

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agency or instrumentality thereof, that is The maximum initial term for a PBV 2% and 3% per year. Justification is made available or expected to be made HAP contract is 20 years pursuant to required for increases outside this range. available with respect to the contract section 8(o)(13)(F) of the 1937 Housing • Vacancy rates must not exceed 7%. units. Act as recently amended by HOTMA, • Completion of an environmental although the initial terms for other Debt service is defined as the funds review and environmental approval is funding sources may be less. SLR required to make payments on all non- required before an AHAP can be requests must include an operating pro forgivable loans, including any existing executed, pursuant to 24 CFR 983.153. forma that reflects each year of the HAP debt on the property. Debt service does At the time of initial submission of the contract initial term. All assumptions not include forgivable/soft loans, non- SLR request, the PHA submits evidence for income, expenses and debt must be repayable grants, non-repayable federal, that a request for a 24 CFR part 58 clearly identified. Both the Debt state or local assistance, deferred review is submitted to the responsible Coverage Ratio (DCR) and cash flow are developer fees, financing fees, entity or a 24 CFR part 50 review is analyzed on a year-by-year basis. If a partnership fees, management fees, submitted to the Field Office. project has no debt, the SLR review is capital contributions, tax concessions, processed based only on cash-flow or tax credits. C. Analysis and Safe Harbor Standards requirements, as described below in If the projected DCR remains between When undertaking an SLR, HUD 6(C)(ii). 1.10 and 1.45 during the initial term of reviews both the development and i. Debt Coverage Ratio: HUD and the HAP contract, then it is assumed the operating costs of a project to determine HCAs analyze the PBV development’s project has enough cash-flow to pay whether costs are within a reasonable projected DCR both on a yearly basis operating expenses and amortized debt, range, taking into consideration the and trended over the term of the and that the amount of government project’s size, characteristics, location, proposed subsidy period as an indicator assistance is not excessive. HUD will costs, financing and risk factors. Costs of overall project health. As a HUD require adjustments if the projected DCR that fall within acceptable safe harbor metric for PBV purposes, the minimum in any one year falls below 1.10 and it standards, as identified below, may DCR is 1.10 and the maximum is 1.45. move forward without further The DCR for each year is determined by continues to remain below 1.10 for a justification. If costs exceed safe harbor dividing the net operating income for series of subsequent years as cash flow standards, then additional justification that year by the amount of the debt would not be enough to ensure stable and documentation are required to service for that year. Factors such as operations. Likewise, HUD will require justify the costs based on risk factors, operating cost increases, rent increases, adjustments to PBV assistance, if the and HUD approval is required. project size, unit and income mix, and projected DCR exceeds the maximum of If the review is by an HCA, project vacancy rates affect net operating 1.45 in any one year and continues to costs exceeding the safe harbor income. Therefore, a trending analysis is remain above 1.45 for a series of standards must be consistent with the also used to evaluate the DCR over time subsequent years. HCA’s published qualified allocation and to determine whether the amount of ii. Cash-Flow: For any given year of plan. assistance is excessive. HUD recognizes the project’s operating pro forma, cash (A) Development Standards: that some projects may have higher flow may not exceed 10% of total i. General Contractor Fees: The safe upfront DCRs since owners may operating expenses. Cash-flow is harbor standard is based on hard frontload debt service to free up cash defined as net operating income minus construction costs. The maximum flow later in the project period for all required debt service. allowable combined contractor fee is higher anticipated operating expenses, • If all or a portion of the developer fourteen percent (14%) of the total for or that some projects may have higher fee has been deferred and is owed, the hard construction costs. For example, if DCRs in later years due to planned face value amount of the deferred construction costs are $100,000, the safe changes in financing costs, interest developer fee (i.e., no interest earned) harbor amount is $14,000: rates, or partnership transfers. If a may be deducted from cash flow. • General Conditions: 6% of project has an overall trending DCR construction contract amount outside the 1.10 to 1.45 range, the • Operational and replacement • Overhead: 2% of construction project may have too much reserves may be deducted from cash contract amount governmental assistance. If a project flow when reserves are adjusted by a • Builder’s Profit: 6% of construction DCR trends outside the range for an consistent amount each year. contract amount individual year, but has an overall • No further adjustments to cash-flow ii. Developer Fee: The safe harbor trending DCR within the range, HUD are permitted beyond deferred standard is a maximum of 15%. For will require justifications from the developer fees, operational reserve projects combining public housing units Owner or PHA to understand the project contributions and replacement reserve and PBV units in a Mixed-Finance assumptions and yearly deviations. contributions. project, safe harbors are 9%, requiring • Net operating income is defined as no justification, above 9% and up to total operating income minus total If in any given year the annual cash- 12%, may be approved with operating expenses. The net operating flow is greater than 10% of total justification. Fees over 12% may be income for a project must cover all operating expenses and it remains above approved if the PHA receives the repayable debt over the life of the HAP 10%, it is assumed the cash generated amount over 12% and it is restricted for contract. from the government assistance is project costs or future phases as • Operating expenses should be greater than is necessary to make the described in the ‘‘Cost Control and Safe trended at a consistent fixed rate project feasible. Therefore, adjustments Harbor Standards for Rental Mixed- between 1% and 3% per year for the must be made by the project owner to Finance Development,’’ dated April 9, first 5 years and 3% thereafter. reduce cash flow to 10% or less of 2003 or any successor document. See Justification for increases above 3% operating expenses. If the owner Section 7 on Mixed Finance Projects must be provided. declines, HUD will reduce PBV rents or below. • Rent increases should be trended the number of PBVs, so the project (B) Operating Standards: yearly at a consistent fixed rate between complies with the 10% requirement.

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D. Requesting a SLR for a Mixed- E. Outcome Revised materials must then be Finance Project (A) HUD: resubmitted to the HCA and the HUD Field Office for review. For Mixed-Finance projects that also If HUD completes the SLR and determines the PBV assistance complies When a proposal for PBV assistance is include PBVs, the SLR is handled as contemporaneous with the application part of the Mixed-Finance project with the standards set in this Notice, where the PBV assistance will not result for or award of LIHTCs, the required review process without a separate PBV SLR may be fulfilled by the HCA in in excessive government subsidy, HUD SLR review. SLRs for Mixed-Finance accordance with IRC section 42(m)(2) will certify compliance pursuant to 24 projects are only done by HUD and may review if such review substantially CFR 4.13 and the local HUD Field Office not be done by an HCA. Mixed-Finance complies with the HUD SLR will notify the PHA in writing. reviews are done by HUD’s Office of requirements and guidelines. If HUD completes the SLR and Public Housing Investments (OPHI) at (C) Mixed-Finance Projects: If HUD determines that the amount of HUD Headquarters. This provision also completes the SLR and determines the government subsidy, including the PBV applies to Mixed-Finance projects with PBV assistance and other public assistance, is excessive, HUD notifies PBVs that are undertaken as part of the housing assistance complies with the the PHA. The notification includes a Choice Neighborhoods Grant Program, above standards of this Notice for recommendation to reduce the amount as well as Choice Neighborhoods Mixed-Finance projects and thus does of PBV assistance or a determination projects that have PBVs, but no public not result in excessive government that PBV assistance cannot be provided. housing. This includes MTW local subsidy, HUD will certify compliance Once the PHA receives HUD’s decision, nontraditional development (LNTD) pursuant to 24 CFR 4.13 and notify the the PHA must notify the owner in proposals. OPHI prepares the SLR as PHA. part of the project review process writing of the outcome and work with For projects that fail to comply, HUD without a separate PBV SLR review. the owner to restructure, as needed. will notify the PHA, which must (i) As it relates to the PBVs, Mixed- Revised materials must then be work with the owner to restructure the Finance projects must comply with the resubmitted to the HUD Field Office for project so it complies with the above SLR standards identified above in the review. standards for Mixed-Finance projects Notice. In addition to this review, the (B) HCA: and resubmit the revised documentation If an HCA completes the SLR and project will also be reviewed to assure to HUD for approval, or (ii) provide determines that PBV assistance compliance with the provisions of 24 sufficient justification to HUD to allow complies with the above standards of CFR 905 Subpart F, and other applicable HUD to approve a variation(s) from the this notice and does not result in guidance, including the following: above standards. • excessive government subsidy, the HCA The ‘‘Cost Control and Safe Harbor must notify the PHA and submit a F. Timing Standards for Rental Mixed-Finance certification to HUD at In accordance with program Development,’’ dated April 9, 2003 or PIH.Financial.Management.Division@ any successor document. regulations at 24 CFR 983.55, a PHA hud.gov with a copy to the Director of may not execute an AHAP contract until • Total Development Cost (TDC) and the local HUD Office of Public Housing after the SLR is completed and Housing Construction Cost (HCC) limits _ (https://www.hud.gov/program offices/ approved by HUD or the HCA. The imposed on the project, pursuant to _ _ _ public indian housing/about/field AHAP also may not be executed until HUD Notice PIH–2011–38 or successor office) stating that the PBV assistance to there is a completed environmental notice. be provided is in accordance with HUD • review (ER) and written approval by the The HUD Pro Rata Test, which SLR guidelines in this Notice and that responsible entity or HUD, pursuant to assures that the proportion of HUD a determination has been made that it 24 CFR part 50 or Part 58 and PIH public housing funds committed to does not result in excessive government Notice 2016–22. The local HUD Field development of the project does not subsidy. The AHAP/HAP contract may Office must receive the completed SLR exceed the proportion of public housing then be executed if the environmental and either approve the Request for units in the project. For example, if approval is received. If the SLR is Release of Funds or complete a Part 50 there are 120 units in the project and 50 performed by an HCA, subsequent environmental review prior to notifying are public housing, 42% of the units are approval of the SLR by HUD is not the PHA that it may execute the AHAP. public housing. Therefore, the amount required. The HCA certification must The PHA may request an SLR and of public housing funds contributed to include the documents outlined in environmental review simultaneously. the development of the project may not Section 10. See Appendix C for a The Field Office confirms to the FMD exceed 42% of the development budget, sample HCA certification letter and and/or the HCA that the ER process is including hard and soft costs. Appendix A for required information. complete. • HUD will review the amount of If the HCA SLR determines the public If the owner reports to the PHA the LIHTC equity to be invested in the assistance amount is excessive, the HCA addition of any governmental assistance project to ensure that the sale of LIHTCs must notify HUD, in writing, with a before or during the AHAP contract results in an amount of net tax credit copy to the PHA. The notification will when no SLR was initially required equity that is consistent with amounts include either a recommendation to because the project had not received generally contributed by investors to reduce the amount of PBV assistance or and did not anticipate receiving similar projects under similar market the amount of LIHTC allocation or a governmental assistance, then an SLR is conditions, and that the amount is not determination that PBV assistance required to be requested by the PHA at less than 51 cents for each dollar of tax cannot be provided. HUD will consult the time of the owner’s report. credit allocation awarded to a project. If with the HCA and the PHA prior to the project receives 51 cents or less of issuing a final determination to adopt III. Housing Credit Agency LIHTC equity or does not receive a the HCA’s recommendation or to revise Participation and Certification market rate of equity, it is subject to it. The PHA must notify the owner in An HCA is ordinarily established for additional review to reassess the writing of the outcome and work with the purpose of allocating and project’s fees and costs. the owner to restructure, as needed. administering the LIHTC program under

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section 42 of the Internal Revenue Code authorization. Notifications of approval (VASH), and/or Regular (IRC). With HUD approval, HCAs may must contain the following f. Elderly, Disabled, Homeless, Non- perform SLRs for proposed PBV projects documentation: Elderly Disabled, Low-Income, and/ that include LIHTCs as part of the • Copy of the Signed HCA Certification or Veteran. proposed financial assistance. If there as shown in Appendix C g. Is the Project New Construction or are no LIHTCs, HCAs cannot conduct • The HCA’s Internal Recommendation Rehabilitation? the SLR. SLRs without LIHTCs will only and Sign-off h. Amount Per Dollar of Syndication • be conducted by HUD. Currently 29 The Developer’s Disclosure of Sources Proceed states have a HUD-approved HCA; the and Uses of Funds • i. Number of PBV Units Approved by remaining 21 states may seek HUD The Developer’s Operating Pro Forma Bedroom Size Considered approval to conduct SLRs for PBV j. Debt Coverage Ratio: llll • Copy of the PBV Commitment/Award projects, by submitting a letter to HUD k. Project meets Cash Flow Criteria notifying HUD of their intent to Letter • HUD Form 2880, and (Y/N) participate. Appendix B is sample letter. • Rent Information and Project IV. Overview Chart Pursuant to the requirements outlined Summary herein, as well as the Memorandum Of a. Project Name and Address The following chart summarizes the Understanding (MOU) between b. PHA name and code types of projects that require an SLR, the participating HCAs and HUD, HCAs are c. Field Office name and code entity authorized to perform the SLR required to provide notification to the d. HCA Name and the required certification. 102 (d) FMD through the FMD mailbox of any e. PBV Type: Rental Assistance Certification is the owner’s certification SLRs approved on HUD’s behalf by no Demonstration (RAD), Veterans of no additional government funding later than 30 days from the date of Assistance and Supportive Housing using form HUD 2880.

102 (d) certification Type of project and scenarios SLR reviewer required?

PBV subsidy without LIHTC. However, project is new construction or HUD ...... Yes. rehabilitation, as defined in 24 CFR § 983.3, with 2 or more forms of government assistance. PBV existing housing, as defined in 24 CFR 983.3 ...... No SLR required ...... No. PBV new construction or rehabilitated housing, but PBV is the only No SLR required ...... No. form of government assistance. PBV subsidy with LIHTC, new construction or rehabilitated project ...... HCA or HUD ...... If by HCA, certification not re- quired. Otherwise, HUD cer- tifies. Mixed-finance projects, with or without LIHTC, with or without PBV, HUD ...... Yes. with or with other forms of government assistance.

V. Monitoring is performed incorrectly, HUD requires a collection of information unless the HUD performs quality control reviews appropriate corrective action. When an collection displays a currently valid of SLRs performed by participating SLR is performed by an HCA, control number. HCAs by examining the following: subsequent approval of the SLR by HUD Dated: February 21, 2020. • If all required document and materials is not required. R. Hunter Kurtz, are available to the reviewer VI. Paperwork Reduction Act Assistant Secretary for Public and Indian • If values are correctly determined Housing. The information collection within the approvable range Appendix A: PHA Submissions • If values are above safe harbor requirements contained in this notice standards are currently approved by the Office of PHAs are responsible for collecting • If documentation was provided to Management and Budget (OMB) under information from project owners and justify higher costs the Paperwork Reduction Act of 1995 assembling it in an SLR request submitted to • If the subsidy was reduced correctly the local HUD Public Housing Field Office or (44 U.S.C. 3501–3520) and assigned HCA. SLR requests must contain the (if applicable) OMB control numbers 2577–0169. An following information. Assembly using a If any required documentation is not agency may not conduct or sponsor, and binder is recommended. Incomplete provided, or any portion of the review a person is not required to respond to, submissions will be returned.

Required elements of an SLR application & checklist Check

1. Subsidy Layering Review request memorandum: Clearly identify the PHA, the PHA number, the Field Office number, the project’s name, the project’s total number of units, and the number of PBV units requested. For a sample memorandum see Attachment 1 of PIH Notice 2013–11 or newer version superseding it. 2. Project Description: Short narrative identifying ownership, type of activity (rehabilitation or new construction), location (includ- ing county), total units, requested PBV units, PBV type (RAD, VASH, regular), utility allowances, bedroom distributions, sup- portive services (if applicable) and residential population (homeless, veteran, elderly, low-income families) The narrative should also identify any exceptions applicable to the project (e.g., number of PBV exceeding the Project Cap).

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Required elements of an SLR application & checklist Check

3. Accounting Statement of Sources and Uses of Funds: Identifying each source and indicate type (loan, grant, syndication pro- ceeds, contributed equity). Sources generally include only permanent financing and grants. If interim financing or a construc- tion loan is proposed, provide details in project description. Separately identify detailed uses, avoiding broad categories such as ‘‘soft costs.’’ Under acquisition costs, identify purchase price separately from related costs such as appraisal, survey, title, recording and legal fees. Include separate line items representing construction contract amount, builder’s profit, builder’s overhead and total project costs. [Complete HUD Form 50156] 4. Description of funding sources: Loans including principal, interest rate, amortization, term, and any accrual, deferral, balloon or forgiveness provisions. Describe any lender, grantor, or syndicator requirements for reserves or escrows requirements. Describe if a lender receives a portion of the net cash-flow, either as additional debt service or in addition to debt service. Identify the amount of LIHTC and include IRS form 8609. 5. Commitment Letters: Lenders and other funding sources evidence their commitment to provide funding and disclose signifi- cant terms. Signed loan agreements and grant agreements meet this requirement. However, proposal letters and letters of in- tent do not meet this requirement. 6. Developer’s Commitment Letter: Delineating any arrangements, contributions, donations, significant terms or transfer of funds from the developer and/or participating partners such as deferred developer’s fees, cash contributions, and equity in- vestments. 7. HOME Commitment Letter: (When applicable) Signed document clearly identifying requirements of the HOME designated units and intended rents. 8. Supportive Service Commitment: (When applicable) A signed Memorandum of Understanding that describes the type of services to be provided, frequency, terms of service and resident eligibility. 9. Appraisal Report: Based on the ‘‘as is’’ value of the property, before construction or rehabilitation, and without consideration of any financial implications of tax credits or project-based voucher assistance. An appraisal establishing value after the prop- erty is built or rehabilitated is not acceptable unless it also includes an ‘‘as is’’ valuation. The date of the appraisal to be with- in six months of date of submission. 10. Stabilized Operating Pro Forma: Including projected rental, commercial, and miscellaneous gross income, vacancy loss, op- erating expenses, debt service, reserve contributions, with cash-flow projections, and debt service ratios; income and ex- penses trended at a consistent percent. [Complete HUD Form 50156] 11. Low-Income Housing Tax Credit Allocation Letter: Issued by the authorized tax credit allocation agency, identifying the amount of LIHTCs reserved for the project. 12. Historic Tax Credit Letter: Issued by an authorized historic credit agency, disclosing the estimated historic tax credit amount awarded to a project located in a designated historical area. 13. Equity Contribution Schedule: If equity contributed to the project is paid in installments over time, provide a schedule show- ing the amount and timing of planned contributions. 14. Bridge Loans: Providing details if the financing plan includes a bridge loan where equity contributions proceeds planned over an extended time can be paid upfront. 15. Disclosure, perjury and identity of interest statement (Form HUD–2880) completed by the owner. 16. PBV award letter: Identifying the housing authority’s approval of project-based voucher assistance for the project by number of units and bedroom distribution. 17. PHA rent certification letter: Documenting proposed contract rents, utility allowances, and gross rental amounts for assisted units. Include rent reasonableness documentation or comparability analysis as evidence of rent determination and certifi- cation. 18. Environmental Clearance: Completion of the environmental review and environmental approval is required before AHAP ap- proval can be granted. At the time of initial submission of the SLR request, submit evidence that a request for a part 58 re- view is submitted to the responsible entity or a part 50 review is submitted to the Field Office.

Appendix B: HCA Notice of Intent To excessive compensation. By signifying this Participate.’’ For questions concerning the Participate notice, the undersigned hereby certifies that: submission and receipt of the email, call the Required personnel reviewed the statutes Financial Management Division at (202) 402– U.S. Department of Housing and Urban identified in Federal Register Notice (Insert 4212. Development new reference) Contracts and Mixed-Finance PIH Financial Management Division, Room Development, and 24 CFR 983.55. Appendix C: HCA Certification 4232 The undersigned understands its HCA U.S. Department of Housing and Urban 451 Seventh Street SW responsibilities and certifies it will perform Development Washington, DC 20410 SLRs in accordance with all present and PIH Financial Management Division, Room By: Email: future statutory, regulatory and HUD 4232 [email protected] requirements. The undersign acknowledges 451 Seventh Street SW participation continues unless and until HUD Washington, DC 20410 Re: Intent to Participate on Subsidy Layering revokes this notice or the undersigned Reviews informs HUD, in writing with a 30-day- By: Email: To Whom It May Concern: notice, of its decision to withdraw. Upon [email protected] The undersigned is a qualified Housing HUD approval, the undersigned shall Re: Certification of Subsidy Layering Review Credit Agency (HCA) as defined under immediately assume the responsibility of To Whom It May Concern: Section 42 of the Internal Revenue Code of performing SLRs. For purposes of providing of Section 8 1986 and hereby notifies the United States Name of agency and address: Project-Based Voucher (PBV) Assistance Department of Housing and Urban Name, title and address if authorized official authorized pursuant to 42 U.S.C. 8(o)(13), Development (HUD) of our intention to Phone, FAX, and email: section 2835(a)(1)(M)(i) of the Housing and conduct subsidy layering reviews (SLRs) Date of execution: Economic Recovery Act of 2008 (HERA), pursuant to HUD’s requirements for the Transmit signed and dated notice of Intent section 102 of the Department of Housing purpose of ensuring the combination of to Participate as a PDF attachment to Miguel and Urban Development Reform Act of 1989, assistance under the Section 8 Project-Based Fontanez at pih.financial.management and in accordance with HUD requirements, Voucher (PBV) Program with other federal, [email protected] with subject line all of which address the prevention of excess state, or local assistance does not result in identified ‘‘Submission of Notice of Intent to governmental subsidy, I hereby certify that

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the PBV assistance is not more than is DATES: We will accept comments Paulding County, Ohio. The draft HCP necessary to provide affordable housing after received or postmarked on or before describes the following: taking into account other government March 30, 2020. 1. Permit duration; assistance for the following project: 2. Covered lands; Name, address of project: ADDRESSES: Obtaining documents: Electronic copies of the documents this 3. Covered species; Name, address of PHA: 4. Project description and covered Phone, FAX, and email: notice announces will be available online in Docket No. FWS–R3–ES– activities; Name, address of HCA: 5. Environmental baseline and Date of HUD’s approval of HCA’s intent to 2020–0005 at http:// affected species; participate: www.regulations.gov. Public comments 6. Impact assessment and take Name of Authorized HCA Certifying Official: will also be available online at http:// authorization request for Indiana bats Signature of Authorized HCA Certifying www.regulations.gov. Official: and northern long-eared bats; Date: Paper copies of the documents this 7. Conservation plan, which includes Transmit signed and dated SLR notice announces will be available at the Biological Goals and Objectives, and certification as PDF attachments to Miguel A. the following libraries: Brumback measures to avoid, minimize, and Fontanez at Library, 215 W Main St., Van Wert, OH mitigate the impact of the taking; [email protected], 45891; and Paulding County Carnegie 8. Monitoring and adaptive with a copy to the Director of the local HUD Library, 205 S Main St., Paulding, OH management; Office of Public Housing: https:// 45879. _ _ 9. Funding assurances; www.hud.gov/program offices/public Submitting comments: Please specify 10. Alternatives to the taking; and indian_housing/about/field_office, with whether your comment addresses the 11. Changed and unforeseen subject line identified ‘‘SLR Certification— draft habitat conservation plan, draft Project Name, City, State’’ For questions circumstances. concerning the submission and receipt of the environmental assessment, any Under the National Environmental email, call the Financial Management combination of the aforementioned Policy Act (NEPA; 43 U.S.C. 4321 et Division at (202) 402–4212. documents, or other supporting seq.) and the ESA, the Service [FR Doc. 2020–04147 Filed 2–27–20; 8:45 am] documents. Please submit written announces that we have gathered the comments by one of the following BILLING CODE 4210–67–P information necessary to: methods: 1. Determine the impacts and • Online: http://www.regulations.gov. formulate alternatives for an EA related DEPARTMENT OF THE INTERIOR Search for and submit comments on to: Docket No. FWS–R3–ES–2020–0005. a. Issuance of an ITP to the applicant Fish and Wildlife Service • By hard copy: Submit comments by for the take of the Indiana bat and the U.S. mail or hand delivery to Public northern long-eared bat, and [Docket No. FWS–R3–ES–2020–0005; Comments Processing, Attn: Docket No. b. Implementation of the associated FXES11140300000–201–FF03E00000] FWS–R3–ES–2020–0005; U.S. Fish and HCP; and 2. Evaluate the application for ITP Draft Environmental Assessment and Wildlife Service; 5275 Leesburg Pike, issuance, including the HCP, which Draft Habitat Conservation Plan; MS: JAO/lN; Falls Church, VA 22041– provides measures to minimize and Receipt of an Application for an 3803. mitigate the effects of the proposed Incidental Take Permit, Timber Road II, FOR FURTHER INFORMATION CONTACT: incidental take of the Indiana bat and III, and IV Wind Farms, Paulding Keith Lott, Wildlife Biologist, or Patrice the northern long-eared bat. County, Ohio Ashfield, Project Leader, via phone at 614–416–8993, via the Federal Relay Background AGENCY: Fish and Wildlife Service, Service at 800–877–8339, or via U.S. Interior. The project includes 134 wind mail at the U.S. Fish and Wildlife turbines, with a total energy-generating ACTION: Notice of availability; request Service, Ohio Ecological Services Office, for comments. capacity of 325.8 megawatts (MW). The 4625 Morse Road, Suite 104, Columbus, project was constructed in several SUMMARY: We, the U.S. Fish and OH 43230. phases, during the period 2012–2020. Wildlife Service, have received an SUPPLEMENTARY INFORMATION: We, the Timber Road II is an operational facility application from Paulding Wind Farm U.S. Fish and Wildlife Service (Service), and consists of 55 turbines with a II, LLC; Paulding Wind Farm III, LLC; have received an application from generating capacity of 99 MW. Timber and Paulding Wind Farm IV Paulding Wind Farm II, LLC; Paulding Road III is also an operational facility (collectively, the applicant), for an Wind Farm III, LLC; and Paulding Wind and consists of 48 turbines with a incidental take permit (ITP) under the Farm IV (collectively, the applicant), for generating capacity of 100.8 MW. Endangered Species Act of 1973, as an incidental take permit (ITP) under Timber Road IV is anticipated to be amended, for the Timber Road II, III, the Endangered Species Act (ESA; 16 operational in 2020; consisting of 31 and IV Wind Farms project. If approved, U.S.C. 1531 et seq.). If approved, the ITP turbines, it has a generating capacity of the ITP would authorize the incidental would be for a 30-year period and 126 MW. The need for the proposed take of the Indiana bat and the northern would authorize incidental take of the action (i.e., issuance of an ITP) is based long-eared bat for a 30-year term. The endangered Indiana bat (Myotis sodalis) on the potential that operation of the applicant has prepared a draft habitat and the threatened northern long-eared project could result in take of Indiana conservation plan, which is available for bat (Myotis septentrionalis). bats and northern long-eared bats. public review. We also announce the The applicant has prepared a draft The HCP provides a detailed availability of a draft environmental habitat conservation plan (HCP), which conservation plan to ensure that the assessment, which has been prepared in covers the operation of the Timber Road incidental take caused by the operation accordance with the requirements of the II, III, and IV Wind Farms (project). The of the project will not appreciably National Environmental Policy Act. We project consists of a wind-powered reduce the likelihood of the survival request public comment on the electric generation facility located in an and recovery of the Indiana bat and application and associated documents. approximately 65,017-acre area in northern long-eared bat, and includes

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mitigation to fully offset the impact of The draft HCP describes the impacts Alternatives in the Draft Environmental the taking. Further, the HCP provides a of take associated with the operation of Assessment long-term monitoring and adaptive the project and includes measures to The DEA contains an analysis of four management strategy to ensure that the avoid, minimize, mitigate, and monitor alternatives: ITP terms are satisfied, and to account the impacts of incidental take on the 1. No Action alternative, in which the for changed and unforeseen Indiana bat and the northern long-eared Service would not issue a permit to the circumstances. bat. The applicant will mitigate for take applicant, and the project turbines and associated impacts through one or Purpose and Need for Action would be feathered until wind speeds more methods, including restoration, if reach 6.9 m/s from a half-hour before In accordance with NEPA, the Service necessary, and permanent protection of sunset to a half-hour after sunrise has prepared a DEA to analyze the documented maternity colony habitat during the entirety of the fall migration impacts to the human environment that and/or swarming habitat, and/or gating season (August 1 through October 31) would occur if the requested ITP is of a hibernaculum. Habitat mitigation, and spring migration season (March 15 issued and the associated HCP is including any restored habitat, will through May 15), under which implemented. occur on private land and be conditions take of listed species is permanently protected by a Proposed Action unlikely to occur; conservation easement, fee simple 2. The applicant’s Proposed Section 9 of the ESA prohibits the acquisition with deed restrictions, or Alternative, in which the Service would ‘‘taking’’ of threatened and endangered another site protection instrument that issue an ITP to authorize incidental take species. However, provided certain provides an equivalent level of of covered species associated with the criteria are met, the Service is protection, and will be approved by the project’s operations as described in the authorized to issue permits under Service. Chapter 5 of the HCP describes applicant’s HCP. In this alternative, the section 10(a)(1)(B) of the ESA for take of the avoidance, minimization measures, project turbines would be feathered federally listed species when, among and compensatory mitigation that will until wind speeds reach 3.5 m/s during other things, such a taking is incidental limit and mitigate for the take of Indiana the spring migration (April 1 through to, and not the purpose of, otherwise bats and northern long-eared bats. This May 15) from a half-hour before sunset lawful activities. Under the ESA, the chapter also includes the monitoring to a half-hour after sunrise, and during term ‘‘take’’ means to harass, harm, and adaptive management plans to the fall migration season (August 1 pursue, hunt, shoot, wound, kill, trap, ensure that the level of take stays within through October 15), project turbines capture, or collect endangered and permitted levels and mitigation sites are would be feathered until wind speeds threatened species, or to attempt to maintained as suitable habitat for the reach 5.0 m/s from a half-hour before engage in any such conduct. Our Indiana bat and northern long-eared bat. sunset to a half-hour after sunrise. implementing regulations in title 50 of The Service is soliciting information While take is not anticipated during the the Code of Federal Regulations (CFR) regarding the adequacy of the HCP to summer (May 16–July 31), turbines will define ‘‘harm’’ as an act which actually avoid, minimize, mitigate, and monitor be feathered until wind speeds reach 3.0 kills or injures wildlife, and such act the proposed incidental take of the m/s from a half-hour before sunset to a may include significant habitat covered species and to provide for half-hour after sunrise. Minimization modification or degradation that results adaptive management. In compliance measures would be applicable until the in death or injury to listed species by temperature was greater than 10 degrees with section 10(c) of the ESA (16 U.S.C. ° significantly impairing essential 1539(c)), the Service is making the ITP Celsius ( C). In this alternative, the behavioral patterns, including breeding, application materials available for applicant estimated take of Indiana and feeding, or sheltering (50 CFR 17.3). public review and comment as northern long-eared bats using an The HCP analyzes, and the ITP would described above. approach that addresses inherent uncertainty in take estimates by authorize, take from killing of bats due We invite comments and suggestions to the operation of the project. If issued, incorporating a 50 percent confidence from all interested parties on the draft bound around the mean estimate, and a the ITP would authorize incidental take documents associated with the ITP consistent with the applicant’s HCP and 50 percent reduction in take from application (HCP and HCP appendices), application of the proposed cut-in speed the ITP. To issue the ITP, the Service and request that comments be as must find that the application, regime. specific as possible. In particular, we The various phases of this project including the associated HCP, satisfies request information and comments on began and will end in different years; the criteria of section 10(a)(1)(B) of the the following topics: thus, different numbers of turbines will ESA and the Service’s implementing 1. Whether adaptive management, be operational during the three different regulations at 50 CFR part 13 and mitigation, and monitoring provisions phases, which will change the amount § 17.22. If the ITP is issued, the in the proposed action alternative are of take during each of the phases. Thus, applicant would receive assurances sufficient; the estimated fatality rates under this under the Service’s No Surprises policy, 2. Any threats to the Indiana bat and alternative are: codified at 50 CFR 17.22(b)(5). • 10.8 Indiana bats and 2.5 northern The applicant proposes to operate a the northern long-eared bat that may influence their populations over the life long-eared bats per year for years 1–22; maximum of 134 wind turbines and • 6.3 Indiana bats and 1.5 northern associated facilities for a period of 30 of the ITP that are not addressed in the draft HCP or DEA; long-eared bats per year for years 23–27; years in Paulding County, Ohio. The and project consists of wind turbines, 3. Any new information on white- • 2.5 Indiana bats and 0.6 northern associated gravel pads and access roads, nose syndrome effects on the Indiana long-eared bats per year for years 28–30. underground and above-ground bat and the northern long-eared bat; and This results in a total of 276 Indiana electrical collection circuits, three 4. Any other information pertinent to bats and 64 northern long-eared bats substations, four permanent un-guyed evaluating the effects of the proposed over the 30-year permit term. meteorological towers, and an action on the Indiana bat and the 3. The Less Restrictive Operations operations and maintenance facility. northern long-eared bat. alternative, in which the Service would

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issue an ITP for the HCP, but turbine The Service invites comments and ACTION: Notice of availability. operations would be different than suggestions from all interested parties under the applicant’s proposed project. on the content of the DEA. In particular, SUMMARY: We, the Department of the All turbines would be feathered when information and comments regarding Interior (DOI), announce the availability the ambient temperature is above 10 °C, the following topics are requested: of a single, searchable, indexed website based on a 5-minute rolling average 1. The direct, indirect, or cumulative that contains all of DOI’s guidance from one half-hour before sunset to one effects that implementation of any documents. This action is required by half-hour after sunrise during the spring alternative could have on the human the Executive Order (E.O.) titled, migration season (April 1 through May environment; ‘‘Promoting the Rule of Law Through 15) up to 3.5 m/s, during the summer 2. Whether or not the significance of Improved Agency Guidance season (May 16 through July 31) up to the impact on various aspects of the Documents’’ in order to make guidance 3.0 m/s, and during the fall migration human environment has been documents readily available to the season (August 1 through October 15) adequately analyzed; and public. This website is found at the up to 4.0 m/s. The estimated fatality 3. Any other information pertinent to Electronic Library of the Interior’s rates for this alternative are: evaluating the effects of the proposed Policies (ELIPS) at www.doi.gov/elips/ • 13.46 Indiana bats and 3.1 northern action on the human environment. browse. long-eared bats per year for years 1–22; Public Comments DATES: This website is available on • 7.94 Indiana bats and 1.84 northern February 28, 2020. You may submit your comments and long-eared bats per year for years 23–27; materials related to the draft HCP, DEA, ADDRESSES: The notice is available for and or other supporting documents by one public inspection at http:// • 3.11 Indiana bats and 0.72 northern of the methods listed in ADDRESSES. We www.regulations.gov in Docket No. long-eared bats per year for years 28–30. request you send comments using only DOI–2020–0001. This results in a total of 345 Indiana one of the methods described in FOR FURTHER INFORMATION CONTACT: bats and 79 northern long-eared bats ADDRESSES. Bivan Patnaik, Deputy Director of over the 30-year permit term; Comments and materials we receive, Regulatory Affairs, Office of the 4. More Restrictive Operations as well as documents associated with Executive Secretariat and Regulatory alternative, in which the Service would the notice, will be available for public Affairs, by phone at 202–208–3181 or issue an ITP for the HCP, but turbine inspection by appointment, during via the Federal Relay Service at 800– operations would be different than normal business hours, at the Ohio 877–8339, or via email at: guidance_ under the applicant’s proposed project. Ecological Services Field Office in [email protected]]. All turbines would be feathered when FOR FURTHER SUPPLEMENTARY INFORMATION: ° Columbus, Ohio (see the ambient temperature is above 10 C INFORMATION CONTACT). Before including Background Information based on a 5-minute rolling average your address, phone number, email from one half-hour before sunset to one address, or other personal identifying A central principle of E.O. 13891 is half-hour after sunrise during the spring information in your comment, you that guidance should only clarify migration season (April 1 through May should be aware that your entire existing obligations and should not 15) up to 3.5 m/s, summer (May 16 comment—including your personal implement new, binding requirements through July 31) up to 3.0 m/s, and identifying information—may be made on the public. Guidance is defined in during the fall migration season (August publicly available at any time. While the E.O. as ‘‘an agency statement of 1 through October 15) up to 6.5 m/s. you can ask us in your comment to general applicability, intended to have The estimated fatality rates for this withhold your personal identifying future effect on the behavior of alternative are: regulated parties, that sets forth a policy • information from public review, we 9.47 Indiana bats and 2.18 northern cannot guarantee that we will be able to on statutory, regulatory, or technical long-eared bats per year for years 1–22; do so. issue, or an interpretation of a statute or • 5.59 Indiana bats and 1.28 northern regulation.’’ Therefore, DOI is long-eared bats per year for years 23–27; Authority establishing on its website a single, and We provide this notice under section searchable, indexed database that links • 2.19 Indiana bats and 0.51 northern 10(c) of the ESA (16 U.S.C.1539(c)) and to all guidance documents in effect from long-eared bats per year for years 28–30. its implementing regulations (50 CFR each bureau and office within the This results in a total of 277 Indiana 17.22) and the NEPA (42 U.S.C. 4321 et Department. bats and 65 northern long-eared bats seq.) and its implementing regulations The purpose of this notice is to over the 30-year permit term. The (40 CFR 1506.6; 43 CFR part 46). announce that DOI’s website for agency quantity of mitigation needed to offset guidance documents subject to posting the impact of the taking and the level of Lori Nordstrom, on the website under the E.O. will be effort of monitoring varies between the Assistant Regional Director, Ecological the Electronic Library of the Interior Services, Midwest Region. alternatives, although mitigation, Policies (ELIPS), https://www.doi.gov/ monitoring, adaptive management, and [FR Doc. 2020–04046 Filed 2–27–20; 8:45 am] elips/browse. When the public enters funding assurances are components of BILLING CODE 4333–15–P this website, click the Departmental all three action alternatives. Guidance Documents and Portals folder, The DEA considers the direct, which will expand to provide a ‘‘drop- DEPARTMENT OF THE INTERIOR indirect, and cumulative effects of the down’’ list of the bureaus and offices alternatives, including any measures [Docket No. DOI–2020–0001; 201D0102DM, within DOI that have issued guidance intended to minimize and mitigate such DS6CS00000, DLSN00000.000000, documents for use by the public. From impacts. The DEA also identifies DX6CS25] this list, the public will be able to click additional alternatives that were Implementation of Executive Order on the specific bureau or office, and will considered but were eliminated from 13891: Guidance Documents further be able to search for a specific analysis as detailed in section 2.4 of the document by using such search DEA. AGENCY: Office of the Secretary, Interior. parameters as title, subject, region, etc.

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The website will contain instructions DEPARTMENT OF THE INTERIOR Office of Government-wide Policy, 1800 for searching for guidance documents. F St. NW, Washington, DC 20405; or via [201D0102DM, DS6CS00000, The website will contain all DLSN00000.000000, DX6CS25]; OMB email to [email protected]; or by Departmental, bureau, service, or office Control No. 1090–NEW] telephone at 202–395–5222. guidance documents. Each guidance SUPPLEMENTARY INFORMATION: Agency Information Collection document that DOI publishes on its A. Purpose guidance website will include the Activities; Improving Customer Experience (OMB Circular A–11, following information: Under the PRA, (44 U.S.C. 3501– Section 280 Implementation) 3520) Federal Agencies must obtain A concise name for the guidance approval from the Office of Management AGENCY: Department of the Interior. document. and Budget (OMB) for each collection of The date on which the guidance ACTION: Notice; request for comment. information they conduct or sponsor. ‘‘Collection of information’’ is defined document was issued. SUMMARY: The Department of the The date on which the guidance Interior (DOI), as part of its continuing in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests document was posted to the website. effort to reduce paperwork and or requirements that members of the An agency unique identifier. respondent burden, is announcing an opportunity for public comment on a public submit reports, keep records, or A hyperlink to the guidance new proposed collection of information provide information to a third party. document. by the Agency. Under the Paperwork Section 3506(c)(2)(A) of the PRA requires Federal Agencies to provide a The general topic addressed by the Reduction Act of 1995 (PRA), Federal 60-day notice in the Federal Register guidance document. Agencies are required to publish notice concerning each proposed collection of One or two sentences summarizing in the Federal Register concerning each proposed collection of information, and information, including each proposed the guidance document’s content. to allow 60 days for public comment in extension of an existing collection of In addition to the information response to the notice. This notice information, before submitting the associated with each guidance solicits comments on a new collection collection to OMB for approval. To document, the website will include a proposed by the Agency. comply with this requirement, GSA is publishing notice of the proposed clearly visible note stating that: (1) DATES: Submit comments on or before: Guidance documents lack the force and collection of information set forth in April 28, 2020. this document. effect of law, unless expressly ADDRESSES: Submit comments authorized by statute or incorporated Whether seeking a loan, Social identified by Information Collection Security benefits, veterans benefits, or into a contract; and (2) the DOI and its 1090–XXXX, Improving Customer other services provided by the Federal component bureaus and offices may not Experience (OMB Circular A–11, Government, individuals and businesses cite, use, or rely on any guidance that Section 280 Implementation), by any of expect Government customer services to is not posted on the website existing the following methods: be efficient and intuitive, just like • under the E.O., except to establish Federal eRulemaking portal: services from leading private-sector historical facts. https://www.regulations.gov. Follow the organizations. Yet the 2016 American instructions for submitting comments. Next Steps Consumer Satisfaction Index and the Comments submitted electronically, 2017 Forrester Federal Customer E.O. 13891 also requires agencies to including attachments to https:// Experience Index show that, on average, finalize new or amend existing www.regulations.gov, will be posted to Government services lag nine the docket unchanged. percentage points behind the private regulations that set forth a process for • issuing guidance documents, which DOI Mail: Jeffrey Parrillo, Departmental sector. is currently preparing. Information Collection Clearance A modern, streamlined and Officer, 1849 C Street NW, Washington, _ responsive customer experience means: Authority DC 20240; or by email to Jeffrey Raising government-wide customer [email protected]. Please reference DOI publishes this notice in experience to the average of the private OMB Control Number 1090–NEW A–11 sector service industry; developing accordance with E.O. 13891 and the Section 280 Improving Customer indicators for high-impact Federal Administrative Procedure Act, codified Experience in the subject line of your programs to monitor progress towards in sections of chapters 5 and 7 of title comments. excellent customer experience and 5, United States Code, that govern Instructions: Please submit comments mature digital services; and providing procedures for agency rulemaking and only and cite Information Collection the structure (including increasing adjudication and provides for judicial 1090–XXXX, Improving Customer transparency) and resources to ensure review of final agency actions. Experience (OMB Circular A–11, customer experience is a focal point for Section 280 Implementation), in all Richard T. Cardinale, agency leadership. To support this, correspondence related to this OMB Circular A–11 Section 280 Director, Office of the Executive Secretariat collection. To confirm receipt of your established government-wide standards and Regulatory Affairs, U.S. Department of comment(s), please check the Interior. for mature customer experience regulations.gov, approximately two-to- organizations in government and [FR Doc. 2020–04097 Filed 2–27–20; 8:45 am] three business days after submission to measurement. To enable Federal BILLING CODE 4334–63–P verify posting (except allow 30 days for programs to deliver the experience posting of comments submitted by taxpayers deserve, they must undertake mail). three general categories of activities: FOR FURTHER INFORMATION CONTACT: Conduct ongoing customer research, Requests for additional information gather and share customer feedback, and should be directed to Amira Boland, test services and digital products.

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These data collection efforts may be Estimated Total Annual Burden when the surface estate is conveyed to either qualitative or quantitative in Hours: 69,365. Kugkaktlik Limited. nature or may consist of mixed Estimated Total Annual Cost to DATES: Any party claiming a property methods. Additionally, data may be Public: $0. interest in the lands affected by the collected via a variety of means, C. Public Comments decision may appeal the decision in including but not limited to electronic accordance with the requirements of 43 or social media, direct or indirect DOI invites comments on: (a) Whether CFR part 4 within the time limits set out observation (i.e., in person, video and the proposed collection of information in the SUPPLEMENTARY INFORMATION audio collections), interviews, is necessary for the proper performance section. of the functions of the agency, including questionnaires, surveys, and focus ADDRESSES: You may obtain a copy of whether the information will have groups. The Department of the Interior the decision from the Bureau of Land practical utility; (b) the accuracy of the will limit its inquiries to data Management, Alaska State Office, 222 collections that solicit strictly voluntary agency’s estimate of the burden West Seventh Avenue, #13, Anchorage, opinions or responses. Steps will be (including hours and cost) of the AK 99513–7504. taken to ensure anonymity of proposed collection of information; (c) FOR FURTHER INFORMATION CONTACT: ways to enhance the quality, utility, and Judy respondents in each activity covered by A. Kelley, BLM Alaska State Office, clarity of the information to be this request. 907–271–3786, or [email protected]. The The results of the data collected will collected; and (d) ways to minimize the BLM Alaska State Office may also be be used to improve the delivery of burden of the collection of information contacted via Telecommunications Federal services and programs. It will on respondents, including through the Device for the Deaf (TDD) through the include the creation of personas, use of automated collection techniques Federal Relay Service at 1–800–877– customer journey maps, and reports and or other forms of information 8339. The relay service is available 24 summaries of customer feedback data technology. Comments submitted in hours a day, 7 days a week, to leave a response to this notice will be and user insights. It will also provide message or question with the BLM. The summarized and/or included in the government-wide data on customer BLM will reply during normal business experience that can be displayed on request for OMB approval of this hours. performance.gov to help build information collection; they also will SUPPLEMENTARY INFORMATION: As transparency and accountability of become a matter of public record. required by 43 CFR 2650.7(d), notice is Federal programs to the customers they The authority for this action is the hereby given that the BLM will issue an serve. Paperwork Reduction Act of 1995 (44 appealable decision to Kugkaktlik U.S.C. 3501 et seq.). Method of Collection Limited for the Native village of Kipnuk. DOI will collect this information by Jeffrey Parrillo, The decision approves conveyance of electronic means when possible, as well Departmental Information Collection the surface estate in certain lands as by mail, fax, telephone, technical Clearance Officer. pursuant to ANCSA (43 U.S.C. 1601, et discussions, and in-person interviews. [FR Doc. 2020–04040 Filed 2–27–20; 8:45 am] seq.). The lands approved for The Department of the Interior may also BILLING CODE 4334–63–P conveyance lie partially within the utilize observational techniques to former Clarence Rhode National collect this information. Wildlife Range, established December 8, DEPARTMENT OF THE INTERIOR 1960, now known as the Yukon Delta Data National Wildlife Refuge. As provided Form Number(s): None. Bureau of Land Management by ANCSA, the subsurface estate in Type of Review: New. lands lying within a national wildlife [F–14875–A, F–14875–A2; refuge in existence on December 18, B. Annual Reporting Burden 20X.LLAK944000.L14100000.HY0000.P] 1971, is not available for conveyance to Affected Public: Collections will be Alaska Native Claims Selection the regional corporation, Calista targeted to the solicitation of opinions Corporation, and will be reserved to the from respondents who have experience AGENCY: Bureau of Land Management, United States in the conveyance with the program or may have Interior. document transferring the surface estate. experience with the program in the near ACTION: Notice of decision approving The subsurface estate in the lands lying future. For the purposes of this request, lands for conveyance. outside the former Clarence Rhode ‘‘customers’’ are individuals, National Wildlife Range will be businesses, and organizations that SUMMARY: The Bureau of Land conveyed to Calista Corporation when interact with a Federal Government Management (BLM) hereby provides the surface estate is conveyed to agency or program, either directly or via constructive notice that it will issue an Kugkaktlik Limited. The lands are a Federal contractor. This could include appealable decision approving located in the vicinity of Kipnuk, and individuals or households; businesses conveyance of the surface estate in are described as: or other for-profit organizations; not-for- certain lands to Kugkaktlik Limited, for profit institutions; State, local or tribal the Native village of Kipnuk, pursuant Lands Within the Former Clarence Rhode governments; Federal government; and to the Alaska Native Claims Settlement National Wildlife Range (Public Land Order Act of 1971, as amended (ANCSA). The No. 2213), Now Known as the Yukon Delta Universities. National Wildlife Refuge Estimated Number of Respondents: lands approved for conveyance lie 146,118. partially within the former Clarence Surface estate to be conveyed to Kugkaktlik Estimated Time per Response: Varied, Rhode National Wildlife Range, now Limited; Subsurface estate to be reserved to the United States. dependent upon the data collection known as the Yukon Delta National method used. The possible response Wildlife Refuge. The subsurface estate Seward Meridian, Alaska time to complete a questionnaire or in the lands lying outside the former T. 1 S., R. 85 W., survey may be 3 minutes or up to 2 Clarence Rhode National Wildlife Range Secs. 31, 32, and 33. hours to participate in an interview. will be conveyed to Calista Corporation Containing 690 acres.

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T. 2 S., R. 85 W., DEPARTMENT OF THE INTERIOR Copies of the Draft RMPA/EIS are Sec. 6. available from the BLM and the BIA at Containing 191 acres. Bureau of Indian Affairs the following addresses: BLM Aggregating 881 acres. Farmington Field Office, 6251 College Bureau of Land Management Blvd., Suite A, Farmington, New Mexico Lands Outside the Former Clarence Rhode 87402; BIA Navajo Regional Office, 301 National Wildlife Range (Public Land Order [LLNMF01000.L13100000.PP0000; West Hill, Gallup, New Mexico 87301; No. 2213), Now Known as the Yukon Delta AANNN04650.A0R9044040.999900. National Wildlife Refuge 201A21000DD] BIA Eastern Agency Office, 222 Chaco Blvd., Crownpoint, NM 87313; Pueblo Surface estate to be conveyed to Kugkaktlik Notice of Availability of the Farmington Pintado Chapter House, Navajo Route 9 Limited; Subsurface estate to be conveyed to Mancos-Gallup Resource Plan HCR 79, Cuba, NM 87013; Ojo Encino Calista Corporation. Amendment and Draft Environmental Chapter House, HCR 79, Ojo Encino, Seward Meridian, Alaska Impact Statement, New Mexico NM 87013; Counselor Chapter House 6828 Highway 44, Counselor, NM T. 1 S., R. 84 W., AGENCY: Bureau of Land Management, 87018; Nageezi Chapter House, 1153 Sec. 22. Interior; and Bureau of Indian Affairs, US–550, Nageezi, NM 87037; Lake Interior. Containing 0.94 acres. Valley Chapter House, 7750 NM 371, T. 1 S., R. 85 W., ACTION: Notice of Availability. Crownpoint, NM 87313; 536 County Secs. 31, 32, and 33. SUMMARY: Road 7150, Bloomfield, NM 87413; Containing 1,083 acres. In compliance with the National Environmental Policy Act of Upper Fruitland Chapter House, T. 2 S., R. 85 W., Fruitland, NM; San Juan Chapter House, Secs. 5 and 6. 1969, as amended (NEPA), and the Federal Land Policy and Management Lower Waterflow, NM; Hogback Chapter Containing 916 acres. Act of 1976, as amended (FLPMA), the House, Shiprock, NM; Burnham Chapter Aggregating 2,000 acres. Bureau of Land Management (BLM) House, Newcomb, NM; White Rock Aggregating a total of 2,881 acres. Farmington Field Office, Farmington, Chapter House, Crownpoint, NM; Becenti Chapter House, Crownpoint, The decision addresses public access New Mexico, and Bureau of Indian NM; Whitehorse Lake Chapter House, easements, if any, to be reserved to the Affairs (BIA) Navajo Regional Office, Cuba, NM; Torreon Chapter House, United States pursuant to Sec. 17(b) of Gallup, New Mexico, have prepared a Draft Resource Management Plan Cuba, NM; Navajo Nation Library, Hwy. ANCSA (43 U.S.C. 1616(b)), in the lands 264 Loop Road, Window Rock, AZ described above. Amendment (RMPA) and associated Environmental Impact Statement (EIS). 86515; Farmington Public Library, 2101 The BLM will publish notice of the This notice announces a 90-day public Farmington Ave, Farmington, NM decision once a week for four review period of the Draft RMPA/EIS, 87401; and BLM New Mexico State consecutive weeks in The Delta and that the BLM and BIA will hold Office, 301 Dinosaur Trail, Santa Fe, Discovery newspaper. public meetings to solicit comments. New Mexico 87508. Any party claiming a property interest DATES: To ensure that comments will be FOR FURTHER INFORMATION CONTACT: in the lands affected by the decision considered, the BLM and BIA must Jillian Aragon, BLM Project Manager; may appeal the decision in accordance receive written comments on the Draft telephone: 505–564–7722; address: 6251 with the requirements of 43 CFR part 4 RMPA/EIS within May 28, 2020 that the College Blvd., Suite A, Farmington, New Mexico 87402; or contact Robert Begay, within the following time limits: Environmental Protection Agency publishes its Notice of Availability for BIA Project Manager; telephone 505– 1. Unknown parties, parties unable to the Draft RMPA/EIS in the Federal 863–8515; address P.O. Box 1060; be located after reasonable efforts have Register. All information on the public Gallup, New Mexico 87301; or email _ _ _ been expended to locate, parties who comment period, including how to both at: blm nm ffo [email protected]. fail or refuse to sign their return receipt, submit comments and when they are Persons who use a telecommunications and parties who receive a copy of the due, will be included on the project device for the deaf (TDD) may call the decision by regular mail which is not website as information is made Federal Relay Service (FRS) at 1–800– certified, return receipt requested, shall available. The BLM and BIA will 877–8339 to contact the above have until March 30, 2020 to file an announce future public meetings, individual during normal business appeal. hearings, or other public participation hours. The FRS is available 24 hours a 2. Parties receiving service of the activities at least 15 days in advance day, 7 days a week, to leave a message or question with the above individuals. decision by certified mail shall have 30 through public notices, media releases, You will receive a reply during normal days from the date of receipt to file an and/or direct mailings. business hours. appeal. ADDRESSES: You may submit comments related to the Draft RMPA/EIS through SUPPLEMENTARY INFORMATION: This Parties who do not file an appeal in the following methods: document evaluates alternatives for accordance with the requirements of 43 Project website: https://go.usa.gov/ updating management of BLM-managed CFR part 4 shall be deemed to have xdrjD; lands and minerals in the Farmington waived their rights. Notices of appeal Email: [email protected]; Field Office, considering new transmitted by facsimile will not be Fax: 505–564–7608, Attn.: Jillian technologies for oil and gas extraction. accepted as timely filed. Aragon, Project Manager; or It also evaluates alternatives and issues Mail: Bureau of Land Management, related to the BIA’s authority over Judy A. Kelley, Farmington Field Office, Attn.: Project mineral leasing and associated activity Land Law Examiner, Adjudication Section. Manager, 6251 College Blvd., Suite A, decisions on Navajo Tribal Trust lands [FR Doc. 2020–04132 Filed 2–27–20; 8:45 am] Farmington, New Mexico 87402; or BIA and Navajo Indian allotments (hereafter BILLING CODE 4310–JA–P Navajo Regional Office, Attn.: Robert referred to as Navajo Trust and Navajo Begay, P.O. Box 1060, Gallup, New Indian allotments, respectively). The Mexico 87301. Draft RMPA/EIS has been developed in

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order to analyze the impacts of The BLM and BIA planning teams (4) BLM Alternative C—Focus on a additional development in what was developed four preliminary planning strategy that balances community needs previously considered a fully developed issues to be addressed in the RMPA, and development, while enhancing land oil and gas play in the San Juan Basin including oil and gas development; health; and in northwestern New Mexico. The lands and realty; BLM-managed lands (5) BLM Alternative D—Focus on Mancos Shale/Gallup Formation was with wilderness characteristics; and maximizing resources that target analyzed in the 2002 Reasonably vegetation. The agencies selected these economic outcomes, while sustaining Foreseeable Development (RFD) issues based on broad concerns or land health. Scenario and current Farmington Field controversies related to conditions, BIA Office 2003 RMP/EIS. Subsequent trends, needs, and existing and potential improvements and innovations in uses of planning area lands. The (1) BIA No Action Alternative— horizontal drilling technology and agencies also identified issues during a Continue current management of leasing multi-stage hydraulic fracturing have review of current land management practices; enhanced the economics of developing documents, including the 2003 (2) BIA Alternative A—Focus on this stratigraphic horizon. With Farmington RMP, and associated plan protecting and enhancing natural favorable oil prices, the oil play in the amendments and applicable Navajo environments, while emphasizing the southern part of the Farmington Field Nation chapter house land use plans. protection of sensitive wildlife areas Office boundary has drawn considerable These planning issues address each and ecological resources; interest. As full-field development agency’s purpose of and need for the (3) BIA Alternative B—Emphasize the occurs, especially in the shale oil play, RMPA/EIS and reflect the range of preservation and protection of the additional impacts may occur. This decisions to be analyzed in the RMPA/ cultural and natural landscapes unique would require an EIS-level plan EIS. Land use planning and NEPA to northern New Mexico; amendment and revision of the RFD regulations require the BLM and BIA to (4) BIA Alternative C—Focus on regarding the Mancos Shale/Gallup formulate a reasonable range of allowing development to occur in Formation. Because the BLM is alternatives to consider different harmony with the traditional, historical, preparing an RMP amendment and not management scenarios and different socioeconomic, and cultural lifeways of a revision, not all decisions from the means of resolving resource or resource the planning area; and 2003 RMP will be revisited. On use conflicts. Established planning (5) BIA Alternative D—Focus on February 25, 2014, the BLM released an criteria, as outline in 43 CFR part 1610, making the most of resources that target initial Notice of Intent to prepare the guide the alternatives development economic outcomes, while protecting RMPA/EIS. In 2016, the BIA became a process. This pursuit provides the BLM, land health. The BLM and BIA have provided co-lead agency. This was because of the BIA, and the public with an extensive opportunities for meaningful two agencies’ shared concerns and understanding of the various ways in and substantive input and comments management responsibilities related to which challenges surrounding resources when preparing this Draft RMPA/EIS. oil and gas development on Navajo and resource uses might be resolved. Those invited to participate in the Tribal trust and Navajo Indian This Draft RMPA/EIS offers the BLM process include the public, non- allotments in the area of the RMPA/EIS. State Director and the BIA Navajo governmental organizations, other The BIA has the responsibility to Regional Director a reasonable range of Federal agencies, Tribal members, and manage fluid and solid mineral leasing alternatives from which to make state, local, and Tribal governments. informed decisions. Both agencies for Indian mineral owners. The Indian Public involvement for this Draft developed one no action alternative and mineral owners include the Navajo RMPA/EIS has consisted of the four action alternatives. The action Nation on Navajo Tribal trust lands and following: individual Navajo allottees on Navajo alternatives for each agency were • An initial BLM public scoping individual Indian allotments. The designed to accomplish the following: comment period from February 25 to Notice of Intent announcing that the • Address the four planning issues; • May 28, 2014; BIA had joined the project was Fulfill the purpose of and need for • A second public scoping period published in the Federal Register on the RMPA/EIS; focused on BIA issues from October 21, • October 21, 2016 (81 FR 72819). Meet the BLM’s multiple use 2016, to February 26, 2017; The planning area spans portions of mandates of FLPMA (43 U.S.C., Section • Public outreach via bulletins, San Juan, Rio Arriba, McKinley, and 1716); newspaper announcements, public Sandoval counties in New Mexico. It • Achieve the BIA’s mission to meetings, and the project website; encompasses approximately 4,189,500 enhance quality of life, promote • Collaboration with Federal, state, acres of land, including approximately economic opportunity, and protect and local, and Tribal governments and 675,400 acres of Navajo Trust surface, improve trust assets. cooperating agencies; and 1,316,200 acres of BLM-managed land, The range of alternatives for each • Public review of and comment on and 210,100 acres of Navajo Indian agency is as follows: the Draft RMPA/EIS. allotments, across 17 Navajo Nation The BLM and BIA are required to BLM chapters. consult Indian Tribes, as applicable, on The purpose of the public comment (1) BLM No Action Alternative— a government-to-government basis, in process is to receive public input on the Continue 2003 RMP management accordance with Executive Order 13175 Draft RMPA/EIS. The BLM’s direction; and other policies. Tribal and preliminary planning criteria identified (2) BLM Alternative A—Focus on individual Indian allottee concerns, in the February 25, 2014, Federal managing and enhancing habitats in the including impacts on Indian trust assets Register (79 FR 10548) notice and the BLM decision area; and potential impacts on cultural BIA’s preliminary planning criteria (3) BLM Alternative B—Emphasize resources in the planning area, will identified in the October 21, 2016, the preservation and protection of the continue to be given due consideration. Federal Register (81 FR 72819) notice Chacoan and cultural landscapes unique Federal, state, and local agencies and are hereby incorporated by reference. to northern New Mexico; individual Indian allottees, Tribes, and

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other stakeholders that may be DEPARTMENT OF AGRICULTURE will receive a reply during normal interested in or affected by the proposed business hours. action being evaluated are invited to Forest Service SUPPLEMENTARY INFORMATION: The J.R. participate in the public comment Simplot Company (Simplot) submitted a process. These entities may request, or DEPARTMENT OF THE INTERIOR proposed lease modification be requested by the BIA and BLM, to (enlargement) and Mine and participate in the development of the Bureau of Land Management Reclamation Plan (M&RP) for the East environmental analysis as cooperating [19XL.LLIDI00000.L71220000.EO0000. Smoky Panel leases (IDI–015259, IDI– agencies, if eligible. Additionally, the LVTFD1900100.241A.4500134029] 26843, and IDI–012890), with the intent BLM and BIA will continue to consult of expanding the current Smoky Canyon with the cooperating agencies, as Notice of Availability of the Final Phosphate Mine in Caribou County, appropriate. Environmental Impact Statement for Idaho. the Proposed East Smoky Panel Mine The BLM, as the Federal lease You may submit comments on the Project at Smoky Canyon Mine, administrator, is the lead agency, and Draft RMPA/EIS in writing at any public Caribou County, ID the USFS is the co-lead agency. The comment meeting, or by using one of Idaho Department of Environmental the methods listed in the ADDRESSES AGENCY: Bureau of Land Management, Interior; Forest Service, USDA. Quality, Idaho Department of Lands, section above. To be included in the and Idaho Governor’s Office of Energy analysis, all comments must be received ACTION: Notice of availability. and Mineral Resources are cooperating by the date set forth in the DATES section SUMMARY: In accordance with the agencies. above and must be submitted using one National Environmental Policy Act of The NOA for the Draft EIS published ADDRESSES of the methods listed in the 1969 (NEPA), as amended, the Bureau of on September 28, 2018, initiating a 90- section above. Please include your Land Management (BLM) and the U.S. day public comment period. Agencies, name, return address, and the caption Department of Agriculture, Forest organizations, and interested parties ‘‘Draft EIS Comments, Farmington Service (USFS) Caribou-Targhee provided comments on the Draft EIS via Mancos-Gallup RMPA/EIS’’ on the first National Forest (CTNF), have prepared mail, email, and public meetings. page of your written comments. a Final Environmental Impact Statement The Final EIS fully addresses issues Written comments, including names (Final EIS) for the proposed East Smoky identified during scoping and during and addresses of respondents, will be Panel Mine Project (Project) and by this public review of the Draft EIS by analyzing impacts to water resources, available for public review at one of the notice are announcing its availability. air quality, human health and safety, addresses listed in the ADDRESSES DATES: The BLM will not issue a final socioeconomics, and wildlife. It also decision on the proposal for a minimum section above, during regular business addresses reclamation, financial of 30 days after the date the hours, 8 a.m. to 4:30 p.m., Monday assurance, mitigation and monitoring. Environmental Protection Agency through Friday, except holidays. The Final EIS evaluates three publishes its notice of availability in the Before including your address, alternatives: The Proposed Action, the Federal Register. The Final EIS and the telephone number, email address, or Preferred Alternative, and a No Action Draft USFS Record of Decision (ROD) Alternative. The agencies identified other personal identifying information are now available for public review. A Alternative 1 as the Preferred in your comment, be aware that your 60-day objection period for the Draft Alternative because it reduces impacts entire comment—including your USFS ROD will start when the USFS to groundwater and other resources. personal identifying information—may publishes a legal notice in the Under the Preferred Alternative, overall be made publicly available at any time. newspaper of record. You can ask us in your comment to mining operations, mining sequences, ADDRESSES: Copies of the East Smoky and other associated ancillary withhold your personal identifying Panel Mine Project Final EIS are information from public review, but we operations remain the same as described available for public inspection at the for the Proposed Action. Use of a cannot guarantee that we will be able to BLM Pocatello Field Office at 4350 do so. steeper pit wall would reduce the Cliffs Drive, Pocatello, ID 83204. ultimate pit footprint by approximately Authority: 40 CFR 1506.6, 40 CFR 1506.10, Interested persons may also review the 78 acres. This eliminates the need to 43 CFR 1610.2 Final EIS on the internet at the mine the highly seleniferous cherty following locations: Timothy R. Spisak, shale overburden. The reduction of • BLM Land Use Planning and NEPA seleniferous overburden material BLM New Mexico State Director. Register: https://go.usa.gov/xnYTG eliminates the need for the Proposed Bartholomew Stevens, • Caribou-Targhee National Forest Action’s geologic store-and-release BIA Navajo Regional Director. Current and Recent Projects: http:// cover and substitutes a less expensive [FR Doc. 2020–04111 Filed 2–27–20; 8:45 am] www.fs.usda.gov/projects/ctnf/ and less complex, soil-only cover. BILLING CODE 4310–FB–P landmanagement/projects The BLM and USFS will make FOR FURTHER INFORMATION CONTACT: Kyle separate but coordinated decisions Free, BLM Pocatello Field Office, 4350 related to the proposed Project. The Cliffs Drive, Pocatello, ID 83204; phone BLM will either approve, approve with 208–478–6352; email: [email protected]; modifications, or deny the M&RP; fax 208–478–6376. Persons who use a recommend whether or not to modify telecommunications device for the deaf lease IDI–015259; and decide whether to (TDD) may call the Federal Relay grant a modification to the previously Service (FRS) at 1–800–877–8339 to approved B-Panel Mine Plan of the contact Mr. Free. The FIRS is available Smoky Canyon Mine. The BLM will 24 hours a day, 7 days a week, to leave base its decisions on the Final EIS, a message or question for Mr. Free. You public and agency input, and any

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recommendations the USFS may have SUMMARY: The Bureau of Land The decision addresses public access regarding surface management of leased Management (BLM) hereby provides easements, if any, to be reserved to the National Forest System lands. The USFS constructive notice that it will issue an United States pursuant to Sec. 17(b) of will make recommendations to the BLM appealable decision approving ANCSA (43 U.S.C. 1616(b)), in the lands concerning surface management and conveyance of the surface estate in described above. The BLM will also best management practices on leased certain lands to Saguyak Incorporated, publish notice of the decision once a lands within the CTNF and will issue for the Native village of Clarks Point, week for four consecutive weeks in the decisions on special use authorizations pursuant to the Alaska Native Claims ‘‘The Bristol Bay Times & The Dutch (SUAs) for off-lease mining support Settlement Act of 1971 (ANCSA), as Harbor Fisherman’’ newspaper. Any activities. The USFS SUAs are necessary amended. As provided by ANCSA, the party claiming a property interest in the for any off-lease disturbances/structures BLM will convey the subsurface estate lands affected by the decision may associated with the Project located in the same lands to Bristol Bay Native appeal the decision in accordance with within the CTNF. The Preferred Corporation when the BLM conveys the the requirements of 43 CFR part 4 Alternative requires an amendment to surface estate to Saguyak Incorporated. within the following time limits: 1. Unknown parties, parties unable to the forest plan as outlined in the Final DATES: Any party claiming a property EIS. interest in the lands affected by the be located after reasonable efforts have The portion of the Project related to decision may appeal the decision in been expended to locate, parties who USFS SUAs for off-lease activities is accordance with the requirements of 43 fail or refuse to sign their return receipt, subject to the objection process CFR part 4 within the time limits set out and parties who receive a copy of the decision by regular mail which is not pursuant to 36 CFR parts 218 and 219. in the SUPPLEMENTARY INFORMATION The USFS will provide instructions for section. certified, return receipt requested, shall filing objections in the legal notice have until March 30, 2020 to file an published in the newspaper of record ADDRESSES: You may obtain a copy of appeal. for the Draft USFS ROD. The USFS will the decision from the BLM, Alaska State 2. Parties receiving service of the only accept objections from those who Office, 222 West Seventh Avenue, #13, decision by certified mail shall have 30 have previously submitted specific Anchorage, Alaska 99513–7504. days from the date of receipt to file an written comments regarding the FOR FURTHER INFORMATION CONTACT: appeal. proposed project during scoping or Bettie J. Shelby, BLM Alaska State Parties who do not file an appeal in other designated opportunities for Office, 907–271–5596 or bshelby@ accordance with the requirements of 43 public comment in accordance with 36 blm.gov. The BLM Alaska State Office CFR part 4 shall be deemed to have CFR 218.5(a) and 219.53(a). Objection may also be contacted via a waived their rights. Notices of appeal issues must be based on previously Telecommunications Device for the Deaf transmitted by facsimile will not be submitted, timely, and specific written (TDD) through the Federal Relay Service accepted as timely filed. comments regarding the proposed at 1–800–877–8339. The relay service is Bettie J. Shelby, project unless they are based on new available 24 hours a day, 7 days a week, Land Law Examiner, Adjudication Section. information arising after designated to leave a message or question with the [FR Doc. 2020–04131 Filed 2–27–20; 8:45 am] opportunities. The BLM will release a BLM. The BLM will reply during BILLING CODE 4310–JA–P ROD concurrent with release of the normal business hours. Final USFS ROD. SUPPLEMENTARY INFORMATION: As (Authority: 36 CFR parts 218 and 219; 42 required by 43 CFR 2650.7(d), notice is INTERNATIONAL TRADE U.S.C. 4321 et seq.; 40 CFR parts 1500–1508; hereby given that the BLM will issue an COMMISSION 43 CFR part 46; 43 U.S.C. 1701; and 43 CFR appealable decision to Saguyak part 3590) Incorporated. The decision approves [Investigation No. 337–TA–1174] conveyance of the surface estate in John F. Ruhs, Certain Toner Cartridges, Components certain lands pursuant to ANCSA (43 Thereof, and Systems Containing State Director, Bureau of Land Management, U.S.C. 1601, et seq.). As provided by Idaho. Same Commission Determination Not ANCSA, the subsurface estate in the To Review an Initial Determination Mel Bolling, same lands will be conveyed to Bristol Forest Supervisor, Caribou-Targhee National Amending the Complaint and Notice of Bay Native Corporation when the Investigation, and Terminating the Forest. surface estate is conveyed to Saguyak [FR Doc. 2020–03970 Filed 2–27–20; 8:45 am] Investigation With Respect to Two Incorporated. The lands are located in Respondents Based on a Partial BILLING CODE 4310–GG–P the vicinity of Clarks Point, Alaska, and Withdrawal of the Complaint are described as: AGENCY: U.S. International Trade DEPARTMENT OF THE INTERIOR Block 3, Tract B, U.S. Survey No. 4992, Alaska. Containing 0.36 acres. Commission. ACTION: Notice. Bureau of Land Management Seward Meridian, Alaska T. 14 S., R. 55 W., SUMMARY: Notice is hereby given that [AA–6657–A; AA–6657–C; AA–6657–F; AA– Sec. 8. the U.S. International Trade 6657–I; AA–6657–A2; Containing 46.62 acres. Commission has determined not to 20X.LLAK.944000.L14100000.HY0000.P] T. 14 S., R. 57 W., review an initial determination (‘‘ID’’) Sec. 25. (Order No. 32) issued by the presiding Alaska Native Claims Selection Containing 638.74 acres. administrative law judge (‘‘ALJ’’) T. 15 S., R. 57 W., AGENCY: Bureau of Land Management, Secs. 2, 3, and 4; amending the complaint and notice of Interior. Secs. 9, 10, 11 and 16; investigation, and terminating the investigation with respect to EPrinter ACTION: Notice of decision approving Sec. 31. Solution LLC of Pomona, California lands for conveyance. Containing 3,399.16 acres. Aggregating 4,084.88 acres. (‘‘EPrinter’’) and IFree E-Commerce Co.

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of Kowloon, Hong Kong (‘‘IFree’’) based On January 28, 2020, the ALJ issued telephone 202–205–2000. General on a partial withdrawal of the the subject ID, and ordered that the information concerning the Commission complaint. complaint and notice of investigation be may also be obtained by accessing its FOR FURTHER INFORMATION CONTACT: amended as requested. The subject ID internet server at https://www.usitc.gov. Robert Needham, Office of the General additionally terminated the The public record for this investigation Counsel, U.S. International Trade investigation with respect to EPrinter may be viewed on the Commission’s Commission, 500 E Street SW, and IFree based on the withdrawal of electronic docket (‘‘EDIS’’) at https:// Washington, DC 20436, telephone (202) the complaint with respect to those edis.usitc.gov. Hearing-impaired 708–5468. Copies of non-confidential entities. No petitions for review of the persons are advised that information on documents filed in connection with this ID were received. this matter can be obtained by investigation are or will be available for The Commission has determined not contacting the Commission’s TDD inspection during official business to review the subject ID. terminal, telephone 202–205–1810. hours (8:45 a.m. to 5:15 p.m.) in the The authority for the Commission’s determination is contained in section SUPPLEMENTARY INFORMATION: On Office of the Secretary, U.S. November 8, 2019, the Commission International Trade Commission, 500 E 337 of the Tariff Act of 1930, as instituted this investigation based on a Street SW, Washington, DC 20436, amended (19 U.S.C. 1337), and in part complaint filed by Erbe Elektromedizin telephone (202) 205–2000. General 210 of the Commission’s Rules of GmbH of the Republic of Germany and information concerning the Commission Practice and Procedure (19 CFR part Erbe USA, Inc. of Marietta, Georgia. 84 may also be obtained by accessing its 210). FR 60451. The complaint alleges internet server (https://www.usitc.gov). By order of the Commission. violations of section 337 of the Tariff The public record for this investigation Issued: February 25, 2020. Act of 1930, as amended, 19 U.S.C. 1337 may be viewed on the Commission’s Lisa Barton, based upon the importation into the electronic docket (EDIS) at https:// Secretary to the Commission. edis.usitc.gov. Hearing-impaired United States, the sale for importation, [FR Doc. 2020–04108 Filed 2–27–20; 8:45 am] persons are advised that information on or the sale within the United States after BILLING CODE 7020–02–P this matter can be obtained by importation of certain argon plasma contacting the Commission’s TDD coagulation system probes, their terminal on (202) 205–1810. components, and other argon plasma INTERNATIONAL TRADE coagulation system components for use SUPPLEMENTARY INFORMATION: The COMMISSION therewith by reason of infringement of Commission instituted this investigation certain claims of U.S. Patent Nos. on September 23, 2019, based on a [Investigation No. 337–TA–1182] D577,671; 7,311,707; 7,717,911; complaint filed by Brother Industries, Certain Argon Plasma Coagulation 9,510,889; and 9,603,653. Id. The Ltd., of Nagoya, Japan; Brother System Probes, Their Components, Commission’s notice of investigation International Corporation (U.S.A.) of and Other Argon Plasma Coagulation named the following as respondents: (1) Bridgewater, New Jersey; and Brother System Components for Use Therewith Industries (U.S.A.), Inc., of Bartlett, Olympus Corporation of Tokyo, Japan; Commission Determination Not To (2) Olympus Corporation of the Tennessee (together, ‘‘Brother’’). 84 FR Review an Initial Determination 49762–63. The complaint, as Americas of Center Valley, Terminating the Investigation as to Pennsylvania; (3) Olympus America of supplemented, alleges violations of Certain Respondents and Granting section 337 of the Tariff Act of 1930, as Center Valley, Pennsylvania; (4) Leave To Amend the Complaint and Olympus Surgical Technologies Europe amended, 19 U.S.C. 1337, in the Notice of Investigation importation into the United States, the of Hamburg, Republic of Germany; (5) sale for importation, and the sale within AGENCY: U.S. International Trade Olympus Winter & lbe GmbH of the United States after importation of Commission. Hamburg, Republic of Germany; (6) Olympus KeyMed Group Limited of certain toner cartridges, components ACTION: Notice. thereof, and systems containing same by Essex, United Kingdom; (7) KeyMed reason of infringement of certain claims SUMMARY: Notice is hereby given that (Medical & Industrial Equipment) Ltd. of U.S. Patent Nos. 9,568,856; 9,575,460; the U.S. International Trade of Essex, United Kingdom; (8) Olympus 9,632,456; 9,785,093; and 9,846,387. Id. Commission (‘‘Commission’’) has Bolton of Bolton, United Kingdom; (9) determined not to review an initial Olympus Surgical Technologies Europe The Commission’s notice of | investigation named 32 respondents, determination (‘‘ID’’) of the presiding Cardiff of Cardiff, United Kingdom. Id. including EPrinter and IFree. Id. at administrative law judge (‘‘ALJ’’) at 60451–52. The Office of Unfair 49763. The Office of Unfair Import terminating this investigation as to Import Investigations was also named as Investigations (‘‘OUII’’) is participating certain respondents and granting leave a party to this investigation. Id. at in this investigation. Id. to amend the complaint and notice of 60452. On January 10, 2020, Brother filed a investigation to add a respondent. On January 27, 2020, the private motion seeking leave to amend the FOR FURTHER INFORMATION CONTACT: Ron parties filed a joint, unopposed motion complaint and notice of investigation to Traud, Office of the General Counsel, seeking to terminate this investigation correct the name for one respondent and U.S. International Trade Commission, in part based on withdrawal of the to correct the address for seven 500 E Street SW, Washington, DC complaint as to named respondents respondents. Brother also sought to 20436, telephone 202–205–3427. Copies Olympus KeyMed Group Limited, terminate the investigation with respect of non-confidential documents filed in KeyMed (Medical & Industrial to EPrinter and IFree based on a partial connection with this investigation are or Equipment) Ltd., Olympus Bolton, and withdrawal of the complaint due to the will be available for inspection during Olympus Surgical Technologies Europe inability to serve those parties with the official business hours (8:45 a.m. to 5:15 | Cardiff. The motion also sought to complaint and notice of investigation. p.m.) in the Office of the Secretary, U.S. amend the complaint and notice of On January 22, 2020, OUII filed a International Trade Commission, 500 E investigation to add Gyrus Medical Ltd. response in support of the motion. Street SW, Washington, DC 20436, as a named respondent.

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On January 29, 2020, the ALJ issued upon request and payment of the shipped empty to the customer, who Order No. 10, the subject ID, granting copying fee set by Department of Justice fills the BiB with liquid and then sells the motion. The ID finds that the motion regulations. the filled BiB. Customers, such as complies with the Commission’s Rules Public comment is invited within 60 dairies, soft-drink manufacturers, and and that no extraordinary circumstances days of the date of this notice. Such other food producers, rely on BiBs to warrant denying the motion. No comments, including the name of the preserve and safely transport their petitions for review of the subject ID submitter, and responses thereto, will be liquids to restaurants, convenience were filed. posted on the Antitrust Division’s stores, other food service operators, and The Commission has determined not website, filed with the Court, and, under retail outlets. to review the subject ID. certain circumstances, published in the 3. In the United States, Liqui-Box and The authority for the Commission’s Federal Register Comments should be DS Smith are two of only three determination is contained in section directed to Katrina Rouse, Chief, significant suppliers of BiBs for nearly 337 of the Tariff Act of 1930, as Defense, Industrials, and Aerospace all end uses, including dairy, post-mix, amended (19 U.S.C. 1337), and in Part Section, Antitrust Division, Department and smoothies. Liqui-Box and DS Smith 210 of the Commission’s Rules of of Justice, 450 Fifth Street NW, Suite also are two of only four significant Practice and Procedure (19 CFR part 8700, Washington, DC 20530 suppliers of BiBs for wine in the United 210). (telephone: 202–598–2459). States. The proposed acquisition will eliminate competition between Liqui- By order of the Commission. Amy Fitzpatrick, Box and DS Smith to supply these BiBs Issued: February 25, 2020. Counsel to the Senior Director of to customers and is likely to lead to Lisa Barton, Investigations and Litigation. increased prices, lower quality and Secretary to the Commission. UNITED STATES DISTRICT COURT service, and less innovation. [FR Doc. 2020–04109 Filed 2–27–20; 8:45 am] FOR THE DISTRICT OF COLUMBIA 4. As a result, the proposed BILLING CODE 7020–02–P acquisition likely would substantially UNITED STATES OF AMERICA, U.S. lessen competition for the development, Department of Justice, Antitrust Division, 450 manufacture, and sale of dairy, post- 5th Street NW, Suite 8700, Washington, DC mix, smoothie, and wine BiBs in the DEPARTMENT OF JUSTICE 20530, Plaintiff, v. OLYMPUS GROWTH FUND VI, L.P., One Station Place, Stamford, United States in violation of Section 7 Antitrust Division CT 06902, LIQUI-BOX, INC., 901 E. Byrd of the Clayton Act, 15 U.S.C. 18, and Street, Richmond, VA 23219, and DS SMITH should be enjoined. United States v. Olympus Growth Fund PLC, 350 Euston Road, London, NW1 3AX, II. The Parties and the Transaction VI, L.P., et al.; Proposed Final Defendants. Judgment and Competitive Impact Civil Action No.: 1:20–cv–00464 5. Olympus, a fund managed by Statement Judge: Hon. Christopher Cooper private equity firm Olympus Partners, is a Delaware limited partnership with Notice is hereby given pursuant to the Complaint headquarters in Stamford, Connecticut. Antitrust Procedures and Penalties Act, The United States of America In 2018, Olympus Partners had 15 U.S.C. 16(b)–(h), that a proposed (‘‘United States’’), acting under the approximately $8.5 billion total capital Final Judgment, Stipulation, and direction of the Attorney General of the under management between its different Competitive Impact Statement have United States, brings this civil antitrust funds, with Olympus comprising been filed with the United States action against Defendants Olympus approximately $2.3 billion of that total. District Court for the District of Growth Fund VI, L.P. (‘‘Olympus’’), 6. Liqui-Box, a company owned by Columbia in United States of America v. Liqui-Box, Inc. (‘‘Liqui-Box’’), and DS Olympus, is a Delaware corporation Olympus Growth Fund VI, L.P., et al., Smith plc (‘‘DS Smith’’) to enjoin with headquarters in Richmond, Civil Action No. 1:20–cv–00464. On Olympus’s proposed acquisition of DS Virginia. Liqui-Box is a global February 19, 2020, the United States Smith’s Plastics Division (‘‘DS Smith manufacturer of packaging and filed a Complaint alleging that the Plastics’’), through Liqui-Box, a packaging equipment, including BiBs, proposed acquisition of the Plastics portfolio company of Olympus. The with four U.S. manufacturing facilities, Division of DS Smith plc by Olympus United States complains and alleges as as well as additional facilities across the Growth Fund VI, L.P., through its follows: world. In 2018, Liqui-Box had total sales portfolio company Liqui-Box, Inc., of $177 million, including would violate Section 7 of the Clayton I. Nature of the Action approximately $123 million in the Act, 15 U.S.C. 18. The proposed Final 1. Pursuant to a Stock Purchase United States. Judgment, filed at the same time as the Agreement dated March 5, 2019, Liqui- 7. DS Smith is a United Kingdom Complaint, requires Defendants to Box proposes to acquire DS Smith public limited company with divest all of DS Smith’s Bag-in-Box Plastics for approximately $500 million, headquarters in London, England. DS (BiB) product lines that overlap with making the combined company one of Smith is a global manufacturer of BiB product lines offered by Liqui-Box the largest bag-in-box (‘‘BiB’’) suppliers packaging, packaging equipment, and in the United States, including those for in the United States. recycled paper. DS Smith operates DS dairy, post-mix, smoothie, and wine. 2. BiBs are engineered plastic bags Smith Plastics, a division that Copies of the Complaint, proposed used to store and dispense liquids such manufactures flexible packaging and Final Judgment, and Competitive Impact as milk, post-mix (e.g., soda syrups and dispensing solutions, rigid packaging, Statement are available for inspection other beverage concentrates), smoothies, injection-molded products, and foam on the Antitrust Division’s website at and wine. BiBs are made up of a single products. Among DS Smith Plastics’ http://www.justice.gov/atr and at the or multi-layer plastic film bag and an flexible packaging products are BiBs, Office of the Clerk of the United States attached fitment, which is a plastic which are primarily sold under the District Court for the District of component used to facilitate the transfer Rapak brand name in the United States. Columbia. Copies of these materials may of the liquids into and out of the bags. DS Smith Plastics has its U.S. be obtained from the Antitrust Division After a BiB is manufactured, it is headquarters in Romeoville, Illinois,

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and operates five plants in the United determined by the liquid that will go 18. There are no substitutes for dairy States, as well as additional plants into the bag and the method that will be BiBs. Dairy BiBs provide dairy liquids across the world. In 2018, DS Smith used to dispense the liquid out of the to customers in an easy to use, Plastics had total sales of $479 million, bag. For example, if the BiB is used to inexpensive format that other packaging including approximately $137 million dispense post-mix into a soda dispenser, does not offer. For example, rigid in sales of BiBs and other goods in the the fitment will be designed to attach to containers require more storage space, United States. a soda dispenser. The simplest fitment may not keep the dairy liquid as fresh, 8. Pursuant to a Stock Purchase is a basic cap, which can be flipped off and may have a higher risk of Agreement dated March 5, 2019, Liqui- or unscrewed to pour out the liquid. contamination. BiBs for other end uses Box agreed to acquire DS Smith Plastics Highly engineered fitments can have cannot be substituted for dairy BiBs due for approximately $500 million. specialized elements such as a built-in to the unique specifications for dairy BiBs. III. Jurisdiction and Venue push-tap feature or an oxygen barrier to provide resistance to the elements. 19. In the event of a small but 9. The United States brings this action Fitments are often protected by patents significant non-transitory price increase under Section 15 of the Clayton Act, 15 due to the specialized nature and high for dairy BiBs, customers would not U.S.C. 25, to prevent and restrain degree of engineering that can be substitute away from dairy BiBs in a Defendants from violating Section 7 of required in fitment manufacturing. sufficient volume to make the price the Clayton Act, 15 U.S.C. 18. 15. BiBs are shipped to the customer increase unprofitable. Therefore, the 10. Defendants develop, manufacture, who fills the BiB with liquid using a development, manufacture, and sale of and sell BiBs throughout the United filler machine that the customer dairy BiBs is a relevant product market States in the flow of interstate typically purchases or leases from the and line of commerce within the commerce. Defendants’ activities in the BiB supplier. The customer then ships meaning of Section 7 of the Clayton Act, development, manufacture, and sale of the filled BiB to a store, restaurant, or 15 U.S.C. 18. BiBs substantially affect interstate other food processor. For example, a commerce. This Court has subject- 2. Post-Mix BiBs post-mix manufacturer seeking to matter jurisdiction over this action 20. Post-mix BiBs hold concentrated distribute its post-mix to a convenience pursuant to Section 15 of the Clayton drink mixes such as soda syrup and store would purchase BiBs and a filler Act, 15 U.S.C. 25, and 28 U.S.C. 1331, juice concentrates. These concentrates machine from a BiB supplier, fill the 1337(a), and 1345. are often mixed with carbonated or non- BiBs with the post-mix at its own 11. Defendants have consented to carbonated water before being served. facility, and then ship the filled BiBs to venue and personal jurisdiction in this Post-mix BiBs are typically made with the convenience store for use in the District. Venue is proper in this District layers of PE or EVOH and a fitment that convenience store’s dispensing under Section 12 of the Clayton Act, 15 attaches to a drink dispensing machine. machine. U.S.C. 22, and 28 U.S.C. 1391(c). Bags used for post-mix must be very 16. BiBs are distinct from and have strong to accommodate high filling flow IV. Industry Background numerous advantages over other forms rates required by post-mix 12. BiBs are used to store and of packaging. For example, compared to manufacturers. Post-mix BiBs are dispense liquids such as milk, post-mix, rigid containers (e.g., jugs and bottles) designed to maintain freshness and smoothies, and wine. The components and cartons, which are the other ensure all liquid is dispensed from the of a BiB include a flexible plastic bag primary forms of packaging used for bag while minimizing leaks and spills and an attached fitment. BiBs typically storing and transporting liquids, BiBs and accurately dispensing the product. hold between one and six gallons of are smaller and thus reduce storage 21. There are no substitutes for post- liquid, but they also come in smaller space and shelf space, both when empty mix BiBs. Post-mix BiBs must attach to and larger sizes. The attached fitment and filled. In addition, BiBs can be a a dispensing machine, which a rigid facilitates the transfer of liquids into more hygienic form of dispensing container cannot do. Moreover, BiBs for and out of the bag. liquids because they can reduce user other end uses cannot be substituted for 13. The flexible plastic bag contact and thus contamination. post-mix BiBs due to the unique component of a BiB is typically made Further, BiBs can keep their contents fitments and bag design required for up of one to five layers of film. The fresher for longer than other types of post-mix BiBs. films are most often made of packaging by allowing for minimal 22. In the event of a small but polyethylene (‘‘PE’’), but also can be contact with air. Finally, BiBs can be significant non-transitory price increase made with ethylene vinyl alcohol more economical because they have for post-mix BiBs, customers would not (‘‘EVOH’’) or other materials, and are features that allow the user to get all the substitute away from post-mix BiBs in a bound together using heat sealing. liquid out of the bag and result in less sufficient volume to make the price Customers require different numbers packaging waste when they are empty increase unprofitable. Therefore, the and types of layers to meet individual and disposed of. development, manufacture, and sale of product demands. For example, the V. Relevant Markets post-mix BiBs is a relevant product most basic bags consist of a single layer market and line of commerce within the of PE that secures the liquid during A. Product Markets meaning of Section 7 of the Clayton Act, transport. More sophisticated bags have 1. Dairy BiBs 15 U.S.C. 18. additional layers of engineered film that add durability, metallization, and 17. BiBs for dairy products hold 3. Smoothie BiBs oxygen, moisture, or temperature liquids such as ice cream mix, yogurt, 23. Smoothie BiBs hold mixes and resistance. milk, and cream. Dairy BiBs are other ingredients for smoothies and 14. The fitment component of a BiB typically durable bags made from PE other drinks. Smoothie BiBs are typically is made from resin using and often have a flip-cap or screw-off typically made with layers of PE that injection molding and attached to the cap fitment. Dairy BiBs are designed to offer low oxygen permeability. Like flexible plastic bag component via heat reduce the risk of contamination and post-mix BiBs, most fitments on sealing. The design of the fitment is extend shelf life. smoothie BiBs are designed to be

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attached to dispensing machines and are can keep wine fresh for up to four weeks 32. Liqui-Box and DS Smith compete highly specialized for the particular after it is opened, significantly longer vigorously with one another on the basis types of machines they attach to. A than a wine bottle can. Also, wine BiBs of price, quality, and service in the smoothie BiB typically has a special cap provide faster and more sanitary markets for the Relevant BiB Products in into which a probe is inserted in order pouring for food service operators than the United States. Competition between to dispense the liquid. Smoothie BiBs bottles do, with no risk of broken glass. Liqui-Box and DS Smith has fostered are designed to maintain the safety and 28. In the event of a small but innovation and led to the development freshness of the liquid, protect the taste significant non-transitory price increase of new types of BiBs and product and quality of these flavor-sensitive for wine BiBs, customers would not features. The proposed acquisition liquids, and reduce the risk of substitute away from wine BiBs in a would eliminate the substantial head-to- contamination. sufficient volume to make the price head competition between Liqui-Box 24. There are no substitutes for increase unprofitable. Therefore, the and DS Smith and the benefits that smoothie BiBs. Rigid containers cannot development, manufacture, and sale of customers have realized from that be attached to the dispensing machines wine BiBs is a relevant product market competition in the form of lower prices, smoothie BiBs are used in. Further, rigid and line of commerce within the better quality and service, and containers are more expensive and meaning of Section 7 of the Clayton Act, innovation. By eliminating DS Smith as bulkier to transport, may not keep the 15 U.S.C. 18. a competitor in the development, liquid as fresh, and may have a higher B. Geographic Market manufacture, and sale of the Relevant risk of contamination. Moreover, BiBs BiB Products in the United States, the for other end uses cannot be substituted 29. Customers in the United States do proposed acquisition of DS Smith for smoothie BiBs due to the unique not purchase dairy, post-mix, smoothie, Plastics would substantially increase the specifications required for smoothie and wine BiBs (collectively, the likelihood that Liqui-Box would BiBs. Fitments for smoothie BiBs, for ‘‘Relevant BiB Products’’) from increase prices, reduce quality and example, often are designed to suppliers located outside the United service, and diminish investment in specifically interact with the dispensing States. Shipping these products from research and development below what it machines. outside the United States generally would have been absent the acquisition. 25. In the event of a small but would not be economical because the 33. The proposed acquisition, significant non-transitory price increase shipping costs are too large relative to therefore, would likely substantially for smoothie BiBs, customers would not the cost of the BiB itself. In addition, lessen competition in the development, substitute away from smoothie BiBs in BiBs manufactured and sold outside the manufacture, and sale of the Relevant a sufficient volume to make the price United States often have different BiB Products in the United States in increase unprofitable. Therefore, the specifications than those manufactured violation of Section 7 of the Clayton development, manufacture, and sale of and sold in the United States due to, for Act, 15 U.S.C. 18. smoothie BiBs is a relevant product example, differences in the liquids market and line of commerce within the stored in the BiBs or differences in VII. Entry meaning of Section 7 of the Clayton Act, dispensing machines. Further, it is 34. Entry into the development, 15 U.S.C. 18. important for a supplier of BiBs in the manufacture, and sale of the Relevant United States to be able to timely BiB Products would not be timely, 4. Wine BiBs provide service to its customers who likely, or sufficient to prevent the harm 26. Wine BiBs hold the wine inside of have issues with the BiBs, such as to competition caused by Liqui-Box’s boxed wines, which are often sold in leakage or breakage of the bags or proposed acquisition of DS Smith retail outlets. The bag component of problems with the attachment of the Plastics. wine BiBs is typically made from PE BiBs to the filler machines. Suppliers 35. Entry into the markets for the and EVOH and is designed to protect located outside the United States do not Relevant BiB Products is costly and time against oxidation and UV light. The have employees located in the United consuming. Significant upfront capital fitment for wine BiBs is typically a States to timely service BiB customers expenditures are required to enter. The push, pull, or twist tap that is in the United States. machinery to manufacture BiBs, specifically designed to avoid allowing 30. In the event of a small but including injection molding machines oxygen into the bag when the wine is significant non-transitory increase in the for the fitments and production lines dispensed. This provides a longer shelf price of the Relevant BiB Products, that seal the bags and attach the life for wine once opened as compared customers in the United States would fitments, is expensive and highly to traditional bottles. Because the not procure these products from engineered. Manufacturing BiBs in fitments for wine BiBs are operated suppliers located outside the United accordance with customer requirements directly by individuals, they must be States in a sufficient volume to make requires skilled employees and industry simple to operate and user friendly. such a price increase unprofitable. know-how that can take years to 27. There are no substitutes for wine Accordingly, the United States is a establish. Further, customers demand BiBs. BiBs for other end uses cannot be relevant geographic market within the that suppliers have a proven ability to substituted for wine BiBs due to the meaning of Section 7 of the Clayton Act, supply BiBs with the required unique specifications for wine BiBs. 15 U.S.C. 18. specifications so that their BiBs do not Both the bag and fitment are specially leak or break and are able to store the engineered to provide an oxygen barrier VI. Anticompetitive Effects liquids for the required amount of time for the product that other BiBs typically 31. Liqui-Box, DS Smith, and one without spoiling. This reputation for do not provide. Bags and fitments that other company are the only significant having a quality product takes lack this specialized oxygen barrier suppliers of dairy, post-mix, and significant time to build. Finally, a new would allow oxygen to seep in and smoothie BiBs to customers located in entrant would need to hire trained degrade the wine, making it unsuitable the United States. Liqui-Box and DS technicians capable of providing timely for consumption after only a short time. Smith are two of only four suppliers of service to customers when BiBs leak, Wine bottles are not adequate wine BiBs to customers located in the break, or encounter other product substitutes for wine BiBs. A wine BiB United States. quality issues.

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VIII. Violations Alleged Christine A. Hill,* II. Definitions (D.C. Bar #461048) 36. The acquisition of DS Smith As used in this Final Judgment: Rebecca Valentine, Plastics by Liqui-Box is likely to (D.C. Bar #989607) A. ‘‘Acquirer’’ means TriMas or substantially lessen competition in each another entity to whom Defendants Daniel J. Monahan, Jr., of the relevant markets set forth above divest the Divestiture Assets. Attorneys for the United States, Defense, B. ‘‘Liqui-Box’’ means Defendant in violation of Section 7 of the Clayton Industrials, and Aerospace Section, U.S. Act, 15 U.S.C. 18. Department of Justice, Antitrust Division, 450 Liqui-Box, Inc., a Delaware corporation 37. The transaction will likely have Fifth Street NW, Suite 8700, Washington, DC with its headquarters in Richmond, the following anticompetitive effects, 20530, Telephone: (202) 305–2738, Virginia; its successors and assigns; and among others, in the relevant markets: Facsimile: (202) 514–9033, Email: its subsidiaries, divisions, groups, a. Competition between Liqui-Box [email protected]. affiliates, partnerships, and joint and DS Smith will be eliminated; * Lead Attorney To Be Noticed. ventures, and their directors, officers, b. competition generally will be United States District Court for the managers, agents, and employees. substantially lessened; and District of Columbia C. ‘‘Olympus Growth’’ means c. prices will likely increase, quality Defendant Olympus Growth Fund VI, and the level of service will likely United States of America, Plaintiff, v. Liqui- L.P., a Delaware limited partnership decrease, and innovation will likely Box, Inc., Olympus Growth Fund VI, L.P., and with its headquarters in Stamford, decline. DS Smith PLC, Defendants. Connecticut; its successors and assigns; Civil Action No.: 1:20–cv–00464 IX. Request for Relief and its subsidiaries, divisions, groups, Judge: Hon. Christopher Cooper affiliates, partnerships, and joint 38. The United States requests that Proposed Final Judgment ventures, and their directors, officers, this Court: managers, agents, and employees. Whereas, Plaintiff, United States of a. Adjudge and decree Liqui-Box’s D. ‘‘DS Smith’’ means Defendant DS America, filed its Complaint on acquisition of DS Smith Plastics to be Smith plc, a United Kingdom February 19, 2020, the United States unlawful and in violation of Section 7 corporation with the U.S. headquarters and Defendants, Liqui-Box, Inc., of the Clayton Act, 15 U.S.C. 18; of its Plastics Division in Romeoville, Olympus Growth Fund VI, L.P., and DS b. enjoin Defendants and all persons Illinois; its successors and assigns; and Smith plc, by their respective attorneys, acting on their behalf from its subsidiaries, divisions, groups, have consented to the entry of this Final consummating the proposed acquisition affiliates, partnerships, and joint Judgment without trial or adjudication of DS Smith Plastics by Liqui-Box or ventures, and their directors, officers, of any issue of fact or law and without from entering into or carrying out any managers, agents, and employees. this Final Judgment constituting any other agreement, plan, or understanding E. ‘‘TriMas’’ means TriMas evidence against or admission by any the effect of which would be to combine Corporation, a Delaware corporation party regarding any issue of fact or law; Liqui-Box with DS Smith Plastics; with its headquarters in Bloomfield c. award the United States its costs of And whereas, Defendants agree to be bound by the provisions of this Final Hills, Michigan; its successors and this action; and assigns; and its subsidiaries, divisions, d. grant the United States such other Judgment pending its approval by the Court; groups, affiliates, partnerships, and joint relief as the Court deems just and ventures, and their directors, officers, proper. And whereas, the essence of this Final Judgment is the prompt and certain managers, agents, and employees. Dated: February 19, 2020. divestiture of certain rights or assets by F. ‘‘BiB Products’’ means all Respectfully submitted, Defendants to assure that competition is components of Bag-in-Box (‘‘BiB’’) FOR PLAINTIFF UNITED STATES: not substantially lessened; packaging and solutions, including, but lllllllllllllllllllll And whereas, Defendants agree to not limited to, bags and fitments, Makan Delrahim, make certain divestitures for the whether the bags or fitments are sold as (D.C. Bar #457795) purpose of remedying the loss of part of a complete BiB solution or Assistant Attorney General. competition alleged in the Complaint; individually. The term ‘‘BiB Products’’ lllllllllllllllllllll And whereas, Defendants have does not include components used Katrina H. Rouse, represented to the United States that the solely for tea or coffee. (D.C. Bar #1013035) divestiture required below can and will G. ‘‘Rapak Business’’ means the Chief, Defense, Industrials, and Aerospace be made and that Defendants will not development, manufacture, and sale of Section. later raise any claim of hardship or BiB Products and filler machines for BiB lllllllllllllllllllll difficulty as grounds for asking the Products by the Plastics Division of DS Bernard A. Nigro, Jr., Court to modify any of the divestiture Smith in the United States. (D.C. Bar #412357) provisions contained below; H. ‘‘Divestiture Assets’’ means the Principal Deputy Assistant Attorney General. Now therefore, before any testimony Rapak Business, including: lllllllllllllllllllll is taken, without trial or adjudication of 1. All of Defendants’ rights, title, and David E. Altschuler, any issue of fact or law, and upon interests in the facilities located at the (D.C. Bar #983023) consent of the parties, it is ordered, following addresses (the ‘‘Divestiture Assistant Chief, Defense, Industrials, and adjudged, and decreed: Facilities’’): Aerospace Section. a. 7430 New Augusta Road, lllllllllllllllllllll I. Jurisdiction Indianapolis, Indiana 46268 Kathleen S. O’Neill, The Court has jurisdiction over the (‘‘Indianapolis Plant’’); Senior Director of Investigations & Litigation. subject matter of and each of the parties b. 6907 Coffman Road, Indianapolis, lllllllllllllllllllll to this action. The Complaint states a Indiana 46268 (‘‘Indianapolis Jay D. Owen, claim upon which relief may be granted Warehouse’’); Assistant Chief, Defense, Industrials, and against Defendants under Section 7 of c. 29959 Ahern Avenue, Union City, Aerospace Section. the Clayton Act, as amended (15 U.S.C. California 94587 (‘‘Union City Plant’’); lllllllllllllllllllll 18). and

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d. 1020 Davey Road, Woodbridge, specific months to be determined by with a copy of this Final Judgment. Illinois 60517; Acquirer. Defendants must offer to furnish to all 2. The DS Smith production lines I. ‘‘Relevant Employees’’ means all prospective Acquirers, subject to listed in Appendix A (the ‘‘Divested employees engaged in the Rapak customary confidentiality assurances, Lines’’); Business. all information and documents relating 3. The DS Smith injection molding III. Applicability to the Divestiture Assets customarily machines listed in Appendix B and all provided in a due diligence process, molds and dies, fitment assembly A. This Final Judgment applies to except information or documents machines, and machinery used to Liqui-Box, Olympus Growth, and DS subject to the attorney-client privilege or manufacture fitments for the Rapak Smith, as defined above, and all other work-product doctrine. Defendants must Business (the ‘‘Divested Fitment persons in active concert or make available such information to the Equipment’’); participation with any of them who United States at the same time that such receive actual notice of this Final 4. At the option of Acquirer, all other information is made available to any Judgment by personal service or tangible assets related to or used in other person. otherwise. connection with the Rapak Business, D. Defendants must provide Acquirer B. If, prior to complying with Section and the United States with reasonable including but not limited to: All IV and Section V of this Final Judgment, manufacturing equipment, quality access to Relevant Employees and with Defendants sell or otherwise dispose of organization charts and all information assurance equipment, research and all or substantially all of their assets or development equipment, machine relating to Relevant Employees, of lesser business units that include the including name, job title, past assembly equipment, tooling and fixed Divestiture Assets, Defendants must assets, personal property, inventory, experience relating to the Divestiture require the purchaser to be bound by the Assets, responsibilities, training and office furniture, materials, supplies, and provisions of this Final Judgment. other tangible property; all licenses, educational history, relevant Defendants need not obtain such an certifications, and to the extent permits, certifications, and agreement from Acquirer of the assets authorizations issued by any permissible by law, job performance divested pursuant to this Final evaluations, and current salary and governmental organization; all Judgment. benefits information, to enable Acquirer contracts, teaming arrangements, to make offers of employment. Upon agreements, leases, commitments, IV. Divestitures request, Defendants must promptly certifications, and understandings, A. Defendants are ordered and make Relevant Employees available for including supply agreements; all directed, within forty-five (45) calendar interviews with Acquirer during normal customer lists, contracts, accounts, and days after the Court’s entry of the Asset business hours at a mutually agreeable credit records; all repair and Preservation Stipulation and Order in location and will not interfere with performance records; and all other this matter, to divest the Divestiture efforts by Acquirer to employ Relevant records; Assets in a manner consistent with this Employees, such as by offering to 5. All intangible assets related to or Final Judgment to TriMas or an increase the salary or benefits of used in connection with the Rapak alternative Acquirer acceptable to the Relevant Employees other than as part Business, including but not limited to: United States, in its sole discretion. The of a company-wide increase in salary or All patents; licenses and sublicenses; United States, in its sole discretion, may benefits granted in the ordinary course intellectual property; copyrights; agree to one or more extensions of this of business. Defendants’ obligations trademarks, trade names, service marks, time period not to exceed sixty (60) under this paragraph will expire ninety and service names (including the Rapak calendar days in total and will notify (90) calendar days after the divestiture name and all trademarks, service marks, the Court in such circumstances. of the Divestiture Assets under and service names associated with the Defendants agree to use their best efforts Paragraph IV(A). Rapak brand); technical information; to divest the Divestiture Assets as E. For any Relevant Employees who computer software and related expeditiously as possible. elect employment with Acquirer in the documentation; customer relationships, B. Prior to the divestiture of the period provided for by Paragraph IV(D), agreements, and contracts; know-how; Divestiture Assets pursuant to Defendants must waive all noncompete trade secrets; drawings; blueprints; Paragraph IV(A), Defendants must and nondisclosure agreements, vest all designs; design protocols; specifications relocate any Divested Lines located at unvested pension and other equity for materials; specifications for parts DS Smith’s facility located at 1201 rights, and provide all other benefits and devices; safety procedures for the Windham Parkway, Romeoville, Illinois that the Relevant Employees would handling of materials and substances; 60446 (‘‘Romeoville Plant’’) to one or generally be provided if transferred to a quality assurance and control more of the Divestiture Facilities, as buyer of an ongoing business. For a procedures; design tools and simulation determined by Acquirer, and must period of twelve (12) months from the capability; all manuals and technical ensure that all Divested Lines are fully filing of the Complaint in this matter, information DS Smith provides to its operational at the time of the Defendants may not solicit to hire, or own employees, customers, suppliers, divestiture. hire, any Relevant Employee who was agents, or licensees; and all research C. In the event Defendants are hired by Acquirer, unless: (1) The data concerning historic and current attempting to divest the Divestiture individual is terminated or laid off by research and development efforts, Assets to an Acquirer other than TriMas, Acquirer; or (2) Acquirer agrees in including but not limited to designs of Defendants promptly must make writing that Defendants may solicit or experiments and the results of known, by usual and customary means, hire that individual. Nothing in successful and unsuccessful designs and the availability of the Divestiture Assets. Paragraphs IV(D) and (E) prohibits experiments; and Defendants must inform any person Defendants from maintaining any 6. At the option of Acquirer, making an inquiry regarding a possible reasonable restrictions on the disclosure inventory of BiB Products up to the purchase of the Divestiture Assets that by any Relevant Employee who accepts amount sold by the Rapak Business in they are being divested pursuant to this an offer of employment with Acquirer of any two (2) months in 2019, with the Final Judgment and provide that person the Defendant’s proprietary non-public

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information that is: (1) Not otherwise The United States, in its sole discretion, Products for dairy, post-mix, smoothie, and required to be disclosed by this Final may approve one or more extensions of wine; and Judgment; (2) related solely to this transition services agreement, for a (2) must be accomplished so as to satisfy Defendants’ businesses and clients; and total of up to an additional six (6) the United States, in its sole discretion, that none of the terms of any agreement between (3) unrelated to the Divestiture Assets. months. If Acquirer seeks an extension an Acquirer and Defendants give Defendants F. Defendants must permit of the term of this transition services the ability unreasonably to raise Acquirer’s prospective Acquirers of the Divestiture agreement, Defendants must notify the costs, to lower Acquirer’s efficiency, or Assets to have reasonable access to United States in writing at least one (1) otherwise to interfere in the ability of make inspections of the physical month prior to the date the agreement Acquirer to compete effectively. facilities of the Divestiture Assets, the expires. The terms and conditions of V. Appointment of Divestiture Trustee Divested Lines, and the Divested any contractual arrangement meant to Fitment Equipment, wherever located; satisfy this provision must be A. If Defendants have not divested the access to any and all environmental, reasonably related to market conditions Divestiture Assets within the time zoning, and other permit documents for the services provided. The period specified in Paragraph IV(A), and information; and access to any and employee(s) of Defendants tasked with Defendants must notify the United all financial, operational, or other providing these transition services must States of that fact in writing. Upon documents and information customarily not share any competitively sensitive application of the United States, the provided as part of a due diligence information of Acquirer with any other Court shall appoint a Divestiture process. employee of Defendants. Trustee selected by the United States G. Defendants must warrant to and approved by the Court to effect the Acquirer that each asset will be fully M. Defendants must warrant to divestiture of the Divestiture Assets. operational on the date of sale. Acquirer: (1) That there are no material B. After the appointment of a H. Defendants will not take any action defects in the environmental, zoning, or Divestiture Trustee becomes effective, that will impede in any way the other permits pertaining to the only the Divestiture Trustee will have permitting, operation, or divestiture of operation of the Divestiture Assets; and the right to sell the Divestiture Assets. the Divestiture Assets. (2) that following the sale of the The Divestiture Trustee will have the I. Defendants must make best efforts Divestiture Assets, Defendants will not power and authority to accomplish the to assign, subcontract, or otherwise undertake, directly or indirectly, any divestiture to an Acquirer acceptable to transfer all contracts related to the challenges to the environmental, zoning, the United States, in its sole discretion, Divestiture Assets, including all supply or other permits relating to the at such price and on such terms as are and sales contracts, to Acquirer. operation of the Divestiture Assets. then obtainable upon reasonable effort Defendants must not interfere with any N. Unless the United States otherwise by the Divestiture Trustee, subject to the negotiations between Acquirer and a consents in writing, the divestiture provisions of Sections IV, V, and VI of contracting party. pursuant to Section IV or by a this Final Judgment, and will have such J. Within one-hundred and eighty Divestiture Trustee appointed pursuant other powers as the Court deems (180) calendar days after the Court’s to Section V of this Final Judgment must appropriate. Subject to Paragraph V(D) entry of the Asset Preservation include the entire Divestiture Assets of this Final Judgment, the Divestiture Stipulation and Order in this matter, and must be accomplished in such a Trustee may hire at the cost and Defendants must ensure that the way as to satisfy the United States, in its expense of Defendants any agents or Divested Fitment Equipment is sole discretion, that the Divestiture consultants, including, but not limited relocated to, and fully operational at, Assets can and will be used by Acquirer to, investment bankers, attorneys, and one or more locations as specified by as part of a viable, ongoing business in accountants, who will be solely Acquirer. the development, manufacture, and sale accountable to the Divestiture Trustee, K. At the option of Acquirer, of BiB Products for dairy, post-mix, reasonably necessary in the Divestiture Defendants must enter into a supply smoothie, and wine. It must be Trustee’s judgment to assist in the agreement for the manufacture of demonstrated to the sole satisfaction of divestiture. Any such agents or fitments for the Rapak Business the United States that the Divestiture consultants will serve on such terms sufficient to meet Acquirer’s needs, as Assets will remain viable and that the and conditions as the United States determined by Acquirer, for a period of divestiture of such assets will remedy approves, including confidentiality up to six (6) months. Upon Acquirer’s the competitive harm alleged in the requirements and conflict of interest request, the United States, in its sole Complaint. If any of the terms of an certifications. discretion, may approve one or more agreement between Defendants and C. Defendants will not object to a sale extensions of this supply agreement, for Acquirer to effectuate the divestitures by the Divestiture Trustee on any a total of up to an additional six (6) required by the Final Judgment varies ground other than the Divestiture months. If Acquirer seeks an extension from the terms of this Final Judgment Trustee’s malfeasance. Any such of the term of this supply agreement, then, to the extent that Defendants objections by Defendants must be Defendants must notify the United cannot fully comply with both terms, conveyed in writing to the United States States in writing at least one (1) month this Final Judgment will determine and the Divestiture Trustee within ten prior to the date the supply agreement Defendants’ obligations. The (10) calendar days after the Divestiture expires. The terms and conditions of divestitures, whether pursuant to Trustee has provided the notice any contractual arrangement meant to Section IV or Section V of this Final required under Section VI. satisfy this provision must be Judgment: D. The Divestiture Trustee will serve reasonably related to market conditions at the cost and expense of Defendants (1) Must be made to an Acquirer that, in pursuant to a written agreement, on for the Rapak Business. the United States’ sole judgment, has the L. At the option of Acquirer, intent and capability (including the such terms and conditions as the United Defendants must enter into a transition necessary managerial, operational, technical, States approves, including services agreement for service and and financial capability) of competing confidentiality requirements and support relating to the Rapak Business effectively in the business in the conflict of interest certifications. The for a period of up to twelve (12) months. development, manufacture, and sale of BiB Divestiture Trustee will account for all

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monies derived from the sale of the acquire, or was contacted or made an proposed divestiture, the proposed assets sold by the Divestiture Trustee inquiry about acquiring any interest in Acquirer, and any other potential and all costs and expenses so incurred. the Divestiture Assets and will describe Acquirer. Defendants and the After approval by the Court of the in detail each contact with any such Divestiture Trustee must furnish any Divestiture Trustee’s accounting, person. The Divestiture Trustee will additional information requested within including fees for any of its services yet maintain full records of all efforts made fifteen (15) calendar days of the receipt unpaid and those of agents and to divest the Divestiture Assets. of the request, unless the parties consultants retained by the Divestiture G. If the Divestiture Trustee has not otherwise agree. Trustee, all remaining money will be accomplished the divestiture ordered C. Within thirty (30) calendar days paid to Defendants and the trust will under this Final Judgment within six (6) after receipt of the notice or within then be terminated. The compensation months after its appointment, the twenty (20) calendar days after the of the Divestiture Trustee and agents Divestiture Trustee will promptly file United States has been provided the and consultants retained by the with the Court a report setting forth: (1) additional information requested from Divestiture Trustee must be reasonable The Divestiture Trustee’s efforts to Defendants, the proposed Acquirer, any in light of the value of the Divestiture accomplish the required divestiture; (2) third party, and the Divestiture Trustee, Assets and based on a fee arrangement the reasons, in the Divestiture Trustee’s whichever is later, the United States that provides the Divestiture Trustee judgment, why the required divestiture will provide written notice to with incentives based on the price and has not been accomplished; and (3) the Defendants and the Divestiture Trustee, terms of the divestiture and the speed Divestiture Trustee’s recommendations. if there is one, stating whether or not, with which it is accomplished, but the To the extent such reports contain in its sole discretion, it objects to timeliness of the divestiture is information that the Divestiture Trustee Acquirer or any other aspect of the paramount. If the Divestiture Trustee deems confidential, such reports will proposed divestiture. If the United and Defendants are unable to reach not be filed in the public docket of the States provides written notice that it agreement on the Divestiture Trustee’s Court. The Divestiture Trustee will at does not object, the divestiture may be or any agents’ or consultants’ the same time furnish such report to the consummated, subject only to compensation or other terms and United States, which will have the right Defendants’ limited right to object to the conditions of engagement within to make additional recommendations sale under Paragraph V(C) of this Final fourteen (14) calendar days of the consistent with the purpose of the trust. Judgment. Absent written notice that the appointment of the Divestiture Trustee, The Court thereafter shall enter such United States does not object to the the United States may, in its sole orders as it deems appropriate to carry proposed Acquirer or upon objection by discretion, take appropriate action, out the purpose of the Final Judgment, the United States, a divestiture including making a recommendation to which may, if necessary, include proposed under Section IV or Section V the Court. The Divestiture Trustee will, extending the trust and the term of the must not be consummated. Upon within three (3) business days of hiring Divestiture Trustee’s appointment by a objection by Defendants under any other agents or consultants, provide period requested by the United States. Paragraph V(C), a divestiture proposed written notice of such hiring and the H. If the United States determines that under Section V must not be rate of compensation to Defendants and the Divestiture Trustee has ceased to act consummated unless approved by the the United States. or failed to act diligently or in a Court. E. Defendants must use their best reasonably cost-effective manner, the efforts to assist the Divestiture Trustee United States may recommend the Court VII. Financing in accomplishing the required appoint a substitute Divestiture Trustee. Defendants must not finance all or divestiture. The Divestiture Trustee and VI. Notice of Proposed Divestiture any part of any purchase made pursuant any agents or consultants retained by to Section IV or Section V of this Final the Divestiture Trustee must have full A. Within two (2) business days Judgment. and complete access to the personnel, following execution of a definitive books, records, and facilities of the divestiture agreement, Defendants or the VIII. Asset Preservation business to be divested, and Defendants Divestiture Trustee, whichever is then Until the divestiture required by this must provide or develop financial and responsible for effecting the divestiture Final Judgment has been accomplished, other information relevant to such required herein, must notify the United Defendants must take all steps necessary business as the Divestiture Trustee may States of any proposed divestiture to comply with the Asset Preservation reasonably request, subject to reasonable required by Section IV or Section V of Stipulation and Order entered by the protection for trade secrets; other this Final Judgment. If the Divestiture Court. Defendants will take no action confidential research, development, or Trustee is responsible, it will similarly that would jeopardize the divestiture commercial information; or any notify Defendants. The notice must set ordered by the Court. applicable privileges. Defendants will forth the details of the proposed IX. Affidavits take no action to interfere with or to divestiture and list the name, address, impede the Divestiture Trustee’s and telephone number of each person A. Within twenty (20) calendar days accomplishment of the divestiture. not previously identified who offered or of the filing of the Complaint in this F. After its appointment, the expressed an interest in or desire to matter, and every thirty (30) calendar Divestiture Trustee will file monthly acquire any ownership interest in the days thereafter until the divestiture has reports with the United States setting Divestiture Assets, together with full been completed under Section IV or forth the Divestiture Trustee’s efforts to details of the same. Section V, Defendants must deliver to accomplish the divestiture ordered B. Within fifteen (15) calendar days of the United States an affidavit, signed by under this Final Judgment. Such reports receipt by the United States of such each Defendant’s Chief Financial Officer will include the name, address, and notice, the United States may request and highest-ranking officer or partner, telephone number of each person who, from Defendants, the proposed which must describe the fact and during the preceding month, made an Acquirer, any other third party, or the manner of Defendants’ compliance with offer to acquire, expressed an interest in Divestiture Trustee, if applicable, Section IV or Section V of this Final acquiring, entered into negotiations to additional information concerning the Judgment. Each such affidavit must

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include the name, address, and documents in the possession, custody, or contempt from the Court. Defendants telephone number of each person who, control of Defendants relating to any matters agree that in any civil contempt action, during the preceding thirty (30) contained in this Final Judgment; and any motion to show cause, or any calendar days, made an offer to acquire, (2) to interview, either informally or on the record, Defendants’ officers, employees, or similar action brought by the United expressed an interest in acquiring, agents, who may have their individual States regarding an alleged violation of entered into negotiations to acquire, or counsel present, regarding such matters. The this Final Judgment, the United States was contacted or made an inquiry about interviews must be subject to the reasonable may establish a violation of this Final acquiring, any interest in the Divestiture convenience of the interviewee and without Judgment and the appropriateness of Assets, and must describe in detail each restraint or interference by Defendants. any remedy therefor by a preponderance contact with any such person during B. Upon the written request of an of the evidence, and Defendants waive that period. Each such affidavit must authorized representative of the any argument that a different standard also include a description of the efforts Assistant Attorney General in charge of of proof should apply. Defendants have taken to complete the the Antitrust Division, Defendants must B. This Final Judgment should be sale of or solicit buyers for the submit written reports or response to interpreted to give full effect to the Divestiture Assets, and to provide written interrogatories, under oath if procompetitive purposes of the antitrust required information to prospective requested, relating to any of the matters laws and to restore the competition the Acquirers, including the limitations, if contained in this Final Judgment as may any, on such information. Assuming the be requested. United States alleged was harmed by the information set forth in the affidavit is C. No information or documents challenged conduct. Defendants agree true and complete, any objection by the obtained by the means provided in that they may be held in contempt of, United States to information provided Section X will be divulged by the and that the Court may enforce, any by Defendants, including limitation on United States to any person other than provision of this Final Judgment that, as information, must be made within an authorized representative of the interpreted by the Court in light of these fourteen (14) calendar days of receipt of executive branch of the United States, procompetitive principles and applying such affidavit. except in the course of legal proceedings ordinary tools of interpretation, is stated B. Within twenty (20) calendar days to which the United States is a party specifically and in reasonable detail, of the filing of the Complaint in this (including grand jury proceedings), for whether or not it is clear and matter, Defendants must deliver to the the purpose of securing compliance unambiguous on its face. In any such United States an affidavit that describes with this Final Judgment, or as interpretation, the terms of this Final in reasonable detail all actions otherwise required by law. Judgment should not be construed Defendants have taken and all steps D. If at the time that Defendants against either party as the drafter. Defendants have implemented on an furnish information or documents to the C. In any enforcement proceeding in ongoing basis to comply with Section United States, Defendants represent and which the Court finds that Defendants VIII of this Final Judgment. Defendants identify in writing the material in any have violated this Final Judgment, the must deliver to the United States an such information or documents to United States may apply to the Court for affidavit describing any changes to the which a claim of protection may be a one-time extension of this Final efforts and actions outlined in asserted under Rule 26(c)(1)(G) of the Judgment, together with other relief as Defendants’ earlier affidavits filed Federal Rules of Civil Procedure, and may be appropriate. In connection with pursuant to this Section within fifteen Defendants mark each pertinent page of any successful effort by the United (15) calendar days after the change is such material, ‘‘Subject to claim of States to enforce this Final Judgment implemented. protection under Rule 26(c)(1)(G) of the C. Defendants must keep all records of Federal Rules of Civil Procedure,’’ then against a Defendant, whether litigated or all efforts made to preserve and divest the United States will give Defendants resolved before litigation, that the Divestiture Assets until one (1) year ten (10) calendar days’ notice prior to Defendant agrees to reimburse the after such divestiture has been divulging such material in any legal United States for the fees and expenses completed. proceeding (other than a grand jury of its attorneys, as well as any other proceeding). costs, including experts’ fees, incurred X. Compliance Inspection in connection with that enforcement A. For the purposes of determining or XI. No Reacquisition effort, including in the investigation of securing compliance with this Final Defendants may not reacquire any the potential violation. Judgment, or of any related orders such part of the Divestiture Assets during the D. For a period of four (4) years as any Asset Preservation Stipulation term of this Final Judgment. following the expiration of the Final and Order or of determining whether Judgment, if the United States has the Final Judgment should be modified XII. Retention of Jurisdiction evidence that a Defendant violated this or vacated, and subject to any legally- The Court retains jurisdiction to Final Judgment before it expired, the recognized privilege, from time to time enable any party to this Final Judgment United States may file an action against authorized representatives of the United to apply to the Court at any time for States, including agents retained by the further orders and directions as may be that Defendant in this Court requesting United States, must, upon written necessary or appropriate to carry out or that the Court order: (1) Defendant to request of an authorized representative construe this Final Judgment, to modify comply with the terms of this Final of the Assistant Attorney General in any of its provisions, to enforce Judgment for an additional term of at charge of the Antitrust Division and on compliance, and to punish violations of least four years following the filing of reasonable notice to Defendants, be its provisions. the enforcement action under this permitted: Section; (2) any appropriate contempt XIII. Enforcement of Final Judgment remedies; (3) any additional relief (1) Access during Defendants’ office hours needed to ensure Defendant complies to inspect and copy or, at the option of the A. The United States retains and United States, to require Defendants to reserves all rights to enforce the with the terms of the Final Judgment; provide electronic copies of all books, provisions of this Final Judgment, and (4) fees or expenses as called for in ledgers, accounts, records, data, and including the right to seek an order of Paragraph XIII(C).

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XIV. Expiration of Final Judgment Drive, Bolingbrook, Illinois 60440 divested assets continue to be ongoing, Unless the Court grants an extension, (‘‘Bolingbrook Plant’’); economically viable competitive this Final Judgment will expire ten (10) 8. IM 373 (located at the Bolingbrook product lines. years from the date of its entry, except Plant); The United States and the Defendants that after five (5) years from the date of 9. IM 294 (located at the Bolingbrook have stipulated that the proposed Final its entry, this Final Judgment may be Plant); and Judgment may be entered after terminated upon notice by the United 10. IM 80 (located at the Bolingbrook compliance with the APPA. Entry of the States to the Court and Defendants that Plant). proposed Final Judgment will terminate the divestitures have been completed United States District Court for the this action, except that the Court will and that the continuation of the Final District of Columbia retain jurisdiction to construe, modify, Judgment no longer is necessary or in or enforce the provisions of the the public interest. United States of America, Plaintiff, v. proposed Final Judgment and to punish Liqui-Box, Inc., Olympus Growth Fund VI, violations thereof. XV. Public Interest Determination L.P., and DS Smith Plc, Defendants. II. Description of Events Giving Rise to Entry of this Final Judgment is in the Civil Action No.: 1:20–cv–00464 the Alleged Violation public interest. The parties have Judge: Hon. Christopher Cooper complied with the requirements of the Competitive Impact Statement A. The Defendants and the Proposed Antitrust Procedures and Penalties Act, The United States of America, under Transaction 15 U.S.C. 16, including making copies Section 2(b) of the Antitrust Procedures Olympus, a fund managed by private available to the public of this Final and Penalties Act, 15 U.S.C. 16(b)–(h) equity firm Olympus Partners, is a Judgment, the Competitive Impact (the ‘‘APPA’’ or ‘‘Tunney Act’’), files Delaware limited partnership with Statement, any comments thereon, and this Competitive Impact Statement headquarters in Stamford, Connecticut. the United States’ responses to relating to the proposed Final Judgment In 2018, Olympus Partners had comments. Based upon the record submitted for entry in this civil antitrust approximately $8.5 billion total capital before the Court, which includes the proceeding. under management between its different Competitive Impact Statement and any funds, with Olympus comprising comments and responses to comments I. Nature and Purpose of the Proceeding approximately $2.3 billion of that total. filed with the Court, entry of this Final On March 5, 2019, Defendant Liqui-Box, a company owned by Judgment is in the public interest. Olympus Growth Fund VI, L.P. Olympus, is a Delaware corporation Date: llllllll (‘‘Olympus’’), through its portfolio with headquarters in Richmond, [Court approval subject to procedures of company Defendant Liqui-Box, Inc. Virginia. Liqui-Box is a global Antitrust Procedures and Penalties Act, 15 (‘‘Liqui-Box’’), agreed to acquire manufacturer of packaging and U.S.C. 16] llllllllllllllllllll Defendant DS Smith plc’s (‘‘DS Smith’’) packaging equipment, including BiBs, United States District Judge Plastics Division (‘‘DS Smith Plastics’’) with four U.S. manufacturing facilities, for approximately $500 million, making as well as additional facilities across the Appendix A the combined company one of the world. In 2018, Liqui-Box had total sales 1. Production Line R01 (located at the largest bag-in-box (‘‘BiB’’) suppliers in of $177 million, including Romeoville Plant); the United States. The United States approximately $123 million in the 2. Production Line R02 (located at the filed a civil antitrust Complaint on United States. Romeoville Plant); February 19, 2020, seeking to enjoin the DS Smith is a United Kingdom public 3. Production Line R12 (located at the proposed acquisition. The Complaint limited company with headquarters in Romeoville Plant); alleges that the likely effect of this London, England. DS Smith is a global 4. Production Line UC01 (located at acquisition would be to substantially manufacturer of packaging, packaging the Union City Plant); lessen competition for the development, equipment, and recycled paper. DS 5. Production Line UC03 (located at manufacture, and sale of dairy, post- Smith Plastics manufactures flexible the Union City Plant); mix, smoothie, and wine BiBs in the packaging and dispensing solutions, 6. Production Line N03 (located at the United States, in violation of Section 7 rigid packaging, injection-molded Indianapolis Plant); and of the Clayton Act, 15 U.S.C. 18. products, and foam products. Among 7. Production Line N04 (located at the At the same time the Complaint was DS Smith Plastics’ flexible packaging Indianapolis Plant). filed, the United States filed an Asset products are BiBs, which are primarily Appendix B Preservation Stipulation and Order sold under the Rapak brand name in the (‘‘APSO’’) and proposed Final 1. Injection Molding Machine (‘‘IM’’) United States. DS Smith Plastics has its Judgment, which are designed to 96 (located at the Worldwide Dispensers U.S. headquarters in Romeoville, address the anticompetitive effects of location at 78 2nd Avenue S, Lester Illinois, and operates five plants in the the acquisition. Under the proposed Prairie, Minnesota 55354 (‘‘Lester United States, as well as additional Final Judgment, which is explained Prairie Plant’’)); plants across the world. In 2018, DS 2. IM 542 (located at the Lester Prairie more fully below, the Defendants are Smith Plastics had total sales of $479 Plant); required to divest all of DS Smith’s million, including approximately $137 3. IM 747 (located at the Lester Prairie product lines that overlap with product million in sales of BiBs and other goods Plant); lines offered by Liqui-Box in the United in the United States. 4. IM 599 (located at the Lester Prairie States, including its dairy, post-mix, Pursuant to a Stock Purchase Plant); smoothie, and wine BiB product lines. Agreement dated March 5, 2019, Liqui- 5. IM 345 (located at the Lester Prairie Under the terms of the APSO, the Box agreed to acquire DS Smith Plastics Plant); Defendants must take certain steps to for approximately $500 million. 6. IM 515 (located at the Lester Prairie ensure that the divested assets are B. Industry Background Plant); preserved and operated in such a way 7. IM 583 (located at the Worldwide as to ensure that the products and BiBs are used to store and dispense Dispensers location at 595 Territorial services produced by or sold under the liquids such as milk, post-mix,

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smoothies, and wine. The components storing and transporting liquids, BiBs bag while minimizing leaks and spills of a BiB include a flexible plastic bag are smaller and thus reduce storage and accurately dispensing the product. and an attached fitment. BiBs typically space and shelf space, both when empty The Complaint alleges that there are hold between one and six gallons of and filled. In addition, BiBs can be a no substitutes for post-mix BiBs. Post- liquid, but they also come in smaller more hygienic form of dispensing mix BiBs must attach to a dispensing and larger sizes. The attached fitment liquids because they can reduce user machine, which a rigid container cannot facilitates the transfer of liquids into contact and thus contamination. do. Moreover, BiBs for other end uses and out of the bag. Further, BiBs can keep their contents cannot be substituted for post-mix BiBs The flexible plastic bag component of fresher for longer than other types of due to the unique fitments and bag a BiB is typically made up of one to five packaging by allowing for minimal design required for post-mix BiBs. layers of film. The films are most often contact with air. Finally, BiBs can be As further alleged in the Complaint, made of polyethylene (‘‘PE’’), but also more economical because they have in the event of a small but significant can be made with ethylene vinyl alcohol features that allow the user to get all the non-transitory price increase for post- (‘‘EVOH’’) or other materials, and are liquid out of bag and result in less mix BiBs, customers would not bound together using heat sealing. packaging waste when they are empty substitute away from post-mix BiBs in a Customers require different numbers and disposed of. sufficient volume to make the price and types of layers to meet individual increase unprofitable. Therefore, the product demands. For example, the C. Relevant Markets Complaint alleges that the development, most basic bags consist of a single layer 1. Product Markets manufacture, and sale of post-mix BiBs of PE that secures the liquid during is a relevant product market and line of transport. More sophisticated bags have a. Dairy BiBs commerce within the meaning of additional layers of engineered film that BiBs for dairy products hold liquids Section 7 of the Clayton Act, 15 U.S.C. add durability, metallization, and such as ice cream mix, yogurt, milk, and 18. oxygen, moisture, or temperature cream. Dairy BiBs are typically durable c. Smoothie BiBs resistance. bags made from PE and often have a Smoothie BiBs hold mixes and other The fitment component of a BiB flip-cap or screw-off cap fitment. Dairy ingredients for smoothies and other typically is made from resin using BiBs are designed to reduce the risk of drinks. Smoothie BiBs are typically injection molding and attached to the contamination and extend shelf life. flexible plastic bag component via heat made with layers of PE that offer low As alleged in the Complaint, there are sealing. The design of the fitment is oxygen permeability. Like post-mix no substitutes for dairy BiBs. Dairy BiBs determined by the liquid that will go BiBs, most fitments on smoothie BiBs provide dairy liquids to customers in an into the bag and the method that will be are designed to be attached to easy to use, inexpensive format that used to dispense the liquid out of the dispensing machines and are highly other packaging does not offer. For bag. For example, if the BiB is used to specialized for the particular types of example, rigid containers require more dispense post-mix into a soda dispenser, machines they attach to. A smoothie BiB storage space, may not keep the dairy the fitment will be designed to attach to typically has a special cap into which a a soda dispenser. The simplest fitment liquid as fresh, and may have a higher probe is inserted in order to dispense is a basic cap, which can be flipped off risk of contamination. BiBs for other the liquid. Smoothie BiBs are designed or unscrewed to pour out the liquid. end uses cannot be substituted for dairy to maintain the safety and freshness of Highly engineered fitments can have BiBs due to the unique specifications for the liquid, protect the taste and quality specialized elements such as a built-in dairy BiBs. of these flavor-sensitive liquids, and push-tap feature or an oxygen barrier to The Complaint alleges that in the reduce the risk of contamination. provide resistance to the elements. event of a small but significant non- According to the Complaint, there are Fitments are often protected by patents transitory price increase for dairy BiBs, no substitutes for smoothie BiBs. Rigid due to the specialized nature and high customers would not substitute away containers cannot be attached to the degree of engineering that can be from dairy BiBs in a sufficient volume dispensing machines smoothie BiBs are required in fitment manufacturing. to make the price increase unprofitable. used in. Further, rigid containers are BiBs are shipped to the customer, Therefore, the Complaint alleges that more expensive and bulkier to transport, who fills the BiB with liquid using a the development, manufacture, and sale may not keep the liquid as fresh, and filler machine that the customer of dairy BiBs is a relevant product may have a higher risk of typically purchases or leases from the market and line of commerce within the contamination. Moreover, BiBs for other BiB supplier. The customer then ships meaning of Section 7 of the Clayton Act, end uses cannot be substituted for the filled BiB to a store, restaurant, or 15 U.S.C. 18. smoothie BiBs due to the unique other food processor. For example, a b. Post-Mix BiBs specifications required for smoothie post-mix manufacturer seeking to BiBs. Fitments for smoothie BiBs, for distribute its post-mix to a convenience Post-mix BiBs hold concentrated example, often are designed to store would purchase BiBs and a filler drink mixes such as soda syrup and specifically interact with the dispensing machine from a BiB supplier, fill the juice concentrates. These concentrates machines. BiBs with the post-mix at its own are often mixed with carbonated or non- The Complaint alleges that in the facility, and then ship the filled BiBs to carbonated water before being served. event of a small but significant non- the convenience store for use in the Post-mix BiBs are typically made with transitory price increase for smoothie convenience store’s dispensing layers of PE or EVOH and a fitment that BiBs, customers would not substitute machine. attaches to a drink dispensing machine. away from smoothie BiBs in a sufficient BiBs are distinct from and have Bags used for post-mix must be very volume to make the price increase numerous advantages over other forms strong to accommodate high filling flow unprofitable. Therefore, the Complaint of packaging. For example, compared to rates required by post-mix alleges that the development, rigid containers (e.g., jugs and bottles) manufacturers. Post-mix BiBs are manufacture, and sale of smoothie BiBs and cartons, which are the other designed to maintain freshness and is a relevant product market and line of primary forms of packaging used for ensure all liquid is dispensed from the commerce within the meaning of

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Section 7 of the Clayton Act, 15 U.S.C. and sold in the United States due to, for likely substantially lessen competition 18. example, differences in the liquids in the development, manufacture, and stored in the BiBs or differences in sale of the Relevant BiB Products in the d. Wine BiBs dispensing machines. Further, United States in violation of Section 7 Wine BiBs hold the wine inside of according to the Complaint, it is of the Clayton Act, 15 U.S.C. 18. boxed wines, which are often sold in important for a supplier of BiBs in the E. Entry retail outlets. The bag component of United States to be able to timely wine BiBs is typically made from PE provide service to its customers who The Complaint alleges that entry into and EVOH and is designed to protect have issues with the BiBs, such as the development, manufacture, and sale against oxidation and UV light. The leakage or breakage of the bags or of the Relevant BiB Products would not fitment for wine BiBs is typically a problems with the attachment of the be timely, likely, or sufficient to prevent push, pull, or twist tap that is BiBs to the filler machines. Suppliers the harm to competition caused by specifically designed to avoid allowing located outside the United States do not Liqui-Box’s proposed acquisition of DS oxygen into the bag when the wine is have employees located in the United Smith Plastics. dispensed. This provides a longer shelf States to timely service BiB customers According to the Complaint, entry life for wine once opened as compared in the United States. into the markets for the Relevant BiB to traditional bottles. Because the The Complaint alleges that, in the Products is costly and time consuming. fitments for wine BiBs are operated event of a small but significant non- Significant upfront capital expenditures directly by individuals, they must be transitory increase in the price of the are required to enter. The machinery to simple to operate and user friendly. Relevant BiB Products, customers in the manufacture BiBs, including injection As alleged in the Complaint, there are United States would not procure these molding machines for the fitments and no substitutes for wine BiBs. BiBs for products from suppliers located outside production lines that seal the bags and other end uses cannot be substituted for the United States in a sufficient volume attach the fitments, is expensive and wine BiBs due to the unique to make such a price increase highly engineered. Manufacturing BiBs specifications for wine BiBs. Both the unprofitable. Accordingly, the in accordance with customer bag and fitment are specially engineered Complaint alleges that the United States requirements requires skilled employees to provide an oxygen barrier for the is a relevant geographic market within and industry know-how that can take product that other BiBs typically do not the meaning of Section 7 of the Clayton years to establish. Further, customers provide. Bags and fitments that lack this Act, 15 U.S.C. 18. demand that suppliers have a proven specialized oxygen barrier would allow ability to supply BiBs with the required oxygen to seep in and degrade the wine, D. Anticompetitive Effects specifications so that their BiBs do not making it unsuitable for consumption The Complaint alleges that Liqui-Box, leak or break and are able to store the after only a short time. Wine bottles are DS Smith, and one other company are liquids for the required amount of time not adequate substitutes for wine BiBs. the only significant suppliers of dairy, without spoiling. This reputation for A wine BiB can keep wine fresh for up post-mix, and smoothie BiBs to having a quality product takes to four weeks after it is opened, customers located in the United States. significant time to build. Finally, a new significantly longer than a wine bottle It also alleges that Liqui-Box and DS entrant would need to hire trained can. Also, wine BiBs provide faster and Smith are two of only four suppliers of technicians capable of providing timely more sanitary pouring for food service wine BiBs to customers located in the service to customers when BiBs leak, operators than bottles do, with no risk United States. break, or encounter other product of broken glass. According to the Complaint, Liqui- quality issues. According to the Complaint, in the Box and DS Smith compete vigorously with one another on the basis of price, III. Explanation of the Proposed Final event of a small but significant non- Judgment transitory price increase for wine BiBs, quality, and service in the markets for customers would not substitute away the Relevant BiB Products in the United The divestiture required by the from wine BiBs in a sufficient volume States. Competition between Liqui-Box proposed Final Judgment will remedy to make the price increase unprofitable. and DS Smith has fostered innovation the loss of competition alleged in the Therefore, the Complaint alleges that and led to the development of new Complaint by establishing an the development manufacture, and sale types of BiBs and product features. The independent and economically viable of wine BiBs is a relevant product proposed acquisition would eliminate competitor with the scale and scope to market and line of commerce within the the substantial head-to-head compete effectively in the markets for meaning of Section 7 of the Clayton Act, competition between Liqui-Box and DS the Relevant BiB Products in the United 15 U.S.C. 18. Smith and the benefits that customers States. Paragraph IV(A) of the proposed have realized from that competition in Final Judgment requires the Defendants 2. Geographic Market the form of lower prices, better quality to divest DS Smith Plastics’ Rapak The Complaint alleges that customers and service, and innovation. By Business within 45 calendar days of the in the United States do not purchase eliminating DS Smith as a competitor in Court’s entry of the APSO to TriMas dairy, post-mix, smoothie, and wine the development, manufacture, and sale Corporation or another acquirer BiBs (collectively, the ‘‘Relevant BiB of the Relevant BiB Products in the acceptable to the United States in its Products’’) from suppliers located United States, the proposed acquisition sole discretion.1 The divestiture outside the United States. Shipping of DS Smith Plastics would these products from outside the United substantially increase the likelihood 1 Paragraph II(G) of the proposed Final Judgment defines the ‘‘Rapak Business’’ as ‘‘the development, States generally would not be that Liqui-Box would increase prices, manufacture, and sale of BiB Products and filler economical because the shipping costs reduce quality and service, and machines for BiB Products by the Plastics Division are too large relative to the cost of the diminish investment in research and of DS Smith in the United States.’’ Paragraph II(F) BiB itself. In addition, BiBs development below what it would have defines ‘‘BiB Products’’ as ‘‘all components of Bag- in-Box (‘‘BiB’’) packaging and solutions, including, manufactured and sold outside the been absent the acquisition. but not limited to, bags and fitments, whether the United States often have different According to the Complaint, the bags or fitments are sold as part of a complete BiB specifications than those manufactured proposed acquisition, therefore, would Continued

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includes four facilities (production the Defendants must ensure that the writing that the Defendants may solicit facilities in Indianapolis, Indiana and fitment equipment to be divested is or hire that individual. Union City, California; an office and relocated to, and fully operational at, a If the Defendants do not accomplish production facility in Woodbridge, facility or facilities specified by the the divestiture within the period Illinois; and a warehouse in acquirer. prescribed in the proposed Final Indianapolis, Indiana); seven The proposed Final Judgment Judgment, Section V of the proposed production lines that are used to contains several provisions to facilitate Final Judgment provides that the Court manufacture dairy, post-mix, smoothie, the immediate use of the divestiture will appoint a divestiture trustee and wine BiBs as well as BiBs for other assets by the acquirer. Paragraph IV(K) selected by the United States to effect products; injection-molding and other of the proposed Final Judgment requires the divestiture. If a divestiture trustee is equipment used to manufacture the Defendants, at the acquirer’s option, appointed, the proposed Final Judgment fitments; at the acquirer’s option, all to enter into a supply contract for provides that the Defendants will pay other tangible assets related to or used fitments sufficient to meet all or part of all costs and expenses of the trustee. in connection with the Rapak Business; the acquirer’s needs for a period of up The divestiture trustee’s commission all intangible assets related to or used in to six months. Upon the acquirer’s will be structured so as to provide an connection with the Rapak Business request, the United States, in its sole incentive for the trustee based on the (including the Rapak brand); and, at the discretion, may approve one or more price obtained and the speed with acquirer’s option, certain inventory. In extensions of any such agreement for a which the divestiture is accomplished. order to enhance its viability, the total of up to an additional six (6) After the divestiture trustee’s divestiture includes not only DS Smith’s months. In addition, Paragraph IV(L) of appointment becomes effective, the dairy, post-mix, smoothie, and wine BiB the proposed Final Judgment requires trustee will provide periodic reports to product lines, but also all other DS the Defendants, at the acquirer’s option, the United States setting forth his or her Smith BiB product lines that overlap to enter into a transition services efforts to accomplish the divestiture. At with product lines offered by Liqui-Box agreement for service and support the end of six months, if the divestiture in the United States. This includes, for relating to the Rapak Business for a has not been accomplished, the example, BiBs for edible oil, liquid egg, period of up to twelve months. The divestiture trustee and the United States and tomato products. Paragraph IV(N) of paragraph further provides that the will make recommendations to the the proposed Final Judgment requires United States, in its sole discretion, may Court, which will enter such orders as appropriate, in order to carry out the that the divestiture assets must be approve one or more extensions of this purpose of the trust, including by divested in such a way as to satisfy the transition services agreement for a total extending the trust or the term of the United States in its sole discretion that of up to an additional six (6) months. divestiture trustee’s appointment. they can and will be operated by the Paragraph IV(L) also provides that purchaser as part of a viable, ongoing The proposed Final Judgment also employees of the Defendants tasked contains provisions designed to promote business that can compete effectively in with providing any transition services the development, manufacture, and sale compliance and make the enforcement must not share any competitively of the Final Judgment as effective as of dairy, post-mix, smoothie, and wine sensitive information of the acquirer BiBs. possible. Paragraph XIII(A) provides with any other employee of the Paragraph IV(B) of the proposed Final that the United States retains and Defendants. Judgment requires that, prior to the reserves all rights to enforce the divestiture, the Defendants must The proposed Final Judgment also provisions of the Final Judgment, relocate any divested production lines contains provisions intended to including its rights to seek an order of that are currently located at DS Smith facilitate the acquirer’s efforts to hire contempt from the Court. Under the Plastics’ Romeoville, Illinois production employees engaged in the Rapak terms of this paragraph, the Defendants facility—a facility that is not being Business. Paragraph IV(D) of the have agreed that in any civil contempt divested—to one or more of the proposed Final Judgment requires the action, any motion to show cause, or production facilities included in the Defendants to provide the acquirer with any similar action brought by the United divestiture, with the specific facility to organization charts and information States regarding an alleged violation of be determined by the acquirer. relating to these employees and to make the Final Judgment, the United States Defendants have both previously moved them available for interviews, and it may establish the violation and the production lines for independent provides that the Defendants must not appropriateness of any remedy by a business reasons with little to no interfere with any negotiations by the preponderance of the evidence and that disruption in production or supply. The acquirer to hire them. In addition, the Defendants have waived any Defendants must also ensure that the Paragraph IV(E) provides that, for argument that a different standard of divested production lines are fully employees who elect employment with proof should apply. This provision operational in their new locations at the the acquirer, the Defendants must waive aligns the standard for compliance time of the closing of the divestiture. all noncompete and nondisclosure obligations with the standard of proof Three of the divested production lines agreements, vest all unvested pension that applies to the underlying offense are currently located at DS Smith and other equity rights, and provide all that the compliance commitments Plastics’ Romeoville facility. These benefits that the employees would address. production lines are to be moved to the generally be provided if transferred to a Paragraph XIII(B) provides additional divested production facilities and buyer of an ongoing business. This clarification regarding the interpretation divested because they are used paragraph further provides that, for a of the provisions of the proposed Final primarily for the manufacture of the period of 12 months from the filing of Judgment. The proposed Final Judgment Relevant BiB Products. In addition, the Complaint, the Defendants may not was drafted to restore competition the Paragraph IV(J) requires that within 180 solicit to hire or hire any employee United States alleged would otherwise days after the Court’s entry of the APSO, engaged in the Rapak Business who was be harmed by the transaction. The hired by the acquirer, unless that Defendants agree that they will abide by solution or individually’’ but ‘‘does not include individual is terminated or laid off by the proposed Final Judgment, and that components used solely for tea or coffee.’’ the acquirer or the acquirer agrees in they may be held in contempt of this

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Court for failing to comply with any prohibited by the antitrust laws may VI. Alternatives to the Proposed Final provision of the proposed Final bring suit in federal court to recover Judgment Judgment that is stated specifically and three times the damages the person has As an alternative to the proposed in reasonable detail, as interpreted in suffered, as well as costs and reasonable Final Judgment, the United States light of this procompetitive purpose. attorneys’ fees. Entry of the proposed considered a full trial on the merits Paragraph XIII(C) of the proposed Final Judgment neither impairs nor against the Defendants. The United Final Judgment provides that if the assists the bringing of any private States could have continued the Court finds in an enforcement antitrust damage action. Under the litigation and sought preliminary and proceeding that the Defendants have provisions of Section 5(a) of the Clayton permanent injunctions against Liqui- violated the Final Judgment, the United Act, 15 U.S.C. 16(a), the proposed Final Box’s acquisition of DS Smith Plastics. States may apply to the Court for a one- Judgment has no prima facie effect in The United States is satisfied, however, time extension of the Final Judgment, any subsequent private lawsuit that may that the divestiture of assets described together with such other relief as may be be brought against the Defendants. in the proposed Final Judgment will appropriate. In addition, to compensate V. Procedures Available for remedy the anticompetitive effects American taxpayers for any costs alleged in the Complaint, preserving associated with investigating and Modification of the Proposed Final Judgment competition for the development, enforcing violations of the Final manufacture, and sale of dairy, post- Judgment, Paragraph XIII(C) provides The United States and the Defendants mix, smoothie, and wine BiBs in the that in any successful effort by the have stipulated that the proposed Final United States. Thus, the proposed Final United States to enforce the Final Judgment may be entered by the Court Judgment achieves all or substantially Judgment against a Defendant, whether after compliance with the provisions of all of the relief the United States would litigated or resolved before litigation, the APPA, provided that the United have obtained through litigation, but that the Defendants will reimburse the States has not withdrawn its consent. avoids the time, expense, and United States for attorneys’ fees, The APPA conditions entry upon the uncertainty of a full trial on the merits experts’ fees, and other costs incurred in of the Complaint. connection with any enforcement effort, Court’s determination that the proposed including the investigation of the Final Judgment is in the public interest. VII. Standard of Review Under the potential violation. The APPA provides a period of at APPA for the Proposed Final Judgment Paragraph XIII(D) states that the least 60 days preceding the effective The Clayton Act, as amended by the United States may file an action against date of the proposed Final Judgment APPA, requires that proposed consent a Defendant for violating the Final within which any person may submit to judgments in antitrust cases brought by Judgment for up to four years after the the United States written comments the United States be subject to a 60-day Final Judgment has expired or been regarding the proposed Final Judgment. comment period, after which the Court terminated. This provision is meant to Any person who wishes to comment shall determine whether entry of the address circumstances such as when should do so within 60 days of the date proposed Final Judgment ‘‘is in the evidence that a violation of the Final of publication of this Competitive public interest.’’ 15 U.S.C. 16(e)(1). In Judgment occurred during the term of Impact Statement in the Federal making that determination, the Court, in the Final Judgment is not discovered Register, or the last date of publication accordance with the statute as amended until after the Final Judgment has in a newspaper of the summary of this in 2004, is required to consider: expired or been terminated or when Competitive Impact Statement, there is not sufficient time for the whichever is later. All comments (A) The competitive impact of such United States to complete an judgment, including termination of alleged received during this period will be violations, provisions for enforcement and investigation of an alleged violation considered by the U.S. Department of modification, duration of relief sought, until after the Final Judgment has Justice, which remains free to withdraw anticipated effects of alternative remedies expired or been terminated. This its consent to the proposed Final actually considered, whether its terms are provision, therefore, makes clear that, Judgment at any time before the Court’s ambiguous, and any other competitive for four years after the Final Judgment entry of the Final Judgment. The considerations bearing upon the adequacy of has expired or been terminated, the comments and the response of the such judgment that the court deems United States may still challenge a necessary to a determination of whether the United States will be filed with the consent judgment is in the public interest; violation that occurred during the term Court. In addition, comments will be and of the Final Judgment. posted on the U.S. Department of (B) the impact of entry of such judgment Finally, Section XIV of the proposed Justice, Antitrust Division’s internet upon competition in the relevant market or Final Judgment provides that the Final website and, under certain markets, upon the public generally and Judgment will expire ten years from the circumstances, published in the Federal individuals alleging specific injury from the date of its entry, except that after five Register. violations set forth in the complaint years from the date of its entry, the Final including consideration of the public benefit, Written comments should be Judgment may be terminated upon if any, to be derived from a determination of submitted to: Katrina Rouse, Chief, the issues at trial. notice by the United States to the Court Defense, Industrials, and Aerospace and the Defendants that the divestiture 15 U.S.C. 16(e)(1)(A) & (B). In Section, Antitrust Division, U.S. has been completed and that the considering these statutory factors, the Department of Justice, 450 Fifth Street continuation of the Final Judgment is no Court’s inquiry is necessarily a limited NW, Suite 8700, Washington, DC 20530. longer necessary or in the public one as the government is entitled to interest. The proposed Final Judgment ‘‘broad discretion to settle with the provides that the Court retains defendant within the reaches of the IV. Remedies Available to Potential jurisdiction over this action, and the public interest.’’ United States v. Private Litigants parties may apply to the Court for any Microsoft Corp., 56 F.3d 1448, 1461 Section 4 of the Clayton Act, 15 order necessary or appropriate for the (D.C. Cir. 1995); United States v. U.S. U.S.C. 15, provides that any person who modification, interpretation, or Airways Grp., Inc., 38 F. Supp. 3d 69, has been injured as a result of conduct enforcement of the Final Judgment. 75 (D.D.C. 2014) (explaining that the

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‘‘court’s inquiry is limited’’ in Tunney Supp. 3d 146, 152–53 (D.D.C. 2016) (‘‘In conduct an evidentiary hearing or to Act settlements); United States v. InBev evaluating objections to settlement require the court to permit anyone to N.V./S.A., No. 08–1965 (JR), 2009 U.S. agreements under the Tunney Act, a intervene.’’ 15 U.S.C. 16(e)(2); see also Dist. LEXIS 84787, at *3 (D.D.C. Aug. court must be mindful that [t]he U.S. Airways, 38 F. Supp. 3d at 76 11, 2009) (noting that a court’s review government need not prove that the (indicating that a court is not required of a consent judgment is limited and settlements will perfectly remedy the to hold an evidentiary hearing or to only inquires ‘‘into whether the alleged antitrust harms[;] it need only permit intervenors as part of its review government’s determination that the provide a factual basis for concluding under the Tunney Act). This language proposed remedies will cure the that the settlements are reasonably explicitly wrote into the statute what antitrust violations alleged in the adequate remedies for the alleged Congress intended when it first enacted complaint was reasonable, and whether harms.’’) (internal citations omitted); the Tunney Act in 1974. As Senator the mechanism to enforce the final United States v. Republic Servs., Inc., Tunney explained: ‘‘[t]he court is judgment are clear and manageable’’). 723 F. Supp. 2d 157, 160 (D.D.C. 2010) nowhere compelled to go to trial or to As the U.S. Court of Appeals for the (noting ‘‘the deferential review to which engage in extended proceedings which District of Columbia Circuit has held, the government’s proposed remedy is might have the effect of vitiating the under the APPA a court considers, accorded’’); United States v. Archer- benefits of prompt and less costly among other things, the relationship Daniels-Midland Co., 272 F. Supp. 2d 1, settlement through the consent decree between the remedy secured and the 6 (D.D.C. 2003) (‘‘A district court must process.’’ 119 Cong. Rec. 24,598 (1973) specific allegations in the government’s accord due respect to the government’s (statement of Sen. Tunney). ‘‘A court complaint, whether the proposed Final prediction as to the effect of proposed can make its public interest Judgment is sufficiently clear, whether remedies, its perception of the market determination based on the competitive its enforcement mechanisms are structure, and its view of the nature of impact statement and response to public sufficient, and whether it may positively the case.’’). The ultimate question is comments alone.’’ U.S. Airways, 38 F. harm third parties. See Microsoft, 56 whether ‘‘the remedies [obtained by the Supp. 3d at 76 (citing Enova Corp., 107 F.3d at 1458–62. With respect to the Final Judgment are] so inconsonant with F. Supp. 2d at 17). adequacy of the relief secured by the the allegations charged as to fall outside proposed Final Judgment, a court may of the ‘reaches of the public interest.’ ’’ VIII. Determinative Documents not ‘‘make de novo determination of Microsoft, 56 F.3d at 1461 (quoting W. There are no determinative materials facts and issues.’’ United States v. W. Elec. Co., 900 F.2d at 309). or documents within the meaning of the Elec. Co., 993 F.2d 1572, 1577 (D.C. Cir. Moreover, the Court’s role under the APPA that were considered by the 1993) (quotation marks omitted); see APPA is limited to reviewing the United States in formulating the also Microsoft, 56 F.3d at 1460–62; remedy in relationship to the violations proposed Final Judgment. United States v. Alcoa, Inc., 152 F. that the United States has alleged in its Dated: February 19, 2020. Supp. 2d 37, 40 (D.D.C. 2001); United complaint, and does not authorize the States v. Enova Corp., 107 F. Supp. 2d Court to ‘‘construct [its] own Respectfully submitted, 10, 16 (D.D.C. 2000); InBev, 2009 U.S. hypothetical case and then evaluate the For Plaintiff, United States of America Dist. LEXIS 84787, at *3. Instead, ‘‘[t]he decree against that case.’’ Microsoft, 56 lllllllllllllllllllll balancing of competing social and F.3d at 1459; see also U.S. Airways, 38 Christine A. Hill political interests affected by a proposed F. Supp. 3d at 75 (noting that the court (D.C. Bar #461048) * antitrust consent decree must be left, in must simply determine whether there is Attorney, United States Department of the first instance, to the discretion of the a factual foundation for the Justice, Antitrust Division, Defense, Attorney General.’’ W. Elec. Co., 993 government’s decisions such that its Industrials, and Aerospace Section, 450 Fifth Street NW, Suite 8700, Washington, DC F.2d at 1577 (quotation marks omitted). conclusions regarding the proposed 20530, (202) 305–2738, christine.hill@ ‘‘The court should bear in mind the settlements are reasonable); InBev, 2009 usdoj.gov. flexibility of the public interest inquiry: U.S. Dist. LEXIS 84787, at *20 (‘‘[T]he * Attorney of Record. the court’s function is not to determine ‘public interest’ is not to be measured by whether the resulting array of rights and comparing the violations alleged in the [FR Doc. 2020–04119 Filed 2–27–20; 8:45 am] liabilities is one that will best serve complaint against those the court BILLING CODE 4410–11–P society, but only to confirm that the believes could have, or even should resulting settlement is within the have, been alleged.’’). Because the DEPARTMENT OF JUSTICE reaches of the public interest.’’ ‘‘court’s authority to review the decree Microsoft, 56 F.3d at 1460 (quotation depends entirely on the government’s Notice of Lodging Proposed Consent marks omitted). More demanding exercising its prosecutorial discretion by Decree requirements would ‘‘have enormous bringing a case in the first place,’’ it practical consequences for the follows that ‘‘the court is only In accordance with Departmental government’s ability to negotiate future authorized to review the decree itself,’’ Policy, 28 CFR 50.7, notice is hereby settlements,’’ contrary to congressional and not to ‘‘effectively redraft the given that a proposed Consent Decree in intent. Id. at 1456. ‘‘The Tunney Act complaint’’ to inquire into other matters United States v. George Gradel Co., Inc., was not intended to create a that the United States did not pursue. et al., Civil Action No. 3:20–cv–00373, disincentive to the use of the consent Microsoft, 56 F.3d at 1459–60. was lodged with the United States decree.’’ Id. In its 2004 amendments to the APPA, District Court for the Northern District The United States’ predictions about Congress made clear its intent to of Ohio, Western Division, on February the efficacy of the remedy are to be preserve the practical benefits of using 19, 2020. afforded deference by the Court. See, consent judgments proposed by the This proposed Consent Decree e.g., Microsoft, 56 F.3d at 1461 United States in antitrust enforcement, concerns a complaint filed by the (recognizing courts should give ‘‘due Public Law 108–237 § 221, and added United States against George Gradel Co., respect to the Justice Department’s . . . the unambiguous instruction that Inc., and First Energy Nuclear Operating view of the nature of its case’’); United ‘‘[n]othing in this section shall be Co., pursuant to Sections 301(a), 309(b), States v. Iron Mountain, Inc., 217 F. construed to require the court to and 309(d) of the Clean Water Act, 33

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U.S.C. 1311(a), 1319(b), and 1319(d), to FOR FURTHER INFORMATION CONTACT: audit. Id. Today’s notice fulfills this obtain injunctive relief from and impose Anita Blaine, Program Specialist, by requirement with respect to civil penalties against the Defendants telephone at (202) 707–7658 or by email SoundExchange’s January 29, 2020 for violating the Clean Water Act by at [email protected]. notice of intent to audit. discharging pollutants without a permit SUMMARY INFORMATION: The Copyright Dated: February 24, 2020. into waters of the United States. The Act, title 17 of the United States Code, Jesse M. Feder, proposed Consent Decree resolves these grants to sound recordings copyright Chief Copyright Royalty Judge. allegations by requiring the Defendants owners the exclusive right to publicly [FR Doc. 2020–04102 Filed 2–27–20; 8:45 am] to perform mitigation and to pay a civil perform sound recordings by means of BILLING CODE 1410–72–P penalty. certain digital audio transmissions, The Department of Justice will accept subject to limitations. Specifically, the written comments relating to this right is limited by the statutory license proposed Consent Decree for thirty (30) in section 114 which allows nonexempt NATIONAL ARCHIVES AND RECORDS days from the date of publication of this noninteractive digital subscription ADMINISTRATION Notice. Please address comments to services, eligible nonsubscription [NARA–2020–022] Phillip R. Dupre´, United States services, pre-existing subscription Department of Justice, Environment and services, new subscription services, and Agency Guidance; Portal Natural Resources Division, preexisting satellite digital audio radio Environmental Defense Section, Post AGENCY: National Archives and Records services to perform publicly sound Administration (NARA). Office Box 7611, Washington, DC 20044, recordings by means of digital audio and refer to United States v. George transmissions. 17 U.S.C. 114(f). In ACTION: Notice of centralized agency Gradel Co., Inc., et al., DJ No. 90–5–1– addition, a statutory license in section guidance portal. 1–20652. 112 allows a service to make necessary SUMMARY: We are announcing that we The proposed Consent Decree may be ephemeral reproductions to facilitate examined at the Clerk’s Office, United have established an online centralized the digital transmission of the sound portal that includes information about States District Court for the Northern recording, including for transmissions District of Ohio, 1716 Spielbusch our guidance and a searchable, indexed to business establishments. 17 U.S.C. listing of, and links to, our guidance Avenue, Toledo, OH 43604. In addition, 112(e). the proposed Consent Decree may be documents. The portal, located on our Licensees may operate under these website, does not displace other listings examined electronically at http:// licenses provided they pay the royalty www.justice.gov/enrd/consent-decrees. of or links to our guidance documents fees and comply with the terms set by in topic-specific sections of our website. the Copyright Royalty Judges. The rates Cherie Rogers, DATES: The portal is online beginning and terms for the section 112 and 114 Assistant Section Chief, Environmental February 28, 2020, although we will be licenses are set forth in 37 CFR parts Defense Section, Environment and Natural refining it and adding existing guidance 380 and 382–84. Resources Division. through the end of May 2020. [FR Doc. 2020–04079 Filed 2–27–20; 8:45 am] As part of the terms set for these ADDRESSES: The portal’s URL is BILLING CODE 4410–CW–P licenses, the Judges designated SoundExchange, Inc., as the Collective, archives.gov/guidance. i.e., the organization charged with FOR FURTHER INFORMATION CONTACT: Kimberly Keravuori, Regulatory and LIBRARY OF CONGRESS collecting the royalty payments and statements of account submitted by External Policy Program Manager, by Copyright Royalty Board Commercial Webcasters, Preexisting mail at National Archives and Records Subscription Services, New Administration, Suite 4100, 8601 [Docket No. 20–CRB–0005–AU] Subscription Services, and Business Adelphi Road, College Park, MD 20740– 6001, or by email at regulation_ Notice of Intent To Audit Establishment Services, and with distributing the royalties to the [email protected]. AGENCY: Copyright Royalty Board (CRB), copyright owners and performers SUPPLEMENTARY INFORMATION: Executive Library of Congress. entitled to receive them under the Order 13891, and OMB implementing ACTION: Public notice. section 112 and 114 licenses. See 37 guidance memorandum M–20–02, CFR 380.4, 382.5, 383.4, 384.4. require Federal agencies to establish an SUMMARY: The Copyright Royalty Judges As the Collective, SoundExchange online, centralized, searchable database announce receipt of a notice from may, only once a year, conduct an audit of their guidance documents, to include SoundExchange of SoundExchange’s of a licensee for any or all of the prior certain identifying information, and to intent to audit the various services, three calendar years in order to verify provide information on how to including Commercial Webcaster royalty payments. SoundExchange must comment on open guidance and how to services, Preexisting Subscription first file with the Judges a notice of request revisions to the agency’s Service(s), New Subscription Service(s), intent to audit a licensee and deliver the guidance. They also require agencies to and Business Establishment Service, of notice to the licensee. 37 CFR 380.6, publish notice in the Federal Register of Mood Media Corporation and its 382.7, 383.4. 384.6. the new guidance portal. affiliates for 2017, 2018, and 2019 On January 29, 2020, SoundExchange Although the E.O. and OMB pursuant to four statutory licenses. filed with the Judges a notice of intent memorandum primarily discuss ADDRESSES: Docket: For access to the to audit Mood Media Corporation and guidance affecting the public, OMB has docket to read background documents, its affiliates (primarily Muzak LLC and clarified that guidance affecting other go to eCRB, the Copyright Royalty DMX Music) for the years 2017, 2018, agencies must also be included in the Board’s electronic filing and case and 2019. The Judges must publish portal. Most of our guidance pertains to management system, at https:// notice in the Federal Register within 30 other Federal agencies, including app.crb.gov/ and search for docket days of receipt of a notice announcing records management guidance, number 20–CRB–0005–AU. the Collective’s intent to conduct an controlled unclassified information

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guidance, and classified information PENSION BENEFIT GUARANTY SECURITIES AND EXCHANGE guidance, and does not directly affect CORPORATION COMMISSION the public. Agency and other users who already access our guidance through the New Guidance Document Database [Release No. 34–88272; File No. SR-Phlx- content-specific sections of our website 2020–06] (such as the records management pages AGENCY: Pension Benefit Guaranty or the CUI pages) may continue to do so. Corporation (PBGC). Self-Regulatory Organizations; Nasdaq The guidance portal does not replace PHLX LLC; Notice of Filing and ACTION: Notice of availability. the information on those pages; it Immediate Effectiveness of Proposed simply pulls the guidance all together in Rule Change To Amend PSX Rule 3506 an additional, centralized location. SUMMARY: PBGC announces its new (Anti-Money Laundering Compliance guidance document database. Guidance David S. Ferriero, Program) and Options 9, Section 21 documents currently in effect are (Anti-Money Laundering Compliance Archivist of the United States. accessible through the database. Program) [FR Doc. 2020–04157 Filed 2–27–20; 8:45 am] DATES: The database will be publicly BILLING CODE 7515–01–P February 24, 2020. available no later than February 28, 2020. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 NATIONAL SCIENCE FOUNDATION FOR FURTHER INFORMATION CONTACT: (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on February Advisory Committee for Geosciences; Hilary Duke ([email protected]), 18, 2020, Nasdaq PHLX LLC (‘‘Phlx’’ or Notice of Meeting Assistant General Counsel for Regulatory Affairs, Office of the General ‘‘Exchange’’) filed with the Securities In accordance with the Federal Counsel, 202–229–3839. (TTY users and Exchange Commission (‘‘SEC’’ or Advisory Committee Act (Pub. L. 92– may call the Federal relay service toll- ‘‘Commission’’) the proposed rule 463, as amended), the National Science free at 800–877–8339 and ask to be change as described in Items I, II, and Foundation (NSF) announces the connected to 202–229–3839.) III, below, which Items have been following meeting: prepared by the Exchange. The Name and Committee Code: Advisory SUPPLEMENTARY INFORMATION: On Commission is publishing this notice to Committee for Geosciences (1755). October 9, 2019, the President issued solicit comments on the proposed rule Date and Time: April 16, 2020; 8:30 Executive Order (E.O.) 13891, change from interested persons. a.m.–5:00 p.m. EDT, April 17, 2020; ‘‘Promoting the Rule of Law Through I. Self-Regulatory Organization’s 8:30 a.m.–2:00 p.m. EDT. Improved Agency Guidance Place: National Science Foundation, Statement of the Terms of Substance of Documents.’’ Central principles of E.O. the Proposed Rule Change 2415 Eisenhower Avenue, Room 2030, 13891 are that the American public Alexandria, Virginia 22314. should only be subject to binding rules The Exchange proposes to amend PSX Type of Meeting: Open. imposed through duly enacted statutes Rule 3506 and Options 9, Section 21, Contact Person: Melissa Lane, both titled ‘‘Anti-Money Laundering National Science Foundation, Room C or through regulations that are lawfully promulgated, and that Americans Compliance Program.’’ This rule change 8000, 2415 Eisenhower Avenue, is intended to reflect the Financial Alexandria, Virginia 22314; Phone 703– should have fair notice of any such obligations. To ensure increasing Crimes Enforcement Network’s 292–8500. (‘‘FinCEN’’) adoption of a final rule on Minutes: May be obtained from the transparency, section 3 of the E.O. Customer Due Diligence Requirements contact person listed above. requires each agency to establish on its for Financial Institutions (‘‘CDD Rule’’). Purpose of Meeting: To provide website a single, searchable, indexed Specifically, the proposed amendments advice, recommendations, and oversight database that contains, or links to, all of would conform PSX Rule 3506 and on support for geoscience research and the agency’s ‘‘guidance documents,’’ as education including atmospheric, geo- Options 9, Section 21 to the CDD Rule’s defined in the E.O., and provides certain amendments to the minimum regulatory space, earth, ocean and polar sciences. information about them. Accordingly, Agenda: requirements for members’ anti-money PBGC has established the required laundering (‘‘AML’’) compliance April 16, 2020 guidance document database at programs by requiring such programs to • Directorate and NSF activities and www.pbgc.gov/guidance. The guidance include risk-based procedures for plans document database contains links to conducting ongoing customer due • Budget Updates PBGC ‘‘guidance documents.’’ diligence. This ongoing customer due • U Issued in Washington, DC, by diligence element for AML programs • Summary of AC OPP Fall Meeting and Gordon Hartogensis, includes: (1) Understanding the nature Upcoming Spring Meeting and purpose of customer relationships • Meeting with the NSF Chief Operating Director, Pension Benefit Guaranty for the purpose of developing a Corporation. Officer customer risk profile; and (2) [FR Doc. 2020–03977 Filed 2–27–20; 8:45 am] April 17, 2020 conducting ongoing monitoring to BILLING CODE 7709–02–P identify and report suspicious • Division Meetings • transactions and, on a risk basis, to Action Items/Planning for Fall 2020 maintain and update customer Meeting information. Dated: February 24, 2020. The Exchange has designated this Crystal Robinson, proposal as ‘‘non-controversial’’ under Committee Management Officer. [FR Doc. 2020–04047 Filed 2–27–20; 8:45 am] 1 15 U.S.C. 78s(b)(1). BILLING CODE 7555–01–P 2 17 CFR 240.19b–4.

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paragraph (f)(6) of Rule 19b–4 3 under Options 9, Section 21, respectively, included in AML programs as a new the Act. which incorporates the BSA’s four ‘‘fifth pillar.’’ The text of the proposed rule change pillars, as well as requires members’ On November 21, 2017, FINRA is available on the Exchange’s website at AML programs to establish and published Regulatory Notice 17–40 to http://nasdaqphlx.cchwallstreet.com/, implement policies and procedures that provide guidance to member firms at the principal office of the Exchange, can be reasonably expected to detect regarding their obligations under FINRA and at the Commission’s Public and cause the reporting of suspicious Rule 3310 in light of the adoption of Reference Room. transactions. FinCEN’s CDD Rule. In addition, the II. Self-Regulatory Organization’s On May 11, 2016, FinCEN, the bureau Notice summarized the CDD Rule’s Statement of the Purpose of, and of the Department of the Treasury impact on member firms, including the Statutory Basis for, the Proposed Rule responsible for administering the BSA addition of the new fifth pillar required Change and its implementing regulations, for member firms’ AML programs. issued the CDD Rule 8 to clarify and FINRA also amended FINRA Rule 3310 In its filing with the Commission, the strengthen customer due diligence for to explicitly incorporate the fifth 12 Exchange included statements 9 pillar. This proposed rule change concerning the purpose of and basis for covered financial institutions, including broker-dealers. In its CDD amends PSX Rule 3506 and Options 9, the proposed rule change and discussed Section 21 to harmonize these rules any comments it received on the Rule, FinCEN identifies four components of customer due diligence: with the FINRA rule and incorporate the proposed rule change. The text of these fifth pillar. statements may be examined at the (1) Customer identification and places specified in Item IV below. The verification; (2) beneficial ownership II. PSX Rule 3506 and Options 9, Exchange has prepared summaries, set identification and verification; (3) Section 21 and Amendment to forth in sections A, B, and C below, of understanding the nature and purpose Minimum Requirements for Members’ the most significant aspects of such of customer relationships; and (4) AML Programs statements. ongoing monitoring for reporting suspicious transactions and, on a risk Section 352 of the USA PATRIOT Act A. Self-Regulatory Organization’s basis, maintaining and updating of 2001 13 amended the BSA to require Statement of the Purpose of, and customer information.10 As the first broker-dealers to develop and Statutory Basis for, the Proposed Rule component is already required to be part implement AML programs that include Change of a broker-dealers AML program under the four pillars mentioned above. Consistent with Section 352 of the 1. Purpose the BSA, the CDD Rule focuses on the other three components. PATRIOT Act, and incorporating the I. Background four pillars, Options 9, Section 21 Specifically, the CDD Rule focuses requires each member to develop and The Bank Secrecy Act 4 (‘‘BSA’’), particularly on the second component implement a written AML program among other things, requires financial by adding a new requirement that reasonably designed to achieve and institutions,5 including broker-dealers, covered financial institutions identify monitor the member’s compliance with to develop and implement AML and verify the identity of the beneficial the BSA and implementing regulations. programs that, at a minimum, meet the owners of all legal entity customers at Among other requirements, PSX Rule statutorily enumerated ‘‘four pillars.’’ 6 the time a new account is opened, 3506 and Options 9, Section 21 require These four pillars currently require subject to certain exclusions and that each member firm, at a minimum: broker-dealers to have written AML 11 exemptions. The CDD Rule also (1) Establish and implement policies programs that include, at a minimum: addresses the third and fourth and procedures that can be reasonably • The establishment and components, which FinCEN states ‘‘are expected to detect and cause the implementation of policies, procedures already implicitly required for covered reporting of suspicious transactions; (2) and internal controls reasonably financial institutions to comply with establish and implement policies, designed to achieve compliance with their suspicious activity reporting procedures, and internal controls the applicable provisions of the BSA requirements,’’ by amending the reasonably designed to achieve and implementing regulations; existing AML program rules for covered compliance with the BSA and • independent testing for compliance financial institutions to explicitly implementing regulations; (3) provide by broker-dealer personnel or a require these components to be independent testing for compliance to qualified outside party; be conducted by member personnel or • designation of an individual or 8 FinCEN Customer Due Diligence Requirements a qualified outside party; (4) designate individuals responsible for for Financial Institutions; CDD Rule, 81 FR 29397 and identify to the Exchange an implementing and monitoring the (May 11, 2016) (CDD Rule Release); 82 FR 45182 individual or individuals (i.e., AML operations and internal controls of the (September 28, 2017) (making technical correcting amendments to the final CDD Rule published on compliance person(s)) who will be AML program; and May 11, 2016). FinCEN is authorized to impose responsible for implementing and • ongoing training for appropriate AML program requirements on financial monitoring the day-to-day operations persons.7 institutions and to require financial institutions to maintain procedures to ensure compliance with the and internal controls of the AML In addition to meeting the BSA’s BSA and associated regulations. 31 U.S.C. program and provide prompt requirement with respect to AML 5318(h)(2) and (a)(2). The CDD Rule is the result of notification to the Exchange of any programs, Exchange members must also the rulemaking process FinCEN initiated in March 2012. See 77 FR 13046 (March 5, 2012) (Advance changes to the designation; and (5) comply with PSX Rule 3506 and Notice of Proposed Rulemaking) and 79 FR 45151 (Aug. 4, 2014) (Notice of Proposed Rulemaking). 12 See Securities Exchange Act Release No. 83154 3 17 CFR 240.19b–4(f)(6). 9 See 31 CFR 1010.230(f) (defining ‘‘covered (May 2, 2018), 83 FR 20906 (May 8, 2018) (File No. 4 31 U.S.C. 5311, et seq. financial institution’’). SR–FINRA–2018–016). 5 See U.S.C. 5312(a)(2) (defining ‘‘financial 10 See CDD Rule Release at 29398. 13 Uniting and Strengthening America by institution’’). 11 See 31 CFR 1010.230(d) (defining ‘‘beneficial Providing Appropriate Tools Required to Intercept 6 31 U.S.C. 5318(h)(1). owner’’) and 31 CFR 1010.230(e) (defining ‘‘legal and Obstruct Terrorism Act of 2001, Public Law 7 31 CFR 1023.210(b). entity customer’’). 107–56, 115 Stat. 272 (2001) (‘‘PATRIOT Act’’).

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provide ongoing training for appropriate III. Summary of Fifth Pillar’s whether a particular flagged transaction persons. Requirements is suspicious.23 FinCEN’s CDD Rule does not change Understanding the Nature and Purpose Conduct Ongoing Monitoring the requirements of either PSX Rule of Customer Relationships As with the requirement to 3506 or Options 9, Section 21, and FinCEN states in the CDD Rule that understand the nature and purpose of members must continue to comply with firms must necessarily have an the customer relationship, the its requirements.14 However, FinCEN’s understanding of the nature and requirement to conduct ongoing CDD Rule amends the minimum purpose of the customer relationship in monitoring to identify and report regulatory requirements for broker- order to determine whether a suspicious transactions and, on a risk dealers’ AML programs by explicitly transaction is potentially suspicious basis, to maintain and update customer requiring such programs to include risk- and, in turn, to fulfill their SAR information, merely adopts existing based procedures for conducting obligations.17 To that end, the CDD Rule supervisory and regulatory expectations ongoing customer due diligence.15 requires that firms understand the as explicit minimum standards of Accordingly, the Exchange is proposing nature and purpose of the customer customer due diligence required for to amend PSX Rule 3506 and Options 9, relationship in order to develop a firms’ AML programs.24 If, in the course Section 21 to incorporate this ongoing customer risk profile. The customer risk of its normal monitoring for suspicious customer due diligence element, or profile refers to information gathered activity, the member detects information ‘‘fifth pillar’’ required for AML about a customer to form the baseline that is relevant to assessing the programs. Thus, proposed PSX Rule against which customer activity is customer’s risk profile, the member 3506(a)(6) and Options 9, Section assessed for suspicious transaction must update the customer information, 21(a)(6) would provide that the AML reporting.18 Information relevant to including the information regarding the programs required by this Rule shall, at understanding the nature and purpose beneficial owners of legal entity 25 a minimum include appropriate risk- of the customer relationship may be customers. However, there is no expectation that the member update based procedures for conducting self-evident and, depending on the facts customer information, including ongoing customer due diligence, to and circumstances, may include such information as the type of customer, beneficial ownership information, on an include, but not be limited to: (A) account or service offered, and the ongoing or continuous basis.26 Understanding the nature and purpose customer’s income, net worth, domicile, of customer relationships for the 2. Statutory Basis or principal occupation or business, as purpose of developing a customer risk well as, in the case of existing The Exchange believes that the profile; and (B) conducting ongoing customers, the customer’s history of proposed rule change is consistent with monitoring to identify and report activity.19 The CDD Rule also does not Section 6(b) of the Act,27 in general, and suspicious transactions and, on a risk prescribe a particular form of the furthers the objectives of Section 6(b)(5) basis, to maintain and update customer customer risk profile.20 Instead, the CDD of the Act,28 in particular, in that it is information. Rule states that depending on the firm designed to promote just and equitable As stated in the CDD Rule, these and the nature of its business, a principles of trade, to remove provisions are not new and merely customer risk profile may consist of impediments to and perfect the codify existing expectations for individualized risk scoring, placement mechanism of a free and open market members to adequately identify and of customers into risk categories or and a national market system, and, in report suspicious transactions as another means of assessing customer general to protect investors and the required under the BSA and encapsulate risk that allows firms to understand the public interest. Specifically, the Exchange believes the proposed rule practices generally already undertaken risk posed by the customer and to 21 change will protect investors, because it by securities firms to know and demonstrate that understanding. will aid members in complying with the understand their customers.16 The The CDD Rule also addresses the CDD Rule’s requirement that members’ proposed rule change simply interplay of understanding the nature and purpose of customer relationships AML programs include risk-based incorporates into PSX Rule 3506 and procedures for conducting ongoing Options 9, Section 21 the ongoing with the ongoing monitoring obligation discussed below. The CDD Rule customer due diligence by also customer due diligence element, or incorporating the requirement into PSX ‘‘fifth pillar,’’ required for AML explains that firms are not necessarily required or expected to integrate Rule 3506 and Options 9, Section 21. programs by the CDD Rule to aid customer information or the customer members in complying with the CDD B. Self-Regulatory Organization’s risk profile into existing transaction Rule’s requirements. However, to the Statement on Burden on Competition monitoring systems (for example, to extent that these elements, which are The Exchange does not believe that serve as the baseline for identifying and the proposed rule change will impose briefly summarized below, are not assessing suspicious transactions on a any burden on competition that is not already included in members’ AML contemporaneous basis).22 Rather, necessary or appropriate in furtherance programs, the CDD Rule requires FinCEN expects firms to use the of the purposes of the Act. The members to update their AML programs customer information and customer risk proposed rule change simply to explicitly incorporate them. profile as appropriate during the course of complying with their obligations 23 Id. 14 FinCEN notes that broker-dealers must under the BSA in order to determine continue to comply with FINRA Rules, 24 Id. at 29402. notwithstanding differences between the CDD Rule 25 Id. at 29420–21. See also FINRA Regulatory 17 and FINRA Rule 3310, which is substantially Id. at 29421. Notice 17–40 (discussing identifying and verifying identical to PSX Rule 3506 and Options 9, Section 18 Id. at 29422. the identity of beneficial owners of legal entity 21. See CDD Rule Release 29421, n. 85. 19 Id. customers). 15 See CDD Rule Release at 29420; 31 CFR 20 Id. 26 Id. 1023.210. 21 Id. 27 15 U.S.C. 78f(b). 16 Id. at 29419. 22 Id. 28 15 U.S.C. 78f(b)(5).

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incorporates into PSX Rule 3506 and temporarily suspend such rule change if to make available publicly. All Options 9, Section 21 the ongoing it appears to the Commission that such submissions should refer to File customer due diligence element, or action is necessary or appropriate in the Number SR–Phlx–2020–06 and should ‘‘fifth pillar,’’ required for AML public interest, for the protection of be submitted on or before March 20, programs by the CDD Rule. Regardless investors, or otherwise in furtherance of 2020. of the proposed rule change, to the the purposes of the Act. If the For the Commission, by the Division of extent that the elements of the fifth Commission takes such action, the Trading and Markets, pursuant to delegated pillar are not already included in Commission shall institute proceedings authority.33 members’ AML programs, the CDD Rule to determine whether the proposed rule J. Matthew DeLesDernier, requires members to update their AML should be approved or disapproved. Assistant Secretary. programs to explicitly incorporate them. IV. Solicitation of Comments [FR Doc. 2020–04073 Filed 2–27–20; 8:45 am] In addition, as stated in the CDD Rule, BILLING CODE 8011–01–P these elements are already implicitly Interested persons are invited to required for covered financial submit written data, views, and arguments concerning the foregoing, institutions to comply with their SECURITIES AND EXCHANGE including whether the proposed rule suspicious activity reporting COMMISSION requirements. Further, all Exchange change is consistent with the Act. members that have customers are Comments may be submitted by any of [Release No. 34–88269; File No. SR– required to be members of FINRA the following methods: NYSEAMER–2020–11] pursuant to Rule 15b9–1 under the Electronic Comments 29 Self-Regulatory Organizations; NYSE Exchange Act, and are therefore • American LLC; Notice of Filing and already subject to the requirements of Use the Commission’s internet comment form (http://www.sec.gov/ Order Granting Accelerated Approval FINRA Rule 3310. Additionally, the of a Proposed Rule Change for Certain proposed rule change is virtually rules/sro.shtml); or • Send an email to rule-comments@ Conforming Changes to Rule 9217 identical 30 to FINRA Rule 3310. The sec.gov. Please include File Number SR– Exchange is not imposing any Phlx–2020–06 on the subject line. February 24, 2020. additional direct or indirect burdens on Pursuant to Section 19(b)(1) 1 of the member firms or their customers Paper Comments Securities Exchange Act of 1934 through this proposal, and as such, the • Send paper comments in triplicate (‘‘Act’’) 2 and Rule 19b–4 thereunder,3 proposal imposes no new burdens on to Secretary, Securities and Exchange notice is hereby given that, on February competition. Commission, 100 F Street NE, 11, 2020, NYSE American LLC (‘‘NYSE C. Self-Regulatory Organization’s Washington, DC 20549–1090. American’’ or the ‘‘Exchange’’) filed Statement on Comments on the All submissions should refer to File with the Securities and Exchange Proposed Rule Change Received From Number SR–Phlx–2020–06. This file Commission (the ‘‘Commission’’) the Members, Participants, or Others number should be included on the proposed rule change as described in subject line if email is used. To help the Items I and II below, which Items have No written comments were either been prepared by the self-regulatory solicited or received. Commission process and review your comments more efficiently, please use organization. The Commission is III. Date of Effectiveness of the only one method. The Commission will publishing this notice to solicit Proposed Rule Change and Timing for post all comments on the Commission’s comments on the proposed rule change Commission Action internet website (http://www.sec.gov/ from interested persons and approving the proposal on an accelerated basis. Because the foregoing proposed rule rules/sro.shtml). Copies of the change does not: (i) Significantly affect submission, all subsequent I. Self-Regulatory Organization’s the protection of investors or the public amendments, all written statements Statement of the Terms of Substance of interest; (ii) impose any significant with respect to the proposed rule the Proposed Rule Change change that are filed with the burden on competition; and (iii) become The Exchange proposes certain Commission, and all written operative for 30 days from the date on conforming changes to Rule 9217 in communications relating to the which it was filed, or such shorter time order to more closely align the proposed rule change between the as the Commission may designate, it has Exchange’s rule with that of its Commission and any person, other than become effective pursuant to Section affiliates. The proposed rule change is 31 those that may be withheld from the 19(b)(3)(A)(iii) of the Act and available on the Exchange’s website at public in accordance with the subparagraph (f)(6) of Rule 19b–4 www.nyse.com, at the principal office of 32 provisions of 5 U.S.C. 552, will be thereunder. the Exchange, and at the Commission’s available for website viewing and At any time within 60 days of the Public Reference Room. filing of the proposed rule change, the printing in the Commission’s Public Commission summarily may Reference Room, 100 F Street NE, II. Self-Regulatory Organization’s Washington, DC 20549, on official Statement of the Purpose of, and 29 17 CFR 240.15b9–1. business days between the hours of Statutory Basis for, the Proposed Rule 30 The Exchange notes that changes between the 10:00 a.m. and 3:00 p.m. Copies of the Change proposed Rule and FINRA Rule 3310 are non- filing also will be available for In its filing with the Commission, the substantive and relate to cross references. inspection and copying at the principal 31 15 U.S.C. 78s(b)(3)(A)(iii). self-regulatory organization included 32 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– office of the Exchange. All comments statements concerning the purpose of, 4(f)(6) requires a self-regulatory organization to give received will be posted without change. and basis for, the proposed rule change the Commission written notice of its intent to file Persons submitting comments are the proposed rule change at least five business days cautioned that we do not redact or edit 33 prior to the date of filing of the proposed rule 17 CFR 200.30–3(a)(12). change, or such shorter time as designated by the personal identifying information from 1 15 U.S.C. 78s(b)(1). Commission. The Exchange has satisfied this comment submissions. You should 2 15 U.S.C. 78a. requirement. submit only information that you wish 3 17 CFR 240.19b–4.

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and discussed any comments it received regulations, and with applicable Exchange’s affiliate, thereby on the proposed rule change. The text Exchange rules. harmonizing minor rule plan fines of those statements may be examined at Subsection (b)(5) requires a member across affiliated exchanges for the same the places specified in Item IV below. organization’s supervisory procedures to conduct. As noted above, Rule 3110— The Exchange has prepared summaries, include procedures to capture, Equities is substantially similar to NYSE set forth in sections A, B, and C below, acknowledge, and respond to all written Rule 3110. Subsections (a), (b)(1) and of the most significant parts of such (including electronic) customer b(5) of NYSE Rule 3110 are each statements. complaints. separately eligible for a minor rule fine Rule 3110—Equities is substantially under NYSE Rule 9217.8 A. Self-Regulatory Organization’s similar to NYSE Rule 3110. Subsections Statement of the Purpose of, and the The Exchange further believes that the (a), (b)(1) and b(5) of NYSE Rule 3110 proposed amendments to Rule 9217 are Statutory Basis for, the Proposed Rule are each separately eligible for a minor Change consistent with Section 6(b)(6) of the rule fine under NYSE Rule 9217.5 Act,9 which provides that members and 1. Purpose Finally, the Exchange proposes to persons associated with members shall correct a typographical error in Rule The Exchange proposes certain be appropriately disciplined for 9217(ii)(7)(b), which refers to ensuring violation of the provisions of the rules conforming changes to Rule 9217 in compliance with, among other things, order to more closely align the of the exchange, by expulsion, NYSE Arca Rules. The correct reference suspension, limitation of activities, Exchange’s rule with that of its should be to the NYSE American Rules. affiliates. functions, and operations, fine, censure, Rule 9217 sets forth the list of rules 2. Statutory Basis being suspended or barred from being associated with a member, or any other under which a member organization or The proposed rule change is fitting sanction. As noted, the proposed covered person may be subject to a fine consistent with Section 6(b) of the Act,6 rule change would provide the under a minor rule violation plan as in general, and furthers the objectives of Exchange ability to sanction minor or described in proposed [sic] Rule Section 6(b)(5),7 in particular, because it technical violations pursuant to the 9216(b). The Exchange proposes the is designed to prevent fraudulent and Exchange’s rules. following amendments to Rule 9217. manipulative acts and practices, to First, the Exchange proposes to add promote just and equitable principles of Finally, the Exchange also believes the following paragraph to the trade, to foster cooperation and that correction of a typographical error introduction to Rule 9217: coordination with persons engaged in would remove impediments to and perfect the mechanism of a free and Nothing in this Rule shall require the facilitating transactions in securities, to Exchange to impose a fine for a violation of remove impediments to, and perfect the open market by ensuring that persons any rule under this Minor Rule Plan. If the mechanism of, a free and open market subject to the Exchange’s jurisdiction, Exchange determines that any violation is not and a national market system and, in regulators, and the investing public can minor in nature, the Exchange may, at its general, to protect investors and the more easily navigate and understand the discretion, proceed under the Rule 9000 public interest. Exchange’s rulebook. Series rather than under this Rule. Minor rule fines provide a meaningful B. Self-Regulatory Organization’s The language is based on the rules of sanction for minor or technical Statement on Burden on Competition the Exchange’s affiliates New York violations of rules. The Exchange Stock Exchange LLC (‘‘NYSE’’) and believes that the proposed rule change The Exchange does not believe that NYSE Arca, Inc. (‘‘NYSE Arca’’).4 will strengthen the Exchange’s ability to the proposed rule change will impose Second, the Exchange proposes to add carry out its oversight and enforcement any burden on competition that is not subsections (a), (b)(1) and (b)(5) of Rule responsibilities in cases where full necessary or appropriate in furtherance 3110—Equities to the list of rules in disciplinary proceedings are of the purposes of the Act. The Rule 9217 eligible for disposition unwarranted in view of the minor proposed change is not designed to pursuant to a fine under Rule 9216(b). nature of the particular violation. address any competitive issue but rather Rule 3110—Equities is the Exchange’s Specifically, the proposed rule change is to update the Exchange’s rules to supervision rule for equities trading. designed to prevent fraudulent and strengthen the Exchange’s ability to Rule 3110(a)—Equities governs manipulative acts and practices because carry out its oversight and enforcement supervisory systems and requires it will provide the Exchange the ability functions and deter potential violative member organizations to establish and to issue a minor rule fine for violations conduct. maintain a system to supervise the of its rules governing supervision C. Self-Regulatory Organization’s activities of each associated person that requirements in situations where either Statement on Comments on the is reasonably designed to achieve a cautionary action letter or a more Proposed Rule Change Received From compliance with applicable securities formal disciplinary action may not be Members, Participants, or Others laws and regulations, and with warranted or appropriate. applicable Exchange rules. In addition, the Exchange believes No written comments were solicited Subsection (b)(1) governs written that adding rules based on the rules of or received with respect to the proposed procedures and requires member its affiliate to the Exchange’s minor rule rule change. organizations to establish, maintain, and plan would promote fairness and III. Solicitation of Comments enforce written procedures to supervise consistency in the marketplace by the types of business in which it permitting the Exchange to issue a Interested persons are invited to engages and the activities of its minor rule fine for violations of submit written data, views, and associated persons that are reasonably substantially similar rules that are arguments concerning the foregoing, designed to achieve compliance with eligible for minor rule treatment on the including whether the proposed rule applicable securities laws and change is consistent with the Act. 5 See NYSE Rules 3110 (Supervision) & 9217. 4 See NYSE Rule 9217 & NYSE Arca Rule 6 15 U.S.C. 78f(b). 8 See NYSE Rules 3110 (Supervision) & 9217. 10.9217. 7 15 U.S.C. 78f(b)(5). 9 15 U.S.C. 78f(b)(6).

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Comments may be submitted by any of exchange.10 In particular, the the filing thereof in the Federal the following methods: Commission finds that the proposed Register. The proposal merely adds rule change is consistent with Section rules and language from affiliated Electronic Comments 6(b)(5) of the Act,11 which requires that exchanges. Accordingly, the • Use the Commission’s internet the rules of an exchange be designed to Commission believes that a full notice- comment form (http://www.sec.gov/ promote just and equitable principles of and-comment period is not necessary rules/sro.shtml); or trade, to remove impediments and to before approving the proposal. perfect the mechanism of a free and • Send an email to rule-comments@ V. Conclusion sec.gov. Please include File Number SR– open market and a national market system, and, in general, to protect It is therefore ordered, pursuant to NYSEAMER–2020–11 on the subject 16 line. investors and the public interest. The Section 19(b)(2) of the Act and Rule Commission also believes that the 19d–1(c)(2) thereunder,17 that the Paper Comments proposal is consistent with Sections proposed rule change (SR–NYSEAMER– 6(b)(1) and 6(b)(6) of the Act 12 which 2020–11) be, and hereby is, approved • Send paper comments in triplicate require that the rules of an exchange and declared effective on an accelerated to Secretary, Securities and Exchange enforce compliance with, and provide basis. Commission, 100 F Street NE, appropriate discipline for, violations of Washington, DC 20549–1090. For the Commission, by the Division of Commission and Exchange rules. Market Regulation, pursuant to delegated All submissions should refer to File Finally, the Commission finds that the authority.18 Number SR–NYSEAMER–2020–11. This proposal is consistent with the public J. Matthew DeLesDernier, file number should be included on the interest, the protection of investors, or Assistant Secretary. subject line if email is used. To help the otherwise in furtherance of the purposes [FR Doc. 2020–04071 Filed 2–27–20; 8:45 am] Commission process and review your of the Act, as required by Rule 19d– comments more efficiently, please use 1(c)(2) under the Act,13 which governs BILLING CODE 8011–01–P only one method. The Commission will minor rule violation plans. As stated above, the Exchange post all comments on the Commission’s SECURITIES AND EXCHANGE proposes to add to its list of equities internet website (http://www.sec.gov/ COMMISSION rules/sro.shtml). Copies of the rule violations rules that are identical to submission, all subsequent those of its affiliated exchange. The amendments, all written statements Commission believes that the proposed [Release No. 34–88273; File No. SR–GEMX– 2020–06] with respect to the proposed rule rule provides a reasonable means of addressing violations that do not rise to change that are filed with the Self-Regulatory Organizations; Nasdaq the level of requiring formal Commission, and all written GEMX, LLC; Notice of Filing and communications relating to the disciplinary proceedings, while providing greater flexibility in handling Immediate Effectiveness of Proposed proposed rule change between the Rule Change To Amend Options 9, Commission and any person, other than certain violations. However, the Commission expects, as suggested by Section 21 (Anti-Money Laundering those that may be withheld from the Compliance Program) public in accordance with the the Exchange’s proposed introduction to provisions of 5 U.S.C. 552, will be its Rule 9217, that the Exchange will February 24, 2020. available for website viewing and continue to conduct surveillance with Pursuant to Section 19(b)(1) of the printing in the Commission’s Public due diligence and make determinations Securities Exchange Act of 1934 Reference Room, 100 F Street NE, based on its findings, on a case-by-case (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Washington, DC 20549 on official basis, regarding whether a sanction notice is hereby given that on February business days between the hours of under the rule is appropriate, or 18, 2020, Nasdaq GEMX, LLC (‘‘GEMX’’ 10:00 a.m. and 3:00 p.m. Copies of the whether a violation requires formal or ‘‘Exchange’’) filed with the Securities filing also will be available for disciplinary action. The Commission and Exchange Commission (‘‘SEC’’ or inspection and copying at the principal further notes that, as before, the ‘‘Commission’’) the proposed rule office of the Exchange. All comments Exchange must give the Commission change as described in Items I, II, and received will be posted without change. prompt notice of any violation with III, below, which Items have been sanction over $2,500, in accordance Persons submitting comments are prepared by the Exchange. The with Securities Exchange Act Rule 19d– cautioned that we do not redact or edit Exchange files the proposed rule change 1(c).14 Accordingly, the Commission personal identifying information from as a ‘‘non-controversial’’ proposed rule believes the proposal raises no novel or comment submissions. You should change pursuant to Section significant issues. submit only information that you wish 19(b)(3)(A)(iii) 3 For the same reasons discussed above, of the Act and Rule to make available publicly. All 4 the Commission finds good cause, 19b–4(f)(6) thereunder. The submissions should refer to File pursuant to Section 19(b)(2) of the Commission is publishing this notice to Number SR–NYSEAMER–2020–11 and Act,15 for approving the proposed rule should be submitted on or before March 16 change prior to the thirtieth day after 15 U.S.C. 78s(b)(2). 20, 2020. 17 17 CFR 240.19d–1(c)(2). the date of publication of the notice of 18 17 CFR 200.30–3(a)(12). IV. Commission’s Findings and Order 1 15 U.S.C. 78s(b)(1). 10 Granting Accelerated Approval of In approving this proposed rule change, the 2 17 CFR 240.19b–4. Commission has considered the proposed rule’s Proposed Rule Change 3 15 U.S.C. 78s(b)(3)(A)(iii). impact on efficiency, competition, and capital 4 formation. See 15 U.S.C. 78c(f). 17 CFR 240.19b–4. The Exchange provided the The Commission finds that the Commission with written notice of its intent to file 11 15 U.S.C. 78f(b)(5). proposed rule change is consistent with the proposed rule change, along with a brief 12 15 U.S.C. 78f(b)(1) and 78f(b)(6). the requirements of the Act and the description and text of the proposed rule change, 13 17 CFR 240.19d–1(c)(2). at least five business days prior to the date of filing rules and regulations thereunder 14 See 17 CFR 240.19d–1(c). the proposed rule change as required by Rule 19b– applicable to a national securities 15 15 U.S.C. 78s(b)(2). 4(f)(6)(iii). 17 CFR 240.19b–4(f)(6)(iii).

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solicit comments on the proposed rule institutions,6 including broker-dealers, suspicious transactions and, on a risk change from interested persons. to develop and implement AML basis, maintaining and updating programs that, at a minimum, meet the customer information.11 As the first I. Self-Regulatory Organization’s statutorily enumerated ‘‘four pillars.’’ 7 component is already required to be part Statement of the Terms of Substance of of a broker-dealers AML program under the Proposed Rule Change These four pillars currently require broker-dealers to have written AML the BSA, the CDD Rule focuses on the The Exchange proposes to amend programs that include, at a minimum: other three components. Options 9, Section 21, ‘‘Anti-Money • The establishment and Specifically, the CDD Rule focuses Laundering Compliance Program.’’ This implementation of policies, procedures particularly on the second component rule change is intended to reflect the and internal controls reasonably by adding a new requirement that Financial Crimes Enforcement designed to achieve compliance with covered financial institutions identify Network’s (‘‘FinCEN’’) adoption of a the applicable provisions of the BSA and verify the identity of the beneficial final rule on Customer Due Diligence and implementing regulations; owners of all legal entity customers at Requirements for Financial Institutions • independent testing for compliance the time a new account is opened, (‘‘CDD Rule’’). Specifically, the by broker-dealer personnel or a subject to certain exclusions and proposed amendments would conform qualified outside party; exemptions.12 The CDD Rule also Options 9, Section 21 to the CDD Rule’s • designation of an individual or addresses the third and fourth amendments to the minimum regulatory individuals responsible for components, which FinCEN states ‘‘are requirements for Members’ anti-money implementing and monitoring the already implicitly required for covered laundering (‘‘AML’’) compliance operations and internal controls of the financial institutions to comply with programs by requiring such programs to AML program; and their suspicious activity reporting include risk-based procedures for • ongoing training for appropriate requirements,’’ by amending the conducting ongoing customer due persons.8 existing AML program rules for covered diligence. This ongoing customer due In addition to meeting the BSA’s financial institutions to explicitly diligence element for AML programs requirement with respect to AML require these components to be includes: (1) Understanding the nature programs, Exchange Members must also included in AML programs as a new and purpose of customer relationships comply with Options 9, Section 21, ‘‘fifth pillar.’’ for the purpose of developing a which incorporates the BSA’s four On November 21, 2017, FINRA customer risk profile; and (2) pillars, as well as requires Members’ published Regulatory Notice 17–40 to conducting ongoing monitoring to AML programs to establish and provide guidance to member firms identify and report suspicious implement policies and procedures that regarding their obligations under FINRA transactions and, on a risk basis, to can be reasonably expected to detect Rule 3310 in light of the adoption of maintain and update customer and cause the reporting of suspicious FinCEN’s CDD Rule. In addition, the information. transactions. Notice summarized the CDD Rule’s The text of the proposed rule change On May 11, 2016, FinCEN, the bureau impact on member firms, including the is available on the Exchange’s website at of the Department of the Treasury addition of the new fifth pillar required http://nasdaqgemx.cchwallstreet.com/, responsible for administering the BSA for member firms’ AML programs. at the principal office of the Exchange, and its implementing regulations, FINRA also amended FINRA Rule 3310 and at the Commission’s Public issued the CDD Rule 9 to clarify and to explicitly incorporate the fifth 13 Reference Room. strengthen customer due diligence for pillar. This proposed rule change 10 amends Options 9, Section 21 to II. Self-Regulatory Organization’s covered financial institutions, including broker-dealers. In its CDD harmonize it with the FINRA rule and Statement of the Purpose of, and incorporate the fifth pillar. Statutory Basis for, the Proposed Rule Rule, FinCEN identifies four Change components of customer due diligence: II. Options 9, Section 21 and (1) Customer identification and Amendment to Minimum Requirements In its filing with the Commission, the verification; (2) beneficial ownership for Members’ AML Programs Exchange included statements identification and verification; (3) Section 352 of the USA PATRIOT Act concerning the purpose of and basis for understanding the nature and purpose the proposed rule change and discussed of 2001 14 amended the BSA to require of customer relationships; and (4) broker-dealers to develop and any comments it received on the ongoing monitoring for reporting proposed rule change. The text of these implement AML programs that include the four pillars mentioned above. statements may be examined at the 6 See U.S.C. 5312(a)(2) (defining ‘‘financial Consistent with Section 352 of the places specified in Item IV below. The institution’’). Exchange has prepared summaries, set 7 31 U.S.C. 5318(h)(1). PATRIOT Act, and incorporating the forth in sections A, B, and C below, of 8 31 CFR 1023.210(b). four pillars, Options 9, Section 21 the most significant aspects of such 9 FinCEN Customer Due Diligence Requirements requires each Member to develop and statements. for Financial Institutions; CDD Rule, 81 FR 29397 implement a written AML program (May 11, 2016) (CDD Rule Release); 82 FR 45182 reasonably designed to achieve and A. Self-Regulatory Organization’s (September 28, 2017) (making technical correcting amendments to the final CDD Rule published on monitor the Member’s compliance with Statement of the Purpose of, and May 11, 2016). FinCEN is authorized to impose Statutory Basis for, the Proposed Rule AML program requirements on financial 11 See CDD Rule Release at 29398. Change institutions and to require financial institutions to 12 See 31 CFR 1010.230(d) (defining ‘‘beneficial maintain procedures to ensure compliance with the owner’’) and 31 CFR 1010.230(e) (defining ‘‘legal 1. Purpose BSA and associated regulations. 31 U.S.C. entity customer’’). 5318(h)(2) and (a)(2). The CDD Rule is the result of 13 See Securities Exchange Act Release No. 83154 I. Background the rulemaking process FinCEN initiated in March (May 2, 2018), 83 FR 20906 (May 8, 2018) (File No. The Bank Secrecy Act 5 (‘‘BSA’’), 2012. See 77 FR 13046 (March 5, 2012) (Advance SR–FINRA–2018–016). Notice of Proposed Rulemaking) and 79 FR 45151 14 Uniting and Strengthening America by among other things, requires financial (Aug. 4, 2014) (Notice of Proposed Rulemaking). Providing Appropriate Tools Required to Intercept 10 See 31 CFR 1010.230(f) (defining ‘‘covered and Obstruct Terrorism Act of 2001, Public Law 5 31 U.S.C. 5311, et seq. financial institution’’). 107–56, 115 Stat. 272 (2001) (‘‘PATRIOT Act’’).

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the BSA and implementing regulations. required under the BSA and encapsulate The CDD Rule also addresses the Among other requirements, Options 9, practices generally already undertaken interplay of understanding the nature Section 21 requires that each Member by securities firms to know and and purpose of customer relationships firm, at a minimum: (1) Establish and understand their customers.17 The with the ongoing monitoring obligation implement policies and procedures that proposed rule change simply discussed below. The CDD Rule can be reasonably expected to detect incorporates into Options 9, Section 21 explains that firms are not necessarily and cause the reporting of suspicious the ongoing customer due diligence required or expected to integrate transactions; (2) establish and element, or ‘‘fifth pillar,’’ required for customer information or the customer implement policies, procedures, and AML programs by the CDD Rule to aid risk profile into existing transaction internal controls reasonably designed to Members in complying with the CDD monitoring systems (for example, to achieve compliance with the BSA and Rule’s requirements. However, to the serve as the baseline for identifying and implementing regulations; (3) provide extent that these elements, which are assessing suspicious transactions on a independent testing for compliance to briefly summarized below, are not contemporaneous basis).23 Rather, be conducted by Member personnel or already included in Members’ AML FinCEN expects firms to use the a qualified outside party; (4) designate programs, the CDD Rule requires customer information and customer risk and identify to the Exchange an Members to update their AML programs profile as appropriate during the course individual or individuals (i.e., AML to explicitly incorporate them. of complying with their obligations compliance person(s)) who will be under the BSA in order to determine responsible for implementing and III. Summary of Fifth Pillar’s whether a particular flagged transaction monitoring the day-to-day operations Requirements is suspicious.24 and internal controls of the AML Understanding the Nature and Purpose Conduct Ongoing Monitoring program and provide prompt of Customer Relationships notification to the Exchange of any As with the requirement to changes to the designation; and (5) FinCEN states in the CDD Rule that understand the nature and purpose of provide ongoing training for appropriate firms must necessarily have an the customer relationship, the persons. understanding of the nature and requirement to conduct ongoing FinCEN’s CDD Rule does not change purpose of the customer relationship in monitoring to identify and report the requirements of Options 9, Section order to determine whether a suspicious transactions and, on a risk 21, and Members must continue to transaction is potentially suspicious basis, to maintain and update customer comply with its requirements.15 and, in turn, to fulfill their SAR information, merely adopts existing However, FinCEN’s CDD Rule amends obligations.18 To that end, the CDD Rule supervisory and regulatory expectations the minimum regulatory requirements requires that firms understand the as explicit minimum standards of for broker-dealers’ AML programs by nature and purpose of the customer customer due diligence required for explicitly requiring such programs to relationship in order to develop a firms’ AML programs.25 If, in the course include risk-based procedures for customer risk profile. The customer risk of its normal monitoring for suspicious conducting ongoing customer due profile refers to information gathered activity, the Member detects diligence.16 Accordingly, the Exchange about a customer to form the baseline information that is relevant to assessing is proposing to amend Options 9, against which customer activity is the customer’s risk profile, the Member Section 21 to incorporate this ongoing assessed for suspicious transaction must update the customer information, customer due diligence element, or reporting.19 Information relevant to including the information regarding the ‘‘fifth pillar’’ required for AML understanding the nature and purpose beneficial owners of legal entity programs. Thus, proposed Options 9, of the customer relationship may be customers.26 However, there is no Section 21(f) would provide that the self-evident and, depending on the facts expectation that the Member update AML programs required by this Rule and circumstances, may include such customer information, including shall, at a minimum include appropriate information as the type of customer, beneficial ownership information, on an risk-based procedures for conducting account or service offered, and the ongoing or continuous basis.27 ongoing customer due diligence, to customer’s income, net worth, domicile, 2. Statutory Basis include, but not be limited to: (1) or principal occupation or business, as Understanding the nature and purpose well as, in the case of existing The Exchange believes that the of customer relationships for the customers, the customer’s history of proposed rule change is consistent with purpose of developing a customer risk activity.20 The CDD Rule also does not Section 6(b) of the Act,28 in general, and profile; and (2) conducting ongoing prescribe a particular form of the furthers the objectives of Section 6(b)(5) monitoring to identify and report customer risk profile.21 Instead, the CDD of the Act,29 in particular, in that it is suspicious transactions and, on a risk Rule states that depending on the firm designed to promote just and equitable basis, to maintain and update customer and the nature of its business, a principles of trade, to remove information. customer risk profile may consist of impediments to and perfect the As stated in the CDD Rule, these individualized risk scoring, placement mechanism of a free and open market provisions are not new and merely of customers into risk categories or and a national market system, and, in codify existing expectations for another means of assessing customer general to protect investors and the Members to adequately identify and risk that allows firms to understand the report suspicious transactions as risk posed by the customer and to 23 Id. demonstrate that understanding.22 24 Id. 25 15 FinCEN notes that broker-dealers must Id. at 29402. continue to comply with FINRA Rules, 26 Id. at 29420–21. See also FINRA Regulatory 17 Id. at 29419. notwithstanding differences between the CDD Rule Notice 17–40 (discussing identifying and verifying 18 and FINRA Rule 3310, which is substantially Id. at 29421. the identity of beneficial owners of legal entity identical to Options 9, Section 21. See CDD Rule 19 Id. at 29422. customers). Release 29421, n. 85. 20 Id. 27 Id. 16 See CDD Rule Release at 29420; 31 CFR 21 Id. 28 15 U.S.C. 78f(b). 1023.210. 22 Id. 29 15 U.S.C. 78f(b)(5).

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public interest. Specifically, the operative for 30 days from the date on Commission and any person, other than Exchange believes the proposed rule which it was filed, or such shorter time those that may be withheld from the change will protect investors, because it as the Commission may designate, it has public in accordance with the will aid Members in complying with the become effective pursuant to Section provisions of 5 U.S.C. 552, will be CDD Rule’s requirement that Members’ 19(b)(3)(A)(iii) of the Act 32 and available for website viewing and AML programs include risk-based subparagraph (f)(6) of Rule 19b–4 printing in the Commission’s Public procedures for conducting ongoing thereunder.33 Reference Room, 100 F Street NE, customer due diligence by also At any time within 60 days of the Washington, DC 20549, on official incorporating the requirement into filing of the proposed rule change, the business days between the hours of Options 9, Section 21. Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the B. Self-Regulatory Organization’s temporarily suspend such rule change if filing also will be available for it appears to the Commission that such Statement on Burden on Competition inspection and copying at the principal action is necessary or appropriate in the office of the Exchange. All comments The Exchange does not believe that public interest, for the protection of the proposed rule change will impose investors, or otherwise in furtherance of received will be posted without change. any burden on competition that is not the purposes of the Act. If the Persons submitting comments are necessary or appropriate in furtherance Commission takes such action, the cautioned that we do not redact or edit of the purposes of the Act. The Commission shall institute proceedings personal identifying information from proposed rule change simply to determine whether the proposed rule comment submissions. You should incorporates into Options 9, Section 21 should be approved or disapproved. submit only information that you wish the ongoing customer due diligence to make available publicly. All element, or ‘‘fifth pillar,’’ required for IV. Solicitation of Comments submissions should refer to File AML programs by the CDD Rule. Interested persons are invited to Number SR–GEMX–2020–06 and Regardless of the proposed rule change, submit written data, views, and should be submitted on or before March to the extent that the elements of the arguments concerning the foregoing, 20, 2020. fifth pillar are not already included in including whether the proposed rule For the Commission, by the Division of Members’ AML programs, the CDD Rule change is consistent with the Act. requires Members to update their AML Trading and Markets, pursuant to delegated Comments may be submitted by any of authority.34 programs to explicitly incorporate them. the following methods: In addition, as stated in the CDD Rule, J. Matthew DeLesDernier, these elements are already implicitly Electronic Comments Assistant Secretary. required for covered financial • Use the Commission’s internet [FR Doc. 2020–04074 Filed 2–27–20; 8:45 am] institutions to comply with their comment form (http://www.sec.gov/ BILLING CODE 8011–01–P suspicious activity reporting rules/sro.shtml); or requirements. Further, all Exchange • Send an email to rule-comments@ Members that have customers are sec.gov. Please include File Number SR– SECURITIES AND EXCHANGE required to be members of FINRA GEMX–2020–06 on the subject line. COMMISSION pursuant to Rule 15b9–1 under the Exchange Act,30 and are therefore Paper Comments [Release No. 34–88275; File No. SR–MRX– already subject to the requirements of • Send paper comments in triplicate 2020–05] FINRA Rule 3310. Additionally, the to Secretary, Securities and Exchange proposed rule change is virtually Commission, 100 F Street NE, Self-Regulatory Organizations; Nasdaq identical 31 to FINRA Rule 3310. The Washington, DC 20549–1090. MRX, LLC; Notice of Filing and Exchange is not imposing any All submissions should refer to File additional direct or indirect burdens on Immediate Effectiveness of Proposed Number SR–GEMX–2020–06. This file Rule Change To Amend Options 9, member firms or their customers number should be included on the through this proposal, and as such, the Section 21 (Anti-Money Laundering subject line if email is used. To help the Compliance Program) proposal imposes no new burdens on Commission process and review your competition. comments more efficiently, please use February 24, 2020. only one method. The Commission will C. Self-Regulatory Organization’s Pursuant to Section 19(b)(1) of the Statement on Comments on the post all comments on the Commission’s Securities Exchange Act of 1934 Proposed Rule Change Received From internet website (http://www.sec.gov/ (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Members, Participants, or Others rules/sro.shtml). Copies of the submission, all subsequent notice is hereby given that on February No written comments were either 18, 2020, Nasdaq MRX, LLC (‘‘MRX’’ or solicited or received. amendments, all written statements with respect to the proposed rule ‘‘Exchange’’) filed with the Securities III. Date of Effectiveness of the change that are filed with the and Exchange Commission (‘‘SEC’’ or Proposed Rule Change and Timing for Commission, and all written ‘‘Commission’’) the proposed rule Commission Action communications relating to the change as described in Items I, II, and Because the foregoing proposed rule proposed rule change between the III, below, which Items have been change does not: (i) Significantly affect prepared by the Exchange. The the protection of investors or the public 32 15 U.S.C. 78s(b)(3)(A)(iii). Commission is publishing this notice to interest; (ii) impose any significant 33 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– solicit comments on the proposed rule 4(f)(6) requires a self-regulatory organization to give change from interested persons. burden on competition; and (iii) become the Commission written notice of its intent to file the proposed rule change at least five business days 30 17 CFR 240.15b9–1. prior to the date of filing of the proposed rule 34 17 CFR 200.30–3(a)(12). 31 The Exchange notes that changes between the change, or such shorter time as designated by the proposed Rule and FINRA Rule 3310 are non- Commission. The Exchange has satisfied this 1 15 U.S.C. 78s(b)(1). substantive and relate to cross references. requirement. 2 17 CFR 240.19b–4.

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I. Self-Regulatory Organization’s A. Self-Regulatory Organization’s components of customer due diligence: Statement of the Terms of Substance of Statement of the Purpose of, and (1) Customer identification and the Proposed Rule Change Statutory Basis for, the Proposed Rule verification; (2) beneficial ownership Change identification and verification; (3) The Exchange proposes to amend understanding the nature and purpose 1. Purpose Options 9, Section 21, ‘‘Anti-Money of customer relationships; and (4) Laundering Compliance Program.’’ This I. Background ongoing monitoring for reporting rule change is intended to reflect the The Bank Secrecy Act 4 (‘‘BSA’’), suspicious transactions and, on a risk Financial Crimes Enforcement among other things, requires financial basis, maintaining and updating 10 Network’s (‘‘FinCEN’’) adoption of a institutions,5 including broker-dealers, customer information. As the first final rule on Customer Due Diligence to develop and implement AML component is already required to be part Requirements for Financial Institutions programs that, at a minimum, meet the of a broker-dealers AML program under (‘‘CDD Rule’’). Specifically, the statutorily enumerated ‘‘four pillars.’’ 6 the BSA, the CDD Rule focuses on the proposed amendments would conform These four pillars currently require other three components. Options 9, Section 21 to the CDD Rule’s broker-dealers to have written AML Specifically, the CDD Rule focuses particularly on the second component amendments to the minimum regulatory programs that include, at a minimum: by adding a new requirement that requirements for Members’ anti-money • The establishment and implementation covered financial institutions identify laundering (‘‘AML’’) compliance of policies, procedures and internal controls and verify the identity of the beneficial reasonably designed to achieve compliance programs by requiring such programs to owners of all legal entity customers at include risk-based procedures for with the applicable provisions of the BSA and implementing regulations; the time a new account is opened, conducting ongoing customer due • independent testing for compliance by subject to certain exclusions and diligence. This ongoing customer due broker-dealer personnel or a qualified outside exemptions.11 The CDD Rule also diligence element for AML programs party; addresses the third and fourth includes: (1) Understanding the nature • designation of an individual or components, which FinCEN states ‘‘are and purpose of customer relationships individuals responsible for implementing already implicitly required for covered for the purpose of developing a and monitoring the operations and internal financial institutions to comply with controls of the AML program; and customer risk profile; and (2) • ongoing training for appropriate their suspicious activity reporting conducting ongoing monitoring to persons.7 requirements,’’ by amending the identify and report suspicious existing AML program rules for covered In addition to meeting the BSA’s transactions and, on a risk basis, to financial institutions to explicitly requirement with respect to AML require these components to be maintain and update customer programs, Exchange Members must also information. included in AML programs as a new comply with Options 9, Section 21, ‘‘fifth pillar.’’ The Exchange has designated this which incorporates the BSA’s four On November 21, 2017, FINRA proposal as ‘‘non-controversial’’ under pillars, as well as requires Members’ published Regulatory Notice 17–40 to paragraph (f)(6) of Rule 19b–4 3 under AML programs to establish and provide guidance to member firms the Act. implement policies and procedures that regarding their obligations under FINRA can be reasonably expected to detect The text of the proposed rule change Rule 3310 in light of the adoption of and cause the reporting of suspicious FinCEN’s CDD Rule. In addition, the is available on the Exchange’s website at transactions. http://nasdaqmrx.cchwallstreet.com/, at Notice summarized the CDD Rule’s On May 11, 2016, FinCEN, the bureau impact on member firms, including the the principal office of the Exchange, and of the Department of the Treasury at the Commission’s Public Reference addition of the new fifth pillar required responsible for administering the BSA for member firms’ AML programs. Room. and its implementing regulations, 8 FINRA also amended FINRA Rule 3310 II. Self-Regulatory Organization’s issued the CDD Rule to clarify and to explicitly incorporate the fifth strengthen customer due diligence for Statement of the Purpose of, and pillar.12 This proposed rule change covered financial institutions,9 Statutory Basis for, the Proposed Rule amends Options 9, Section 21 to including broker-dealers. In its CDD Change harmonize it with the FINRA rule and Rule, FinCEN identifies four incorporate the fifth pillar. In its filing with the Commission, the 4 31 U.S.C. 5311, et seq. II. Options 9, Section 21 and Exchange included statements 5 See U.S.C. 5312(a)(2) (defining ‘‘financial Amendment to Minimum Requirements concerning the purpose of and basis for institution’’). for Members’ AML Programs the proposed rule change and discussed 6 31 U.S.C. 5318(h)(1). any comments it received on the 7 31 CFR 1023.210(b). Section 352 of the USA PATRIOT Act 13 proposed rule change. The text of these 8 FinCEN Customer Due Diligence Requirements of 2001 amended the BSA to require for Financial Institutions; CDD Rule, 81 FR 29397 broker-dealers to develop and statements may be examined at the (May 11, 2016) (CDD Rule Release); 82 FR 45182 places specified in Item IV below. The implement AML programs that include (September 28, 2017) (making technical correcting the four pillars mentioned above. Exchange has prepared summaries, set amendments to the final CDD Rule published on forth in sections A, B, and C below, of May 11, 2016). FinCEN is authorized to impose AML program requirements on financial 10 See CDD Rule Release at 29398. the most significant aspects of such institutions and to require financial institutions to 11 See 31 CFR 1010.230(d) (defining ‘‘beneficial statements. maintain procedures to ensure compliance with the owner’’) and 31 CFR 1010.230(e) (defining ‘‘legal BSA and associated regulations. 31 U.S.C. entity customer’’). 5318(h)(2) and (a)(2). The CDD Rule is the result of 12 See Securities Exchange Act Release No. 83154 the rulemaking process FinCEN initiated in March (May 2, 2018), 83 FR 20906 (May 8, 2018) (File No. 2012. See 77 FR 13046 (March 5, 2012) (Advance SR–FINRA–2018–016). Notice of Proposed Rulemaking) and 79 FR 45151 13 Uniting and Strengthening America by (Aug. 4, 2014) (Notice of Proposed Rulemaking). Providing Appropriate Tools Required to Intercept 9 See 31 CFR 1010.230(f) (defining ‘‘covered and Obstruct Terrorism Act of 2001, Public Law 3 17 CFR 240.19b–4(f)(6). financial institution’’). 107–56, 115 Stat. 272 (2001) (‘‘PATRIOT Act’’).

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Consistent with Section 352 of the basis, to maintain and update customer of customers into risk categories or PATRIOT Act, and incorporating the information. another means of assessing customer four pillars, Options 9, Section 21 As stated in the CDD Rule, these risk that allows firms to understand the requires each Member to develop and provisions are not new and merely risk posed by the customer and to implement a written AML program codify existing expectations for demonstrate that understanding.21 reasonably designed to achieve and Members to adequately identify and The CDD Rule also addresses the monitor the Member’s compliance with report suspicious transactions as interplay of understanding the nature the BSA and implementing regulations. required under the BSA and encapsulate and purpose of customer relationships Among other requirements, Options 9, practices generally already undertaken with the ongoing monitoring obligation Section 21 requires that each Member by securities firms to know and discussed below. The CDD Rule firm, at a minimum: (1) Establish and understand their customers.16 The explains that firms are not necessarily implement policies and procedures that proposed rule change simply required or expected to integrate can be reasonably expected to detect incorporates into Options 9, Section 21 customer information or the customer and cause the reporting of suspicious the ongoing customer due diligence risk profile into existing transaction transactions; (2) establish and element, or ‘‘fifth pillar,’’ required for monitoring systems (for example, to implement policies, procedures, and AML programs by the CDD Rule to aid serve as the baseline for identifying and internal controls reasonably designed to Members in complying with the CDD assessing suspicious transactions on a achieve compliance with the BSA and Rule’s requirements. However, to the contemporaneous basis).22 Rather, implementing regulations; (3) provide extent that these elements, which are FinCEN expects firms to use the independent testing for compliance to briefly summarized below, are not customer information and customer risk be conducted by Member personnel or already included in Members’ AML profile as appropriate during the course a qualified outside party; (4) designate programs, the CDD Rule requires of complying with their obligations and identify to the Exchange an Members to update their AML programs under the BSA in order to determine individual or individuals (i.e., AML to explicitly incorporate them. whether a particular flagged transaction compliance person(s)) who will be III. Summary of Fifth Pillar’s is suspicious.23 responsible for implementing and Requirements monitoring the day-to-day operations Conduct Ongoing Monitoring and internal controls of the AML Understanding the Nature and Purpose As with the requirement to program and provide prompt of Customer Relationships understand the nature and purpose of notification to the Exchange of any FinCEN states in the CDD Rule that the customer relationship, the changes to the designation; and (5) firms must necessarily have an requirement to conduct ongoing provide ongoing training for appropriate understanding of the nature and monitoring to identify and report persons. purpose of the customer relationship in suspicious transactions and, on a risk FinCEN’s CDD Rule does not change order to determine whether a basis, to maintain and update customer the requirements of Options 9, Section transaction is potentially suspicious information, merely adopts existing 21, and Members must continue to and, in turn, to fulfill their SAR supervisory and regulatory expectations 14 comply with its requirements. obligations.17 To that end, the CDD Rule as explicit minimum standards of However, FinCEN’s CDD Rule amends requires that firms understand the customer due diligence required for the minimum regulatory requirements nature and purpose of the customer firms’ AML programs.24 If, in the course for broker-dealers’ AML programs by relationship in order to develop a of its normal monitoring for suspicious explicitly requiring such programs to customer risk profile. The customer risk activity, the Member detects include risk-based procedures for profile refers to information gathered information that is relevant to assessing conducting ongoing customer due about a customer to form the baseline the customer’s risk profile, the Member diligence.15 Accordingly, the Exchange against which customer activity is must update the customer information, is proposing to amend Options 9, assessed for suspicious transaction including the information regarding the Section 21 to incorporate this ongoing reporting.18 Information relevant to beneficial owners of legal entity customer due diligence element, or understanding the nature and purpose customers.25 However, there is no ‘‘fifth pillar’’ required for AML of the customer relationship may be expectation that the Member update programs. Thus, proposed Options 9, self-evident and, depending on the facts customer information, including Section 21(f) would provide that the and circumstances, may include such beneficial ownership information, on an AML programs required by this Rule information as the type of customer, ongoing or continuous basis.26 shall, at a minimum include appropriate account or service offered, and the 2. Statutory Basis risk-based procedures for conducting customer’s income, net worth, domicile, ongoing customer due diligence, to or principal occupation or business, as The Exchange believes that the include, but not be limited to: (1) well as, in the case of existing proposed rule change is consistent with Understanding the nature and purpose customers, the customer’s history of Section 6(b) of the Act,27 in general, and of customer relationships for the activity.19 The CDD Rule also does not furthers the objectives of Section 6(b)(5) purpose of developing a customer risk prescribe a particular form of the of the Act,28 in particular, in that it is profile; and (2) conducting ongoing customer risk profile.20 Instead, the CDD monitoring to identify and report Rule states that depending on the firm 21 Id. suspicious transactions and, on a risk and the nature of its business, a 22 Id. customer risk profile may consist of 23 Id. 24 14 FinCEN notes that broker-dealers must individualized risk scoring, placement Id. at 29402. continue to comply with FINRA Rules, 25 Id. at 29420–21. See also FINRA Regulatory notwithstanding differences between the CDD Rule Notice 17–40 (discussing identifying and verifying 16 and FINRA Rule 3310, which is substantially Id. at 29419. the identity of beneficial owners of legal entity identical to Options 9, Section 21. See CDD Rule 17 Id. at 29421. customers). Release 29421, n. 85. 18 Id. at 29422. 26 Id. 15 See CDD Rule Release at 29420; 31 CFR 19 Id. 27 15 U.S.C. 78f(b). 1023.210. 20 Id. 28 15 U.S.C. 78f(b)(5).

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designed to promote just and equitable III. Date of Effectiveness of the rules/sro.shtml). Copies of the principles of trade, to remove Proposed Rule Change and Timing for submission, all subsequent impediments to and perfect the Commission Action amendments, all written statements mechanism of a free and open market Because the foregoing proposed rule with respect to the proposed rule and a national market system, and, in change does not: (i) Significantly affect change that are filed with the general to protect investors and the the protection of investors or the public Commission, and all written public interest. Specifically, the interest; (ii) impose any significant communications relating to the Exchange believes the proposed rule burden on competition; and (iii) become proposed rule change between the change will protect investors, because it operative for 30 days from the date on Commission and any person, other than will aid Members in complying with the which it was filed, or such shorter time those that may be withheld from the CDD Rule’s requirement that Members’ as the Commission may designate, it has public in accordance with the AML programs include risk-based become effective pursuant to Section provisions of 5 U.S.C. 552, will be procedures for conducting ongoing 19(b)(3)(A)(iii) of the Act 31 and available for website viewing and printing in the Commission’s Public customer due diligence by also subparagraph (f)(6) of Rule 19b–4 Reference Room, 100 F Street NE, incorporating the requirement into thereunder.32 Options 9, Section 21. At any time within 60 days of the Washington, DC 20549, on official filing of the proposed rule change, the business days between the hours of B. Self-Regulatory Organization’s Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the Statement on Burden on Competition temporarily suspend such rule change if filing also will be available for inspection and copying at the principal The Exchange does not believe that it appears to the Commission that such action is necessary or appropriate in the office of the Exchange. All comments the proposed rule change will impose received will be posted without change. public interest, for the protection of any burden on competition that is not Persons submitting comments are investors, or otherwise in furtherance of necessary or appropriate in furtherance cautioned that we do not redact or edit the purposes of the Act. If the of the purposes of the Act. The personal identifying information from Commission takes such action, the proposed rule change simply comment submissions. You should Commission shall institute proceedings incorporates into Options 9, Section 21 submit only information that you wish to determine whether the proposed rule the ongoing customer due diligence to make available publicly. All should be approved or disapproved. element, or ‘‘fifth pillar,’’ required for submissions should refer to File AML programs by the CDD Rule. IV. Solicitation of Comments Number SR–MRX–2020–05 and should Regardless of the proposed rule change, Interested persons are invited to be submitted on or before March 20, to the extent that the elements of the submit written data, views, and 2020. fifth pillar are not already included in arguments concerning the foregoing, For the Commission, by the Division of Members’ AML programs, the CDD Rule including whether the proposed rule Trading and Markets, pursuant to delegated requires Members to update their AML change is consistent with the Act. authority.33 programs to explicitly incorporate them. Comments may be submitted by any of J. Matthew DeLesDernier, In addition, as stated in the CDD Rule, the following methods: Assistant Secretary. these elements are already implicitly [FR Doc. 2020–04075 Filed 2–27–20; 8:45 am] Electronic Comments required for covered financial BILLING CODE 8011–01–P institutions to comply with their • Use the Commission’s internet suspicious activity reporting comment form (http://www.sec.gov/ requirements. Further, all Exchange rules/sro.shtml); or SECURITIES AND EXCHANGE • Members that have customers are Send an email to rule-comments@ COMMISSION sec.gov. Please include File Number SR– required to be members of FINRA [Release No. 34–88271; File No. SR–ISE– pursuant to Rule 15b9–1 under the MRX–2020–05 on the subject line. 2020–08] Exchange Act,29 and are therefore Paper Comments already subject to the requirements of Self-Regulatory Organizations; Nasdaq • Send paper comments in triplicate FINRA Rule 3310. Additionally, the ISE, LLC; Notice of Filing and to Secretary, Securities and Exchange proposed rule change is virtually Immediate Effectiveness of Proposed 30 Commission, 100 F Street NE, Rule Change To Amend Options 9, identical to FINRA Rule 3310. The Washington, DC 20549–1090. Exchange is not imposing any Section 21 (Anti-Money Laundering All submissions should refer to File additional direct or indirect burdens on Compliance Program) Number SR–MRX–2020–05. This file member firms or their customers number should be included on the February 24, 2020. through this proposal, and as such, the subject line if email is used. To help the Pursuant to Section 19(b)(1) of the proposal imposes no new burdens on Commission process and review your Securities Exchange Act of 1934 competition. 1 2 comments more efficiently, please use (‘‘Act’’), and Rule 19b–4 thereunder, C. Self-Regulatory Organization’s only one method. The Commission will notice is hereby given that on February Statement on Comments on the post all comments on the Commission’s 18, 2020, Nasdaq ISE, LLC (‘‘ISE’’ or Proposed Rule Change Received From internet website (http://www.sec.gov/ ‘‘Exchange’’) filed with the Securities Members, Participants, or Others and Exchange Commission (‘‘SEC’’ or 31 15 U.S.C. 78s(b)(3)(A)(iii). ‘‘Commission’’) the proposed rule No written comments were either 32 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– change as described in Items I, II, and solicited or received. 4(f)(6) requires a self-regulatory organization to give III, below, which Items have been the Commission written notice of its intent to file prepared by the Exchange. The the proposed rule change at least five business days 29 17 CFR 240.15b9–1. prior to the date of filing of the proposed rule 30 The Exchange notes that changes between the change, or such shorter time as designated by the 33 17 CFR 200.30–3(a)(12). proposed Rule and FINRA Rule 3310 are non- Commission. The Exchange has satisfied this 1 15 U.S.C. 78s(b)(1). substantive and relate to cross references. requirement. 2 17 CFR 240.19b–4.

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Commission is publishing this notice to A. Self-Regulatory Organization’s including broker-dealers. In its CDD solicit comments on the proposed rule Statement of the Purpose of, and Rule, FinCEN identifies four change from interested persons. Statutory Basis for, the Proposed Rule components of customer due diligence: Change (1) Customer identification and I. Self-Regulatory Organization’s verification; (2) beneficial ownership 1. Purpose Statement of the Terms of Substance of identification and verification; (3) the Proposed Rule Change I. Background understanding the nature and purpose of customer relationships; and (4) The Exchange proposes to amend The Bank Secrecy Act 4 (‘‘BSA’’), ongoing monitoring for reporting Options 9, Section 21, ‘‘Anti-Money among other things, requires financial 5 suspicious transactions and, on a risk Laundering Compliance Program.’’ This institutions, including broker-dealers, to develop and implement AML basis, maintaining and updating rule change is intended to reflect the customer information.10 As the first Financial Crimes Enforcement programs that, at a minimum, meet the statutorily enumerated ‘‘four pillars.’’ 6 component is already required to be part Network’s (‘‘FinCEN’’) adoption of a These four pillars currently require of a broker-dealers AML program under final rule on Customer Due Diligence broker-dealers to have written AML the BSA, the CDD Rule focuses on the Requirements for Financial Institutions programs that include, at a minimum: other three components. (‘‘CDD Rule’’). Specifically, the • The establishment and Specifically, the CDD Rule focuses proposed amendments would conform implementation of policies, procedures particularly on the second component Options 9, Section 21 to the CDD Rule’s and internal controls reasonably by adding a new requirement that amendments to the minimum regulatory designed to achieve compliance with covered financial institutions identify requirements for Members’ anti-money the applicable provisions of the BSA and verify the identity of the beneficial laundering (‘‘AML’’) compliance and implementing regulations; owners of all legal entity customers at programs by requiring such programs to • independent testing for compliance the time a new account is opened, include risk-based procedures for by broker-dealer personnel or a subject to certain exclusions and 11 conducting ongoing customer due qualified outside party; exemptions. The CDD Rule also • addresses the third and fourth diligence. This ongoing customer due designation of an individual or components, which FinCEN states ‘‘are diligence element for AML programs individuals responsible for implementing and monitoring the already implicitly required for covered includes: (1) Understanding the nature financial institutions to comply with and purpose of customer relationships operations and internal controls of the AML program; and their suspicious activity reporting for the purpose of developing a • ongoing training for appropriate requirements,’’ by amending the customer risk profile; and (2) persons.7 existing AML program rules for covered conducting ongoing monitoring to In addition to meeting the BSA’s financial institutions to explicitly identify and report suspicious requirement with respect to AML require these components to be transactions and, on a risk basis, to programs, Exchange Members must also included in AML programs as a new maintain and update customer comply with Options 9, Section 21, ‘‘fifth pillar.’’ information. which incorporates the BSA’s four On November 21, 2017, FINRA The Exchange has designated this pillars, as well as requires Members’ published Regulatory Notice 17–40 to proposal as ‘‘non-controversial’’ under AML programs to establish and provide guidance to member firms regarding their obligations under FINRA paragraph (f)(6) of Rule 19b–4 3 under implement policies and procedures that Rule 3310 in light of the adoption of the Act. can be reasonably expected to detect and cause the reporting of suspicious FinCEN’s CDD Rule. In addition, the The text of the proposed rule change transactions. Notice summarized the CDD Rule’s is available on the Exchange’s website at On May 11, 2016, FinCEN, the bureau impact on member firms, including the http://ise.cchwallstreet.com/, at the of the Department of the Treasury addition of the new fifth pillar required principal office of the Exchange, and at responsible for administering the BSA for member firms’ AML programs. the Commission’s Public Reference and its implementing regulations, FINRA also amended FINRA Rule 3310 Room. issued the CDD Rule 8 to clarify and to explicitly incorporate the fifth strengthen customer due diligence for pillar.12 This proposed rule change II. Self-Regulatory Organization’s covered financial institutions,9 amends Options 9, Section 21 to Statement of the Purpose of, and harmonize it with the FINRA rule and Statutory Basis for, the Proposed Rule 4 31 U.S.C. 5311, et seq. incorporate the fifth pillar. Change 5 See U.S.C. 5312(a)(2) (defining ‘‘financial institution’’). II. Options 9, Section 21 and In its filing with the Commission, the 6 31 U.S.C. 5318(h)(1). Amendment to Minimum Requirements Exchange included statements 7 31 CFR 1023.210(b). for Members’ AML Programs 8 FinCEN Customer Due Diligence Requirements concerning the purpose of and basis for for Financial Institutions; CDD Rule, 81 FR 29397 Section 352 of the USA PATRIOT Act the proposed rule change and discussed (May 11, 2016) (CDD Rule Release); 82 FR 45182 of 2001 13 amended the BSA to require any comments it received on the (September 28, 2017) (making technical correcting broker-dealers to develop and amendments to the final CDD Rule published on proposed rule change. The text of these May 11, 2016). FinCEN is authorized to impose 10 statements may be examined at the AML program requirements on financial See CDD Rule Release at 29398. places specified in Item IV below. The institutions and to require financial institutions to 11 See 31 CFR 1010.230(d) (defining ‘‘beneficial maintain procedures to ensure compliance with the owner’’) and 31 CFR 1010.230(e) (defining ‘‘legal Exchange has prepared summaries, set BSA and associated regulations. 31 U.S.C. entity customer’’). forth in sections A, B, and C below, of 5318(h)(2) and (a)(2). The CDD Rule is the result of 12 See Securities Exchange Act Release No. 83154 the most significant aspects of such the rulemaking process FinCEN initiated in March (May 2, 2018), 83 FR 20906 (May 8, 2018) (File No. statements. 2012. See 77 FR 13046 (March 5, 2012) (Advance SR–FINRA–2018–016). Notice of Proposed Rulemaking) and 79 FR 45151 13 Uniting and Strengthening America by (Aug. 4, 2014) (Notice of Proposed Rulemaking). Providing Appropriate Tools Required to Intercept 9 See 31 CFR 1010.230(f) (defining ‘‘covered and Obstruct Terrorism Act of 2001, Public Law 3 17 CFR 240.19b–4(f)(6). financial institution’’). 107–56, 115 Stat. 272 (2001) (‘‘PATRIOT Act’’).

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implement AML programs that include monitoring to identify and report customer risk profile may consist of the four pillars mentioned above. suspicious transactions and, on a risk individualized risk scoring, placement Consistent with Section 352 of the basis, to maintain and update customer of customers into risk categories or PATRIOT Act, and incorporating the information. another means of assessing customer four pillars, Options 9, Section 21 As stated in the CDD Rule, these risk that allows firms to understand the requires each Member to develop and provisions are not new and merely risk posed by the customer and to implement a written AML program codify existing expectations for demonstrate that understanding.21 reasonably designed to achieve and Members to adequately identify and The CDD Rule also addresses the monitor the Member’s compliance with report suspicious transactions as interplay of understanding the nature the BSA and implementing regulations. required under the BSA and encapsulate and purpose of customer relationships Among other requirements, Options 9, practices generally already undertaken with the ongoing monitoring obligation Section 21 requires that each Member by securities firms to know and discussed below. The CDD Rule 16 firm, at a minimum: (1) Establish and understand their customers. The explains that firms are not necessarily implement policies and procedures that proposed rule change simply required or expected to integrate can be reasonably expected to detect incorporates into Options 9, Section 21 customer information or the customer and cause the reporting of suspicious the ongoing customer due diligence risk profile into existing transaction transactions; (2) establish and element, or ‘‘fifth pillar,’’ required for monitoring systems (for example, to implement policies, procedures, and AML programs by the CDD Rule to aid serve as the baseline for identifying and internal controls reasonably designed to Members in complying with the CDD assessing suspicious transactions on a achieve compliance with the BSA and Rule’s requirements. However, to the contemporaneous basis).22 Rather, implementing regulations; (3) provide extent that these elements, which are FinCEN expects firms to use the independent testing for compliance to briefly summarized below, are not customer information and customer risk already included in Members’ AML be conducted by Member personnel or profile as appropriate during the course programs, the CDD Rule requires a qualified outside party; (4) designate of complying with their obligations Members to update their AML programs and identify to the Exchange an under the BSA in order to determine to explicitly incorporate them. individual or individuals (i.e., AML whether a particular flagged transaction compliance person(s)) who will be III. Summary of Fifth Pillar’s is suspicious.23 responsible for implementing and Requirements monitoring the day-to-day operations Conduct Ongoing Monitoring and internal controls of the AML Understanding the Nature and Purpose As with the requirement to program and provide prompt of Customer Relationships understand the nature and purpose of notification to the Exchange of any FinCEN states in the CDD Rule that changes to the designation; and (5) the customer relationship, the firms must necessarily have an requirement to conduct ongoing provide ongoing training for appropriate understanding of the nature and persons. monitoring to identify and report purpose of the customer relationship in suspicious transactions and, on a risk FinCEN’s CDD Rule does not change order to determine whether a the requirements of Options 9, Section basis, to maintain and update customer transaction is potentially suspicious information, merely adopts existing 21, and Members must continue to and, in turn, to fulfill their SAR 14 supervisory and regulatory expectations comply with its requirements. 17 obligations. To that end, the CDD Rule as explicit minimum standards of However, FinCEN’s CDD Rule amends requires that firms understand the the minimum regulatory requirements customer due diligence required for nature and purpose of the customer 24 for broker-dealers’ AML programs by firms’ AML programs. If, in the course relationship in order to develop a of its normal monitoring for suspicious explicitly requiring such programs to customer risk profile. The customer risk include risk-based procedures for activity, the Member detects profile refers to information gathered information that is relevant to assessing conducting ongoing customer due about a customer to form the baseline 15 the customer’s risk profile, the Member diligence. Accordingly, the Exchange against which customer activity is is proposing to amend Options 9, must update the customer information, assessed for suspicious transaction including the information regarding the Section 21 to incorporate this ongoing reporting.18 Information relevant to beneficial owners of legal entity customer due diligence element, or understanding the nature and purpose customers.25 However, there is no ‘‘fifth pillar’’ required for AML of the customer relationship may be expectation that the Member update programs. Thus, proposed Options 9, self-evident and, depending on the facts customer information, including Section 21(f) would provide that the and circumstances, may include such beneficial ownership information, on an AML programs required by this Rule information as the type of customer, ongoing or continuous basis.26 shall, at a minimum include appropriate account or service offered, and the risk-based procedures for conducting customer’s income, net worth, domicile, 2. Statutory Basis ongoing customer due diligence, to or principal occupation or business, as include, but not be limited to: (1) well as, in the case of existing The Exchange believes that the Understanding the nature and purpose customers, the customer’s history of proposed rule change is consistent with 27 of customer relationships for the activity.19 The CDD Rule also does not Section 6(b) of the Act, in general, and purpose of developing a customer risk prescribe a particular form of the profile; and (2) conducting ongoing customer risk profile.20 Instead, the CDD 21 Id. Rule states that depending on the firm 22 Id. 23 14 FinCEN notes that broker-dealers must and the nature of its business, a Id. continue to comply with FINRA Rules, 24 Id. at 29402. notwithstanding differences between the CDD Rule 25 Id. at 29420–21. See also FINRA Regulatory 16 and FINRA Rule 3310, which is substantially‘ Id. at 29419. Notice 17–40 (discussing identifying and verifying identical to Options 9, Section 21. See CDD Rule 17 Id. at 29421. the identity of beneficial owners of legal entity Release 29421, n. 85. 18 Id. at 29422. customers). 15 See CDD Rule Release at 29420; 31 CFR 19 Id. 26 Id. 1023.210. 20 Id. 27 15 U.S.C. 78f(b).

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furthers the objectives of Section 6(b)(5) III. Date of Effectiveness of the rules/sro.shtml). Copies of the of the Act,28 in particular, in that it is Proposed Rule Change and Timing for submission, all subsequent designed to promote just and equitable Commission Action amendments, all written statements principles of trade, to remove Because the foregoing proposed rule with respect to the proposed rule impediments to and perfect the change does not: (i) Significantly affect change that are filed with the mechanism of a free and open market the protection of investors or the public Commission, and all written and a national market system, and, in interest; (ii) impose any significant communications relating to the general to protect investors and the burden on competition; and (iii) become proposed rule change between the public interest. Specifically, the operative for 30 days from the date on Commission and any person, other than Exchange believes the proposed rule which it was filed, or such shorter time those that may be withheld from the change will protect investors, because it as the Commission may designate, it has public in accordance with the will aid Members in complying with the become effective pursuant to Section provisions of 5 U.S.C. 552, will be CDD Rule’s requirement that Members’ 19(b)(3)(A)(iii) of the Act 31 and available for website viewing and AML programs include risk-based subparagraph (f)(6) of Rule 19b–4 printing in the Commission’s Public procedures for conducting ongoing thereunder.32 Reference Room, 100 F Street NE, customer due diligence by also At any time within 60 days of the Washington, DC 20549, on official incorporating the requirement into filing of the proposed rule change, the business days between the hours of Options 9, Section 21. Commission summarily may 10:00 a.m. and 3:00 p.m. Copies of the B. Self-Regulatory Organization’s temporarily suspend such rule change if filing also will be available for Statement on Burden on Competition it appears to the Commission that such inspection and copying at the principal office of the Exchange. All comments The Exchange does not believe that action is necessary or appropriate in the public interest, for the protection of received will be posted without change. the proposed rule change will impose Persons submitting comments are any burden on competition that is not investors, or otherwise in furtherance of the purposes of the Act. If the cautioned that we do not redact or edit necessary or appropriate in furtherance personal identifying information from of the purposes of the Act. The Commission takes such action, the Commission shall institute proceedings comment submissions. You should proposed rule change simply submit only information that you wish incorporates into Options 9, Section 21 to determine whether the proposed rule should be approved or disapproved. to make available publicly. All the ongoing customer due diligence submissions should refer to File element, or ‘‘fifth pillar,’’ required for IV. Solicitation of Comments Number SR–ISE–2020–08 and should be AML programs by the CDD Rule. Interested persons are invited to submitted on or before March 20, 2020. Regardless of the proposed rule change, submit written data, views, and to the extent that the elements of the For the Commission, by the Division of arguments concerning the foregoing, Trading and Markets, pursuant to delegated fifth pillar are not already included in 33 Members’ AML programs, the CDD Rule including whether the proposed rule authority. requires Members to update their AML change is consistent with the Act. J. Matthew DeLesDernier, programs to explicitly incorporate them. Comments may be submitted by any of Assistant Secretary. In addition, as stated in the CDD Rule, the following methods: [FR Doc. 2020–04072 Filed 2–27–20; 8:45 am] these elements are already implicitly Electronic Comments BILLING CODE 8011–01–P required for covered financial • Use the Commission’s internet institutions to comply with their comment form (http://www.sec.gov/ suspicious activity reporting rules/sro.shtml); or DEPARTMENT OF STATE requirements. Further, all Exchange • Send an email to rule-comments@ [Public Notice: 11055] Members that have customers are sec.gov. Please include File Number SR– required to be members of FINRA ISE–2020–08 on the subject line. Notice of Determinations; Culturally pursuant to Rule 15b9–1 under the Significant Objects Re-Imported for 29 Exchange Act, and are therefore Paper Comments Exhibition—Determinations: ‘‘Caravans already subject to the requirements of • Send paper comments in triplicate of Gold, Fragments in Time: Art, FINRA Rule 3310. Additionally, the to Secretary, Securities and Exchange Culture, and Exchange Across proposed rule change is virtually Commission, 100 F Street NE, Medieval Saharan Africa’’ Exhibition identical 30 to FINRA Rule 3310. The Washington, DC 20549–1090. SUMMARY: Notice is hereby given of the Exchange is not imposing any All submissions should refer to File following determinations: I hereby additional direct or indirect burdens on Number SR–ISE–2020–08. This file determine that certain objects included member firms or their customers number should be included on the through this proposal, and as such, the in the exhibition ‘‘Caravans of Gold, subject line if email is used. To help the proposal imposes no new burdens on Fragments in Time: Art, Culture, and Commission process and review your competition. Exchange across Medieval Saharan comments more efficiently, please use Africa,’’ being re-imported from abroad C. Self-Regulatory Organization’s only one method. The Commission will for temporary exhibition within the Statement on Comments on the post all comments on the Commission’s United States, are of cultural Proposed Rule Change Received From internet website (http://www.sec.gov/ significance. The objects are re-imported Members, Participants, or Others pursuant to loan agreements with the No written comments were either 31 15 U.S.C. 78s(b)(3)(A)(iii). 32 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– foreign owners or custodians. I also solicited or received. 4(f)(6) requires a self-regulatory organization to give determine that the exhibition or display the Commission written notice of its intent to file of the exhibit objects at the National 28 15 U.S.C. 78f(b)(5). the proposed rule change at least five business days Museum of African Art, Smithsonian 29 17 CFR 240.15b9–1. prior to the date of filing of the proposed rule 30 The Exchange notes that changes between the change, or such shorter time as designated by the Institution, Washington, District of proposed Rule and FINRA Rule 3310 are non- Commission. The Exchange has satisfied this substantive and relate to cross references. requirement. 33 17 CFR 200.30–3(a)(12).

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Columbia, from on or about April 8, dated October 9, 2019 (the Executive DEPARTMENT OF STATE 2020, until on or about November 29, Order), the Department of State has 2020, and at possible additional established a portal that contains or [Public Notice: 11054] exhibitions or venues yet to be links to all Department documents that determined, is in the national interest. qualify as ‘‘Guidance Documents’’ under Notice of Determinations; Additional I have ordered that Public Notice of the Executive Order. The URL for this Culturally Significant Objects Imported these determinations be published in searchable Guidance Portal is https:// for Exhibition—Determinations: the Federal Register. state.gov/guidance. ‘‘Malangatana: Mozambique Modern’’ FOR FURTHER INFORMATION CONTACT: Chi Pursuant to Sections 2 and 7 of the Exhibition D. Tran, Program Administrator, Office Executive Order, certain documents are of the Legal Adviser, U.S. Department of not linked to or included on the SUMMARY: On November 15, 2019, notice State (telephone: 202–632–6471; email: Department’s Guidance Portal. Such was published on page 62561 of the [email protected]). The mailing Federal Register (volume 84, number address is U.S. Department of State, documents include, but are not limited to, those that pertain to ‘‘foreign or 221) of determinations pertaining to L/PD, SA–5, Suite 5H03, Washington, certain objects to be included in an DC 20522–0505. military affairs, or to a national security or homeland security function of the exhibition entitled ‘‘Malangatana: SUPPLEMENTARY INFORMATION: The United States (other than guidance Mozambique Modern.’’ Notice is hereby foregoing determinations were made given of the following determinations: I pursuant to the authority vested in me documents involving procurement or the import or export of non-defense hereby determine that certain additional by the Act of October 19, 1965 (79 Stat. objects to be included in the exhibition 985; 22 U.S.C. 2459), Executive Order articles and services)’’; including but not limited to documents related to the ‘‘Malangatana: Mozambique Modern,’’ 12047 of March 27, 1978, the Foreign imported from abroad for temporary Affairs Reform and Restructuring Act of implementation of the Arms Export exhibition within the United States, are 1998 (112 Stat. 2681, et seq.; 22 U.S.C. Control Act, 22 U.S.C. 2751 et seq; of cultural significance. The additional 6501 note, et seq.), Delegation of educational and cultural exchange, e.g., objects are imported pursuant to a loan Authority No. 234 of October 1, 1999, via implementation of the United States and Delegation of Authority No. 236–3 Information and Educational Exchange agreement with the foreign owner or of August 28, 2000. Act of 1948, as amended (22 U.S.C. custodian. I also determine that the 1431, et seq.), and the Mutual exhibition or display of the additional Marie Therese Porter Royce, Educational and Cultural Exchange Act exhibit objects at the Art Institute of Assistant Secretary, Educational and Cultural Chicago, Chicago, Illinois, from on or Affairs, Department of State. of 1961, as amended, (22 U.S.C. 2451 et seq.), and related or similar legislation; about March 22, 2020, until on or about [FR Doc. 2020–04093 Filed 2–27–20; 8:45 am] administration and enforcement of July 5, 2020, and at possible additional BILLING CODE 4710–05–P immigration laws relating to visas in 8 exhibitions or venues yet to be U.S.C. 1101 et seq. and other determined, is in the national interest. I have ordered that Public Notice of DEPARTMENT OF STATE immigration laws; and documents included exclusively on a U.S. Embassy these determinations be published in [Public Notice 11052] website. the Federal Register. Department of State Guidance Portal If those documents are included on FOR FURTHER INFORMATION CONTACT: Chi (Executive Order 13891) other Department websites, exclusion D. Tran, Program Administrator, Office from the Guidance Portal will not affect of the Legal Adviser, U.S. Department of AGENCY: Department of State. the availability of those documents on State (telephone: 202–632–6471; email: ACTION: Notice. such websites. For clarity and [email protected]). The mailing address is U.S. Department of State, L/ SUMMARY: The Department of State (the convenience, the Department may Department) is publishing this notice include on the Guidance Portal PD, SA–5, Suite 5H03, Washington, DC pursuant to Executive Order 13891 to documents that fall outside the scope of 20522–0505. announce and describe the public-facing the Executive Order, including SUPPLEMENTARY INFORMATION: The portal that will contain the documents that are not ‘‘Guidance foregoing determinations were made Department’s Guidance Documents, as Documents’’ and documents that are pursuant to the authority vested in me described under the Executive Order. otherwise exempted under the by the Act of October 19, 1965 (79 Stat. DATES: The Guidance Portal is available Executive Order. The Department may 985; 22 U.S.C. 2459), Executive Order as of February 28, 2020. remove any or all such documents from 12047 of March 27, 1978, the Foreign ADDRESSES: If a member of the public the Guidance Portal at any time. Affairs Reform and Restructuring Act of wishes to provide a comment on any John C. Sullivan, 1998 (112 Stat. 2681, et seq.; 22 U.S.C. Guidance Document included on the Deputy Assistant Secretary for Global 6501 note, et seq.), Delegation of portal, or suggestions for operation of Information Services, Bureau of Authority No. 234 of October 1, 1999, the site, he or she can submit the Administration, U.S. Department of State. and Delegation of Authority No. 236–3 comment to [email protected]. [FR Doc. 2020–04101 Filed 2–27–20; 8:45 am] of August 28, 2000. FOR FURTHER INFORMATION CONTACT: BILLING CODE 4710–24–P Alice Kottmyer, Attorney-Adviser, Marie Therese Porter Royce, Office of the Legal Adviser, 202–647– Assistant Secretary, Educational and Cultural 2318, [email protected]. Affairs, Department of State. SUPPLEMENTARY INFORMATION: Pursuant [FR Doc. 2020–04096 Filed 2–27–20; 8:45 am] to Section 3 of Executive Order 13891, BILLING CODE 4710–05–P Promoting the Rule of Law Through Improved Agency Guidance Documents,

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SURFACE TRANSPORTATION BOARD continued rail service has been under the AIP. The FAA will accept received, this exemption will be public comments concerning these [Docket No. AB 1297X] effective on March 29, 2020, unless modified grant assurances for 30 days. Indiana & Ohio Railway Company— stayed pending reconsideration. Comments must be submitted on or Discontinuance of Service Petitions to stay that do not involve before March 30, 2020. If necessary, in Exemption—in Warren County, Ohio environmental issues and formal response to comments received, the expressions of intent to file an OFA to FAA will consider appropriate revisions Indiana & Ohio Railway Company subsidize continued rail service under to these grant assurance modifications (IORY) has filed a verified notice of 49 CFR 1152.27(c)(2) 3 must be filed by through publication of a subsequent exemption under 49 CFR part 1152 March 9, 2020.4 Petitions for notice in the Federal Register. subpart F—Exempt Abandonments and reconsideration must be filed by March ADDRESSES: You may send comments Discontinuances of Service to 19, 2020, with the Surface [identified by Docket Number FAA– discontinue service over a 5.6-mile rail Transportation Board, 395 E Street SW, 2020–0137] using any of the following line extending between milepost 1.10 Washington, DC 20423–0001. methods: near Lebanon and milepost 6.70 at A copy of any petition filed with • Government-wide Rulemaking Hageman Junction near Mason in Board should be sent to IORY’s Website: Go to http:// 1 Warren County, Ohio (the Line). The representative, Justin J. Marks, Clark www.regulations.gov and follow the Line traverses U.S. Postal Service Zip Hill PLC, 1001 Pennsylvania Ave. NW, instructions for sending your comments Codes 45036 and 45040. Suite 1300 South, Washington, DC electronically. IORY has certified that: (1) No local 20004. • Mail: Docket Operations, U.S. traffic has moved over the Line for at If the verified notice contains false or Department of Transportation, West least two years; (2) because the Line is misleading information, the exemption Building, Ground Floor, Room W12– stub-ended, it has not handled any is void ab initio. 140, Routing Symbol M–30, 1200 New overhead traffic in at least two years, Board decisions and notices are Jersey Avenue SE, Washington, DC and there is no potential overhead available at www.stb.gov. 20590. traffic that would need to be rerouted; Decided: February 25, 2020. • Fax: 1–202–493–2251. (3) no formal complaint filed by a user • Hand Delivery: To Docket of rail service on the Line (or by a state By the Board, Allison C. Davis, Director, Office of Proceedings. Operations, Room W12–140 on the or local government entity acting on ground floor of the West Building, 1200 behalf of such user) regarding cessation Aretha Laws-Byrum, Clearance Clerk. New Jersey Avenue SE, Washington, DC of service over the Line is pending 20590, between 9 a.m. and 5 p.m., [FR Doc. 2020–04104 Filed 2–27–20; 8:45 am] either with the Surface Transportation Monday through Friday, except Federal Board (Board) or with any U.S. District BILLING CODE 4915–01–P holidays. Court or has been decided in favor of FOR FURTHER INFORMATION CONTACT: complainant within the two-year period; Dave Cushing, Manager, Airports and (4) the requirements at 49 CFR DEPARTMENT OF TRANSPORTATION Financial Assistance Division, Federal 1105.12 (newspaper publication) and 49 Aviation Administration, 800 CFR 1152.50(d)(1) (notice to Federal Aviation Administration Independence Avenue SW, Washington, governmental agencies) have been met. [Docket No. FAA–2020–0137] DC 20591, telephone (202) 267–8827; As a condition to this exemption, any fax: (202) 267–5302. employee adversely affected by the Airport Improvement Program (AIP) discontinuance of service shall be Grant Assurances Authority for Grant Assurance protected under Oregon Short Line Modifications Railroad—Abandonment Portion AGENCY: Federal Aviation Administration (FAA), Department of This notice is published under the Goshen Branch Between Firth & authority described in Subtitle VII, Part Ammon, in Bingham & Bonneville Transportation. ACTION: Notice of modification of B, Chapter 471, Sections 47107 and Counties, Idaho, 360 I.C.C. 91 (1979). To 47122 of Title 49 United States Code address whether this condition Airport Improvement Program grant assurances; opportunity to comment. (U.S.C.). In addition, the statutory adequately protects affected employees, authorities delegated to the Federal a petition for partial revocation under SUMMARY: The FAA has updated the AIP Aviation Administration are 49 U.S.C. 10502(d) must be filed. grant assurances to reflect recent enumerated in Title 49 Code of Federal Provided no formal expression of legislative provisions in the FAA Regulations (CFR) § 1.83 (‘‘Delegations intent to file an offer of financial Reauthorization Act of 2018 as well as to the Federal Aviation assistance (OFA) 2 to subsidize recently issued executive orders. Administration’’). 1 While the verified notice states that the Line is DATES: The FAA is implementing these SUPPLEMENTARY INFORMATION: A sponsor owned by the City of Lebanon, agency precedent modified grant assurances upon (applicant) seeking financial assistance (which is cited by IORY) indicates that IORY itself publication of this notice to expedite in the form of an AIP grant for airport acquired the Line in 1987, and no other authority processing Fiscal Year 2020 grants is provided to suggest that the Line has since been planning, airport development, noise transferred. (Verified Notice 2 n.1.) Ind. & Ohio compatibility planning, or noise Ry.—Acquis. & Operation Exemption—Ind. & Ohio indicating the intent to file an OFA for subsidy and mitigation under 49 U.S.C., as amended, R.R., FD 30906 (ICC served Feb. 6, 1987); see also demonstrating that they are preliminarily must agree to comply with certain Ind. & Ohio Rail Passenger Corp.—Trackage Rights financially responsible. See 49 CFR 1152.27(c)(2)(i). Exemption—Cincinnati Term. Ry., et al., FD 32894 3 The filing fee for OFAs can be found at 49 CFR assurances. These grant assurances are (STB served Apr. 30, 1996) (notice of exemption for, 1002.2(f)(25). incorporated in, and become part of a among other things, IORY to grant trackage rights 4 Because this is a discontinuance proceeding and sponsor’s grant agreement for Federal to the Indiana & Ohio Rail Passenger Corporation not an abandonment, trail use/rail banking and assistance. As need dictates, the FAA between Lebanon and Hageman). public use conditions are not appropriate. Because 2 Persons interested in submitting an OFA to there will be an environmental review during modifies these assurances to reflect new subsidize continued rail service must first file a abandonment, this discontinuance does not require Federal requirements. Notice of such formal expression of intent to file an offer, environmental review. modifications is published in the

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Federal Register, and an opportunity for has received funds under this upon the transferee all of the terms, public comment is provided. The subchapter.’’ conditions, and assurances contained in assurances that apply to a sponsor this grant agreement. Updates Pursuant to Section 135 of the depend on the type of sponsor. 29. Airport Layout Plan. Act There are three types of AIP grant a. Subject to the FAA Reauthorization assurances: Section 135 of the Act expands the Act of 2018, Public Law 115–254, • Airport Sponsor (applicable for statutory grant assurance regarding Section 163, it will keep up to date at airport development); veteran’s preference to include veterans all times an airport layout plan of the • Non-Airport Sponsors Undertaking of ‘‘Operation New Dawn, Operation airport showing: Noise Compatibility Program Projects; Inherent Resolve, Operation Freedom’s (1) Boundaries of the airport and all and Sentinel, or any successor contingency proposed additions thereto, together • Planning Agency Sponsors. operation to such operations;’’ and with the boundaries of all offsite areas Prior to the FAA Reauthorization Act small business concerns owned and owned or controlled by the sponsor for of 2018 (Pub. L. 115–254), the controlled by disabled veterans. FAA airport purposes and proposed assurances were published on: has revised Sponsor Assurance #15, additions thereto; • February 3, 1988, at 53 FR 3104 and Veteran’s Preference, to include these (2) the location and nature of all amended on September 6, 1988, at 53 changes. existing and proposed airport facilities FR 34361; and structures (such as runways, Updates Pursuant to Section 163 of the • August 29, 1989, at 54 FR 35748; taxiways, aprons, terminal buildings, Act • June 10, 1994, at 59 FR 30076; hangars and roads), including all • January 4, 1995, at 60 FR 521; Section 163 of the Act modified the proposed extensions and reductions of • June 2, 1997, at 62 FR 29761; FAA’s authorities and responsibilities existing airport facilities; • August 18, 1999, at 64 FR 45008; regarding changes in airport land use (3) the location of all existing and • March 29, 2005, at 70 FR 15980; under certain circumstances. Sponsor proposed non-aviation areas and of all • March 18, 2011, at 76 FR 15028; Assurances #5(b) and #29 have been existing improvements thereon; and • April 13, 2012, at 72 FR 22376; and amended to reflect this provision. (4) all proposed and existing access • April 3, 2014, at 79 FR 18755. In consideration of the above, the points used to taxi aircraft across the A complete list of the current grant FAA makes the following changes to the airport’s property boundary. Such assurances may be viewed at: https:// existing published Airport Sponsor airport layout plans and each www.faa.gov/airports/aip/grant_ Assurances. amendment, revision, or modification assurances/. C. Sponsor Certification. The sponsor thereof, shall be subject to the approval hereby assures and certifies that it will of the Secretary which approval shall be Discussion of AIP Grant Assurance comply with all applicable Federal evidenced by the signature of a duly Modifications laws, regulations, executive orders, authorized representative of the The FAA is making several changes to policies, guidelines, and requirements Secretary on the face of the airport the AIP grant assurances. These changes as they relate to the application, layout plan. The sponsor will not make will be in effect for grants issued on or acceptance and use of Federal funds for or permit any changes or alterations in after the date of publication of this this project including but not limited to the airport or any of its facilities which notice. The changes to the AIP grant the following updated provisions. are not in conformity with the airport assurances are listed below. The grant layout plan as approved by the Executive Orders assurance numbers referenced relate to Secretary and which might, in the the assurance (airport development g. Executive Order 13788—Buy opinion of the Secretary, adversely grants): American and Hire American. affect the safety, utility, or efficiency of the airport. Technical Non-Substantive Changes To Executive Order 13858—Strengthening b. Subject to the FAA Reauthorization Correct Minor Typographical Errors Buy-American Preferences for Act of 2018, Public Law 115–254, Infrastructure Projects Because these have no change on the Section 163, if a change or alteration in substance of the assurances, these 5. Preserving Rights and Powers. the airport or the facilities is made changes, including minor edits to Grant b. Subject to the FAA Act of 2018, which the Secretary determines Assurance 37, have not been specifically Public Law 115–254, Section 163, it will adversely affects the safety, utility, or called out. not sell, lease, encumber, or otherwise efficiency of any federally owned, transfer or dispose of any part of its title leased, or funded property on or off the Addition of Buy American and Hire or other interests in the property shown airport and which is not in conformity American Executive Orders on Exhibit A to this application or, for with the airport layout plan as approved The FAA has added Executive Order a noise compatibility program project, by the Secretary, the owner or operator 13788 (‘‘Buy American and Hire that portion of the property upon which will, if requested, by the Secretary (1) American’’) and Executive Order 13858 Federal funds have been expended, for eliminate such adverse effect in a (‘‘Strengthening Buy-American the duration of the terms, conditions, manner approved by the Secretary; or Preferences for Infrastructure Projects’’) and assurances in this grant agreement (2) bear all costs of relocating such to the list of executive orders applicable without approval by the Secretary. If the property (or replacement thereof) to a in Grant Assurance C. transferee is found by the Secretary to site acceptable to the Secretary and all be eligible under Title 49, United States costs of restoring such property (or Updates Pursuant to Section 131 of the Code, to assume the obligations of this replacement thereof) to the level of Act grant agreement and to have the power, safety, utility, efficiency, and cost of Section 131 of the Act requires the authority, and financial resources to operation existing before the FAA to change Sponsor Assurance #32 carry out all such obligations, the unapproved change in the airport or its (‘‘Engineering and Design Services’’). sponsor shall insert in the contract or facilities except in the case of a Sponsor Assurance #32 now applies to document transferring or disposing of relocation or replacement of an existing a sponsor if ‘‘any phase of such project the sponsor’s interest, and make binding airport facility due to a change in the

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Secretary’s design standards beyond the on the proposed information collection repeated harassment of minority male control of the airport sponsor. to the Office of Information and truckers. Currently, FMCSA does not 32. Engineering and Design Services. Regulatory Affairs, Office of provide materials or training to truckers, If any phase of such project has received Management and Budget. Comments including minority and female truckers, Federal funds under Chapter 471 should be addressed to the attention of on how to protect themselves from subchapter 1 of Title 49 U.S.C., it will the Desk Officer, Department of being stalked, harassed, assaulted, or award each contract, or sub-contract for Transportation/Federal Motor Carrier robbed. Before effective solutions for program management, construction Safety Administration, and sent via preventing or reducing these crimes management, planning studies, electronic mail to oira_submission@ against female and minority truckers feasibility studies, architectural omb.eop.gov, or faxed to (202) 395– can be developed and implemented, services, preliminary engineering, 6974, or mailed to the Office of FMCSA must understand the design, engineering, surveying, mapping Information and Regulatory Affairs, prevalence, seriousness, and nature of or related services in the same manner Office of Management and Budget, the problem of harassment and assaults as a contract for architectural and Docket Library, Room 10102, 725 17th against truckers. Currently, there is engineering services is negotiated under Street NW, Washington, DC 20503. insufficient data. The frequency and Chapter 11 of Title 40 U.S.C., or an FOR FURTHER INFORMATION CONTACT: number of harassment- and assault- equivalent qualifications-based Chris Flanigan, General Engineer, related crimes occurring, the portion requirement prescribed for or by the Technology Division, Department of that are unreported, and reasons for sponsor of the airport. Transportation, Federal Motor Carrier underreporting are unknown. As noted previously, all other grant Safety Administration, 6th Floor, West The purpose of this research study is assurances remain in full force and Building, 1200 New Jersey Avenue SE, to gather information to answer these effect except as shown above. Washington, DC 20590–0001. questions, to understand how serious the problem is, and to report it to Telephone: 202–385–2384; Email Issued in Washington, DC on February 25, FMCSA so the Agency can decide on 2020. Address: [email protected]. Office further options for evaluation and hours are from 9 a.m. to 5 p.m., Monday Robert John Craven, action. FMCSA needs to explore and through Friday, except Federal Director, Office of Airport Panning and validate the problem of harassment- and Holidays. Programming. assault-related crimes, especially against [FR Doc. 2020–04139 Filed 2–27–20; 8:45 am] SUPPLEMENTARY INFORMATION: female and minority male truckers for BILLING CODE 4910–13–P Title: Crime Prevention for Truckers. two reasons. First, there seems to be a OMB Control Number: 2126–00XX. perception among these subpopulations Type of Request: New information of truckers that they are more vulnerable DEPARTMENT OF TRANSPORTATION collection. than others. Second, there is a critical Respondents: Female and minority shortage of truckers, and helping these Federal Motor Carrier Safety male commercial motor vehicle drivers. subpopulations of truckers protect Administration Estimated Number of Respondents: themselves from crimes could draw [Docket No. FMCSA–2018–0278] Maximum of 880 truck drivers [80 more truckers from these respondents reporting no incidents of subpopulations, while stemming Agency Information Collection harassment or crime + 800 respondents turnover, to alleviate the shortage. Activities; Approval of a New reporting one or more incidents of FMCSA has contracted with Battelle Information Collection Request: Crime harassment or crime]. to create and execute a survey of truck Prevention for Truckers Estimated Time per Response: Varies. drivers to gather this information. This [8 minutes for respondents not reporting exploratory survey will be limited in AGENCY: Federal Motor Carrier Safety incidents of harassment or crime; 20 scale and scope. Quantitative and Administration (FMCSA), DOT. minutes for respondents reporting an qualitative analysis of the data will help ACTION: Notice and request for incident of harassment or crime]. the Agency to understand the nature comments. Expiration Date: This is a new and extent of the problem and begin to information collection. formulate an approach to reducing it. SUMMARY: In accordance with the Frequency of Response: Once. Paperwork Reduction Act of 1995, The results will not be used for Estimated Total Annual Burden: rulemaking. FMCSA announces its plan to submit 277.3 hours [80 respondents reporting The survey of professional truck the Information Collection Request (ICR) no incidents × (8 minutes ÷ 60 minutes drivers will be limited to female and described below to the Office of per hour) + 800 respondents reporting minority male drivers. The survey will Management and Budget (OMB) for one or more incidents × (20 minutes ÷ ask whether the drivers have review and approval. This request, titled 60 minutes per hour)]. experienced race- or gender-related ‘‘Crime Prevention for Truckers,’’ will Background: FMCSA has harassment or crimes on the job. If the allow for a study to understand the accumulated evidence, both driver has had such an experience, the prevalence, seriousness, and nature of documentary and anecdotal, for a survey will ask follow-up questions on the problem of harassment and assaults serious pattern of harassment- and where and when the incidents occurred, against minority and female truckers. assault-related crimes against female any information the respondent knows DATES: Please send your comments by and minority male truckers. For about the perpetrator, and whether the March 30, 2020. OMB must receive your example, Security Journal, in a 2006 respondent reported the incident. The comments by this date in order to act article titled ‘‘Workplace Violence survey will be anonymous. None of the quickly on the ICR. against Female Long-haul Truckers,’’ questions ask for information that could ADDRESSES: All comments should reported that 42 percent of female personally identify the respondent or reference Federal Docket Management longhaul truckers reported experiencing any perpetrators involved. Some System (FDMS) Docket Number one or more types of workplace respondents will take the survey online, FMCSA–2018–0278. Interested persons violence. USA Today, in a 2017 article and others will take it in the form of an are invited to submit written comments titled ‘‘Rigged,’’ gave accounts of in-person interview. Identical questions

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will be asked of all drivers, but answers harassment. Such training or outreach necessary for the FMCSA to perform its from males and females will be materials could help foster motor functions; (2) the accuracy of the analyzed separately. carriers’ employee retention efforts and estimated burden; (3) ways for the A maximum of 440 males and 440 help make the truck driving profession FMCSA to enhance the quality, females will be included in the more attractive to a greater range of usefulness, and clarity of the collected information collection. The information people. information; and (4) ways that the will be collected through a combination Public comments on this were burden could be minimized without of an online survey and in-person requested in the Federal Register in a reducing the quality of the collected interviews. Approximately 160 in July 23, 2019 notice (Docket No. information. person interviews will be completed, 80 FMCSA–2018–0278). Three comments Issued under the authority delegated in 49 females and 80 minority males. The were received and are summarized CFR 1.87 on: February 19, 2020. balance will take the survey below. Kenneth Riddle, electronically. Some individuals may be Ellen Voie, President, Women In Acting, Associate Administrator for Office of eligible to participate in the survey but Trucking (WIT) Association, appreciates Research and Information Technology. will not have had any recent experience the initiative to better understand the [FR Doc. 2020–04100 Filed 2–27–20; 8:45 am] of harassment or assault. These challenges female and minority drivers individuals will be included in the final face. WIT conducted research on best BILLING CODE 4910–EX–P results for calculation of prevalence. practices in hiring and retaining female The total number of respondents professional drivers. The respondents DEPARTMENT OF TRANSPORTATION targeted for those who experienced indicated their level of safety at 4.4 on some sort of harassment or assault will a scale of one to ten. She states that this Federal Railroad Administration be 400 in each group. If 400 targeted is unacceptable and that once the survey individuals are reached before the has been completed and we can better [Docket Number FRA–2020–0018] understand the extent of crimes against overall cap of 440 respondents, data Petition for Waiver of Compliance collection will be stopped for that female (and minority) drivers, we can group. Individuals who are screened but better address how to eliminate any Under part 211 of title 49 Code of are not female or minority male, or with harassment and assaults directed against Federal Regulations (CFR), this other criteria such as not being active them. Overall, this information will document provides the public notice drivers, will not be included in the assist WIT in their efforts to attract and that on January 30, 2020, Nevada interview counts, though a tabulation of retain more women in trucking. Northern Railway (NN) petitioned the the number of such contacts and reason Desiree Wood, President, Real Women Federal Railroad Administration (FRA) for their disqualification will be in Trucking, Inc. (RWIT), has been for a waiver of compliance from certain reported to better understand resource receiving distress calls related to sexual provisions of the Federal railroad safety needs and burden in future data misconduct related to entry-level driver regulations contained at 49 CFR part collection efforts of this type. A $25 training fleets for over 10 years. RWIT 230, Steam Locomotive Inspection and incentive will be given to eligible is a truck driver organization formed by Maintenance Standards. FRA assigned respondents to the in-person interview working female truck drivers, many of the petition Docket Number FRA–2020– or the online survey. For respondents to whom have had firsthand experience 0018. be eligible and to receive the incentive, with sexual misconduct at a trucking Specifically, NN requests relief from they must report that they are a female company, including Ms. Wood. This led 49 CFR 230.17, One thousand four or a minority male who has driven a to her forming RWIT, which aims to hundred seventy-two (1,472) service day truck professionally in the past 2 years assist women who have been raped, inspection, which requires that and complete the survey—at least assaulted, harassed, and abandoned by locomotives be inspected after 1,472 through the initial questions of what their employing carrier by referring service days or 15 years, whichever events, if any, they have experienced. them to law firms and the EEOC. Ms. occurs first. NN states that Locomotive Battelle statisticians experienced in Wood recommends that FMCSA take 40 will be due for its 1,472 service day surveys and in analyzing data for immediate action to address these issues inspection (SDI) on May 20, 2020, FMCSA will execute the data analysis instead of conducting the survey. although it has only accrued 795 service plan. Findings will be presented in a Bunny Sterling, East Calais, Vermont, days since its last 1,472 SDI. The report that will be made available on the described several types of harassment railroad would like to operate the Agency’s website so that interested against women working in the trucking locomotive through October 20, 2020, stakeholders and the general public will industry, but did not claim specifically which would consist of less than 60 be aware of the findings. Battelle is that they happened to her. They service days. During this period, NN required to deliver a public-use dataset included lude comments and gestures, states that it will perform all regularly at the conclusion of the project. By unwanted physical advances and phone required maintenance and inspection as understanding the nature and calls, and threats of losing employment otherwise required. prevalence of crimes against truckers, if retaliation occurred. NN is a historical railroad that offers FMCSA will be able to formulate and FMCSA appreciates the comments passenger train rides. It is supported by promote programs to address the and support for examining this issue the Nevada Northern Railway problem. The report may be useful to and plans to proceed with the data call Foundation. NN is concerned that if law enforcement personnel, motor to assess in more detail the extent of this Locomotive 40 must be taken out of carriers, truck drivers, operators of problem. This could lead to the agency service, NN will be left with only one private truck stops, and others reaching out to driver training schools operating steam locomotive for its 2020 interested in addressing the situation. to encourage that they address these season. If that steam engine also cannot If study findings indicate a significant issues in their courses. run, it will be impossible for NN to problem that merits action, FMCSA may Public Comments Invited: You are operate its schedule of steam-powered consider developing training or asked to comment on any aspect of this excursion trips, which would cause an outreach materials to help truckers information collection, including: (1) excessive financial strain on the protect themselves from crime or Whether the proposed collection is organization, as locomotive rides are

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essential to revenue and ridership. https://www.transportation.gov/privacy. specific docket number. All comments Approval of this waiver request would See also https://www.regulations.gov/ received will be posted without change allow NN to finish restoration of another privacyNotice for the privacy notice of to the docket at www.regulations.gov, steam locomotive that could take regulations.gov. including any personal information Locomotive 40’s place in late 2020, Issued in Washington, DC. provided. For detailed instructions on when Locomotive 40 would receive its John Karl Alexy, submitting comments, see the section 1,472 SDI. entitled Public Participation. A copy of the petition, as well as any Associate Administrator for Railroad Safety, Chief Safety Officer. FOR FURTHER INFORMATION CONTACT: written communications concerning the Bianca Carr, U.S. Department of petition, is available for review online at [FR Doc. 2020–04141 Filed 2–27–20; 8:45 am] BILLING CODE 4910–06–P Transportation, Maritime www.regulations.gov and in person at Administration, 1200 New Jersey the U.S. Department of Transportation’s Avenue SE, Room W23–453, (DOT) Docket Operations Facility, 1200 DEPARTMENT OF TRANSPORTATION Washington, DC 20590. Telephone 202– New Jersey Ave. SE, W12–140, 366–9309, Email [email protected]. Washington, DC 20590. The Docket Maritime Administration Operations Facility is open from 9 a.m. SUPPLEMENTARY INFORMATION: As to 5 p.m., Monday through Friday, [Docket No. MARAD–2020–0045] described by the applicant the intended except Federal Holidays. service of the vessel EPIPHANY is: Interested parties are invited to Requested Administrative Waiver of —INTENDED COMMERCIAL USE OF participate in these proceedings by the Coastwise Trade Laws: Vessel VESSEL: ‘‘Private Vessel Charters, submitting written views, data, or EPIPHANY (Sailing Catamaran); Passengers Only, for day charters and comments. FRA does not anticipate Invitation for Public Comments overnight charters.’’ —GEOGRAPHIC REGION INCLUDING scheduling a public hearing in AGENCY: Maritime Administration, DOT. connection with these proceedings since BASE OF OPERATIONS: ‘‘Maine, ACTION: Notice. the facts do not appear to warrant a New Hampshire, Massachusetts, hearing. If any interested parties desire SUMMARY: The Secretary of Connecticut, Rhode Island, New York an opportunity for oral comment and a Transportation, as represented by the (excluding New York Harbor), New public hearing, they should notify FRA, Maritime Administration (MARAD), is Jersey, Pennsylvania, Delaware, in writing, before the end of the authorized to grant waivers of the U.S.- Maryland, Virginia, North Carolina, comment period and specify the basis build requirements of the coastwise South Carolina, Georgia, Florida, for their request. trade laws to allow the carriage of no Alabama, Mississippi, Louisiana, All communications concerning these more than twelve passengers for hire on Texas’’ (Base of Operations: St. proceedings should identify the vessels, which are three years old or Michaels, MD) ′ appropriate docket number and may be more. A request for such a waiver has —VESSEL LENGTH AND TYPE: 43 submitted by any of the following been received by MARAD. The vessel, sailing catamaran methods: The complete application is available • and a brief description of the proposed Website: http:// service, is listed below. for review identified in the DOT docket www.regulations.gov. Follow the online DATES: Submit comments on or before as MARAD–2020–0045 at http:// instructions for submitting comments. • March 30, 2020. www.regulations.gov. Interested parties Fax: 202–493–2251. may comment on the effect this action • Mail: Docket Operations Facility, ADDRESSES: You may submit comments identified by DOT Docket Number may have on U.S. vessel builders or U.S. Department of Transportation, 1200 businesses in the U.S. that use U.S.-flag New Jersey Ave. SE, W12–140, MARAD–2020–0045 by any one of the following methods: vessels. If MARAD determines, in Washington, DC 20590. accordance with 46 U.S.C. 12121 and • Hand Delivery: 1200 New Jersey • Federal eRulemaking Portal: Go to MARAD’s regulations at 46 CFR part Ave. SE, Room W12–140, Washington, http://www.regulations.gov. Search 388, that the issuance of the waiver will DC 20590, between 9 a.m. and 5 p.m., MARAD–2020–0045 and follow the have an unduly adverse effect on a U.S.- Monday through Friday, except Federal instructions for submitting comments. vessel builder or a business that uses Holidays. • Mail or Hand Delivery: Docket Communications received by April Management Facility is in the West U.S.-flag vessels in that business, a 13, 2020 will be considered by FRA Building, Ground Floor of the U.S. waiver will not be granted. Comments before final action is taken. Comments Department of Transportation. The should refer to the vessel name, state the received after that date will be Docket Management Facility location commenter’s interest in the waiver considered if practicable. Anyone can address is: U.S. Department of application, and address the waiver search the electronic form of any written Transportation, MARAD–2020–0045, criteria given in section 388.4 of communications and comments 1200 New Jersey Avenue SE, West MARAD’s regulations at 46 CFR part received into any of our dockets by the Building, Room W12–140, Washington, 388. name of the individual submitting the DC 20590, between 9 a.m. and 5 p.m., Public Participation comment (or signing the document, if Monday through Friday, except on submitted on behalf of an association, Federal holidays. How do I submit comments? business, labor union, etc.). Under 5 Note: If you mail or hand-deliver your Please submit your comments, U.S.C. 553(c), DOT solicits comments comments, we recommend that you include including the attachments, following the from the public to better inform its your name and a mailing address, an email instructions provided under the above processes. DOT posts these comments, address, or a telephone number in the body heading entitled ADDRESSES. Be advised without edit, including any personal of your document so that we can contact you that it may take a few hours or even information the commenter provides, to if we have questions regarding your days for your comment to be reflected www.regulations.gov, as described in submission. on the docket. In addition, your the system of records notice (DOT/ALL– Instructions: All submissions received comments must be written in English. 14 FDMS), which can be reviewed at must include the agency name and We encourage you to provide concise

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comments and you may attach considered. If you wish to provide of Transportation, 1200 New Jersey additional documents as necessary. comments containing proprietary or Avenue SE, West Building, Room W12– There is no limit on the length of the confidential information, please contact 140, Washington, DC 20590, between 9 attachments. the agency for alternate submission a.m. and 5 p.m., Monday through instructions. Where do I go to read public comments, Friday, except on Federal holidays. and find supporting information? (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, Note: All submissions must include the 46 U.S.C. 12121) Go to the docket online at http:// agency name and docket number for this www.regulations.gov., keyword search * * * * * notice. All comments received will be posted without change to http:// MARAD–2020–0045 or visit the Docket Dated: February 24, 2020. www.regulations.gov including any personal Management Facility (see ADDRESSES for By Order of the Maritime Administrator. information provided. hours of operation). We recommend that T. Mitchell Hudson, Jr., you periodically check the Docket for Secretary, Maritime Administration. Docket: For access to the docket to new submissions and supporting [FR Doc. 2020–04054 Filed 2–27–20; 8:45 am] read comments received, go to http:// material. BILLING CODE 4910–81–P www.regulations.gov and search using Will my comments be made available to ‘‘MARAD–2020–0026’’ or go to Room the public? W12–401 of the Department of DEPARTMENT OF TRANSPORTATION Transportation, 1200 New Jersey Yes. Be aware that your entire Avenue SE, Washington, DC, between 9 comment, including your personal Maritime Administration a.m. and 5 p.m., Monday through identifying information, will be made Friday, except Federal Holidays. publicly available. [Docket No. MARAD–2020–0026] FOR FURTHER INFORMATION CONTACT: May I submit comments confidentially? Inventory of U.S.-Flag Launch Barges; Invitation for Public Comments Bianca Carr, U.S. Department of If you wish to submit comments Transportation, Maritime under a claim of confidentiality, you AGENCY: Maritime Administration, DOT. Administration, 1200 New Jersey should submit three copies of your ACTION: Notice and request for Avenue SE, Room W23–453, complete submission, including the comments. Washington, DC 20590. Telephone 202– information you claim to be confidential 366–9309, Email [email protected]. business information, to the Department SUMMARY: The Maritime Administration of Transportation, Maritime (MARAD) is performing its annual SUPPLEMENTARY INFORMATION: Pursuant Administration, Office of Legislation update of registered U.S.-flag launch to 46 CFR part 389.3, in order to provide and Regulations, MAR–225, W24–220, barges. Any additions or changes to the timely notification and to identify 1200 New Jersey Avenue SE, current Register of U.S.-Flag Launch potential participants to each other so Washington, DC 20590. Include a cover Barges published below in the they may examine how they can best letter setting forth with specificity the SUPPLEMENTARY INFORMATION section work together to maximize use of basis for any such claim and, if possible, should be submitted as comments to coastwise-qualified vessels, MARAD is a summary of your submission that can MARAD. MARAD’s Launch Barge required to publish a notice in the be made available to the public. Program information page is located at Federal Register annually requesting https://www.maritime.dot.gov/ports/ that owners or operators (or potential Privacy Act domestic-shipping/launch-barge- owners or operators) of coastwise In accordance with 5 U.S.C. 553(c), program. qualified launch barges notify us of: (1) DOT solicits comments from the public DATES: Submit comments on or before Their interest in participating in the to better inform its rulemaking process. March 30, 2020. transportation and, if needed, the DOT posts these comments, without ADDRESSES: You may submit comments launching or installation of offshore edit, to www.regulations.gov, as identified by DOT Docket Number platform jackets; (2) the contact described in the system of records MARAD–2020–0026 by any of the information for their company; and, (3) notice, DOT/ALL–14 FDMS, accessible following methods: the specifications of any currently through www.dot.gov/privacy. To • Website/Federal eRulemaking owned or operated coastwise qualified facilitate comment tracking and Portal: Go to http:// launch barges or plans to construct response, we encourage commenters to www.regulations.gov. Search ‘‘MARAD– same. In addition, MARAD is also provide their name, or the name of their 2020–00026’’ and follow the seeking the same information from organization; however, submission of instructions for submitting comments owners or operators of non-coastwise names is completely optional. Whether on the electronic docket site. qualified (U.S.-flag) launch barges. The or not commenters identify themselves, • Mail or Hand Delivery: Docket following is MARAD’s current register all timely comments will be fully Management Facility, U.S. Department of U.S.-flag launch barges:

REGISTER OF U.S.-FLAG LAUNCH BARGES

Approx. Length Beam DWT launch Coastwise Vessel name Owner Built (ft.) (ft.) (L.T.) capacity qualified (L.T.)

455 4 ...... Crowley Marine Services ...... 2009 400 105 19,226 18,766 X 455 5 ...... Crowley Marine Services ...... 2009 400 105 19,226 18,766 X 455 6 ...... Crowley Marine Services ...... 2009 400 105 19,226 18,766 X 455 7 ...... Crowley Marine Services ...... 2009 400 105 19,226 18,766 X 455 8 ...... Crowley Marine Services ...... 2010 400 105 19,226 18,766 X 455 9 ...... Crowley Marine Services ...... 2010 400 105 19,226 18,766 X

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REGISTER OF U.S.-FLAG LAUNCH BARGES—Continued

Approx. Length Beam DWT launch Coastwise Vessel name Owner Built (ft.) (ft.) (L.T.) capacity qualified (L.T.)

Barge 400L ...... Crowley Marine Services ...... 1997 400 100 19,646 19,146 X Barge 410 ...... Crowley Marine Services ...... 1974 400 99.5 12,035 11,535 X Barge 455–3 ...... Crowley Marine Services ...... 2008 400 105 19,226 18,766 X Barge 500–1 ...... Crowley Marine Services ...... 1982 400 105 16,397 15,897 X Julie B ...... Crowley Marine Services ...... 2008 400 130 23,600 23,100 X Marty J ...... Crowley Marine Services ...... 2008 400 105 19,226 18,766 X MWB 403 ...... HMC Leasing, Inc ...... 1979 400 105 16,322 6,800 X INTERMAC 600 ...... J. Ray McDermott, Inc ...... 1973 500 120 32,290 15,600 McDermott Tidelands 020 ...... J. Ray McDermott, Inc ...... 1980 240 72 5,186 5,000 X McDermott Tidelands 021 ...... J. Ray McDermott, Inc ...... 1980 240 72 4,700 2,200 X McDermott Tidelands 021 ...... J. Ray McDermott, Inc ...... 1981 240 72 5,186 5,000 X McDermott Tidelands No. 012 ..... J. Ray McDermott, Inc ...... 1973 240 72.2 4,217 4,000 X McDermott Tidelands No. 014 ..... J. Ray McDermott, Inc ...... 1973 240 72.2 4,217 4,000 X MARMAC 11 ...... McDonough Marine Service ...... 1994 250 72 4,743 4,200 X MARMAC 12 ...... McDonough Marine Service ...... 1994 250 72 4,743 4,200 X MARMAC 15 ...... McDonough Marine Service ...... 1995 250 72 4,743 4,200 X MARMAC 16 ...... McDonough Marine Service ...... 1995 250 72 4,743 4,200 X MARMAC 17 ...... McDonough Marine Service ...... 1997 250 72 4,743 4,200 X MARMAC 18 ...... McDonough Marine Service ...... 1998 250 72 4,743 4,200 X MARMAC 19 ...... McDonough Marine Service ...... 1999 250 72 4,743 4,200 X MARMAC 20 ...... McDonough Marine Service ...... 1999 250 72 4,743 4,200 X MARMAC 21 ...... McDonough Marine Service ...... 2002 260 72 5,163 4,500 X MARMAC 22 ...... McDonough Marine Service ...... 2003 260 72 5,082 4,500 X MARMAC 23 ...... McDonough Marine Service ...... 2009 260 72 5,082 4,500 X MARMAC 24 ...... McDonough Marine Service ...... 2010 260 72 5,082 4,500 X MARMAC 25 ...... McDonough Marine Service ...... 2010 260 72 5,082 4,500 X MARMAC 300 ...... McDonough Marine Service ...... 1998 300 100 10,105 9,500 X MARMAC 301 ...... McDonough Marine Service ...... 1996 300 100 9,553 9,000 X MARMAC 3018 ...... McDonough Marine Service ...... 1996 318 95′ -9″ 10,046 9,500 MARMAC 400 ...... McDonough Marine Service ...... 2001 400 99′ -9″ 11,272 10,500 X MARMAC 9 ...... McDonough Marine Service ...... 1993 250 72 4,743 4,200 X COLUMBIA NORFOLK ...... Moran Towing ...... 1982 329′ 31⁄2″ 78 8,036 8,000 X FAITHFUL SERVANT ...... Puglia Engineering, Inc ...... 1979 492 131 23,174 23,000 ATLANTA BRIDGE ...... Trailer Bridge, Inc ...... 1998 402 100 6,017 6,017 X BROOKLYN BRIDGE ...... Trailer Bridge, Inc ...... 1998 402 100 6,017 6,017 X CHARLOTTE BRIDGE ...... Trailer Bridge, Inc ...... 1998 402 100 6,017 6,017 X CHICAGO BRIDGE ...... Trailer Bridge, Inc ...... 1998 402 100 6,017 6,017 X MEMPHIS BRIDGE ...... Trailer Bridge, Inc ...... 1998 402 100 6,017 6,017 X

Privacy Act (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, SUMMARY: The Secretary of 46 U.S.C. 12121) Transportation, as represented by the In accordance with 5 U.S.C. 553(c), * * * * * Maritime Administration (MARAD), is DOT/MARAD solicits comments from authorized to grant waivers of the U.S.- the public to better inform its Dated: February 24, 2020. build requirements of the coastwise rulemaking process. DOT/MARAD posts By Order of the Maritime Administrator. trade laws to allow the carriage of no these comments, without edit, to T. Mitchell Hudson, Jr., more than twelve passengers for hire on www.regulations.gov, as described in Secretary, Maritime Administration. vessels, which are three years old or the system of records notice, DOT/ALL– [FR Doc. 2020–04057 Filed 2–27–20; 8:45 am] more. A request for such a waiver has 14 FDMS, accessible through BILLING CODE 4910–81–P been received by MARAD. The vessel, www.dot.gov/privacy. In order to and a brief description of the proposed facilitate comment tracking and service, is listed below. response, we encourage commenters to DEPARTMENT OF TRANSPORTATION DATES: Submit comments on or before provide their name, or the name of their March 30, 2020. Maritime Administration organization; however, submission of ADDRESSES: You may submit comments names is completely optional. Whether identified by DOT Docket Number or not commenters identify themselves, [Docket No. MARAD–2020–0042] MARAD–2020–0042 by any one of the all timely comments will be fully Requested Administrative Waiver of following methods: considered. If you wish to provide • the Coastwise Trade Laws: Vessel Federal eRulemaking Portal: Go to comments containing proprietary or WATER LILY (Motor Vessel); Invitation http://www.regulations.gov. Search confidential information, please contact for Public Comments MARAD–2020–0042 and follow the the agency for alternate submission instructions for submitting comments. instructions. AGENCY: Maritime Administration, DOT. • Mail or Hand Delivery: Docket Management Facility is in the West ACTION: Notice. Building, Ground Floor of the U.S.

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Department of Transportation. The U.S.-flag vessels in that business, a facilitate comment tracking and Docket Management Facility location waiver will not be granted. Comments response, we encourage commenters to address is: U.S. Department of should refer to the vessel name, state the provide their name, or the name of their Transportation, MARAD–2020–0042, commenter’s interest in the waiver organization; however, submission of 1200 New Jersey Avenue SE, West application, and address the waiver names is completely optional. Whether Building, Room W12–140, Washington, criteria given in section 388.4 of or not commenters identify themselves, DC 20590, between 9 a.m. and 5 p.m., MARAD’s regulations at 46 CFR part all timely comments will be fully Monday through Friday, except on 388. considered. If you wish to provide Federal holidays. Public Participation comments containing proprietary or confidential information, please contact Note: If you mail or hand-deliver your How do I submit comments? the agency for alternate submission comments, we recommend that you include Please submit your comments, instructions. your name and a mailing address, an email including the attachments, following the (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, address, or a telephone number in the body instructions provided under the above 46 U.S.C. 12121) of your document so that we can contact you heading entitled ADDRESSES. Be advised if we have questions regarding your * * * * * submission. that it may take a few hours or even days for your comment to be reflected Dated: February 24, 2020. Instructions: All submissions received on the docket. In addition, your By Order of the Maritime Administrator. must include the agency name and comments must be written in English. T. Mitchell Hudson, Jr., specific docket number. All comments We encourage you to provide concise Secretary, Maritime Administration. received will be posted without change comments and you may attach [FR Doc. 2020–04053 Filed 2–27–20; 8:45 am] to the docket at www.regulations.gov, additional documents as necessary. BILLING CODE 4910–81–P including any personal information There is no limit on the length of the provided. For detailed instructions on attachments. submitting comments, see the section DEPARTMENT OF TRANSPORTATION entitled Public Participation. Where do I go to read public comments, and find supporting information? FOR FURTHER INFORMATION CONTACT: Maritime Administration Bianca Carr, U.S. Department of Go to the docket online at http:// Transportation, Maritime www.regulations.gov, keyword search [Docket No. MARAD–2020–0044] MARAD–2020–0042 or visit the Docket Administration, 1200 New Jersey Requested Administrative Waiver of Management Facility (see ADDRESSES for Avenue SE, Room W23–453, the Coastwise Trade Laws: Vessel Washington, DC 20590. Telephone 202– hours of operation). We recommend that you periodically check the Docket for ALEMANDE (Motor Vessel); Invitation 366–9309, Email [email protected]. for Public Comments SUPPLEMENTARY INFORMATION: As new submissions and supporting described by the applicant the intended material. AGENCY: Maritime Administration, DOT. service of the vessel WATER LILLY is: Will my comments be made available to ACTION: Notice. —INTENDED COMMERCIAL USE OF the public? VESSEL: ‘‘This vessel will be used for SUMMARY: The Secretary of Yes. Be aware that your entire Transportation, as represented by the private charters on inland waters. It comment, including your personal will primarily be used on the Ohio Maritime Administration (MARAD), is identifying information, will be made authorized to grant waivers of the U.S.- River in the vicinity of Cincinnati, publicly available. Ohio. There may be times when the build requirements of the coastwise vessel will be operated on other May I submit comments confidentially? trade laws to allow the carriage of no more than twelve passengers for hire on nearby inland waters for special If you wish to submit comments vessels, which are three years old or events (e.g. Louisville, etc) should a under a claim of confidentiality, you more. A request for such a waiver has customer request something of this should submit three copies of your been received by MARAD. The vessel, nature. These will be sight seeing complete submission, including the and a brief description of the proposed charters of 2 to 3 hours in duration.’’ information you claim to be confidential service, is listed below. —GEOGRAPHIC REGION INCLUDING business information, to the Department BASE OF OPERATIONS: ‘‘Ohio, of Transportation, Maritime DATES: Submit comments on or before Kentucky, Indiana’’ (Base of Administration, Office of Legislation March 30, 2020. Operations: Four Seasons Marina, and Regulations, MAR–225, W24–220, ADDRESSES: You may submit comments Cincinnati, OH) 1200 New Jersey Avenue SE, identified by DOT Docket Number ′ —VESSEL LENGTH AND TYPE: 30 Washington, DC 20590. Include a cover MARAD–2020–0044 by any one of the motor vessel letter setting forth with specificity the following methods: The complete application is available basis for any such claim and, if possible, • Federal eRulemaking Portal: Go to for review identified in the DOT docket a summary of your submission that can http://www.regulations.gov. Search as MARAD–2020–0042 at http:// be made available to the public. MARAD–2020–0044 and follow the www.regulations.gov. Interested parties instructions for submitting comments. may comment on the effect this action Privacy Act • Mail or Hand Delivery: Docket may have on U.S. vessel builders or In accordance with 5 U.S.C. 553(c), Management Facility is in the West businesses in the U.S. that use U.S.-flag DOT solicits comments from the public Building, Ground Floor of the U.S. vessels. If MARAD determines, in to better inform its rulemaking process. Department of Transportation. The accordance with 46 U.S.C. 12121 and DOT posts these comments, without Docket Management Facility location MARAD’s regulations at 46 CFR part edit, to www.regulations.gov, as address is: U.S. Department of 388, that the issuance of the waiver will described in the system of records Transportation, MARAD–2020–0044, have an unduly adverse effect on a U.S.- notice, DOT/ALL–14 FDMS, accessible 1200 New Jersey Avenue SE, West vessel builder or a business that uses through www.dot.gov/privacy. To Building, Room W12–140, Washington,

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DC 20590, between 9 a.m. and 5 p.m., Public Participation comments containing proprietary or Monday through Friday, except on confidential information, please contact How do I submit comments? Federal holidays. the agency for alternate submission Please submit your comments, Note: If you mail or hand-deliver your instructions. including the attachments, following the comments, we recommend that you include (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, your name and a mailing address, an email instructions provided under the above 46 U.S.C. 12121) address, or a telephone number in the body heading entitled ADDRESSES. Be advised of your document so that we can contact you that it may take a few hours or even Dated: February 24, 2020. if we have questions regarding your days for your comment to be reflected By Order of the Maritime Administrator. submission. on the docket. In addition, your T. Mitchell Hudson, Jr., comments must be written in English. Secretary, Maritime Administration. Instructions: All submissions received We encourage you to provide concise must include the agency name and [FR Doc. 2020–04049 Filed 2–27–20; 8:45 am] comments and you may attach specific docket number. All comments BILLING CODE 4910–81–P additional documents as necessary. received will be posted without change There is no limit on the length of the to the docket at www.regulations.gov, attachments. DEPARTMENT OF TRANSPORTATION including any personal information provided. For detailed instructions on Where do I go to read public comments, Maritime Administration submitting comments, see the section and find supporting information? [Docket No. MARAD–2020–0041] entitled Public Participation. Go to the docket online at http:// FOR FURTHER INFORMATION CONTACT: www.regulations.gov., keyword search Requested Administrative Waiver of Bianca Carr, U.S. Department of MARAD–2020–0044 or visit the Docket the Coastwise Trade Laws: Vessel Transportation, Maritime Management Facility (see ADDRESSES for KISKEEDEE (Sailboat); Invitation for Administration, 1200 New Jersey hours of operation). We recommend that Public Comments Avenue SE, Room W23–453, you periodically check the Docket for Washington, DC 20590. Telephone 202– new submissions and supporting AGENCY: Maritime Administration, DOT. 366–9309, Email [email protected]. material. ACTION: Notice. SUPPLEMENTARY INFORMATION: As Will my comments be made available to SUMMARY: The Secretary of described by the applicant the intended the public? Transportation, as represented by the service of the vessel ALEMANDE is: Yes. Be aware that your entire Maritime Administration (MARAD), is —INTENDED COMMERCIAL USE OF comment, including your personal authorized to grant waivers of the U.S.- VESSEL: ALEMANDE, provides identifying information, will be made build requirements of the coastwise families with means of carrying/ publicly available. trade laws to allow the carriage of no disbursing creamins three nautical (3) more than twelve passengers for hire on miles offshore per enviromental May I submit comments confidentially? vessels, which are three years old or protection agency. depart dock; If you wish to submit comments more. A request for such a waiver has proceed to the three (3) nautical mile under a claim of confidentiality, you been received by MARAD. The vessel, limit; conduct service and return to should submit three copies of your and a brief description of the proposed dock. approximately 3hr cruise. total complete submission, including the service, is listed below. time outside of line of demarkation is information you claim to be confidential DATES: Submit comments on or before fifty (50) minutes business information, to the Department March 30, 2020. —GEOGRAPHIC REGION INCLUDING of Transportation, Maritime ADDRESSES: You may submit comments BASE OF OPERATIONS: ‘‘Florida’’ Administration, Office of Legislation identified by DOT Docket Number (Base of Operations: Ponce Inlet, FL) and Regulations, MAR–225, W24–220, MARAD–2020–0041 by any one of the 1200 New Jersey Avenue SE, —VESSEL LENGTH AND TYPE: 49′ following methods: Washington, DC 20590. Include a cover • motor vessel Federal eRulemaking Portal: Go to letter setting forth with specificity the http://www.regulations.gov. Search The complete application is available basis for any such claim and, if possible, MARAD–2020–0041 and follow the for review identified in the DOT docket a summary of your submission that can instructions for submitting comments. as MARAD–2020–0044 at http:// be made available to the public. • Mail or Hand Delivery: Docket www.regulations.gov. Interested parties Privacy Act Management Facility is in the West may comment on the effect this action Building, Ground Floor of the U.S. may have on U.S. vessel builders or In accordance with 5 U.S.C. 553(c), Department of Transportation. The businesses in the U.S. that use U.S.-flag DOT solicits comments from the public Docket Management Facility location vessels. If MARAD determines, in to better inform its rulemaking process. address is: U.S. Department of accordance with 46 U.S.C. 12121 and DOT posts these comments, without Transportation, MARAD–2020–0041, MARAD’s regulations at 46 CFR part edit, to www.regulations.gov, as 1200 New Jersey Avenue SE, West 388, that the issuance of the waiver will described in the system of records Building, Room W12–140, Washington, have an unduly adverse effect on a U.S.- notice, DOT/ALL–14 FDMS, accessible DC 20590, between 9 a.m. and 5 p.m., vessel builder or a business that uses through www.dot.gov/privacy. To Monday through Friday, except on U.S.-flag vessels in that business, a facilitate comment tracking and Federal holidays. waiver will not be granted. Comments response, we encourage commenters to should refer to the vessel name, state the provide their name, or the name of their Note: If you mail or hand-deliver your comments, we recommend that you include commenter’s interest in the waiver organization; however, submission of your name and a mailing address, an email application, and address the waiver names is completely optional. Whether address, or a telephone number in the body criteria given in section 388.4 of or not commenters identify themselves, of your document so that we can contact you MARAD’s regulations at 46 CFR part all timely comments will be fully if we have questions regarding your 388. considered. If you wish to provide submission.

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Instructions: All submissions received Where do I go to read public comments, DEPARTMENT OF TRANSPORTATION must include the agency name and and find supporting information? specific docket number. All comments Maritime Administration Go to the docket online at http:// received will be posted without change [Docket No. MARAD–2020–0043] to the docket at www.regulations.gov, www.regulations.gov., keyword search including any personal information MARAD–2020–0041 or visit the Docket Requested Administrative Waiver of provided. For detailed instructions on Management Facility (see ADDRESSES for the Coastwise Trade Laws: Vessel submitting comments, see the section hours of operation). We recommend that JUNO (Sailboat); Invitation for Public entitled Public Participation. you periodically check the Docket for Comments new submissions and supporting FOR FURTHER INFORMATION CONTACT: material. AGENCY: Maritime Administration, DOT. Bianca Carr, U.S. Department of ACTION: Notice. Transportation, Maritime Will my comments be made available to Administration, 1200 New Jersey the public? SUMMARY: The Secretary of Avenue SE, Room W23–453, Yes. Be aware that your entire Transportation, as represented by the Washington, DC 20590. Telephone 202– comment, including your personal Maritime Administration (MARAD), is 366–9309, Email [email protected]. identifying information, will be made authorized to grant waivers of the U.S.- SUPPLEMENTARY INFORMATION: As publicly available. build requirements of the coastwise described by the applicant the intended trade laws to allow the carriage of no service of the vessel KISKEEDEE is: May I submit comments confidentially? more than twelve passengers for hire on vessels, which are three years old or —INTENDED COMMERCIAL USE OF If you wish to submit comments more. A request for such a waiver has VESSEL: ‘‘Sailing instruction and live under a claim of confidentiality, you been received by MARAD. The vessel, aboard pleasure cruises for youth should submit three copies of your and a brief description of the proposed groups and families’’ complete submission, including the service, is listed below. —GEOGRAPHIC REGION INCLUDING information you claim to be confidential business information, to the Department DATES: Submit comments on or before BASE OF OPERATIONS: ‘‘Florida’’ March 30, 2020. (Base of Operations: Miami, FL) of Transportation, Maritime Administration, Office of Legislation ADDRESSES: You may submit comments ′ —VESSEL LENGTH AND TYPE: 51 and Regulations, MAR–225, W24–220, identified by DOT Docket Number sailboat 1200 New Jersey Avenue SE, MARAD–2020–0043 by any one of the Washington, DC 20590. Include a cover following methods: The complete application is available • Federal eRulemaking Portal: Go to for review identified in the DOT docket letter setting forth with specificity the basis for any such claim and, if possible, http://www.regulations.gov. Search as MARAD–2020–0041 at http:// MARAD–2020–0043 and follow the www.regulations.gov. Interested parties a summary of your submission that can be made available to the public. instructions for submitting comments. may comment on the effect this action • Mail or Hand Delivery: Docket may have on U.S. vessel builders or Privacy Act Management Facility is in the West businesses in the U.S. that use U.S.-flag Building, Ground Floor of the U.S. In accordance with 5 U.S.C. 553(c), vessels. If MARAD determines, in Department of Transportation. The DOT solicits comments from the public accordance with 46 U.S.C. 12121 and Docket Management Facility location to better inform its rulemaking process. MARAD’s regulations at 46 CFR part address is: U.S. Department of DOT posts these comments, without 388, that the issuance of the waiver will Transportation, MARAD–2020–0043, edit, to www.regulations.gov, as have an unduly adverse effect on a U.S.- 1200 New Jersey Avenue SE, West described in the system of records vessel builder or a business that uses Building, Room W12–140, Washington, notice, DOT/ALL–14 FDMS, accessible U.S.-flag vessels in that business, a DC 20590, between 9 a.m. and 5 p.m., through www.dot.gov/privacy. To waiver will not be granted. Comments Monday through Friday, except on facilitate comment tracking and should refer to the vessel name, state the Federal holidays. commenter’s interest in the waiver response, we encourage commenters to application, and address the waiver provide their name, or the name of their Note: If you mail or hand-deliver your criteria given in section 388.4 of organization; however, submission of comments, we recommend that you include names is completely optional. Whether your name and a mailing address, an email MARAD’s regulations at 46 CFR part address, or a telephone number in the body 388. or not commenters identify themselves, of your document so that we can contact you all timely comments will be fully Public Participation if we have questions regarding your considered. If you wish to provide submission. How do I submit comments? comments containing proprietary or confidential information, please contact Instructions: All submissions received Please submit your comments, the agency for alternate submission must include the agency name and including the attachments, following the instructions. specific docket number. All comments instructions provided under the above received will be posted without change (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, heading entitled ADDRESSES. Be advised to the docket at www.regulations.gov, 46 U.S.C. 12121) that it may take a few hours or even including any personal information days for your comment to be reflected * * * * * provided. For detailed instructions on submitting comments, see the section on the docket. In addition, your Dated: February 24, 2020. comments must be written in English. entitled Public Participation. By Order of the Maritime Administrator. We encourage you to provide concise FOR FURTHER INFORMATION CONTACT: comments and you may attach T. Mitchell Hudson, Jr., Bianca Carr, U.S. Department of additional documents as necessary. Secretary, Maritime Administration. Transportation, Maritime There is no limit on the length of the [FR Doc. 2020–04052 Filed 2–27–20; 8:45 am] Administration, 1200 New Jersey attachments. BILLING CODE 4910–81–P Avenue SE, Room W23–453,

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Washington, DC 20590. Telephone 202– identifying information, will be made authorized to grant waivers of the U.S.- 366–9309, Email [email protected]. publicly available. build requirements of the coastwise trade laws to allow the carriage of no SUPPLEMENTARY INFORMATION: As May I submit comments confidentially? described by the applicant the intended more than twelve passengers for hire on service of the vessel JUNO is: If you wish to submit comments vessels, which are three years old or —INTENDED COMMERCIAL USE OF under a claim of confidentiality, you more. A request for such a waiver has VESSEL: ‘‘Captained charter sails on should submit three copies of your been received by MARAD. The vessel, the San Francisco Bay for parties no complete submission, including the and a brief description of the proposed more than 12.’’ information you claim to be confidential service, is listed below. —GEOGRAPHIC REGION INCLUDING business information, to the Department DATES: Submit comments on or before BASE OF OPERATIONS: ‘‘California, of Transportation, Maritime March 30, 2020. Washington, Oregon’’ (Base of Administration, Office of Legislation ADDRESSES: You may submit comments Operations: Oakland, CA) and Regulations, MAR–225, W24–220, identified by DOT Docket Number —VESSEL LENGTH AND TYPE: 36′ 1200 New Jersey Avenue SE, MARAD–2020–0040 by any one of the sailboat Washington, DC 20590. Include a cover following methods: letter setting forth with specificity the • The complete application is available Federal eRulemaking Portal: Go to basis for any such claim and, if possible, for review identified in the DOT docket http://www.regulations.gov. Search a summary of your submission that can as MARAD–2020–0043 at http:// MARAD–2020–0040 and follow the be made available to the public. www.regulations.gov. Interested parties instructions for submitting comments. • may comment on the effect this action Privacy Act Mail or Hand Delivery: Docket Management Facility is in the West may have on U.S. vessel builders or In accordance with 5 U.S.C. 553(c), businesses in the U.S. that use U.S.-flag Building, Ground Floor of the U.S. DOT solicits comments from the public Department of Transportation. The vessels. If MARAD determines, in to better inform its rulemaking process. accordance with 46 U.S.C. 12121 and Docket Management Facility location DOT posts these comments, without address is: U.S. Department of MARAD’s regulations at 46 CFR part edit, to www.regulations.gov, as 388, that the issuance of the waiver will Transportation, MARAD–2020–0040, described in the system of records 1200 New Jersey Avenue SE, West have an unduly adverse effect on a U.S.- notice, DOT/ALL–14 FDMS, accessible vessel builder or a business that uses Building, Room W12–140, Washington, through www.dot.gov/privacy. To DC 20590, between 9 a.m. and 5 p.m., U.S.-flag vessels in that business, a facilitate comment tracking and waiver will not be granted. Comments Monday through Friday, except on response, we encourage commenters to Federal holidays. should refer to the vessel name, state the provide their name, or the name of their commenter’s interest in the waiver organization; however, submission of Note: If you mail or hand-deliver your application, and address the waiver names is completely optional. Whether comments, we recommend that you include your name and a mailing address, an email criteria given in section 388.4 of or not commenters identify themselves, MARAD’s regulations at 46 CFR part address, or a telephone number in the body all timely comments will be fully of your document so that we can contact you 388. considered. If you wish to provide if we have questions regarding your Public Participation comments containing proprietary or submission. confidential information, please contact How do I submit comments? Instructions: All submissions received the agency for alternate submission must include the agency name and Please submit your comments, instructions. specific docket number. All comments including the attachments, following the (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, received will be posted without change instructions provided under the above 46 U.S.C. 12121) to the docket at www.regulations.gov, heading entitled ADDRESSES. Be advised including any personal information * * * * * that it may take a few hours or even provided. For detailed instructions on days for your comment to be reflected Dated: February 24, 2020. submitting comments, see the section on the docket. In addition, your By Order of the Maritime Administrator. entitled Public Participation. comments must be written in English. T. Mitchell Hudson, Jr., FOR FURTHER INFORMATION CONTACT: We encourage you to provide concise Secretary, Maritime Administration. Bianca Carr, U.S. Department of comments and you may attach [FR Doc. 2020–04051 Filed 2–27–20; 8:45 am] Transportation, Maritime additional documents as necessary. BILLING CODE 4910–81–P Administration, 1200 New Jersey There is no limit on the length of the Avenue SE, Room W23–453, attachments. Washington, DC 20590. Telephone 202– Where do I go to read public comments, DEPARTMENT OF TRANSPORTATION 366–9309, Email [email protected]. and find supporting information? SUPPLEMENTARY INFORMATION: As Maritime Administration Go to the docket online at http:// described by the applicant the intended www.regulations.gov., keyword search [Docket No. MARAD–2020–0040] service of the vessel DOCKTALES is: MARAD–2020–0043 or visit the Docket —INTENDED COMMERCIAL USE OF Requested Administrative Waiver of Management Facility (see ADDRESSES for VESSEL: ‘‘Charter trips to Key West, the Coastwise Trade Laws: Vessel hours of operation). We recommend that the Florida Keys, St. Augustine and DOCKTALES (Motor Vessel); Invitation you periodically check the Docket for Jacksonville Florida.’’ for Public Comments new submissions and supporting —GEOGRAPHIC REGION INCLUDING material. AGENCY: Maritime Administration, DOT. BASE OF OPERATIONS: ‘‘Florida’’ ACTION: Notice. (Base of Operations: Tampa, FL) Will my comments be made available to —VESSEL LENGTH AND TYPE: 58′ the public? SUMMARY: The Secretary of motor vessel Yes. Be aware that your entire Transportation, as represented by the The complete application is available comment, including your personal Maritime Administration (MARAD), is for review identified in the DOT docket

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as MARAD–2020–0040 at http:// a summary of your submission that can 25, 2019. FCA US subsequently www.regulations.gov. Interested parties be made available to the public. petitioned NHTSA on April 5, 2019, and may comment on the effect this action filed a supplemental petition on May Privacy Act may have on U.S. vessel builders or 14, 2019, for a decision that the subject businesses in the U.S. that use U.S.-flag In accordance with 5 U.S.C. 553(c), noncompliance is inconsequential as it vessels. If MARAD determines, in DOT solicits comments from the public relates to motor vehicle safety. This accordance with 46 U.S.C. 12121 and to better inform its rulemaking process. document announces receipt of FCA MARAD’s regulations at 46 CFR part DOT posts these comments, without US’s petition. edit, to www.regulations.gov, as 388, that the issuance of the waiver will DATES: The closing date for comments have an unduly adverse effect on a U.S.- described in the system of records on the petition is February 28, 2020. vessel builder or a business that uses notice, DOT/ALL–14 FDMS, accessible through www.dot.gov/privacy. To ADDRESSES: Interested persons are U.S.-flag vessels in that business, a invited to submit written data, views, waiver will not be granted. Comments facilitate comment tracking and response, we encourage commenters to and arguments on this petition. should refer to the vessel name, state the Comments must refer to the docket commenter’s interest in the waiver provide their name, or the name of their organization; however, submission of number cited in the title of this notice application, and address the waiver and may be submitted by any of the criteria given in section 388.4 of names is completely optional. Whether or not commenters identify themselves, following methods: MARAD’s regulations at 46 CFR part • Mail: Send comments by mail 388. all timely comments will be fully considered. If you wish to provide addressed to the U.S. Department of Public Participation comments containing proprietary or Transportation, Docket Operations, M– 30, West Building Ground Floor, Room How do I submit comments? confidential information, please contact the agency for alternate submission W12–140, 1200 New Jersey Avenue SE, Please submit your comments, instructions. Washington, DC 20590. including the attachments, following the • Hand Delivery: Deliver comments (Authority: 49 CFR 1.93(a), 46 U.S.C. 55103, by hand to the U.S. Department of instructions provided under the above 46 U.S.C. 12121) heading entitled ADDRESSES. Be advised Transportation, Docket Operations, M– that it may take a few hours or even * * * * * 30, West Building Ground Floor, Room days for your comment to be reflected Dated: February 24, 2020. W12–140, 1200 New Jersey Avenue SE, Washington, DC 20590. The Docket on the docket. In addition, your By Order of the Maritime Administrator. comments must be written in English. Section is open on weekdays from 10 T. Mitchell Hudson, Jr., We encourage you to provide concise a.m. to 5 p.m. except for Federal Secretary, Maritime Administration. comments and you may attach Holidays. additional documents as necessary. [FR Doc. 2020–04050 Filed 2–27–20; 8:45 am] • Electronically: Submit comments There is no limit on the length of the BILLING CODE 4910–81–P electronically by logging onto the attachments. Federal Docket Management System (FDMS) website at https:// Where do I go to read public comments, DEPARTMENT OF TRANSPORTATION www.regulations.gov/. Follow the online and find supporting information? instructions for submitting comments. National Highway Traffic Safety • Go to the docket online at http:// Administration Comments may also be faxed to www.regulations.gov., keyword search (202) 493–2251. MARAD–2020–0040 or visit the Docket [Docket No. NHTSA–2019–0020; Notice 1] Comments must be written in the Management Facility (see ADDRESSES for English language, and be no greater than FCA US, LLC, Receipt of Petition for hours of operation). We recommend that 15 pages in length, although there is no Decision of Inconsequential you periodically check the Docket for limit to the length of necessary Noncompliance new submissions and supporting attachments to the comments. If material. AGENCY: National Highway Traffic comments are submitted in hard copy Safety Administration (NHTSA), form, please ensure that two copies are Will my comments be made available to provided. If you wish to receive the public? Department of Transportation (DOT). ACTION: Receipt of petition. confirmation that comments you have Yes. Be aware that your entire submitted by mail were received, please comment, including your personal SUMMARY: FCA US, LLC, (f/k/a Chrysler enclose a stamped, self-addressed identifying information, will be made Group, LLC) ‘‘FCA US,’’ has determined postcard with the comments. Note that publicly available. that certain Mopar headlamp assemblies all comments received will be posted sold as aftermarket equipment and without change to https:// May I submit comments confidentially? installed as original equipment in www.regulations.gov, including any If you wish to submit comments certain model year (MY) 2017–2018 personal information provided. under a claim of confidentiality, you Dodge Journey motor vehicles do not All comments and supporting should submit three copies of your fully comply with Federal Motor materials received before the close of complete submission, including the Vehicle Safety Standard (FMVSS) No. business on the closing date indicated information you claim to be confidential 108, Lamps, Reflective Devices, and above will be filed in the docket and business information, to the Department Associated Equipment. FCA US filed a will be considered. All comments and of Transportation, Maritime noncompliance report for the supporting materials received after the Administration, Office of Legislation replacement equipment dated March 14, closing date will also be filed and will and Regulations, MAR–225, W24–220, 2019, and later amended it on April 9, be considered to the fullest extent 1200 New Jersey Avenue SE, 2019. FCA US also filed a possible. Washington, DC 20590. Include a cover noncompliance report for the associated When the petition is granted or letter setting forth with specificity the vehicles dated March 14, 2019, later denied, notice of the decision will also basis for any such claim and, if possible, amended it on April 9, 2019, and April be published in the Federal Register

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pursuant to the authority indicated at certain MY 2017–2018 Dodge Journey relative to headlamps that would the end of this notice. motor vehicles contain a front amber illuminate them.’’ Decision on Petition All comments, background side reflex reflector that does not meet for Inconsequential Noncompliance, 82 documentation, and supporting the photometric requirements specified FR 24204, May 25, 2017. (emphasis materials submitted to the docket may in paragraph S8.1.11 of FMVSS No. 108. added by FCA US). be viewed by anyone at the address and Specifically, the reflex reflector, in the B. For reasons discussed below, and times given above. The documents may subject headlamp assemblies, do not supported by a demonstration project also be viewed on the internet at https:// meet the minimum photometry conducted by FCA US, FCA US submits www.regulations.gov by following the requirements at the observation angle of that the reflex reflectors on the subject online instructions for accessing the 0.2 degrees. vehicles perform adequately to meet the dockets. The docket ID number for this IV. Rule Requirements: Paragraph safety purpose of the standard because petition is shown in the heading of this S8.1.11 of FMVSS No. 108 includes the they permit the early detection of an notice. requirements relevant to this petition. unlighted motor vehicle at an DOT’s complete Privacy Act Each reflex reflector must be designed to intersection or when parked, Statement is available for review in a conform to the photometry requirements notwithstanding their deviation from Federal Register notice published on of Table XVI–a, when tested according certain photometric requirements. April 11, 2000 (65 FR 19477–78). to the procedure in paragraph S14.2.3 of 1. FCA US believes that the failure of FMVSS No. 108, for the reflex reflector these reflex reflectors to meet the SUPPLEMENTARY INFORMATION: color. photometric requirements does not I. Overview: FCA US has determined V. Summary of FCA US’s Petition: reduce their effectiveness in providing that certain MY 2017–2018 Dodge The following views and arguments the necessary visibility for oncoming Journey motor vehicles and replacement presented in this section, V. Summary vehicles and that the difference between Dodge Journey headlamp assemblies do of FCA US’s petition, are the views and the reflectivity provided by a compliant not fully comply with paragraph S8.1.11 arguments provided by FCA US. They reflector is not distinguishable from the of FMVSS No. 108, Lamps, Reflective have not been evaluated by the Agency reflectivity provided by a noncompliant Devices, and Associated Equipment (49 and do not reflect the views of the reflector. To demonstrate this point, CFR 571.108). FCA US filed a Agency. FCA US conducted an informal noncompliance report for the FCA US described the subject evaluation comparing the performance replacement equipment dated March 14, noncompliance and stated that the of a Dodge Journey equipped with a 2019, and later amended it on April 9, noncompliance is inconsequential as it known compliant reflex reflector with a 2019. FCA US also filed a relates to motor vehicle safety. FCA US Dodge Journey equipped with a known noncompliance report for the associated submitted the following views and noncompliant reflex reflector. This vehicles dated March 14, 2019, later arguments in support of the petition: evaluation was conducted with two amended it on April 9, 2019, and April A. For the purposes of FMVSS No. Dodge Journey vehicles parked front 25, 2019, pursuant to 49 CFR part 573, 108, the primary function of a reflex end to front end across the road surface, Defect and Noncompliance reflector is to prevent crashes by 100 feet (30.5 meters) away from Responsibility and Reports. FCA US permitting early detection of an vehicles that used their headlamps as a subsequently petitioned NHTSA on unlighted motor vehicle at an source of illumination for observers to April 5, 2019, and filed a supplemental intersection or when parked on or by evaluate the luminous intensity of each petition on May 14, 2019, for an the side of the road. Because reflex front side reflex reflector. The 100 feet exemption from the notification and reflectors are not independent light (30.5 meters) distance was chosen remedy requirements of 49 U.S.C. sources, their performance is wholly because that is the distance specified in Chapter 301 on the basis that this reliant upon the amount of illumination FMVSS No. 108 and CMVSS No. 108 for noncompliance is inconsequential as it they receive from vehicle headlamps. testing reflex reflectors using a relates to motor vehicle safety, pursuant Ideally, a reflex reflector would achieve goniometer in a photometric laboratory. to 49 U.S.C. 30118(d) and 30120(h) and its highest performance when the reflex 2. A 2019 Jeep Cherokee with LED 49 CFR part 556, Exemption for reflector is mounted at the height of projector headlamps and a 2019 Ram Inconsequential Defect or another vehicle’s lower beam ‘hot spot.’ 1500 Pickup Truck with LED reflector Noncompliance. Due to the significant range of headlamps were used as sources of This notice of receipt, of FCA US’s permissible mounting heights for illumination. Sixteen volunteer petition, is published under 49 U.S.C. headlamps (between 22 and 54 inches), evaluators (who were FCA US or FCA 30118 and 30120 and does not represent achieving such ideal performance is Canada, Inc., employees) stood any agency decision or other exercises impractical. FMVSS No. 108, which immediately in front of, and at the of judgment concerning the merits of the establishes minimum performance centerline of, the vehicles whose petition. standards for reflex reflectors, specifies headlamps were being used as the II. Equipment and Vehicles Involved: a range of acceptable reflector mounting source of illumination. Evaluators were Approximately 16,604 Mopar headlamp heights (not less than 15 inches or more asked if they were able to distinguish a assemblies sold as aftermarket than 60 inches) to ensure that reflex difference between the compliant and equipment, manufactured between reflectors are exposed to enough noncompliant reflex reflectors. None of August 2, 2017, and July 6, 2018, are illumination to be effective. The the evaluators were able to distinguish potentially involved. Approximately standard also provides allowances in any luminous intensity differences of 84,908 MY 2017–2018 Dodge Journey the fore and aft location of reflex the light being reflected in any of the motor vehicles, manufactured between reflectors (e.g., as far to the front as scenarios. August 2, 2017, and July 6, 2018, are practicable). This flexibility provides 3. The reflex reflectors in the subject potentially involved. vehicle manufacturers with sufficient vehicles were mounted 32.31 to 32.62 III. Noncompliance: FCA US explains flexibility in mounting locations to inches from the ground to the center of that the noncompliance is that the ensure that the mounting height remains the devices. The headlamp mounting subject headlamp assemblies, sold as in the appropriate range to ensure heights of the two vehicles used as aftermarket equipment and equipped in adequate reflex reflector performance sources of illumination in the

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evaluation are 34.89 inches for the Jeep asked if they were able to distinguish a to the center of the device). The second Cherokee and 39.59 inches for the Ram difference between the reflex reflectors. vehicle used as a source of illumination 1500. FCA US believes that these Five different scenarios were was a Ram 1500 Pickup Truck that had vehicles cover the range of typical subjectively evaluated as described a headlamp mounting height of 39.59 headlamp mounting heights for vehicles below: inches above ground (as measured to the on the road today. Nevertheless, FCA Subjective Evaluation A: Jeep center of the device). US is undertaking another round of Cherokee Low beam Headlamps used as This follow-up evaluation was evaluations using a vehicle with a lower light source at center of the pavement conducted using an Alfa Romeo Giulia headlamp mounting height as a source shining towards the two Dodge Journey that had a headlamp mounting height of of illumination to try to demonstrate a Vehicles. 26.50 inches above ground (as measured ‘‘worst-case’’ scenario. FCA US expects Subjective Evaluation B: Jeep to the center of the device). This vehicle to supplement this petition with the Cherokee High beam Headlamps used as was chosen to demonstrate a scenario of results of that further evaluation in the light source at center of the pavement a vehicle with low headlamp mounting near future. (See Supplement to FCA US shining towards the two Dodge Journey heights being used as the source of Petition, dated May 14, 2019.) Vehicles. illumination. (Please note the lettering FCA’s Evaluation: A subjective Subjective Evaluation C: Jeep is sequential to those used in the evaluation was conducted on a Dodge Cherokee Low beam Headlamps used as previous March 22, 2019 report.) Journey with a headlamp assembly light source at the left edge of pavement FCA’s Follow-up Evaluation: A containing a front side reflex reflector (146 inches to the left of the centerline subjective evaluation was conducted on known not to meet FMVSS No. 108/ of pavement) shining towards the two a Dodge Journey with a headlamp CMVSS No. 108 photometric Dodge Journey vehicles. assembly containing a front side reflex requirements compared to a Dodge Subjective Evaluation D: Jeep reflector known not to meet FMVSS No. Journey with a headlamp assembly Cherokee Low beam Headlamps used as 108/CMVSS No. 108 photometric containing a front side reflex reflector light source at the right edge of requirements compared to a Dodge known to meet FMVSS No. 108/CMVSS pavement (150 inches to the right of the Journey with a headlamp assembly No. 108 photometric requirements. This centerline of pavement) shining towards containing a front side reflex reflector evaluation was conducted at 6:30 a.m., the two Dodge Journey vehicles. known to meet FMVSS No. 108/CMVSS Friday, March 22, 2019, in the Lighting Subjective Evaluation E: Ram 1500 No. 108 photometric requirements. This Tunnel at the FCA Canada Automotive Pickup Truck Low beam Headlamps evaluation was conducted at 9:00 a.m., Research and Development Center in used as light source at the center of the Friday, April 26, 2019, in the Lighting Windsor, Ontario, Canada. Sixteen FCA pavement shining towards the two Tunnel at the FCA Canada Automotive US employees, with various job Dodge Journey vehicles. Research and Development Center in responsibilities, participated in this Findings: None of the sixteen Windsor, Ontario, Canada. Eight FCA subjective evaluation. evaluators were able to distinguish any US employees, with various job This evaluation was conducted with luminous intensity differences of the responsibilities, participated in this two Dodge Journey vehicles parked light being reflected to their eyes from subjective evaluation. front end to front end across the road the Dodge Journey front side reflex This evaluation was conducted with surface, 100 feet (30.5 meters) away reflectors that were being illuminated by two Dodge Journey vehicles parked from vehicles that used their headlamps the headlamps of the source vehicles in front end to front end across the road as a source of illumination for observers the five subjective evaluations that were surface, 100 feet (30.5 meters) away to evaluate the luminous intensity of conducted. from an Alfa Romeo Giulia vehicle that each front side reflex reflector. The 100 FCA US submitted a supplemental used its headlamps as a source of feet (30.5 meters) distance was chosen petition dated May 14, 2019, and illumination for observers to evaluate because that is the distance that is provided the following supplemental the luminous intensity of each front side specified in FMVSS No. 108 and information: reflex reflector. The 100 feet (30.5 CMVSS No. 108 for testing reflex Background: Reflex reflectors are meters) distance was chosen because reflectors using a goniometer in a devices used on vehicles to give an that is the distance that is specified in photometric laboratory. indication to approaching drivers using FMVSS No. 108 and CMVSS No. 108 for A black Dodge Journey was parked reflected light from the lamps of the testing reflex reflectors using a across the left side of the pavement with approaching vehicle. A subjective goniometer in a photometric laboratory. a passenger-side headlamp containing a evaluation of the ‘‘on-vehicle’’ reflective A red Dodge Journey was parked front side reflex reflector known to not performance of Dodge Journey Front across the left side of the pavement with meet FMVSS No. 108 and CMVSS No. Side Reflex Reflectors was conducted to a passenger-side headlamp containing a 108 photometric requirements. A red determine if human eyes are capable of front side reflex reflector known to not Dodge Journey was parked across the distinguishing between reflex reflectors meet FMVSS No. 108 and CMVSS No. right side of the pavement with a driver- known to not meet, and known to meet, 108 photometric requirements. Another side headlamp containing a front side the photometric requirements of FMVSS red Dodge Journey was parked across reflex reflector known to meet FMVSS 108 and CMVSS 108. the right side of the pavement with a No. 108 and CMVSS No. 108 The original subjective evaluation was driver-side headlamp containing a front photometric requirements. conducted on March 22, 2019, in the side reflex reflector known to meet A 2019 Jeep Cherokee with LED Lighting Tunnel at the FCA Canada FMVSS No. 108 and CMVSS No. 108 projector headlamps and a 2019 Ram Automotive Research and Development photometric requirements. These were 1500 Pickup Truck with LED reflector Center in Windsor, Ontario, Canada, the same headlamp assemblies and side headlamps were used as sources of with headlamps of two different reflex reflectors that were used for the illumination. Evaluators stood vehicles used as sources of illumination. previous subjective evaluation that immediately in front of, and at the The first vehicle used as a source of occurred on March 22, 2019. centerline of, the vehicles whose illumination was a Jeep Cherokee that A 2019 Alfa Romeo Giulia with Bi- headlamps were being used as the had a headlamp mounting height of Xenon Projector Headlamps (25 watt source of illumination. Evaluators were 34.89 inches above ground (as measured D5S light sources) was used as the

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source of illumination. Evaluators stood prohibitions on the sale, offer for sale, DATES: Responses to this RFI are due no immediately in front of, and at the or introduction or delivery for later than 11:59 p.m. 30 days after centerline of, the Alfa Romeo Giulia introduction into interstate commerce of publication of this notice. The Bureau vehicle while its headlamps were being the noncompliant equipment and may hold an RFI information session(s) used as the source of illumination. vehicles under their control after FCA before the due date. Evaluators were asked if they were able US notified them that the subject ADDRESSES: All responses MUST be to distinguish a difference between the noncompliance existed. submitted electronically via email to the reflex reflectors. Authority: (49 U.S.C. 30118, 30120: Bureau at [email protected]. Questions Four different scenarios were Delegations of authority at 49 CFR 1.95 and regarding the RFI may be submitted to subjectively evaluated as described 501.8) the Bureau at [email protected]. below: FOR FURTHER INFORMATION CONTACT: For Subjective Evaluation F: Alfa Romeo Otto G. Matheke III, Director, Office of Vehicle Safety Compliance. further information regarding this RFI Giulia Low Beam Headlamps used as a please contact Sam Beydoun via email light source at the center of the [FR Doc. 2020–04106 Filed 2–27–20; 8:45 am] at [email protected] or via pavement shining towards the two BILLING CODE 4910–59–P telephone at 202–366–2300. A TDD is Dodge Journey vehicles. available at 202–366–3993. Subjective Evaluation G: Alfa Romeo Giulia High Beam Headlamps used as a DEPARTMENT OF TRANSPORTATION Background light source at the center of the Office of the Secretary The Bureau is responsible for driving pavement shining towards the two transportation infrastructure Dodge Journey vehicles. [Docket No. DOT–OST–2020–0023] development projects in the United Subjective Evaluation H: Alfa Romeo States through innovative financing Giulia Low Beam Headlamps used as a Regional Infrastructure Accelerator programs. Its mission is to provide light source at the left edge of pavement Program access to the Bureau’s credit programs (146 inches to the left of the centerline AGENCY: Build America Bureau, U.S. in a streamlined, expedient and of pavement) shining towards the two Department of Transportation. transparent manner. In accomplishing Dodge Journey vehicles. ACTION: Request for Information (RFI). its mission, the Bureau also provides Subjective Evaluation J: Alfa Romeo technical assistance and encourages Giulia Low Beam Headlamps used as a SUMMARY: The Fixing America’s Surface innovative best practices in project light source at the right edge of Transportation Act (FAST),1 enacted in planning, financing, delivery, and pavement (150 inches to the right of the December 2015, authorized the monitoring. The Bureau draws upon the centerline of pavement) shining towards establishment of a Regional full resources of the Department of the two Dodge Journey vehicles. Infrastructure Accelerator Transportation to best utilize the Findings: None of the eight evaluators Demonstration Program (the Program) to expertise of the Department’s Operating were able to distinguish any luminous assist entities in developing improved Administrations while promoting a intensity differences of the light being infrastructure priorities and financing culture of innovation and customer reflected to their eyes from the Dodge strategies for the accelerated service. Journey front side reflex reflectors that development of a project that is eligible The Transportation Infrastructure were being illuminated by the for funding under the Transportation Finance and Innovation Act of 1998 3 headlamps of the Alfa Romeo Giulia in Infrastructure Finance and Innovation established a Federal credit program the four subjective evaluations that were Act (TIFIA) Program under Chapter 6 of (TIFIA Program) for eligible conducted. Title 23, United States Code. The transportation projects under which the FCA US concluded by expressing its Further Consolidated Appropriations Department may provide three forms of belief that the subject noncompliance is Act, 2020 enacted on December 20, 2019 credit assistance—secured (direct) inconsequential as it relates to motor appropriated $5 million for this loans, loan guarantees, and standby vehicle safety, and that its petition to be Program.2 lines of credit. The TIFIA Program’s exempted from providing notification of The Build America Bureau (the fundamental goal is to leverage federal the noncompliance, as required by 49 Bureau) of the U.S. Department of funds by attracting substantial private U.S.C. 30118, and a remedy for the Transportation (Department or DOT) is and other non-Federal co-investment to noncompliance, as required by 49 seeking input from interested parties support critical improvements to the U.S.C. 30120, should be granted. with the intent to gather as much Nation’s surface transportation system. NHTSA notes that the statutory information as possible before Eligible recipients of TIFIA credit provisions (49 U.S.C. 30118(d) and implementing the Program. assistance include State departments of 30120(h)) that permit manufacturers to The Bureau is issuing this RFI on the transportation, transit operators, special file petitions for a determination of most effective, transparent and authorities, local governments and inconsequentiality allow NHTSA to expedient way to implement the private entities. exempt manufacturers only from the Program. Information gleaned from this Demonstration Program duties found in sections 30118 and effort will help inform the development 30120, respectively, to notify owners, of the Program and approach to Section 1441 of the FAST Act (https:// purchasers, and dealers of a defect or designating and funding Regional www.transportation.gov/buildamerica/ noncompliance and to remedy the Infrastructure Accelerators that will: (1) programs-and-services/regional- defect or noncompliance. Therefore, any Serve a defined geographic area; and (2) infrastructure-accelerators) authorizes decision on this petition only applies to act as a resource to qualified entities in the Program to assist in developing the subject equipment and vehicles that the geographic area in accordance with improved infrastructure priorities and FCA US no longer controlled at the time Section 1441 of the FAST Act. financing strategies for the accelerated it determined that the noncompliance development of eligible projects. It is existed. However, any decision on this 1 Public Law 114–94, 129 Stat. 1312, 1435. envisioned that Regional Infrastructure petition does not relieve equipment and 2 Public Law 116–94, div. H, tit. I, H.R. 1865 at vehicle distributors and dealers of the 413 (as enrolled December 20, 2019). 3 Codified as 23 U.S.C. 601–609.

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Accelerator(s) will act as a resource and Approach However, only the first 10 pages will be help facilitate delivery of projects (1) What is the most effective reviewed. The Bureau is not seeking and within a designated geographic region approach to achieve the goals of the will not accept any unsolicited while promoting investment in covered Program through an accelerator? In proposals through this RFI. infrastructure projects. The Further responding, please address This RFI does NOT constitute a Consolidated Appropriations Act, 2020 considerations for the creation, selection Request for Proposal and is not to be appropriated $5 million to carry out the and designation of regional construed as a commitment, implied or Program. accelerator(s). otherwise, by the Bureau or the The goal of this RFI is to engage (2) What actions are required to plan, Department that a procurement action interested parties to obtain input into implement and assess effectiveness of will be issued. Any response related to the most effective, transparent and regional accelerators? If your response this RFI is not a request to be added to expedient ways to structure and deliver considers a phased approach, what a bidders list or to receive a copy of a the Program. Respondents to this RFI would be the activities, resources and solicitation. There is no entitlement to are encouraged to provide related timelines for each phase? If new entities payment for direct or indirect costs or information and answers to one or more are considered, how much time would charges arising as a result of any of the following: be needed to stand up a regional potential inquiries regarding this accelerator and what would be the solicitation. The Bureau may not Structure major challenges? respond to any specific questions or (1) What would be an effective form (3) How could an accelerator leverage comments submitted in response to this of the accelerator that could influence the Federal funding beyond the initial notice or information provided as a the development of infrastructure Federal support? If feasible, could a result of this notification. This RFI is projects, and what type of structure and standalone, self-funded and sustainable solely for information and planning authority would be required for the model continue to deliver the intended purposes and should not be construed establishment of a regional accelerator? benefits under the Program? as a commitment by Bureau or Are there examples of such entities from (4) Rural transportation infrastructure Department for any other purpose. around the country and abroad, or in is of critical interest to the Department. All interested parties are encouraged other sectors that could be used as a How could Regional Infrastructure to respond fully to this RFI. The Bureau model for the Program? Accelerators assist in supporting is in no way obligated by the (2) What barriers such as regulatory, priority programs in the region such as information received and submission by technical and institutional (public or Rural Opportunities to Use respondents to the RFI is strictly private) would hinder implementation? Transportation for Economic Success voluntary. Not responding to the RFI What authority should the accelerator(s) (ROUTES) and the Bureau’s Railroad does not preclude participation in any have to effectively carry out its mission? Rehabilitation & Improvement future procurement or grant program, if Financing (RRIF) credit program that any is issued. However, the Bureau Geographic Diversity further accelerate projects? places tremendous value on information (1) What is the most effective regional Measures of Success received and may utilize it to approach in achieving geographic implement and finalize its Program diversity? (1) How would Bureau assess and development strategy. (2) What consideration should be monitor the success of the program in ALL INFORMATION SUBMITTED given to urban versus rural areas, accomplishing the goals and objectives? SHALL BE UNCLASSIFIED. DO NOT (2) What would be appropriate key regional verses statewide or multi-State SUBMIT ANY PROPRIATARY OR performance indicators that help accelerators? PRICING INFORMATION. measure the effectiveness of this (3) Given the appropriated amount ($5 demonstration program? Please consider Issued in Washington, DC on February 24, million), what would be the optimum the planned activities under the 2020. range and most effective number of Program as indicated in Section 1441 of Morteza Farajian, awards for regional accelerators? What the FAST Act. Executive Director. would be an appropriate size program to [FR Doc. 2020–04099 Filed 2–27–20; 8:45 am] consider in addressing the needs of Other Considerations BILLING CODE 4910–9X–P priority infrastructure projects in rural (1) What else should the Bureau areas? consider (in addition to the statutory Qualifications criteria in Section 1441 of the FAST Act) and/or do to ensure an effective DEPARTMENT OF THE TREASURY (1) What resources, competencies and and successful regional accelerator United States Mint experience would be required from and program? within an accelerator? The approach Public Meeting; Notification of Citizens should consider the resources required RFI Review Coinage Advisory Committee in accelerating the development of Individuals or entities wishing to smaller rural projects and assisting respond to the RFI should state their ACTION: Notification of Citizens Coinage inexperienced or under-resourced role as well as knowledge and Advisory Committee March 10–11, regions. experience in developing or delivering 2020, Public Meeting. (2) If external resources and expertise such programs. The Bureau may request would be contemplated, what would be additional clarifying information from SUMMARY: The United States Mint the acquisition strategy while ensuring any or all respondents. Responses shall announces the Citizens Coinage transparency and accountability? not exceed 10 pages and have no Advisory Committee (CCAC) public (3) What is the best way to conduct an smaller than 12-point font with 1-inch meeting scheduled for March 10, 2020 effective and transparent selection margin all around. Any additional and March 11, 2020. process? What evaluation criteria documents (e.g. white papers, brochure Date: March 10, 2020 and March 11, should the Bureau consider? materials) would be considered. 2020.

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Time: 1:00 p.m. to 3:30 p.m. (March Liaison to the CCAC; 801 9th Street NW; Under the PRA of 1995, Federal 10, 2020) and 9:00 a.m. to 12:30 p.m. Washington, DC 20220; or call 202–354– agencies must obtain approval from the (March 11, 2020). 7208. Office of Management and Budget Location: 2nd Floor Conference Room Authority: 31 U.S.C. 5135(b)(8)(C). (OMB) for each collection of A&B, United States Mint, 801 9th Street information they conduct or sponsor. NW, Washington, DC 20220. Dated: February 24, 2020. This request for comment is being made Subject: Review and discussion of Patrick Hernandez, pursuant to Section 3506(c)(2)(A) of the candidate designs for the George H.W. Acting Deputy Director, United States Mint. PRA. Bush Coin and Barbara Bush Gold Coin [FR Doc. 2020–04116 Filed 2–27–20; 8:45 am] With respect to the following and Bronze Medal (March 10, 2020); BILLING CODE P collection of information, NCA invites and the 2021 American Innovation $1 comments on: (1) Whether the proposed Coin Program (March 11, 2020). collection of information is necessary Interested members of the public may DEPARTMENT OF VETERANS for the proper performance of NCA’s either attend the meeting in person or AFFAIRS functions, including whether the dial in to listen to the meeting at (866) information will have practical utility; 564–9287/Access Code: 62956028. [OMB Control No. 2900–0571] (2) the accuracy of NCA’s estimate of the burden of the proposed collection of Interested persons should call the Agency Information Collection information; (3) ways to enhance the CCAC HOTLINE at (202) 354–7502 for Activity: (Customer Satisfaction quality, utility, and clarity of the the latest update on meeting time and Surveys) room location. information to be collected; and (4) Any member of the public interested AGENCY: National Cemetery ways to minimize the burden of the in submitting matters for the CCAC’s Administration (NCA), Department of collection of information on consideration is invited to submit them Veterans Affairs. respondents, including through the use by email to [email protected]. ACTION: Notice. of automated collection techniques or The CCAC advises the Secretary of the the use of other forms of information Treasury on any theme or design SUMMARY: National Cemetery technology. proposals relating to circulating coinage, Administration (NCA), Department of Authority: Public Law 104–13; 44 bullion coinage, Congressional Gold Veterans Affairs (VA), is announcing an U.S.C. 3501–3521. Medals, and national and other medals; opportunity for public comment on the Title: Customer Satisfaction Surveys. advises the Secretary of the Treasury proposed collection of certain OMB Control Number: 2900–0571. with regard to the events, persons, or information by the agency. Under the Type of Review: Extension of a places to be commemorated by the Paperwork Reduction Act (PRA) of currently approved collection. Abstract: Improving Customer Service issuance of commemorative coins in 1995, Federal agencies are required to through Effective Performance each of the five calendar years publish notice in the Federal Register Management, NCA will conduct surveys succeeding the year in which a concerning each proposed collection of to determine the level of satisfaction commemorative coin designation is information, including each proposed with existing services among their made; and makes recommendations extension of a currently approved customers. The surveys will solicit with respect to the mintage level for any collection, and allow 60 days for public voluntary opinions and are not intended commemorative coin recommended. comment in response to the notice. This to collect information required to obtain Members of the public interested in notice solicits comments on the or maintain eligibility for a VA program attending the meeting in person will be collection of perceptions of the quality or benefit. Baseline data obtained admitted into the meeting room on a of service afforded by the National through these information collections first-come, first-serve basis as space is Cemetery Administration as judged by are used to validate customer service limited. Conference Room A&B can next of kin of those interred, or funeral standards. accommodate up to 50 members of the directors who facilitate these Affected Public: Individuals and public at any one time. In addition, all interments. households interring Veterans or persons entering a United States Mint DATES: Written comments and eligible dependents, and funeral facility must adhere to building security recommendations on the proposed directors facilitating such interments. protocol. This means they must consent collection of information should be I. National Cemetery Mail Surveys to the search of their persons and received on or before April 28, 2020. objects in their possession while on a. National Cemeteries Next of Kin/ government grounds and when they ADDRESSES: Submit written comments on the collection of information through Family Member and Funeral Director enter and leave the facility, and are Satisfaction Surveys prohibited from bringing into the Federal Docket Management System facility weapons of any type, illegal (FDMS) at www.Regulations.gov or to Estimated Annual Burden: 14,500 drugs, drug paraphernalia, or Mr. James Geleta, National Cemetery hours. contraband. Administration (42A), Department of Estimated Average Burden per The United States Mint Police Officer Veterans Affairs, 810 Vermont Avenue Respondent: 30 minutes. conducting the screening will evaluate NW, Washington, DC 20420 or email to Frequency of Response: On occasion. Estimated Number of Respondents: whether an item may enter into or exit [email protected]. Please refer to 29,000. from a facility based upon Federal law, ‘‘OMB Control No. 2900–0571’’ in any Treasury policy, United States Mint correspondence. During the comment b. State or Tribal Veterans Cemeteries policy, and local operating procedure; period, comments may be viewed online Next of Kin/Family Member and Funeral and all prohibited and unauthorized through FDMS. Director Satisfaction Surveys FOR FURTHER INFORMATION CONTACT: Ms. items will be subject to confiscation and Estimated Annual Burden: 9,500 Cynthia Harvey-Pryor at (202) 461– disposal. hours. FOR FURTHER INFORMATION CONTACT: 5870. Estimated Average Burden per Jennifer Warren, United States Mint SUPPLEMENTARY INFORMATION: Respondent: 30 minutes.

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Frequency of Response: On occasion. Estimated Average Burden per Estimated Number of Respondents: Estimated Number of Respondents: Respondent: 3 hours. 50. 19,000. Frequency of Response: On occasion. Estimated Number of Respondents: IV. National Cemetery Visitor Comment II. Program/Specialized Service Survey 50. Cards (Local Use) a. VA Memorial Products Next of Kin/ b. Focus Groups With Funeral Directors Estimated Annual Burden: 208 hours. Family Member and Funeral Director Estimated Average Burden Per Satisfaction Surveys Estimated Annual Burden: 150 hours. Estimated Average Burden per Respondent: 5 minutes. Estimated Annual Burden: 1, 500 Respondent: 3 hours. Frequency of Response: On occasion. hours. Frequency of Response: On occasion. Estimated Average Burden per Estimated Number of Respondents: Estimated Number of Respondents: 2,500. Respondent: 30 minutes. 50. Frequency of Response: On occasion. By direction of the Secretary. Estimated Number of Respondents: c. Focus Groups With Veteran Service Danny S. Green, 6,000. Organizations Department Clearance Officer, Office of III. National Cemetery Focus Groups Estimated Annual Burden: 150 hours. Quality, Performance and Risk, Department Estimated Average Burden Per of Veterans Affairs. a. Focus Groups With Next of Kin Respondent: 3 hours. [FR Doc. 2020–04094 Filed 2–27–20; 8:45 am] Estimated Annual Burden: 150 hours. Frequency of Response: On occasion. BILLING CODE 8320–01–P

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Part II

Securities and Exchange Commission

17 CFR Parts 210, 229, 239, et al. Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information; Proposed Rule

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SECURITIES AND EXCHANGE viewing and printing in the A. Selected Financial Data (Item 301) COMMISSION Commission’s Public Reference Room, B. Supplementary Financial Information 100 F Street NE, Room 1580, (Item 302) 17 CFR Parts 210, 229, 239, 240, and Washington, DC 20549, on official 1. Supplementary Financial Information 249 (Item 302(a)) business days between the hours of 10 2. Information About Oil and Gas [Release No. 33–10750; 34–88093; IC– a.m. and 3 p.m. All comments received Producing Activities (Item 302(b)) 33795; File No. S7–01–20] will be posted without change. Persons C. Management’s Discussion and Analysis submitting comments are cautioned that of Financial Condition and Results of RIN 3235–AM48 we do not redact or edit personal Operations (Item 303) identifying information from comment 1. Restructuring and Streamlining (Item Management’s Discussion and submissions. You should submit only 303(a)) Analysis, Selected Financial Data, and information that you wish to make 2. Capital Resources (Item 303(a)(2)) Supplementary Financial Information available publicly. 3. Results of Operations—Known Trends or We or the staff may add studies, Uncertainties (Item 303(a)(3)(ii)) AGENCY: Securities and Exchange 4. Results of Operations—Net Sales and Commission. memoranda, or other substantive items Revenues (Item 303(a)(3)(iii)) to the comment file during this ACTION: Proposed rule. 5. Results of Operations—Inflation and rulemaking. A notification of the Price Changes (Item 303(a)(3)(iv), and SUMMARY: We are proposing inclusion in the comment file of any Instructions 8 and 9 to Item 303(a)) amendments to modernize, simplify, such materials will be made available 6. Off-Balance Sheet Arrangements (Item and enhance certain financial disclosure on our website. To ensure direct 303(a)(4)) requirements in Regulation S–K. electronic receipt of such notifications, 7. Contractual Obligations Table (Item 303(a)(5)) Specifically, we are proposing to sign up through the ‘‘Stay Connected’’ option at www.sec.gov to receive 8. Critical Accounting Estimates eliminate Item 301 of Regulation S–K, 9. Interim Period Discussion (Item 303(b)) Selected Financial Data and Item 302 of notifications by email. 10. Safe Harbor for Forward-Looking Regulation S–K, Supplementary FOR FURTHER INFORMATION CONTACT: Information (Item 303(c)) Financial Information because they are Angie Kim, Special Counsel, or 11. Smaller Reporting Companies (Item largely duplicative of other Courtney Lindsay, Special Counsel, 303(d)) requirements and to amend Item 303 of Office of Rulemaking, at (202) 551– D. Application to Foreign Private Issuers Regulation S–K, Management’s 3430, or Ryan Milne, Associate Chief 1. Form 20–F Discussion & Analysis of Financial Accountant, Office of the Chief 2. Form 40–F Accountant, at (202) 551–3400 in the 3. Item 303 of Regulation S–K Condition and Results of Operations E. Additional Conforming Amendments (‘‘MD&A’’) to modernize and enhance Division of Corporation Finance, U.S. 1. Roll-up Transactions—Item 914 of MD&A disclosures. In combination, the Securities and Exchange Commission, Regulation S–K proposed amendments are intended to 100 F Street NE, Washington, DC 20549. 2. Regulation AB—Items 1112, 1114, and eliminate duplicative disclosures and SUPPLEMENTARY INFORMATION: The 1115 modernize and enhance MD&A Commission is proposing to remove and 3. Summary Prospectus in Forms S–1 and disclosures for the benefit of investors, reserve 17 CFR 229.301 (‘‘Item 301’’) F–1 while simplifying compliance efforts for and 17 CFR 229.302 (‘‘Item 302’’) of 4. Business Combinations—Form S–4, registrants. Regulation S–K under the Securities Act Form F–4 and Schedule 14A of 1933 (the ‘‘Securities Act’’) and the 5. Form S–20 DATES: Comments should be received by F. Compliance Date April 28, 2020. Securities Exchange Act of 1934 (the III. General Request for Comments ‘‘Exchange Act’’). The Commission is ADDRESSES: Comments may be IV. Economic Analysis also proposing to amend 17 CFR 210.1– submitted by any of the following A. Introduction 02(bb) of Regulation S–X (‘‘Rule 1– methods: B. Baseline and Affected Parties 02(bb)’’); 17 CFR 229.303 (‘‘Item 303’’) C. Potential Benefits and Costs of the Electronic Comments and 17 CFR 229.914 (‘‘Item 914’’) of Proposed Amendments 1. Overall Potential Benefits and Costs • Use the Commission’s internet Regulation S–K under the Securities Act and the Exchange Act; 17 CFR 229.1112 2. Benefits and Costs of Specific Proposed comment forms (https://www.sec.gov/ Amendments rules/proposed.shtml); or (‘‘Item 1112’’), 17 CFR 229.1114 (‘‘Item 1114’’) and 17 CFR 229.1115 (‘‘Item D. Anticipated Effects on Efficiency, • Send an email to rule-comments@ Competition, and Capital Formation sec.gov. Please include File Number S7– 1115’’) of Regulation AB (a subpart of E. Alternatives 01–20 on the subject line. Regulation S–K) under the Securities V. Paperwork Reduction Act Act and the Exchange Act; 17 CFR A. Summary of the Collections of Paper Comments 239.11 (‘‘Form S–1’’), 17 CFR 239.20 Information • Send paper comments to Vanessa (‘‘Form S–20’’), 17 CFR 239.25 (‘‘Form B. Summary of the Proposed Amendments’ A. Countryman, Secretary, Securities S–4’’), 17 CFR 239.31 (‘‘Form F–1’’) and Effects on the Collections of Information 17 CFR 239.34 (‘‘Form F–4’’) under the C. Incremental and Aggregate Burden and and Exchange Commission, 100 F Street Cost Estimates for the Proposed NE, Washington, DC 20549–1090. Securities Act; 17 CFR 240.14a–101 (‘‘Schedule 14A’’) under the Exchange Amendments All submissions should refer to File VI. Small Business Regulatory Enforcement Act; and 17 CFR 249.220f (‘‘Form 20– Number S7–01–20. This file number Fairness Act F’’), 17 CFR 249.240f (‘‘Form 40–F’’), should be included in the subject line VII. Regulatory Flexibility Act Certification and 17 CFR 249.308 (‘‘Form 8–K’’) if email is used. To help us process and VIII. Statutory Authority under the Exchange Act. review your comments more efficiently, I. Introduction please use only one method. The Table of Contents A. Background Commission will post all comments on I. Introduction the Commission’s website (https:// A. Background We are proposing certain amendments www.sec.gov/rules/proposed.shtml). B. Overview of the Proposed Amendments to Regulation S–K, and related rules and Comments also are available for website II. Description of the Proposed Amendments forms. Specifically, we are proposing (1)

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to eliminate Item 301, Selected ‘‘Disclosure Effectiveness Initiative’’).4 Act and the FAST Act, and the work on Financial Data and Item 302, The objective of the Disclosure the Disclosure Effectiveness Initiative Supplementary Financial Information; Effectiveness Initiative is to improve our and the S–K Study, have focused on and (2) to modernize, simplify, and disclosure regime for the benefit of both modernizing and improving disclosure enhance the disclosure requirements in investors and registrants. In connection to reduce costs and burdens while Item 303, MD&A.1 We are also with the S–K Study and the launch of continuing to provide investors with all proposing certain parallel amendments the Disclosure Effectiveness Initiative, material information. These proposals applicable to financial disclosures Commission staff received public input continue that work with a particular provided by foreign private issuers on how to improve registrant focus on performance and financial (‘‘FPIs’’).2 disclosures.5 Additionally, in a concept disclosure. Based on a recommendation in the release issued in 2016,6 the Commission In developing the proposed Report on Review of Disclosure solicited comment on the business and amendments, we considered input from Requirements in Regulation S–K (‘‘S–K financial disclosure requirements in comment letters the Commission Study’’),3 Commission staff initiated a Regulation S–K. Specifically, the received on the initiatives described comprehensive evaluation of the Commission solicited comment on above. We also took into account the Commission’s disclosure requirements, whether these requirements provide the staff’s experience with Regulation S–K which included an assessment of the material information that investors need arising from the Division of Corporation information our rules require registrants to make informed investment and voting Finance’s disclosure review program to disclose, how and where this decisions, and whether any of our rules and changes in the regulatory and information is presented, and how we have become outdated or unnecessary, business landscape since the adoption can better leverage technology as part of or could otherwise be improved. These of Regulation S–K over 40 years ago. these efforts (collectively, the proposals also are informed by the Regulation S–K was adopted in 1977 to objectives of the Fixing America’s foster uniform and integrated disclosure 1 Concurrent with this release we are issuing Surface Transportation Act (the ‘‘FAST for registration statements under both guidance on key performance indicators and Act’’), which, among other things, the Securities Act and the Exchange metrics in MD&A. See Commission Guidance on required the Commission to study ways Act, and other Exchange Act filings, Management’s Discussion and Analysis of Financial including periodic and current reports.8 Condition and Results of Operations, Release No. that Regulation S–K could be 7 33–10751 (Jan. 30, 2020) (the ‘‘Companion modernized and simplified. The JOBS In 1982, the Commission expanded and Guidance’’). reorganized Regulation S–K to be the 2 See Section II.D below. An FPI is any foreign 4 See SEC Spotlight on Disclosure Effectiveness, central repository for its non-financial issuer other than a foreign government, except for available at https://www.sec.gov/spotlight/ statement disclosure requirements.9 The an issuer that (1) has more than 50% of its disclosure-effectiveness.shtml. Commission’s goals in adopting outstanding voting securities held of record by U.S. 5 In connection with the S–K Study, the residents; and (2) any of the following: (i) A Commission received public comments on integrated disclosure were to revise or majority of its officers or directors are citizens or regulatory initiatives to be undertaken in response eliminate overlapping or unnecessary residents of the United States; (ii) more than 50% to the JOBS Act. See Comments on SEC Regulatory disclosure requirements wherever of its assets are located in the United States; or (iii) Initiatives Under the JOBS Act: Title I—Review of possible, thereby reducing burdens on its business is principally administered in the Regulation S–K, available at http://www.sec.gov/ United States. See 17 CFR 230.405. See also 17 CFR comments/jobs-title-i/reviewreg-sk/reviewreg- registrants and enhancing readability 240.3b–4(c). sk.shtml. While the disclosure requirements for Item 9 of Similarly, to facilitate public input on the staff published the Report on Modernization and Form 1–A for Regulation A issuers are similar to the Disclosure Effectiveness Initiative, members of the Simplification of Regulation S–K (the ‘‘FAST Act MD&A requirements under Item 303, we are not public were invited to submit comments. See Report’’). See Report on Modernization and proposing to amend Form 1–A at this time. See Request for Public Comment, available at http:// Simplification of Regulation S–K (Nov. 23, 2016), Amendments for Small and Additional Issues www.sec.gov/spotlight/disclosure- available at https://www.sec.gov/reportspubs/sec- Exemptions Under the Securities Act (Regulation effectiveness.shtml. Public comments received to fast-act-report-2016.pdf. Comment letters received A), Release No. 33–9741 (Mar. 25, 2015) [80 FR date on the Disclosure Effectiveness Initiative are in response to the FAST Act Report are available 21805 (Apr. 20, 2015)], at 21830. With that said, in available on our website. See Comments on at https://www.sec.gov/comments/fast/fast.htm. the preparation of Part II of Form 1–A, Regulation Disclosure Effectiveness, available at https:// In connection with the FAST Act Report, the A issuers have the option of disclosing either the www.sec.gov/comments/disclosure-effectiveness/ Commission proposed and then adopted certain information required by (i) the Offering Circular disclosureeffectiveness.shtml. amendments to Regulation S–K. See FAST Act format (including Item 9 referenced above) or (ii) 6 See Business and Financial Disclosure Required Modernization and Simplification of Regulation S– Part I of Forms S–1 or S–11 (except for the financial by Regulation S–K, Release No. 33–10064 (Apr. 13, K, Release No. 33–10425 (Oct. 11, 2017) [82 FR statements, selected financial data, and 2016) [81 FR 23915 (Apr. 22, 2016)] (‘‘Concept 50988 (Nov. 2, 2017)] (‘‘FAST Act Proposing supplementary information called for by those Release’’). Comment letters related to the Concept Release’’) and FAST Act Modernization and forms). Thus, even though the proposed changes Release are available at https://www.sec.gov/ Simplification of Regulation S–K, Release No. 33– would not amend Item 9 of Form 1–A, they would comments/s7-06-16/s70616.htm. Unless otherwise 10618 (Mar. 20, 2019) [84 FR 12674 (Apr. 20, 2019)] still impact Regulation A issuers that choose to indicated, comments cited in this release are to the (‘‘FAST Act Adopting Release’’). disclose the information required by Part I of Forms public comments on the Concept Release. 8 The Commission adopted the initial version of S–1 or S–11. See Section (a)(1)(ii) of Part II of Form 7 Public Law 114–94, Sec. 72003, 129 Stat. 1311 Regulation S–K following issuance of the report by 1–A. (2015) (requiring, among other things, that the SEC the Advisory Committee on Corporate Disclosure 3 See Report on Review of Disclosure conduct a study, issue a report, and issue a led by former Commissioner A.A. Sommer, Jr., Requirements in Regulation S–K (Dec. 2013), proposed rule on the modernization and which recommended adoption of a single integrated available at https://www.sec.gov/news/studies/ simplification of Regulation S–K). Among other disclosure system. See H. Comm. on Interstate and 2013/reg-sk-disclosure-requirements-review.pdf. things, the FAST Act directed the Commission to Foreign Commerce, Report of the Advisory The report was mandated by Section 108 of the study Regulation S–K to: Determine how to best Committee on Corporate Disclosure to the Securities Jumpstart Our Business Startups Act (‘‘JOBS Act’’). modernize and simplify such requirements in a and Exchange Commission, 95th Cong., 1st Sess., at Public Law 112–106, Sec. 108, 126 Stat. 306 (2012). manner that reduces costs and burdens on 95–29 (Comm. Print 1977), available at http:// Section 108 required the Commission to conduct a registrants while continuing to provide all material 3197d6d14b5f19f2f440-5e13d29c4c016cf96 review of Regulation S–K to comprehensively information; emphasize a company-by-company cbbfd197c579b45.r81.cf1.rackcdn.com/collection/ analyze the current registration requirements and to approach that allows relevant and material papers/1970/1977_1103_AdvisoryDisclosure.pdf. determine how such requirements can be updated information to be disseminated without boilerplate This version of Regulation S–K included only two to modernize and simplify the registration process language or static requirements while preserving disclosure requirements—a description of business and to reduce the costs and other burdens completeness and comparability of information and a description of properties. associated with these requirements for emerging across registrants; and evaluate methods of 9 See Adoption of Integrated Disclosure System, growth companies. Section 108 also required the information delivery and presentation and explore Release No. 33–6383 (Mar. 3, 1982) [47 FR 11380 Commission to provide a report on this review to methods for discouraging repetition and the (Mar. 16, 1982)] (‘‘1982 Integrated Disclosure Congress. disclosure of immaterial information. In 2016, the Adopting Release’’).

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without affecting the provision of disclosure and focus on material • Add a new Item 303(b)(4), Critical material information to investors.10 The information. Specifically, we propose to accounting estimates, to clarify and amendments we are proposing in this eliminate: codify Commission guidance on critical release would continue to advance these • Item 301—Selected Financial Data; accounting estimates; 12 • Item 302—Supplementary Financial goals. • Eliminate current Item 303(c), Safe Additionally, we reviewed Items 301, Information; and • Item 303(a)(5)—MD&A, Tabular harbor, in light of the proposed 302, and 303 in light of advancements disclosure of contractual obligations. replacement of Item 303(a)(4) and in technology (in particular the We are also proposing changes to elimination of Item 303(a)(5); and availability of past financial statements modernize, simplify, and enhance • and other disclosure made in filings on Eliminate Item 303(d), Smaller disclosure requirements in Item 303 in reporting companies 13 in light of the the Commission’s Electronic Data order to improve these disclosures for Gathering, Analysis, and Retrieval proposed elimination of Items investors and simplify compliance 303(a)(3)(iv) and 303(a)(5). (‘‘EDGAR’’) system) and changes in efforts for registrants. Specifically, these requirements under U.S. Generally proposed revisions would: We are also proposing certain parallel Accepted Accounting Principles (‘‘U.S. • Add a new Item 303(a), Objective, amendments to Forms 20–F and 40–F, GAAP’’). We also considered the to state the principal objectives of including Item 3.A of Form 20–F benefits and appropriateness of a MD&A; (Selected Financial Information), Item 5 principles-based approach in reviewing • Amend Item 303(a), Full fiscal years of Form 20–F (Operating and Financial these Items and our proposals are (proposed Item 303(b)) and Item 303(b), Review and Prospects), General intended to promote the principles- Interim periods (proposed Item 303(c)) Instruction B.(11) of Form 40–F (Off- based nature of MD&A.11 to modernize, clarify, and streamline the Balance Sheet Arrangements), and items; General Instruction B.(12) of Form 40– B. Overview of the Proposed • Amendments Replace Item 303(a)(4), Off-balance F (Tabular Disclosure of Contractual sheet arrangements, with an instruction Arrangements).14 The following table We are proposing changes to Items regarding the need to discuss such summarizes some of the changes we are 301, 302, and 303 of Regulation S–K obligations in the broader context of proposing, as described more fully in that would reduce duplicative MD&A; Section II (Proposed Amendments): 15

Discussed Current item or issue Summary description of proposal Principal objective(s) Corresponding below in FPI change(s)? section

Item 301, Selected financial Registrants would no longer be required to Modernize disclosure requirement in light of Yes ...... II.A & II.D.1. data. provide 5 years of selected financial data. technological developments and simplify disclosure requirements. Item 302(a), Supplementary fi- Registrants would no longer be required to Reduce repetition and focus disclosure on N/A ...... II.B.1. nancial information. provide 2 years of selected quarterly finan- material information. Modernize disclosure cial data. requirement in light of technological devel- opments. Item 303(a), MD&A ...... Clarify the objective of MD&A and streamline Simplify and enhance the purpose of MD&A .. Yes ...... II.C.1 & II.D.1. the fourteen instructions. Item 303(a)(2), Capital re- Registrants would disclose material cash re- Modernize and enhance disclosure require- Yes ...... II.C.2 & II.D.1. sources. quirements, including commitments for cap- ments to account for capital expenditures ital expenditures, as of the latest fiscal pe- that are not necessarily capital investments. riod, the anticipated source of funds need- ed to satisfy such cash requirements, and the general purpose of such requirements. Item 303(a)(3)(ii), Results of Registrants would disclose known events that Clarify item requirement by using a disclosure Yes ...... II.C.3 & II.D.1. operations. are reasonably likely to cause a material threshold of ‘‘reasonably likely,’’ which is change in the relationship between costs consistent with the Commission’s interpre- and revenues, such as known or reason- tative guidance on forward-looking state- ably likely future increases in costs of labor ments. or materials or price increases or inventory adjustments. Item 303(a)(3)(iii), Results of Clarify that a discussion of the reasons un- Clarify MD&A disclosure requirements by Yes ...... II.C.4 & II.D.1. operations. derlying material changes in net sales or codifying existing Commission guidance. revenues is required.

10 See id. 12 See Commission Guidance Regarding company that is not registered under the Investment 11 See Concept Release on Management’s Management’s Discussion and Analysis of Financial Company Act. Discussion and Analysis of Financial Condition and Condition and Results of Operation, Release No. 14 We discuss our proposals that would affect 33–8350 (Dec. 19, 2003) [68 FR 75056 (Dec. 29, Operations, Release No. 33–6711 (Apr. 23, 1987) FPIs in Section II.D below. [52 FR 13715 (Apr. 24, 1987)] (stating that when the 2003)] (the ‘‘2003 MD&A Interpretive Release’’). 15 Commission adopted MD&A as a separate 13 Item 10 of Regulation S–K defines a smaller The information in this table is not disclosure requirement, the rules remained reporting company (‘‘SRC’’) as a registrant that is comprehensive and is intended only to highlight intentionally general in nature: ‘‘The Commission not an investment company, an asset-backed issuer, some of the more significant aspects of the current believed that a flexible approach would elicit more or a majority-owned subsidiary of a parent that is rules and proposed amendments. It does not reflect meaningful disclosure and avoid boilerplate not an SRC that: Had a public float of less than $250 all of the proposed amendments or all of the rules discussions which a more specific approach could million; or had annual revenues of less than $100 and forms that are affected. All changes are foster. Further, the Commission reasoned that, million, and either no public float or a public float discussed in their entirety below. As such, this because each registrant is unique, no one checklist of less than $700 million. Business development table should be read together with the referenced could be fashioned to cover all registrants companies (‘‘BDCs’’) do not fall within the SRC comprehensively.’’). definition and are a type of closed-end investment sections and the complete text of this release.

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Discussed Current item or issue Summary description of proposal Principal objective(s) Corresponding below in FPI change(s)? section

Item 303(a)(3)(iv), Results of The item and instructions would be elimi- Encourage registrants to focus on material in- Yes ...... II.C.5. operations. nated. Registrants would still be required to formation that is tailored to a registrant’s Instructions 8 and 9 (Inflation discuss these matters if they are part of a businesses, facts, and circumstances. and price changes). known trend or uncertainty that has had, or the registrant reasonably expects to have, a material favorable or unfavorable impact on net sales, or revenue, or income from continuing operations. Item 303(a)(4), Off-balance The item would be replaced by a new instruc- Prompt registrants to consider and integrate Yes ...... II.C.6, II.D.1, & sheet arrangements. tion added to Item 303. Under the new in- disclosure of off-balance sheet arrange- II.D.2. struction, registrants would be required to ments within the context of their MD&A. discuss commitments or obligations, includ- ing contingent obligations, arising from ar- rangements with unconsolidated entities or persons that have, or are reasonably likely to have, a material current or future effect on such registrant’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements, or capital resources even when the arrangement results in no obligation being reported in the registrant’s consolidated balance sheets. Item 303(a)(5), Contractual obli- Registrants would no longer be required to Promote the principles-based nature of Yes ...... II.C.7, II.D.1, & gations. provide a contractual obligations table. MD&A and simplify disclosures by reducing II.D.2. redundancy. Instruction 4 (Material changes Incorporate a portion of the instruction into Enhance analysis in MD&A. Clarify MD&A Yes ...... II.C.1 & II.D.1. in line items). proposed Item 303(b). Clarify that where disclosure requirements by codifying exist- there are material changes in a line item, ing Commission guidance on the impor- including where material changes within a tance of analysis in MD&A. line item offset one another, disclosure of the underlying reasons for these material changes in quantitative and qualitative terms is required. Item 303(b), Interim periods ..... Registrants would be permitted to compare Allow for flexibility in comparison of interim N/A ...... II.C.9. their most recently completed quarter to ei- periods to enhance the disclosure provided ther the corresponding quarter of the prior to investors. year or to the immediately preceding quar- ter. Registrants subject to Rule 3–03(b) of Regulation S–X would be afforded the same flexibility. Critical Accounting Estimates... Explicitly require disclosure of critical ac- Facilitate compliance and improve resulting Yes ...... II.C.8 & II.D.1. counting estimates. disclosure. Eliminate disclosure that dupli- cates the financial statement discussion of significant policies. Promote meaningful analysis of measurement uncertainties.

We discuss the proposed amendments significant trends in the registrant’s companies (‘‘EGCs’’) 19 that are below in the order that each Item financial condition and results of providing the information called for by appears in Regulation S–K. We welcome operations. Instruction 2 to Item 301 Item 301 in a Securities Act registration feedback and encourage interested lists specific items that must be statement, need not present selected parties to submit comments on any or included, subject to appropriate financial data for any period prior to the all aspects of the proposals. When variation to conform to the nature of the earliest audited financial statements commenting, it would be most helpful registrant’s business, and provides that presented in connection with the EGC’s if you include the reasoning behind registrants may include additional items initial public offering (‘‘IPO’’) of its your position or recommendation. they believe would enhance an common equity securities.20 In addition, understanding of, and highlight, other an EGC that is providing the II. Description of the Proposed trends in their financial condition or information called for by Item 301 in a Amendments results of operations.17 registration statement, periodic report, A. Selected Financial Data (Item 301) SRCs are not required to provide Item or other report filed under the Exchange 18 Item 301 16 requires registrants to 301 information. Emerging growth Act need not present selected financial furnish selected financial data in 17 Instruction 2 to Item 301 of Regulation S–K 19 An EGC is defined as a company that has total comparative tabular form for each of the states that, subject to appropriate variation to annual gross revenues of less than $1.07 billion registrant’s last five fiscal years and any conform to the nature of the registrant’s business, during its most recently completed fiscal year and, additional fiscal years necessary to keep the following items shall be included in the table as of December 8, 2011, had not sold common of financial data: Net sales or operating revenues; equity securities under a registration statement. A the information from being misleading. income (loss) from continuing operations; income company continues to be an EGC for the first five Instruction 1 to Item 301 states that the (loss) from continuing operations per common fiscal years after it completes an IPO, unless one of purpose of the item is to supply in a share; total assets; long-term obligations and the following occurs: Its total annual gross revenues convenient and readable format selected redeemable preferred stock (including long-term are $1.07 billion or more; it has issued more than debt, capital leases, and redeemable preferred $1 billion in non-convertible debt in the past three financial data that highlights certain stock); and cash dividends declared per common years; or it becomes a ‘‘large accelerated filer,’’ as share. defined in Exchange Act Rule 12b–2. See Securities 16 See also Section II.D below for a discussion of 18 Item 301(c) of Regulation S–K [17 CFR Act Rule 405 and Exchange Act Rule 12b–2. related amendments to Form 20–F. 229.301(c)]. 20 Item 301(d)(1) of Regulation S–K.

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data for any period prior to the earliest One of these commenters noted the current financial data not misleading,33 audited financial statements presented potentially significant costs in public or to illustrate material trends.34 in connection with its first registration offerings for comfort letters associated A few commenters supported statement that became effective under with this disclosure.28 This commenter retaining Item 301.35 Some of these the Exchange Act or Securities Act.21 stated that where prior years have been commenters stated that having the In the Concept Release, the audited by a different accounting firm, information in one place keeps investors Commission solicited comment on companies typically incur significant from having to review multiple sources whether to retain, modify, or eliminate additional costs, both in terms of direct to obtain this information,36 with one of Item 301.22 The Commission also costs and internal resources, to obtain these commenters noting that investors solicited comment on the cost of this comfort letters. Additionally, this sometimes rely on printed copies.37 disclosure and whether information on commenter stated that if Item 301 Two of the commenters also stated that the earliest two of the last five fiscal information is required for periods requiring this disclosure for five years is years is available without unreasonable where no audited financial statements an appropriate timeframe,38 with one cost or expense. Additionally, the are otherwise required, the costs can be stating that five years is more likely to Commission solicited comment on the much more substantial. capture the effects that business cycles utility of this disclosure. Another commenter encouraged the may have on a registrant.39 Another Many commenters recommended Commission to ask investors whether stated that Item 301 information should eliminating Item 301 completely or the utility of the information provided be easy for companies to disclose questioned its usefulness.23 One of these in response to Item 301 justify the costs because the information is already in commenters stated that ‘‘absent a of presenting it.29 This commenter company records.40 requirement to provide narrative stated that, while this required We propose to eliminate Item 301. discussions of trends, the current disclosure is limited to a small number When the precursor to Item 301 was requirement under [Item 301] seems less of line items, certain of these items adopted in 1970, prior annual reports useful in an electronic era where effectively require preparation of a full were not quickly and easily accessible.41 historical financial information is easily income statement and balance sheet to Today, the information required by Item accessible.’’ 24 Another commenter derive information for the earlier two 301 can be readily accessed and stated that it did not believe that years. compiled through prior filings on 42 presenting five years of information is Many commenters recommended EDGAR. In addition, this information useful to an investor and similarly noted revising Item 301 to allow registrants to is tagged using eXtensible Business that the information is accessible omit the earliest two years.30 Some of Reporting Language (‘‘XBRL’’) data through EDGAR.25 An additional these commenters noted that providing format. As noted above, there are commenter questioned whether selected disclosure of the earliest two years often currently certain exceptions to Item 301 43 financial data was necessary in light of creates challenges for registrants, for EGC and SRC registrants. Our data-tagged financial statements.26 A including non-EGC issuers conducting proposals would not affect these number of commenters recommended IPOs.31 A few of these commenters exceptions or result in any further loss 44 revising the item to reduce burdens, if recommended a practicability exception of information from these registrants. retained.27 allowing registrants to omit the earliest two years when the information cannot 33 See, e.g., letters from Chamber, FedEx, and CGCIV. 21 Item 301(d)(2) of Regulation S–K. be provided without unreasonable cost 34 See, e.g., letters from NAREIT and SIFMA. 22 See Concept Release, at 23940. 32 or expense. Others recommended that 35 See, e.g., letters from R.G. Associates, Inc. (July 23 See, e.g., letters from New York State Society the earliest two years should be required 6, 2016) (‘‘RGA’’), California Public Employees’ of Certified Public Accountants (July 19, 2016) only when necessary to make the Retirement System (July 21, 2016) (‘‘CalPERS’’), (‘‘NYSSCPA’’), Aflac, Inc. (July 19, 2016) California State Teachers’ Retirement System (July (‘‘AFLAC’’), Ernst & Young LLP (July 21, 2016) 21, 2016), and CFA Institute (Oct. 6, 2016). (‘‘E&Y’’), PNC Financial Services Group (July 21, prior to those presented in the financial statements 36 See letters from RGA and CFA Institute. 2016) (‘‘PNC’’), Edison Electric Institute and cannot be recast without unreasonable effort or cost 37 American Gas Association (July 21, 2016) (‘‘EEI and (letter from General Motors); and allowing See letter from RGA. AGA’’), XBRL US, Inc. (July 21, 2016), Chevron hyperlinks to access five-year data if placed within 38 See letters from CalPERS and CFA Institute. Corporation (July 22, 2016) (‘‘Chevron’’), Fenwick a separate ‘company profile’ section of EDGAR 39 See letter from CFA Institute. West LLP (Aug. 1, 2016) (‘‘Fenwick’’), Grant (letter from FEI). 40 See letter from CalPERs. Thornton LLP (July 21, 2016) (‘‘Grant Thornton’’), 28 See letter from Fenwick. 41 Before adopting the precursor to Item 301, the Northrop Grumman Corporation (Sept. 27, 2016) 29 See letter from PricewaterhouseCoopers LLP Commission implemented a microfiche system in (‘‘Northrop Grumman’’), General Motors Company (July 21, 2016) (‘‘PWC’’) (stating that providing the 1968 that supplemented its hard copy reproduction (Sept. 30, 2016) (‘‘General Motors’’), and Financial earliest two years can be time consuming and service and was intended to ‘‘facilitate wider, more Executives International (Oct. 3, 2016) (‘‘FEI’’). costly, such as in circumstances where the economical and more rapid distribution’’ of 24 See letter from Grant Thornton. information has not been previously provided (e.g., Exchange Act reports. See Disclosure to Investors— 25 See letter from NYSSCPA. in an initial registration statement)). A Reappraisal of Federal Administrative Policies 26 See letter from E&Y. This commenter also 30 See, e.g., letters from Deloitte & Touche LLP under the ’33 and ’34 Acts, Policy Study, Mar. 27, suggested that the Commission ‘‘encourage (July 15, 2016) (‘‘Deloitte’’), BDO USA, LLP (July 20, 1969, available at http://www.sechistorical.org/ _ registrants to include tables of selected financial 2016) (‘‘BDO’’), U.S. Chamber of Commerce (Jul. 20, museum/galleries/tbi/gogo d.php, at 313. data in the summary section of their annual reports 2016) (‘‘Chamber’’), FedEx Corporation (‘‘FedEx’’) 42 In addition, filings are generally available on if the information would highlight the key content (Jul. 21, 2016), Corporate Governance Coalition for registrants’ websites and other third-party websites. and developments disclosed in the full report.’’ Investor Value (July 20, 2016) (‘‘CGCIV’’), Center for 43 We recognize an exception to this accessibility 27 See, e.g., letters from NYSSCPA, AFLAC, E&Y, Audit Quality (July 21, 2016) (‘‘CAQ’’), Securities would be SRCs and EGCs that are either filing an Fenwick, General Motors, and FEI. These Industry and Financial Markets Association (July initial registration statement or those that have not commenters suggested: Limiting the disclosure 21, 2016) (‘‘SIFMA’’), National Association of Real been public for at least two fiscal years following requirement to two or three years (letters from Estate Investment Trusts (July 21, 2016) their initial registration statement. NYSSCPA and AFLAC); making disclosure of the (‘‘NAREIT’’), Allstate Insurance Company (July 21, 44 Based on Ives Group’s Audit Analytics data, earlier years voluntary and allowing all registrants 2016) (‘‘Allstate’’), Davis Polk & Wardwell LLP (July during the period from April 5, 2012 through to adopt a ‘‘build up’’ approach to Item 301 similar 22, 2016) (‘‘Davis Polk’’), Stephen Percoco (July 24, December 31, 2018, EGC issuers accounted for to the option available to EGCs (letters from E&Y 2016) (‘‘S. Percoco’’), and Shearman & Sterling LLP approximately 1,267 out of 1,440, or approximately and Fenwick); making the selected financial data (Aug. 31, 2016) (‘‘Shearman’’). 88%, of priced exchange-listed IPOs (excluding table voluntary and permitting registrants to present 31 See, e.g., letters from Deloitte and CAQ. deals identified as mergers, spin-offs, or fund only a retroactive accounting change for the periods 32 See, e.g., letters from BDO, Davis Polk, and S. offerings). SRCs are often also EGCs so these presented in the financial statements if the periods Percoco. statistics of IPOs conducted by EGCs likely

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In adding the requirement for selected disclosure of material trends and such registered closed-end investment financial data to Regulation S–K, the other information necessary to an companies to disclose ‘‘financial Commission stated that Item 301 was understanding of the registrant’s highlights.’’ 50 The disclosure required ‘‘relevant primarily where it can be financial conditions, changes in by Item 301 and the financial highlights related to trends in the registrant’s financial condition, and results of requirement is similar in many respects. continuing operations.’’ 45 However, operations.48 If we were to adopt the financial Item 303 specifically calls for disclosure highlights requirement and retain Item Request for Comment of material trend information.46 In 301, should we specifically exclude addition, since Item 301 has been 1. Should we eliminate Item 301, as BDCs from the Item 301 requirement? incorporated into Regulation S–K, the proposed? Would eliminating Item 301 Commission has issued guidance result in the loss of material information B. Supplementary Financial Information emphasizing trend disclosure in that is otherwise not available to (Item 302) MD&A.47 In light of the requirement for investors, such as through prior filings 1. Supplementary Financial Information discussion and analysis of trends in on EDGAR? If so, what information (Item 302(a)) Item 303, we believe requiring five years would be lost, and are there alternatives of selected financial data is not we should consider that would capture Item 302(a)(1) requires disclosure of selected quarterly financial data of necessary to achieve the original this information? 51 purpose of providing trend disclosure. 2. Is the option for investors to specified operating results and Item Registrants may, however, continue to compile selected financial information 302(a)(2) requires disclosure of from current or prior filings an adequate variances in these results from amounts include a tabular presentation of 52 relevant financial or other information substitute for the separate presentation previously reported on a Form 10–Q. discussed in MD&A, to the extent they of that information in Item 301? Do Item 302(a) does not apply to SRCs or believe that such a presentation would current XBRL-tagging requirements FPIs and, because it only applies to be useful to an understanding of the facilitate compilation and comparison of companies that already have a class of disclosure. We believe that eliminating selected financial information? securities registered under Section 12 of Item 301 would continue to allow 3. Are the requirements of Item 303 the Exchange Act at the time of filing, registrants the flexibility to present a sufficient to provide investors with it does not apply to first time registrants meaningful MD&A discussing material necessary disclosure regarding trends in conducting an IPO and registrants who trend information, while easing a registrant’s results of operations and are only required to file reports financial condition? pursuant to Section 15(d) of the compliance burdens on registrants. 53 We acknowledge that some 4. Alternatively, if Item 301 should be Exchange Act. When Item 302(a) commenters suggested we revise Item retained, should registrants be allowed applies, it requires certain information 301 to require only presentation of the to provide less than five years of for each full quarter within the two most same number of years as included in the selected financial data? If so, what is the recent fiscal years and any subsequent financial statements, or otherwise appropriate number of years that should period for which financial statements provide accommodations to limit the be provided, and in what are included or required by Article 3 of 54 number of years presented. However, circumstances? Regulation S–X. Item 302(a)(3) we believe that such an approach would 5. What are the costs to registrants of requires a description of the effect of result in disclosure that would be providing five years of selected financial any discontinued operations and largely duplicative of information in the data? Would those costs significantly unusual or infrequently occurring items financial statements, and therefore may decrease if the Commission limited recognized in each quarter, as well as have limited utility. We also selected financial data to only those the aggregate effect and the nature of acknowledge that some commenters years presented in the filing’s historical year-end or other adjustments that are 55 recommended that we retain Item 301 financial statements? material to the results of that quarter. without any revisions or enhance the 6. How do market participants use the selected financial data disclosures? Do 50 See Securities Offering Reform for Closed-End item requirement. We believe, however, Investment Companies, Release No. 33–10619 (Mar. that the incremental utility of having a market participants rely on any 20, 2019) [84 FR 14448 (Apr. 10, 2019)], at 14472. full five years of selected financial particular fiscal year or years more than 51 Item 302(a)(1) of Regulation S–K [17 CFR information is not justified by the cost others (e.g., the most recent two or three 229.302(a)(1)]. Item 302(a)(1) specifies disclosure of: to prepare such disclosures, particularly years)? Would there be a cost to obtain Net sales; gross profit (net sales less costs and selected financial data disclosures expenses associated directly with or allocated to since Item 303 already requires products sold or services rendered); income (loss) elsewhere and, if so, what would that from continuing operations; per share data based encompass the majority of IPOs conducted by SRCs. cost be? upon income (loss) from continuing operations; net In addition, for reasons discussed in this release, 7. Would registrants continue to income (loss); and net income (loss) attributable to registrants would still be required to discuss and provide selected financial data even if the registrant. analyze material trends, which was one of the they are no longer required to do so? If 52 Item 302(a)(2) of Regulation S–K [17 CFR intended purposes of Item 301. Accordingly, in the 229.302(a)(2)]. When the data supplied pursuant to majority of instances, we believe that our proposal so, for how many years? Item 302(a) varies from amounts previously would not result in a loss of disclosure. 8. If we were to retain Item 301, reported on the Form 10–Q filed for any quarter, 45 Amendments to Annual Report Form, Related should we modify the line items such as when a combination between entities under Forms, Rules, Regulations, and Guides; Integration required to be included in the common control occurs or where an error is of Securities Acts Disclosure Systems, Release No. corrected, the registrant must reconcile the amounts 33–6231 (Sept. 2, 1980) [45 FR 63630 (Sept. 25, presentation pursuant to Instruction given with those previously reported and describe 49 1980)] (‘‘1980 Form 10–K Adopting Release’’). 2? For example, should we allow the reason for the difference. 46 See, e.g., Item 303(a)(3). registrants more discretion regarding 53 Item 302(a)(5) and (c) of Regulation S–K [17 47 See, e.g., Management’s Discussion and which line items to present? CFR 229.302(a)(5) and (c)]. Analysis of Financial Condition and Results of 9. The Commission recently proposed 54 Item 302(a)(1) and (a)(3) [17 CFR 229.302(a)(1) Operations; Certain Investment Company to extend to BDCs the requirement for and (a)(3)]. Disclosures, Release No. 33–6835 (May 18, 1989) 55 Item 302(a)(3) of Regulation S–K [17 CFR [54 FR 22427 (May 24, 1989)] (the ‘‘1989 MD&A 229.302(a)(3)]. The requirement applies to items Interpretative Release’’) and 2003 MD&A 48 See Item 303(a). recognized in each full quarter within the two most Interpretive Release. 49 See Instruction 2 to Item 301, supra note 17. Continued

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If a registrant’s financial statements statement beyond revenues, net income, 302(a) is already available in Form 10– have been reported on by an accountant, and earnings per share.’’ Yet another Qs.68 This commenter supported a Item 302(a)(4) requires that accountant commenter recommended that Item flexible approach for Item 302(a) to follow appropriate professional 302(a) be revised to ensure the disclosure that would allow registrants standards and procedures regarding the information is presented in a consistent to determine when and if this disclosure data required by Item 302(a).56 manner across registrants.61 would be relevant and enhance an In the Concept Release, the Multiple commenters recommended investor’s understanding of the business Commission solicited input on whether streamlining Item 302(a).62 Several of throughout the year. This commenter to retain, eliminate, or modify Item these commenters recommended also stated that fourth quarter data can 302(a). The Commission also solicited revising Item 302(a)(5) to accommodate be easily derived from prior filings input on the importance of information newly reporting registrants in an annual without needing to separately reference required by Item 302(a) that is not report or a follow-on offering where the the fourth quarter information. duplicative of previously provided registrant would be required to provide We propose to eliminate Item 302(a). information, such as a separate Item 302(a) data for interim periods Like many commenters, we believe that presentation of certain fourth quarter prior to those presented in the IPO this prescriptive requirement largely information and the effect of a registration statement.63 Another results in duplicative disclosures. The retrospective change in the earliest of commenter recommended only precursor to Item 302 was adopted at a the two years.57 The Commission also requiring Item 302(a) disclosure when time when quarterly data was ‘‘reported sought input on the costs and benefits there is a material retrospective change on an extremely abbreviated basis.’’ 69 of this disclosure item. in the financial statements that has not The item was intended to help investors A few commenters recommended been previously filed.64 The commenter understand the pattern of corporate retaining and expanding Item 302(a).58 also stated that some companies activities throughout a fiscal period by One of these commenters stated that it voluntarily provide fourth quarter data disclosing trends over quarterly periods ‘‘sense[d] that investors find it useful to in earnings releases. to reflect seasonal patterns.70 Today, see fourth quarter results presented Most commenters recommended most of the financial data required by discretely, rather than having to infer eliminating Item 302(a) altogether,65 Item 302(a) can be found in prior them based on the annual results and with many of these commenters stating quarterly reports, which are readily the interim results through the third that this item is duplicative of available on EDGAR. While Item 302(a) quarter.’’ 59 The commenter also stated disclosures provided in prior filings.66 requires separate disclosure of certain that, where the data changes from what Two of these commenters stated that fourth quarter information, which is not was previously reported, having the ‘‘the disclosure required under Item otherwise required to be disclosed, we revised data in an annual report allows 302(a) is yet another example of believe this data generally can be investors to understand the effects of the duplicative information that calculated from a registrant’s Form 10– changes sooner. Another of these unnecessarily complicates and K and third quarter Form 10–Q. We commenters noted the importance of lengthens disclosure documents, while believe that eliminating this prescriptive fourth quarter data, stating that, in the increasing burdens for registrants and requirement will encourage registrants absence of a Form 8–K filing containing offering little value to investors.’’ 67 to take a more principles-based such information, analysts must derive Another commenter stated that, though approach to presenting information the information from the annual report the original intent of the item was ‘‘to called for by Item 302(a) in their filings and the three previously filed quarterly help investors understand the pattern of and specifically, in MD&A. reports and that ‘‘any numbers derived corporate activities throughout a fiscal Eliminating Item 302(a) may result in from this method are at best year,’’ not all businesses are seasonal the loss of a separate presentation of approximate.’’ 60 This commenter stated and the information provided by Item certain fourth quarter information and, that, ‘‘if a requirement to file a full where applicable, the effect of a fourth-quarter report is too onerous . . . 61 See letter from CFA Institute. retrospective change in the earliest of 62 [Item 302(a)] could be enhanced to See, e.g., letters from Fenwick, Deloitte, CAQ, the two years.71 Where fourth quarter include more data from the income E&Y, Grant Thornton, and PWC. 63 See, e.g., letters from Deloitte, CAQ, E&Y, Grant results are material or there is a material Thornton, and PWC. Suggested accommodations retrospective change, existing recent fiscal years and any subsequent interim included: Requiring registrants to begin presenting requirements would still elicit this period for which financial statements are included selected quarterly data in their second annual disclosure. Specifically, Item 303 or are required to be included. report (see letters from E&Y, PWC, and CAQ); and 56 Item 302(a)(4) of Regulation S–K [17 CFR allowing new registrants to present supplementary requires registrants to discuss unusual 229.302(a)(4)]. financial data in registration statements and annual events that materially affected reported 57 Because Item 302(a)(2) requires disclosure of reports that ‘‘build’’ from the quarterly information income and other matters that are variances in results from amounts previously that has been separately filed in Exchange Act necessary to understand their results of reported for the two most recent fiscal years, the reports subsequent to an IPO (see letters from 72 effect of a retrospective change in any quarter for Deloitte, CAQ, E&Y, Grant Thornton, and PWC). operations. The item also requires which a Form 10–Q is filed in the more recent of 64 See letter from Fenwick. In this commenter’s the two fiscal years will be disclosed in the selected view, outside of such situations, quarterly financial 68 See letter from FEI. quarterly data. However, absent Item 302(a)(2), this information in a registrant’s annual report is 69 See Interim Financial Data: Proposals to variance would not be specifically required to be redundant with information available on EDGAR. Increase Disclosure, Release No. 34–11142 (Dec. 19, disclosed until the following year in the See also letter from Crowe. 1974) [40 FR 1079 (Jan. 6, 1975)], at 1080. corresponding fiscal quarter in which the 65 See, e.g., letters from AFLAC, Chamber, FedEx, 70 See Interim Financial Reporting: Increased retrospective change occurred. Additionally, CGCIV, UnitedHealth Group, Inc. (July 21, 2016) Disclosures, Release No. 33–5611 (Sept. 10, 1975) disclosure in the Form 10–Q for this corresponding (‘‘United Health’’), SIFMA, PNC, EEI and AGA, [40 FR 46107 (Oct. 6, 1975)], at 46108. fiscal quarter would not include the effects of this NAREIT, Davis Polk, S. Percoco, National Investor 71 See supra note 51. change in the earliest of the two years presented in Relations Institute (‘‘NIRI’’), Northrop Grumman, 72 Item 303(a)(3)(i) requires registrants to describe the Form 10–K, as this Form 10–Q would be limited FEI, and General Motors. any unusual or infrequent events or transactions or to the current and prior-year interim periods. 66 See, e.g., letters from AFLAC, Chamber, FedEx, any significant economic changes that materially 58 See letters from BDO, Bloomberg LP (July 21, CGCIV, UnitedHealth Group, SIFMA, PNC, EEI and affected the amount of reported income from 2016) (‘‘Bloomberg’’), and CFA Institute. AGA, NAREIT, NIRI, Northrop Grumman, FEI, and continuing operations and indicate the extent to 59 See letter from BDO. General Motors. which income was so affected. In addition, the item 60 See letter from Bloomberg. 67 See letters from Chamber and CGCIV. requires registrants to describe any other significant

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registrants to discuss known trends and information presented in Item 302(a) Disclosure Update and Simplification,81 uncertainties that have had or that from other sources and, if so, what which would amend U.S. GAAP to registrants reasonably expect to have an would that cost be? require the incremental disclosure impact on net sales, revenues, or 13. What are the burdens on called for by Item 302(b), disclosure of operating income.73 Also, U.S. GAAP registrants to provide the information oil and gas producing activities for each requires disclosure of disposals of required by Item 302(a)? period presented. If FASB adopts components of an entity and unusual or 14. Is a separate presentation of amendments consistent with those it infrequently occurring items recognized certain fourth quarter data material to proposed, upon effectiveness of the for the fourth quarter if interim data and investors? If so, is such information amendments to U.S. GAAP, the disclosures are not separately reported material for all companies or industries? requirements of Item 302(b) will be for the fourth quarter.74 Additionally, Are investors able to readily calculate duplicative of U.S. GAAP. Therefore, we Item 101(c)(1)(v) of Regulation S–K this fourth quarter data from a propose to eliminate Item 302(b), requires disclosure of the extent to registrant’s Form 10–K and related third subject to the FASB finalizing its related which a business is seasonal.75 quarter Form 10–Q? What are the amendments to U.S. GAAP.82 challenges to making such calculations? Request for Comment 15. Would registrants continue to Request for Comment 10. Should we eliminate Item 302(a), provide fourth quarter data in the 17. As proposed, should we eliminate as proposed? Would eliminating Item absence of a requirement to do so (e.g., Item 302(b) if the FASB amends U.S. 302(a) result in the loss of material through voluntary earnings releases)? If GAAP to require substantially similar information that is otherwise not we eliminate Item 302(a), should we disclosure? available to investors, such as through require registrants to disclose certain C. Management’s Discussion and prior filings on EDGAR? If so, what fourth quarter data elsewhere in an Analysis of Financial Condition and material information would be lost, and annual report, such as in MD&A? What Results of Operations (Item 303) are there alternatives we should would be the cost of this approach? consider that would capture this Should we require registrants to Item 303 of Regulation S–K requires information? disclose any variances to its previously disclosure of information relevant to 11. Do market participants find Item issued quarterly information that would assessing a registrant’s financial 302(a) disclosures to be helpful? If so, inhibit the calculation of fourth quarter condition, changes in financial how do market participants use the data by market participants? What condition, and results of operations. The disclosures? Does the utility of the would be the costs of this approach? disclosure requirements for full fiscal disclosures vary by industry or 16. Should we retain Item 302(a) but years in Item 303(a) specify five business? If so, for which industries or allow a newly reporting registrant to components: Liquidity, capital businesses are Item 302(a) disclosures exclude Item 302(a) data for interim resources, results of operations, off- helpful? periods prior to those presented in its balance sheet arrangements, and 12. Is the option for investors to IPO registration statement? 76 contractual obligations.83 Item 303(b) compile supplemental financial covers interim period disclosures and 2. Information About Oil and Gas information through searches of prior requires registrants to discuss material Producing Activities (Item 302(b)) filings an adequate substitute for Item changes in the items listed in Item 302(a)? Do current XBRL-tagging Item 302(b) 77 requires registrants 303(a) (including the instructions), other requirements reliably facilitate engaged in oil and gas producing than the impact of inflation and compilation and comparison of activities, other than SRCs, to disclose changing prices on operations and supplemental financial information? information about those activities for tabular disclosure of contractual Would there be a cost to investors of each period presented. The disclosure obligations.84 Item 303(c) acknowledges compiling and/or calculating called for by Item 302(b) is also required the application of a statutory safe harbor by U.S. GAAP.78 However, unlike the for forward-looking information components of revenues or expenses that, in the U.S. GAAP requirement, Item 302(b) provided in off-balance sheet registrant’s judgment, should be described in order incrementally requires that the arrangements and contractual to understand the registrant’s results of operations. disclosure be provided for each period obligations disclosures. Item 303(d) 73 Item 303(a)(3)(ii) requires registrants to describe any known trends or uncertainties that presented. provides certain accommodations for have had or that the registrant reasonably expects In 2018, the Commission referred SRCs. will have a material favorable or unfavorable impact certain of its disclosure requirements to The Concept Release solicited on net sales or revenues or income from continuing the FASB for potential incorporation comment on the overall objectives of the operations. If the registrant knows of events that into U.S. GAAP because these items current MD&A requirements, as well as will cause a material change in the relationship between costs and revenues (such as known future largely overlapped with, but required specific subsections of Item 303, increases in costs of labor or materials or price information incremental to, U.S. including how to improve the content increases or inventory adjustments), the change in GAAP.79 Item 302(b) was among the and focus of MD&A. Many commenters the relationship must be disclosed. items referred to the FASB.80 responded to the Commission’s request 74 ASC 270–10–50–2 requires the disclosure of On May 6, 2019, the FASB issued certain information if interim data and disclosures are not separately reported for the fourth quarter. proposed Accounting Standards Update, 81 FASB, File Reference No. 2019–600, available _ This information includes ‘‘disposals of Disclosure Improvements: Codification at https://www.fasb.org/jsp/FASB/Document C/ components of an entity and unusual, or Amendments in Response to the SEC’s DocumentPage&cid=1176172611572. infrequently occurring items recognized in the 82 Item 302(c) of Regulation S–K states that SRCs fourth quarter, as well as the aggregate effect of year do not have to provide the information required by 76 end adjustments that are material to the results of See supra note 63 and corresponding text. the Item. Since we are proposing to eliminate Items that quarter.’’ 77 See Item 302(b) of Regulation S–K [17 CFR 302(a) and (b), we are likewise proposing to 75 Item 101(c)(1)(v) [17 CFR 229.101(c)(1)(v)]. The 229.302(b)]. eliminate Item 302(c) since it will no longer be Commission recently proposed changes to Item 101 78 See ASC 932–235–50. applicable. and proposed retaining Item 101(c)(1)(v). See 79 See Disclosure Update and Simplification, 83 Item 303(a)(1)-(5) of Regulation S–K [17 CFR Modernization of Regulation S–K Items 101, 103, Release No. 33–10532 (Aug. 17, 2018) [83 FR 50234 229.303(a)(1)–(5)]. and 105, Release No. 33–10668 (Aug. 8, 2019) [84 (Oct. 4, 2018)]. 84 See Item 303(b) and Instruction 7 to Item 303(b) FR 44358 (Aug. 23, 2019)]. 80 See id. of Regulation S–K [17 CFR 229.303(b)].

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for input with a variety of suggestions, Æ Amend current Item 303(a)(2) to importance of discussing these which we discuss below. The modernize and enhance the current obligations in the broader context of Commission recently addressed some of requirement, which is limited to capital MD&A disclosure when such the Item 303(a) disclosure requirements expenditures, to specifically require a obligations have or are reasonably likely referenced in the Concept Release and discussion of material cash to have a material current or future by commenters when it adopted requirements; effect on a registrant’s financial amendments to modernize and simplify Æ Amend current Item 303(a)(3)(ii) to condition, changes in financial certain disclosure requirements in clarify that a registrant should disclose condition, revenues or expenses, results Regulation S–K.85 reasonably likely changes in the of operations, liquidity, cash We propose further amendments to relationship between costs and requirements or capital resources; and Item 303 of Regulation S–K that are revenues; Æ Eliminate current Item 303(a)(5), intended to modernize, simplify, and Æ Amend current Item 303(a)(3)(iii) the requirement that registrants provide enhance the MD&A disclosures for and Instruction 4 to Item 303(a) to a tabular disclosure of contractual investors while reducing compliance enhance analysis in MD&A by clarifying obligations; 86 burdens for registrants. Specifically, that a registrant should include in its • Recaption Item 303(b) as Item we are proposing to: MD&A a discussion of the reasons 303(c) and: • Establish a new paragraph 303(a) underlying material changes from Æ Amend current Item 303(b) to allow that incorporates much of the substance period-to-period in one or more line for more flexibility in interim periods of Instructions 1, 2, and 3 to current items; compared; and Æ Eliminate current Item 303(a)(3)(iv), Item 303(a) to emphasize the objective Æ of MD&A for both full fiscal years and which requires registrants to discuss the Simplify current Item 303(b) by interim periods; impact of inflation and changing prices eliminating certain instructions and • Recaption current Item 303(a) as where material, along with the related providing cross-references to similar Item 303(b), and make the following Instructions 8 and 9 to Item 303(a); instructions in Item 303(a); and additional changes: Æ Replace current Item 303(a)(4), the • Eliminate current Items 303(c) and Æ Streamline current Item 303(a) by requirement that registrants provide off- (d) as conforming changes. eliminating unnecessary cross- balance sheet arrangement disclosures The following table outlines the references to industry guides in in a separately captioned section, with current and proposed structure of Item Instructions 13 and 14; 87 an instruction emphasizing the 303: 88

Current structure Proposed structure Discussed in section(s)

Item 303(a), Full fiscal years ...... Item 303(a), Objective ...... II.C.1. Item 303(a) (combined liquidity and capital resources dis- Instruction 2 to Item 303(b) ...... II.C.1. cussions). Item 303(a)(1), Liquidity ...... Item 303(b)(1), Liquidity ...... II.C.2. Item 303(a)(2), Capital resources ...... Item 303(b)(2), Capital resources ...... II.C.2. (i) Capital expenditures ...... (i) Capital expenditures. (ii) Known material trends ...... (ii) Known material trends. Item 303(a)(3), Results of operations ...... Item 303(b)(3), Results of operations ...... II.C.3, II.C.4, & II.C.5. (i) Unusual or infrequent events ...... (i) Unusual or infrequent events. (ii) Known trends or uncertainties ...... (ii) Known trends or uncertainties. (iii) Material increases ...... (iii) Material changes. (iv) Inflation and changing prices. Item 303(a)(4), Off-balance sheet arrangements ...... Replace with Instruction 8 to Item 303(b) ...... II.C.6. Instructions 1, 2, 3, 4, and 5 to Item 303(a)(4) ...... Replace with Instruction 8 to Item 303(b) ...... II.C.6. Item 303(a)(5), Contractual obligations ...... Eliminate ...... II.C.7. 2003 MD&A Interpretative Release, Critical accounting Item 303(b)(4), Critical accounting estimates ...... II.C.8. estimates. Instruction 1 to Item 303(a) ...... Instruction 1 to Item 303(b)(with amendments) ...... II.C.1. Instruction 2 to Item 303(a) ...... Eliminate (with content incorporated into Objective) .. II.C.1. Instruction 3 to Item 303(a) ...... Eliminate (with content incorporated into Objective) .. II.C.1. Instruction 4 to Item 303(a) ...... Instruction 3 to Item 303(b)(with amendments and II.C.4. some content incorporated into Item 303(b)). Instruction 5 to Item 303(a) ...... Instruction 4 to Item 303(b) ...... II.C.1. Instruction 6 to Item 303(a) ...... Instruction 5 to Item 303(b) ...... II.C.1.

85 See FAST Act Adopting Release. Specifically, reference to five-year selected financial data in 88 The information in this table is not the Commission amended Item 303 to: Revise Instruction 1 to Item 303(a). comprehensive and is intended only to highlight Instruction 1 to Item 303(a) to allow registrants that 86 We discuss below in Section II.D our proposals the general structure of the current rules and provide financial statements covering three years in to make certain parallel amendments to Item 5 of proposed amendments. It does not reflect all of the a filing to omit discussion of the earliest of the three Form 20–F (Operating and Financial Review and substance of the proposed amendments or all of the Prospects), General Instruction B.(11) of Form rules and forms that may be affected. All changes years if such discussion was already included in the 40–F (Off-Balance Sheet Arrangements), and are discussed in their entirety throughout this registrant’s prior filings on EDGAR; eliminate the General Instruction B.(12) of Form 40–F (Tabular release. As such, this table should be read together reference to year-over-year comparisons in Disclosure of Contractual Obligations). with the referenced sections and the complete text Instruction 1 to Item 303(a); and eliminate the 87 See 17 CFR 229.802. of this release.

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Current structure Proposed structure Discussed in section(s)

Instruction 7 to Item 303(a) ...... Instruction 6 to Item 303(b) ...... II.C.1. Instruction 8 to Item 303(a) ...... Eliminate ...... II.C.5. Instruction 9 to Item 303(a) ...... Eliminate ...... II.C.5. Instruction 10 to Item 303(a) ...... Instruction 7 to Item 303(b) ...... II.C.1. Instruction 11 to Item 303(a) ...... Instruction 9 to Item 303(b)(with amendments) ...... II.D.3. Instruction 12 to Item 303(a) ...... Instruction 10 to Item 303(b) ...... II.C.1. Instruction 13 to Item 303(a) ...... Eliminate ...... II.C.1. Instruction 14 to Item 303(a) ...... Eliminate ...... II.C.1. Item 303(b), Interim periods ...... Item 303(c), Interim periods ...... II.C.9. (1) Material changes in financial condition ...... (1) Material changes in financial condition. (2) Material changes in results of operations, Rule 3– (2) Material changes in results of operations ...... 03(b) of Regulation S–X matters. (i) Material changes in results of operations (year-to- date). (ii) Material changes in results of operations (quarter comparisons). Instruction 1 to Item 303(b) ...... Instruction 1 to Item 303(c) (with amendments to ref- II.C.9. erence Instructions 3, 6, 8, and 11 to proposed Item 303(b)). Instruction 2 to Item 303(b) ...... Eliminate ...... II.C.9. Instruction 3 to Item 303(b) ...... Eliminate ...... II.C.9. Instruction 4 to Item 303(b) ...... Instruction 2 to Item 303(c) ...... II.C.9. Instruction 5 to Item 303(b) ...... Eliminate ...... II.C.9. Instruction 6 to Item 303(b) ...... Eliminate ...... II.C.9. Instruction 7 to Item 303(b) ...... Eliminate ...... II.C.9. Instruction 8 to Item 303(b) ...... Instruction 11 to Item 303(b) ...... II.C.9. Item 303(c), Safe harbor ...... Eliminate ...... II.C.10. Item 303(d), Smaller reporting companies ...... Eliminate ...... II.C.11.

1. Restructuring and Streamlining (Item we propose adding a new Item 303(a) to operations and are not expected to have 303(a)) succinctly state the purposes of MD&A an impact on future operations. The first paragraph of current Item by incorporating a portion of the We are also proposing to codify 303(a) instructs registrants to discuss substance of Instruction 1, and much of Commission guidance that states that a their financial condition, changes in the substance of Instructions 2 and 3 registrant should provide a narrative financial condition, and results of into the item. Specifically, we propose explanation of its financial statements 89 to incorporate each of the following that enables investors to see a registrant operations for full fiscal years. The 92 paragraph then sets forth the items that portions of current Instructions 1, 2, and ‘‘through the eyes of management’’ must be included in this discussion, 3 to describe the objectives of MD&A, into the description of MD&A including liquidity, capital resources, which is for companies to provide objectives. We believe that emphasizing disclosure regarding: the purpose of MD&A at the outset of results of operations, off-balance sheet • arrangements, contractual obligations, Material information relevant to an the Item will provide clarity and focus and any other information a registrant assessment of the financial condition to registrants as they consider what and results of operations of the information to discuss and analyze. Our believes would be necessary to registrant, including an evaluation of intent is to facilitate a thoughtful understand its financial condition, the amounts and certainty of cash flows discussion and analysis, and encourage changes in financial condition, and from operations and from outside management to disclose factors specific results of operations. The paragraph also sources. to the registrant’s business, which instructs that discussions of capital • The material financial and management is in the best position to resources and liquidity may be statistical data that the registrant know, and underscore materiality as the combined when the topics are believes will enhance a reader’s overarching principle of MD&A.93 Our interrelated. Finally, the paragraph understanding of the registrant’s proposal is intended to serve as a states that a registrant must provide a financial condition, changes in financial reminder to registrants as they prepare discussion of business segments and/or condition, and results of operations.91 their MD&A that the general purpose of of subdivisions when, in the registrant’s • Material events and uncertainties the disclosure is to provide both a judgment, such a discussion would be known to management that would cause historical and prospective analysis of appropriate for understanding its reported financial information not to be the registrant’s financial condition and business. This discussion must focus on necessarily indicative of future each relevant, reportable segment and/ operating results or of future financial 92 See 2003 MD&A Interpretative Release, at or other subdivision of the business and condition. This would include 75056. See also 1989 Interpretative Release, at on the registrant as a whole. In addition descriptions and amounts of matters 22428. to the text, there are fourteen 93 See, e.g., FAST Act Adopting Release, at 12679 that: (i) Would have a material impact (emphasizing that ‘‘[m]ateriality remains, as always, instructions to Item 303(a). on future operations and have not had the primary consideration’’ of MD&A) and the 2003 We are proposing multiple changes an impact in the past, and (ii) have had MD&A Interpretative Guidance, at 75060 (noting that are intended to streamline and a material impact on reported that ‘‘it is increasingly important for companies to clarify the purposes of Item 303.90 First, focus their MD&A on material information. In preparing MD&A, companies should evaluate issues elsewhere in this release, would result in some presented in previous periods and consider 89 Item 303(a) of Regulation S–K [17 CFR changes in the subsection labeling and headings. reducing or omitting discussion of those that may 229.303(a)]. 91 The remainder of the instruction also specifies no longer be material or helpful, or revise 90 These proposed changes, along with the other periods that the discussion must cover, which our discussions where a revision would make the proposed amendments and eliminations discussed proposed amendments would retain. continuing relevance of an issue more apparent.’’).

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results of operations, with particular example would provide registrants with omission would not materially impair emphasis on the registrant’s prospects additional clarity on the types of an investor’s understanding of a for the future.94 This principles-based subdivisions that may require separate registrant’s results of operations.105 This approach is also well-suited to elicit disclosure, though it is not intended to revision, the commenter stated, would disclosure about complex and often complete the list. allow registrants and investors to focus rapidly evolving areas, without the need We also propose to move to proposed on line items that had the most impact to continuously amend the text of the Item 303(b) the portion of current on its results of operations. rule to impose bright-line or Instruction 4 to Item 303(a) that requires We propose to amend the language of 95 prescriptive requirements. a description of the causes of material Instruction 4 to Item 303(a),106 which In light of our proposal to add new changes from year-to-year in line items would be moved to proposed Item Item 303(a), we propose to re-caption of the financial statements to the extent 303(b), to clarify that MD&A requires a current Item 303(a) as Item 303(b), necessary to an understanding of the narrative discussion of the ‘‘underlying which will continue to apply to all registrant’s business as a whole.99 In 96 reasons’’ for material changes from MD&A disclosures. As proposed, the response to general requests for period-to-period in one or more line introductory paragraph would retain the comment on Item 303 in the Concept items in quantitative and qualitative current language that outlines what is to Release, a few commenters provided terms, rather than only the ‘‘cause’’ for be covered in the discussion of a recommendations on how to revise Item material changes. We are also proposing registrant’s financial condition, changes 303(a) to facilitate a more meaningful to amend the language to clarify that in financial condition, and results of analysis.100 One commenter suggested registrants should discuss material operations.97 Additionally, we propose amending Item 303 to require a changes within a line item even when to add product lines as an example of description of material factors that such material changes offset each other subdivisions of a registrant’s contributed to any material change in other.107 We believe our proposals business that should be discussed results, and that quantitative and would enhance analysis in MD&A, and where, in the registrant’s judgment, qualitative factors could be listed as accordingly, would be responsive to such a discussion would be necessary to examples of the types of factors that concerns raised by commenters. We also an understanding of the registrant’s could be discussed in MD&A.101 believe the proposals would clarify business.98 We believe that this added Similarly, another commenter recommended revising Item 303(a)(3) to MD&A’s requirements by codifying 94 See 1989 MD&A Interpretive Release (‘‘In require a description of the major factors some of the Commission’s prior preparing MD&A disclosure, registrants should be that caused changes in line items (e.g., guidance on the importance of analysis guided by the general purpose of the MD&A economic trends, industry conditions in MD&A. The Commission has requirements: To give investors an opportunity to previously emphasized the importance look at the registrant through the eyes of and sales and costs related to key management by providing a historical and products and services).102 Yet another of providing an analysis in MD&A and prospective analysis of the registrant’s financial commenter stated that Item 303(a) and stated that a thorough analysis often condition and results of operations, with particular Instruction 4 should be revised to will involve discussing both the emphasis on the registrant’s prospects for the ‘‘clearly instruct’’ registrants that intermediate effects of known material future.’’). trends, events, demands, commitments, 95 See, e.g., Commission Guidance Regarding discussions about material changes Disclosure Related to Climate Change, Release No. should address quantitative and and uncertainties and the reasons 33–9106 (Feb. 2, 2010) [75 FR 6290 (Feb. 8, 2010)] qualitative factors underlying the underlying those intermediate effects.108 and Commission Statement and Guidance on Public changes.103 One commenter also noted Commission guidance has also stated Company Cybersecurity Disclosures (Feb. 21, 2018) that MD&A should include both [83 FR 8166 (Feb. 26, 2018)]. Commission staff has that it would be preferable for the 109 also provided its views on the application of our requirements to indicate that registrants qualitative and quantitative analysis. principles-based disclosure requirements to cannot present line item changes We believe the proposed amendments emerging issues. See, e.g., Staff Statement on LIBOR without providing ‘‘meaningful would encourage registrants to provide Transition (July 12, 2019), available at https:// 104 a more nuanced discussion of the www.sec.gov/news/public-statement/libor- explanations.’’ Finally, another transition. commenter recommended revising underlying reasons that may be 96 For interim periods, current Item 303(b) of Instruction 4 to Item 303(a) to allow contributing to material changes in line Regulation S–K requires a ‘‘discussion of material registrants to omit financial statement items. changes in those items specifically listed in [Item line item changes to the extent such an 303(a)], except that the impact of inflation and We also are proposing several changing prices on operations for interim periods amendments to further streamline the need not be addressed.’’ See 1989 MD&A understanding of such business, the discussion text of Item 303: Interpretive Release at n. 38 and 39 and shall focus on each relevant segment and/or other corresponding text (‘‘The second sentence of Item subdivision of the business and on the registrant as 303(b) states that MD&A relating to interim period a whole. 105 See letter from Davis Polk. financial statements ‘shall include a discussion of 99 Instruction 4 to Item 303(a) of Regulation S–K 106 Proposed to be renumbered as Instruction 3 to material changes in those items specifically listed [17 CFR 229.303(a)]. Item 303(b). in paragraph (a) of this Item, except that the impact 100 See, e.g., letters from Fenwick, Maryland State 107 See, e.g., 1989 MD&A Interpretive Release of inflation and changing prices on operations for Bar Association (July 21, 2016) (‘‘Maryland Bar (providing an example of material changes in interim periods need not be addressed.’ As this Securities Committee’’), S. Percoco, and NYSSCPA. revenue and in so doing, describing the effects of sentence indicates, material changes to each and 101 See letter from Fenwick. offsetting developments: ‘‘Revenue from sales of every specific disclosure requirement contained in 102 See letter from S. Percoco. single-family homes for 1987 increased 6 percent paragraph (a), with the noted exception, should be 103 See letter from Maryland Bar Securities from 1986. The increase resulted from a 14 percent discussed.’’); 2003 MD&A Interpretive Release Committee. increase in the average sales price per home, (‘‘Disclosure in MD&A in quarterly reports is 104 See letter from NYSSCPA. This commenter partially offset by a 6 percent decrease in the complementary to that made in the most recent also expressed its belief that a significant number number of homes delivered. Revenues from sales of annual report and in any intervening quarterly of registrants were providing narratives that did not single-family homes for 1986 increased 2 percent reports.’’). allow an investor to view performance ‘‘through the from 1985. The average sales price per home in 97 See Item 303(a). eyes of management.’’ According to this 1986 increased 6 percent, which was offset by a 4 98 The current relevant Item 303(a) language states commenter, such discussions ‘‘generally [become] percent decrease in the number of homes that where, in the registrant’s judgment, a an exercise where management provides a delivered.’’). discussion of segment information and/or of other quantitative analysis, which most investors can 108 See, e.g., 2003 MD&A Interpretive Release. subdivisions (e.g., geographic areas) of the recompute—if they chose to—from the financial 109 See, e.g., 2003 MD&A Interpretive Release and registrant’s business would be appropriate to an statements.’’ 1989 MD&A Interpretive Release.

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• We propose to move the text in 19. Should we incorporate the The Concept Release solicited current Item 303(a) stating that language from current Instruction 4 to comment on how the Commission could registrants may combine their Item 303(a) into proposed Item 303(b), revise Item 303(a) to elicit a more discussions of liquidity and capital as proposed? Should we amend this meaningful analysis of a registrant’s resources when the topics are language to require disclosure of the capital resources while maintaining interrelated to an instruction to the underlying reasons for material changes flexibility.121 The Concept Release also item.110 We believe this language is an in quantitative and qualitative terms, requested comment on how registrants instruction given that it is not a including material changes within a line interpret the term ‘‘capital resources’’ substantive requirement or item, as proposed? and whether defining the term would be accommodation, but rather a 20. Are there any instructions that we helpful to registrants.122 clarification of how registrants may are proposing to delete or move that we Some commenters observed structure their disclosures. should retain or leave as is? Are there differences in how registrants apply the • Instruction 8 to current Item 303(b) any other current instructions that we term ‘‘capital resources.’’ 123 One of indicates that the term ‘‘statement of should revise or clarify? comprehensive income’’ is defined by 21. Should we eliminate Instructions these commenters stated that the Rule 1–02 of Regulation S–X.111 We are 13 and 14 to Item 303(a) that reference Commission should adopt a definition proposing to move this language to Guides 3 and 6, as proposed? Should we of capital resources that is broader than proposed Instruction 11 to proposed instead include additional instructions currently implied by Item 124 Item 303(b) to clarify that the to reference the other industry guides? 303(a)(2)(i). This commenter stated instruction applies to both full fiscal that registrants interpret ‘‘capital 2. Capital Resources (Item 303(a)(2)) year and interim period MD&A resources’’ as material commitments for disclosure. Item 303(a)(2) requires a registrant to capital expenditures and the source of • We also propose to eliminate discuss its material commitments for funds related to such commitments. current Instructions 13 and 14 to Item capital expenditures as of the end of the Another commenter stated that some 303(a) as simplifying amendments. latest fiscal period, and to indicate the registrants interpret ‘‘capital resources’’ These instructions call the attention of general purpose of such commitments to require ‘‘disclosure of a registrant’s bank holding companies and property- and the anticipated sources of funds sources of capital, while others interpret casualty insurance companies to Guide needed to fulfill such commitments.114 it to require disclosure of the sources of 3 112 and Guide 6,113 respectively. A registrant also must discuss any capital assets used in a registrant’s Registrants should still consider the known material trends, favorable or business.’’ 125 Guides in preparing their disclosures unfavorable, in its capital resources, and Some commenters supported the generally, but we do not believe the indicate any expected material changes Commission’s current approach to the cross-reference is necessary to an in the mix and relative cost of such term ‘‘capital resources.’’ 126 One understanding of the requirements of resources.115 The discussion must commenter urged the Commission not Item 303. consider changes between equity, debt, to depart from the existing policy of and any off-balance sheet financing Request for Comment recognizing the term ‘‘capital resources’’ arrangements.116 as a general term in a manner that might 18. Should we adopt proposed Item When adopting disclosure decrease the flexibility needed by 303(a)? Would proposed Item 303(a) requirements for capital resources, the management for a meaningful clarify the purpose of MD&A disclosures Commission recognized that the term discussion.127 Another commenter for registrants and others? Would the ‘‘capital resources’’ lacked precision, recommended that the Commission not proposed amendments aid registrants in but stated that ‘‘additional specificity further define the term ‘‘capital determining what to disclose in their would decrease the flexibility needed by resources’’ beyond its current general MD&A? management for a meaningful use.128 discussion.’’ 117 To that end, Item 303 110 Proposed Instruction 2 to Item 303(b). does not define ‘‘capital resources.’’ 118 We continue to believe that disclosure 111 [17 CFR 210.1–02(cc)]. Rule 1–02 defines a The current capital resources disclosure of capital resources is critical to an ‘‘statement of comprehensive income’’ as follows: assessment of a registrant’s prospects for ‘‘[t]he term statement(s) of comprehensive income requirements in Item 303(a)(2) have remained largely the same since the future and likelihood of its means a financial statement that includes all 129 changes in equity during a period except those 1980.119 Item 303(a)(2) specifies that survival. Therefore, we propose to resulting from investments by owners and registrants must disclose material distributions to owners. . . . A statement of commitments for capital expenditures, 121 See Concept Release, at 23947. operations or variations thereof may be used in 122 See id. place of a statement of comprehensive income if which generally relate to physical 123 See letters from NYSSCPA and BDO. there was no other comprehensive income during assets, such as buildings and 124 See letter from NYSSCPA. the period.’’ Thus, references to a statement of equipment. Some registrants include comprehensive income would include a statement 125 See letter from BDO. of operations prepared by certain issuers, such as disclosure beyond capital expenditures, 126 See letters from Davis Polk and FEI. BDCs. which the Commission’s guidance has 127 See letter from Davis Polk. 112 [17 CFR 229.801(c) and 17 CFR 229.802(c)]. encouraged.120 128 See letter from FEI (‘‘As noted above, we We recently proposed rules relating to Guide 3. See believe it would be helpful to consolidate the Update of Statistical Disclosures for Bank and 114 Item 303(a)(2)(i) of Regulation S–K [17 CFR guidance on MD&A into a single source. In doing Savings and Loan Registrants, Release No. 33– 229.303(a)(2)(i)]. so, we recommend that the SEC not expand 10688 (Sept. 17, 2019) [84 FR 52936 (Oct., 3, 2019)]. prescriptive requirements with respect to liquidity 115 Item 303(a)(2)(ii) [17 CFR 229.303(a)(2)(ii)]. The proposed rules would update the disclosures and capital resources, including not further 116 that investors receive, codify certain Guide 3 Id. defining the terms ‘‘liquidity’’ and ‘‘capital disclosures and eliminate other Guide 3 disclosures 117 1980 Form 10–K Adopting Release, at 63636. resources’’ beyond their current general terms.’’). that overlap with Commission rules, U.S. GAAP, or 118 Instruction 5 to Item 303(a) of Regulation S– 129 See 2003 MD&A Interpretive Release at note International Financial Reporting Standards K [17 CFR 229.303(a)]. See also 1980 Form 10–K 41 and corresponding text. Much of the (‘‘IFRS’’). In addition, the Commission proposed to Adopting Release, supra note 45, at 63636. Commission’s prior guidance has focused on relocate the codified disclosures to a new subpart 119 See 1980 Form 10–K Adopting Release. enhancing disclosure of liquidity and capital of Regulation S–K and to rescind Guide 3. 120 See 2003 MD&A Interpretive Release, at resources. See, e.g., 1989 MD&A Interpretive 113 [17 CFR 229.801(f)]. 75062. Release and 2003 MD&A Interpretive Release.

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amend current Item 303(a)(2) 130 to Request for Comment Request for Comment specify, consistent with the 22. Should we amend Item 303(a)(2), Commission’s 2003 MD&A Interpretive 24. Should we amend Item as proposed? Would the proposed 303(a)(3)(ii) to provide that registrants Release, that a registrant should broadly amendments continue to allow must disclose events reasonably likely disclose material cash commitments, management flexibility to provide a to cause a material change in the including but not limited to capital meaningful discussion of capital expenditures. Specifically, our proposed resources? relationship between costs and revenue, amendment would require a registrant 23. Are there other aspects of Item as proposed? Are there other areas in to describe its material cash 303(a)(2) we should revise? If so, which Item 303 where we should provide a requirements, including commitments aspects? similar requirement? for capital expenditures, as of the latest fiscal period, the anticipated source of 3. Results of Operations—Known 4. Results of Operations—Net Sales and funds needed to satisfy such cash Trends or Uncertainties (Item Revenues (Item 303(a)(3)(iii)) 303(a)(3)(ii)) requirements, and the general purpose Item 303(a)(3)(iii) specifies that, to the 131 of such requirements. Item 303(a)(3)(ii) requires a registrant extent financial statements disclose This proposal is intended to require to describe any known trends or material increases in net sales or registrants to identify and disclose uncertainties that have had or that the revenues, a registrant must provide a known material cash requirements. registrant reasonably expects will have narrative discussion of the extent to Depending on the registrant, this could a material impact (favorable or which such increases are attributable to include items such as: Funds necessary unfavorable) on net sales or revenues or increases in prices, or to increases in the to maintain current operations, income from continuing operations.135 complete projects underway, and In addition, if the registrant knows of volume or amount of goods or services achieve stated objectives or plans; or events that will cause a material change being sold, or to the introduction of new 140 commitments for capital or other in the relationship between costs and products or services. The expenditures.132 This proposal is also revenues, the change in the relationship Commission previously clarified that a intended to modernize Item 303(a)(2) by must be disclosed.136 results of operations discussion should specifically requiring disclosure of We propose to amend Item describe not only increases but also material cash requirements in addition 303(a)(3)(ii) 137 to provide that when a decreases in net sales or revenues.141 to capital expenditures. While capital registrant knows of events that are Accordingly, we propose to amend Item expenditures remain important in many reasonably likely to cause (as opposed to 303(a)(3)(iii) to codify this guidance and industries, we recognize that certain will cause) a material change in the clarify the requirement by tying the expenditures and cash commitments relationship between costs and required disclosure to ‘‘material that are not necessarily capital revenues, such as known or reasonably changes’’ in net sales or revenues, rather investments in property, plant, and likely future increases in costs of labor than solely to ‘‘material increases’’ in equipment may be increasingly or materials or price increases or these line items. important to companies, especially inventory adjustments, the reasonably those for which human capital or likely change must be disclosed. This Request for Comment intellectual property are key resources. proposed amendment would conform 25. Should we revise Item the language in this paragraph to other Our proposals are intended to 303(a)(3)(iii), as proposed? encompass these and other material Item 303 disclosure requirements for cash requirements. known trends,138 and align Item 26. Are there reasons other than These proposals, alongside the 303(a)(3)(ii) with the Commission’s changes in prices, or changes in volume current requirement for registrants to guidance on forward-looking or amount of goods or services being discuss their ability to generate cash,133 disclosure.139 sold, or the introduction of new are intended to enhance disclosure and products or services that can contribute provide investors with a clear picture of 135 Item 303(a)(3)(ii) of Regulation S–K [17 CFR to changes in revenue or net sales, or a registrant’s ability to meet its material 229.303(a)(3)(ii)]. other line items? If so, what are they? 136 Examples given include known future cash requirements. We acknowledge the increases in costs of labor or materials or price Would enumerating other reasons aid commenters who suggested that we increases or inventory adjustments. See id. registrants in determining what define ‘‘capital resources.’’ We have 137 To be renumbered as Item 303(b)(3)(ii). information may be necessary to decided, however, not to propose a 138 See, e.g., Item 303(a)(1), which requires understand material changes in line definition of the term to allow for registrants to ‘‘[i]dentify any known trends or any known demands, commitments, events or items, or would this result in a de facto continued flexibility and business- uncertainties that will result in or that are prescriptive or minimum disclosure specific discussions of the topic.134 reasonably likely to result in the registrant’s standard? Lastly, and as discussed in Section liquidity increasing or decreasing in any material II.C.7, our proposal to enhance way.’’ Item 303(a)(1) to Regulation S–K [17 CFR 229.303(a)(1)]. commitment, event or uncertainty, on the discussion of capital resources is also 139 See 1989 MD&A Interpretive Release, at assumption that it will come to fruition. Disclosure intended to complement our proposed 22430, where the Commission articulated a two- is then required unless management determines deletion of the contractual obligations step test for assessing when forward-looking that a material effect on the registrant’s financial table. disclosure is required in MD&A: condition or results of operations is not reasonably ‘‘Where a trend, demand, commitment, event or likely to occur.’’ uncertainty is known, management must make two 140 Item 303(a)(3)(iii) of Regulation S–K [17 CFR 130 Proposed to be renumbered as Item 303(b)(2). assessments: 229.303(a)(3)(iii)]. 131 See 2003 MD&A Interpretive Release, at (1) Is the known trend, demand, commitment, 141 See 1989 MD&A Interpretative Release, at n. 75063. event or uncertainty likely to come to fruition? If 36 (‘‘Although Item 303(a)(3)(iii) speaks only to 132 See id. management determines that it is not reasonably material increases, not decreases, in net sales or 133 See Item 303(a)(1) and Instruction 5 of Item likely to occur, no disclosure is required. revenues, the Commission interprets Item 303(a). See also 2003 MD&A Interpretive Release, at (2) If management cannot make that 303(a)(3)(i) and Instruction 4 as seeking similar 75062–75064. determination, it must evaluate objectively the disclosure for material decreases in net sales or 134 See 1980 Form 10–K Adopting Release. consequences of the known trend, demand, revenues.’’).

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5. Results of Operations—Inflation and disclosure of inflation is only required reasons under both current Item 303 and Price Changes (Item 303(a)(3)(iv), and if material.148 amended Item 303, as proposed. Instructions 8 and 9 to Item 303(a)) Although Instruction 8 to Item 303(a) specifies that a discussion of inflation Request for Comment Item 303(a)(3)(iv) 142 generally and other changes in prices is required 27. Should we eliminate the requires registrants, for the three most only when such matters are considered references to inflation disclosure by recent fiscal years, or for those fiscal material, we believe that the reference to eliminating Item 303(a)(3)(iv) and years in which the registrant has been inflation and changing prices may give Instructions 8 and 9 to Item 303(a), as engaged in business, whichever period undue attention to the topic, even when proposed? Would there be a loss of is shortest, to discuss the impact of such information is not necessary to an material information if we eliminate inflation and price changes on their net understanding of a registrant’s financial these provisions? sales, revenue, and income from condition or results of operations. In 6. Off-Balance Sheet Arrangements continuing operations. Instruction 8 to order to encourage registrants to focus (Item 303(a)(4)) Item 303(a) clarifies that a registrant their MD&A on material information 153 must provide a discussion of the effects that is tailored to their respective facts Item 303(a)(4) requires, in a of inflation and other changes in prices and circumstances, we propose to separately-captioned section, a only to the extent it is material. The eliminate Item 303(a)(3)(iv) and current discussion of a registrant’s off-balance instruction further states that the Instruction 8 and Instruction 9 to Item sheet arrangements that have or are discussion may be made in whatever 303(a). reasonably likely to have a current or manner appears appropriate under the We do not believe that these proposed future effect on a registrant’s financial circumstances and that no specific changes would result in a loss of condition, changes in financial numerical financial data is required, material information. Despite these condition, revenues or expenses, results except as required by Rule 3–20(c) of proposed deletions, registrants would of operations, liquidity, capital Regulation S–X,143 which applies to still be expected to discuss the impact expenditures, or capital resources that is material to investors.154 FPIs. Instruction 9 to Item 303(a) states of inflation or changing prices if they Generally, Item 303(a)(4)(ii) defines off-balance sheet that registrants that elect to disclose are part of a known trend or uncertainty arrangements as certain guarantees, supplementary information on the that has had, or the registrant reasonably retained or contingent interests in assets effects of changing prices may combine expects to have, a material favorable or transferred to an unconsolidated entity, such disclosures with the Item 303(a) unfavorable impact on net sales, or obligations under certain derivative discussion and analysis or provide it revenue, or income from continuing 149 instruments,155 and variable interests in separately (with an appropriate cross- operations. The Commission has also specifically encouraged registrants to any unconsolidated entity. To the extent reference).144 consider disclosure of economic or necessary to an understanding of such The precursors to Item 303(a)(3)(iv) industry-wide factors where relevant.150 arrangements and effect, registrants and Instructions 8 and 9 were adopted In addition, the proposed must disclose the following items and in 1980,145 during a period of rapid amendments to current Item such other information that the domestic inflation.146 At that time, the 303(a)(3)(iii) 151 would require registrant believes is necessary for such Commission was concerned with the registrants to provide the reasons an understanding: adequacy of disclosures about the effect underlying material changes from • The nature and business purpose of of inflation and changing prices on period-to-period in one or more line such off-balance sheet arrangements; 156 registrants.147 Several years later, the items in the statement of comprehensive • The importance to the registrant of Commission amended the instructions income.152 Similarly, our proposed such off-balance sheet arrangements in to, among other things, clarify that amendment to Instruction 4 to Item respect of its liquidity, capital resources, 303(a) would require that, where the market risk support, credit risk support, 157 142 Item 303(a)(3)(iv) of Regulation S–K [17 CFR financial statements reveal material or other benefits; 229.303(a)(3)(iv)]. changes in one or more line items, • The amounts of revenues, expenses, 143 Rules 3–20(c) and 3–20(d) of Regulation S–X registrants would be required to disclose and cash flows arising from such provide the situations when a registrant must arrangements; the nature and amounts discuss hyperinflation. Rule 3–20(d) generally the underlying reasons for material describes a hyperinflationary environment as one changes in quantitative and qualitative of any interests retained, securities that has cumulative inflation of approximately 100 terms. If there are material changes from percent or more over the most recent three-year inflation or changing prices, registrants 153 Item 5.E. of Form 20–F and General period. would be required to discuss those Instruction B.(11) of Form 40–F contain 144 Instruction 9 to Item 303(a). requirements for issuers that use those forms that 145 1980 Form 10–K Adopting Release. are virtually identical to the requirements of Item 148 146 See One Hundred Years of Price Change: The At that time, the Commission amended 303(a)(4). Consumer Price Index and the American Inflation Instructions 8 and 9 to conform the requirement to 154 Item 303(a)(4) of Regulation S–K [17 CFR Experience (Apr. 2014) available at https:// the then-recently adopted SFAS No. 89 (Financial 229.303(a)(4)]. www.bls.gov/opub/mlr/2014/article/one-hundred- Reporting and Changing Prices) and stated ‘‘Item 155 For registrants whose financial statements are years-of-price-change-the-consumer-price-index- 303(a) does not require registrants to discuss the prepared in accordance with U.S. GAAP, the and-the-american-inflation-experience.htm (stating impact of inflation when such impact does not definition includes a contract that would be ‘‘the period from 1968 to 1983 stands out as the materially affect the financial statements.’’ See accounted for as a derivative instrument, except definitive era of sustained inflation in the 20th- Disclosure of the Effects of Inflation and Changes that it is both indexed to the registrant’s own stock century United States’’ and that during this time in Prices, Release No. 33–6681 (Dec. 18, 1986), [51 and classified in the registrant’s statement of period, the largest 12-month increase in inflation of FR 47026 (Dec. 30, 1986)), adopted in Release No. stockholders’ equity. See ASC 815–10–15–74. For 14.8 percent occurred between March 1979 to 33–6728 (Aug. 7, 1987), [52 FR 30917 (Aug. 18, other registrants, the definition includes derivative March 1980). 1987)]. instruments that are both indexed to the registrant’s 149 147 See 1980 Form 10–K Adopting Release (‘‘[T]he See Item 303(a)(3)(ii) [CFR 229.303(a)(3)(ii)] own stock and classified in stockholders’ equity, or Commission believes that Management’s Discussion and proposed Item 303(b)(3)(ii). not reflected, in the registrant’s statement of and Analysis should contain information which 150 See 2003 MD&A Interpretive Release, at financial position. See Item 5.E.2.(c) of Form 20–F. changes the potentially confusing situation 75059. 156 Item 303(a)(4)(i)(A) of Regulation S–K [17 CFR involving inflation impact disclosure into a 151 Proposed to be renumbered as Item 229.303(a)(4)(i)(A)]. meaningful discussion of the effects of changing 303(b)(3)(iii). 157 Item 303(a)(4)(i)(B) of Regulation S–K [17 CFR prices on the registrant’s business.’’). 152 See supra Section II.C.4. 229.303(a)(4)(i)(B)].

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issued, and other indebtedness incurred Several months after the 2002 The Commission stated, however, that in connection with such arrangements; Commission Statement, the Sarbanes- the proposed rules were designed to and the nature and amounts of any other Oxley Act 165 was enacted and added provide more comprehensive obligations or liabilities (including Section 13(j) to the Exchange Act, which information and analysis in MD&A than contingent obligations or liabilities) of required the Commission to adopt rules the disclosure that U.S. GAAP required the registrant arising from such providing that each annual and in footnotes to financial statements.172 arrangements that are or are reasonably quarterly financial report required to be Since the adoption of Item 303(a)(4), likely to become material and the filed with the Commission disclose all the FASB has issued additional triggering events or circumstances that material off-balance sheet requirements that have caused U.S. could cause them to arise; 158 and arrangements.166 To implement Section GAAP to further overlap with the • Any known event, demand, 13(j), in 2003 the Commission adopted item.173 For example, U.S. GAAP now commitment, trend, or uncertainty that specific disclosure requirements for off- requires disclosure in the notes to the will result in or is reasonably likely to balance sheet arrangements in current financial statements of the nature and result in the termination, or material Item 303(a)(4).167 When adopting Item amount of a guarantee,174 retained or reduction in availability, of a registrant’s 303(a)(4), the Commission reiterated contingent interests in assets transferred off-balance sheet arrangements that that, while at that time only one item in to unconsolidated entities,175 pertinent provide material benefits, and the Item 303 specifically identified off- information of derivative instruments course of action that the registrant has balance sheet arrangements,168 other that are classified as stockholders’ taken or proposes to take in response to requirements ‘‘clearly require[d] equity under U.S. GAAP,176 and any such circumstances.159 disclosure of off-balance sheet obligations under variable interests in In 2002, the Commission issued a arrangements if necessary to an unconsolidated entities.177 In the statement that the quality of disclosure understanding of a registrant’s financial Commission staff’s experience, this of off-balance sheet arrangements in condition, changes in financial overlap often leads to registrants MD&A should be improved.160 The condition or results of operations.’’ 169 providing cross-references to the Commission also noted that off-balance The 2003 amendments supplemented relevant notes to their financial sheet arrangements often are integral to and clarified the disclosures that statements or providing disclosure that both liquidity and capital resources and registrants must make about off-balance is duplicative of information in the that registrants should ‘‘consider all of sheet arrangements and required notes in response to Item 303(a)(4). these items together, as well as registrants to provide those disclosures Nevertheless, while many of the individually,’’ when drafting MD&A in a separately designated section of requirements in Item 303(a)(4) overlap disclosure.161 The Commission further MD&A.170 with U.S. GAAP, some of the noted that off-balance sheet In the release proposing Item requirements related to the location, arrangements and transactions with 303(a)(4), the Commission recognized presentation, and nature of the unconsolidated, limited purpose entities that parts of the proposed off-balance disclosure are not the same. should be discussed pursuant to Item sheet disclosure requirements might Additionally, Item 303(a)(4) disclosure 303(a) when they are ‘‘reasonably likely overlap with disclosure presented in the is not audited. Below we discuss these to affect materially liquidity or the footnotes to the financial statements.171 differences in greater detail. availability of or requirements for Location of Disclosure. Item capital resources.’’ 162 term capital resources must address material capital 303(a)(4)(i) specifies that off-balance The 2002 Commission Statement was expenditures, significant balloon payments or other sheet arrangements should be discussed consistent with Commission rules and payments due on long-term obligations, and other demands or commitments, including any off- in a separately-captioned section. The guidance at the time. For example, Item balance sheet items, to be incurred beyond the next instructions to Item 303(a)(4) permit 303(a)(2)(ii) specifically requires 12 months, as well as the proposed sources of that discussion to cross-reference registrants to disclose off-balance sheet funding required to satisfy such obligations.’’). information in the footnotes to the 165 Sarbanes-Oxley Act of 2002, Public Law 107– financing arrangements in their financial statements, rather than repeat 163 204, 116 Stat 745 (Jul. 2002) (‘‘Sarbanes-Oxley discussion of capital resources. Act’’). it, provided that the MD&A disclosure Similarly, the 1989 MD&A Interpretive 166 Section 401(a) of the Sarbanes-Oxley Act Release indicated that a registrant’s added Section 13(j) to the Exchange Act [15 U.S.C. Arrangements, Contractual Obligations and discussion of long-term liquidity and 78m(j)], which directed the Commission to adopt Contingent Liabilities and Commitments, Release rules requiring each annual and quarterly financial No. 33–8144 (Nov. 4, 2002) 67 FR 68054 (Nov. 8, long-term capital resources must report filed with the Commission to disclose ‘‘all 2002), at n.72. address demands or commitments, material off-balance sheet transactions, 172 arrangements, obligations (including contingent See id. including any off-balance sheet 173 items.164 obligations), and other relationships of the issuer In June 2009, the FASB Issued SFAS No. 166, with unconsolidated entities or other persons, that Accounting for Transfers of Financial Assets an may have a material current or future effect on amendment of FASB Statement No. 140, which 158 Item 303(a)(4)(i)(C) of Regulation S–K [17 CFR financial condition, changes in financial condition, requires enhanced disclosures about transfers of 229.303(a)(4)(i)(C)]. results of operations, liquidity, capital financial assets and a transferor’s continuing 159 Item 303(a)(4)(i)(D) of Regulation S–K [17 CFR expenditures, capital resources, or significant involvement with transfers of financial assets 229.303(a)(4)(i)(D)]. components of revenues or expenses.’’ accounted for as sales. Also in June 2009, the FASB 160 See Commission Statement about 167 See Disclosure in Management’s Discussion issued SFAS No. 167, Amendments to FASB Management’s Discussion and Analysis of Financial and Analysis about Off-Balance Sheet Interpretation No. 46(R), which requires enhanced Condition and Results of Operations, Release No. Arrangements and Aggregate Contractual disclosures about an enterprise’s involvement in a 33–8056 (Jan. 22, 2002) [67 FR 3746 (Jan. 25, 2002)] Obligations, Release No. 33–8182 (Jan. 28, 2003), variable interest entity, including unconsolidated (‘‘2002 Commission Statement’’). [68 FR 5981(Feb. 5, 2003)] (‘‘Off-Balance Sheet entities. SFAS No. 166 and 167 have been codified 161 See id. at 3748. Arrangements and Contractual Obligations as ASC Topics 860 (Transfers and Servicing) and 162 See id. Adopting Release’’), at 5983. 810 (Consolidation), respectively. See also Section 168 II.D.1.b and note 315 below for a discussion of IFRS 163 Item 303(a)(2)(ii) of Regulation S–K [17 CFR Item 303(a)(2)(ii) of Regulation S–K [17 CFR 229.303(a)(2)(ii)]. The item specifies that the 229.303(a)(2)(ii)]. requirements that overlap with Item 5.E of Form discussion shall consider changes between equity, 169 See Off-Balance Sheet Arrangements and 20–F. 174 debt, and any off-balance sheet financing Contractual Obligations Adopting Release, at 5983. See ASC 460–10–50. arrangements. 170 See id. 175 See ASC 860–10–50–3, ASC 860–20–50. 164 See 1998 MD&A Interpretive Release at 22431 171 See Disclosure in Management’s Discussion 176 See ASC 815–40–50–5, ASC 505–10–50. (‘‘The discussion of long-term liquidity and long- and Analysis About Off-Balance Sheet 177 See ASC 810–10–50–4.

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integrates the substance of the footnotes should be retained and expanded, and arrangements enumerated in Item in a manner designed to inform readers stated that it was comfortable with 303(a)(4) may be discussed more of the significance of the information duplications between the financial cohesively with other off-balance sheet that is cross-referenced.178 By contrast, statements and MD&A disclosures.182 arrangements that are not enumerated in U.S. GAAP does not prescribe the This commenter indicated that an Item 303(a)(4). We believe this could location of these disclosures, which may executive overview analyzing the risks result in more effective discussion of the be dispersed throughout the notes to the associated with off-balance sheet impact of these arrangements. financial statements. However, the arrangements would be beneficial. Commission staff and commenters have submission of this information in Several commenters encouraged the observed that the current requirements interactive data format, which is Commission to eliminate or amend Item often result in boilerplate disclosure or required in periodic reports on Forms 303(a)(4), stating that the requirements a duplication of disclosures in the 10–K, 10–Q, 20–F, 40–F and reports on substantially overlap with U.S. financial statements. Further, Item Forms 8–K and 6–K that contain revised GAAP.183 Some commenters suggested 303(a)(4)’s requirement for disclosure in or updated financial statements, allows that the Commission apply the a separately captioned section often investors to isolate disclosures about principles-based disclosure framework results in a disjointed presentation of off-balance sheet arrangements even in MD&A to off-balance sheet off-balance sheet arrangements that may when it is dispersed throughout the arrangements.184 Other commenters lack the necessary context of how these notes to the financial statements. recommended that the Commission obligations should be considered in Presentation of Disclosure. Item make clear that no disclosure is required light of a registrant’s overall financial 303(a)(4) requires disclosure for the related to off-balance sheet condition. We believe that the proposed most recent period and a discussion of arrangements that are not material.185 amendment would result in disclosure changes from the previous year where In light of the updates made to U.S. that would be more useful to necessary to an understanding of the GAAP that result in substantial overlap understanding the impact of off-balance disclosure.179 U.S. GAAP does not between U.S. GAAP and Item 303(a)(4) sheet arrangements, and may help avoid require discussion of changes from the of Regulation S–K, and consistent with boilerplate or disjointed disclosure. previous year. our other proposed amendments We acknowledge that, as discussed Nature of Disclosures. While Item intended to promote the principles- above, certain Item 303(a)(4) 303(a)(4) and U.S. GAAP both require based nature of MD&A, we believe that requirements related to the location, disclosure of the nature and amounts the current more prescriptive off- presentation, and nature of the associated with off-balance sheet balance sheet arrangement definition disclosure do not overlap with U.S. arrangements, Item 303(a)(4)(i)(A) and related disclosure requirement in GAAP. However, we believe that requires additional disclosure about the Item 303(a)(4) should be replaced with proposed Instruction 8 would mitigate business purpose of the off-balance a principles-based instruction. any potential loss of information by sheet arrangement and the importance Specifically, we propose to replace requiring a discussion of material of the off-balance sheet arrangement to current Item 303(a)(4) with a new matters of liquidity, capital resources, the registrant’s liquidity and capital Instruction to Item 303(b) that would and financial condition as they relate to resources. Item 303(a)(4) also requires require registrants to discuss off-balance sheet arrangements. Below, disclosure of any known event, demand, commitments or obligations, including we seek comment on what material commitment, trend, or uncertainty that contingent obligations, arising from information, if any, may be lost if we will result in or is reasonably likely to arrangements with unconsolidated adopt the proposed amendments. result in the termination or material entities or persons that have, or are Unlike Item 303(a)(4), the proposed reduction in the availability of material reasonably likely to have, a material instruction would not define ‘‘off- off-balance sheet arrangements to the current or future effect on a registrant’s balance sheet arrangements.’’ Rather, it registrant and the course of action the financial condition, changes in financial states that discussion of commitments registrant has taken or proposes to take condition, revenues or expenses, results or obligations, including contingent to address such circumstances. U.S. of operations, liquidity, cash obligations, of the registrant arising from GAAP does not require this disclosure. requirements, or capital resources.186 arrangements with unconsolidated In the Concept Release, the This proposed instruction would build entities or persons that have or are Commission solicited comment on the reasonably likely to have a material on the current requirement in Item importance of disclosure elicited by current or future effect on a registrant’s 303(a)(2) that specifically requires Item 303(a)(4) and whether and how we financial condition, changes in financial consideration of off-balance sheet should amend the requirements. Some condition, revenues or expenses, results financing arrangements as part of the commenters supported retaining the 187 of operations, liquidity, cash requirements.180 One of these capital resources discussion. The proposed amendment should requirements, or capital resources shall commenters stated that without this result in greater integration of material be provided even when the arrangement disclosure requirement, ‘‘a registrant off-balance sheet arrangements results in no obligations being reported could create significant off-balance in the registrant’s consolidated balance disclosure within the context of broader sheet liabilities that have the potential sheets. The instruction provides MD&A disclosures as those to impair its financial condition without examples of such arrangements that are investors knowing of it.’’ 181 Another substantially the same as those included 182 See letter from CalPERS. commenter stated that off-balance sheet 183 See. e.g., letters from Chamber, CGCIV, Davis in the current definition of off-balance arrangements disclosure requirements Polk, E&Y, KPMG LLP (July 21, 2016) (‘‘KPMG’’), sheet arrangements in Item 303(a)(4), Arthur J. Radin, Janover LLC (‘‘A. Radin’’), and including: Guarantees; retained or 178 Instruction 5 to Item 303(a)(4) of Regulation SIFMA. contingent interests in assets S–K [17 CFR 229.303(a)(4)]. 184 See, e.g., letters from CGCIV, Chamber, and transferred; contractual arrangements 179 Instruction 4 to Item 303(a)(4) of Regulation PWC. S–K [17 CFR 229.303(a)(4)]. 185 See letters from Davis Polk and Fenwick. that support the credit, liquidity, or 180 See, e.g., letters from CFA, CalPERS, and S. 186 See proposed Instruction 8 to Item 303(b). market risk for assets transferred; Percoco. 187 See Item 303(a)(2)(ii) of Regulation S–K [17 obligations that arise or could arise from 181 See letter from CFA. CFR 302(a)(2)(ii)]. variable interests held in an

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unconsolidated entity; or obligations 303(a)(4). Currently, Form 8–K defines 7. Contractual Obligations Table (Item related to derivative instruments that off-balance sheet arrangements by cross 303(a)(5)) 188 are both indexed to and classified in a reference to Item 303(a)(4)(ii). This Under Item 303(a)(5),190 registrants registrant’s own equity under U. S. proposed amendment would not result other than SRCs must disclose in tabular GAAP and are therefore not presented in any changes in reporting obligations format their known contractual as liabilities on a registrant’s balance under Item 2.03 and Item 2.04 of Form obligations. The item requires a 189 sheet. 8–K. registrant to arrange its table to disclose While the examples in the proposed contracts by type of obligations,191 the instruction are substantially the same as Request for Comment overall payments due, and by four those in the current off-balance sheet 28. Should we amend the off-balance prescribed periods.192 A registrant may arrangements definition in Item sheet arrangements disclosure disaggregate the categories of 303(a)(4), the examples do not include requirement by replacing Item 303(a)(4) obligations, but it must disclose all references to specific paragraphs in U.S. with Instruction 8 to Item 303(b), as obligations falling within the prescribed GAAP. Despite the elimination of these proposed? Is the proposed instruction a five categories and for the prescribed cross-references, the amendments are sufficient replacement for the current time periods. A registrant may provide not intended to broaden the types of requirement for a separately-captioned footnotes to the table to the extent such arrangements for which MD&A presentation of off-balance sheet information is necessary to understand disclosure would be required. In this arrangements? the disclosures in the contractual regard, under existing MD&A 29. Are there alternative approaches obligations table. There is no materiality requirements, registrants are required to we should consider to address the threshold for this item, meaning discuss in MD&A any known demands, potential for boilerplate or duplicative registrants must disclose all contractual commitments, events or uncertainties disclosure? that will result in or that are reasonably 30. Would the proposed amendments obligations falling within the prescribed likely to result in the registrant’s result in the loss of material information four categories. When the Commission implemented liquidity decreasing in any material to investors that would not be disclosed this disclosure requirement, its purpose way, even if the known demand did not elsewhere? If so, what information was to ensure that aggregated meet the definition of an off-balance would be lost? Are the proposed information about contractual sheet arrangement in Item 303(a)(4). amendments sufficiently tailored to obligations was presented in one Under the proposed amendments, those avoid discussion of immaterial off- place.193 This was intended to aid same arrangements would continue to balance sheet arrangements? be required to be discussed in MD&A. 31. Would the proposed amendments investors in determining the effect such For the same reason, the proposed result in more meaningful MD&A obligations would have in the context of 194 amendments also would not narrow the disclosures about off-balance sheet off-balance sheet arrangements. scope of what would be required to be arrangements? Are the proposed Commission guidance that followed the disclosed in MD&A. The primary amendments likely to reduce boilerplate implementation of this requirement difference from what is currently or duplicative disclosure? encouraged registrants to include required, and would be required under 32. Should we amend Items 2.03 and narratives to the table to provide more the proposed amendments, is that the 2.04 of Form 8–K to incorporate the context and analysis for the numbers 195 discussion would no longer occur in a definition of ‘‘off-balance sheet presented. separately-captioned section; but rather, arrangements’’ that is currently in Item In the Concept Release, the it would be made in the context of a 303(a)(4), as proposed? Would the Commission solicited comment on the more holistic, principles-based analysis. proposed amendments create any meaningfulness of disclosure elicited by We considered whether our proposal confusion as to when a reporting Item 303(a)(5). Several commenters is consistent with Section 13(j) of the recommended retaining and enhancing obligation under Item 2.03 or Item 2.04 196 Exchange Act, as added by Section of Form 8–K would be triggered? this item requirement, with two of 401(a) of the Sarbanes-Oxley Act, which these commenters supporting an required the Commission to adopt rules 188 See Item 2.03(d) and Item 2.04(d) of Form additional requirement to include providing that each annual and 8–K. In 2004, as part of a broader effort to expand pension obligations.197 Another quarterly financial report required to be the events that registrants must report on a current basis, the Commission adopted additional 190 Item 303(a)(5) of Regulation S–K [17 CFR filed with the Commission shall requirements for disclosing off-balance sheet disclose all material off-balance sheet 229.303(a)(5)]. arrangements on Form 8–K. These provisions 191 The types of obligations include long-term arrangements. We believe that Section require registrants to file a Form 8–K upon the debt obligations, capital lease obligations, operating 13(j) remains satisfied because, under creation of a direct financial obligation or an lease obligations, purchase obligations, and other proposed Instruction 8 to Item 303(b), obligation under an off-balance sheet arrangement long-term liabilities reflected on the registrant’s (Item 2.03) and to file a Form 8–K if a triggering balance sheet under GAAP. disclosure of all material off-balance event occurs that causes the increase or acceleration 192 The payment obligations must be disclosed for of such an obligation and the consequences of the sheet arrangements would continue to the following timeframes: Less than one year; one event are material to the registrant (Item 2.04). be required in annual and quarterly to three years; three to five years; and more than While the Form 8–K requirements rely on the reports. As discussed above, although a five years. definition of ‘‘off-balance sheet arrangement’’ in 193 discussion of off-balance sheet Item 303(a)(4)(ii), the purpose of the disclosure is See Off-Balance Sheet Arrangements and arrangements would no longer be different. Unlike Item 303(a)(4), Form 8–K does not Contractual Obligations Adopting Release at 5990. require registrants to provide an analysis of off- 194 See id. required to be provided in a separately 195 captioned section, registrants would balance sheet arrangements or their importance to See Commission Guidance on Presentation of the registrant. Liquidity and Capital Resources Disclosures in still be required to discuss such 189 We believe it is appropriate to retain the Management’s Discussion and Analysis, Release arrangements in the broader context of current, prescriptive definition of ‘‘off-balance sheet No. 33–9144 (Sept. 17, 2010) [75 FR 59894 (Sept. their MD&A disclosures. arrangements’’ in Form 8–K in light of its four 28, 2010)] (‘‘2010 MD&A Interpretive Release’’), at We also propose to amend Items 2.03 business day filing requirement. See Instruction B.1 59896. and Instructions to Item 2.03 of Form 8–K. Our 196 See, e.g., letters from RGA, Bloomberg, Better and 2.04 of Form 8–K to include the intent is that a prescriptive definition will provide Markets, Inc. (Jul. 21, 2016) (‘‘Better Markets’’), S. definition of ‘‘off-balance sheet registrants with greater certainty when filing a Form Percoco, and CFA Institute. arrangements’’ that is currently in Item 8–K. 197 See letters from Bloomberg and S. Percoco.

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commenter recommended enhancing accounting standards undergo a high with U.S. GAAP and is therefore this disclosure by requiring XBRL level of scrutiny in the standards-setting included in the notes to the financial tagging and disclosure of single, discrete process and are subjected to ongoing statements.214 As commenters also years (as opposed to grouped years).198 FASB monitoring for needed observed, the current table does not Some of these commenters revisions.’’ 207 Another commenter provide insight into the registrant’s recommended requiring, or at least stated that the information provided in ability to pay its obligations as they encouraging, registrants to provide a response to Item 303(a)(5) is largely the become due 215 and may not provide a narrative to the contractual obligations same as that provided in a registrant’s complete picture of the registrant’s table.199 financial statements and questioned its expected uses of cash.216 Our proposals Many commenters, however, utility.208 The commenter went on to to enhance the liquidity and capital recommended that we simplify or state that the information in the Item resources discussion are intended to eliminate Item 303(a)(5).200 Some 303(a)(5) contractual obligations table address some of these commenter commenters encouraged the did not provide insight as to whether a concerns. We recognize that some of the Commission to consider whether the registrant could pay the obligations as information in the contractual contractual obligations table is they became due. obligations table is not specifically necessary given the overlap with the In the FAST Act Report, Commission called for under U.S. GAAP.217 disclosure requirements of U.S. staff recommended eliminating the However, under our capital resources GAAP.201 One commenter also noted contractual obligations table while proposals, described above in Section that ‘‘to the degree that elimination of enhancing the liquidity discussion II.C.2, registrants would be required to duplicative topics is unavoidable, requirements.209 Under this discuss material cash requirements, registrants should be able to cross- recommendation, registrants would no which would include material reference within a filing.’’ 202 Another longer be required to present contractual contractual obligations. commenter broadly supported the idea obligations in a table, but registrants of making MD&A contractual would have to provide a hyperlink to Request for Comment obligations disclosure more principles- the relevant information in the financial 33. Should we eliminate the based ‘‘to highlight material issues statements. One commenter on the contractual obligations disclosure regarding [a registrant’s] liquidity’’ and FAST Act Report stated that eliminating requirement, as proposed? allowing the relevant factual the contractual obligations table would 34. Would investors be deprived of information to be provided in the be a ‘‘step backwards.’’ 210 The material information under the financial statements.203 One commenter commenter wrote that ‘‘[t]he table as it proposal? questioned whether the contractual exists is a user-friendly, central location 35. Is the disclosure of information obligations table, as currently for the complete display of all a firm’s related to contractual obligations in the structured, provides a complete picture future cash obligations.’’ notes to the financial statements an of a registrant’s obligations and liquidity Although the Commission did not adequate substitute for its separate concerns.204 propose to eliminate Item 303(a)(5) in tabular presentation in Item 303(a)(5)? Several commenters recommended the FAST Act Proposing Release,211 we Would there be any costs or challenges the Commission eliminate Item now propose to eliminate Item 303(a)(5), to investors of compiling information 303(a)(5), stating that the disclosure consistent with our objective to promote required in Item 303(a)(5) from other requirement is largely redundant with the principles-based nature of MD&A sources and, if so, what would the costs what is required in the financial and streamline disclosures by reducing or challenges be? Do current XBRL- 205 statements. One of these commenters redundancy.212 We do not believe that tagging requirements facilitate indicated that the Commission should eliminating the requirement would compilation and comparison of such eliminate disclosure requirements that result in a loss of material information information? are redundant with U.S. GAAP or IFRS, to investors given the overlap with 36. How do market participants use 206 as applicable. This commenter stated information required in the financial the ‘‘payments due by period’’ that ‘‘[i]dentical, or even similar statements and our proposed expansion information in the contractual disclosures, to GAAP appear of the capital resources requirement, obligations table and is the disclosure unnecessary considering that discussed above in Section II.C.2. material to an investor’s investment 213 As many commenters pointed out, decision? If we eliminate Item 303(a)(5), 198 See letter from RGA. much of the information presented in should we require registrants to disclose 199 See, e.g., letters from Better Markets, S. response to this requirement overlaps Percoco, and CFA Institute. information regarding the time periods 200 See, e.g., letters from E&Y, SIFMA, BDO, EEI in which material contractual 207 and AGA, Davis Polk, General Motors, FEI, A. The commenter then also included a chart obligations will become due? that, among other things, noted the items that Radin, Deloitte, Chamber, FedEx, CGCIV, CAQ, 37. If we eliminate the required table KPMG, PWC, Chevron, Fenwick, and Grant overlap between Item 303(a)(5) and U.S. GAAP Thornton. requirements. of contractual obligations, as proposed, 201 See letters from General Motors, PWC, Grant 208 See letter from Grant Thornton. Thornton, CAQ, and Deloitte. 209 See Report on Modernization and 214 For example, the following ASC requirements 202 See letter from General Motors. Simplification of Regulation S–K (Nov. 23, 2016), overlap with Item 303(a)(5): ASC 470–10–50 (debt); 203 See letter from SIFMA. available at https://www.sec.gov/reportspubs/sec- ASC 840–10–50 (leases); ASC 842 (leases); ASC 204 As an example, the commenter noted that a fast-act-report-2016.pdf. 440–10–50 (purchase commitments); and ASC 410, registrant can have a large or small amount of 210 See letter to the FAST Act Report from Jack 420, 450, and 710 (other long-term obligations). contractual obligations, but the disclosure of such T. Ciesielski, R.G. Associates, Inc. (Dec. 12, 20016), 215 See, e.g., letters from Grant Thornton, General amount does not necessarily provide investors with available at https://www.sec.gov/comments/fast/ Motors, CAQ, and E&Y. information about the registrant’s ability to generate fast.htm. 216 See, e.g., letters from CAQ and E&Y. liquidity, its contractual obligations at any other 211 See FAST Act Proposing Release. 217 See Off-Balance Sheet Arrangements and point in time, or a complete picture of its expected 212 Item 2.03 of Form 8–K defines ‘‘direct Contractual Obligations Adopting Release, at 5986 uses of cash. See letter from E&Y. financial obligation’’ by cross references to Item (‘‘The preparation of financial statements in 205 See, e.g., letters from A. Radin, Deloitte, 303(a)(5)(ii)—Definitions. Accordingly, we are accordance with GAAP already requires registrants Chamber, FedEx, CGCIV, CAQ, KPMG, PWC, proposing to replace these cross references in Form to assess payments under all of the above categories Chevron, Fenwick, E&Y, and Grant Thornton. 8–K with the definitions from Item 303(a)(5)(ii). of contractual obligations, except for purchase 206 See letter from KPMG. 213 See, supra note 201. obligations.’’).

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what information about contractual guidance further stated that if critical provide disclosure that is duplicative of obligations are registrants likely to accounting estimates or assumptions are their accounting policies or does not provide in their MD&A? identified, a registrant should analyze, otherwise provide meaningful analysis 38. Should we retain the contractual to the extent material, factors such as of the estimates and assumptions obligations disclosure requirement in a how it arrived at the estimate, how involved.229 Several commenters modified form (e.g., with a materiality accurate the estimate/assumption has recommended revising Item 303 to threshold, but not require a tabular been in the past, how much the include a critical accounting estimate presentation, etc.)? If so, what estimate/assumption has changed in the requirement,230 with some of these modifications should we make to the past, and whether the estimate/ commenters suggesting this may requirement? assumption is reasonably likely to improve the resulting disclosure.231 39. If we retain the current contractual change in the future. This guidance also While some of the commenters that obligations disclosure requirement, stated that a registrant should analyze recommended revising Item 303 should we revise it to enhance the its specific sensitivity to change based supported a prescriptive rule for critical information provided to investors (e.g., on other outcomes that are reasonably accounting estimates,232 others should we expressly require a narrative likely to occur. Any disclosure should suggested revising the item to provide a to the contractual obligations table)? supplement, not duplicate, the principles-based framework for critical 233 8. Critical Accounting Estimates description of accounting policies that accounting estimates. One are already disclosed in the notes to the commenter stated that a critical While not specified in Item 303, the financial statements, and provide accounting estimate requirement in Item Commission in prior guidance has greater insight into the quality and 303 should specifically state that the stated that, while preparing MD&A, variability of information regarding disclosure is meant to supplement, and registrants should consider whether financial condition and operating not duplicate, the description of accounting estimates and judgments performance.223 accounting policies in the footnotes to could materially affect reported U.S. GAAP does not require a similar the financial statements.234 This same financial information. disclosure of estimates and assumptions commenter also recommended that Item Specifically, in 2001, the Commission in the notes to financial statements 303 require a discussion about the reminded registrants that, under the except in a limited number of judgments and assumptions that existing MD&A disclosure requirements, circumstances.224 Instead, U.S. GAAP management must make in order to a registrant should address material requires disclosure of the accounting prepare its financial statements and that implications of uncertainties associated principles followed and the methods of have the most significant impact on with the methods, assumptions, and applying those principles that such financial statements. estimates underlying the registrant’s materially affect the determination of Some commenters suggested that, if 218 critical accounting measurements. financial position, cash flows, or results Item 303 is revised to address critical The Commission also encouraged of operations.225 Unlike U.S. GAAP, any accounting estimates specifically, the companies to explain the effects of the discussion in MD&A should present a Commission should not codify the critical accounting policies applied and registrant’s analysis of the uncertainties Commission’s guidance on disclosure of the judgments made in their involved in applying the principles.226 critical accounting estimates and related 219 application. In 2002, the Commission IFRS requires disclosures regarding disclosure requirements as set forth in proposed rules to require disclosure of sources of estimation uncertainty and the 2003 MD&A Interpretive Release.235 critical accounting estimates, but it judgments made in the process of One commenter suggested that 220 never adopted this proposal. applying accounting policies that have disclosure of critical accounting In the 2003 MD&A Interpretive the most significant effect on the estimates should be required when: (i) Release, the Commission addressed amounts recognized in the financial It is at least reasonably possible that the critical accounting estimates.221 The statements.227 estimate of the effect on the financial Commission stated that when preparing In the Concept Release, the statements of a condition, situation, or MD&A disclosure, companies should Commission noted that, despite its set of circumstances that existed at the consider whether they have made guidance, many registrants repeat the date of the financial statements will accounting estimates or assumptions discussion of significant accounting change in the near term due to one or where the nature of the estimates or policies from the notes to the financial more future confirming events; and (ii) assumptions is material due to the statements in MD&A and provide the effect of the change would be levels of subjectivity and judgment limited additional discussion of the material to the financial statements.236 necessary to account for highly critical accounting estimates.228 The Two commenters stated that the uncertain matters or the susceptibility of Commission solicited comment on how such matters to change; and the impact to improve the discussion of critical 229 See, e.g., letters from A. Radin, NYSSCPA, of the estimates and assumptions on Deloitte, PWC, Investment Program Association accounting estimates in MD&A. (Jul. 21, 2016), Davis Polk, Fenwick, CalPERS, financial condition or operating The Commission received a range of 222 NAREIT and American Bar Association (Dec. 15, performance is material. This comments on critical accounting 2017) (‘‘ABA’’). estimates. Many commenters 230 See, e.g., letters from Deloitte, NYSSCPA, 218 See Cautionary Advice Regarding Disclosure, acknowledged that registrants typically BDO, CAQ, Grant Thornton, PWC, CalPERS, S. Release No. 33–8040 (Dec. 12, 2001) [66 FR 65013 Percoco, and ABA. (Dec. 17, 2001)] (‘‘Cautionary Advice Release’’). 231 See, e.g., letters from Deloitte, BDO, and Grant 219 See id. 223 See id. Thornton. 220 See Disclosure in Management’s Discussion 224 For example, ASC 820–10–50–1C requires 232 See, e.g., letters from NYSSCPA and CalPERS. and Analysis about the Application of Critical similar disclosure related to fair value 233 See letters from Deloitte, Grant Thornton, Accounting Policies, Release No. 33–8098 (May 10, measurements. BDO, PWC, and CAQ. 2002) [67 FR 35620 (May 20, 2002)] (‘‘2002 Critical 225 See ASC 235–10–50–3. 234 See letter from ABA. Accounting Policies Proposal’’). See also, Concept 226 See 2003 MD&A Interpretive Release, at 235 See, e.g., letters from A. Radin, CalPERS, Release, at 239452, for a summary of the 2002 75064. NAREIT, and S. Percoco. Critical Accounting Policies Proposal. 227 International Accounting Standard (‘‘IAS’’) 1, 236 See letter from KPMG (citing KPMG, LLP letter 221 See 2003 MD&A Interpretive Release. paragraphs 122 to 133. (Dec. 9, 2002) to the 2002 Critical Accounting 222 See id. 228 See Concept Release, at 23953. Policies Proposal).

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disclosures should describe the process on estimation uncertainties, we intend required to be communicated to the employed in creating the estimate.237 to avoid any unnecessary repetition of audit committee and that: (1) Relates to Other commenters suggested that the significant accounting policy footnotes. accounts or disclosures that are material Commission coordinate with the FASB For each critical accounting estimate, to the financial statements; and (2) to enhance U.S. GAAP so that it requires the proposed amendments would involved especially challenging, these disclosures.238 Yet others require registrants to disclose, to the subjective, or complex auditor suggested that the Commission extent material, why the estimate is judgment.’’ 250 Beginning with audits of eliminate guidance related to critical subject to uncertainty, how much each fiscal years ending on or after June 30, accounting estimates because they estimate has changed during the 2019,251 audit reports are required, believe the disclosures are not useful reporting period, the sensitivity of the among other things, to include a and the dynamic nature of uncertainties reported amounts to the material description of ‘‘the principal makes it overly challenging to quantify methods, assumptions, and estimates considerations that led the auditor to 245 the reasonably likely range of outcomes underlying the estimate’s calculation. determine that the matter is a critical with a solid basis for investor We believe the proposed amendments audit matter.’’ 252 The communications 239 reliance. A few commenters stated would clarify for registrants the auditors are expected to provide on disclosures required to address any that current Commission guidance is critical audit matters in an audit report critical accounting estimates, help avoid sufficient but recommended that the have a different objective than boilerplate or duplicative disclosures, Commission provide additional disclosures related to critical accounting 240 and provide investors with material illustrative guidance. Two of these estimates. In this regard, critical audit information regarding critical commenters opposed revising Item 303 matters provide insight into matters that to require disclosure of critical accounting estimates. We also believe that the disclosure elicited by the are especially challenging, subjective, accounting estimates and opposed and complex to audit from the adopting a ‘‘strict definition’’ of critical proposed amendments would facilitate further understanding of an analysis of perspective of the auditor. On the other accounting estimates; these commenters hand, critical accounting estimates stated that any clarification in this area amounts reported in the financial statements by providing greater insight disclosure should provide should be done through a revised management’s insights into estimation 241 on the uncertainties involved in creating interpretive release. uncertainties that have had or are We propose to amend Item 303(a) 242 and applying an accounting policy and reasonably likely to have a material to explicitly require disclosure of how significant accounting policies of impact on reported financial statements. critical accounting estimates.243 We are registrants faced with similar facts and A critical accounting estimate may not persuaded by commenters who stated circumstances may differ. that a requirement in Item 303 would We recognize that some of the be a critical audit matter because it may facilitate compliance and may improve disclosure that would be required under not involve especially challenging, the resulting disclosure.244 As stated by our proposals may be provided already subjective, or complex auditor 246 247 many commenters, registrants often under U.S. GAAP or IFRS. To judgment, but it would still require repeat the information in the financial discourage duplicative disclosures, we analysis in MD&A. Likewise, a critical statement footnotes about significant are proposing, as suggested by one audit matter that would require accounting policies. By proposing to commenter, to also include an reporting in the audit report may not codify this requirement, our intent is to instruction specifying that the necessarily be a critical accounting eliminate disclosure that duplicates the disclosure of critical accounting estimate, as proposed, because it may financial statement discussion of estimates shall supplement, but not not involve estimation uncertainty that significant accounting policies and, duplicate, the description of accounting can materially affect reported policies or other disclosures in the notes amounts.253 For these reasons, we do instead, promote enhanced analysis of 248 measurement uncertainties. to the financial statements. Our proposed amendments are also We considered the potential for 250 See AS 3101. intended to clarify for registrants the overlap with auditor communications of 251 The requirements related to critical audit critical audit matters.249 A critical audit matters in AS 3101 apply to reports of independent required disclosures related to critical registered public accounting firms that are included accounting estimates. To this end, our matter is defined as ‘‘any matter arising from the audit of the financial in certain registrant filings. These requirements are proposals define a critical accounting effective for audits of fiscal years ending on or after estimate as an estimate made in statements that was communicated or June 30, 2019 for large accelerated filers; and for accordance with generally accepted fiscal years ending on or after December 15, 2020, 245 These disclosure requirements are similar to for all other companies to which the requirements accounting principles that involves a those found in IFRS. See IAS 1, paragraph 129. apply. See Public Company Accounting Oversight significant level of estimation 246 For example, with respect to recurring fair Board; Order Granting Approval of Proposed Rules uncertainty and has had or is reasonably value measurements categorized with Level 3 of the on the Auditor’s Report on an Audit of Financial likely to have a material impact on the fair value, ASC 820–10–50–2 requires a narrative Statements When the Auditor Expresses an description of the sensitivity of the fair value Unqualified Opinion, and Departures from registrant’s financial condition or results measurement to changes in unobservable inputs if Unqualified Opinions and Other Reporting of operations. By focusing the definition a change in those inputs to a different amount Circumstances, and Related Amendments to might result in a significantly higher or lower fair Auditing Standards, Release No. 33–81916 (Oct. 23, 2017) [82 FR 49886 (Oct. 27, 2017)]. 237 See letters from CAQ and CalPERS. value measurement. We are not proposing to eliminate any requirement that this information be 252 See paragraph 14 of AS 3101. 238 See, e.g., letters from E&Y, Northrop provided. 253 Grumman, and KPMG. See e.g., ‘‘Implementation of Critical Audit 247 See IAS 1, paragraphs 125 to 133. Matters: A Deeper Dive on the Determination of 239 See letters from A. Radin, Davis Polk, and 248 CAMS’’ (Mar. 18, 2019), at 6 available at https:// Fenwick. See letter from ABA. 249 pcaobus.org/Standards/Documents/ 240 See, e.g., letters from Chevron, CGCIV, and See PCAOB Standard AS 3101, The Auditor’s Report on an Audit of Financial Statements When Implementation-of-Critical-Audit-Matters-Deeper- Chamber. Dive.pdf. 241 the Auditor Expresses an Unqualified Opinion (‘‘AS See letter from Chamber and CGCIV. 3101’’). See also letter from Grant Thornton (stating Additionally, our proposal to require critical 242 Proposed to be renumbered as Item 303(b). that ‘‘[w]hile the two concepts have different accounting estimates would apply to EGCs. In 243 See proposed Item 303(b)(6). meanings, there may be some confusion amongst contrast, disclosure of critical audit matters is not 244 See, e.g., letters from Deloitte, BDO and Grant stakeholders as to the relationship between the required for audits of EGCs. See paragraph 5 of AS Thornton. two.’’). 3101.

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not believe that proposed Item 303(a)(4) critical accounting estimates of its effort to integrate and simplify its would necessarily result in duplicative requirement? As an alternative to a new disclosure system.261 The Commission disclosure. requirement, should we refer the matter stated at the time that the amendments to the FASB for potential incorporation it was adopting formed ‘‘an integral part Request for Comment into U.S. GAAP? of the Commission’s program to 40. Should we amend Item 303 to integrate the disclosure requirements of 9. Interim Period Discussion (Item require disclosure of critical accounting the Exchange Act with those of the 303(b)) estimates, as proposed? Securities Act, and to encourage and 41. Is the proposed definition of Item 303(b) requires registrants to facilitate the integration of corporate critical accounting estimates sufficiently provide MD&A disclosure for interim reporting on formal Commission filings clear? Are there alternative definitions periods that enables market participants with informal corporate that we should consider? to assess material changes in financial communications with shareholders.’’ 262 42. Should any registrants, such as condition and results of operations The Commission also noted that the SRCs, EGCs, or IPO issuers, be between certain specified periods.257 amendments were complements to the exempted from this proposed Item 303(b)(1) requires registrants to annual report amendments adopted requirement? If so, which registrants, discuss any material change in financial around the same time.263 and should there be a time limitation on condition from the end of the preceding The Commission recently solicited such an accommodation? fiscal year to the date of the most recent comment on the current quarterly 43. Would the proposed amendments interim balance sheet.258 Item 303(b)(2) reporting process and how the result in disclosures that are duplicative requires registrants to discuss any Commission can reduce the of U.S. GAAP or IFRS, as applicable? If material changes in their results of administrative burdens on reporting so, how? Are there alternatives we operations for the most recent fiscal companies associated with this process should consider to encourage registrants year-to-date period presented in their while enhancing the investor to provide disclosures that will income statement, along with a similar protections associated with periodic supplement, rather than duplicate, discussion of the corresponding year-to- reporting under the Exchange Act.264 disclosures that appear in the financial date period of the preceding fiscal year. The Commission also sought input on statements? If a registrant is required or elects to the benefits, costs, and burdens of the 44. Would the proposed amendments provide an income statement for the current quarterly reporting system, and provide clarity to registrants on most recent fiscal quarter, the possible approaches to simplifying the disclosures regarding critical accounting discussion must also cover material process through which investors access, estimates? Would the proposed changes with respect to that fiscal process, and evaluate information.265 amendments provide investors with quarter and the corresponding fiscal Multiple commenters responding to material information regarding critical quarter in the preceding fiscal year.259 the Request for Comment recommended accounting estimates? Item 303(b)(2) also states that registrants that the Commission consider allowing 45. Some commenters suggested we subject to Rule 3–03(b) of Regulation more flexibility in interim period issue a revised interpretive release S–X 260 providing statements of MD&A, or otherwise streamline or addressing critical accounting comprehensive income for the twelve- eliminate certain discussion estimates 254 and others suggested we month period ended as of the date of the requirements.266 One commenter provide illustrative examples to most recent interim balance sheet must recommended that the Commission facilitate this disclosure.255 Instead of discuss material changes of that twelve- amending Item 303, should we issue month period as compared to the 261 See New Interim Financial Information revised guidance addressing critical preceding fiscal year rather than the Provisions and Revisions of Form 10–Q for preceding period. Quarterly Reporting, Release No. 33–6288 (Feb. 9, accounting estimates? Should we 1981), 46 FR 12480 (Feb. 17, 1981) (adopting provide illustrative examples? The Commission adopted the current Item 303(b) of Regulation S–K as then Item 46. The Commission has previously precursor to current Item 303(b) as part 11(b) of Regulation S–K) (‘‘Item 303(b) Adopting encouraged registrants to include, in Release’’). See also 1982 Integrated Disclosure 257 Adopting Release (reorganizing Regulation S–K to, their MD&A, explanations of the Item 303(b) of Regulation S–K [17 CFR 229.303(b)]. among other things, move the substance of Item judgments and uncertainties affecting 258 If the interim financial statements include an 11(b) of Regulation S–K to Item 303(b) of Regulation application of their accounting interim balance sheet as of the corresponding S–K). policies.256 For example, critical interim date of the preceding year, the registrant 262 See Item 303(b) Adopting Release, at 12481. accounting judgments may include must also discuss any material changes in financial 263 Id. condition from that date to the date of the most 264 Request for Comment on Earnings Releases whether financial assets are held-to- recent interim balance sheet provided. At their and Quarterly Reports, Release No. 33–10588 (Dec. maturity investments, whether an discretion, registrants may combine discussions of 18, 2018) [83 FR 65601 (Dec. 21, 2018)] (the instrument is classified as debt or changes from both the end and the corresponding ‘‘Request for Comment’’). Comment letters in equity, or judgments made about the interim date of the preceding fiscal year when such response to the Request for Comment are available appropriate scope for a transaction. discussions are required. See Item 303(b)(1). at https://www.sec.gov/comments/s7-26-18/ 259 In addition, if the registrant elects to provide s72618.htm. References to comment letters in this Should the Commission be more a statement of comprehensive income for the Section II.C.9 are to those letters received in prescriptive in this area and, for twelve-month period ended as of the date of the response to the Request for Comment. example, adopt a requirement for most recent interim balance sheet provided, the 265 The request for comment also addressed other registrants to disclose critical registrant must also discuss material changes with items relating to (1) the use of earnings releases to respect to that twelve-month period and the twelve- satisfy the core disclosure requirements of Form accounting judgments? Would such a month period ended as of the corresponding 10–Q, (2) the frequency of interim reporting, and (3) requirement elicit material information interim balance sheet date of the preceding fiscal earnings guidance. that would not otherwise be provided, year. See Item 303(b)(2). 266 See, e.g., letters in response to the Request for including as a result of the proposed 260 These registrants include those primarily Comment from Bank of America (Mar. 21, 2019) engaged in: The generation, transmission, or (‘‘BoA’’), BDO USA, LLP (Mar. 21, 2019) (‘‘BDO 2’’), distribution of electricity; the manufacture, mixing Center for Audit Quality (Mar. 20, 2019) (‘‘CAQ 2’’), 254 See, e.g., letters from Chamber and CGCIV. transmission, or distribution of gas; the supplying Financial Executives International (‘‘FEI 2’’), Cleary 255 See, e.g., letters from PWC, KPMG, and or distribution of water; or the furnishing of Gottlieb Steen & Hamilton LLP (Mar. 27, 2019) Chevron. telephone or telegraph services; or in holding (‘‘Cleary Gottlieb’’), and Institute of Management 256 See Cautionary Advice Release, at 65013. securities of companies engaged in such business. Accountants (Mar. 21, 2019).

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evaluate whether registrants should only termism on our capital markets.275 We believe that these changes would be required to discuss year-to-date During the roundtable discussion, allow registrants additional flexibility to results of operations in their MD&A multiple panelists discussed the need provide an analysis that they believe is (and not be required to provide a for streamlined MD&A disclosures, most relevant to an understanding of the separate discussion of the results of including interim period MD&A.276 One frequency and amplitude of past operations of individual quarters).267 panelist suggested that the Commission business cycles while also ensuring that Other commenters, however, allow registrants to make MD&A investors have appropriate information recommended that the Commission comparisons to the preceding interim to assess the comparisons being assess whether registrants should be period or to discuss only year-to-date presented. We recognize that not all required to discuss year-to-date results changes.277 Another panelist noted that businesses are seasonal and a and condition (i.e., evaluate whether ‘‘companies will want to talk about comparison to the corresponding registrants should be permitted to discrete quarters’’ because ‘‘that’s how quarter of the preceding year may not be exclude year-to-date discussions).268 they do their earnings releases.’’ 278 as meaningful as a comparison to the One of these commenters recommended We propose to amend Item 303(b) (to preceding quarter. We also believe that that the Commission permit flexibility be renumbered as proposed Item 303(c)) this proposal would respond to in how registrants present their MD&A to allow for flexibility in comparisons of commenters’ concern about the need for 280 by allowing registrants to choose the interim periods and to simplify the flexibility in MD&A. These changes presentation that is most consistent with item.279 Specifically, we propose to are intended to provide market how they manage their respective permit registrants to compare their most participants with the most relevant businesses (e.g., quarter over quarter vs. recently completed quarter to either the information about a registrant while 269 year over year). Another commenter corresponding quarter of the prior year reducing comparisons that may obscure recommended the Commission consider (as is currently required) or to the the most material trends. We believe allowing management to exercise immediately preceding quarter. Under that requiring registrants to provide both judgment in omitting certain year-to- the proposal, if a registrant elects to comparisons and explain the reasons for date and/or quarterly information from discuss changes from the immediately a change in comparison from prior interim period MD&A if the omitted preceding sequential quarter, the periods would ensure that investors and information is consistent with prior registrant must provide summary other market participants have sufficient trends or repeats information provided financial information that is the subject information to understand and adjust to 270 elsewhere in a quarterly report. of the discussion for that quarter or any period over period change. Other commenters noted that Form identify the prior EDGAR filing that We are also proposing amendments to 10–Q’s prescribed disclosures ensure presents such information so that a simplify Item 303(b) (to be renumbered uniformity among registrants.271 One of reader may have ready access to the as proposed Item 303(c)) that would: these commenters stated that the • prior quarter financial information being Eliminate the text that states that structured format of quarterly reports discussed. In addition, under the registrants need not provide a allows certain market participants to proposed amendment, if a registrant discussion of the impact of inflation and analyze results and to produce tools that changes the comparison from the prior changing prices, consistent with the ‘‘aid investors to make more informed interim period comparison, the proposed amendments described investment decisions.’’ 272 Another 281 registrant would be required to explain above; and commenter stated that there should be • the reason for the change and present Amend Item 303(b)(2) (proposed some element of uniformity in required both comparisons in the filing where the Item 303(c)(2)) material changes in disclosures so that there is consistency change is announced. For example, if a results of operations—to break the among registrants.273 registrant in its third quarter Form 10– requirements into two subsections: Several commenters encouraged the Æ Q decides to compare its results to the Proposed Item 303(c)(2)(i) would Commission to conduct further outreach preceding quarter after the registrant continue to require registrants to discuss with investors and companies.274 On had compared such quarter to the any material changes in their results of July 18, 2019, the Commission held a corresponding quarter of the previous operations between the most recent roundtable discussion on whether the year in its earlier report, the registrant year-to-date interim period(s) and the quarterly reporting system should be would be required to present both corresponding period(s) of the modified to address the impact of short- comparisons in that third quarter Form preceding fiscal year for which statements of comprehensive income are 267 See letter from Ernst & Young (Mar. 21, 2019) 10–Q and explain the reasons for the change in comparison. provided; and (‘‘Ernst’’). Æ 268 See letters from BoA, BDO 2, CAQ 2, CCR, Proposed Item 303(c)(ii) would, as Cleary Gottlieb, FEI 2, and IMA. 275 Roundtable on Short-term/Long-term discussed above, require registrants to 269 See letter from BDO. Management of Public Companies, our Periodic compare their most recently completed 270 See letter from CAQ 2. Reporting System and Regulatory Requirements quarter to either of the corresponding 271 See, e.g., letters from AFL–CIO (Mar. 21, (July 18, 2019), archived at https://www.sec.gov/ quarter of the prior year (as is currently 2019), BDO 2, Better Markets (Mar. 21, 2019), CAQ video/webcast-archive-player.shtml?document_ id=roundtable-short-long-term-071819. required) or to the immediately 2, CIT Group Inc. (Mar. 21, 2019) (‘‘CIT’’), Edison 282 Electric Institute and American Gas Association 276 See id. at 2:40:56, Statement of Steven Jacobs. preceding quarter. (Mar. 21, 2019), Gallagher Co. (Mar. 14, 2019), See also id. at 3:22:20, Statement of Nicolas Grabar. We are also proposing to eliminate Investment Company Institute (Mar. 21, 2019), 277 See supra note 275 at 2:48:36, Statement of language requiring registrants subject to KPMG LLP (Mar. 21, 2019), Marcum LLP (Mar. 21, Nicolas Grabar. Rule 3–03(b) of Regulation S–X 283 that 2019), Mazars USA LLP (Mar. 21, 2019), New York 278 See supra note 275 at 2:40:56, Statement of City Bar Association (Apr. 10, 2019), RSM US LLP Steven Jacobs. 280 (Mar. 20, 2019) (‘‘RSM’’), T. Rowe Price (Mar. 20, 279 The proposed changes to Item 303(a) would See supra note 266. 2019), Think Computer Foundation (Mar. 20, 2019), flow through to Item 303(b) because Item 303(b) 281 See discussion, supra at Section II.C.5. and XBRL US (Mar. 21, 2019). currently provides that the interim discussion and 282 As described above, if a registrant changes the 272 See letter from Better Markets. analysis must include a discussion of the material comparison from the prior interim period 273 See letter from CIT. changes in items specified in Item 303(a) (with the comparison, the registrant would be required to 274 See, e.g, letters from CAQ 2, FEI 2, Ernst, exception of inflation and changing prices, which explain the reason for the change. Grant Thornton, RSM, and Tapestry Networks. we propose to eliminate). 283 See supra note 260.

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elect to provide a statement of Regulation S–X. Accordingly, we do not because they duplicate current comprehensive income for the twelve- believe the elimination of the provisions Instructions 4 286 and 7 to Item 303(a), month period ended as of the date of the in Item 303(b) would cause any impact. respectively.287 Instead, we propose a most recent interim balance sheet to We also believe that the additional new Instruction 1 to proposed Item discuss material changes in that twelve- flexibility we are proposing for all 303(c) that would cross-reference the month period with respect to the registrants would allow registrants applicable instructions in proposed Item preceding fiscal year, rather than the subject to Rule 3–03(b) of Regulation 303(b). We propose to eliminate corresponding preceding period. We S–X 284 to make the most meaningful Instruction 7 to Item 303(b) in light of propose giving these registrants the comparisons in their MD&A. our proposal to eliminate Item 303(a)(5), same flexibility as other registrants to Finally, we are proposing to delete the subsection that requires disclosure make the most meaningful comparisons Instructions 2, 3, 5, 6, 7, and 8 to current of contractual obligations. We also in their interim period MD&A. In paragraph (b).285 We are proposing to propose to eliminate Instruction 5, addition to simplifying Item 303, this eliminate Instruction 2 because we no which is currently reserved. Finally, we change is meant to modernize the longer believe it necessary that an propose to move Instruction 8 to current current Item 303 requirement. We have instruction make explicit the Item 303(b) to Instruction 10 of not observed any registrants in recent presumption that readers have read or proposed Item 303(b). The following history that provided the statements of have access to the MD&A for the table outlines the current and proposed comprehensive income in registration preceding fiscal year. We also propose structure of Item 303(b) (proposed Item statements permitted by Rule 3–03(b) of to eliminate Instructions 3 and 6 303(c)): 288

Current structure Proposed structure

Item 303(b), Interim periods ...... Item 303(c), Interim periods. (1) Material changes in financial condition ...... (1) Material changes in financial condition. (2) Material changes in results of operations, Rule 3–03(b) of Regula- (2) Material changes in results of operations. tion S–X matters. (i) Material changes in results of operations (year-to-date). (ii) Material changes in results of operations (quarter compari- sons). Instruction 1 to Item 303(b) ...... Instruction 1 to Item 303(c) (with amendments to reference Instructions 2, 5, 9, and 10 to proposed Item 303(b)). Instruction 2 to Item 303(b) ...... Eliminate. Instruction 3 to Item 303(b) ...... Eliminate. Instruction 4 to Item 303(b) ...... Instruction 2 to Item 303(c). Instruction 5 to Item 303(b) ...... Eliminate. Instruction 6 to Item 303(b) ...... Eliminate. Instruction 7 to Item 303(b) ...... Eliminate. Instruction 8 to Item 303(b) ...... Instruction 10 to proposed Item 303(b).

Request for Comment 49. Would the ability to compare 10. Safe Harbor for Forward-Looking interim period information across Information (Item 303(c)) 47. Should we amend the interim registrants be significantly affected by 289 period disclosure requirements in Item allowing flexibility for interim period Item 303(c) states that the safe 303(b), as proposed? Alternatively, in comparisons, as proposed? harbors provided in Section 27A of the order to permit registrants flexibility to Securities Act and 21E of the Exchange 50. How do market participants use choose their presentation in the manner Act (together, ‘‘statutory safe harbors’’) Item 303(b) disclosures? What are the that is most consistent with how their apply to all forward-looking information benefits and drawbacks of the current business is managed, should we allow provided in response to Item 303(a)(4) period-to-period comparisons registrants to include a discussion of (off-balance sheet arrangements) and requirements? material changes in the results of Item 303(a)(5) (contractual obligations), operations with respect to either the 51. How would our proposed provided such disclosure is made by most recent fiscal year-to-date period or amendments affect registrants subject to certain enumerated persons.290 Item the most recent fiscal quarter? Are there Rule 3–03(b) of Regulation S–X? We are 303(c) confirms application of the other approaches we should consider? not proposing to eliminate Rule 3–03(b). statutory safe harbors to Item 303(a)(4) If adopted, would the Commission’s 48. What would the benefits and/or and Item 303(a)(5), and states that all of disclosure rules and guidance be the required disclosures under these drawbacks be of allowing registrants sufficiently clear about disclosure these two items are deemed to be ‘‘forward- more flexibility regarding the interim registrants must provide? What would looking statements’’ as that term is period comparisons they discuss in the consequences of these proposed defined in the statutory safe harbors, MD&A? changes be for market participants?

284 See d. 287 We also propose to move the text of this release. As such, this table should be read 285 Instruction 5 to Item 303(b) is currently Instruction 8 to a new Instruction 11 to Item 303(a) together with this Section II.C.9. reserved. (proposed Item 303(b)), and reference it in proposed 289 Item 303(c) of Regulation S–K [17 CFR Instruction 1 to Item 303(c). 286 As discussed in Section II.C.4, we are 229.303(c)]. 288 The information in this table is not proposing to revise current Instruction 4 to Item 290 Such persons are the issuer; a person acting comprehensive and is intended only to highlight 303(a) to clarify that registrants must discuss the the general structure of the current rules and on behalf of the issuer; an outside reviewer retained ‘‘underlying reasons’’ for material changes in proposed amendments. It does not reflect all of the by the issuer making a statement on behalf of the ‘‘quantitative and qualitative terms.’’ We are also substance of the proposed amendments or all of the issuer; or an underwriter, with respect to proposing to clarify that registrants must discuss rules and forms that are proposed to be affected. All information provided by the issuer or information material changes within a line item. changes are discussed in their entirety throughout derived from information provided by the issuer.

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except for historical facts.291 With the statutory safe harbor provisions of contractual obligations chart specified respect to Item 303(a)(4), Item 303(c) the Private Securities Litigation Reform in Item 303(a)(5). In light of our further states that the ‘‘meaningful Act.300 While these provisions apply proposals to eliminate Item 303(a)(3)(iv) cautionary statements’’ element of the more broadly, they also protect eligible and (a)(5), we are also proposing to statutory safe harbors is satisfied if a forward-looking statements 301 in MD&A eliminate Item 303(d), which registrant satisfies all of Item 303(a)(4) against private legal actions that are specifically and exclusively references requirements.292 based on allegations of a material these two disclosure requirements. SRCs The Commission added Item 303(c) in misstatement or omission. We continue may continue to rely on Instruction 1 to 2003 when it adopted Items 303(a)(4) to believe that the safe harbors for Item 303(a),303 which states that an and (5).293 Item 303(c) was intended to eligible forward-looking statements and SRC’s discussion shall cover the two- remove possible ambiguity about the the safe harbor provisions of the Private year period required in Article 8 of application of the statutory safe harbors Securities Litigation Reform Act have Regulation S–X. to these items.294 Since we propose to encouraged greater disclosure of Request for Comment eliminate both Items 303(a)(4) and (5), forward-looking information that has we are also proposing to eliminate Item benefited investors and our markets. 54. Should we eliminate Item 303(d), 303(c), which specifically and as proposed? Request for Comment exclusively refers to those disclosure 55. Are there any proposed requirements. 52. Should we eliminate Item 303(c), amendments to Item 303 where we Nevertheless, forward-looking as proposed? should consider providing further information included in off-balance 53. If we eliminate Item 303(c), is it accommodations to SRCs? sheet arrangement disclosures provided necessary or helpful to provide a in response to proposed Instruction 8 to specific instruction referring to the General Requests for Comment for Item Item 303(b), along with disclosures statutory safe harbors for forward- 303 regarding contractual obligations, would looking statements that may apply to the 56. Are there any other changes we continue to be covered by existing safe proposed off-balance sheet arrangement should consider to Item 303 to harbors. The proposed amendments are disclosures? Should we instead retain streamline, update, or modernize MD&A intended to be conforming changes and Item 303(c) and acknowledge that the disclosure requirements? would not alter the availability of the statutory safe harbors would apply to all 57. Should we require MD&A to be regulatory safe harbors in Securities Act of Item 303? Rule 175 295 and Exchange Act Rule 3b– structured in Inline eXtensible Business 6,296 which expressly apply to forward- 11. Smaller Reporting Companies (Item Reporting Language (‘‘Inline XBRL’’) 304 looking information in MD&A 303(d)) format? If so, should MD&A be structured using block tags, detail tags, disclosure.297 These rules establish a Item 303(d) 302 states that an SRC may or some combination of the two? How safe harbor for ‘‘forward-looking provide Item 303(a)(3)(iv) information would investors and other market statements’’ and define such statements for the most recent two fiscal years if it participants benefit from such a to include statements of ‘‘future provides financial information on net requirement, and what would be the economic performance contained in sales and revenues and income from costs and burdens to registrants? Would management’s discussion and continuing operations for only two 298 the costs and burdens be analysis.’’ These rules were adopted years. Item 303(d) also states that an disproportionately high for any group of with the express purpose of encouraging SRC is not required to provide the forward-looking information and in issuers? response to commenters’ 300 See Sections 27A of the Securities Act and 21E 58. Should we amend Item 9 of Form recommendations stating that the of the Exchange Act. 1–A to reflect any of the proposals in absence of a safe harbor could 301 The statutory safe harbors by their terms do this release? not apply to forward-looking statements included in discourage forward-looking D. Application to Foreign Private Issuers 299 financial statements prepared in accordance with information. generally accepted accounting principles. Notably, Our proposed amendments are also the statutory safe harbors also would not apply to We are proposing corresponding not intended to alter the application of MD&A disclosure if the MD&A forward-looking amendments that would apply to FPIs statements were made in connection with: An providing disclosure required by Form initial public offering; a tender offer; an offering by 291 Item 303(c)(2)(i) of Regulation S–K [17 CFR 20–F or Form 40–F.305 We are also 229.303(c)(2)(i)]. a partnership, limited liability company, or a direct participation investment program, or the forward- proposing amendments to current 292 Item 303(c)(2)(ii) of Regulation S–K [17 CFR looking statement is made by an issuer of penny 229.303(c)(2)(ii)]. Instruction 11 to Item 303, which stock or is made by an issuer in connection with 293 specifically applies to FPIs that choose See Off-Balance Sheet Arrangements and an offering of securities by a blank check company, Contractual Obligations Adopting Release at 5992 or is made in connection with a roll-up transaction to file on domestic forms. Similar to our (‘‘To encourage the type of information and analysis or a going private transaction. See Section 27A(b) discussions above and for the reasons necessary for investors to understand the impact of of the Securities Act and Section 21E(b) of the discussed in greater detail below, our off-balance sheet arrangements and to reduce the Exchange Act. Also, the statutory safe harbors do burden of estimating the payments due under proposals to these forms are intended to not, absent a rule, regulation, or Commission order, contractual obligations, the amendments include a apply to forward-looking statements by issuers safe harbor for forward-looking information.’’). covered by Section 27A(b)(1)(A) of the Securities 303 Proposed renumbered Item 303(b). 294 See id. Act and Section 21E(b)(1)(A) of the Exchange Act. 304 Registrants subject to the financial disclosure 295 [17 CFR 230.175]. Because the statutory safe harbors only apply to requirements of Regulation S–K are either currently 296 [17 CFR 240.3b–6]. forward-looking statements made by or on behalf of required or will be required to file their financial 297 Instruction 7 to Item 303(a) of Regulation S– an issuer that is subject to the reporting statements and filing cover page disclosures in the K [17 CFR 229.303(a)], Securities Act Rule 175 [17 requirements of Section 13(a) or 15(d) of the Inline XBRL format. See [17 CFR 229.601(b)(101)]. CFR 230.175], and Exchange Act Rule 3b–6 [17 CFR Exchange Act, they would not apply to forward- See also Inline XBRL Filing of Tagged Data, 240.3b–6]. looking statements made in connection with an Securities Act Release No. 10514 (June 28, 2018) [83 298 See Rule 175(c)(3) and Rule 3b–6(c)(3) [17 CFR offering under Regulation A unless the issuer is a FR 40846 (Aug. 16, 2018), at 40851] (‘‘Inline XBRL 230.175(c)(3) and 17 CFR 240.3b–6(b)(3)]. reporting company and no other exclusions from Adopting Release’’). 299 See Safe Harbor Rule for Projections, Release the safe harbor apply. 305 These proposals would also apply to those No. 33–6084 (June 25, 1979) [44 FR 38810 (July 2, 302 Item 303(d) of Regulation S–K [17 CFR forms calling for information in Forms 20–F, such 1979)]. 229.303(d)]. as Form F–1.

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modernize, clarify, and streamline these consider that would elicit this Regulation S–K.309 To maintain a disclosure requirements. information? consistent approach to MD&A for domestic registrants and FPIs, our 1. Form 20–F 60. The Commission revised Form 20–F in 1999 to conform in large part to proposed amendments to Form 20–F a. Selected Financial Data (Item 3.A of the international disclosure standards generally conform to our proposed Form 20–F) endorsed by the International amendments to Item 303. Similar to Item 301, Item 3.A of Form Organization of Securities Commissions Some of our proposals would amend 20–F requires FPIs to provide selected (‘‘IOSCO’’) for the non-financial Item 5 of Form 20–F to incorporate historical financial data for the most statement portions of a disclosure portions of both current and proposed recent five financial years (or such document, which have served as the Item 303. Specifically, we are proposing shorter period that the company has basis for the disclosure requirements in to incorporate portions of current been in operation). Also similar to Item several foreign jurisdictions.308 One of Instructions 1 and 3 to Item 303(a) that 301, Item 3.A specifies the information the objectives of the IOSCO standards specify the purpose of MD&A, into the that must be included in the selected was to facilitate the cross-border flow of forepart of Item 5 of Form 20–F to financial data and provides that EGCs securities and capital by promoting the highlight the item’s objective. Our are not required to present selected use of a single disclosure document that proposals would revise Item 5 to state financial data for any period prior to the would be accepted in multiple that the discussion must: • earliest audited financial statements jurisdictions. If we revise Item 3.A of Include other statistical data that presented in connection with the Form 20–F as proposed, would such will enhance a reader’s understanding registrant’s initial public offering of its revision reduce the ability of FPIs to use of the company’s financial condition, common equity securities. In a a single document in multiple changes in financial condition, and registration statement, periodic report, jurisdictions? results of operations; and or other report filed under the Exchange 61. Would the proposed amendments • Focus specifically on material Act, an EGC need not present selected conflict with home-country events and uncertainties known to financial data for any period prior to the requirements in some jurisdictions if the management that would cause reported earliest audited financial statements FPI were engaging in a cross-border financial information not to be presented in connection with the EGC’s offering or listing? If so, please explain. necessarily indicative of future first registration statement that became 62. Unlike Item 301, Item 3.A operating results or future financial effective under the Exchange Act or the provides an accommodation to FPIs for condition. Securities Act.306 However, unlike Item either or both of the earliest two years We are also proposing to codify into 301, Item 3.A also permits a FPI to omit of data. Given this accommodation, the forepart of Item 5 Commission either or both of the earliest two years should we retain this item? Does Item guidance that states that a registrant of data if it represents that it cannot 3.A require disclosure that is should provide a narrative explanation provide the information, or cannot duplicative of the financial statements? of its financial statements that enables provide the information on a restated 63. Are there any unique investors to see a registrant ‘‘through the basis, without unreasonable effort or considerations with respect to FPIs in eyes of management.’’ 310 Consistent expense. this context? with our rationale for proposing Given the similarities between Item 64. Are the requirements of Item 5 of analogous changes to Item 303,311 we 3.A and Item 301, we propose to delete Form 20–F sufficient to provide believe that emphasizing the purpose of Item 3.A and the related instructions. As investors with necessary disclosure of MD&A at the outset of the Item will with Item 301, trend disclosure elicited trends in a registrant’s results of provide clarity and focus to registrants by Item 3.A typically would be operations and financial condition? If as they consider what information to discussed in disclosure provided in we eliminate Item 3.A as proposed, discuss and analyze. We are also response to Item 5 of Form 20–F, which should we amend Item 5 of Form 20– proposing to revise the forefront of Item requires MD&A disclosure similar to F to explicitly require a tabular 5 to state that, in addition to providing Item 303. FPIs may, however, continue presentation of line items discussed in information relating to all separate to include a tabular presentation of the the disclosure? segments, FPIs must also provide line items discussed in the MD&A, to 65. What are the costs to FPIs of information relating to other the extent they believe that such a providing required selected financial subdivisions, such as geographic areas presentation would be useful to an data? or product lines. This proposed revision understanding of the disclosure.307 66. How do market participants use is intended to conform Form 20–F to both current Item 303, by referencing Request for Comment the selected financial data disclosures provided by FPIs? Do market other subdivisions and including 59. Should we eliminate Item 3.A of participants rely on any time segment of geographic areas as an example, and Form 20–F, as proposed? Would the data more than others (e.g., the most proposed Item 303, by adding product 312 proposed elimination of Item 3.A result recent two or three years)? lines as an example. in the loss of material information that is otherwise not available to investors? b. Operating and Financial Review and 309 When the Commission revised the wording of If so, what information would be lost, Prospects (Item 5 of Form 20–F) Item 5 of Form 20–F in 1999, the adopting release noted that the requirements correspond with Item and are there alternatives we should The disclosure requirements for Item 303 of Regulation S–K. See International Disclosure 5 of Form 20–F (Operating and Standards, Release No. 33–7745 (Sept. 28, 1999) [64 306 See Instruction 3 to Item 3.A. Financial Review and Prospects) are FR 53900 (Oct. 5, 1999)], at 53904 (‘‘International 307 See 2003 MD&A Interpretive Release substantively comparable to the MD&A Disclosure Standards Release’’). 310 See 2003 MD&A Interpretative Release, at (‘‘Companies should consider whether a tabular requirements under Item 303 of presentation of relevant financial or other 75056. See also 1989 Interpretative Release, at information may help a reader’s understanding of 22428. MD&A.’’). See also footnote 1 of 2003 MD&A 308 See International Disclosure Standards, 311 See Section II.C.1 above. Interpretive Release which states that the guidance Release No. 33–7745 (Sept. 28, 1999) [64 FR 53900 312 See footnote 98 above and corresponding in that release is intended to apply to FPIs. (Oct. 5, 1999)]. sentence.

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For the reasons discussed above, we require disclosure of critical accounting substantive MD&A requirements in Item are proposing to: estimates.318 303.324 • Revise Item 5 to specify that the We are also proposing a change to the Request for Comment discussion must include a quantitative requirement in Form 20–F that requires and qualitative description of the disclosure of inflation for FPIs.319 Item 67. Should we amend Item 5 of Form reasons underlying material changes, 5.A.2 requires disclosure of the impact 20–F as proposed? including where material changes of inflation, if material, and 68. Would the proposed deletions in within a line item offset one another; 313 hyperinflation, if the currency in which Item 5 result in the loss of material • Revise the liquidity and capital the financial statements are presented is information that is otherwise not resources requirement in Item 5.B to of a country that has experienced available to investors? If so, what specify that a registrant must broadly hyperinflation.320 Instruction 1 to Item information would be lost, and are there disclose material cash commitments, 5.A states that disclosure of alternatives we should consider that including but not limited to capital hyperinflation must be provided if would elicit this information? expenditures; 314 hyperinflation has occurred in any of 69. Would the proposed additions to • Replace Item 5.E, which covers off- the periods for which an FPI is required Item 5 create burdens for companies? 70. If we revise Item 5 of Form 20–F balance sheet arrangements, with a to provide audited financial statements as proposed, would such revision principles-based instruction; 315 or unaudited interim financial reduce the ability of FPIs to use a single • Eliminate Item 5.F., which covers statements. We believe that for FPIs in tabular disclosure of contractual document in multiple jurisdictions? a hyperinflationary economy, 71. Would the proposed amendments obligations; 316 and hyperinflation is a salient issue such conflict with home-country • Eliminate Item 5.G, which that it merits specific mention. As it requirements in some jurisdictions? If acknowledges application of the relates to hyperinflation, we are so, please explain. statutory safe harbor and specifically therefore not proposing to amend Item 72. Are there any unique and exclusively applies to Item 5.E and 5.A.2 or the related instruction. 317 considerations with respect to FPIs in Item 5.F. However, and consistent with our the context of MD&A and Item 5 321 Consistent with our proposal to change to Item 303, we are proposing disclosures? amend Item 303 above, we are also to amend the portion of Item 5.A.2 proposing to revise Item 5 to explicitly calling for disclosure of the impact of 2. Form 40–F inflation, if material. Some of our Form 40–F generally permits eligible 313 See Section II.C.4 above. proposals to amend Form 20–F are Canadian FPIs to use Canadian 314 See Sections II.C.2 and II.C.7 above. unique to this form but are consistent disclosure documents to satisfy the 315 See proposed Instruction 7 to Item 5 of Form with MD&A’s focus on materiality. 20–F. For FPIs filing on Forms 20–F and 40–F that Commission’s registration and apply IFRS, the overlap between the requirements Specifically, we are proposing to: disclosure requirements. As a result, the of those Forms and IFRS are similar to the overlap • Amend Item 5.D of Form 20–F, MD&A contained in Form 40–F is between Item 303(a)(4) and U.S. GAAP, as which requires FPIs to identify ‘‘the largely prepared in accordance with described in Section II.C.6 above. most significant recent trends,’’ to IFRS now requires the following disclosures that Canadian disclosure standards. General substantially overlap with the requirements of Item instead, require disclosure of ‘‘material Instructions B.(11) and B.(12), however, 5.E. of Form 20–F: The nature and amount of a trends,’’ consistent with Item 303 and were added when the Commission guarantee (see Paragraph 35M of IFRS 7, Financial MD&A’s focus on materiality; 322 and adopted the off-balance sheet Instruments: Disclosures (‘‘IFRS 7’’)); retained or • Amend Instruction 1 to Item 5, contingent interests in assets transferred to arrangements and contractual unconsolidated entities (see Paragraphs 42B and which currently references only the obligations disclosure requirements.325 42E of IFRS 7); the significance of financial 1989 MD&A Interpretive Release, to add For the reasons discussed above, we are instruments for the entity’s financial position and the 2002 Commission Statement, 2003 proposing to eliminate the contractual performance; and the nature and extent of risks MD&A Interpretive Release, 2010 MD&A arising from financial instruments to which the obligations disclosure requirement in 323 entity is exposed and how the entity manages those Interpretive Release and the B.(12) of Form 40–F.326 In addition, we risks (see Paragraphs 1 of IFRS 7); and obligations Companion Guidance, to direct FPIs to are also proposing to make parallel under interests in unconsolidated entities (see the Commission’s guidance. changes (as discussed above) to the off- Paragraphs 1 and 24 to 31 of IFRS 12, Disclosure of Interests in Other Entities). These and all of our proposals to Item balance sheet disclosure requirement in We believe our proposed amendments to Item 5.E 5 of Form 20–F are consistent with our Form 40–F by replacing General of Form 20–F are consistent with the statutory policy of having the existing MD&A Instruction B.(11) with a principles- mandate in Section 13(j) of the Exchange Act for the requirements for FPIs mirror the based instruction.327 As noted above, same reasons discussed above in Section II.C.6. unlike Item 303 and Form 20–F, the 316 See Sections II.C.6 and II.C.7 above. Similar to 318 our discussion above, current IFRS requirements See Section II.C.8 above. As discussed in this MD&A required under Form 40–F is overlap with the contractual obligations table. For section, the 2003 MD&A Interpretive Release defined as required by Canadian law.328 example, IFRS 7.39(a), requires disclosure of a addressed critical accounting estimates. The Accordingly, our proposal to amend guidance in the 2003 MD&A Interpretive Release maturity analysis for long-term debt obligations; Item 40–F would only require IFRS 16.58 requires disclosure of a maturity applies to MD&A drafted pursuant to Item 5 of analysis of lease obligations; and IAS 37.85 requires Form 20–F. See footnote 1 of the 2003 MD&A disclosure of the expected timing of outflows of Interpretive Release. 324 See International Disclosure Standards economic benefits related to each class of provision. 319 See Section II.C.5 above. Release. See also Off-Balance Sheet Arrangements IFRS does not have a specific requirement to 320 Rules 3–20(c) and 3–20(d) of Regulation S–X and Contractual Obligations Adopting Release. disclose the timing of purchase obligations. provide the situations when a registrant must 325 See Off-Balance Sheet Arrangements and We are also proposing to delete the Instructions discuss hyperinflation in a company’s financial Contractual Obligations Adopting Release. to Item 5.E and 5.F. statements. Rule 3–20(d) generally describes a 326 See Section II.C.7 and footnote 316 above. 317 See Section II.C.10 above. Similar to this hyperinflationary environment as one that has 327 See Section II.C.6 and footnote 153 above. We discussion above, we remind FPIs of the existing cumulative inflation of approximately 100 percent believe our proposed amendments to General regulatory and statutory safe harbors. Additionally, or more over the most recent three-year period. Instruction B.(11) of Form 40–F is consistent with Form 20–F reminds companies that forward-looking 321 See Section II.C.5 above. the statutory mandate in Section 13(j) of the information is expressly covered by statutory safe 322 See, e.g., 2003 MD&A Interpretive Release, at Exchange Act for the same reasons discussed above harbor provisions. See Instruction 3 to Item 5 of 75060. in Section II.C.6. Form 20–F. 323 See 2010 MD&A Interpretive Release. 328 See General Instruction B.(3) of Form 40–F.

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disclosure of off-balance sheet discuss hyperinflation in a additional or other information should arrangements to the extent it is not hyperinflationary economy.332 Proposed be provided if material to an already provided under the MD&A Instruction 9 would also replace understanding of each partnership required by Canadian law. Lastly, and ‘‘foreign private registrants’’ with the proposed to be included in a roll-up consistent with our proposals above, we defined term ‘‘foreign private transaction. In light of these other are proposing to eliminate General issuer.’’ 333 requirements, we believe deleting references to Items 301 and 302 in Item Instruction B.(13), which acknowledges Request for Comment application of the statutory safe harbor 914(a) would not result in a loss of and specifically and exclusively applies 78. Should we retain and amend the material information. FPI instruction to Item 303, as to General Instructions B.(11) and Request for Comment B.(12).329 proposed? 79. If we eliminate Items 301 and 302 E. Additional Conforming Amendments Request for Comment should we also delete these references 73. Should we amend Form 40–F, as We propose additional conforming in Item 914(a) and not specify proposed? amendments that are consistent with the additional disclosure requirements, as 74. Would replacing General proposed amendments described proposed? Are there any unique 334 Instruction B.(11) of Form 40–F with a above. considerations for roll-up transactions more principles-based instruction result 1. Roll-Up Transactions—Item 914 of that would necessitate some or all of the in the loss of material information that Regulation S–K information required by Items 301 and 302? is otherwise not available to investors? We propose to delete references to If so, what information would be lost, Items 301 and 302 in Item 914(a) of 2. Regulation AB—Items 1112, 1114, and are there alternatives we should Regulation S–K. This item applies to and 1115 consider that would elicit this roll-up transactions, which generally Item 1112 of Regulation AB requires information? involve the combination or 75. Would the proposed deletion of disclosure of financial information reorganization of one or more required by Item 301 or Item 3.A of General Instruction B.(12) of Form 40– partnerships, directly or indirectly, F result in the loss of material Form 20–F about significant obligors of where some or all of the investors in any pool assets if the pool assets relating to information that is otherwise not such partnerships will receive new available to investors? If so, what the significant obligor represent 10% or securities, or securities in another more, but less than 20%, of the asset information would be lost, and are there entity.335 Item 914(a) provides that, for pool in an asset-backed securities alternatives we should consider that each partnership to be included in a (‘‘ABS’’) transaction. Similarly, Items would elicit this information? roll-up transaction, certain financial 1114 and 1115 of Regulation AB require 76. If we eliminate General information, including disclosure under disclosure of financial information Instruction B.(13) of Form 40–F, is it Item 301 and Item 302, must be required by Item 301 or Item 3.A of necessary or helpful to provide a provided. Form 20–F about credit enhancement specific instruction referring to the In the context of Item 914(a), providers and derivatives statutory safe harbors for forward- disclosure provided under Items 301 counterparties, respectively, whose looking statements that may apply to the and 302 would not be duplicative of the support represents a similar level of proposed off-balance sheet arrangement financial statements and would concentration in an ABS transaction. disclosures? Should we instead retain otherwise be unavailable. However, With our proposal to eliminate Item 301 General Instruction B.(13) of Form 40– Item 914(a) specifies disclosure of other and Item 3.A of Form 20–F for corporate F and acknowledge that the statutory financial information 336 and states that issuers, financial information about safe harbors would apply? these third parties to an ABS 77. Are there any unique 332 See proposed Instruction 9. transaction, including any trend 333 considerations with respect to eligible See Rule 405 and Rule 3b–4(c). information comparable to information Canadian FPIs in this context? 334 If the proposed amendments are adopted, the Commission will also amend certain rules and required by Item 303 or Item 5 of Form 3. Item 303 of Regulation S–K forms to update references to the items we are 20–F, may not otherwise be available. proposing to amend. Specifically, if adopted as Therefore, we propose to replace in FPIs may voluntarily choose to file on proposed, conforming amendments will be made to: Regulation AB those requirements to forms that would require disclosure Remove references to Item 301 or Item 3.A of Form disclose selected financial data under under Item 303. Current Instruction 11 20–F (Item 10 of Regulation S–K [17 CFR 229.10]; Item 301 or Item 3.A of Form 20–F with to Item 303 requires ‘‘foreign private Forms S–1 [17 CFR 239.11], N–2 [17 CFR 274.11a– 1], S–11 [17 CFR 239.18], S–4 [17 CFR 239.25], F– requirements to disclose summarized registrants’’ to discuss briefly any 1 [17 CFR 239.31], F–4 [17 CFR 239.34], 1–A [17 financial information, as defined by pertinent governmental economic, CFR 239.90], 10 [17 CFR 249.208c], and 10–K [17 Rule 1–02(bb) of Regulation S–X,337 for fiscal, monetary, or political policies or CFR 249.310]; Schedule 14A [17 CFR 240.14a–101]; factors that have materially affected or and Exchange Act Rule 14a–3 [17 CFR 240.14a–3]); remove references to Item 302 (Items 10 [17 CFR disclosures: Ratio of earnings to fixed charges, cash could materially affect, directly or 229.10; Forms S–1 [17 CFR 239.11], N–2 [17 CFR and cash equivalents, total assets at book value, indirectly, their operations or 274.11a–1], S–11 [17 CFR 239.18], S–4 [17 CFR total assets at the value assigned for purposes of the investments by United States 239.25], 1–A [17 CFR 239.90], 10 [17 CFR roll-up transaction (if applicable), total liabilities, nationals.330 249.208c], and 10–K [17 CFR 249.310]; Schedule general and limited partners’ equity, net increase 14A [17 CFR 240.14a–101]; Securities Act Rule 175 (decrease) in cash and cash equivalents, net cash For consistency with the requirements [17 CFR 230.175]; Exchange Act Rules 3b–6 [17 CFR provided by operating activities, distributions; and of Form 20–F,331 we are proposing to 240.3b–6] and 14a–3 [17 CFR 240.14a–3]; and Trust per unit data for net income (loss), book value, amend this FPI instruction to Indenture Act of 1939 Rule 0–11 [17 CFR 260.0– value assigned for purposes of the roll-up incorporate the requirement for FPIs to 11].); and update references to subparagraphs of transaction (if applicable), and distributions Item 303 (Securities Act Rule 419 [17 CFR (separately identifying distributions that represent a 230.419]). return of capital). 329 See Section II.C.10 and footnote 317. 335 See Rule 901 of Regulation S–K [17 CFR 337 [17 CFR 210.1–02(bb)]. We are also proposing 330 See Instruction 11 to Item 303(a) of Regulation 229.901]. amendments to Rule 1–02(bb) of Regulation S–X, S–K. 336 In addition to disclosure under Items 301 and which calls for disclosure of summary financial 331 See Section II.D.1.b above. 302, Item 914(a) calls for the following financial information. To eliminate any implication that a

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each of the last three fiscal years (or the condensed statement of the more are effectively duplicative of the pro life of the relevant entity or group of important information in the forma financial statements required entities, if less). We believe the registration statement.341 Consistent elsewhere by the form, we propose to information required under Rule 1– with this purpose, the Instructions as to delete them.344 02(bb) is similar to the information Summary Prospectuses in Forms S–1 Similarly, we are proposing to currently required, and is consistent and F–1 call for disclosure of selected eliminate references to Item 301 and with other types of financial statement financial data under Item 301 or Item Item 3.A of Form 20–F in Item 17(b)(3) disclosures that are required to be 3.A of Form 20–F, respectively. These of both Form S–4 and Form F–4. We are disclosed when certain significance instructions also state that, with the also proposing to delete the reference to 338 thresholds have been met. As exception of these items, the summary Item 302 in Item 17(b)(4) of Form S–4. proposed, these requirements span the prospectus shall not contain any other Because Item 17(b) of Forms S–4 and F– same periods as the historical data that financial information.342 To preserve 4 applies to non-reporting target the ABS registrant is required to provide disclosure of financial information in companies in a business combination, for the pool assets under Item 1111 of summary prospectuses, we propose to this disclosure may not be available 339 Regulation AB. While this proposal replace the requirement for selected elsewhere. We believe, however, would generally result in fewer periods financial data in Forms S–1 and F–1 consistent with the discussion above,345 being presented under these items, we with summarized financial information that the requirement for discussion and do not believe requiring disclosure under Item 1–02(bb) of Regulation S–X. analysis of trends in Item 303 would beyond three years is necessary. Such We believe the information required also be sufficient to address material disclosure would cover periods beyond under Rule 1–02(bb) is similar to the information related to a target company those presented for the underlying pool information currently required and is in a business combination context. assets to which the third-party financial consistent with other types of financial information would relate. statement disclosures that should be Request for Comment Request for Comment included when certain significance 82. If we eliminate Item 301 and Item thresholds have been met. 80. If we eliminate Item 301 and Item 3.A of Form 20–F as proposed, should 3.A of Form 20–F, should we replace Request for Comment we also eliminate references to these items in Form S–4 and F–4 and these references in Items 1112, 1114, 81. If we eliminate Item 301 and Item Schedule 14A, as proposed? Are there and 1115 of Regulation AB with a 3.A of Form 20–F, as proposed, should any unique considerations in the reference to Rule 1–02(bb) of Regulation we replace these references in the context of a business combination? S–X, as proposed? Would the potential Instructions as to Summary fewer earlier periods being presented Prospectuses of Forms S–1 and F–1 with 83. In Forms S–4 and F–4, pro forma under these items result in the loss of Item 1–02(bb) of Regulation S–X, as information of selected financial data is material information? Are there proposed? required as part of the prospectus alternatives that we should consider? summary. Are there any unique Should we explicitly require a tabular 4. Business Combinations—Form S–4, considerations in the context of a presentation of the summarized Form F–4 and Schedule 14A business combination such that Item financial information for ABS? We are proposing to eliminate 301 and Item 3.A of Form 20–F pro 3. Summary Prospectus in Forms S–1 references to Items 301 and 302 in Form forma information should be required as and F–1 S–4, Form F–4, and Schedule 14A. part of the prospectus summary? Where these forms are used in 84. Should we eliminate the We are proposing to replace conjunction with a business requirement to provide Item 301, Item references to Item 301 and Item 3.A of combination, pro forma financial 3.A of Form 20–F, and Item 302 Form 20–F in Form S–1 and Form F–1, statements for the most recent fiscal respectively, with Rule 1–02(bb) of disclosure in Forms S–4 and F–4 for year and interim period under Article non-reporting target companies, as Regulation S–X, where these forms 11 of Regulation S–X are required.343 provide for use of a summary proposed? Additionally, Item 3(e) and (f) in both prospectus under Rule 431.340 A Forms S–4 and F–4 require Item 301 or 5. Form S–20 summary prospectus is intended to Item 3.A of Form 20–F information, provide prospective investors with a We are proposing a conforming respectively, on a pro forma basis. Item change to Form S–20 to remove 14(b)(9) and (10) of Schedule 14A registrant would need to prepare disclosure that is references to Item 302 of Regulation S– not consistent with the disclosure in the entity’s generally call for similar pro forma K.346 Form S–20 is used to register financial statements, the proposed amendments information in the context of a business standardized options under the would clarify that the disclosure of summary combination. A related instruction Securities Act and requires limited financial information may vary, as appropriate, to stipulates that, for a business conform to the nature of the entity’s business. information about the clearing agency 338 For example, Rule 4–08(g) of Regulation S–X combination accounted for as a registrant and the options being [17 CFR 210.4–08(g)] requires disclosure of purchase, financial information is registered. Since the adoption of Rule summarized financial information for equity required for the same periods required 238 in 2002, which exempts from method investees when significance thresholds are by Article 11 of Regulation S–X. Securities Act Section 5 the registration met. Because these pro forma requirements 339 While ABS registrants are generally not of offerings of standardized options that required to provide financial statements, under Item are issued by a registered clearing 1111 of Regulation AB, ABS registrants must 341 See Adoption of Summary Prospectus Rule agency and traded on a national provide historical data on the pool assets as and Amendments to Form S–1 and S–9, Release No. appropriate (e.g., the lesser of three years or the 33–3722 (Nov. 26, 1956) [21 FR 9642 (Dec. 6, time such assets have existed) to allow material 1956)]. 344 We are also proposing to delete the related evaluation of the pool data. See 17 CFR 229.1111. 342 See Instruction 2 under Instructions as to instruction to these items. 340 See 17 CFR 230.431. See also Instruction 1(f) Summary Prospectuses for Form S–1 and Form F– 345 See Section II.A above. under Instructions as to Summary Prospectuses in 1. 346 17 CFR 239.20. Current references in Form S– Form S–1 and Instruction 1(c)(v) under Instructions 343 See Item 5 under Part 1 of Forms F–4 and S– 20 to Item 302 are references to the item’s as to Summary Prospectuses in Form F–1. 4. predecessor, Item 12.

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securities exchange, Form S–20 is rarely IV. Economic Analysis and capital formation expected to result used.347 from the proposed amendments. In A. Introduction many cases, however, we are unable to Request for Comment As discussed above, we are proposing quantify the potential economic effects 85. If we eliminate Item 302, should amendments to modernize, simplify, because we lack information necessary we also eliminate reference to this item and enhance certain financial disclosure to provide a reasonable estimate. For in Form S–20? Are there any unique requirements in Regulation S–K. example, we are unable to quantify, considerations in the context of Form S– Specifically, we are proposing (1) to with precision, the costs to investors of 20? eliminate Item 301 of Regulation S–K, accessing alternative information Selected Financial Data, and Item 302 of F. Compliance Date sources (e.g., footnotes to financial Regulation S–K, Supplementary statements or earnings announcements) We propose to provide a transition Financial Information; and (2) to amend under each disclosure item. We are also period after the publication of a final Item 303 of Regulation S–K, unable to quantify the potential rule in the Federal Register to provide Management’s Discussion & Analysis of information processing cost savings that registrants with adequate time to adjust Financial Condition and Results of may arise from the elimination of their disclosures in light of the proposed Operations. The proposed amendments disclosures that are duplicative or not amendments. Though companies would are intended to eliminate duplicative material to an investment decision. be able to begin voluntarily complying disclosures and enhance MD&A Where we are unable to quantify the with the proposed amendments upon disclosures for the benefit of investors, economic effects of the proposed effectiveness, we propose a compliance while simplifying compliance efforts for amendments, we provide a qualitative date of 180 days after effectiveness of registrants. assessment of the potential effects and Overall, investors and registrants may any final rule, if adopted. The encourage commenters to provide data benefit from the proposed amendments Commission believes that this transition and information that would help if they would help avoid duplicative period would allow sufficient time to quantify the benefits, costs, and the disclosure and if emphasizing the prepare for and come into compliance potential impacts of the proposed current principles-based approach to with the amended reporting amendments on efficiency, competition, MD&A results in more tailored requirements, but we request comment and capital formation. on whether this time period is disclosures that allow investors to better appropriate. understand the registrant’s business B. Baseline and Affected Parties through the eyes of management. We Request for Comment The current disclosure requirements acknowledge the risk that emphasizing under Items 301, 302, and 303 of 86. Is the proposed transition period the current principles-based approach Regulation S–K, and the related necessary and appropriate? If not, what may result in certain loss of information requirements under Items 3.A and 5 of time period would be necessary for to investors. However, we believe that Form 20–F, and General Instructions registrants to comply with the proposed any loss of information would be B.(11), (12), and (13) of Form 40–F, amendments? limited because the proposed together with the current disclosure 87. Would certain proposed eliminations are mostly duplicative. practices registrants have adopted to Additionally, under the proposed amendments (e.g., critical accounting comply with these requirements, form principles-based approach, registrants estimates) require more time to prepare the baseline from which we estimate the would still be required to provide for than other requirements? likely economic effects of the proposed disclosure about these topics if they are amendments.349 The disclosure III. General Request for Comments material to an investment decision, requirements apply to various filings, We request and encourage any further mitigating the potential loss of including registration statements, interested person to submit comments information. on any aspect of our proposals, other We are mindful of the costs and periodic reports, and certain proxy matters that might have an impact on benefits of the proposed amendments. statements filed with the Commission. the proposed amendments, and any The discussion below addresses the Thus, the parties that are likely to be suggestions for additional changes. With potential economic effects of the affected by the proposed amendments respect to any comments, we note that proposed amendments, including the include investors and other market they are of greatest assistance to our likely benefits and costs, as well as the participants that use the information in rulemaking initiative if accompanied by likely effects on efficiency, competition, these filings (such as financial analysts, supporting data and analysis of the and capital formation.348 At the outset, investment advisors, and portfolio issues addressed in those comments and we note that, where possible, we have managers), as well as registrants subject by alternatives to our proposals where attempted to quantify the benefits, costs, to the relevant disclosure requirements appropriate. and effects on efficiency, competition, discussed above. The proposed amendments may affect 350 347 See Exemption for Standardized Options From 348 Section 2(b) of the Securities Act [15 U.S.C. both domestic registrants and FPIs. Provisions of the Securities Act of 1933 and From 77b(b)] and Section 3(f) of the Exchange Act [17 the Registration Requirements of the Securities U.S.C. 78c(f)] require the Commission, when 349 See supra Section I. Exchange Act of 1934, Release No. 33–8171 (Dec. engaging in rulemaking where it is required to 350 The number of domestic registrants and FPIs 23, 2002) [68 FR 188 (Jan. 2, 2003)] (‘‘New consider or determine whether an action is affected by the proposed amendments is estimated Securities Act Rule 238 does not make Form S–20 necessary or appropriate in the public interest, to as the number of unique companies, identified by obsolete. We are retaining Form S–20 for use by an consider, in addition to the protection of investors, Central Index Key (CIK), that filed a Form 10–K, issuer of standardized options that is not a clearing whether the action will promote efficiency, Form 10–Q, Form 20–F, and Form 40–F or an agency registered under Section 17A of the competition, and capital formation. Further, Section amendment thereto with the Commission during Exchange Act, such as a foreign clearing agency, or 23(a)(2) of the Exchange Act [17 U.S.C. 78w(a)(2)] calendar year 2018. The estimates for the for use by issuers of standardized options that do requires the Commission, when making rules under percentages of SRCs, are based on information from not trade on a registered national securities the Exchange Act, to consider the impact that the Form 10–K, Form 20–F, and Form 40–F. For exchange or on a registered national securities rules would have on competition, and prohibits the purposes of this economic analysis, these estimates association.’’). Since the effective date of Rule 238 Commission from adopting any rule that would do not include issuers that filed only initial in 2003, we estimate that approximately one entity impose a burden on competition not necessary or Securities Act registration statements during has used Form S–20. appropriate in furtherance of the Exchange Act. calendar year 2018, and no Exchange Act reports,

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We estimate that during calendar year disclosure burden and associated more enhanced and principles-based 2018 there were approximately 6,919 compliance costs. Second, by disclosure, they could allow investors to registrants that filed on domestic modernizing and simplifying Item 303 more efficiently process the disclosure forms 351 and 806 FPIs that filed on F- disclosure requirements, the proposal and make better-informed investment forms, other than registered investment may benefit registrants by reducing decisions. In particular, investors may companies. Among the registrants that disclosure burdens and associated benefit from more tailored disclosures filed on domestic forms, approximately compliance costs. In addition, to the that allow them to better understand the 29 percent were large accelerated filers, extent the proposed amendments result registrant’s business through the eyes of 19 percent were accelerated filers, and in more tailored and informative management. Investors also could 52 percent were non-accelerated filers. disclosure, they could potentially benefit from the reduction of In addition, we estimate that reduce information asymmetry between duplicative disclosure, because approximately 33 percent of these registrants and investors, improve firms’ reducing such duplication may improve domestic issuers were SRCs 352 and 21.3 liquidity, and decrease the cost of the readability and conciseness of the percent were EGCs. The proposed capital. Finally, certain of the proposed information provided, help investors amendments would also affect ABS amendments emphasize a more focus on material information, and issuers. ABS issuers are required to file principles-based approach to MD&A, facilitate more efficient information on Forms SF–1 and SF–3 and, as a which we believe would benefit processing.355 result, may be subject to the proposed registrants by underscoring the However, investors could incur changes to Regulation AB requirements flexibility available in presenting certain costs under the proposed in this release. We estimate that during financial results that are more indicative amendments. For example, investors calendar year 2018, there were 36 of their business.354 A more principles- who are used to the current disclosure unique depositors filing at least one based approach, however, could lead to format might experience costs when Form SF–1 or Form SF–3. registrants incurring increased costs adjusting to the new format. However, associated with assessing materiality. this cost should decrease over time. C. Potential Benefits and Costs of the We believe investors could also Investors could also incur monetary Proposed Amendments benefit from the proposed amendments. costs such as database subscriptions, or In this section, we discuss the First, proposed amendments that clarify opportunity costs such as time spent, if anticipated economic benefits and costs and codify existing guidance, such as they need to obtain or reconstruct of the proposed amendments. We first the proposed amendments related to information through alternative sources. analyze the overall economic effects of critical accounting estimates and capital However, we do not expect such costs the proposed amendments. We then resources, could enhance MD&A to be significant since registrants would discuss the potential benefits and costs disclosure. More robust and informative still need to disclose material of specific proposed amendments. disclosure on these topics could information. There could be certain 1. Overall Potential Benefits and Costs facilitate investors’ decision making and additional costs associated with the enhance investor protection. Second, if proposed amendments to the extent that We anticipate the proposed the proposed amendments result in they result in the elimination of amendments 353 would benefit disclosure material to an investment registrants in several ways. First, by 354 A number of academic studies have explored decision if registrants misjudge what eliminating certain duplicative the use of prescriptive thresholds and materiality information is material, or if disclosure disclosure requirements, the proposed criteria. Many of these papers highlight a preference for principles-based materiality criteria. See, e.g., becomes less comparable across amendments could reduce registrants’ Eugene A. Imhoff Jr. and Jacob K. Thomas, firms.356 The risk of misjudgment may Economic consequences of accounting standards: in order to avoid including entities, such as certain The lease disclosure rule change, 10.4 J. Acct. & 355 See A. Lawrence, Individual Investors and co-registrants of debt securities, which may not Econ. 277–310 (1988) (providing evidence that Financial Disclosure, 56 J. Acct. & Econ., 130–147 have independent reporting obligations and management modifies existing lease agreements to (2013). Using data on trades and portfolio positions avoid crossing rules-based criteria for lease therefore would not be affected by the proposed of 78,000 households, this article shows that capitalization); Cheri L. Reither, What are the best amendments. Nevertheless, the proposed individuals invest more in firms with clear and and the worst accounting standards?, 12.3 Acct. amendments would affect any registrant that files concise financial disclosures. This relation is Horizons 283 (1998) (documenting that due to the a Securities Act or Exchange Act registration reduced for high frequency trading, financially statement or is subject to Exchange Act reporting widespread abuse of bright-lines in rules for lease capitalization, SFAS No. 13 was voted the least literate investors, and speculative individual obligations. We believe that most registrants that investors. The article also shows that individuals’ have filed a Securities Act or Exchange Act favorite FASB standard by a group of accounting academics, regulators, and practitioners); returns increase with clearer and more concise registration statement, other than the co-registrants disclosures, implying such disclosures reduce described above, would be captured by this Christopher P. Agoglia, Timothy S. Doupnik, and George T. Tsakumis. Principles-based versus rules- individuals’ relative information disadvantage. A estimate through their annual or quarterly filings. one standard deviation increase in disclosure The estimates for the percentages of SRCs, EGCs, based accounting standards: The influence of standard precision and audit committee strength on readability and conciseness corresponds to return accelerated filers, large accelerated filers, and non- increases of 91 and 58 basis points, respectively. accelerated filers are based on data obtained by financial reporting decisions, 86.3 The Acct. Rev. 747–767 (2011) (conducting experiments in which The article acknowledges that, given the changes in Commission staff using a computer program that financial disclosure standards and the possible analyzes SEC filings, with supplemental data from experienced financial statement preparers are placed in a lease classification decision context and advances in individual investor sophistication, the Ives Group Audit Analytics. extent to which these findings, which are based on 351 finding that preparers applying principles-based This number includes fewer than 25 FPIs that accounting are less likely to make aggressive historical data from the 1990s, would differ from filed on domestic forms in 2018 and approximately reporting decisions than preparers applying a more those today is unknown. Recent advances in 100 BDCs. precise rules-based standard and supporting the information processing technology, such as 352 This estimate is based on the definition of notion that a move toward principles-based machine learning for textual analysis, may also SRCs prior to the September 2018 effective date of accounting could result in better financial affect the generalizability of these findings. recent amendments to this definition. See reporting); Usha Rodrigues and Mike Stegemoller, 356 See Mark W. Nelson, Behavioral evidence on Amendments to the Smaller Reporting Company An inconsistency in SEC disclosure requirements? the effects of principles- and rules-based standards, Definition, Release No. 33–10513 (June 28, 2018) The case of the ‘‘insignificant’’ private target, 13.2– 17.1 Accounting Horizons 91–104 (2003); and [83 FR 31992 (July 10, 2018)]. As these amendments 3 J. Corp. Fin. 251–269 (2007) (providing evidence, Katherine Schipper, Principles-based accounting increased the number of registrants who are eligible in the context of mergers and acquisitions, where standards, 17.1 Accounting Horizons 61–72 (2003) to be SRCs, it is likely that the percentage of rule-based [disclosure] thresholds deviate from (noting potential advantages of rules-based registrants that are SRCs is now higher than 33 investor preferences). Papers that highlight a accounting standards, including: Increased percent. preference for rules-based materiality criteria are comparability among firms, increased verifiability 353 See supra Sections II.A. through II.E. cited below. Continued

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be mitigated by factors including 2. Benefits and Costs of Specific submissions that can be accessed accounting, financial reporting, and Proposed Amendments through prior filings on EDGAR. disclosure controls or procedures,357 as The current disclosure requirement well as the antifraud provisions of the We expect the proposed amendments under Item 301 could result in securities laws. In terms of the potential would result in costs and benefits to duplicative disclosure, and it can be registrants and investors, and we loss of comparability, the cost related to costly for registrants to provide such discuss those costs and benefits item by it should be minimal since investors can disclosures under certain item in this section. The proposed pull data from the financial statements circumstances. For example, as changes to each item would impact the via XBRL. discussed above, providing disclosure of compliance burden for registrants in the earliest two years often creates Some of the costs of the proposed filing forms that require disclosures that challenges for registrants when such amendments could be mitigated by are responsive to such items. Overall, information has not been previously external disciplining mechanisms, such we expect the net effect of the proposed provided.363 Therefore, eliminating this as the Commission staff’s filing review amendments on a registrant’s requirement may facilitate capital program. In general, registrants would compliance burden to be limited. As raising activity and increase efficiency remain subject to the antifraud explained in this section, we expect for non-EGC issuers contemplating an provisions of the securities laws.358 certain aspects of the proposed IPO. Overall, we expect the proposed There also may be incentives for amendments to increase compliance elimination of Item 301 would benefit registrants to voluntarily disclose burdens, and others to decrease the registrants by eliminating duplicative additional information if the benefits of burdens. The quantitative estimates of disclosures and reducing compliance reduced information asymmetry exceed changes in those burdens for purposes costs. We also note that the benefit the disclosure costs. of the Paperwork Reduction Act of 1995 associated with eliminating the costs of (‘‘PRA’’) 359 are further discussed in providing Item 301 disclosure may be The proposed amendments likely Section V below. For purposes of the offset by the costs associated with would affect registrants and investors PRA, we estimate that the effect of the making materiality determinations differently. For example, any proposed amendments would vary for under a principles-based disclosure compliance cost reduction might be different forms. However, taken framework. In general, we do not expect more beneficial to smaller registrants together, the amendments are likely to the proposed elimination of Item 301 that are financially constrained. result in a net decrease in burden hours would affect the cost of capital given Similarly, although eliminating for all forms, ranging from 0.1 to 6.5 that the eliminated disclosures are information that is not material should burden hours per form.360 largely duplicative. To the extent that benefit all investors, retail investors there is information loss under certain could benefit more as they are less a. Selected Financial Data (Item 301) circumstances, such as in the case of likely to have the time and resources to Item 301 requires certain non-EGC IPOs, these registrants could devote to reviewing and evaluating registrants 361 to furnish selected potentially experience an increase in the disclosure. On the other hand, retail financial data in comparative tabular cost of capital as a result of reduced investors could also incur additional form for each of the registrant’s last five disclosure. However, in these costs as a result of the proposed fiscal years and any additional fiscal circumstances registrants would likely amendments because they may need to years necessary to keep the information voluntarily provide the disclosures to the extent the increase in cost of capital obtain information from alternative from being misleading.362 The purpose sources, which could involve monetary would be significant. of this disclosure is to supply in a To the extent the proposed costs, such as database subscriptions, or convenient and readable format selected opportunity costs, such as time spent amendments result in the elimination of financial data that highlights certain disclosure that is not material, investors searching for alternative sources. These significant trends in the registrant’s costs may be higher for retail investors may benefit. In particular, if the financial conditions and results of readability and conciseness of the than for institutional investors. operations. For certain registrants, information provided improves,364 information disclosed under Item 301 investors may be able to process for auditors, and reduced litigation for firms). See has also been disclosed in historical information more effectively by focusing also Randall Rentfro and Karen Hooks, The effect financial data and related XBRL data of professional judgment on financial reporting on the material information. Also, a comparability, 1 Journal of Accounting and Finance principles-based approach may permit Research 87–98 (2004) (finding that comparability 359 Paperwork Reduction Act of 1995, Public Law or encourage registrants to present more in financial reporting may be reduced under 104–13, 109 Stat. 163 (1995) (codified at 44 U.S.C. principles-based standards, which rely more 3501 et seq.). tailored information, which also may heavily on the exercise of professional judgment, 360 See infra Section V.B. benefit investors by allowing them to but comparability may improve as financial 361 As discussed above in Section II.A, SRCs are better understand the registrant’s statement preparers become more experienced and not required to provide Item 301 information and business. hold higher organizational rank); Andrew A. Acito, EGCs that are providing the information called for Investors may incur costs to the extent Jeffrey J. Burks, and W. Bruce Johnson, The by Item 301 in a Securities Act registration Materiality of Accounting Errors: Evidence from statement need not present selected financial data the proposed amendments result in a SEC Comment Letters, 36.2 Contemp. Acct. Res. for any period prior to the earliest audited financial loss of information. While we do not 839, 862 (2019) (studying managers’ responses to statements presented in connection with the EGC’s anticipate significant information loss SEC inquiries about the materiality of accounting IPO of its common equity securities. In addition, an from the elimination of Item 301, we errors and finding that managers are inconsistent in EGC that is providing the information called for by their application of certain qualitative Item 301 in a registration statement, periodic report, recognize that selected financial considerations and may omit certain qualitative or other report filed under the Exchange Act need information for the two earliest years considerations from their analysis that weigh in not present selected financial data for any period would no longer be disclosed in non- favor of an error’s materiality). prior to the earliest audited financial statements EGC IPOs. However, the purpose of the 357 See, e.g., Exchange Act Rules 13b–2b [17 CFR presented in connection with its first registration 240.13b–2b], 13a–15e [17 CFR 240.13a–15e], and statement that became effective under the Exchange item is to highlight certain significant 13a–15f [17 CFR 240.13a–15f]. Act or Securities Act. See Item 301(c) of Regulation 358 See, e.g., Exchange Act Rule 10b–5(b) [17 CFR S–K; Item 301(d)(1) of Regulation S–K. 363 See supra Section II.A. 240.10b–5(b)]. 362 See supra Section II.A. 364 See supra note 355.

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trends in the registrant’s financial quarterly information for each full sources and cross-referencing. condition and results of operations and quarter within the two most recent fiscal Additionally, investors could make we expect that any material trend years and any subsequent period for mistakes in deriving the fourth quarter information that would have been which financial statements are included financial information. Finally, in the disclosed pursuant to Item 301 would or required by Article 3 of Regulation S– case of a restatement, investors, be disclosed under Item 303. We also X. Item 302(a) also requires disclosure including more sophisticated recognize investors may incur certain related to effects of any discontinued institutional investors, might not be able other costs. In particular, investors operations and unusual or infrequently to accurately back out the fourth quarter would incur search costs if they have to occurring items. information. To the extent that there is spend more time to retrieve the Since the financial data required lack of accurate fourth quarter information from prior filings. under this item (including disclosure information which cannot be obtained Additionally, to the extent investors are related to the effect of any discontinued through alternative means, investors’ used to the current format and rely on operations and unusual or infrequently decision making could be affected. the compiled comparable data, they may occurring items), other than fourth- However, the potential information incur costs to adjust to new disclosure quarter data, typically can be found in loss from the elimination of Item 302(a) formats. prior quarterly filings through EDGAR, might be mitigated under MD&A’s Elimination of Item 301 would affect the prescriptive disclosure requirements principles-based framework. We believe the financial information disclosure by under existing Item 302(a) result in that fourth quarter data may not be material to all registrants or in every ABS issuers. As discussed above, the duplicative disclosures. By eliminating the duplicative disclosure and fiscal year. For example, for investors in currently available financial information associated compliance costs, the companies with long operating cycles, set forth in Item 301 or Item 3.A of Form proposed amendments would benefit fourth quarter data might not be as 20–F about significant obligors of pool registrants. We do not expect the incrementally important as annual data. assets, credit enhancement providers, proposed elimination of Item 302(a) to However, to the extent that there are and derivatives counterparties as affect registrants negatively. While a material trends or events in the fourth required by Item 1112, Items 1114, and decrease in disclosure could potentially quarter or throughout the fiscal year, 1115 of Regulation AB may not increase the company’s cost of capital in registrants would be required to address otherwise be available. To mitigate this general, registrants can always choose to those matters in their MD&A. potential information loss, we propose disclose the quarterly financial Item 302(b) requires issuers engaged to replace in Regulation AB those information through other channels, in oil and gas producing activities, other requirements to disclose selected such as an earnings release. than SRCs, to disclose information financial data under Item 301 or Item Investors could benefit to the extent about those activities that is required by 3.A of Form 20–F with requirements to that the proposed amendments result in U.S. GAAP for each period presented. disclose summarized financial less duplicative disclosure and less The FASB has recently proposed to information, as defined by Rule 1– disclosure of immaterial information. amend U.S. GAAP to require the 02(bb) of Regulation S–X, for each of the The proposed amendments may result incremental disclosure called for by last three fiscal years (or the life of the in improved readability and conciseness Item 302(b). Thus, because the relevant entity or group of entities, if of the information provided, help disclosure required by Item 302(b) less). investors focus on material information, would be included in the notes to the Since the proposed changes related to and facilitate more efficient information registrant’s financial statements, the ABS issuers are intended to conform to processing by investors. The proposed proposed elimination of Item 302(b) the other changes related to selected amendments would also allow would remove duplicative disclosure on financial data and MD&A, our analysis registrants to present financial this topic, benefiting both registrants of the costs and benefits for registrants information that is more reflective of and investors. Registrants could benefit and their investors under the proposed their own industry and firm operating from the reduced compliance burden. amendments to Item 301 and Item 3.A cycles, which could allow investors to Investors should not face information of Form 20–F can be carried over to ABS better understand their business. loss from this aspect of the proposed issuers. While this proposal would We anticipate information loss from amendments, as this requirement generally result in fewer periods being the proposed elimination of fourth completely overlaps with the proposed presented, we do not expect it to have quarter financial information currently amendments to U.S. GAAP. However, a significant effect on ABS issuers and required under Item 302(a), which is investors may incur costs to adjust to their investors, because the disclosure of otherwise not explicitly required to be the new disclosure format. Such costs the earlier years would cover periods disclosed. Though fourth quarter are likely to be one-time costs or to beyond those presented for the financial data could be calculated from decrease over time. underlying pool assets to which the annual report and cumulative third c. Item 303(a) Restructuring and third-party financial information would quarter data, it may be costly for Streamlining relate. investors to calculate or obtain. While such costs might be minimal for The proposal includes multiple b. Supplementary Financial Information changes that are intended to clarify and (Item 302) institutional investors, which have both resources and sophistication to obtain streamline the requirements of Item 303. Under Item 302(a), certain registrants the needed financial information, for For example, we are proposing a new are required to disclose quarterly retail investors, the search costs might Item 303(a) to provide a succinct and financial data of specified operating be substantially larger, which could clear description of the purpose of results and variances in these results involve monetary costs such as database MD&A. As discussed above, from amounts previously reported on a subscriptions, or opportunity costs such emphasizing the purpose of MD&A at Form 10–Q.365 Registrants must provide as time spent searching for alternative the outset of the item is intended to provide clarity and focus to registrants 365 As discussed in Section II.B.1, SRCs, FPIs, a class of securities registered under Section 15(d) as they consider what information to issuers conducting an IPO, and registrants that have of the Exchange Act are not subject to Item 302(a). discuss and analyze, which could

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encourage management to disclose those but not limited to capital expenditures. thereby improve firms’ liquidity and factors that are most specific and We believe the proposed amendments their access to capital markets.368 relevant to a registrant’s business. Other would modernize the requirement and e. Results of Operations—Known changes include restructuring and make the disclosure more reflective of Trends or Uncertainties (Item streamlining language in Item 303 and current and future industry outlays. 303(a)(3)(ii)) the related instructions. We believe that the proposed We anticipate that the proposed Item 303(a)(3)(ii) requires a registrant amendments could benefit registrants by amendments would provide registrants to describe any known trends or providing additional clarity on the term with more clarity on disclosure uncertainties that have had or that the ‘‘capital resources’’ and reducing requirements. When there is confusion registrant expects will have a material related to disclosure requirements, confusion, thereby eliciting appropriate impact (favorable or unfavorable) on net registrants may either over-disclose and disclosure from registrants and sales or revenues or income from incur additional compliance costs, or potentially decreasing litigation risk. continuing operations. The proposed under-disclose and face increased Capital expenditures vary across amendments clarify that when a litigation risk. To the extent that the industries. While firms in traditional registrant knows of events that are proposed amendments reduce industries rely more on physical assets, reasonably likely to cause a material registrants’ confusion, registrants could firms in other industries such as the change in the relationship between costs potentially benefit from reduced technology sector may invest more and revenues, such as known or compliance costs and litigation risk. heavily in intellectual property and reasonably likely future increases in More informative disclosure could human capital. Specifying only capital costs of labor or materials or price potentially benefit both registrants and expenditures in the rule could lead to increases or inventory adjustments, the investors by reducing information confusion about what information reasonably likely change must be asymmetry in the market. Reduced should be provided. As a result, disclosed. This proposed amendment information asymmetry could help registrants may over-disclose and incur would conform the language in this investors make more informed additional compliance costs, or under- paragraph to other Item 303 disclosure investment decisions, which may disclose and face increased litigation requirements for known trends and benefit registrants in their capital risk. Further, we expect that registrants align Item 303(a)(3)(ii) with the raising. For registrants, reduced would benefit from decreased Commission’s guidance on forward- information asymmetry could also compliance costs to the extent that the looking disclosure.369 potentially improve firm liquidity and proposed amendments reduce the need As discussed above, the language in reduce cost of capital. to consult existing Commission the existing Item 303(a)(3)(ii) differs guidance to process and understand the from other Item 303 disclosure d. Capital Resources (Item 303(a)(2)) disclosure requirements. requirements for forward-looking 370 Item 303(a)(2), which requires a The proposed amendments should information. This differing language registrant to discuss its material also benefit investors through improved 368 commitments for capital expenditures disclosure. As discussed above, lack of See Douglas W. Diamond and Robert E. as of the end of the latest fiscal period, Verrecchia, Disclosure, Liquidity, and the Cost of clarity might lead to under- or over- Capital, 46 J. Fin. 1325 (1991) (finding that does not define the term ‘‘capital disclosure by registrants. For example, revealing public information to reduce information resources.’’ The lack of specificity was disclosure focusing only on capital asymmetry can reduce a firm’s cost of capital intended to provide management through increased liquidity). See also Christian expenditures rather than on material Leuz and Robert E. Verrecchia, The Economic flexibility for a meaningful discussion cash commitments more generally might when this disclosure requirement was Consequences of Increased Disclosure, 38 J. Acct. lead to under-disclosure for less capital Res. 91 (2000) (providing empirical evidence that adopted in 1980. Nonetheless, the intensive industries. As a result, increased disclosure leads to lower information asymmetry component of the cost of capital in a Commission has previously provided investors might not receive adequate or guidance to clarify the nature of this sample of German firms); Christian Leuz and Peter consistent information to make requirement.366 Further, while the D. Wysocki, The Economics of Disclosure and informed investment decisions. By Financial Reporting Regulation: Evidence and required disclosure of material providing clarity on the requirement, Suggestions for Future Research, 54 J. Acct. Res. commitments of capital expenditures 525 (2016) (providing a comprehensive survey of the proposed amendments may facilitate generally relates to physical assets, such the literature on the economic effect of disclosure). more informative disclosure. Studies that provide both theoretical and empirical as buildings and equipment, this evidence on the link between information requirement may not fully reflect market The proposed amendments might asymmetry and cost of capital include Thomas E. developments. While capital increase the disclosure burden for some Copeland and Dan Galai, Information Effects on the expenditures remain important in many registrants because they may prompt Bid-Ask Spread, 38 J. Fin. 1457 (1983) (proposing disclosure of material investments in a theory of information effects on the bid-ask industries, certain expenditures that are spread); David Easley and Maureen O’Hara, Price, not necessarily capital investments may non-physical assets that registrants Trade Size, and Information in Securities Markets, be increasingly important to companies. might not otherwise be disclosing. 19 J. Fin. Econ. 69 (1987) (using a model to provide For example, expenditures for human However, we do not anticipate a explanation for the price effect of block trades); significant increase in compliance costs. David Easley and Maureen O’Hara, Information and resources or intellectual property may the Cost of Capital, 59 J. Fin. 1553 (2004) (showing be essential for companies in certain As discussed above, some registrants that differences in the composition of information industries. The proposed amendments already include disclosure beyond between public and private information affect the to Item 303(a)(2) are intended to capital expenditures, which the cost of capital, with investors demanding a higher encompass these types of expenditures. Commission’s MD&A guidance has return to hold stocks with greater private 367 information); Yakov Amihud and Haim Mendelson, The proposed amendments would also encouraged. Also, better disclosure Asset Pricing and the Bid-Ask Spread, 17 J. Fin. 223 require, consistent with the should eventually benefit registrants, (1986) (predicting that market-observed expected Commission’s 2003 MD&A Interpretive because it could reduce information return is an increasing and concave function of the asymmetry between management and spread, and providing empirical results that are Release, that registrants broadly disclose consistent with the predictions of the model). material cash commitments, including investors, reduce the cost of capital, and 369 See supra note 139. 370 See supra Section II.C.3. See also supra note 366 See 2003 MD&A Interpretive Release. 367 See supra Section II.C.2 and footnote 129. 138 and 139.

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may have led to confusion and The proposed amendments are elimination is to streamline Item 303 by inconsistent practice regarding what intended to codify Commission eliminating the specific reference to events should be disclosed. While the guidance on results of operations these topics, which may not be material Commission has sought to alleviate disclosure. The Commission has to most registrants. This proposed some of these concerns by clarifying the previously stated that MD&A disclosure change is consistent with the principles- standard for forward-looking should include both qualitative and based disclosure framework of Item 303. information in its MD&A guidance,371 quantitative analysis and clarified that a We do not believe that these proposed the proposed amendment could further results of operations discussion should changes would result in a loss of benefit registrants by reducing any describe increases or decreases in any material information for market residual confusion, eliciting more line item, including net sales or participants. Registrants would still be consistent disclosure, and potentially revenues.373 The need for registrants to required to discuss in their MD&A the decreasing compliance costs and consult both existing Item 303(a)(3)(iii) impact of inflation and changing prices, litigation risk. In addition, more and the Commission’s guidance to if material. consistent disclosure may allow understand the requirement could lead The proposed elimination of this item investors to make more meaningful to confusion and inconsistent disclosure could benefit registrants by streamlining comparisons across firms and make practice in registrants. The additional Item 303 and reducing compliance more informed investment decisions. clarity provided by the proposed costs. Similar to what we have Some registrants may experience an amendments could benefit registrants by discussed above,375 to the extent that increased cost of compliance under the reducing any confusion, eliciting more the elimination encourages registrants proposed amendments to the extent that consistent disclosure, and potentially that currently disclose inflation and these registrants have been disclosing decreasing compliance costs and changing prices even if not material to events that will cause a material change litigation risk. modify such disclosure,376 investors in the relationship between costs and The proposed amendments could could potentially benefit from a focus revenues as opposed to events that are increase disclosure burdens for on material information, which would reasonably likely to cause the change. registrants, thus potentially increasing allow them to process information more Also, some registrants might need to compliance costs. However, since many effectively. Also, emphasizing a spend resources to evaluate the future registrants may already be following principles-based approach may likelihood that such events might occur. relevant Commission guidance, the encourage registrants to present more However, such registrants might be few marginal increase in compliance costs is tailored information, which also may in light of existing Commission not expected to be significant. benefit investors. guidance, and the increase in Additionally, to the extent that h. Off-Balance Sheet Arrangements compliance costs could be offset by the registrants do incur additional (Item 303(a)(4)) potential decrease in cost of capital as compliance costs, such costs could be a result of enhanced disclosure and offset by the potential decrease in cost Current Item 303(a)(4) requires, in a reduced information asymmetry.372 of capital as a result of increased separately-captioned section, disclosure of a registrant’s off-balance sheet f. Results of Operations—Net Sales, disclosure and reduced information asymmetry.374 arrangements that have or are Revenues, and Line Item Changes (Item reasonably likely to have a current or 303(a)(3)(iii) and Instruction 4) The proposed amendments would require registrants to provide a nuanced future effect on a registrant’s financial Item 303(a)(3)(iii) currently requires discussion of the underlying reasons condition, changes in financial management to discuss certain factors, that may be contributing to material condition, revenues or expenses, results such as changes in prices or volume, changes in line items, and therefore of operations, liquidity, capital that led to certain material increases in should enhance the disclosure. More expenditures, or capital resources that is net sales or revenues. The proposed consistent and informative disclosure material to investors. We propose to amendments broaden the current would allow investors to make more replace Item 303(a)(4) with a new requirement focusing on ‘‘material meaningful comparisons across firms principles-based instruction that would increases in net sales or revenue’’ in the and make more informed investment require registrants to discuss ‘‘financial statements’’ to instead require decisions. However, any potential commitments or obligations, including disclosure of ‘‘material changes from benefits to investors may be limited to contingent obligations, arising from period to period in one more line items’’ the extent registrants already are arrangements with unconsolidated in the ‘‘statement of comprehensive following the relevant Commission entities or persons that have, or are income.’’ Additionally, the proposed guidance. reasonably likely to have, a material amendments would amend Item current or future effect on a registrant’s 303(a)(3)(iii) to require disclosure g. Results of Operations—Inflation and financial condition, changes in financial specifying the reasons underlying these Price Changes (Item 303(a)(3)(iv), condition, revenues or expenses, results material changes. Instead of specifying Instruction 8, and Instruction 9) of operations, liquidity, cash disclosure of ‘‘material increases’’ in net We propose to eliminate Item requirements, or capital resources. sales or revenue, our proposed revisions 303(a)(3)(iv) and related Instructions 8 We do not believe the proposed would tie the required disclosure to and 9, which generally require that amendments would lead to significant ‘‘material changes’’ in net sales or registrants specifically discuss the information loss, as we expect the revenues. The proposed amendments to impact of inflation and price changes on proposed principles-based instruction Instruction 4 would similarly clarify their net sales, revenue, and income would continue to elicit material that MD&A requires a narrative from operations for the three most information about off-balance sheet discussion of the underlying reasons for recent fiscal years, to the extent arrangements. As discussed above, we material changes in quantitative and material. The purpose of the proposed believe that the proposed amendments qualitative terms. would encourage registrants to consider 373 See, e.g., 2003 MD&A Interpretative Release 371 See 1989 MD&A Interpretive Release. and 1989 MD&A Interpretative Release. 375 See supra Section III.B.2.i. 372 See supra note 368. 374 See supra note 368. 376 See supra note 354.

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and integrate disclosure of off-balance significant given that the materiality statements.378 Although the sheet arrangements in the context of standard is already used by registrants Commission has issued guidance on their broader MD&A disclosures and when preparing MD&A disclosures. As disclosure of critical accounting may avoid boilerplate disclosure that discussed above, to the extent the estimates, many registrants repeat the either duplicates information in the elimination of redundant or immaterial discussion of significant accounting financial statements, or cross-references disclosure improves the readability and policies from the notes to the financial the financial statements without conciseness of the information statements in their MD&A and provide additional disclosure to put such provided, the proposed amendment limited additional discussion of critical information into appropriate context. could potentially benefit investors, accounting estimates. We propose The proposed amendments could because it may help them process amending Item 303 to explicitly require benefit registrants by avoiding information more effectively by focusing such disclosure due to the importance duplicative disclosure and reducing on material information. Also, since a of critical accounting estimates in compliance costs. As discussed above, principles-based approach allows providing meaningful insight into the to the extent the proposed amendments registrants to present more tailored uncertainties related to these estimates improve the readability and conciseness information, it could lead to more and reported financials and how of the information provided, they may informative disclosure, which would accounting policies of registrants faced help investors process information more benefit investors. with similar facts and circumstances effectively. Also, emphasizing a We recognize that there could be a may differ. principles-based approach may loss of certain information due to the As discussed above, commenters have encourage registrants to provide proposed elimination of the item. As suggested that there is confusion as to disclosure that is tailored and discussed in Section II.C.7, some of the how and whether to disclose critical informative, which could be more information in the contractual accounting estimates, resulting in beneficial to investors. obligations table such as purchase inconsistent disclosure practice among Investors might need to spend time obligations is not specifically called for registrants. As noted above, many searching for the information and under U.S. GAAP. Additionally, registrants simply repeat the discussion adjusting to the new format and location information related to the ‘‘payments of significant accounting policies from of the disclosure as the proposal would due by period’’ currently required by the notes to the financial statements in no longer require the relevant disclosure the item may be difficult to ascertain their MD&A, which is duplicative and in a separately captioned section. Such from a registrant’s financial statements. may not be particularly informative to costs are likely to be one-time or However, since the proposed investors. Providing a clear disclosure decrease over time. amendments to capital resources framework could benefit registrants by disclosure would encompass material reducing confusion and duplicative i. Tabular Disclosure of Contractual contractual obligations, we believe any disclosure, thereby decreasing Obligations (Item 303(a)(5)) loss of information would not be compliance costs. Under existing Item 303(a)(5), significant. Investors would also likely benefit registrants other than SRCs must We expect investors could experience from the proposed amendments. The disclose in tabular format their known certain additional costs. A centralized proposed amendments could elicit more contractual obligations. There is no location and tabular format make it informative disclosure from registrants materiality threshold for this item. A convenient for investors to extract and related to their estimates and registrant must arrange its chart to analyze information. Under the assumptions, which would help disclose the aggregate amount of proposed amendments, the absence of a investors better understand any contractual obligations by type and with centralized location and tabular format potential risk or uncertainty related to subtotals by four prescribed periods. may cause investors to incur search these estimates and make more The Commission adopted this costs to derive the data from the informed investment decisions. The requirement so that aggregated financial statements, or monetary costs proposed amendments could also information about contractual to obtain the information through promote more consistent disclosure obligations was presented in one alternative channels, such as database practices among registrants by providing place.377 However, as discussed above, subscriptions. Investors may also incur more clarity, allowing investors to make most of the information presented in opportunity costs, such as time spent more meaningful comparisons across response to this requirement is already searching for alternative sources, and registrants and better informed included in the notes to the financial these costs may fall more heavily on investment decisions. statements. In order to promote the retail investors than on other types of We recognize that the proposed principles-based nature of MD&A and investors, such as institutional disclosure requirement could introduce streamline disclosures by reducing investors. additional costs to market participants. While we do not anticipate that overlapping requirements, we propose j. Critical Accounting Estimates to eliminate Item 303(a)(5). investors would incur any direct costs We believe the proposal could lead to Item 303(a) does not currently include (other than information processing reduced compliance costs by avoiding a subsection requiring registrants to costs) associated with this proposal, duplicative disclosure, therefore disclose critical accounting estimates. compliance costs might increase for benefiting registrants. On the other U.S. GAAP also does not require similar registrants because of the proposed hand, we also recognize that there might disclosure of estimates and assumptions more prescriptive disclosure compared be increased costs associated with in the notes to financial statements, to the existing more principles-based assessing the materiality of contractual except in limited circumstances. approach. However, the potential obligations under the proposed However, IFRS requires disclosures increase in compliance costs might principles-based approach. However we regarding sources of estimation decline over time as registrants become do not expect such costs to be uncertainty and judgments made in the more accustomed to the new filing process of applying accounting policies requirements. We also note that, 377 See Off-Balance Sheet Arrangements and that have the most significant effect on Contractual Obligations Adopting Release, at 5990. the amounts recognized in the financial 378 See supra note 227.

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consistent with Commission guidance, in the same industry may be likely to propose to eliminate this item as a some registrants may already provide have similar business cycles and choose conforming change, we do not believe disclosures related to critical accounting similar interim periods. Therefore, the this proposed change would have any estimates that do not duplicate the concern about a reduction of economic effect by itself. financial statement disclosures, thus the comparability across firms in the same n. Foreign Private Issuers increase in compliance costs might be industry could be mitigated. minimal to those registrants. In Streamlining this item is potentially The proposed changes related to Item addition, the increase in compliance beneficial to investors, as the resultant 3.A and Item 5 of Form 20–F and costs could be offset by a potential reduction of duplicative disclosure General Instructions B.(11), (12), and decrease in registrants’ cost of capital, might increase the effectiveness of (13) of Form 40–F for FPIs are intended because such disclosure could reduce information processing by investors, to conform to the other changes related information asymmetry between thus helping them make more informed to selected financial data and MD&A. investors and firms.379 Taken together, decisions. Therefore, our analysis of the costs and we expect any potential increase in benefits for domestic issuers and their registrants’ disclosure-related costs to be l. Safe Harbor for Forward-Looking investors under the proposed small. Information (Item 303(c)) amendments to Item 301 can be carried Item 303(c) 381 states that the safe over to FPIs and their investors under k. Interim Period Discussion (Item harbors provided in Section 27A of the the amended items. The proposed 303(b)) Securities Act and 21E of the Exchange changes could benefit FPIs through a Item 303(b) requires registrants to Act apply to all forward-looking reduction in compliance costs, although provide MD&A disclosure for interim information provided in response to the benefits are likely to be smaller periods that enables market participants Item 303(a)(4) (off-balance sheet given that current Item 3.A permits a to assess material changes in financial arrangements) and Item 303(a)(5) FPI to omit either or both of the earliest condition and results of operations (contractual obligations), provided such two years of data under certain between certain specified periods. The disclosure is made by certain conditions and registrants that file on proposal would amend current Item enumerated persons.382 We propose to Form 40–F use Canadian disclosure 303(b) to allow for flexibility in eliminate this item to conform to the documents to satisfy the Commission’s comparisons of interim periods and to proposed elimination of Items 303(a)(4) registration and disclosure streamline the item. Specifically, under and 303(a)(5). We do not believe this requirements. Since FPIs would have the proposed Item 303(c), registrants proposed change would have any more flexibility to provide information would be allowed to compare their most economic effect by itself. Disclosure that is better tailored to their industry or recently completed quarter to either the would continue to be protected by the country, investors could benefit from corresponding quarter of the prior year existing safe harbors, and therefore, we more informative disclosure. However, (as is currently required) or to the do not expect changes in market investors might incur additional search immediately preceding quarter. The behavior. To the extent that the costs when looking for information proposed amendments would also elimination of the section may result in through alternative channels. streamline the instructions to current any confusion as to the application of To maintain a consistent approach to Item 303(b), consistent with the the safe harbors, there could be a cost MD&A for domestic registrants and proposed amendments to current Item to registrants. However, we believe such FPIs, we are proposing changes to 303(a) and the related instructions. cost should be de minimis. Forms 20–F and 40–F that generally This more flexible approach is conform to our proposed amendments intended to allow registrants to provide m. Smaller Reporting Companies (Item to Item 303. Therefore, our discussion of analysis that is better tailored to their 303(d)) the costs and benefits for domestic business cycles. This may result in more Item 303(d) 383 states that an SRC may issuers and their investors under the informative disclosure that could reduce provide Item 303(a)(3)(iv) information proposed amendments to Item 303 information asymmetry and firms’ cost for the most recent two fiscal years if it generally can be carried over to FPIs of capital, benefiting registrants.380 In provides financial information on net under the amended item. The proposal addition, streamlining the item could sales and revenues and income from adds to Item 303 the current Form 20– avoid duplicative disclosure and reduce continuing operations for only two F instruction that requires FPIs that are associated compliance costs. years. Item 303(d) also states that an not subject to the multijurisdictional Investors also may benefit from the SRC is not required to provide the disclosure system to discuss proposed amendments. As noted above, contractual obligations chart specified hyperinflation in a hyperinflationary the proposed amendments would in Item 303(a)(5). To conform to the economy. This disclosure can be provide registrants flexibility to choose proposals to eliminate Item 303(a)(3)(iv) important to investors when analyzing the interim period presented, which and (a)(5), we propose to eliminate Item FPIs, as hyperinflation in some FPIs’ could allow them to provide a more 303(d). SRCs may continue to rely on home countries might be an important tailored analysis. This, in turn, could Instruction 1 to Item 303(a),384 which risk factor for the firm’s results of allow investors to make better informed states that an SRC’s discussion shall operations or financial health. investment decisions. On the other cover the two-year period required in D. Anticipated Effects on Efficiency, hand, more flexibility in disclosure Article 8 of Regulation S–X. As we Competition, and Capital Formation could also decrease comparability across firms, potentially increasing the 381 Item 303(c) of Regulation S–K. We believe the proposed amendments cost of investors’ decision-making. 382 Such persons are: An issuer; a person acting could have positive effects on However, we do not expect the on behalf of the issuer; an outside reviewer retained efficiency, competition, and capital flexibility in reporting to significantly by the issuer making a statement on behalf of the formation. As discussed above, we issuer; or an underwriter, with respect to reduce comparability, since registrants information provided by the issuer or information expect the proposed amendments could derived from information provided by the issuer. reduce duplicative disclosure and elicit 379 See supra note 368. 383 Item 303(d) of Regulation S–K. disclosure that is more focused on 380 Id. 384 Proposed renumbered Item 303(b). material information and tailored to a

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registrant’s business, making the years, we considered amending the item the earliest years when it is deemed not disclosure more informative. We believe to require only the same number of time consuming and costly. On the more informative disclosure could years of data as presented in the other hand, while investors would still reduce information asymmetry between registrant’s financial statements in that incur search costs if they prefer to firms and investors, thereby improving same filing. Similarly, another analyze five years’ financial data, such firm liquidity and price efficiency.385 alternative we considered is expanding costs would be smaller compared to the We also believe the proposed the current EGC accommodation to all proposed approach. We decided not to amendments could promote initial registrants. The EGC propose this alternative because the lack competition in the capital markets and accommodation generally provides that of a consistent or objective standard to facilitate capital formation. This is an EGC need not present selected determine when additional financial because more informative disclosure financial data for any period prior to the disclosure is required could be time could allow investors to make more earliest audited period presented in its consuming or burdensome for meaningful comparisons across firms initial filing.386 This accommodation registrants. and make more informed investment allows EGCs to build up to the full five As an alternative to the proposed decisions, and as a result, more value- years of selected financial data. elimination of Item 302, which requires enhancing projects may receive more The benefit of these alternatives disclosure of quarterly financial data of capital allocation. would be potential cost savings from a selected operating results and variances However, as discussed above, since reduction in compliance burdens by not in these results from amounts registrants no longer need to present having to reproduce the earliest years of previously reported on a Form 10–Q, we certain information (e.g., five-year selected financial data. These considered requiring a registrant to comparable data), investors could incur alternatives might be sufficient for separately disclose fourth quarter data costs when searching for alternative investors to make a quick comparison elsewhere in its annual report, such as channels to obtain or reconstruct the with the most recent financial data in MD&A. This approach could prevent information. Since each investor would without cross-referencing to other or mitigate the potential loss of the have to consider the need for alternative sources. However, given the nature of fourth quarter financial data under the sources of information, it could result in electronic access to financial data proposed approach. We decided not to inefficiency in the information through EDGAR, we think the potential propose this alternative because the distribution process. Additionally, if benefits of these alternatives would be fourth quarter information may not be registrants misjudge what information is more limited than the proposed material or significant to investors in all material, there could be an increase in elimination of Item 301. We decided not circumstances. Therefore, separate information asymmetries between to propose the alternative of requiring presentation of the fourth quarter registrants and investors, negatively the same number of years of data as information might not justify its cost. affecting efficiency, competition, and presented in the registrant’s financial We are proposing to amend current capital formation. However, we expect statements in that same filing because Item 303(a)(2) to specify that a registrant this risk to be offset by mitigating such disclosure would be largely should broadly disclose material cash factors, including accounting controls duplicative and therefore, have limited commitments, including but not limited and the antifraud provisions of the utility. Regarding the alternative that we to capital expenditures. We considered securities laws. expand the current EGC accommodation proposing a definition for the term The proposed amendments, in to all initial registrants, while this ‘‘capital resources.’’ While defining the particular by simplifying and codifying approach could provide cost savings to term could provide more clarity for certain positions expressed in various non-EGC initial registrants at the registrants, it would also result in a Commission guidance, might reduce the beginning, in the long run, these disclosure requirement more compliance costs of private companies registrants would still face the same prescriptive in nature, inconsistent with considering going public and this cost duplicative disclosure problem that our current objective to promote the reduction may be more significant for other registrants do currently. As a principles-based nature of MD&A. We SRCs. For companies considering an result, we decided not to propose this therefore decided not to propose this IPO, the benefit of easing the burdens alternative. alternative. associated with preparing these As another alternative, we considered As an alternative to the proposed disclosures for the first time could amending Item 301 to require the elimination of Item 303(a)(5), which decrease the costs of going public and earliest years only in circumstances requires registrants to disclose in tabular format contractual obligations by type of thus leave more capital for future where the company can represent that obligation, overall payments due and investment. This could lead to more the information cannot be provided prescribed periods, we considered efficient capital formation. without unreasonable effort and maintaining the contractual obligations expense, as is currently allowed under E. Alternatives disclosure requirement in a modified Item 3.A of Form 20–F. For example, as As an alternative to the proposed form. For example, we considered a commenter noted, there are several elimination of Item 301, which requires allowing this disclosure in a non-tabular situations where such disclosure can be registrants to furnish selected financial format. While this approach could costly.387 Under this approach, data in comparative tabular form for prevent any potential information loss, each of the registrant’s last five fiscal registrants would experience reduced the non-tabular presentation of compliance costs under the exempted information may not be as clear as the 385 See supra note 368. See also David Hirshleifer circumstances, albeit a smaller tabular format. Also, this approach may and Siew Hong Teoh, Limited attention, reduction compared to the proposed not generate meaningful savings for information disclosure, and financial reporting, 36 approach, because they would still need registrants through reduced compliance J. Acct. & Econ. 337–386 (2003) (developing a to disclose selected financial data for theoretical model where investors have limited costs. Another alternative we attention and processing power and showing that, considered was to reduce the prescribed with partially attentive investors, the means of 386 See Item 301(d) of Regulation S–K [17 CFR presenting information may have an impact on 229.301]. time periods that need to be disclosed. stock price reactions, misvaluation, long-run 387 See supra note 28 and 29 and corresponding For example, we could require abnormal returns, and corporate decisions). text. disclosures of only short-term or long-

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term obligations rather than requiring investors (either through direct use of Request for Comment disclosure to be grouped in the four the data or through reliance on the data time periods currently specified in Item as extracted and analyzed by We request comment on all aspects of 303(a)(5). While this approach could be intermediaries) as well as other market our economic analysis, including the more beneficial to investors by reducing participants by enabling more efficient potential costs and benefits of the their search costs compared to the retrieval, aggregation, and analysis of proposed amendments and alternatives proposed approach, it would result in disclosed information and facilitating thereto, and whether the proposed redundant disclosure and higher comparisons across issuers and time amendments, if adopted, would compliance costs to registrants. periods.389 However, as other promote efficiency, competition, and As an alternative to proposed Item commenters observed, filers would capital formation or have an impact on 303(b)(4), we considered issuing incur increased costs under this investor protection. In addition, we also additional guidance on critical alternative, with a block text and detail seek comment on alternative approaches accounting estimates that enhances the tagging requirement imposing greater to the proposed amendments and the guidance issued in the 2003 MD&A costs than a block text tagging-only associated costs and benefits of these Release. While this alternative could requirement.390 This increased cost approaches. Commenters are requested save compliance costs for registrants to provide empirical data, estimation effect may be mitigated by the fact that because it would not create a new methodologies, and other factual registrants are or will be required to requirement, the savings might not support for their views, in particular, on structure financial statement and cover necessarily be significant, given the costs and benefits estimates. existing Commission guidance on this page disclosures in the Inline XBRL 391 Specifically, we seek comment with topic. Further, we believe that by format, and would therefore incur respect to the following questions: Are codifying existing guidance, proposed only the incremental cost associated there any costs and benefits to any Item 303(b)(4) would provide investors with tagging the additional disclosures. entity that are not identified or with more enhanced disclosure and Also, concerns as to filer cost might be misidentified in the above analysis? Are protection by ensuring that companies partially alleviated by the overall consistently provide such disclosure. decline in the costs of XBRL tagging there any effects on efficiency, Therefore, we decided not to propose over time, including for SRCs. 392 competition, and capital formation that this alternative. However, our proposed amendments are not identified or misidentified in the Proposed Item 303(b) would allow emphasize MD&A’s principles-based above analysis? Should we consider any flexibility for registrants to compare framework, which encourages of the alternative approaches outlined their most recently completed quarter to registrants to provide meaningful above instead of the proposed either the corresponding quarter of the disclosure that is tailored to their amendments? Which approach and prior year (as is currently required) or to specific facts and circumstances. This why? Are there any other alternative the immediately preceding quarter. As may make MD&A less comparable approaches to improving MD&A an alternative, we considered an across issuers, thereby reducing the disclosure that we should consider? If approach under which registrants benefits of this alternative. As a result, so, what are they and what would be the would be required to compare the most we did not propose this alternative, but associated costs or benefits of these recent quarter to both the corresponding solicit comment on the specific benefits alternative approaches? quarter of the prior year and the and costs of such a tagging requirement. V. Paperwork Reduction Act immediately preceding quarter. While this alternative approach would provide 389 See Inline XBRL Adopting Release, at 40851, A. Summary of the Collections of investors with more disclosure, it might footnote 71 and accompanying text, and 40862. See Information not be clear to investors which time also, e.g., Mohini Singh, ‘‘Data and Technology: period is more representative of the How Information is Consumed in the New Age,’’ Certain provisions of our rules, CFA Institute (July 3, 2018) (describing examples of schedules, and forms that would be registrant’s business, and registrants analytical, benchmarking, and regulatory XBRL would incur more compliance costs. usage); Chunhui Liu, Tawei Wang, and Lee J. Yao affected by the proposed amendments Also, this alternative is less consistent (2014), ‘‘XBRL’s Impact on Analyst Forecast contain ‘‘collection of information’’ with the principles-based nature of Behavior: An Empirical Study,’’ Journal of requirements within the meaning of the Accounting and Public Policy, 33(1) (finding that PRA.393 The Commission is submitting MD&A. Therefore, we decided not to XBRL adoption has significantly increased propose this alternative. information quantity and quality, as measured by the proposed amendments to the Office The proposed amendments do not analyst following and forecast accuracy). of Management and Budget (‘‘OMB’’) for require registrants to structure financial 390 See, e.g., letters from Institute of Management review in accordance with the PRA.394 disclosures in a machine-readable Accountants (July 29, 2016); FEI I and II; Maryland The hours and costs associated with Bar Securities Committee, Northrop Grumman, and format. An alternative suggested by CCMC. preparing, filing, and sending the 388 some commenters was to require 391 See Inline XBRL Adopting Release; FAST Act schedules and forms constitute registrants to structure MD&A in the Adopting Release. reporting and cost burdens imposed by Inline XBRL format. Requiring 392 Preliminary statistics from a pricing survey each collection of information. An registrants to structure MD&A being conducted by the AICPA and XBRL US agency may not conduct or sponsor, and indicate that the cost of XBRL formatting has disclosures could create benefits for declined 41% since 2014 and that the average cost a person is not required to comply with, of XBRL preparation for SRCs in 2017 averaged a collection of information unless it 388 See, e.g., letters from CalPERS, California State $5,850 per year. See AICPA, ‘‘Research shows XBRL displays a currently valid OMB control Teachers’ Retirement System (July 21, 2016), CFA filing costs are lower than expected,’’ available at number. Compliance with the Institute, Deloitte, RGA, Data Coalition (July 21, https://www.aicpa.org/InterestAreas/FRC/ 2016) (‘‘Data Coalition’’), Merrill Corporation (July AccountingFinancialReporting/XBRL/ information collections is mandatory. 19, 2016) (‘‘Merrill’’), and XBRL US (July 21, 2016) DownloadableDocuments/XBRL%20Costs Responses to the information collections (‘‘XBRL US’’). In addition, the Commission received %20for%20Small%20Companies.pdf. See also are not kept confidential and there is no several comments supporting an Inline XBRL Mohini Singh, ‘‘The Cost of Structured Data: Myth mandatory retention period for the structuring requirement for MD&A disclosure in vs. Reality,’’ CFA Institute (August 2017), available connection with the Inline XBRL proposing release. at https://www.cfainstitute.org/-/media/documents/ See, e.g., letters from CFA Institute (July 1, 2017) survey/the-cost-of-structured-data-myth-vs-reality- 393 44 U.S.C. 3501 et seq. and XBRL US (July 1, 2017 and Feb. 1, 2018). august-2017.ashx. 394 44 U.S.C. 3507(d); 5 CFR 1320.11.

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information disclosed. The titles for the ‘‘Form N–2’’ (OMB Control No. 3235– informed investment and voting collections of information are: 0026); decisions. ‘‘Form 1–A’’ (OMB Control No. 3235– ‘‘Form S–1’’ (OMB Control No. 3235– A description of the proposed 0286); 0065); amendments, including the need for the ‘‘Form 10’’ (OMB Control No. 3235– information and its proposed use, as ‘‘Form S–4’’ (OMB Control No. 3235– 0064); well as a description of the likely 0324); ‘‘Form 10–Q’’ (OMB Control No. respondents, can be found in Section II 3235–0070); ‘‘Form S–11’’ (OMB Control No. above, and a discussion of the economic ‘‘Form 10–K’’ (OMB Control No. 3235–0067); effects of the proposed amendments can 3235–0063); ‘‘Schedule 14A’’ (OMB Control No. We adopted all of the existing be found in Section IV above. 3235–0059); regulations, schedules, and forms B. Summary of the Proposed ‘‘Form 20–F’’ (OMB Control No. pursuant to the Securities Act, the Amendments’ Effects on the Collections 3235–0288); Exchange Act, and/or the Investment of Information ‘‘Form 40–F’’ (OMB Control No. Company Act. The regulations, 3235–0381); schedules, and forms set forth the The following Table 1 summarizes the ‘‘Form F–1’’ (OMB Control No. 3235– disclosure requirements for registration estimated effects of the proposed 0258); statements, periodic reports, and proxy amendments on the paperwork burdens ‘‘Form F–4’’ (OMB Control No. 3235– and information statements filed by associated with the affected forms listed 0325); registrants to help investors make in Section V.A.

PRA TABLE 1—ESTIMATED PAPERWORK BURDEN EFFECTS OF THE PROPOSED AMENDMENTS

Proposed amendments and effects Affected forms Estimated net effect *

Item 301: Selected Financial Data • Elimination of Item 301 requirement to furnish selected financial data for each of • Forms 10, 10–K, S–1, S– • 2 hour net decrease in the registrant’s last five fiscal years because Item 303 already calls for disclosure 4, and S–11. compliance burden per of material trend information, which would decrease the paperwork burden by re- form. ducing repetitive information about a registrant’s historical performance. • Schedule 14A ** ...... • 0.2 hour net decrease in • Replacing the reference to Item 301 with a reference to Rule 1–02(bb) of Regula- compliance burden per tion S–X in Items 1112, 1114, and 1115 of Regulation AB would generally result schedule. in similar disclosure being presented under these Items, and therefore not affect • Form N–2 ± ...... • 0.3 hour net decrease in the burden estimate. compliance burden per form. • Forms SF–1 and SF–3 ... • No change in compliance burden per form. Item 302(a): Supplementary Financial Information • Elimination of Item 302(a) requirement to disclose selected quarterly financial data • Forms 10, 10–K, S–1, S– • 3 hour net decrease in of selected operating results because Item 302(a) information is largely available 4, and S–11. compliance burden per in Forms 10–Q, which would decrease the paperwork burden by reducing repet- form. itive information about a registrant’s quarterly performance. • Schedule 14A ** ...... • 0.3 hour net decrease in compliance burden per schedule. • Form N–2 ± ...... • 0.5 hour net decrease in compliance burden per form. Item 302(b): Information About Oil and Gas Producing Activities • Elimination of Item 302(b) disclosures required for registrants engaged in oil and • Forms 10, 10–K, S–1, S– • 0.1 hour net decrease in gas producing activities would decrease the paperwork burden by reducing repet- 4, and S–11. compliance burden per itive disclosure that, subject to the adoption of the FASB’s Accounting Standards form. Update, will be duplicative of U.S. GAAP. • Schedule 14A ** ...... • 0.1 hour net decrease in compliance burden per schedule. Item 303(a): Full Fiscal Years Restructuring and Streamlining: • Establishing a new paragraph to emphasize the purpose of the MD&A section at • Forms 10, 10–K, 10–Q, • 2.6 hour net increase in the outset to clarify and focus registrants is expected to have a minimal impact on S–1, S–4, and S–11. compliance burden per the paperwork burden, as the change would codify existing guidance. Estimated form. burden increase: 0.1 hour per form and per schedule. • Form 1–A ∧ ...... • 0.3 hour net increase in • Amendments to streamline the text of new Item 303 would have no effect on the compliance burden per paperwork burden because these amendments are clarifications of existing re- form. quirements. • Schedule 14A** ...... • 0.3 hour net increase in compliance buren per schedule. • Form N–2 ± ...... • 0.4 hour net increase in compliance burden per form. Capital Resources: • Expanding Item 303(a)(2) to also require a discussion of material cash require- ments, in addition to commitments for capital expenditures, would increase the pa- perwork burden. Estimated burden increase: 1 hour per form and 0.1 hour in- crease per schedule. Results of Operations—Known Trends or Uncertainties:

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PRA TABLE 1—ESTIMATED PAPERWORK BURDEN EFFECTS OF THE PROPOSED AMENDMENTS—Continued

Proposed amendments and effects Affected forms Estimated net effect *

• Amending Item 303(a)(3)(ii) to clarify that a registrant should disclose reasonably likely changes in the relationship between costs and revenues would increase the paperwork burden, although this effect is expected to be minimal because the amendment is consistent with existing guidance. Estimated burden increase: 1.0 hour per form and 0.1 hour increase per schedule. Results of Operations—Net Sales, Revenues, and Line Item Changes: • Amending Item 303(a), Item 303(a)(3)(iii) and Instruction 4 to Item 303(a) to clarify that a registrant should include in its MD&A a discussion of the reasons under- lying material changes from period-to-period in one or more line items could mar- ginally increase the paperwork burden by requiring a more nuanced discussion consistent with the overall objective of MD&A. Estimated burden increase: 1.0 hour per form and 0.1 hour increase per schedule. Results of Operations—Inflation and Price Changes: • Eliminating the specific reference to inflation within Item 303(a)(3)(iv) for issuers should marginally reduce the paperwork burden, although such decrease is ex- pected to be minimal. Estimated burden decrease: 0.5 hours per form and 0.1 hour decrease per schedule. Off-Balance Sheet Arrangements: • Replacing Item 303(a)(4) with an instruction emphasizing a more principles-based approach with respect to off-balance sheet arrangement disclosures, would re- duce duplicative disclosures and decrease the paperwork burden. Estimated bur- den decrease: 1.0 hour per form and 0.1 hour decrease per schedule. • Amending Items 2.03 and 2.04 of Form 8–K to retain the definition of ‘‘off-balance sheet arrangements’’ that is currently in Item 303(a)(4) would not result in any changes in reporting obligations under Item 2.03 and Item 2.04 of Form 8–K, and would therefore result in no change in paperwork burden for this form. Contractual Obligations Table: • Eliminating Item 303(a)(5), the requirement that registrants provide a tabular dis- closure of contractual obligations, would reduce duplicative disclosures and de- crease the paperwork burden. Estimated burden decrease: 1.0 hour per form and 0.1 hour decrease per schedule. Critical Accounting Estimates: • Amending Item 303 to explicitly require disclosure of critical accounting estimates would provide more clarity on the uncertainties involved in creating an accounting policy and how significant accounting policies of registrants may differ. This would increase the paperwork burden. Estimated burden increase: 2.0 hours per form and 0.2 hour increase per schedule. Item 303(b): Interim Periods • Amending Item 303(b) to allow for more flexibility in interim periods compared and • Forms 10, 10–K, 10–Q, • 4.0 hour net decrease in eliminating certain instructions and providing cross-references to similar instruc- S–1, S–4, and S–11. compliance burden per tions in Item 303(a) would decrease the paperwork burden. form. • Form 1–A ∧ ...... • 0.4 hour net decrease in compliance burden per form. • Schedule 14A ** ...... • 0.4 hour net decrease in compliance burden per schedule. • Form N–2 ± ...... • 0.7 hour net decrease in compliance burden per form. Item 303(c): Safe Harbor for Forward-Looking Information • Eliminating Item 303(c) as a conforming change would have no effect on the pa- perwork burden. Item 303(d): Accommodations for SRCs • Eliminating Item 303(d) as a conforming change would have no effect on the pa- perwork burden. Effect on FPIs • Eliminating Item 3.A and generally conforming Item 5 of Form 20–F to the pro- • Form 20–F ...... • 2.0 hour net decrease in posed amendments to Item 303 would reduce the paperwork burden. compliance burden per form. • Eliminating the contractual obligations disclosure requirement and replacing the • Form 40–F ...... • 2.0 hour net decrease in off-balance sheet disclosure requirements in Forms 20–F and 40–F with a prin- compliance burden per ciples-based instruction would reduce the paperwork burden. form. • Amending current Instruction 11 to Item 303 to conform to the hyperinflation dis- • Forms F–1 and F–4 ...... • 3.5 hour net decrease closure requirements of Form 20–F would not affect the paperwork burden. per form.

Total ...... • Form 1–A ...... • 0.1 hour net decrease per form. • Form 10–Q ...... • 1.4 hour net decrease per form. • Forms 10, 10–K, S–1, S– • 6.5 hour net decrease 4, and S–11. per form.

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PRA TABLE 1—ESTIMATED PAPERWORK BURDEN EFFECTS OF THE PROPOSED AMENDMENTS—Continued

Proposed amendments and effects Affected forms Estimated net effect *

• Schedule 14A ...... • 0.7 hour net decrease per form. • Forms F–1 and F–4 ...... • 3.5 hour net decrease per form. • Form 20–F ...... • 2.0 hour net decrease per form. • Form 40–F ...... • 2.0 hour net decrease per form. • Form N–2 ...... • 1.1 hour net decrease per form. * Estimated effect expressed as increase or decrease of burden hours on average and derived from Commission staff review of samples of rel- evant sections of the affected forms. ** The lower estimated average incremental burden for Schedule 14A reflects the Commission staff estimates that no more than 10% of the Schedule 14As filed annually include Item 301–303 disclosures. ± Form N–2 states that disclosure under Items 301–303 of Regulation S–K is only required if ‘‘the Registrant is regulated as a business devel- opment company under the 1940 Act.’’ The estimated average incremental burden for Form N–2 reflects the fact that approximately 17% of reg- istrants are BDCs. The estimated burden has been reduced to adjust for this percentage. ≠ The reduced estimated average incremental burden for the proposed elimination of Item 302(b) reflects the fact that approximately 3.5% of registrants engage in oil and gas producing activities. For purposes of this PRA analysis, BDCs have been deemed not to be engaged in oil and gas producing activities. ∧ In the preparation of Part II of Form 1–A, Regulation A issuers have the option of disclosing either the information required by (i) the Offering Circular format or (ii) Part I of Forms S–1 or S–11 (except for the financial statements, selected financial data, and supplementary information called for by those forms). The burden associated with Form 1–A is affected only to the extent that an issuer chooses to use Part I of these forms. The Commission staff estimates that 10.6% of Form 1–A filings reflect this election.

C. Incremental and Aggregate Burden registrants based on a number of factors, average amount of time it would take a and Cost Estimates for the Proposed including the nature of their business. registrant to prepare and review Amendments We do not believe that the proposed disclosure required under the proposed amendments would change the amendments. For purposes of the PRA, Below we estimate the incremental frequency of responses to the existing the burden is to be allocated between and aggregate reductions in paperwork collections of information; rather, we internal burden hours and outside burden as a result of the proposed estimate that the proposed amendments professional costs. Table 2 below sets amendments. These estimates represent would change only the burden per forth the percentage estimates we the average burden for all registrants, response. typically use for the burden allocation both large and small. In deriving our The burden reduction estimates were for each form. We also estimate that the estimates, we recognize that the burdens calculated by multiplying the estimated average cost of retaining outside will likely vary among individual number of responses by the estimated professionals is $400 per hour.395

PRA TABLE 2—STANDARD ESTIMATED BURDEN ALLOCATION FOR SPECIFIED FORMS AND SCHEDULES

Outside Form/schedule type Internal professionals (percent) (percent)

Forms 1–A, 10–K, 10–Q, 8–K, Schedule 14A ...... 75 25 Forms S–1, S–4, S–11, F–1, F–4, SF–1, SF–3, and 10 ...... 25 75 Forms 20–F and 40–F ...... 25 75 Form N–2 ...... 25 75

Table 3 below illustrates the hours and in costs, as a result of the incremental change to the total annual proposed amendments. compliance burden of affected forms, in

395 We recognize that the costs of retaining registrants in preparing and filing reports with the year average. We do not expect that the proposed outside professionals may vary depending on the Commission. amendments would materially change the number nature of the professional services, but for purposes 396 The number of estimated affected responses is of responses in the current OMB PRA filing of this PRA analysis, we estimate that such costs based on the number of responses in the inventory. would be an average of $400 per hour. This estimate 397 is based on consultations with several registrants, Commission’s current OMB PRA filing inventory. The estimated reductions in Columns (C), (D), law firms, and other persons who regularly assist The OMB PRA filing inventory represents a three- and (E) are rounded to the nearest whole number.

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PRA TABLE 3—CALCULATION OF THE INCREMENTAL CHANGE IN BURDEN ESTIMATES OF CURRENT RESPONSES RESULTING FROM THE PROPOSED AMENDMENTS

Reduction in Reduction in Number of Burden hour Reduction in Reduction in professional professional estimated reduction per burden hours for company hours hours costs Form affected current affected current affected for current for current for current responses response responses affected affected affected responses responses responses

(A) 396 (B) (C) = (A) × (B) 397 (D) = (C) × 0.25 (E) = (C)¥(D) (F) = (E) × $400 or 0.75

S–1 ...... 901 6.5 5,857 1,464 4,393 $1,757,200 S–4 ...... 551 6.5 3,582 896 2,687 1,074,800 S–11 ...... 64 6.5 416 104 312 124,800 F–1 ...... 63 4.5 284 71 213 85,200 F–4 ...... 39 4.5 176 44 132 52,800 N–2 ...... 166 1.1 183 46 137 54,800 1–A ...... 179 0.1 18 14 5 2,000 10 ...... 216 6.5 1,404 351 1,053 421,200 10–K ...... 8,137 6.5 52,891 39,668 13,223 5,289,200 10–Q ...... 22,907 1.4 32,070 24,053 8,018 3,207,200 20–F ...... 725 2.0 1,450 363 1,088 435,200 40–F ...... 132 2.0 264 66 198 79,200 Sch. 14A ...... 5,586 0.7 3,910 2,933 978 391,200

Total ...... 39,666 ...... 70,073 ...... 12,974,800

The following Table 4 summarizes the and costs, under the proposed requested paperwork burden, including amendments. the estimated total reporting burdens PRA TABLE 4—REQUESTED PAPERWORK BURDEN UNDER THE PROPOSED AMENDMENTS

Current Program Requested burden change change in Number of Reduction in Reduction in Form current current burden affected company professional Annual Burden hours Cost burden annual burden current responses hours costs responses responses hours cost burden

(A) (B) (C) (D) (E) 398 (F) 399 (G) = (A) (H) = (B)¥(E) (I) = (C)¥(F)

S–1 ...... 901 148,556 $182,048,700 901 1,464 $1,757,200 901 147,092 $180,291,500 S–4 ...... 551 563,216 678,291,204 551 896 1,074,800 551 562,320 677,216,404 S–11 ...... 64 12,290 15,016,968 64 104 124,800 64 12,186 14,892,168 F–1 ...... 63 26,815 32,445,300 63 71 85,200 63 26,744 32,360,100 F–4 ...... 39 14,076 17,106,000 39 44 52,800 39 14,032 17,053,200 N–2 ...... 166 73,250 4,668,396 166 46 54,800 166 73,204 4,613,596 1–A ...... 179 98,396 13,111,912 179 14 2,000 179 98,382 13,109,912 10 ...... 216 12,072 14,356,888 216 351 421,200 216 11,721 13,935,688 10–K ...... 8,137 14,220,652 1,896,891,869 8,137 39,058 5,207,600 8,137 14,181,594 1,891,684,269 10–Q ...... 22,907 3,253,411 432,290,354 22,907 24,053 3,207,200 22,907 3,229,358 429,083,154 20–F ...... 725 479,304 576,875,025 725 363 435,200 725 478,941 576,439,825 40–F ...... 132 14,237 17,084,560 132 66 79,200 132 14,171 17,005,360 Sch. 14A 5,586 3,253,411 432,290,354 5,586 2,933 391,200 5,586 3,250,478 431,899,154

Total 39,666 22,169,686 4,312,477,530 39,666 70,073 12,974,800 39,666 22,099,613 4,299,502,730

Request for Comment clarity of the information to be burdens. Persons submitting comments collected; on the collection of information Pursuant to 44 U.S.C. 3506(c)(2)(B), • Evaluate whether there are ways to requirements should direct their we request comment in order to: minimize the burden of the collection of comments to the Office of Management • Evaluate whether the proposed information on those who respond, and Budget, Attention: Desk Officer for collections of information are necessary including through the use of automated the U.S. Securities and Exchange for the proper performance of the collection techniques or other forms of Commission, Office of Information and functions of the Commission, including information technology; and Regulatory Affairs, Washington, DC whether the information will have • Evaluate whether the proposed 20503, and send a copy to, Vanessa A. practical utility; amendments would have any effects on Countryman, Secretary, U.S. Securities • Evaluate the accuracy and any other collection of information not and Exchange Commission, 100 F Street assumptions and estimates of the previously identified in this section. NE, Washington, DC 20549–1090, with burden of the proposed collection of Any member of the public may direct reference to File No. S7–01–20. information; to us any comments concerning the Requests for materials submitted to • Determine whether there are ways accuracy of these burden estimates and OMB by the Commission with regard to to enhance the quality, utility, and any suggestions for reducing these the collection of information should be

398 From Column (D) in PRA Table 3. 399 From Column (F) in PRA Table 3.

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in writing, refer to File No. S7–01–20 of small entities.404 However, the authority set forth in Sections 7, 10, and be submitted to the U.S. Securities Commission expects that the impact on 19(a), and 28 of the Securities Act of and Exchange Commission, Office of entities affected by the proposed rule 1933, as amended, Sections 3(b), 12, 13, FOIA Services, 100 F Street NE, would not be significant.405 The 14, 23(a), and 36 of the Securities Washington, DC 20549–2736. OMB is primary effects of the proposed Exchange Act of 1934, as amended, and required to make a decision concerning amendments would be to (1) modernize, Sections 8, 24, 30, and 38 of the the collection of information between 30 simplify, and enhance the disclosure Investment Company Act of 1940, as and 60 days after publication of this requirements for MD&A in Item 303, amended. proposed rule. Consequently, a such as by codifying prior Commission List of Subjects comment to OMB is best assured of interpretive guidance and eliminating having its full effect if the OMB receives duplicative disclosures; (2) simplify 17 CFR Part 210 it within 30 days of publication. duplicative disclosure requirements by eliminating Item 301, Selected Financial Accountants, Accounting, Banks, VI. Small Business Regulatory Data, and Item 302, Supplementary Banking, Employee benefit plans, Enforcement Fairness Act Financial Information; and (3) generally Holding companies, Insurance companies, Investment companies, Oil For purposes of the Small Business make conforming changes that would and gas exploration, Reporting and Regulatory Enforcement Fairness Act of apply to FPIs filing on Forms 20–F or recordkeeping requirements, Securities, 1996 (SBREFA),400 the Commission 40–F. As a result, we expect that the Utilities. must advise OMB as to whether the impact of the proposed amendments proposed amendments constitute a would be a reduction in the paperwork 17 CFR Parts 229, 239, 240, and 249 ‘‘major’’ rule. Under SBREFA, a rule is burden of affected entities, including Administrative practice and considered ‘‘major’’ where, if adopted, it small entities, and that the overall procedure, Reporting and recordkeeping results or is likely to result in: impact of the paperwork burden 406 requirements, Securities. • An annual effect on the U.S. reduction would be modest. economy of $100 million or more; Accordingly, the Commission hereby In accordance with the foregoing, we • A major increase in costs or prices certifies, pursuant to 5 U.S.C. 605(b), propose to amend Title 17, Chapter II of for consumers or individual industries; that the proposed amendments to Items the Code of Federal Regulations as or 301, 302, and 303 of Regulation S–K and follows: Forms 20–F and 40–F and the related • Significant adverse effects on conforming changes, if adopted, would PART 210—FORM AND CONTENT OF competition, investment, or innovation. not have a significant economic impact AND REQUIREMENTS FOR FINANCIAL We request comment on whether our on a substantial number of small entities STATEMENTS, SECURITIES ACT OF proposal would be a ‘‘major rule’’ for for purposes of the RFA. 1933, SECURITIES EXCHANGE ACT purposes of the Small Business OF 1934, INVESTMENT COMPANY ACT Regulatory Enforcement Fairness Act. In Request for Comment OF 1940, INVESTMENT ADVISERS ACT particular, we request comment on the We request comment on this OF 1940, AND ENERGY POLICY AND potential effect on the U.S. economy on certification. In particular, we solicit CONSERVATION ACT OF 1975 an annual basis; any potential increase comment on the following: Do in costs or prices for consumers or commenters agree with the certification? ■ 1. The authority citation for part 210 individual industries; and any potential If not, please describe the nature of any continues to read as follows: effect on competition, investment, or impact of the proposed amendments on Authority: 15 U.S.C. 77f, 77g, 77h, 77j, 77s, innovation. small entities and provide empirical 77z–2, 77z–3, 77aa(25), 77aa(26), 77nn(25), Commenters are requested to provide data to illustrate the extent of the 77nn(26), 78c, 78j–1, 78l, 78m, 78n, 78o(d), empirical data and other factual support impact. Such comments will be 78q, 78u–5, 78w, 78ll, 78mm, 80a–8, 80a–20, for their views to the extent possible. considered in the preparation of the 80a–29, 80a–30, 80a–31, 80a–37(a), 80b–3, final rules (and in a Final Regulatory 80b–11, 7202 and 7262, and sec. 102(c), Pub. VII. Regulatory Flexibility Act Flexibility Analysis if one is needed) L. 112–106, 126 Stat. 310 (2012), unless Certification and will be placed in the same public otherwise noted. When an agency issues a rulemaking file as comments on the proposed rules ■ 2. Amend § 210.1–02 by revising proposal, the Regulatory Flexibility Act themselves. paragraph (bb)(1) introductory text and (‘‘RFA’’) 401 requires the agency to (bb)(2) to read as follows: VIII. Statutory Authority and Text of prepare and make available for public Proposed Rule and Form Amendments § 210.1–02 Definitions of terms used in comment an Initial Regulatory Regulation S–X (17 CFR part 210). Flexibility Analysis (‘‘IRFA’’) that will The amendments contained in this describe the impact of the proposed rule release are being proposed under the * * * * * on small entities.402 Section 605 of the (bb) * * * (1) Except as provided in RFA allows an agency to certify a rule, 404 We estimate that there are 1,171 issuers that paragraph (bb)(2) of this section, in lieu of preparing an IRFA, if the file with the Commission, other than investment summarized financial information companies, that may be considered small entities referred to in this regulation shall mean proposed rulemaking is not expected to and are potentially subject to the proposed have a significant economic impact on amendments. This estimate is based on staff the presentation of summarized a substantial number of small analysis of issuers, excluding co-registrants, with information as to the assets, liabilities EDGAR filings of Form 10–K, 20–F, and 40–F, or entities.403 and results of operations of the entity amendments, filed during the calendar year of for which the information is required. The proposed amendments would January 1, 2018, to December 31, 2018. Analysis is have an impact on a substantial number based on data from XBRL filings, Compustat, and Summarized financial information shall Ives Group Audit Analytics. include the following disclosures, 405 See Section IV.B above. which may be subject to appropriate 400 5 U.S.C. 801 et seq. 406 We estimate that the proposed amendments variation to conform to the nature of the 401 5 U.S.C. 601 et seq. are likely to result in a net decrease of between 0.1 402 5 U.S.C. 603(a). and 6.5 burden hours per form for purposes of the entity’s business: 403 5 U.S.C. 605(b). PRA. See Section V.B above. * * * * *

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(2) Summarized financial information financial statements and other statistical transactions or any significant economic for unconsolidated subsidiaries and 50 data that the registrant believes will changes that materially affected the percent or less owned persons referred enhance a reader’s understanding of the amount of reported income from to in and required by § 210.10–01(b) for registrant’s financial condition, changes continuing operations and, in each case, interim periods shall include the in financial condition and results of indicate the extent to which income was information required by paragraph operations. so affected. In addition, describe any (bb)(1)(ii) of this section. (b) Full fiscal years. The discussion of other significant components of * * * * * financial condition, changes in financial revenues or expenses that, in the condition and results of operations must registrant’s judgment, would be material PART 229—STANDARD provide information as specified in to an understanding of the registrant’s INSTRUCTIONS FOR FILING FORMS paragraphs (b)(1) through (4) of this results of operations. UNDER SECURITIES ACT OF 1933, section and such other information that (ii) Describe any known trends or SECURITIES EXCHANGE ACT OF 1934 the registrant believes to be necessary to uncertainties that have had or that the AND ENERGY POLICY AND an understanding of its financial registrant reasonably expects will have CONSERVATION ACT OF 1975— condition, changes in financial a material favorable or unfavorable REGULATION S–K condition and results of operations. impact on net sales or revenues or Where the financial statements reflect income from continuing operations. If ■ 3. The authority citation for part 229 material changes from period-to-period the registrant knows of events that are continues to read as follows: in one or more line items, including reasonably likely to cause a material Authority: 15 U.S.C. 77e, 77f, 77g, 77h, 77j, where material changes within a line change in the relationship between costs 77k, 77s, 77z–2, 77z–3, 77aa(25), 77aa(26), item offset one another, describe the and revenues (such as known or 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, underlying reasons for these material reasonably likely future increases in 77nnn, 77sss, 78c, 78i, 78j, 78j–3, 78l, 78m, changes in quantitative and qualitative costs of labor or materials or price 78n, 78n–1, 78o, 78u–5, 78w, 78ll, 78 mm, terms. The reasons for material changes increases or inventory adjustments), the 80a–8, 80a–9, 80a–20, 80a–29, 80a–30, 80a– must be described to the extent reasonably likely change in the 31(c), 80a–37, 80a–38(a), 80a–39, 80b–11 and necessary to an understanding of the relationship must be disclosed. 7201 et seq.; 18 U.S.C. 1350; sec. 953(b), Pub. registrant’s businesses as a whole. (iii) If the statement of comprehensive L. 111–203, 124 Stat. 1904 (2010); and sec. 102(c), Pub. L. 112–106, 126 Stat. 310 (2012). Where in the registrant’s judgment a income presents material changes from discussion of segment information and/ period to period in net sales or revenue, § 229.301 [Removed and Reserved] or of other subdivisions (e.g., geographic if applicable, describe the extent to ■ 4. Remove and reserve § 229.301. areas, product lines) of the registrant’s which such changes are attributable to business would be necessary to an changes in prices or to changes in the § 229.302 [Removed and Reserved] understanding of such business, the volume or amount of goods or services ■ 5. Remove and reserve § 229.302. discussion must focus on each relevant being sold or to the introduction of new ■ 6. Revise § 229.303 to read as follows: segment and/or other subdivision of the products or services. business and on the registrant as a (4) Critical accounting estimates. § 229.303 (Item 303) Management’s whole. Critical accounting estimates are those discussion and analysis of financial (1) Liquidity. Identify any known estimates made in accordance with condition and results of operations. trends or any known demands, generally accepted accounting (a) Objective. The objective of the commitments, events or uncertainties principles that involve a significant discussion and analysis is to provide that will result in or that are reasonably level of estimation uncertainty and have material information relevant to an likely to result in the registrant’s had or are reasonably likely to have a assessment of the financial condition liquidity increasing or decreasing in any material impact on financial condition and results of operations of the material way. If a material deficiency is or results of operations. Discuss, to the registrant including an evaluation of the identified, indicate the course of action extent material, why each critical amounts and certainty of cash flows that the registrant has taken or proposes accounting estimate is subject to from operations and from outside to take to remedy the deficiency. Also uncertainty, how much each estimate sources. This discussion and analysis identify and separately describe internal has changed during the reporting must provide a narrative explanation of and external sources of liquidity, and period, and the sensitivity of the the registrant’s financial statements that briefly discuss any material unused reported amount to the methods, allows investors to view the registrant sources of liquid assets. assumptions and estimates underlying from management’s perspective. The (2) Capital resources. (i) Describe the its calculation. The discussion should discussion and analysis must focus registrant’s material cash requirements, provide quantitative as well as specifically on material events and including commitments for capital qualitative information when uncertainties known to management expenditures, as of the end of the latest quantitative information is reasonably that would cause reported financial fiscal period, the anticipated source of available and will provide material information not to be necessarily funds needed to satisfy such cash information to investors. indicative of future operating results or requirements and the general purpose of Instructions to paragraph 303(b): of future financial condition. This such requirements. 1. Generally, the discussion must includes descriptions and amounts of (ii) Describe any known material cover the periods covered by the matters that are reasonably expected to trends, favorable or unfavorable, in the financial statements included in the have a material impact on future registrant’s capital resources. Indicate filing and the registrant may use any operations and have not had a material any expected material changes in the presentation that in the registrant’s impact on past operations, and matters mix and relative cost of such resources. judgment enhances a reader’s that have had a material impact on The discussion must consider changes understanding. A smaller reporting reported operations and are not between equity, debt and any off- company’s discussion must cover the reasonably expected to have a material balance sheet financing arrangements. two-year period required in Article 8 of impact upon future operations. The (3) Results of operations. (i) Describe Regulation S–X and may use any discussion and analysis must be of the any unusual or infrequent events or presentation that in the registrant’s

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judgment enhances a reader’s required by § 210.4–08(e)(3) of 10. If the registrant is a foreign private understanding. For registrants providing Regulation S–X [17 CFR part 210] to issuer, the discussion must focus on the financial statements covering three include disclosure of restrictions on the primary financial statements presented years in a filing, discussion about the ability of both consolidated and in the registration statement or report. earliest of the three years may be unconsolidated subsidiaries to transfer The foreign private issuer must refer to omitted if such discussion was already funds to the registrant in the form of the reconciliation to United States included in the registrant’s prior filings cash dividends, loans or advances, the generally accepted accounting on EDGAR that required disclosure in discussion of liquidity must include a principles and discuss any aspects of compliance with Item 303 of Regulation discussion of the nature and extent of the difference between foreign and S–K, provided that registrants electing such restrictions and the impact such United States generally accepted not to include a discussion of the restrictions have had or are expected to accounting principles, not discussed in earliest year must include a statement have on the ability of the parent the reconciliation, that the registrant that identifies the location in the prior company to meet its cash obligations. believes is necessary for an filing where the omitted discussion may 6. Any forward-looking information understanding of the financial be found. An emerging growth supplied is expressly covered by the statements as a whole, if applicable. company, as defined in Rule 405 of the safe harbor rule for projections. See Rule 11. The term statement of Securities Act (§ 230.405 of this chapter) 175 under the Securities Act [17 CFR comprehensive income means a or Rule 12b–2 of the Exchange Act 230.175 ], Rule 3b–6 under the statement of comprehensive income as (§ 240.12b–2 of this chapter), may Exchange Act [17 CFR 240.3b–6], and defined in § 210.1–02 of Regulation provide the discussion required in Securities Act Release No. 6084 (June S–X. paragraph (b) of this section for its two 25, 1979) (44 FR 33810). Instruction to paragraph 303(b)(4): most recent fiscal years if, pursuant to 7. All references to the registrant in The disclosure of critical accounting Section 7(a) of the Securities Act of the discussion and in this Item mean the estimates should supplement, but not 1933 (15 U.S.C. 77g(a)), it provides registrant and its subsidiaries duplicate, the description of accounting audited financial statements for two consolidated. policies or other disclosures in the notes years in a Securities Act registration 8. Discussion of commitments or to the financial statements. statement for the initial public offering obligations, including contingent (c) Interim periods. If interim period of the emerging growth company’s obligations, arising from arrangements financial statements are included or are common equity securities. with unconsolidated entities or persons required to be included by Article 3 of 2. Discussions of liquidity and capital that have or are reasonably likely to Regulation S–X [17 CFR 210.3], a resources may be combined whenever have a material current or future effect management’s discussion and analysis the two topics are interrelated. on a registrant’s financial condition, of the financial condition and results of 3. If the reasons underlying a material changes in financial condition, revenues operations must be provided so as to change in one line item in the financial or expenses, results of operations, enable the reader to assess material statements also relate to other line liquidity, cash requirements or capital changes in financial condition and items, no repetition of such reasons in resources must be provided even when results of operations between the the discussion is required and a line-by- the arrangement results in no periods specified in paragraphs (c)(1) line analysis of the financial statements obligations being reported in the and (2) of this section. The discussion as a whole is not required or generally registrant’s consolidated balance sheets. and analysis must include a discussion appropriate. Registrants need not recite Such off-balance sheet arrangements of material changes in those items the amounts of changes from period to may include: Guarantees; retained or specifically listed in paragraph (b) of period which are readily computable contingent interests in assets this section. from the financial statements. The transferred; contractual arrangements (1) Material changes in financial discussion must not merely repeat that support the credit, liquidity or condition. Discuss any material changes numerical data contained in the market risk for transferred assets; in financial condition from the end of financial statements. obligations that arise or could arise from the preceding fiscal year to the date of 4. The term ‘‘liquidity’’ as used in this variable interests held in an the most recent interim balance sheet Item refers to the ability of an enterprise unconsolidated entity; or obligations provided. If the interim financial to generate adequate amounts of cash to related to derivative instruments that statements include an interim balance meet the enterprise’s needs. Except are both indexed to and classified in a sheet as of the corresponding interim where it is otherwise clear from the registrant’s own equity under U. S. date of the preceding fiscal year, any discussion, the registrant must indicate GAAP. material changes in financial condition those balance sheet conditions or 9. If the registrant is a foreign private from that date to the date of the most income or cash flow items which the issuer, briefly discuss any pertinent recent interim balance sheet provided registrant believes may be indicators of governmental economic, fiscal, also must be discussed. If discussions of its liquidity condition. Liquidity monetary, or political policies or factors changes from both the end and the generally must be discussed on both a that have materially affected or could corresponding interim date of the long-term and short-term basis. The materially affect, directly or indirectly, preceding fiscal year are required, the issue of liquidity must be discussed in their operations or investments by discussions may be combined at the the context of the registrant’s own United States nationals. The discussion discretion of the registrant. business or businesses. For example, a must also consider the impact of (2) Material changes in results of discussion of working capital may be hyperinflation if hyperinflation has operations. (i) Discuss any material appropriate for certain manufacturing, occurred in any of the periods for which changes in the registrant’s results of industrial, or related operations but audited financial statements or operations with respect to the most might be inappropriate for a bank or unaudited interim financial statements recent fiscal year-to-date period for public utility. are filed. See Rule 3–20(c) of Regulation which a statement of comprehensive 5. Where financial statements S–X for a discussion of cumulative income is provided and the presented or incorporated by reference inflation rates that may trigger this corresponding year-to-date period of the in the registration statement are requirement. preceding fiscal year.

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(ii) Discuss any material changes in capital). This information must be provide payments representing 10% or the registrant’s results of operations provided for the previous two fiscal more, but less than 20%, of the cash with respect to either the most recent years. Additional or other information flow supporting any offered class of the quarter for which a statement of must be provided if material to an asset-backed securities, provide comprehensive income is provided and understanding of each partnership summarized financial information, as the corresponding quarter for the proposed to be included in a roll-up defined by Rule 1–02(bb) of Regulation preceding fiscal year or, in the transaction. S–X (§ 210.1–02(bb) of this chapter), for alternative, the most recent quarter for * * * * * each such entity or group of affiliated which a statement of comprehensive ■ 8. Amend § 229.1112 by revising entities for each of the last three fiscal income is provided and the immediately paragraph (b)(1) and Instruction 3.a. to years (or the life of the entity or group preceding sequential quarter. If the paragraph (b) to read as follows: of affiliated entities and any latter immediately preceding sequential predecessors, if less). quarter is discussed, then provide in § 229.1112 (Item 1112) Significant obligors of pool assets. * * * * * summary form the financial information Instruction 4 to Item 1114(b). *** for that immediately preceding * * * * * a. If the summarized financial sequential quarter that is subject of the (b) Financial information. (1) If the information required by paragraph (b)(1) discussion or identify the registrant’s pool assets relating to a significant of this section is presented on a basis of prior filings on EDGAR that present obligor represent 10% or more, but less accounting other than U.S. GAAP or such information. If there is a change in than 20%, of the asset pool, provide IFRS as issued by the IASB, then the form of presentation from period to summarized financial information, as present a reconciliation to U.S. GAAP period that forms the basis of defined by Rule 1–02(bb) of Regulation and Regulation S–X, pursuant to Item 17 comparison from previous periods S–X (§ 210.1–02(bb) of this chapter), for of Form 20–F. If a reconciliation is provided pursuant to this paragraph, the the significant obligor for each of the unavailable or not obtainable without registrant must discuss the reasons for last three fiscal years (or the life of the unreasonable cost or expense, at a changing the basis of comparison and significant obligor and its predecessors, minimum provide a narrative provide both comparisons in the first if less), provided, however, that for a description of all material variations in filing in which the change is made. significant obligor under Instructions to paragraph 303(c): § 229.1101(k)(2) of this chapter (Item accounting principles, practices and 1. If interim financial statements are 1101(k)(2) of Regulation AB), only net methods used in preparing the non-U.S. presented together with financial operating income for the most recent GAAP financial statements used as a statements for full fiscal years, the fiscal year and interim period is basis for the summarized financial discussion of the interim financial required. information from those accepted in the information must be prepared pursuant * * * * * U.S. to this paragraph (c) and the discussion Instructions to Item 1112(b): * * * * * of the full fiscal year’s information must * * * * * ■ 10. Amend § 229.1115 by revising be prepared pursuant to paragraph (b) of 3. * * * paragraph (b)(1) to read as follows: this section. Such discussions may be a. If the summarized financial combined. Instructions 3, 6, 8 and 11 to information required by paragraph (b)(1) § 229.1115 (Item 1115) Certain derivatives instruments. paragraph (b) of this section apply to of this section is presented on a basis of this paragraph (c). accounting other than U.S. GAAP or * * * * * 2. The registrant’s discussion of IFRS as issued by the IASB, then (b) Financial information. (1) If the material changes in results of operations present a reconciliation to U.S. GAAP aggregate significance percentage related must identify any significant elements and Regulation S–X, pursuant to Item 17 to any entity or group of affiliated of the registrant’s income or loss from of Form 20–F. If a reconciliation is entities providing derivative continuing operations which do not unavailable or not obtainable without instruments contemplated by this arise from or are not necessarily unreasonable cost or expense, at a section is 10% or more, but less than representative of the registrant’s ongoing minimum provide a narrative 20%, provide summarized financial business. description of all material variations in information, as defined by Rule 1– ■ 7. Amend § 229.914 by revising accounting principles, practices and 02(bb) of Regulation S–X (§ 210.1– paragraph (a) to read as follows: methods used in preparing the non-U.S. 02(bb) of this chapter), for such entity or GAAP financial statements used as a group of affiliated entities for each of § 229.914 (Item 914) Pro forma financial the last three fiscal years (or the life of statements: Selected financial data. basis for the summarized financial information from those accepted in the the entity or group of affiliated entities (a) For each partnership proposed to U.S. and any predecessors, if less). be included in a roll-up transaction provide: Ratio of earnings to fixed * * * * * * * * * * ■ charges, cash and cash equivalents, total 9. Amend § 229.1114 by revising paragraph (b)(2)(i) and Instruction 4.a. PART 239—FORMS PRESCRIBED assets at book value, total assets at the UNDER THE SECURITIES ACT OF 1933 value assigned for purposes of the roll- to paragraph (b) to read as follows: up transaction (if applicable), total § 229.1114 (Item 1114) Credit enhancement ■ 11. The authority citation for part 239 liabilities, general and limited partners’ and other support, except for certain continues to read in part as follows: derivatives instruments. equity, net increase (decrease) in cash Authority: 15 U.S.C. 77c, 77f, 77g, 77h, 77j, and cash equivalents, net cash provided * * * * * 77s, 77z–2, 77z–3, 77sss, 78c, 78l, 78m, 78n, by operating activities, distributions; (b) * * * 78o(d), 78o–7 note, 78u–5, 78w(a), 78ll, and per unit data for net income (loss), (2) Financial information. (i) If any 78mm, 80a–2(a), 80a–3, 80a–8, 80a–9, 80a– book value, value assigned for purposes entity or group of affiliated entities 10, 80a–13, 80a–24, 80a–26, 80a–29, 80a–30, of the roll-up transaction (if applicable), providing enhancement or other support and 80a–37; and sec. 107, Pub. L. 112–106, and distributions (separately identifying described in paragraph (a) of this 126 Stat. 312, unless otherwise noted. distributions that represent a return of section is liable or contingently liable to * * * * *

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■ 12. Amend Form S–1 (referenced in Item 7. Financial Statements F. If interim period financial statements § 239.11) by: Include financial statements meeting are included, the summarized financial ■ a. Revising paragraphs (f) and (g) of the requirements of Regulation S–X [17 information should be updated for that Instruction 1 under ‘‘Instructions as to CFR 210]. interim period, which may be Summary Prospectus’’; and unaudited, provided that fact is stated. ■ b. Adding paragraph (h) of Instruction Item 8. Undertakings If summarized financial data for interim 1 under ‘‘Instructions as to Summary Furnish the following undertakings: periods is provided, comparative data Prospectus’’ to read as follows: 1. The undersigned registrant hereby from the same period in the prior Note: The text of Form S–1 does not, and undertakes to file a post-effective financial year shall also be provided, this amendment will not, appear in the Code amendment, not later than 120 days except that the requirement for of Federal Regulations. after the end of each fiscal year comparative balance sheet data is subsequent to that covered by the satisfied by presenting the year end UNITED STATES SECURITIES AND financial statements presented herein, balance sheet information. EXCHANGE COMMISSION containing financial statements meeting * * * * * Washington, DC 20549 the requirements of Regulation S–X [17 ■ 16. Amend Form F–4 (referenced in CFR 210]. § 239.34) by: FORM S–1 * * * * * ■ a. Removing and reserving Item 3(d), REGISTRATION STATEMENT UNDER ■ 14. Amend Form S–4 (referenced in (e), and (f) and removing the Instruction THE SECURITIES ACT OF 1933 § 239.25) by: to Item 3(e) and (f) under Part I, Section ■ A (‘‘Information About the * * * * * a. Removing and reserving Item 3(d), (e), and (f) and removing the Instruction Transaction’’); and INSTRUCTIONS AS TO SUMMARY to Item 3(e) and (f) under Part I, Section ■ b. Removing and reserving Item PROSPECTUSES A (‘‘Information About the 17(b)(3) under Part I, Section C (‘‘Information with Respect to Foreign 1. * * * Transaction’’); and ■ b. Removing and reserving Item Companies Other Than F–3 (f) As to Item 11, a brief statement of Companies’’). the general character of the business 17(b)(3) and (4) under Part I, Section C (‘‘Information with Respect to done and intended to be done and a PART 240—GENERAL RULES AND brief statement of the nature and present Companies Other Than S–3 Companies’’). REGULATIONS, SECURITIES status of any material pending legal ■ EXCHANGE ACT OF 1934 proceedings; 15. Amend Form F–1 (referenced in (g) A tabular presentation of notes § 239.31) by: ■ 17. The authority citation for part 240 ■ a. Revising the paragraph 1(c)(v) payable, long term debt, deferred continues to read in part as follows: under ‘‘Instructions as to Summary credits, minority interests, if material, Prospectuses’’; and Authority: 15 U.S.C. 77c, 77d, 77g, 77j, and the equity section of the latest ■ 77s, 77z–2, 77z–3, 77eee, 77ggg, 77nnn, b. Adding paragraph 1(c)(vi) to read as 77sss, 77ttt, 78c, 78c–3, 78c–5, 78d, 78e, 78f, balance sheet filed, as may be follows: appropriate; and 78g, 78i, 78j, 78j–1, 78k, 78k–1, 78l, 78m, (h) Subject to appropriate variation to Note: The text of Form F–1 does not, and 78n, 78n–1, 78o, 78o–4, 78o–10, 78p, 78q, 78q–1, 78s, 78u–5, 78w, 78x, 78dd, 78ll, conform to the nature of the registrant’s this amendment will not, appear in the Code of Federal Regulations. 78mm, 80a–20, 80a–23, 80a–29, 80a–37, 80b– business, provide summarized financial 3, 80b–4, 80b–11, and 7201 et seq., and 8302; information defined by Rule 1– UNITED STATES SECURITIES AND 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 02(bb)(1)(i) and (ii) of Regulation S–X EXCHANGE COMMISSION U.S.C. 1350; Pub. L. 111–203, 939A, 124 Stat. (§ 210.1–02(bb) of this chapter) in 1376 (2010); and Pub. L. 112–106, sec. 503 comparative columnar form for the Washington, DC 20549 and 602, 126 Stat. 326 (2012), unless otherwise noted. periods for which financial statements FORM F–1 are required by Regulation S–X (17 CFR * * * * * part 210). REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 § 240.14a–101 [Amended] * * * * * ■ 18. Amend § 240.14a–101 by ■ 13. Amend Form S–20 (referenced in * * * * * removing and reserving (b)(8), (9), and § 239.20) by revising Item 7 and INSTRUCTIONS AS TO SUMMARY (10) under Item 14 (‘‘Mergers, paragraph (1) to Item 8 to read as PROSPECTUSES consolidations, acquisitions and similar follows: 1. * * * matters’’): Note: The text of Form S–20 does not, and (c) * * * this amendment will not, appear in the Code (v) As to Item 4, a brief statement of PART 249—FORMS, SECURITIES of Federal Regulations. the general character of the business EXCHANGE ACT OF 1934 UNITED STATES SECURITIES AND done and intended to be done and a ■ 19. The authority citation for part 249 EXCHANGE COMMISSION brief statement of the nature and present continues to read, in part, as follows: status of any material pending legal Washington, DC 20549 Authority: 15 U.S.C. 78a et seq. and 7201 proceedings; et seq.; 12 U.S.C. 5461 et seq.; 18 U.S.C. 1350; FORM S–20 (vi) Subject to appropriate variation to Sec. 953(b), Pub. L. 111–203, 124 Stat. 1904; conform to the nature of the registrant’s REGISTRATION STATEMENT UNDER Sec. 102(a)(3), Pub. L. 112–106, 126 Stat. 309 business, provide summarized financial (2012); Sec. 107, Pub. L. 112–106, 126 Stat. THE SECURITIES ACT OF 1933 information defined by Rule 1– 313 (2012), and Sec. 72001, Pub. L. 114–94, * * * * * 02(bb)(1)(i) and (ii) of Regulation S–X 129 Stat. 1312 (2015), unless otherwise (§ 210.1–02(bb) of this chapter) in noted. PART II INFORMATION NOT comparative columnar form for the * * * * * REQUIRED IN PROSPECTUS periods for which financial statements ■ 20. Amend Form 20–F (referenced in * * * * * are required by Item 8.A. of Form 20– § 249.220f) by:

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■ a. Removing and reserving General understanding of the company’s impact such restrictions have had or are Instruction G(c); financial condition, changes in financial expected to have on the ability of the ■ b. Removing and reserving Item 3.A; condition and results of operations. company to meet its cash obligations. ■ c. Removing Instructions to Item 3.A; A. Operating results. Provide 2. Information regarding the type of ■ d. Amending Item 5; and information regarding significant financial instruments used, the maturity ■ e. Revising Instruction 3 of factors, including unusual or infrequent profile of debt, currency and interest Instructions to Item 8.A.2 to remove the events or new developments, materially rate structure. The discussion also must final sentence, to read as follows: affecting the company’s income from include funding and treasury policies Note: The text of Form 20–F does not, and operations, indicating the extent to and objectives in terms of the manner in this amendment will not, appear in the Code which income was so affected. Describe which treasury activities are controlled, of Federal Regulations. any other significant component of the currencies in which cash and cash revenue or expenses necessary to equivalents are held, the extent to UNITED STATES SECURITIES AND understand the company’s results of which borrowings are at fixed rates, and EXCHANGE COMMISSION operations. the use of financial instruments for Washington, DC 20549 1. If the statement of comprehensive hedging purposes. income presents material changes from 3. Information regarding the FORM 20–F period to period in net sales or revenue, company’s material cash requirements, * * * * * if applicable, describe the extent to including commitments for capital expenditures, as of the end of the latest Item 5. Operating and Financial Review which such changes are attributable to financial year and any subsequent and Prospects changes in prices or to changes in the volume or amount of products or interim period and an indication of the The purpose of this standard is to services being sold or to the general purpose of such requirements provide management’s explanation of introduction of new products or and the anticipated sources of funds factors that have materially affected the services. needed to satisfy such requirements. company’s financial condition and 2. If the currency in which financial C. Research and development, patents results of operations for the historical statements are presented is of a country and licenses, etc. Provide a description periods covered by the financial that has experienced hyperinflation, the of the company’s research and statements, and management’s existence of such inflation, a five year development policies for the last three assessment of factors and trends which history of the annual rate of inflation years. are anticipated to have a material effect and a discussion of the impact of D. Trend information. The company on the company’s financial condition hyperinflation on the company’s must identify material recent trends in and results of operations in future business must be disclosed. production, sales and inventory, the periods. This discussion and analysis 3. Provide information regarding the state of the order book and costs and must provide a narrative explanation of impact of foreign currency fluctuations selling prices since the latest financial the registrant’s financial statements that on the company, if material, and the year. The company also must discuss, allows investors to view the registrant extent to which foreign currency net for at least the current financial year, from management’s perspective. investments are hedged by currency any known trends, uncertainties, Discuss the company’s financial borrowings and other hedging demands, commitments or events that condition, changes in financial instruments. are reasonably likely to have a material condition and results of operations for 4. Provide information regarding any effect on the company’s net sales or each year and interim period for which governmental economic, fiscal, revenues, income from continuing financial statements are required. The monetary or political policies or factors operations, profitability, liquidity or discussion must include a quantitative that have materially affected, or could capital resources, or that would cause and qualitative description of the materially affect, directly or indirectly, reported financial information not reasons underlying material changes, the company’s operations or necessarily to be indicative of future including where material changes investments by host country operating results or financial condition. within a line item offset one another, to shareholders. E. Critical Accounting Estimates. the extent necessary for an B. Liquidity and capital resources. A registrant that does not apply in its understanding of the company’s The following information must be primary financial statements IFRS as business as a whole. Information provided: issued by the IASB must discuss provided also must relate to all separate 1. Information regarding the information about its critical accounting segments and/or other subdivisions company’s liquidity (both short and estimates. This disclosure should (e.g., geographic areas, product lines) of long term), including: supplement, not duplicate, the the company. The discussion must (a) A description of the internal and description of accounting policies in the include other statistical data that the external sources of liquidity and a brief notes to the financial statements. company believes will enhance a discussion of any material unused Critical accounting estimates. Critical reader’s understanding of the company’s sources of liquidity. Include a statement accounting estimates are those estimates financial condition, changes in financial by the company that, in its opinion, the made in accordance with generally condition, and results of operations. The working capital is sufficient for the accepted accounting principles that discussion and analysis must also focus company’s present requirements, or, if involve a significant level of estimation specifically on material events and not, how it proposes to provide the uncertainty and have had or are uncertainties known to management additional working capital needed. reasonably likely to have a material that would cause reported financial (b) an evaluation of the sources and impact on financial condition or results information not to be necessarily amounts of the company’s cash flows, of operations. Discuss, to the extent indicative of future operating results or including the nature and extent of any material, why each critical accounting of future financial condition. Provide legal or economic restrictions on the estimate is subject to uncertainty, how the information specified below as well ability of subsidiaries to transfer funds much each estimate has changed during as such other information that is to the company in the form of cash the reporting period, and the sensitivity necessary for an investor’s dividends, loans or advances and the of the reported amounts to the material

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methods, assumptions and estimates disclosure requirements. In responding Instructions to Item 8.A.2: underlying its calculation. The to this Item 5, an issuer need not repeat * * * * * discussion should provide quantitative information contained in financial In initial registration statements, if the as well as qualitative information when statements that comply with IFRS as financial statements presented pursuant quantitative information is reasonably issued by the IASB. to Item 8.A.2 are prepared in accordance available and will provide material 6. Generally, the discussion must with U.S. generally accepted accounting information to investors. cover the periods covered by the principles, the earliest of the three years Instructions to Item 5: financial statements and the registrant may be omitted if that information has 1. Refer to the Commission’s may use any format that in the not previously been included in a filing interpretive releases (No. 33–6835) registrant’s judgment enhances a made under the Securities Act of 1933 dated May 18, 1989, (No. 33–8056) reader’s understanding. For registrants or the Securities Exchange Act of 1934. dated January 22, 2002, (No. 33–8350) providing financial statements covering * * * * * dated Dec. 19, 2003, (No. 33–9144) three years in a filing, a discussion of dated September 17, 2010, and (No. 33– ■ 21. Amend Form 40–F (referenced in the earliest of the three years may be § 249.240f) by: 10751) dated January 30, 2020 for omitted if such discussion was already guidance in preparing this discussion ■ a. Revising General Instruction B.(11) included in any other of the registrant’s to read as follows; and analysis by management of the prior filings on EDGAR that required company’s financial condition and ■ b. Removing and reserving General disclosure in compliance with Item 5 of Instructions B.(12) and (13); and results of operations. Form 20–F, provided that registrants 2. The discussion must focus on the ■ c. Removing the Instructions electing not to include a discussion of primary financial statements presented following General Instruction B.(13). the earliest year must include a in the document. You should refer to statement that identifies the location in Note: The text of Form 40–F does not, and the reconciliation to U.S. GAAP, if any, the prior filing where the omitted this amendment will not, appear in the Code and discuss any aspects of the discussion may be found. of Federal Regulations. differences between foreign and U.S. GAAP, not otherwise discussed in the 7. Discussion of commitments or UNITED STATES SECURITIES AND reconciliation, that you believe are obligations, including contingent EXCHANGE COMMISSION obligations, arising from arrangements necessary for an understanding of the Washington, DC 20549 financial statements as a whole. with unconsolidated entities or persons 3. We encourage you to supply that have or are reasonably likely to FORM 40–F forward-looking information, but that have a material current or future effect * * * * * type of information is not required. on a registrant’s financial condition, Forward-looking information is covered changes in financial condition, revenues B. Information To Be Filed on This Form expressly by the safe harbor provisions or expenses, results of operations, * * * * * of Section 27A of the Securities Act and liquidity, cash requirements or capital (11) Off-balance sheet arrangements. Section 21E of the Exchange Act. resources must be provided even when To the extent not discussed in Forward-looking information is different the arrangement results in no management’s discussion and analysis than presently known data which will obligations being reported in the that is provided pursuant to General have an impact on future operating registrant’s consolidated balance sheets. Instruction B.(3) of this form, discuss results, such as known future increases Such off-balance sheet arrangements the commitments or obligations, in costs of labor or materials. You are may include: Guarantees; retained or including continent obligations, arising required to disclose this latter type of contingent interests in assets from arrangements with unconsolidated data if it is material. transferred; contractual arrangements entities or persons that have or are 4. To the extent the primary financial that support the credit, liquidity or reasonably likely to have a material statements reflect the use of exceptions market risk for transferred assets; current or future effect on a registrant’s permitted or required by IFRS 1, the obligations that arise or could arise from financial condition, changes in financial issuer must: variable interests held in an condition, revenues or expenses, results a. Provide detailed information as to unconsolidated entity; or obligations of operations, liquidity, cash the exceptions used, including: related to derivative instruments that requirements or capital resources must i. An indication of the items or class are both indexed to and classified in a be provided even when the arrangement of items to which the exception was registrant’s own equity, or not reflected results in no obligations being reported applied; and in the statement of financial position. ii. A description of what accounting in the registrant’s consolidated balance Instruction to Item 5.A: principle was used and how it was sheets. Such off-balance sheet applied; 1. You must provide the information arrangements may include: Guarantees; b. Include, where material, qualitative required by Item 5.A.2 with respect to retained or contingent interests in assets disclosure of the impact on financial hyperinflation if hyperinflation has transferred; contractual arrangements condition, changes in financial occurred in any of the periods for which that support the credit, liquidity or condition and results of operations that you are required to provide audited market risk for transferred assets; the treatment specified by IFRS would financial statements or unaudited obligations that arise or could arise from have had absent the election to rely on interim financial statements in the variable interests held in an the exception. document. See Rule 3–20(c) of unconsolidated entity; or obligations 5. An issuer filing financial Regulation S–X for a discussion of related to derivative instruments that statements that comply with IFRS as cumulative inflation rates that trigger are both indexed to and classified in a issued by the IASB must, in providing this requirement. registrant’s own equity, or not reflected information in response to paragraphs of * * * * * in the statement of financial position. this Item 5 that refer to pronouncements * * * * * of the FASB, provide disclosure that Item 8. Financial Information ■ 22. Amend Form 8–K (referenced in satisfies the objective of the Item 5 * * * * * § 249.308) by revising Item 2.03(c)(1)

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through(3) and 2.03(d) to read as FASB ASC Topic 840, Leases, as may be (3) Any obligation, including a follows: modified or supplemented; contingent obligation, under a contract Note: The text of Form 8–K does not, and (3) an operating lease obligation that would be accounted for as a this amendment will not, appear in the Code means a payment obligation under a derivative instrument, except that it is of Federal Regulations. lease classified as an operating lease and both indexed to the registrant’s own disclosed pursuant to FASB ASC Topic stock and classified in stockholders’ UNITED STATES SECURITIES AND 840, as may be modified or equity in the registrant’s statement of EXCHANGE COMMISSION supplemented; or financial position, and therefore Washington, DC 20549 (4) a short-term debt obligation that excluded from the scope of FASB ASC arises other than in the ordinary course Topic 815, Derivatives and Hedging, FORM 8–K of business. pursuant to FASB ASC subparagraph * * * * * (d) For purposes of this Item 2.03, off- 815–10–15–74(a), as may be modified or balance sheet arrangement means any supplemented; or INFORMATION TO BE INCLUDED IN transaction, agreement or other (4) Any obligation, including a THE REPORT contractual arrangement to which an contingent obligation, arising out of a * * * * * entity unconsolidated with the variable interest (as defined in the FASB registrant is a party, under which the ASC Master Glossary), as may be Item 2.03 Creation of a Direct Financial registrant has: modified or supplemented in an Obligation or an Obligation Under an (1) Any obligation under a guarantee unconsolidated entity that is held by, Off-Balance Sheet Arrangement of a contract that has any of the and material to, the registrant, where Registrant. characteristics identified in FASB ASC such entity provides financing, * * * * * paragraph 460–10–15–4 (Guarantees liquidity, market risk or credit risk (c) For purposes of this Item 2.03, Topic), as may be modified or support to, or engages in leasing, direct financial obligation means any of supplemented, and that is not excluded hedging or research and development the following: from the initial recognition and services with, the registrant. (1) A long-term debt obligation means measurement provisions of FASB ASC * * * * * a payment obligation under long-term paragraphs 460–10–15–7, 460–10–25–1, By the Commission. borrowings referenced in FASB ASC and 460–10–30–1. paragraph 470–10–50–1 (Debt Topic), as (2) A retained or contingent interest in Dated: January 30, 2020. may be modified or supplemented); assets transferred to an unconsolidated Eduardo A. Aleman, (2) a capital lease obligation means a entity or similar arrangement that serves Deputy Secretary. payment obligation under a lease as credit, liquidity or market risk [FR Doc. 2020–02313 Filed 2–27–20; 8:45 am] classified as a capital lease pursuant to support to such entity for such assets; BILLING CODE 8011–01–P

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Part III Department of the Treasury Office of the Comptroller of the Currency Federal Reserve System

Federal Deposit Insurance Corporation Commodity Futures Trading Commission Securities and Exchange Commission 12 CFR Parts 44, 248, and 351 17 CFR Parts 75 and 255 Prohibitions and Restrictions on Proprietary Trading and Certain Interests in, and Relationships With, Hedge Funds and Private Equity Funds; Proposed Rules

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DEPARTMENT OF THE TREASURY section 13 of the BHC Act by modifying • Email: regs.comments@ and clarifying requirements related to occ.treas.gov. Office of the Comptroller of the the covered fund provisions. • Mail: Chief Counsel’s Office, Office Currency DATES: Comments must be received on of the Comptroller of the Currency, 400 or before April 1, 2020. 7th Street SW, Suite 3E–218, 12 CFR Part 44 Washington, DC 20219. ADDRESSES: Interested parties are • Hand Delivery/Courier: 400 7th encouraged to submit written comments [Docket No. OCC–2020–0002] Street SW, Suite 3E–218, Washington, jointly to all of the agencies. RIN 1557–AE67 DC 20219. Commenters are encouraged to use the • Fax: (571) 465–4326. title ‘‘Proposed Revisions to Restrictions FEDERAL RESERVE SYSTEM Instructions: You must include on Proprietary Trading and Certain ‘‘OCC’’ as the agency name and ‘‘Docket Interests in, and Relationships with, 12 CFR Part 248 ID OCC 2020–0002’’ in your comment. Hedge Funds and Private Equity Funds’’ In general, the OCC will enter all [Docket No. R–1694] to facilitate the organization and comments received into the docket and distribution of comments among the publish the comments on the RIN 7100–AF70 agencies. Commenters are also Regulations.gov website without encouraged to identify the number of FEDERAL DEPOSIT INSURANCE change, including any business or the specific question for comment to CORPORATION personal information that you provide which they are responding. Comments such as name and address information, should be directed to: 12 CFR Part 351 email addresses, or phone numbers. OCC: You may submit comments to Comments received, including RIN 3064–AF17 the OCC by any of the methods set forth attachments and other supporting below. Commenters are encouraged to materials, are part of the public record COMMODITY FUTURES TRADING submit comments through the Federal and subject to public disclosure. Do not COMMISSION eRulemaking Portal or email, if possible. include any information in your Please use the title ‘‘Proposed Revisions comment or supporting materials that 17 CFR Part 75 to Prohibitions and Restrictions on you consider confidential or Proprietary Trading and Certain RIN 3038–AE93 inappropriate for public disclosure. Interests in, and Relationships with, You may review comments and other SECURITIES AND EXCHANGE Hedge Funds and Private Equity Funds’’ related materials that pertain to this COMMISSION to facilitate the organization and rulemaking action by any of the distribution of the comments. You may following methods: • 17 CFR Part 255 submit comments by any of the Viewing Comments Electronically— following methods: Regulations.gov Classic or [Release No. BHCA–8; File No. S7–02–20] Federal eRulemaking Portal— Regulations.gov Beta: ‘‘Regulations.gov Classic or Regulations.gov Classic: Go to https:// RIN 3235–AM70 Regulations.gov Beta’’: www.regulations.gov/. Enter ‘‘Docket ID Prohibitions and Restrictions on Regulations.gov Classic: Go to https:// OCC–2020–0002’’ in the Search box and Proprietary Trading and Certain www.regulations.gov/. Enter ‘‘Docket ID click ‘‘Search.’’ Click on ‘‘Open Docket Interests in, and Relationships With, OCC–2020–0002’’ in the Search Box and Folder’’ on the right side of the screen. Hedge Funds and Private Equity Funds click ‘‘Search.’’ Click on ‘‘Comment Comments and supporting materials can Now’’ to submit public comments. For be viewed and filtered by clicking on AGENCY: Office of the Comptroller of the help with submitting effective ‘‘View all documents and comments in Currency, Treasury (OCC); Board of comments please click on ‘‘View this docket’’ and then using the filtering Governors of the Federal Reserve Commenter’s Checklist.’’ Click on the tools on the left side of the screen. Click System (Board); Federal Deposit ‘‘Help’’ tab on the Regulations.gov home on the ‘‘Help’’ tab on the Insurance Corporation (FDIC); Securities page to get information on using Regulations.gov home page to get and Exchange Commission (SEC); and Regulations.gov, including instructions information on using Regulations.gov. Commodity Futures Trading for submitting public comments. The docket may be viewed after the Commission (CFTC). Regulations.gov Beta: Go to https:// close of the comment period in the same ACTION: Notice of proposed rulemaking. beta.regulations.gov/ or click ‘‘Visit manner as during the comment period. New Regulations.gov Site’’ from the Regulations.gov Beta: Go to https:// SUMMARY: The OCC, Board, FDIC, SEC, Regulations.gov Classic homepage. beta.regulations.gov/ or click ‘‘Visit and CFTC (together, the agencies) are Enter ‘‘Docket ID OCC–2020–0002’’ in New Regulations.gov Site’’ from the inviting comment on a proposal that the Search Box and click ‘‘Search.’’ Regulations.gov Classic homepage. would amend the regulations Public comments can be submitted via Enter ‘‘Docket ID OCC–2020–0002’’ in implementing section 13 of the Bank the ‘‘Comment’’ box below the the Search Box and click ‘‘Search.’’ Holding Company Act (BHC Act). displayed document information or by Click on the ‘‘Comments’’ tab. Section 13 contains certain restrictions clicking on the document title and then Comments can be viewed and filtered on the ability of a banking entity or clicking the ‘‘Comment’’ box on the top- by clicking on the ‘‘Sort By’’ drop-down nonbank financial company supervised left side of the screen. For help with on the right side of the screen or the by the Board to engage in proprietary submitting effective comments please ‘‘Refine Results’’ options on the left side trading and have certain interests in, or click on ‘‘Commenter’s Checklist.’’ For of the screen. Supporting materials can relationships with, a hedge fund or assistance with the Regulations.gov Beta be viewed by clicking on the private equity fund. The proposed site, please call (877) 378–5457 (toll ‘‘Documents’’ tab and filtered by amendments are intended to continue free) or (703) 454–9859 Monday–Friday, clicking on the ‘‘Sort By’’ drop-down on the agencies’ efforts to improve and 9 a.m.–5 p.m. ET or email regulations@ the right side of the screen or the streamline the regulations implementing erulemakinghelpdesk.com. ‘‘Refine Results’’ options on the left side

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of the screen. For assistance with the Corporation, 550 17th Street NW, applicable laws, and may be accessible Regulations.gov Beta site, please call Washington, DC 20429. under the Freedom of Information Act. (877) 378–5457 (toll free) or (703) 454– • Hand Delivered/Courier: Comments SEC: You may submit comments by 9859 Monday–Friday, 9 a.m.–5 p.m. ET may be hand-delivered to the guard the following methods: or email regulations@ station at the rear of the 550 17th Street, Electronic Comments erulemakinghelpdesk.com. NW, building (located on F Street) on The docket may be viewed after the business days between 7:00 a.m. and • Use the SEC’s internet comment close of the comment period in the same 5:00 p.m. form (http://www.sec.gov/rules/ • manner as during the comment period. Email: [email protected]. proposed.shtml); or • Viewing Comments Personally: You Include the 3064–AF17 on the subject Send an email to rule-comments@ line of the message. sec.gov. Please include File Number S7– may personally inspect comments at the • OCC, 400 7th Street SW, Washington, Public Inspection: All comments 02–20 on the subject line. received must include the agency name DC 20219. For security reasons, the OCC Paper Comments requires that visitors make an and RIN 3064–AF17 for this rulemaking. • appointment to inspect comments. You All comments received will be posted Send paper comments in triplicate may do so by calling (202) 649–6700 or, without change to http://www.fdic.gov/ to Vanessa A. Countryman, Secretary, for persons who are deaf or hearing regulations/laws/federal/, including any Securities and Exchange Commission, impaired, TTY, (202) 649–5597. Upon personal information provided. Paper 100 F Street NE, Washington, DC arrival, visitors will be required to copies of public comments may be 20549–1090. present valid government-issued photo ordered from the FDIC Public All submissions should refer to File identification and submit to security Information Center, 3501 North Fairfax Number S7–02–20. This file number screening in order to inspect comments. Drive, Room E–1002, Arlington, VA should be included on the subject line 22226 or by telephone at (877) 275–3342 Board: You may submit comments, if email is used. To help us process and or (703) 562–2200. identified by Docket No. R–1694; RIN review your comments more efficiently, CFTC: You may submit comments, 7100–AF70, by any of the following please use only one method. The SEC identified by RIN 3038–AE93 and methods: will post all comments on the SEC’s ‘‘Proposed Revisions to Prohibitions and • website (http://www.sec.gov/rules/ Agency Website: http:// Restrictions on Proprietary Trading and proposed.shtml). Comments are also www.federalreserve.gov. Follow the certain Interests in, and Relationships available for website viewing and instructions for submitting comments at with, Hedge Funds and Private Equity printing in the SEC’s Public Reference http://www.federalreserve.gov/ Funds,’’ by any of the following generalinfo/foia/ProposedRegs.cfm. Room, 100 F Street NE, Washington, DC • methods: Email: regs.comments@ • Agency Website: https:// 20549, on official business days federalreserve.gov. Include docket and comments.cftc.gov. Follow the between the hours of 10:00 a.m. and RIN numbers in the subject line of the instructions on the website for 3:00 p.m. All comments received will be message. submitting comments. posted without change. Persons • Fax: (202) 452–3819 or (202) 452– • Mail: Send to Christopher submitting comments are cautioned that 3102. Kirkpatrick, Secretary, Commodity the SEC does not redact or edit personal • Mail: Ann E. Misback, Secretary, Futures Trading Commission, 1155 21st identifying information from comment Board of Governors of the Federal Street NW, Washington, DC 20581. submissions. You should submit only Reserve System, 20th Street and • Hand Delivery/Courier: Same as information that you wish to make Constitution Avenue NW, Washington, Mail above. available publicly. DC 20551. Please submit your comments using Studies, memoranda, or other All public comments will be made only one method. All comments must be substantive items may be added by the available on the Board’s website at submitted in English, or if not, SEC or SEC staff to the comment file http://www.federalreserve.gov/ accompanied by an English translation. during this rulemaking. A notification of generalinfo/foia/ProposedRegs.cfm as Comments will be posted as received to the inclusion in the comment file of any submitted, unless modified for technical www.cftc.gov and the information you materials will be made available on the reasons or to remove personally submit will be publicly available. If, SEC’s website. To ensure direct identifiable information at the however, you submit information that electronic receipt of such notifications, commenter’s request. Accordingly, ordinarily is exempt from disclosure sign up through the ‘‘Stay Connected’’ comments will not be edited to remove under the Freedom of Information Act, option at www.sec.gov to receive any identifying or contact information. you may submit a petition for notifications by email. Public comments may also be viewed confidential treatment of the exempt FOR FURTHER INFORMATION CONTACT: electronically or in paper form in Room information according to the procedures OCC: Roman Goldstein, Risk 146, 1709 New York Avenue NW, set forth in CFTC Regulation 145.9.1. Specialist, Treasury and Market Risk Washington, DC 20006, between 9:00 The CFTC reserves the right, but shall Policy, (202) 649–6360; Tabitha Edgens, a.m. and 5:00 p.m. on weekdays. have no obligation, to review, pre- Counsel; Mark O’Horo, Senior Attorney, FDIC: You may submit comments, screen, filter, redact, refuse or remove Chief Counsel’s Office, (202) 649–5490; identified by RIN 3064–AF17 by any of any or all of your submission from for persons who are deaf or hearing the following methods: www.cftc.gov that it may deem to be impaired, TTY, (202) 649–5597, Office • Agency Website: https:// inappropriate for publication, such as of the Comptroller of the Currency, 400 www.FDIC.gov/regulations/laws/ obscene language. All submissions that 7th Street SW, Washington, DC 20219. federal/propose.html. Follow have been redacted or removed that Board: Flora Ahn, Special Counsel, instructions for submitting comments contain comments on the merits of the (202) 452–2317, Gregory Frischmann, on the Agency website. rulemaking will be retained in the Senior Counsel, (202) 452–2803, Kirin • Mail: Robert E. Feldman, Executive public comment file and will be Walsh, Attorney, (202) 452–3058, or Secretary, Attention: Comments/Legal considered as required under the Sarah Podrygula, Attorney, (202) 912– ESS, Federal Deposit Insurance Administrative Procedure Act and other 4658, Legal Division, Elizabeth

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MacDonald, Manager, (202) 475–6316, B. Paperwork Reduction Act Analysis rule implementing section 13 in Cecily Boggs, Senior Financial Request for Comment on Proposed December 2013 (the 2013 rule), and Institution Policy Analyst, (202) 530– Information Collection those provisions became effective on 6209, Jinai Holmes, Lead Financial C. Initial Regulatory Flexibility Act April 1, 2014.6 Analysis The agencies published a notice of Institution Policy Analyst, (202) 452– D. Riegle Community Development and 2834, Division of Supervision and Regulatory Improvement Act proposed rulemaking in July 2018 (the Regulation; Board of Governors of the E. OCC Unfunded Mandates Reform Act 2018 proposed rule or 2018 proposal) Federal Reserve System, 20th and C F. SEC Economic Analysis that proposed several amendments to Streets NW, Washington, DC 20551. G. SEC Small Business Regulatory the 2013 rule.7 These proposed FDIC: Bobby R. Bean, Associate Enforcement Fairness Act revisions sought to provide greater clarity and certainty about what Director, [email protected], Andrew D. I. Background Carayiannis, Senior Policy Analyst, activities are prohibited under the 2013 [email protected], or Brian Cox, Section 13 of the Bank Holding rule—in particular, under the 1 Senior Policy Analyst, [email protected], Company Act of 1956 (BHC Act), also prohibition on proprietary trading—and Capital Markets Branch, (202) 898–6888; known as the Volcker Rule, generally to better tailor the compliance Michael B. Phillips, Counsel, prohibits any banking entity from requirements based on the risk of a [email protected], or Benjamin J. engaging in proprietary trading or from banking entity’s activities. The agencies Klein, Counsel, [email protected], Legal acquiring or retaining an ownership issued a final rule implementing the Division, Federal Deposit Insurance interest in, sponsoring, or having certain amendments in November 2019 (the Corporation, 550 17th Street NW, relationships with a hedge fund or 2019 amendments), and those 2 Washington, DC 20429. private equity fund (covered fund). The provisions became effective in January statute expressly exempts from these 2020.8 CFTC: Cantrell Dumas, Special prohibitions various activities, As part of the 2018 proposal, the Counsel, (202) 418–5043, cdumas@ including among other things: agencies suggested targeted changes to cftc.gov; Jeffrey Hasterok, Data and Risk • Underwriting and market making- the provisions of the 2013 rule relating Analyst, (646) 746–9736, jhasterok@ related activities; to acquiring or retaining an ownership cftc.gov, Division of Swap Dealer and • Risk-mitigating hedging activities; interest in, sponsoring, or having certain Intermediary Oversight; Mark Fajfar, • Activities on behalf of customers; relationships with a fund and sought Assistant General Counsel, (202) 418– • Activities for the general account of comments on other aspects of the 6636, [email protected], Office of the insurance companies; and covered fund provisions beyond those General Counsel; Stephen Kane, • Trading and covered fund activities changes for which specific rule text was Research Economist, (202) 418–5911, and investments by non-U.S. banking proposed.9 The 2019 amendments [email protected], Office of the Chief entities solely outside the United finalized those changes to the covered Economist; Commodity Futures Trading States.3 fund provisions for which specific rule Commission, Three Lafayette Centre, In addition, section 13 of the BHC Act text was proposed in the 2018 proposal. 1155 21st Street NW, Washington, DC contains an exemption that permits The agencies indicated they would 20581. banking entities to organize and offer, continue to consider other aspects of the SEC: Matthew Cook, Senior Counsel, including sponsor, covered funds, covered fund provisions and intended Benjamin Tecmire, Senior Counsel, and subject to certain restrictions, including to issue a separate proposed rulemaking Jennifer Songer, Branch Chief at (202) that banking entities do not rescue that specifically addresses those areas.10 551–6787 or [email protected], Division investors in those funds from loss, and The staffs of the agencies also have of Investment Management, U.S. are not themselves exposed to addressed several questions concerning Securities and Exchange Commission, significant losses due to investments in the regulations implementing section 13 100 F Street NE, Washington, DC 20549. or other relationships with these funds.4 through a series of staff Frequently 11 SUPPLEMENTARY INFORMATION: Authority under section 13 of the Asked Questions (FAQs). In the 2018 BHC Act for developing and adopting Table of Contents regulations to implement the 6 Prohibitions and Restrictions on Proprietary I. Background prohibitions, restrictions, and Trading and Certain Interests in, and Relationships exemptions of section 13 is shared with, Hedge Funds and Private Equity Funds; Final II. Overview of Proposal Rule, 79 FR 5535 (Jan. 31, 2014). III. Discussion of the Proposal among the Board, the FDIC, the OCC, 7 Proposed Revisions to Prohibitions and A. Qualifying Foreign Excluded Funds the SEC, and the CFTC (individually, an Restrictions on Proprietary Trading and Certain B. Modifications to Existing Covered Fund agency, and collectively, the agencies).5 Interests in, and Relationships With, Hedge Funds Exclusions The agencies originally issued a final and Private Equity Funds, 83 FR 33432 (July 17, 1. Foreign Public Funds 2018). 2. Loan Securitizations 8 Prohibitions and Restrictions on Proprietary 1 12 U.S.C. 1851. 3. Public Welfare and Small Business Trading and Certain Interests in, and Relationships 2 Id. Funds With, Hedge Funds and Private Equity Funds, 84 3 12 U.S.C. 1851(d)(1). FR 61974 (Nov. 14, 2019). The agencies refer to the C. Proposed Additional Covered Fund 4 12 U.S.C. 1851(d)(1)(G). Other restrictions and regulations implementing section 13 of the BHC Act Exclusions requirements include: (1) The banking entity that are effective as of February 28, 2020 as the 1. Credit Funds provides bona fide trust, fiduciary, or investment ‘‘implementing regulations.’’ 2. Venture Capital Funds advisory services; (2) the fund is organized and 9 83 FR 33471–87. 3. Family Wealth Management Vehicles offered only to customers in connection with the 10 84 FR 62016. 4. Customer Facilitation provision of such services; (3) the banking entity 11 See https://www.occ.treas.gov/topics/ D. Limitations on Relationships With a does not have an ownership interest in the fund, capitalmarkets/financial-markets/trading- Covered Fund except for a de minimis investment; (4) the banking volckerrule/volcker-rule-implementation-faqs.html E. Ownership Interest entity complies with certain marketing restrictions (OCC); https://www.federalreserve.gov/bankinforeg/ related to the fund; (5) no director or employee of F. Parallel Investments volcker-rule/faq.htm (Board); https://www.fdic.gov/ the banking entity has an ownership interest in the regulations/reform/volcker/faq.html (FDIC); https:// G. Technical Amendments fund, with certain exceptions; and (6) the banking www.sec.gov/divisions/marketreg/faq-volcker-rule- IV. Administrative Law Matters entity discloses to investors that it does not section13.htm (SEC); https://www.cftc.gov/ A. Solicitation of Comments on Use of guarantee the performance of the fund. Id. LawRegulation/DoddFrankAct/Rulemakings/DF_ Plain Language 5 12 U.S.C. 1851(b)(2). 28_

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proposal, the agencies requested monitor and verify. Several industry requirements of the implementing comment on the effectiveness of the groups made various suggestions for regulations. First, the proposal would guidance provided in certain of these simplifying the loan securitization revise certain restrictions in the foreign FAQs.12 The agencies discussed exemption, including expanding the public funds exclusion to more closely comments received in the preamble to securities an issuer is permitted to hold align the provision with the exclusion the 2019 amendments.13 The proposed and permitting an issuer to hold up to for similarly-situated U.S. registered rule would not modify or revoke any a certain percent of assets in non-loan investment companies. Second, the previously issued staff FAQs, unless assets. proposed rule would permit loan otherwise specified. Finally, several bank and industry securitizations excluded from the rule to group commenters supported making hold a small amount of non-loan assets, High-Level Summary of Comments on the exemptions under section 23A of the consistent with past industry practice, 2018 Proposal 14 Federal Reserve Act and the Board’s and codify existing staff-level guidance The agencies invited comment on all Regulation W available under section regarding this exclusion. In addition, aspects of the 2018 proposal and 13(f) of the BHC Act. Several such the proposed rule would revise the received over 75 unique comments and commenters also supported exempting exclusion for small business investment approximately 3,700 comments from certain payment, clearing, and companies to account for the life cycle individuals using a version of a short settlement services from the restrictions. of those companies and would request form letter to express opposition to the A foreign bank industry group also comment on whether to clarify the 2018 proposed rule.15 The preamble to recommended limiting the application scope of the exclusion for public welfare the 2019 amendments reviewed of section 13(f) to the U.S. operations of investments, including as it relates to comments relating to the proprietary foreign firms. rural business investment companies trading provisions of the 2018 proposal II. Overview of Proposal and qualified opportunity zone funds. and the covered fund provisions that Finally, the proposed rule would were adopted as part of the 2019 The agencies are issuing a notice of address concerns about certain amendments. The agencies generally proposed rulemaking that proposes components of the preamble to the 2013 deferred public consideration of specific changes to the restrictions on rule related to calculating a banking comments received on other aspects of covered fund investments and activities entity’s ownership interests in covered the covered fund provisions to a future and other issues related to the treatment funds. proposed rulemaking. of investment funds in the The agencies recognized in the Various industry groups suggested implementing regulations (the proposal preamble to the 2013 rule that the maintaining the 2013 rule’s base or the proposed rule). The proposed rule definition of ‘‘covered fund’’ was definition of covered fund, citing costs is intended to improve and streamline expansive 16 and, based on their associated with complying with a new the covered fund provisions and experience implementing the rule, the definition, while others supported an provide clarity to banking entities so agencies are now proposing several new alternative definition. A number of that they can offer financial services and exclusions from the covered fund industry groups and banks, and several engage in other permissible activities in provisions to address the potential over- Members of Congress, urged the a manner that is consistent with the breadth of the covered fund definition agencies to amend the definition of requirements of section 13 of the BHC and related requirements. For example, covered fund to exclude certain funds, Act. the agencies recognize that the including the following: (1) Family To better limit the extraterritorial exclusions in the implementing wealth investment vehicles; (2) funds impact of the implementing regulations, regulations have inhibited banking that extend credit to customers; (3) long- the proposal would exempt the entities’ relationships with credit funds, term investment funds that do not activities of certain funds that are and the proposed rule would create a engage in any short-term proprietary organized outside of the United States new exclusion for such funds. Under trading; (4) venture capital funds; and and offered to foreign investors the proposal, banking entities would be (5) customer facilitation funds. Various (qualifying foreign excluded funds) from able to invest in and have certain public interest commenters objected to the restrictions of the implementing relationships with credit funds that any additional exclusions, citing regulations. In certain circumstances, extend the type of credit that a banking insufficient notice in the 2018 proposal some foreign funds that are not entity may provide directly, subject to and the potential for evasion of the 2013 ‘‘covered funds’’ may be subject to the certain safeguards. Relatedly, the rule. implementing regulations as ‘‘banking proposed rule would establish an Commenters also proposed modifying entities,’’ if they are controlled by a exclusion from the definition of covered the 2013 rule’s existing exclusions from foreign banking entity, and thus could fund for venture capital funds. This the definition of covered fund. be subject to more onerous compliance provision would help ensure that Numerous industry groups suggested obligations than are imposed on banking entities can fully engage in this revising the exclusion for foreign public similarly-situated covered funds, even important type of development and funds to focus on the characteristics of though the foreign funds have limited investment activity, which may the fund and foreign regulations, rather nexus to the United States. This facilitate capital formation and provide than imposing specific conduct provision would codify an existing important financing for small requirements that are difficult to policy statement by the Federal banking businesses, particularly in areas where agencies that addresses the potential such financing may not be readily 12 83 FR 33444–33446. attribution to a foreign banking entity of available. 13 84 FR 61978–61980. the activities and investments of The proposal also would include two 14 This summary is not meant to be a qualifying foreign excluded funds. new exclusions that would allow comprehensive assessment of the comments The proposal also would make banking entities to provide certain received on the 2018 proposal and only reviews modifications to several existing traditional financial services via a fund certain major areas of interest. Comments are discussed in greater detail throughout this exclusions from the covered fund structure, subject to certain safeguards. SUPPLEMENTARY INFORMATION. provisions, to provide clarity and 15 84 FR 61976. simplify compliance with the 16 See 79 FR 5677.

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First, the proposed rule would exclude III. Discussion of the Proposal raises money from investors primarily for the purpose of investing in financial from the definition of covered fund an A. Qualifying Foreign Excluded Funds entity created and used to facilitate a instruments for resale or other customer’s exposures to a transaction, Since the adoption of the 2013 rule, disposition or otherwise trading in investment strategy, or other service. a number of foreign banking entities, financial instruments; Second, the proposal would exclude foreign government officials, and other (3) Would not otherwise be a banking from the covered fund definition wealth market participants have expressed entity except by virtue of the foreign management vehicles that manage the concern regarding instances in which banking entity’s acquisition or retention certain funds offered and sold outside of investment portfolio of a family, and of an ownership interest in, or the United States are excluded from the certain other persons, allowing a sponsorship of, the entity; covered fund definition but still could (4) Is established and operated as part banking entity to provide integrated be considered banking entities in certain private wealth management services. of a bona fide asset management circumstances (foreign excluded business; and In addition, the proposed rule would 18 funds). This situation may occur if a (5) Is not operated in a manner that permit a banking entity to engage in a foreign banking entity controls the enables the foreign banking entity to foreign fund. A foreign banking entity limited set of covered transactions with evade the requirements of section 13 or could be considered to control the fund a covered fund the banking entity implementing regulations. based on common corporate governance sponsors or advises or with which the To provide additional time to structures abroad such as where the banking entity has certain other consider this issue, the 2017 policy fund’s sponsor selects the majority of relationships. The implementing statement provided that the Federal the fund’s directors or trustees, or regulations generally prohibit all banking agencies would not propose to otherwise controls the fund for purposes covered transactions between a covered take action during the one-year period of section 13 of the BHC Act by contract fund and its banking entity sponsor or ending July 21, 2018, against a foreign or through a controlled corporate investment adviser. The agencies banking entity 20 based on attribution of director. As a result, such a fund would recognize that the existing restrictions the activities and investments of a be subject to the requirements of section have prevented banking entities from qualifying foreign excluded fund to a 13 and the implementing regulations, providing certain traditional banking foreign banking entity, or against a including restrictions on proprietary services to covered funds, such as qualifying foreign excluded fund as a trading, restrictions on investing in or standard payment, clearing, and banking entity. To be eligible for this sponsoring covered funds, and settlement services to related covered relief, the foreign banking entity’s compliance obligations. funds. The Federal banking agencies released acquisition or retention of any Lastly, the proposal would clarify a policy statement on July 21, 2017 (the ownership interest in, or sponsorship of, certain aspects of the definition of 2017 policy statement) to address the qualifying foreign excluded fund ownership interest. Currently, due to concerns about the possible unintended must have met the requirements for the broad definition of ownership consequences and extraterritorial permitted covered fund activities and interest, some loans by banking entities impact of section 13 and the 2013 rule investments solely outside the United to covered funds could be deemed to be for foreign excluded funds.19 The 2017 States, as provided in section 13(d)(1)(I) l ownership interests. The proposal policy statement noted that the staffs of of the BHC Act and § .13(b) of the 2013 rule, as if the qualifying foreign would provide a safe harbor for bona the agencies were considering excluded fund were a covered fund. The fide senior loans or senior debt alternative ways in which the 2013 rule agencies extended this relief for an instruments to make clear that an could be amended, or other appropriate action could be taken, to address any additional period of one year (until July ‘‘ownership interest’’ in a fund does not 21, 2019) in the 2018 proposal.21 On include such credit interests in the unintended consequences of section 13 and the 2013 rule for foreign excluded July 17, 2019, the Federal banking fund. In addition, the proposal would agencies released a policy statement (the provide clarity about the types of credit funds. For purposes of the 2017 policy 2019 policy statement) that further rights that would be considered within extended this period to July 21, 2021.22 the scope of the definition of ownership statement, a ‘‘qualifying foreign excluded fund’’ meant, with respect to This additional time facilitates the interest. Finally, the proposed rule agencies proposing the specific changes would simplify compliance efforts by a foreign banking entity, an entity that: (1) Is organized or established outside in the proposal to address this issue and tailoring the calculation of a banking the United States and the ownership will allow the public to submit entity’s compliance with the 23 interests of which are offered and sold comments in response to the proposal. implementing regulations’ aggregate solely outside the United States; fund limit and covered fund deduction, (2) Would be a covered fund were the 20 ‘‘Foreign banking entity’’ was defined for and provide clarity to banking entities entity organized or established in the purposes of the 2017 policy statement to mean a regarding their permissible investments United States, or is, or holds itself out banking entity that is not, and is not controlled made alongside covered funds.17 directly or indirectly by, a banking entity that is as being, an entity or arrangement that located in or organized under the laws of the United The agencies request comment States or any State. regarding all aspects of the proposed 18 The 2013 rule generally excludes covered 21 83 FR 33444. rule. Specific requests for comment are funds from the definition of ‘‘banking entity.’’ 2013 22 Statement regarding Treatment of Certain rule § l.2(c)(2)(i). However, because foreign Foreign Funds under the Rules Implementing included in the following sections. excluded funds are not covered funds, they can Section 13 of the Bank Holding Company Act (July Comments on the proposal must be become banking entities through affiliation with 17, 2019), available at https:// submitted to the agencies on or before other banking entities. www.federalreserve.gov/newsevents/pressreleases/ April 1, 2020. 19 Statement regarding Treatment of Certain files/bcreg20190717a1.pdf. Foreign Funds under the Rules Implementing 23 The agencies did not propose any specific Section 13 of the Bank Holding Company Act (July amendments to the 2013 rule in the 2018 proposal 17 Separately, the agencies are proposing various 21, 2017), available at https:// on this issue and instead requested comment on technical edits to the implementing regulations. See www.federalreserve.gov/newsevents/pressreleases/ foreign excluded funds, the policy statements, and infra III.G (Technical Amendments). files/bcreg20170721a1.pdf. related issues. See, e.g., 83 FR 33442–46.

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In response to questions in the 2018 in section l.13(b) of the rule. Under the ownership interest in or sponsorship of proposal, several commenters urged the proposal, a qualifying foreign excluded the fund meets the requirements in agencies to exclude controlled foreign fund has the same meaning as in the section l.13(b). Thus, the proposed funds offered solely outside the United 2017 and 2019 policy statements as exemption may have the effect of States.24 Many suggested that the described above. promoting the safety and soundness of agencies accomplish this by excluding Section 13(d)(1)(H) and (I) of the BHC these foreign funds and their sponsors, these funds from the definition of Act permit foreign banking entities to while at the same time limiting the banking entity.25 Some commenters conduct certain trading and investing extraterritorial impact of the provided alternative proposals, activities outside the United States, implementing regulations, consistent including establishing a rebuttable notwithstanding the restrictions under with the purposes of section 13(d)(1)(H) presumption of compliance and making section 13(a) of the BHC Act. As and (I) of the BHC Act. permanent the relief provided in the indicated in the preamble to the 2013 The proposed exemption would also 2017 policy statement.26 Several rule, the purpose of these statutory promote and protect U.S. financial commenters suggested permitting provisions is to limit the extraterritorial stability. While qualifying foreign foreign banking entities to opt to be application of section 13 as it applies to excluded funds have very limited nexus treated as a covered fund, instead of a foreign banking entities.30 to the U.S. financial system, they are banking entity, and providing additional In addition, section 13(d)(1)(J) of the permitted to invest in U.S. companies. relief from the limitations on BHC Act gives the agencies rulemaking Therefore, to the extent that these funds relationships with a covered fund, authority to exempt activities from the have any direct impact on U.S. financial under section l.14.27 One commenter prohibitions of section 13, provided the stability, it would be to promote U.S. suggested exempting from the definition agencies determine that the activity in financial stability by providing of ‘‘banking entity’’ foreign excluded question would promote and protect the additional capital and liquidity to U.S. funds controlled by a non-U.S. banking safety and soundness of the banking capital markets. Because the proposed entity as part of the non-U.S. banking entity and the financial stability of the exemption would require that the entity’s asset management activities or United States.31 The agencies believe foreign banking entity’s acquisition of in connection with consumer derivative that the proposal described above would an ownership interest in or sponsorship activities not marketed to U.S. be consistent with the purposes of of the fund meets the requirements in residents.28 One commenter opposed section 13(d)(1)(H) and (I) of the BHC section l.13(b), the exemption would any type of exclusion for foreign Act and could promote and protect the ensure that the risks of the investments excluded funds and argued that the safety and soundness of banking entities made by these foreign funds would be 2013 rule as it stands is adequate in and U.S. financial stability. booked to foreign entities in foreign relation to the nexus between U.S. and Exempting the activities of qualifying jurisdictions, thus promoting and 29 foreign activities. foreign excluded funds in the protecting U.S. financial stability. To provide greater clarity and circumstances described above would Additionally, subjecting such funds to certainty to banking entities and provide clarity and certainty to, and the requirements of section 13 of the qualifying foreign excluded funds, the likely promote and protect the safety BHC Act imposed on banking entities agencies are proposing, pursuant to and soundness of, such banking entities. could precipitate disruptions in foreign their authority under section 13(d)(1)(J) This relief would be limited to the asset capital markets, which could generate spillover effects in the U.S. financial of the BHC Act, to exempt the activities management activities of these foreign of qualifying foreign excluded funds. system. funds, which are organized outside of Specifically, the agencies are proposing Question 1. Should the agencies make the United States and operate pursuant to exempt from the proprietary trading any other amendments to §§ l.6 and l to the local laws of foreign jurisdictions. prohibition and covered fund .13 or include any additional parameters Thus, if the activities of these foreign restrictions the purchase or sale of a on the proposed exemption? Why or funds were subjected to the restrictions financial instrument by a qualifying why not? applicable to banking entities, generally, foreign excluded fund and the Question 2. Would the proposed their asset management activities may acquisition or retention of any amendments to §§ l.6 and l.13 be significantly disrupted, and the ownership interest in, or the address the concerns raised regarding foreign banking entities may be at a sponsorship of, a covered fund by a unintended consequences and qualifying foreign excluded fund, if any competitive disadvantage to other extraterritorial impact? Why or why acquisition or retention of an ownership foreign bank and non-bank market not? If the amendments would not interest in, or sponsorship of, the participants conducting asset address these concerns, what other qualifying foreign excluded fund by the management business outside of the amendments should be made? foreign banking entity meets the United States. Exempting the activities Question 3. Is the proposed approach requirements for permitted covered of these foreign funds would also allow to addressing foreign excluded funds fund activities and investments solely their foreign banking entity sponsors to effective? Why or why not? If not, what outside the United States, as provided continue to conduct their asset alternative approach would better management business outside the address these types of entities? 24 See, e.g., Institute of International Bankers (IIB); United States as long as the foreign Question 4. Would the use of the term American Investment Council (AIC); American banking entity’s acquisition of an ‘‘covered fund’’ in § l.13(b)(1) or in Bankers Association (ABA); Financial Services proposed § l.13(d)(2), together with the Agency/Bank of Japan (FSA/BOJ); Canadian 30 79 FR 5655 n. 1518 (identifying statement of definition of ‘‘covered fund’’ in § l Bankers Association (CBA); Federated Investors Sen. Merkley regarding how section 13(d)(1)(H) (FI); BVI; European Banking Federation (EBF); ‘‘recognize[s] rules of international comity by .10(b)(1), create any unintended Japanese Bankers Association (JBA); and Credit permitting foreign banks, regulated and backed by consequences for foreign banking Suisse (CS). foreign taxpayers, in the course of operating outside entities seeking to rely on the exemption 25 Id. of the United States to engage in activities for activities permitted by section 26 See, e.g., EBF and IIB. permitted under relevant foreign law’’). The 27 See, e.g., EBF; CS; IIB; and CBA. agencies believe that the same rationale applies to 13(d)(1)(I) of the BHC Act? Why or why 28 BVI. section 13(d)(1)(I). not? If so, what other alternatives 29 Data Boiler. 31 12 U.S.C. 1851(d)(1)(J). should be considered to make the

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exemption for activities permitted by with all applicable requirements in the seeking to limit the possibility for section 13(d)(1)(I) of the BHC Act clear jurisdiction in which such distribution evasion through foreign public funds.39 or more workable? is being made; the distribution does not Based on experience implementing Question 5. What impacts would the restrict availability to investors having a the 2013 rule, as well as discussions proposed amendments to §§ l.6 and l minimum level of net worth or net with and comments received from .13 have on the safety and soundness of investment assets; and the issuer has regulated entities, it appears that some banking entities, and on the financial filed or submitted, with the appropriate of the conditions of the foreign public stability of the United States? Would the regulatory authority in such fund exclusion may not be necessary to activities permitted under the proposed jurisdiction, offering disclosure ensure consistent treatment of foreign amendments to §§ l.6 and l.13 of the documents that are publicly available.34 public funds and registered investment regulations promote and protect safety The 2013 rule places an additional companies. Moreover, some conditions and soundness and U.S. financial condition on a U.S. banking entity’s may make it difficult for a non-U.S. stability? Please explain. ability to rely on the foreign public fund fund to qualify for the exclusion or for exclusion with respect to any foreign a banking entity to validate whether a B. Modifications to Existing Covered fund it sponsors.35 The foreign public non-U.S. fund qualifies for the Fund Exclusions fund exclusion is only available to a exclusion, resulting in certain non-U.S. 1. Foreign Public Funds U.S. banking entity with respect to a funds that are similar to U.S. registered In addition to the foreign excluded foreign fund sponsored by the U.S. investment companies being treated as fund issues discussed above with banking entity if, in addition to the covered funds. For example, the respect to the banking entity definition, requirements discussed above, the requirement that the fund be authorized there are other foreign fund issues that fund’s ownership interests are sold to be offered and sold to retail investors arise under the covered fund definition. predominantly to persons other than the in the fund’s home jurisdiction (the In order to provide consistent treatment sponsoring banking entity, the issuer (or home jurisdiction requirement) between U.S. registered investment affiliates of the sponsoring banking disqualifies certain funds that are companies and their foreign entity or issuer), and employees and organized in one jurisdiction but only 36 equivalents, the implementing directors of such entities. The agencies authorized to be sold to retail investors 40 regulations exclude foreign public funds stated in the preamble to the 2013 rule in another jurisdiction. It appears that, from the definition of covered fund. A that, consistent with the agencies’ view for a variety of reasons, it is not foreign public fund is generally defined concerning whether a foreign public uncommon for foreign retail funds to be under the implementing regulations as fund has been sold predominantly organized in one jurisdiction and sold 41 any issuer that is organized or outside of the United States, the in another jurisdiction. established outside of the United States agencies generally expect that a foreign Additionally, the requirement that a and the ownership interests of which public fund would satisfy this fund be sold ‘‘predominantly’’ through are (1) authorized to be offered and sold additional condition if 85 percent or one or more public offerings may cause to retail investors in the issuer’s home more of the fund’s interests are sold to certain compliance and monitoring 42 jurisdiction and (2) sold predominantly persons other than the sponsoring U.S. difficulties. This is because banking through one or more public offerings banking entity and the specified persons entities may have limited visibility into 37 outside of the United States.32 The connected to that banking entity. the distribution history of a third-party agencies stated in the preamble to the In adopting the foreign public fund sponsored fund, or, in the case of a fund 2013 rule that they generally expect that exclusion, the agencies’ view was that it sponsored by the banking entity, the an offering is made predominantly was appropriate to exclude these funds fund’s interests may be sold through outside of the United States if 85 from the ‘‘covered fund’’ definition third-party distributors, and the precise percent or more of the fund’s interests because they are sufficiently similar to pattern of distribution may be affected 38 are sold to investors that are not U.S. registered investment companies. by market forces and changes in residents of the United States.33 The The agencies also expressed the view investor demand.43 Also, the limitation 2013 rule defines ‘‘public offering’’ for that the additional condition applicable on ownership of interests in a U.S. purposes of this exclusion to mean a to U.S. banking entities with respect to banking entity-sponsored foreign public ‘‘distribution,’’ as defined in § l.4(a)(3) foreign funds that they sponsor was fund by certain employees (including of subpart B, of securities in any designed to treat foreign public funds their immediate family members) of the jurisdiction outside the United States to consistently with similar U.S. funds and sponsoring banking entity or fund may investors, including retail investors, to limit the extraterritorial application be difficult for banking entities to provided that the distribution complies of section 13 of the BHC Act, including monitor for similar reasons, and by permitting U.S. banking entities and imposes a requirement on foreign public 32 See 2013 rule § l.10(c)(1); see also 79 FR 5678 their foreign affiliates to carry on funds that may not apply to similarly (‘‘For purposes of this exclusion, the [a]gencies note traditional asset management businesses situated U.S. registered investment that the reference to retail investors, while not outside of the United States, while also companies.44 Finally, commenters have defined, should be construed to refer to members of the general public who do not possess the level expressed concerns with the expectation 34 of sophistication and investment experience 2013 rule § l.10(c)(1)(iii). stated in the preamble to the 2013 rule typically found among institutional investors, 35 Although the discussion of this condition that for a U.S. banking entity-sponsored professional investors or high net worth investors generally refers to U.S. banking entities for ease of who may be permitted to invest in complex reading, the condition also applies to foreign 39 Id. investments or private placements in various subsidiaries of a U.S. banking entity. See 2013 rule 40 jurisdictions. Retail investors would therefore be § l.10(c)(1)(ii) (applying this limitation ‘‘[w]ith See, e.g., IIB; Bank Policy Institute (BPI); EBF; expected to be entitled to the full protection of respect to a banking entity that is, or is controlled and JBA. securities laws in the home jurisdiction of the fund, directly or indirectly by a banking entity that is, 41 For example, commenters have noted that retail and the [a]gencies would expect a fund authorized located in or organized under the laws of the United funds are sometimes organized in the Cayman to sell ownership interests to such retail investors States or of any State and any issuer for which such Islands for tax considerations but only offered for to be of a type that is more similar to a U.S. banking entity acts as sponsor’’). sale in Japan. See, e.g., BPI. registered investment company rather than to a U.S. 36 See 2013 rule § l.10(c)(1)(ii). 42 See, e.g., BPI. covered fund.’’). 37 79 FR 5678. 43 Id. 33 79 FR 5678. 38 Id. 44 See, e.g., IIB.

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foreign fund to satisfy the condition that ownership interests in such funds, and there foreign funds that cannot satisfy it be ‘‘predominantly’’ sold to persons it would more closely align the the exclusion’s proposed conditions but other than the sponsoring U.S. banking treatment of foreign public funds with that are nonetheless sufficiently similar entity and certain persons connected to that of U.S. registered investment to U.S. registered investment companies that banking entity, 85 percent of the companies, which have no such such that it would be appropriate to ownership interests in the fund should requirement. The agencies believe the exclude those foreign funds from the be sold to such persons.45 revised requirement would help ensure covered fund definition? If so, how To address the concerns noted above that the foreign public fund is should the agencies modify the related to the home jurisdiction sufficiently similar to a U.S. registered exclusion’s conditions to permit those requirement and the requirement that investment company. funds to rely on it? ownership interests be sold To simplify the requirements of the Question 7. How effectively does the predominantly through public offerings, exclusion and address concerns proposed replacement of the home the agencies are proposing to replace described by banking entities with the jurisdiction requirement and the those two requirements with a difficulty in tracking the sale of requirement that ownership interests be requirement that the fund is authorized ownership interests to employees and sold predominantly through public to offer and sell ownership interests, their immediate family members, the offerings with a requirement that the and such interests are offered and sold, proposal would eliminate the limitation fund is authorized to offer and sell through one or more public offerings. on selling ownership interests of the ownership interests, and such interests The agencies are also proposing to issuer to employees (other than senior are offered and sold, through one or modify the definition of ‘‘public executive officers) of the sponsoring more public offerings address the offering’’ from the implementing banking entity or the issuer (or affiliates concerns discussed above related to the regulations to add a new requirement of the banking entity or issuer). This compliance with these requirements? If that the distribution is subject to change would also help to align the such concerns are not addressed, how substantive disclosure and retail treatment of foreign public funds with should the agencies further modify investor protection laws or regulations, that of U.S. registered investment these requirements? to help ensure that funds qualifying for companies, as the exclusion for U.S. Question 8. Is the additional this exclusion are sufficiently similar to registered investment companies has no condition added to the ‘‘public offering’’ U.S. registered investment companies. such limitation. The proposal would definition requiring the distribution be Additionally, the proposal would only continue to limit the sale of ownership subject to substantive disclosure and apply the condition that the distribution interests to directors or senior executive retail investor protection laws or comply with all applicable requirements officers of the sponsoring banking entity regulations sufficiently clear and in the jurisdiction where it is made to or the fund (or their affiliates), as the effective? If not, how should the instances in which the banking entity agencies believe that such a requirement agencies modify or clarify this acts as the investment manager, would be simpler for a banking entity to requirement? Should the agencies investment adviser, commodity trading track. As discussed in the preamble to further specify features of ‘‘substantive advisor, commodity pool operator, or the 2013 rule, this requirement is disclosure and retail investor protection sponsor. This change is intended to intended to prevent evasion of section laws or regulations?’’ Would it be address the potential difficulty that a 13 of the BHC Act.46 clearer if the agencies identified banking entity investing in a third-party As reflected in the detailed questions particular types of laws or regulations sponsored fund may have in that follow, the agencies request that would meet this condition (e.g., determining whether the distribution of comment on all aspects of the proposed requirements for periodic filings with, such fund complied with all the modifications to the foreign public fund and periodic examinations by, the requirements in the jurisdiction where it exclusion, including whether the appropriate regulatory authority; was made. exclusion is effective in identifying requirements for periodic reports to be The changes discussed above would foreign funds that may be sufficiently distributed to retail investors; or a seek to ensure that the exclusion similar to U.S. registered investment prohibition against fraud)? remains limited to funds that are companies and permitting U.S. banking Question 9. In what ways, if any, is it authorized to be sold to retail investors, entities and their foreign affiliates to difficult for a banking entity to but it would no longer require the fund carry on traditional asset management determine whether a fund satisfies the to be authorized to be sold to retail businesses outside of the United States, implementing regulations’ condition of investors in the jurisdiction where it is without creating opportunities for the ‘‘public offering’’ definition organized. Additionally, while the fund evasion of the requirements of section requiring that the distribution comply would still be required to be offered and 13 of the BHC Act. with all applicable requirements in the sold through one or more public Question 6. Are foreign funds that jurisdiction in which the distribution is offerings (which would require, among satisfy the proposed conditions in the made? Should the agencies eliminate other things, that the distribution be foreign public fund exclusion this requirement with respect to funds made in a jurisdiction outside the sufficiently similar to U.S. registered for which the banking entity does not United States that subjects the foreign investment companies such that it is serve as the investment manager, public fund to substantive disclosure appropriate to exclude these funds from investment adviser, commodity trading and retail investor protection laws or the covered fund definition? Why or advisor, commodity pool operator, or regulations), the proposal would why not? If these foreign funds are not sponsor, as proposed, or should this eliminate the requirement that it be sold sufficiently similar to U.S. registered requirement be otherwise modified? ‘‘predominantly’’ through one or more investment companies, how should the Would eliminating or modifying this public offerings. This change would agencies modify the exclusion’s requirement create an opportunity for eliminate the difficulty that banking conditions to permit only funds that are evasion of the requirements of section entities have described in tracking the sufficiently similar to U.S. registered 13? If so, how should the agencies specific distribution patterns of investment companies to rely on it? Are address this concern? Question 10. As discussed above, the 45 See, e.g., Investment Company Institute. 46 79 FR 5678–79. agencies propose to modify the

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additional conditions on U.S. banking 2. Loan Securitizations assets to holders of the asset-backed 53 entity-sponsored foreign funds, which Section 13 of the BHC Act provides securities. In response to confusion are intended in part to limit the that ‘‘[n]othing in this section shall be regarding the scope of these two possibility for evasion of section 13. In construed to limit or restrict the ability provisions, the staffs of the agencies what ways, if any, would the proposed of a banking entity . . . to sell or released the Loan Securitization modifications, including the elimination securitize loans in a manner otherwise Servicing FAQ. Under this FAQ, a of the limitations on certain employees permitted by law.’’ 48 To effectuate this servicing asset may or may not be a owning interests in the fund, create an statutory requirement, the 2013 rule security, but if the servicing asset is a opportunity for evasion? How should excludes from the definition of covered security, it must be a permitted security the agencies modify these additional fund loan securitizations that issue under the rule. requirements to limit the possibility for asset-backed securities and hold only Several commenters on the 2018 evasion? Is the limitation on directors loans, certain rights and assets, and a proposal supported codifying this FAQ, and senior executive officers owning small set of other financial instruments with one commenter encouraging the interests in the fund necessary or 49 agencies to include specific examples of (permissible assets). The staffs of the 54 appropriate to prevent evasion of agencies in June 2014 issued an FAQ servicing assets. However, one section 13? Why or why not? Should the explaining that assets other than commenter suggested that the Loan agencies eliminate or modify this permitted securities can be servicing Securitization Servicing FAQ was limitation? How difficult is it for assets for purposes of the loan sufficient and that the regulation need 55 banking entities to monitor and track securitization exclusion.50 not be modified. Another commenter this limitation? Commenters should Since the adoption of the 2013 rule, suggested that the exclusion be address whether banking entities several banking entities and other expanded to cover leases and related already track this information. participants in the loan securitization assets, including operating or capital Question 11. Is the proposed industry have commented that the leases.56 requirement that the fund’s ownership limited set of permissible assets has The agencies propose codifying the interests are sold predominantly to inappropriately restricted their ability to Loan Securitization Servicing FAQ to persons other than the sponsoring use the loan securitization exclusion. clarify the scope of the servicing asset banking entity or the issuer (or affiliates The agencies asked several questions provision.57 However, the agencies are of the sponsoring banking entity or regarding the efficacy and scope of the not proposing to separately list leases issuer), and directors and senior exclusion and the Loan Securitization within the loan securitization exclusion executive officers of such entities, Servicing FAQ in the 2018 proposal.51 because leases are included in the necessary to prevent evasion of the Comments were focused on permitting definition of loan and thus are requirements of section 13? If the small amounts of non-loan assets and permitted assets for loan securitizations requirement is not necessary to prevent clarifying the treatment of leases and under the current exclusion.58 evasion, how should the agencies related assets. The agencies are Question 13. Does the proposed eliminate or further modify this proposing to codify the Loan modification of the loan securitization requirement? Should the agencies Securitization Servicing FAQ and exclusion sufficiently permit consider this condition satisfied if 75 permit loan securitizations to hold a securitization of leases, servicing assets, percent (or some other percentage) of small amount of non-loan assets. The and related assets, including leases that the ownership interests are sold to agencies also request comment on are security interests? Why or why not? persons other than the sponsoring whether other revisions are necessary or Limited Holdings of Non-Loan Assets banking entity, the issuer (or affiliates of appropriate to effectuate section 13 of the sponsoring banking entity or issuer), the BHC Act, as described in greater In the preamble to the 2013 rule, the and directors and senior executive detail below. agencies declined to permit loan officers of such entities? Why or why securitizations to hold a certain amount Leases and Servicing Assets 59 not? of non-loan assets. The agencies Question 12. Do the proposed changes The 2013 rule defines ‘‘loan’’ to supported a narrow scope of permissible to the foreign public fund exclusion, in include leases and permits loan assets by noting that ‘‘the purpose the aggregate, increase opportunities for securitizations to hold rights or other underlying section 13 is not to expand evasion of the requirements of section assets (servicing assets) that arise from the scope of assets in an excluded loan 13? If so, how should the agencies the structure of the loan securitization securitization beyond loans as defined address these concerns? Should the or from the loans supporting a loan in the final rule and the other assets that agencies include a specific reservation securitization.52 Rights or other the agencies are specifically permitting of authority to prevent evasion through servicing assets are assets designed to in a loan securitization.’’ 60 the foreign public fund exclusion, or are facilitate the servicing of the assets Several commenters on the 2018 the anti-evasion provisions in § __.21 of underlying a loan securitization or the proposal disagreed with the agencies’ the implementing regulations sufficient distribution of proceeds from those 53 47 See, e.g., FASB Statement No. 156: Accounting to address these concerns? for Servicing of Financial Assets, ¶ 61 (FAS 156). activities under the 2013 rule and dispose of any 54 investment. Structured Finance Industry Group (SFIG) and 47 Section l.21 of the implementing regulations JBA. 48 12 U.S.C. 1851(g)(2). provides in part that whenever an agency finds 55 Data Boiler. reasonable cause to believe any banking entity has 49 See 2013 rule § llll.10(c)(8). Loan is 56 SFIG. engaged in an activity or made an investment in further defined as any loan, lease, extension of 57 violation of section 13 of the BHC Act or the credit, or secured or unsecured receivable that is The proposal also clarifies that special units of implementing regulations, or engaged in any not a security or derivative. Implementing beneficial interest and collateral certificates meeting activity or made any investment that functions as regulations § ll.2(t). the requirements of paragraph (c)(8)(v) of the an evasion of the requirements of section 13 of the 50 Loan Securitization Servicing FAQ. See supra exclusion that are securities need not meet the BHC Act or the implementing regulations, the n. 11 and accompanying text. See also, infra, Leases requirements of paragraph (c)(8)(iii) of the agency may take any action permitted by law to and Servicing Assets for a discussion of the FAQ. exclusion. enforce compliance with section 13 of the BHC Act 51 83 FR 33480–81. 58 See implementing regulations § l.2(t). and the 2013 rule, including directing the banking 52 2013 rule §§ llll.2(s); llll 59 79 FR 5687–88. entity to restrict, limit, or terminate any or all .10(c)(8)(i)(D), (v). 60 79 FR 5687.

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views and supported expanding the commenter claimed was to divest Cash Equivalents 68 range of permissible assets in an banking entities of risky assets. The loan securitization exclusion 61 excluded loan securitization. Many After considering the comments permits issuers to hold certain types of commenters recommended allowing received on the 2018 proposal, the contractual rights or assets directly agencies are proposing to allow a loan loan securitizations to hold up to five or arising from the loans supporting the securitization vehicle to hold up to five ten percent of non-loan assets. asset-backed securities that a loan percent of assets in non-loan assets. Commenters suggested that a limited securitization relying on the exclusion Authorizing loan securitizations to hold bucket of non-loan assets would be may hold, including cash equivalents. small amounts of non-loan assets could, consistent with exclusions under the In response to questions about the scope consistent with section 13 of the BHC Investment Company Act, such as of the cash equivalent provision, the 62 Act, permit loan securitizations to section 3(c)(5)(C) and rule 3a–7. Loan Securitization Servicing FAQ respond to market demand and reduce Commenters argued that banking stated that ‘‘cash equivalents’’ means compliance costs associated with the entities would use such authority to high quality, highly liquid investments securitization process without incorporate into securitizations whose maturity corresponds to the corporate bonds, interests in letters of significantly increasing risk to banking entities and the financial system. The securitization’s expected or potential credit, cash and short-term highly liquid need for funds and whose currency investments, derivatives, and senior proposed limit on the amount of non- loan assets also would assuage potential corresponds to either the underlying secured bonds that do not significantly loans or the asset-backed securities.69 change the nature and risk profile of the concerns that allowing certain non-loan assets will lead to evasion, indirect To promote transparency and clarity, securitization.63 One commenter proprietary trading, and other the proposal would codify this suggested permitting additional non- impermissible activities or excessive additional language in the Loan loan assets so long as the securitization risk to the banking entity. Moreover, Securitization Servicing FAQ regarding is ‘‘primarily backed by qualifying 70 loan securitizations provide an the meaning of ‘‘cash equivalents.’’ assets that are not impermissible The agencies are not requiring ‘‘cash 64 important avenue for banking entities to securities or derivatives.’’ fund lending programs, and allowing equivalents’’ to be ‘‘short term,’’ because One commenter suggested that loan securitizations to hold a small the agencies recognize that a loan permitting loan securitizations to hold a amount of non-loan assets in response securitization may need greater small number of non-loan assets, to customer and market demand may flexibility to match the maturity of high typically fixed income securities, would increase a banking entity’s capacity to quality, highly liquid investments to its decrease compliance burdens associated provide financing and lending. expected or potential need for funds. with analyzing fund assets and increase Question 14. Should the loan Question 16. Should the agencies fund managers’ flexibility in responding securitization exclusion permit loan codify the cash equivalents language in to market conditions and customer securitization issuers to hold a certain the Loan Securitization Servicing FAQ? preferences.65 One commenter also percentage of non-loan assets? Why or Why or why not? claimed that permitting non-loan why not? If so, should the maximum 3. Public Welfare and Small Business holdings below a certain threshold percentage of permissible non-loan Funds would conform the rule with industry assets be five or ten percent, or some i. Public Welfare Funds practice without requiring a wholesale other amount? Regardless of the non- redefinition of covered funds.66 In loan asset limit, what should be the Section 13(d)(1)(E) of the BHC Act addition, some commenters maintained method of calculating compliance with permits, among other things, a banking that such an approach was consistent the limit (e.g., market value, par value, entity to make and retain investments with the rule of construction because principal balance, or some other that are designed primarily to promote inclusion of small amounts of non- measure)? Would permitting loan the public welfare of the type permitted permissible assets was standard securitization issuers to hold a certain under 12 U.S.C. 24(Eleventh).71 practice, particularly for international percentage of non-loan assets further the Consistent with the statute, the 2013 securitizations, and permitted by law.67 statutory rule of construction in section rule excludes from the definition of In contrast, another commenter objected 13(g)(2) of the BHC Act? If so, explain ‘‘covered fund’’ issuers that make to allowing a limited amount of non- how. investments that are designed primarily loan investments and suggested that Question 15. In what ways, if any, to promote the public welfare, of the permitting such investments would be should the agencies limit the type of type permitted under paragraph 11 of contrary to the general purpose of permissible non-loan assets to certain section 5136 of the Revised Statutes of section 13 of the BHC Act, which the asset classes or structures (e.g., only the United States (12 U.S.C. 24).72 The debt securities or any permissible asset, agencies noted in the preamble to the such as a derivative)? Would the 61 E.g., Investment Adviser Association (IAA); 2013 rule that excluding issuers in the Loan Syndications and Trading Association (LSTA); inclusion of certain financial business of making public welfare ABA; SFIG; Goldman Sachs (GS); BPI; JBA; and instruments—such as derivatives and investments would give effect to the Securities Industry and Financial Markets collateralized debt obligations—raise statutory exemption for these Association (SIFMA). safety and soundness concerns? If so, investments. The agencies further stated 62 BPI. should qualifying loan securitizations 63 their belief that permitting a banking LSTA and JBA. be permitted to hold such instruments 64 SFIG. entity to sponsor and invest in entities 65 SFIG. and, if so, what restrictions should be that are in the business of making public 66 LSTA. placed on the holding of such welfare investments would result in 67 LSTA and SIFMA. Some of these commenters instruments? What, if any, other banking entities being able to provide subsequently indicated that the loan securitization restrictions should the agencies impose industry has evolved since the issuance of the 2013 on non-loan assets to reduce the 69 rule and loan securitization issuers no longer See supra, n. 11. include non-loan assets and might not include non- potential for evasion of the rule? 70 Proposed rule § l.10(c)(8)(iii)(A). loan assets in a securitization even if the scope of 71 See 12 U.S.C. 1851(d)(1)(E). non-loan assets permitted to be held was expanded. 68 Data Boiler. 72 2013 rule § l.10(c)(11)(ii).

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valuable expertise and services to these investment under applicable provide an express exclusion from the entities and to provide funding and regulations. definition of covered fund for RBICs, assistance to small businesses and low- In particular, the agencies request similar to the exclusion for SBICs? Are and moderate-income communities. The comment on the following: RBICs substantially similar to SBICs and agencies also stated their belief that Question 17. Is the scope of the public welfare companies that banking excluding issuers that are in the current public welfare investment fund entities are permitted to make and retain business of making public welfare exclusion properly calibrated? Why or investments in under section 13(d)(1)(E) investments would allow banking why not? Under what circumstances, if of the BHC Act? Would excluding RBICs entities to continue to provide capital to any, have banking entities experienced in the same manner that SBICs and community-improving projects and, in compliance challenges under the public welfare companies are excluded some instances, promote capital covered fund provisions in Subpart C from the definition of covered fund formation.73 regarding investments in community provide certainty regarding the covered In response to the 2018 proposal, the development, public welfare, or similar fund status of RBICs or serve similar agencies received one comment stating funds that are designed to receive interests, as identified by commenters in that the 2013 rule’s exclusion for funds consideration as CRA-qualified response to the 2018 proposal? that are designed primarily to promote investments? Question 22. The Tax Cuts and Jobs the public welfare does not account for Question 18. Have banking entities Act established the ‘‘opportunity zone’’ community development investments avoided making investments that are program to provide tax incentives for that are made through investment designed to receive consideration as long-term investing in designated vehicles. The commenter recommended CRA-qualified investments because they economically distressed communities. expressly excluding all investments that believed that the investment may not The program allows taxpayers to defer qualify for Community Reinvestment satisfy the public welfare investment and reduce taxes on capital gains by Act (CRA) credit, including direct and fund exclusion? If so, what factors have reinvesting gains in ‘‘qualified indirect investments in a community caused uncertainty as to whether an opportunity funds’’ (QOFs) that are development fund, small business issuer qualifies for the exclusion for required to have at least 90 percent of investment company (SBIC), or similar public welfare investment funds? their assets in designated low-income fund.74 Question 19. In what ways would it zones. Do commenters believe that The OCC’s regulations implementing promote transparency, clarity, and many or all QOFs are excluded from the 12 U.S.C. 24(Eleventh) provide that consistency with other Federal banking definition of covered fund under the investments that receive consideration regulations if the agencies explicitly implementing regulations under the as qualified investments under the exclude from the definition of covered public welfare exclusion or another regulations implementing the CRA fund any issuer that invests exclusively exclusion or exemption? Should the (CRA-qualified investments) would also or substantially in investments that are agencies provide an express exclusion meet the public welfare investment designed to receive consideration as from the definition of covered fund for requirements.75 The 2013 rule did not CRA-qualified investments? What QOFs? Are QOFs substantially similar expressly incorporate these policy considerations weigh for or to SBICs and public welfare companies implementing regulations into the against such an exclusion? What that banking entities are permitted to exclusion for public welfare conditions should apply to such an make and retain investments in under investments. The agencies are exclusion? section 13(d)(1)(E) of the BHC Act? requesting comment on whether any Question 20. Should the agencies Would excluding QOFs in the same change should be made to clarify that all establish a separate exclusion for CRA- manner that SBICs and public welfare permissible public welfare investments, qualified investments or incorporate companies are excluded from the under any agency’s regulation, are such an exclusion into the exclusion for definition of covered fund provide excluded from the covered fund public welfare investments? certainty regarding the covered fund restrictions.76 For example, the agencies Question 21. Rural Business status of QOFs or serve similar interests, understand that there may be Investment Companies (RBICs)—as as identified by commenters in response uncertainty regarding how the exclusion defined under 203(l) and 203(m) of the to the 2018 proposal? for public welfare investments applies Investment Advisers Act of 1940 ii. Small Business Investment to community development investments (‘‘Advisers Act’’)—are companies Companies that are made through fund structures— licensed under the Rural Business Consistent with section 13 of the BHC for example, an investment fund that Investment Program (RBIP), a program Act,78 the 2013 rule excludes from the invests exclusively in SBICs, that is created as a joint initiative between the definition of covered fund SBICs and designed to receive consideration as a U.S. Department of Agriculture and the issuers that have received notice from CRA-qualified investment, and that Small Business Administration. The the Small Business Administration to would be considered a public welfare RBIP was designed to promote economic development and job creation exempt from investment adviser registration 73 See 79 FR 5698. in rural communities by investing in pursuant to Advisers Act, section 203(b)(8) and 74 See ABA. companies involved in the production, 203(b)(7), respectively. The venture capital fund 75 See 12 CFR 24.3 (stating that, for national processing and supply of food and adviser exemption deems RBICs and SBICs to be banks, an investment that would receive agriculture-related products. Under the venture capital funds for purposes of the consideration under 12 CFR 25.23 as a ‘‘qualified registration exemption. 15 U.S.C. 80b–3(l). investment’’ is a public welfare investment); 12 CFR implementing regulations, are many Accordingly, the agencies’ proposed exclusion for 25.23 (describing the investment test under the RBICs excluded from the definition of certain venture capital funds discussed below, see regulations implementing the CRA for national covered fund because of the public infra section III.C.2, which would require that a banks). welfare exclusion or because of another fund be a ‘‘venture capital fund’’ as defined in the 76 SEC regulations implementing the registration A banking entity must have independent 77 authority to make a public welfare investment. For provision? Should the agencies exemption, could apply to RBICs and SBICs to the example, a banking entity that is a state member extent that they satisfy the other elements of the bank may make a public welfare investment to the 77 Following enactment of the RBIC Advisers proposed exclusion. extent permissible under 12 U.S.C. 338a and 12 Relief Act of 2018, Pub. L. 115–417 (2019), advisers 78 See 12 U.S.C. 1851(d)(1)(E) (permitting CFR 208.22. to solely RBICs and advisers to solely SBICs are investments in SBICs).

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proceed to qualify for a license as a revisions, banking entities may become companies and why? What conditions SBIC, which notice or license has not discouraged from investing in SBICs should apply to such activities or been revoked.79 The agencies explained due to concern that an SBIC may investments? in the preamble to the 2013 rule that become a covered fund during its wind- C. Proposed Additional Covered Fund excluding SBICs from the definition of down phase. As indicated by the Exclusions ‘‘covered fund’’ would give appropriate statutory exemption for investments in effect to the statutory exemption for SBICs, section 13 of the BHC Act was 1. Credit Funds investments in SBICs in a way that not intended to discourage investments 88 The agencies are proposing to create facilitates national community and in SBICs. a new exclusion from the definition of 80 The proposed rule includes economic development objectives. ‘‘covered fund’’ under § l.10(b) for In response to the 2018 proposal,81 conditions designed to ensure that the credit funds that make loans, invest in the agencies received three comments revised exclusion is not abused. In debt, or otherwise extend the type of recommending revising the 2013 rule’s particular, the requirement that an exclusion for SBICs to clarify that SBICs issuer that has voluntarily surrendered credit that banking entities may provide that surrender their SBIC licenses when its license does not make new directly under applicable banking law. winding down may continue to qualify investments (other than investments in In the preamble to the 2013 rule, the for the exclusion for SBICs.82 Two of cash equivalents) after surrendering its agencies declined to establish an exclusion from the definition of covered these commenters stated that SBICs license is intended to ensure that the 89 often surrender their licenses during exclusion would only apply to funds fund for credit funds. The agencies wind-down, which is when the fund that are actually winding down and not cited concerns about whether such focuses on returning capital to funds that are making new investments funds could be distinguished from partners.83 One commenter asserted (whether wholly new or as follow-on private equity funds and hedge funds that, during the wind-down phase of an investments to existing investments) or and the possible evasion of the SBIC’s lifecycle, an SBIC license is that are engaged in speculative requirements of section 13 of the BHC neither necessary nor a prudent use of activities. In addition, the exclusion Act through the availability of such an partnership funds.84 One commenter would only apply to an issuer that exclusion. In addition, the agencies noted that banking entities that are surrenders its SBIC license in suggested that some credit funds would investors in SBICs generally do not accordance with 13 CFR 107.1900. The be able to operate using other exclusions control whether an SBIC surrenders its agencies note that surrendering a license from the definition of covered fund in license. This could raise questions as to under 13 CFR 107.1900 requires the the 2013 rule, such as the exclusion for whether an issuer that a banking entity prior written approval of the Small joint ventures or the exclusion for loan invested in when the issuer was an SBIC Business Administration. Furthermore, securitizations.90 could become a covered fund for because the exclusion would only apply In the 2018 proposal, the agencies reasons outside the banking entity’s to an issuer that voluntarily surrenders issued a broad request for comment on control.85 In contrast, another its SBIC license, the exclusion would whether to provide new exclusions from commenter suggested concerns about not extend to an issuer if its SBIC the definition of covered fund to more 91 the SBIC exclusion generally.86 license has been revoked. effectively tailor the 2013 rule. Several The agencies propose to revise the The agencies request comment on the commenters urged the agencies to exclusion for SBICs to clarify how the proposed revisions to the exclusion for establish an exclusion for funds that exclusion would apply to SBICs that SBICs. Specifically, the agencies request extend credit to customers in a manner surrender their licenses during wind- comment on the following. similar to what banking entities are down phases. The proposed rule would Question 23. Should the agencies otherwise authorized to provide directly specify that the exclusion for SBICs revise the SBIC exclusion as proposed? because the credit funds were not able applies to an issuer that was an SBIC Why or why not? Would the proposed to take advantage of the alternative that has voluntarily surrendered its revisions to the SBIC exclusion exclusions noted by the agencies in the license to operate as a small business appropriately address issuers that 2013 rule’s preamble.92 Commenters investment company in accordance with surrender their SBIC licenses? If not, also offered specific suggestions relating 13 CFR 107.1900 and does not make what changes should be made to the to the scope, requirements of, and new investments (other than proposal? restrictions on such an exclusion. investments in cash equivalents) after Question 24. Should the proposed The agencies understand that many such voluntary surrender.87 exclusion for issuers that surrender their credit funds have not been able to The agencies believe that continuing SBIC licenses include a requirement utilize the joint venture and loan to apply the SBIC exclusion to an issuer that the issuer operate pursuant to a securitization exclusions 93 and are that has surrendered its SBIC license is written plan to dissolve within a set appropriate because, absent these period of time, such as five years? Why 89 79 FR 5705. The agencies did not request comments specifically on credit funds in the or why not? If so, what is the associated 2011 proposed rule. See 76 FR 68896– 79 See 2013 rule § l.10(c)(11). appropriate time period? 900. 80 See 79 FR 5698. Question 25. What additional 90 Id. 81 89 FR 33432. restrictions, if any, should apply to the 91 83 FR 33471–72. The agencies did not request 82 See Small Business Investors Alliance (SBIA); proposed exclusion for issuers that comments specifically on credit funds in the 2018 Capital One et al.; and BB&T Corporation (BB&T). proposal. 83 surrender their SBIC licenses? See SBIA and BB&T. 92 E.g., SIFMA; GS; ABA; Financial Services 84 Question 26. What specific activities See BB&T. Forum (FSF); and CS. 85 See SBIA. or investments, if any, should an issuer 93 For example, one industry group commenter 86 Data Boiler. that surrenders its SBIC license be claimed that ‘‘no credit funds have been able to 87 For purposes of this exclusion, ‘‘cash expressly permitted to engage in during qualify for the exclusion for joint ventures, and very equivalents’’ would mean high quality, highly wind-down phases, such as follow-on few have been able to qualify for the exclusion for liquid investments whose maturity corresponds to loan securitization vehicles, because these the issuer’s expected or potential need for funds investments in existing portfolio exclusions simply were not tailored for credit and whose currency corresponds to the issuer’s funds. In particular, credit funds are generally assets. 88 See 12 U.S.C. 1851(d)(1)(E). Continued

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proposing an exclusion for credit funds. equity instruments, subject to ownership interest in the credit fund), A credit fund, for the purposes of the appropriate conditions. The agencies are and the limitations in section ll.15 proposed exclusion, is an issuer whose inviting comment on the nature and regarding material conflicts of interest, assets consist solely of: scope of such conditions. Although the high-risk investments, and safety and • Loans; agencies are not proposing a specific soundness and financial stability, in • Debt instruments; quantitative limit on equity securities each case as though the credit fund were • Related rights and other assets that (or rights to acquire equity securities) in a covered fund.106 A banking entity’s are related or incidental to acquiring, the proposed rule, the agencies expect investment in and relationship with a holding, servicing, or selling loans, or that such a limit may be appropriate, credit fund also would be required to debt instruments; and and are considering imposing such a comply with applicable safety and • Certain interest rate or foreign limit in a final rule. The agencies are soundness standards.107 Finally, a exchange derivatives.94 thus soliciting comment, below, about banking entity that invests in or has a To ease compliance burdens, several the terms of any quantitative limit on relationship with a credit fund would provisions of the proposed exclusion are equity securities (or rights to acquire continue to be subject to capital charges similar to and modeled on conditions in equity securities), and the method for and other requirements under the loan securitization exclusion. For calculating such a limit. applicable banking law.108 example, any related rights or other The exclusion also would be subject The agencies believe that the assets held that are securities must be to certain additional restrictions to proposed credit fund exclusion would cash equivalents, securities received in ensure that the issuer is actually (1) address the application of the lieu of debts previously contracted with engaged in providing credit and credit covered fund provisions to credit- respect to loans held or, unique to the intermediation and is not operated for related activities in which banking proposed credit funds exclusion, certain the purpose of evading the provisions of entities are permitted to engage directly equity securities (or rights to acquire section 13 of the BHC Act.100 Under the and (2) be consistent with and effectuate equity securities) received on customary proposal, a credit fund would not be a Congress’s intent that section 13 of the terms in connection with the credit covered fund, provided that: BHC Act not limit or restrict banking • fund’s loans or debt instruments.95 The fund does not engage in entities’ ability to sell loans.109 The Relatedly, any derivatives held by the activities that would constitute agencies also believe the proposed credit fund must relate to loans, proprietary trading, as defined in § l credit fund exclusion may effectively permissible debt instruments, or other .3(b)(1)(i) of the rule, as if the fund were address concerns the agencies expressed a banking entity; 101 and rights or assets held and reduce the • in the preamble to the 2013 rule about interest rate and/or foreign exchange The fund does not issue asset- the administrability and evasion of 102 risks related to these holdings.96 The backed securities. section 13 of the BHC Act. Banking In addition, a banking entity would proposed exclusion also would be entities already have experience using not be able to rely on the credit fund broader than the loan securitization and complying with the loan exclusion unless certain conditions exclusion, by providing that a credit securitization exclusion. Establishing an were met. If a banking entity sponsors fund would be able to transact in certain exclusion for credit funds based on the or serves as an investment adviser or debt instruments.97 framework provided by the loan commodity trading advisor to a credit As noted above, the proposed securitization exclusion would allow fund, the banking entity would be exclusion would permit the credit fund banking entities to provide traditional required to provide disclosures to receive and hold a limited amount of extensions of credit regardless of the specified in section _l.11(a)(8), and equity securities (or rights to acquire specific form, whether directly via a ensure that the activities of the credit equity securities) that are received on loan made by a banking entity, or fund are consistent with safety and customary terms in connection with the indirectly through an investment in or soundness standards that are credit fund’s loans or debt relationship with a credit fund that substantially similar to those that would instruments.98 The agencies understand transacts primarily in loans and certain apply if the banking entity engaged in that some banking entities are permitted debt instruments. the activities directly.103 Likewise, a to take as consideration for a loan to a The proposed credit fund exclusion banking entity would not be permitted borrower a warrant or option issued by limits the universe of potential funds to rely on the credit fund exclusion if it the borrower—which allows the creditor that could rely on the exclusion by guarantees the performance of the to share in the profits, income, or clearly specifying the types of activities fund,104 or if the fund holds any debt earnings of the borrower—as an those funds may engage in. Excluded securities, equity, or rights to receive alternative or replacement to interest on credit funds could transact in or hold equity that the banking entity would not an extension of credit.99 To ensure that only loans, permissible debt be permitted to acquire and hold an extension of credit may be subject to instruments, and certain related rights directly.105 Furthermore, a banking similar conditions, regardless of form, or assets. These financial products, and entity’s investment in and relationship the agencies believe that excluded credit the regulations delimiting the use with a credit fund would be required to funds should be able to hold certain thereof, are well-known and should not comply with the limitations in section raise administrability and evasion __.14 (except the banking entity would unable to satisfy the conditions of the loan concerns. Similarly, the requirement securitization exclusion because credit funds do not be permitted to acquire and retain any typically issue asset-backed securities, credit funds 106 Proposed rule § l.10(c)(15)(v)(A). are managed and to meet the needs of clients, credit 100 Proposed rule § l.10(c)(15)(iv)–(vi). 107 Proposed rule § l.10(c)(15)(v)(B). funds typically invest in debt securities and 101 Proposed rule § l.10(c)(15)(ii)(A). For the 108 warrants.’’ SIFMA. For example, a banking entity’s investment in avoidance of doubt, a credit fund would not be able or relationship with a credit fund could be subject 94 Proposed rule § l.10(c)(15)(i). to elect a different definition of proprietary trading to the regulatory capital adjustments and 95 Proposed rule § l.10(c)(15)(i)(C). or trading account. deductions relating to investments in financial 96 Proposed rule § l.10(c)(15)(i)(D). 102 Proposed rule § l.10(c)(15)(ii)(B). subsidiaries or in the capital of unconsolidated 97 Proposed rule § l.10(c)(15)(i)(B). 103 Proposed rule § l.10(c)(15)(iii). financial institutions, if applicable. See 12 CFR 98 Proposed rule § l.10(c)(15)(i)(C)(1)(iii). 104 Proposed rule § l.10(c)(15)(iv). 217.22. 99 See 12 CFR 7.1006. See also SIFMA. 105 Id. 109 12 U.S.C. 1851(g)(2).

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that the credit fund not engage in securities (or rights to acquire equity fund, to comply with the disclosure activities that would constitute securities) received on customary terms requirements of § l.11(a)(8), as if the proprietary trading under section 13 of in connection with the credit fund’s credit fund were a covered fund? Why the BHC Act and implementing loans or debt instruments? If so, how? or why not? regulations should help to ensure that Question 30. The proposed credit Question 36. Is the definition of credit extensions that are bought and fund exclusion would permit excluded proprietary trading in the credit fund sold are held for the purpose of credit funds to hold related rights and exclusion appropriately scoped, facilitating the extension of credit and other assets that are related or incidental overbroad, or under-inclusive? Why or not for the purpose of evading the to acquiring, holding, servicing, or why not? If the definition is not requirements of section 13. Finally, the selling loans or debt instruments, appropriately scoped, is there an restrictions on guarantees and other provided that each right or asset that is alternative definition of proprietary limitations should eliminate the ability a security meets certain requirements. trading? Should credit funds sponsored and incentive for either the banking Should credit funds be allowed to hold by, or that have as an investment entity sponsoring a credit fund or any such related rights and other assets? Are adviser, a banking entity be able or be affiliate to provide additional support these assets necessary for the proper required to use the associated banking beyond the ownership interest retained functioning of a credit fund? Are the entity’s definition of proprietary trading, by the sponsor. Thus, the agencies requirements regarding rights or assets for the purposes of this exclusion? Why expect that, together, the proposed that are securities applicable to the or why not? Would such an approach criteria for the credit fund exclusion holdings of credit funds or otherwise impose undue compliance burdens? If would prevent a banking entity having appropriate? so, what are such burdens? any incentive to bail out such funds in Question 31. Is the list of permitted Question 37. Should the agencies periods of financial stress or otherwise securities appropriately scoped, establish additional provisions to expose the banking entity to the types overbroad, or under-inclusive? Why or prevent evasion of section 13 of the BHC of risks that the covered fund provisions why not? Should the list of permitted Act? Why or why not? If so, what of section 13 were intended to address. securities be modified? If so, how and requirements would be appropriate and The agencies request comment on all why? properly balance providing firms with aspects of the proposed credit fund Question 32. The proposal provides flexibility to facilitate extensions of exclusion. that any interest rate or foreign credit and ensuring compliance with Question 27. Is the proposed rule’s exchange derivatives held by the credit section 13 of the BHC Act? For example, approach to a credit fund exclusion fund adhere to certain requirements. should the agencies impose quantitative appropriate and effective? Why or why Should credit funds be allowed to hold limitations, additional capital charges, not? Do the conditions imposed on the these, or any other type of derivatives? control restrictions, or other proposed exclusion effectively address Are the requirements that the written requirements on use of the credit fund the concerns about administrability and terms of the derivatives directly relate to exclusion? evasion that the agencies expressed in assets held and that the derivatives Question 38. The proposed exclusion the preamble to the 2013 rule? reduce the interest rate and/or foreign for credit funds is similar to the current Question 28. What types of loans and exchange risks related to the assets held exclusion for loan securitizations. permissible debt instruments or some applicable to the holdings of credit Should the agencies combine the subset of those assets, if any, should a funds generally? Are such requirements proposed credit fund exclusion with the credit fund be able to hold? Are the otherwise appropriate? Why or why current loan securitization exclusion? If definitions used in the proposed not? so, how? What would be the benefits exclusion appropriate and clear? Question 33. Which safety and and drawbacks of combining the Question 29. The agencies believe it soundness standards, if any, should be exclusions or maintaining separate could be appropriate to permit credit referenced in the credit fund exclusion? exclusions for each type of activity? If funds to hold a small amount of non- Should the agencies reference the safety the two exclusions remain separate, loan and non-debt assets, such as and soundness standards codified in the should the proposed credit fund warrants or other equity-like interests banking agencies’ regulations, e.g., 12 exclusion contain a requirement that a directly related to the other permitted CFR part 30, 12 CFR part 364, or other credit fund not issue asset-backed assets, subject to appropriate conditions. safety and soundness standards? Safety securities? Why or why not? Should credit funds be able to hold and soundness standards can vary 2. Venture Capital Funds small amounts of equity securities (or depending on the type of banking entity. rights to acquire equity securities) Is there a universally applicable Under the implementing regulations, received on customary terms in standard that would be more venture capital funds that invest in connection with the credit fund’s loans appropriate, such as standards small businesses and start-up businesses or debt instruments? If so, what should applicable to insured depository that would be investment companies be the quantitative limit on permissible institutions? but for the exclusion contained in non-loan and non-debt assets? Should Question 34. Is the application of section 3(c)(1) or 3(c)(7) of the the limit be five or ten percent of assets, sections l.14 and l.15 to the proposed Investment Company Act are covered or some other amount? How should credit fund exclusion appropriate? Why funds unless they otherwise qualify for such quantitative limit be calculated? or why not? Should a banking entity an exclusion. The agencies are Does the holding of a certain amount of that sponsors or serves as an investment proposing to add an exclusion from the equity securities (or rights to acquire adviser to a credit fund be required to definition of ‘‘covered fund’’ under equity securities) raise concerns that comply with the limitations imposed by § l.10(b) of the rule that would allow banking entities may use credit funds to both sections l.14(a) and (b)? Why or banking entities to acquire or retain an evade the limitations and prohibitions why not? ownership interest in, or sponsor, in section 13 of the BHC Act? Why or Question 35. Is it appropriate to certain venture capital funds to the why not? For example, under the require a banking entity that sponsors or extent the banking entity is permitted to proposal, could the holdings of an serves as an investment adviser or engage in such activities under excluded fund be predominantly equity commodity trading advisor to a credit otherwise applicable law. The exclusion

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would be available with respect to 13.112 The FSOC Report noted that businesses.’’ 121 The agencies further ‘‘qualifying venture capital funds,’’ several commenters recommended stated that it appeared that the activities which the proposal defines as an issuer excluding venture capital funds from and risk profiles for banking entities that meets the definition in 17 CFR the definition of ‘‘hedge fund’’ and regarding sponsorship of, and 275.203(l)–1 and that meets several ‘‘private equity fund’’ because the investment in, private equity and additional criteria specified below. nature of venture capital funds is venture capital funds were not readily Contemporaneous with the passage of fundamentally different from such other distinguishable.122 the Dodd-Frank Act, multiple Members funds and because they promote In 2017, the U.S. Department of the of Congress made statements indicating innovation.113 The FSOC Report stated Treasury issued a report stating that the that section 13 of the BHC Act should that the treatment of venture capital definition of ‘‘covered fund’’ is overly not restrict the activities of venture funds was a significant issue and noted broad and that the covered fund capital funds.110 Several of these that the SEC had recently proposed provisions are not well-tailored to the Members of Congress noted that rules distinguishing the characteristics objectives of section 13 of the BHC Act.123 The report stated that changes to properly conducted venture capital and activities of venture capital funds the covered fund provisions would funds do not present the same concerns from other private funds.114 The FSOC ‘‘greatly assist in the formation of at which section 13 of the BHC Act was Report recommended that the agencies venture and other capital that is critical directed and can promote the public carefully evaluate the range of funds 111 to fund economic growth interest and job creation. In addition, and other legal vehicles that rely on the in accordance with section 13(b)(1) of opportunities.’’ 124 In the 2018 proposal, exclusions contained in section 3(c)(1) the agencies requested comment on the BHC Act, the Financial Stability or 3(c)(7) and consider whether it would Oversight Council (FSOC) released a whether to exclude from the definition be appropriate for the regulations of ‘‘covered fund’’ issuers that do not report providing recommendations implementing section 13 to adopt a concerning implementation of section meet the definition of ‘‘hedge fund’’ or narrower definition in some cases.115 ‘‘private equity fund’’ in the SEC’s Form 125 110 See 156 Cong. Rec. E1295 (daily ed. July 13, In the 2011 proposed rule, the PF. The agencies noted that a venture 2010) (statement of Rep. Eshoo) (‘‘the purpose of the agencies requested comment on whether capital fund, as defined in rule 203(l)– Volcker Rule is to eliminate risk-taking activities by to exclude venture capital funds from 1 under the Advisers Act, is not a banks and their affiliates while at the same time 116 ‘‘private equity fund’’ or ‘‘hedge fund,’’ preserving safe, sound investment activities that the definition of ‘‘covered fund.’’ The serve the public interest . . . Venture capital funds agencies received several comments as those terms are defined in Form PF do not pose the same risk to the health of the supporting such an exclusion and two and requested comment on whether to financial system. They promote the public interest comments opposing such an include venture capital funds within the by funding growing companies critical to spurring 117 definition of ‘‘covered fund’’ if the innovation, job creation, and economic exclusion, but declined to explicitly competitiveness. I expect the regulators to use the exclude venture capital funds from the agencies adopted a definition of covered broad authority in the Volcker Rule wisely and definition of ‘‘covered fund’’ in the 2013 fund based on the definitions in Form 126 clarify that funds . . . such as venture capital rule.118 The agencies indicated at the PF. funds, are not captured under the Volcker Rule and In response to the 2018 proposal, the time that they did not believe the fall outside the definition of ‘private equity.’ ’’); 156 agencies received several comments Cong. Rec. S5904 (daily ed. July 15, 2010) statutory language of section 13 (statement of Sen. Boxer) (recognizing ‘‘the crucial supported providing an exclusion for 121 Id. (quoting S. Rep. No. 111–176 (2010)). See and unique role that venture capital plays in 119 spurring innovation, creating jobs and growing venture capital funds. The agencies also H. Rep. No. 111–517 (2010) (indicating that companies’’ and that ‘‘the intent of the rule is not explained that this view was based on venture capital funds are subsets of ‘‘private to harm venture capital investment.’’); 156 Cong. an understanding that Congress treated funds’’). However, the agencies did not address the Rec. S5905 (daily ed. July 15, 2010) (statement of difference in terminology that Congress used in Sen. Dodd) (confirming ‘‘the purpose of the Volcker venture capital funds as a subset of section 402 of the Dodd-Frank Act (‘‘private funds’’) rule is to eliminate excessive risk taking activities private equity funds in other contexts and section 619 (‘‘hedge funds’’ and ‘‘private equity by banks and their affiliates while at the same time and that Congress did not adopt an funds’’). Nor did the agencies address the different preserving safe, sound investment activities that statutory definitions of these terms. Section 402 express exclusion for venture capital defines ‘‘private fund’’ as ‘‘an issuer that would be serve the public interest’’ and stating ‘‘properly 120 conducted venture capital investment will not funds in section 13 of the BHC Act. an investment company, as defined in section 3 of cause the harms at which the Volcker rule is Specifically, the agencies cited to the Investment Company Act of 1940 (15 U.S.C. directed. In the event that properly conducted Congressional reports related to section 80a–3), but for section 3(c)(1) or 3(c)(7) of that Act.’’ Section 619 defines ‘‘hedge fund or private equity venture capital investment is excessively restricted 402 of the Dodd-Frank Act that by the provisions of section 619, I would expect the fund’’ as ‘‘an issuer that would be an investment appropriate Federal regulators to exempt it using characterized venture capital funds as company, as defined in section 3 of the Investment their authority under section 619[d][1](J) . . .’’); 156 ‘‘a subset of private investment funds Company Act of 1940 (15 U.S.C. 80a–3), but for Cong. Rec. S6242 (daily ed. July 26, 2010) specializing in long-term equity section 3(c)(1) or 3(c)(7) of that Act, or such similar (statement of Sen. Scott Brown) (‘‘One other area of funds as the [agencies] may, by rule . . . remaining uncertainty that has been left to the investment in small or start-up determine.’’ (emphasis added). regulators is the treatment of bank investments in 122 See 79 FR 5704. The agencies do not believe venture capital funds. Regulators should carefully 112 See Financial Stability Oversight Counsel, the fact that Congress expressly distinguished these consider whether banks that focus overwhelmingly Study and Recommendations on Prohibitions on funds from other types of private funds in other on lending to and investing in start-up technology Proprietary Trading and Certain Relationships with provisions of the Dodd-Frank Act is dispositive. In companies should be captured by one-size-fits-all Hedge Funds and Private Equity Funds (Jan. 18, this context, we do not believe that the differences restrictions under the Volcker rule. I believe they 2011), available at https://www.treasury.gov/ in how the terms private equity fund and venture should not be. Venture capital investments help initiatives/Documents/Volcker%20sec%20%20619 capital fund are used in the Dodd-Frank Act entrepreneurs get the financing they need to create %20study%20final%201%2018%2011%20rg.pdf. prohibit this proposal. The agencies believe it is new jobs. Unfairly restricting this type of capital (FSOC Report). reasonable under the authority given to the agencies under the statute to exclude these funds from the formation is the last thing we should be doing in 113 See id. definition of ‘‘covered fund.’’ this economy.’’). 114 See id. 123 111 See U.S. Department of the Treasury, A See 156 Cong. Rec. E1295 (daily ed. July 13, 115 See id. 2010) (statement of Rep. Eshoo); 156 Cong. Rec. Financial System That Creates Economic 116 See 76 FR 68915. S5904 (daily ed. July 15, 2010) (statement of Sen. Opportunities: Banks and Credit Unions at 77 (June 117 Boxer); 156 Cong. Rec. S5905 (daily ed. July 15, See 79 FR 5703–04. 2017). 2010) (statement of Sen. Dodd); 156 Cong. Rec. 118 See id. 124 See id. S6242 (daily ed. July 26, 2010) (statement of Sen. 119 See id. 125 See 83 FR 33478. Scott Brown). 120 See id. 126 See id.

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supporting excluding venture capital adviser, or commodity trading advisor leverage is for a non-renewable term of funds from the definition of covered to the issuer, the banking entity would no longer than 120 calendar days, fund.127 Commenters stated that the be required to: except that any guarantee by the private legislative record does not indicate that • Provide in writing to any fund of a qualifying portfolio company’s Congress intended to restrict the prospective and actual investor the obligations up to the amount of the activities of venture capital funds and disclosures required under § l.11(a)(8), value of the private fund’s investment in that Members of Congress supported as if the issuer were a covered fund; and the qualifying portfolio company is not excluding venture capital funds from • Ensure that the activities of the subject to the 120 calendar day limit; the definition of covered fund.128 issuer are consistent with safety and • Only issues securities the terms of Commenters further stated that venture soundness standards that are which do not provide a holder with any capital funds engage in long-term substantially similar to those that would right, except in extraordinary investments that promote growth, apply if the banking entity engaged in circumstances, to withdraw, redeem or capital formation, and the activities directly. require the repurchase of such securities competitiveness.129 Some commenters In addition, a banking entity that but may entitle holders to receive specifically recommended using the relies on this exclusion would not, distributions made to all holders pro definition of ‘‘venture capital fund’’ in directly or indirectly, be permitted to rata; and • rule 203(l)–1 under the Advisers Act to guarantee, assume, or otherwise insure Is not registered under section 8 of determine the scope of a venture capital the obligations or performance of the the Investment Company Act of 1940 fund exclusion.130 One commenter issuer. Finally, the proposed exclusion ..., and has not elected to be treated argued that venture capital funds should would require a banking entity’s as a business development company be treated the same as private equity ownership interest in or relationship pursuant to section 54 of that Act 137 funds.131 Two commenters opposed with a qualifying venture capital fund .... to: ‘‘Qualifying investment’’ is defined in excluding venture capital funds from • the definition of covered fund.132 In Comply with the limitations the SEC’s regulation to be: (1) An equity addition, several commenters opposed imposed in § l.14 (except the banking security issued by a qualifying portfolio redefining ‘‘covered fund’’ using the entity may acquire and retain any company that has been acquired directly definitions of ‘‘hedge fund’’ and ownership interest in the issuer) and by the private fund from the qualifying ‘‘private equity fund’’ in Form PF.133 § l.15 of the implementing regulations, portfolio company; (2) any equity as if the issuer were a covered fund; and security issued by a qualifying portfolio Two commenters supported using the • definitions in Form PF as a basis for Be conducted in compliance with, company in exchange for an equity excluding certain issuers from the and subject to, applicable banking laws security issued by the qualifying definition of covered fund.134 In and regulations, including applicable portfolio company described in (1); or addition, the agencies received several safety and soundness standards. (3) any equity security issued by a These requirements are intended to comments stating the rule should allow company of which a qualifying portfolio ensure that banking entity investments banking entities to invest in funds that company is a majority-owned in qualifying venture capital funds are engage only in long-term activities, subsidiary, as defined in section 2(a)(24) consistent with the purposes of section including venture capital investments, of the Investment Company Act, or a 13 of the BHC Act. First, a qualifying that would be permissible for the predecessor, and is acquired by the 135 venture capital fund must be a venture private fund in exchange for an equity banking entity to engage in directly. 138 As discussed in detail below, the capital fund as defined in 17 CFR security described in (1) or (2). agencies are proposing to exclude from 275.203(l)–1. The SEC has defined ‘‘Qualifying portfolio company,’’ in ‘‘venture capital fund’’ as any private turn, is defined in the SEC’s regulation the definition of ‘‘covered fund’’ 136 qualifying venture capital funds. The fund that: to be a company that: (1) At the time of • Represents to investors and proposal would define a qualifying any investment by the private fund, is potential investors that it pursues a venture capital fund as an issuer that: not reporting or foreign traded and does • Is a venture capital fund as defined venture capital strategy; not control, is not controlled by or • Immediately after the acquisition of in 17 CFR 275.203(l)–1; and under common control with another • Does not engage in any activity that any asset, other than qualifying company, directly or indirectly, that is would constitute proprietary trading, investments or short-term holdings, reporting or foreign traded; (2) does not under § l.3(b)(1)(i), as if it were a holds no more than 20 percent of the borrow or issue debt obligations in banking entity. amount of the fund’s aggregate capital connection with the private fund’s With respect to any banking entity contributions and uncalled committed investment in such company and that acts as a sponsor, investment capital in assets (other than short-term distribute to the private fund the holdings) that are not qualifying proceeds of such borrowing or issuance 127 See ABA; BPI; IIB; SIFMA; Crapo et al.; investments, valued at cost or fair value, in exchange for the private fund’s Hultgren; Hensarling et al; National Venture Capital consistently applied by the fund; investment; and (3) is not an investment Association (NVCA); and Center for American • Does not borrow, issue debt company, a private fund, an issuer that Entrepreneurship (CAE). obligations, provide guarantees or would be an investment company but 128 See ABA; BPI; Representative Hultgren; otherwise incur leverage, in excess of 15 NVCA; and Center for Capital Markets for the exemption provided by 17 CFR Competitiveness (CCMC). percent of the private fund’s aggregate 270.3a–7, or a commodity pool.139 The 129 See ABA; BPI; Representative Hultgren; capital contributions and uncalled SEC explained that the definitions of NVCA; Representatives Hensarling et al.; and CAE. committed capital, and any such ‘‘qualifying investment’’ and ‘‘qualifying 130 See Representative Hultgren and NVCA. borrowing, indebtedness, guarantee or portfolio company’’ reflect the typical 131 See AIC. characteristics of investments made by 132 See Occupy the SEC and Data Boiler. 136 For purposes of 17 CFR 275.203(l)–1, ‘‘private venture capital funds and that these 133 See, e.g., Americans for Financial Reform; fund’’ is defined as ‘‘an issuer that would be an AIC; and SIFMA. investment company, as defined in section 3 of the 134 See Association for Corporate Growth and FI. Investment Company Act of 1940, but for section 137 17 CFR 275.203(l)–1(a). 135 See e.g., ABA; NVCA; AIC; CCMC; and 3(c)(1) or 3(c)(7) of that Act.’’ 15 U.S.C. 80b– 138 17 CFR 275.203(l)–1(c)(3). Committee on Capital Markets Regulation. 2(a)(29). 139 17 CFR 275.203(l)–1(c)(4).

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definitions work together to cabin the The agencies believe the SEC’s notwithstanding 17 CFR 275.203(l)– definition of venture capital fund to rationale for adopting this definition of 1(a)(2), the venture capital fund only the funds that Congress understood venture capital fund could also support exclusion would be limited to funds to be venture capital funds during the using this definition as the foundation that do not invest in companies that, at passage of the Dodd-Frank Act.140 for an exclusion from the definition of the time of the investment, have more In the preamble to the regulations ‘‘covered fund.’’ First, this definition than a limited dollar amount of total adopting this definition of venture helps to distinguish the investment annual revenue, calculated as of the last capital fund, the SEC explained that the activities of venture capital funds from day of the calendar year. The agencies definition’s criteria distinguish venture those of hedge funds and private equity are considering what specific threshold capital funds from other types of funds, funds, which was one of the agencies’ would be appropriate. For example, the including private equity funds and primary concerns in declining to adopt agencies are considering whether a limit hedge funds. For example, the SEC an exclusion for venture capital funds in of $50 million in annual revenue would explained that it understood the criteria the 2013 rule. Second, this definition be appropriate, or whether a higher or for ‘‘qualifying portfolio companies’’ to includes criteria reflecting the lower limit would help to appropriately be characteristic of issuers of portfolio characteristics of venture capital funds differentiate venture capital funds from securities held by venture capital funds that the agencies believe may pose less the types of funds that section 13 of the and, taken together, would operate to potential risk to a banking entity BHC Act was intended to address. exclude most private equity funds and sponsoring or investing in venture A banking entity that serves as a hedge funds from the venture capital capital funds and to the financial sponsor, investment adviser, or fund definition.141 The SEC also system—specifically, the smaller role of commodity trading advisor to a explained that the criteria for leverage financing and a lesser degree of qualifying venture capital fund would ‘‘qualifying investments’’ under the interconnectedness with public be required to provide the disclosures SEC’s regulation would help to markets.145 These characteristics would required under § l.11 (a)(8) to differentiate venture capital funds from help to address the concern expressed prospective and actual investors in the other types of private funds, such as in the preamble to the 2013 rule that the fund. In addition, any banking entity 142 leveraged buyout funds. Moreover, activities and risk profiles for banking that relies on the exclusion would not the SEC explained that these criteria entities regarding sponsorship of, and be permitted to, directly or indirectly, reflect the Congressional understanding investment in, venture capital fund guarantee, assume or otherwise insure that venture capital funds are less activities are not readily distinguishable the obligations or performance of the connected with the public markets and from those funds that section 13 of the qualifying venture capital fund. These therefore may have less potential for BHC Act was intended to capture. requirements would promote yet 143 systemic risk. The SEC further While the SEC’s regulatory definition another goal of section 13 of the BHC explained that its regulation’s restriction in 17 CFR 275.203(l)–1 would form the Act, which was to prevent banking on the amount of borrowing, debt base of the proposed exclusion for entities from bailing out funds that they 147 obligations, guarantees or other qualifying venture capital funds, the sponsor or advise. incurrence of leverage was appropriate proposed exclusion includes additional A banking entity that serves as a to differentiate venture capital funds criteria that would help promote the sponsor, investment adviser, or from other types of private funds that specific purposes of section 13 of the commodity trading advisor to a may engage in trading strategies that use BHC Act. In particular, a qualifying qualifying venture capital fund also financial leverage and may contribute to venture capital fund would not be must ensure the fund’s activities are 144 consistent with safety and soundness systemic risk. permitted to engage in any activity that standards that are substantially similar would constitute proprietary trading 140 See Exemptions for Advisers to Venture to those that would apply if the banking under § l.3(b)(1)(i) as if the fund were Capital Funds, Private Fund Advisers With Less entity engaged in the activities directly. a banking entity. This requirement Than $150 Million in Assets Under Management, Therefore, a banking entity could not and Foreign Private Advisers, 76 FR 39646, 39657 would promote one of the purposes of rely on this exclusion to sponsor an (Jul. 6, 2011). the covered fund provisions in section 141 investment fund that exposes the 76 FR 39656. 13 of the BHC Act, which was to 142 See, e.g., 76 FR 39653 (explaining that a banking entity to the type of high-risk prevent banking entities from limitation on secondary market purchases of a trading and investment activities that circumventing the proprietary trading qualifying portfolio company’s shares would the covered fund provisions of section recognize ‘‘the critical role this condition played in prohibition through fund 13 of the BHC Act were intended to differentiating venture capital funds from other investments.146 Under this requirement, types of private funds’’). restrict. Further, a banking entity’s a qualifying venture capital fund could 143 76 FR 39648 (‘‘[T]he proposed definition of investment in or relationship with a not engage in any activities that are venture capital fund was designed to . . . address qualifying venture capital fund would concerns expressed by Congress regarding the principally for the purpose of short-term be subject to § l14 (except the banking potential for systemic risk.’’); 76 FR 39656 resale, benefitting from actual or (‘‘Congressional testimony asserted that these funds entity may acquire and retain any expected short-term price movements, may be less connected with the public markets and ownership interest in the fund in realizing short-term arbitrage profits, or may involve less potential for systemic risk. This accordance with the terms of the appears to be a key consideration by Congress that hedging one or more of the positions exclusion) and § l.15 of the led to the enactment of the venture capital resulting from such purchases or sales. exemption. As we discussed in the Proposing The agencies are considering an implementing regulations, as if the fund Release, the rule we proposed sought to incorporate were a covered fund. These limitations this Congressional understanding of the nature of additional restriction for which they are investments of a venture capital fund, and these seeking specific comment. Under this would help to ensure that the risk a principles guided our consideration of the proposed additional restriction, and banking entity takes on as a result of its venture capital fund definition.’’). investment in or relationship with a 144 76 FR 39662. See also 76 FR 39657 (‘‘We qualifying venture capital fund remains proposed these elements of the qualifying portfolio Congress that stressed the lack of leverage in company definition because of the focus on venture capital investing.’’). appropriately limited. Like the leverage in the Dodd-Frank Act as a potential 145 See supra notes 106 and 107. contributor to systemic risk as discussed by the 146 See, e.g., Treasury Report at 77 and FSOC 147 See Treasury Report at 77 and FSOC Report Senate Committee report, and the testimony before Report at 6. at 6.

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restrictions on guarantees described share the costs and risks of their could allow banking entities with a above, applying the requirements in permissible investment activities with presence in and knowledge of the areas § l.14 would restrict a banking entity third-party investors.149 Investments in where venture capital and other types of that sponsors or advises the fund from qualifying venture capital funds could financing are less readily available to providing additional support or bailing allow banking entities to allocate businesses to provide this type of out the fund. Applying the requirements available resources to a more diverse financing in those areas. in § l.15 would ensure that the fund array of long-term investments in a For all of these reasons, the agencies does not expose the banking entity to broader range of geographic areas, believe the proposal could promote the high-risk assets or high-risk trading industries and sectors than the banking benefits of long-term investment that the strategies. In particular, to the extent a entity may be able to access directly. agencies and Members of Congress have fund would expose a banking entity to Banking entity investments in previously recognized, while also a high-risk asset or high-risk trading qualifying venture capital funds may addressing the concerns that were the strategy (or otherwise engage in benefit the broader financial system by target of the funds prohibition in section proprietary trading), the fund would not improving the flow of financing to small 13 of the BHC Act. The agencies are be a qualifying venture capital fund. businesses and start-ups and thus may seeking comment on whether to exclude Therefore, prior to making an promote and protect the financial other types of funds that, like qualifying investment in a qualifying venture stability of the United States. Permitting venture capital funds, provide capital fund, a banking entity would these types of investments would be important capital to businesses through need to ensure that the fund’s consistent with the Treasury long-term investments and do not investment mandate and strategy would Department’s June 2017 report, which engage in proprietary trading and other satisfy the requirements of § l.15. In said such fund investments ‘‘can greatly activities that section 13 of the BHC Act addition, a banking entity would need assist in the formation of venture and was intended to prohibit. to monitor the activities of a qualifying other capital that is critical to fund The agencies are requesting comment venture capital fund to ensure it economic growth opportunities.’’ 150 on the proposal to exclude qualifying satisfies these requirements on an Similarly, the agencies recognized the venture capital funds from the covered ongoing basis. economic benefits of allowing banking fund definition, in particular: The agencies believe that qualifying entities to make venture capital-style Question 39. Is the proposed venture capital funds meeting each of investments in the preamble to the 2013 exclusion for qualifying venture capital these requirements would not raise the rule, despite not adopting an exclusion funds appropriate? Why or why not? type of concerns that were the target of for such funds.151 Further, it is possible Question 40. Does the proposed section 13 of the BHC Act. The that permitting banking entities to exclusion for qualifying venture capital proposed exclusion, including extend financing to businesses through funds include the appropriate vehicles? incorporation of the SEC’s regulatory qualifying venture capital funds would Why or why not? If not, how should the venture capital fund definition in 17 allow banking entities to compete more agencies expand or narrow the vehicles CFR 275.203(l)–1, should also address effectively with non-banking entities for which banking entities would be the concerns the agencies expressed in that are not subject to the same permitted to make use of the exclusion? the preamble to the 2013 rule that the prudential regulation or supervision as What modifications to the proposed activities and risk profiles for banking banking entities subject to section 13 of exclusion would be appropriate and entities regarding sponsorship of, and the BHC Act. In this respect, the why? investment in, venture capital funds are proposal could allow a larger volume of Question 41. Are the proposed not readily distinguishable from those of permissible banking and financial conditions on the proposed exclusion funds that section 13 of the BHC Act activities to occur in the regulated for qualifying venture capital funds was intended to capture. Accordingly, banking system. appropriate? Why or why not? If not the agencies believe the foregoing In addition, it is widely noted that the appropriate, how should the agencies requirements could give effect to the availability of venture and other modify the conditions, and why? language and purpose of section 13 of financing from funds is not uniform Question 42. Would permitting the BHC Act without allowing banking throughout the United States. In banking entities to invest in or sponsor entities to evade the requirements of particular, it is noted that such funding a qualifying venture capital fund section 13. The agencies further believe is generally available on a competitive promote and protect the safety and that permitting banking entities to basis for companies with a significant soundness of banking entities and the invest in and have certain relationships presence in certain geographic regions financial stability of the United States? with qualifying venture capital funds (e.g., the New York metropolitan area, What data is available to support an would be consistent with statements by the Boston metropolitan area and argument that venture capital funds Members of Congress that were made ‘‘Silicon Valley’’ and surrounding would or would not promote and contemporaneously with passage of the areas).152 In this respect, the proposal protect the safety and soundness of Dodd-Frank Act.148 banking entities and the financial The agencies believe that properly- 149 79 FR 5681. stability of the United States? conducted activities involving these 150 Treasury Report at 77. Question 43. Are the requirements for types of venture capital funds could 151 79 FR 5704 (‘‘While the final rule does not a qualifying venture capital fund provide a separate exclusion for venture capital promote and protect the safety and funds from the definition of covered fund, the sufficient to distinguish these types of soundness of banking entities and the [a]gencies recognize that certain venture capital funds from covered funds? Are there financial stability of the United States. investments by banking entities provide capital and any additional standards or funding to nascent or early-stage companies and Qualifying venture capital funds could small businesses and also may provide these requirements that should apply to a allow banking entities to diversify their companies expertise and services. Other provisions permissible investment activities, and of the final rule or the statute may facilitate, or at CityLab (Oct. 3, 2017), available at https:// like other exclusions provided in the least not impede, other forms of investing that may www.citylab.com/life/2017/10/venture-capital- provide the same or similar benefits.’’) (emphasis concentration/539775/; PricewaterhouseCoopers & 2013 rule, allow banking entities to added). CB Insights, MoneyTree Report (Q3 2019), available 152 See, e.g., Richard Florida, Venture Capital at: https://www.pwc.com/us/en/moneytree-report/ 148 See supra note 110. Remains Highly Concentrated in Just a Few Cities, assets/moneytree-report-q3-2019.pdf.

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qualifying venture capital fund? If so, proposed venture capital fund exclusion 3. Family Wealth Management Vehicles what are they and why should they appropriate? Why or why not? apply? Question 49. Is it sufficiently clear The agencies are proposing to exclude Question 44. Should the additional what kind of assets or investments from the definition of ‘‘covered fund’’ proposed revenue requirement be added would result in a conflict of interest or under § l.10(b) of the rule any entity to the venture capital fund exclusion to an exposure to a high-risk asset or high- that acts as a ‘‘family wealth help ensure that the investments made risk trading strategy in the context of a management vehicle.’’ The proposed by excluded venture capital funds are qualifying venture capital fund? Should family wealth management vehicle truly made in small and early-stage the agencies provide additional exclusion would be available to an companies? Why or why not? If the parameters regarding the types of assets entity that: (1) If organized as a trust, the additional restriction is added, is $50 and strategies that could result in such grantor(s) of the entity are all family million an appropriate annual revenue exposure in this context? customers and, (2) if not organized as a limit? If not, what would be an Question 50. Should the agencies trust, a majority of the voting interests appropriate revenue limit? Is there a exclude from the definition of covered in the entity are owned (directly or metric other than annual gross revenue, fund, or otherwise permit the activities indirectly) by family customers; and the such as amount of time in operation, of, certain long-term investment funds entity is owned only by family that would serve as a better indicator of that would not be qualifying venture customers and up to 3 closely related whether an investment in a company capital funds? For example, should the persons of the family customers.153 In should allow a venture capital fund to agencies provide an exclusion for response to the 2018 proposal, qualify for the exclusion? issuers (1) that make long-term commenters raised concerns that family Question 45. Should the proposed investments that a banking entity could wealth management vehicles were not venture capital fund exclusion require make directly, (2) that hold themselves specifically excluded from the covered that 100 percent of the fund’s holdings, out as entities or arrangements that fund definition following the adoption other than short-term holdings, be in make investments that they intend to of the 2013 rule or in the 2018 proposed qualifying investments instead of the 80 hold for a set minimum time period, rule.154 Commenters stated that family percent that is required under 17 CFR such as two years, (3) whose relevant wealth management vehicles are 275.203(l)–1(a)(2)? Why or why not? offering and governing documents typically designed to facilitate family Question 46. Are there provisions or reflect a long-term investment strategy, wealth management, estate planning, conditions of the definition under rule and (4) that meet all other requirements and other similar objectives and may 203(l)–1 under the Advisers Act that are of the proposed qualifying venture take a variety of legal forms, including inappropriate for purposes of capital fund exclusion (other than that trusts, limited liability companies, determining an exclusion from the the issuers would be venture capital limited partnerships, and other pooled ‘‘covered fund’’ definition in § l.10? If funds as defined in 17 CFR 275.203(l)– investment vehicles.155 Commenters so, please explain why the purposes of 1)? Would the rationale for excluding further stated that absent an exclusion an exclusion from the ‘‘covered fund’’ qualifying venture capital funds also from the covered fund definition, family definition should lead the agencies to extend to such long-term investment wealth management vehicles could be exclude a provision or condition, such funds? Why or why not? If the agencies restricted from obtaining various types as paragraph (a)(2), of the definition were to adopt an exclusion for long-term of ordinary course banking and asset under rule 203(l)–1 under the Advisers investment funds, should the agencies management services from a banking Act. impose safeguards on such an entity simply because they would Question 47. How would a banking exclusion? If so, what safeguards should entity ensure the activities of a receive those services through a family the agencies impose, and why? Would 156 qualifying venture capital fund are such an exclusion promote and protect wealth management vehicle. consistent with the safety and the safety and soundness of the banking Commenters provided examples of these soundness standards that apply to the entity and the financial stability of the services, including investment advice, banking entity? Are the standards and brokerage execution, financing, and United States? If so, how? 157 requirements for a banking entity that Question 51. Is there evidence that the clearance and settlement services. A acts as a sponsor, investment adviser, or covered fund provisions have caused commenter also stated that family commodity trading advisor to a banking entities to make more wealth management vehicles structured qualifying venture capital fund standalone direct balance sheet as trusts for the benefit of family appropriate to apply to a qualifying investments? If so, have these members also often appoint banking venture capital fund? Are there any investments increased or decreased risk entities, acting in a fiduciary capacity, additional standards or requirements to banking entities? as trustees for the trusts.158 that should apply to a banking entity Question 52. Is there evidence that the that acts as a sponsor, investment covered fund provisions have negatively 153 Under § l.10(c)(17)(iii)(A) of the proposed adviser, or commodity trading advisor impacted the provision of financing? If rule, ‘‘closely related person’’ would mean ‘‘a natural person (including the estate and estate to a qualifying venture capital fund? If so, is this impact non-uniform? For planning vehicles of such person) who has a so, what are they, and why should they example, are effects more acute in longstanding business or personal relationship with apply? certain geographic areas or in certain any family customer.’’ Question 48. A banking entity that industries? To the extent negative 154 See e.g., ABA; BPI; IAA; and SIFMA. These commenters stated that many family wealth sponsors or advises a qualifying venture effects are asymmetric by geography or management vehicles rely on the exclusions capital fund would be required to otherwise, would the proposal provided by sections 3(c)(1) or 3(c)(7) of the comply with the limitations imposed by effectively address these asymmetries? Investment Company Act and would therefore be §§ l.14 (except the banking entity may Is there evidence that the covered fund covered funds unless they satisfy the conditions for one of the 2013 rule’s exclusions from the covered acquire and retain any ownership provisions have caused end-users to fund definition. interest in the issuer) and l.15 of the seek financing from non-banking 155 See e.g., IAA and SIFMA. 2013 rule, as if the qualifying venture entities? If so, would the proposed 156 See e.g., BPI; IAA; and SIFMA. capital fund were a covered fund. Is the exclusion for qualifying venture capital 157 See e.g., BPI and SIFMA. application of these sections to the funds help to address these impacts? 158 See SIFMA.

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In the 2018 proposal, the agencies covered fund by permitting banking the banking entity (or an affiliate): (1) requested comment regarding whether entities to continue to provide Provides bona fide trust, fiduciary, the agencies should address the traditional banking and asset investment advisory, or commodity application of Super 23A in the context management services that do not trading advisory services to the entity; of family wealth management vehicles. involve the types of risks section 13 was (2) does not, directly or indirectly, One commenter responded that the designed to address. As the agencies guarantee, assume, or otherwise insure agencies should incorporate the noted in the preamble to the 2013 rule, the obligations or performance of such exemptions under Section 23A and section 13 and the implementing entity; (3) complies with the disclosure Regulation W into the definition of regulations were designed to permit obligations under § l.11(a)(8), as if ‘‘covered transaction.’’ 159 However, banking entities to continue to provide such entity were a covered fund; 164 (4) commenters also stated that client-oriented financial services, does not acquire or retain, as principal, incorporating the exemptions under including asset management services.162 an ownership interest in the entity, Section 23A and Regulation W would In addition, the agencies believe that an other than up to 0.5 percent of the still not permit banking entities to exclusion for family wealth entity’s outstanding ownership interests engage in the full range of transactions management vehicles is consistent with that may be held by the banking entity and services sought by family wealth section 13(d)(1)(D), which permits and its affiliates for the purpose of and management vehicles, including banking entities to engage in to the extent necessary for establishing ordinary extensions of credit, and transactions on behalf of customers, corporate separateness or addressing therefore the regulations would when those transactions would bankruptcy, insolvency, or similar continue to unnecessarily impede otherwise be prohibited under section concerns; (5) complies with the traditional banking and asset 13. The proposed exclusion would requirements of §§ l.14(b) and l.15, as management services.160 Commenters similarly allow banking entities to if such issuer were a covered fund; and further stated that incorporation of the provide traditional services to (6) complies with the requirements of 12 exemptions would not eliminate the customers through vehicles used to CFR 223.15(a), as if such banking entity uncertainty and the associated burden manage the wealth and other assets of and its affiliates were a member bank for banking entities resulting from an those customers and their families. and the issuer were an affiliate thereof. analysis of the status of a family wealth Under the proposed exclusion, a The agencies believe that, collectively, management vehicle as a covered fund. family wealth management vehicle the conditions on the proposed The proposal is intended to allow would include any entity that is not, exclusion should help to ensure that banking entities to provide the full and does not hold itself out as being, an family wealth management vehicles are range of traditional customer-facing entity or arrangement that raises money used for customer oriented financial banking and asset management services from investors primarily for the purpose services provided on arms-length, to family wealth management vehicles of investing in securities for resale or market terms, and to prevent evasion of and recognizes that a specific exclusion other disposition or otherwise trading in the requirements of section 13 of the for family wealth management securities, provided that: (1) If the entity BHC Act and the implementing vehicles—rather than merely addressing is a trust, the grantor(s) of the entity are regulations. In addition, these proposed the application of Super 23A—is all family customers and, (2) if the conditions are based on existing necessary to address the issues related entity is not a trust, a majority of the conditions in other provisions of the family wealth management vehicles voting interests are owned (directly or implementing regulations,165 which the more completely and effectively. indirectly) by family customers and the Similar to the customer facilitation entity is owned only by family 164 The obligations under § l.11(a)(8) of the vehicles discussed below, the agencies customers and up to 3 closely related proposed rule would apply in connection with the believe that the proposed exclusion for exemption for organizing and offering covered persons of the family customers. Under family wealth management vehicles funds, which would typically require the the proposed exclusion, a family would appropriately allow banking preparation and distribution of offering documents. customer would mean a family client, as The agencies understand that offering documents entities to structure services or defined in Rule 202(a)(11)(G)–1(d)(4) of may not be necessary in connection with most transactions for customers, or to family wealth management vehicles given the the Advisers Act (17 CFR otherwise provide traditional customer- vehicles’ purpose and the requirement that interests 275.202(a)(11)(G)–1(d)(4)); or any facing banking and asset management in such vehicles be limited to family customers and natural person who is a father-in-law, up to 3 closely related persons of the family services, through a vehicle, even though mother-in-law, brother-in-law, sister-in- customers. Accordingly, the agencies believe that such a vehicle may rely on section for purposes of the proposed exclusion, a banking law, son-in-law or daughter-in-law of a 3(c)(1) or 3(c)(7) of the Investment entity could satisfy these written disclosure family client, spouse or spousal Company Act or would otherwise be a obligations in a number of ways, such as including equivalent of any of the foregoing.163 them in the family wealth management vehicle’s covered fund under the implementing In addition, a banking entity would governing documents, in account opening materials regulations. The agencies have or in supplementary materials. The condition previously indicated their intent to rely on the proposed exclusion only if reflects the agencies’ interest in providing family avoid unintended results that might customers with the substance of the disclosures, 162 See 79 FR 5541 (describing the 2013 rule as rather than a concern with the document in which follow from a definition of ‘‘covered ‘‘permitting banking entities to continue to provide, they are provided. Similarly, the agencies expect fund’’ that is inappropriately and to manage and limit the risks associated with the specific wording of the disclosures in imprecise,161 and believe that these providing, client-oriented financial services that are § l.11(a)(8) of the proposed rule may need to be commenters have identified such critical to capital generation for businesses of all modified to accurately reflect the specific sizes, households and individuals, and that circumstances of the family wealth management unintended results. The agencies facilitate liquid markets. These client-oriented vehicle. believe that an exclusion for family financial services, which include underwriting, 165 See implementing regulations § l.11(a)(5) wealth management vehicles would market making, and asset management services, are (imposing, as a condition of the exemption for effectively tailor the definition of important to the U.S. financial markets and the organizing and offering a covered fund, that a participants in those markets.’’). banking entity and its affiliates do not, directly or 163 All terms defined in Rule 202(a)(11)(G)–1 of indirectly, guarantee, assume, or otherwise insure 159 See id. the Advisers Act (17 CFR 275.202(a)(11)(G)–1) have the obligations or performance of the covered fund 160 See e.g., BPI and SIFMA. the same meaning in the proposed family wealth or of any covered fund in which such covered fund 161 See 83 FR 33471; 79 FR 5670–71. management exclusion. Continued

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agencies believe should facilitate include as ‘‘family customers’’ certain family wealth management vehicle be banking entities’ compliance. in-laws of the family clients as well as increased, decreased, or remain at 3 The agencies are not proposing to a limited number of persons closely such persons? Should, for example, the apply Super 23A to family wealth related to the family customers. agencies consider raising the number of management vehicles because, as Question 53. Should the agencies closely related persons to 10 to parallel discussed above, the agencies exclude family wealth management the number of permitted unaffiliated co- understand that the application of Super vehicles from the definition of ‘‘covered venturers permitted under the § l.10(c) 23A to family wealth management fund’’ as proposed? Does the agencies’ exclusion for joint ventures? Why or vehicles would prohibit banking entities proposed definition of ‘‘family wealth why not? What if any other or from providing the full range of banking management vehicle’’ include the additional qualitative or quantitative and asset management services to appropriate vehicles? What, if any, limits on the ownership interest of customers using these vehicles. modifications to the scope, definitions closely related persons in family wealth However, the agencies are proposing to or conditions prescribed in the management vehicles? Would the apply the prohibition on purchases of proposed exclusion should be made? inclusion of closely related persons that low-quality assets under the Board’s Should the agencies provide any are not family customers in the family regulations implementing section 23A additional guidance or requirements wealth management vehicle exclusion of the Federal Reserve Act (12 CFR regarding the conditions? For example, raise concerns about these vehicles 223.15(a)) to help ensure that the should the agencies provide additional being used to evade the prohibitions in exclusion for family wealth guidance or requirements regarding the section 13 of the BHC Act? Why or why management vehicles does not allow timing of the disclosures required by not? Commenters should offer specific banking entities to ‘‘bail out’’ the § l.11(a)(8)? examples detailing when it would be vehicle. Question 54. Would an exclusion for appropriate for a family wealth The agencies believe that the family wealth management vehicles management vehicle to include persons proposed definition of a family wealth create any opportunities for evasion, for that are not family customers. management vehicle appropriately example, by allowing a banking entity to Question 58. The proposed family distinguishes it from the type of entity structure investment vehicles to evade wealth management vehicle exclusion that section 13 of the BHC Act intended the restrictions of section 13 on covered would permit a banking entity or its to capture. The proposed definition fund activities? Why or why not? If so, affiliates to hold up to 0.5 percent of the would require that a family wealth how could such concerns be addressed? issuer’s outstanding ownership interests management vehicle not raise money Please explain. only to the extent necessary for from investors primarily for the purpose Question 55. Are there alternative establishing corporate separateness or of investing in securities for resale or approaches the agencies should take to addressing bankruptcy, insolvency, or other disposition or otherwise trading in enable banking entities to provide similar concerns. Instead of permitting securities. This aspect of the definition family wealth management vehicles such an ownership interest to be held by would help to differentiate family with banking and asset management a banking entity or its affiliates, should wealth management vehicles from services? the agencies permit such an ownership covered funds, which raise money from Question 56. The proposed exclusion interest to be held by a third party that investors for this purpose. Defining would require the banking entity and its is unaffiliated with either the banking ‘‘family customer’’ by building off of the affiliates to comply with the entity or the family customer? Why or definition of ‘‘family client’’ from rule requirements of 12 CFR 223.15(a), as if why not? 202(a)(11)(G)–1(d)(4) of Advisers Act such banking entity and its affiliates Question 59. The proposed family (family office rule) may facilitate were a member bank and the issuer wealth management vehicle exclusion compliance by using a definition known were an affiliate thereof. Should the would require the banking entity and its in the financial services industry. At the agencies adopt this proposed affiliates to comply with the same time, the agencies recognize that requirement? Why or why not? Would requirements of § l.14(b) and § l.15, the purpose of the family wealth this proposed requirement address the as if the family wealth management management exclusion differs from the agencies’ concerns about banking vehicle were a covered fund. Should the purpose of the family office rule, and entities or their affiliates bailing out a exclusion require also that the banking should be designed to capture the types family wealth management vehicle? entity and its affiliates comply with the of persons and entities to which banking Why or why not? requirements of all of § l.14? Why or entities have traditionally provided Question 57. The proposed exclusion why not? permits ownership of the family wealth banking and asset management services, 4. Customer Facilitation as these services do not expose banking management vehicle by 3 closely related entities to the types of risks that section persons of the family customer owners. The agencies are proposing to exclude 13 was intended to restrict and would Should the exclusion permit closely from the definition of ‘‘covered fund’’ facilitate banking entities’ customer- related persons to invest in family under § l.10(b) of the rule any issuer facing financial services. Accordingly, wealth management vehicles? What, if that acts as a ‘‘customer facilitation the agencies believe it appropriate to any, modifications should the agencies vehicle.’’ The proposed customer make to the proposed definition of facilitation vehicle exclusion would be invests); § l.11(a)(8) (imposing, as a condition of ‘‘closely related person’’? Why or why available for any issuer that is formed by the exemption for organizing and offering a covered not? For example, should the definition or at the request of a customer of the fund, that the banking entity provide certain of ‘‘closely related person’’ include banking entity for the purpose of disclosures to any prospective and actual investor in the covered fund); § l.10(c)(2)(ii) (allowing, as individuals with longstanding personal providing such customer (which may a condition of the exclusion from the covered fund relationships with family customers, but include one or more affiliates of such definition for wholly-owned subsidiaries, for the exclude individuals with only customer) with exposure to a holding of up to 0.5 percent of outstanding longstanding business relationships transaction, investment strategy, or ownership interests by a third party for limited purposes); and § l.14(b) (subjecting certain with family customers, or vice versa? other service provided by the banking transactions with covered funds to section 23B of Should the number of closely related entity. In response to the 2018 proposal, the Federal Reserve Act). persons permitted to invest in the a number of commenters indicated that

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the 2013 rule has restricted their ability commenters have identified such these vehicles do not expose banking to provide banking and asset unintended results. In particular, the entities to the types of risks that section management services to customers and agencies do not believe that section 13 13 was intended to restrict and would requested an exclusion for vehicles or was intended to interfere unnecessarily facilitate banking entities’ customer- structures created to accommodate with the ability of banking entities to facing financial services. customer exposure to securities, provide services to their customers The proposed exclusion would transactions, or other services that simply because the customer may prefer require that the vehicle be formed by or banking entities can provide directly to to receive those services through a at the request of the customer. This the customers.166 Commenters provided vehicle or through a transaction with a requirement is intended to help ensure examples of services or transactions that vehicle instead of directly with the that customer facilitation vehicles are customers (or a group of affiliated banking entity. As the agencies noted in formed to provide customer-oriented customers) might prefer to receive from the preamble of the 2013 rule, section financial services, and to differentiate a banking entity through a vehicle 13 and the implementing regulations customer facilitation vehicles from formed to facilitate those services or were designed to permit banking covered funds that are organized and transactions rather than directly. For entities to continue to provide client- offered by the banking entity. This example, a customer might wish to oriented financial services, which the condition would not preclude a banking purchase structured notes issued by a agencies believe would include asset entity from marketing its services vehicle rather than a banking entity for management services provided through through the use of customer facilitation certain legal, counterparty risk customer facilitation vehicles.171 vehicles or discussing with its management, or accounting reasons The agencies have previously customers prior to formation of the specific to the customer.167 Similarly, a indicated that section 13 permits the customer facilitation vehicle the customer might seek financing or agencies to tailor the scope of the potential benefits of structuring such exposure to a particular, customer- definition of covered fund to funds that services through a vehicle. specified investment through a special engage in the investment activities A banking entity would be able to rely purpose vehicle to structure the contemplated by section 13 (as opposed, on the customer facilitation vehicle transaction for the customer’s business for example, to vehicles that merely exclusion only under certain conditions, needs or objectives.168 Another serve to facilitate corporate including that all of the ownership commenter stated that many clients, in structures).172 In addition, the agencies interests of the issuer are owned by the particular non-U.S. clients, prefer to believe that an exclusion for customer customer (which may include one or face an entity structure rather than a facilitation vehicles is consistent with more of the customer’s affiliates) for banking entity to facilitate their trading section 13(d)(1)(D), which permits whom the issuer was created, other than and lending transactions for a variety of banking entities to engage in a de minimis interest that may be held legal, counterparty risk management transactions on behalf of customers, by the banking entity or its affiliates for and accounting reasons.169 when those transactions would specified purposes (as described below). The agencies believe that the otherwise be prohibited under section The agencies believe that this condition proposed exclusion for customer 13. The agencies have elsewhere would be appropriate to prevent facilitation vehicles would tailored the 2013 rule to allow banking banking entities from using the appropriately allow banking entities to entities to meet their customers’ proposed exclusion for customer structure these types of services or needs.173 The proposed exclusion facilitation vehicles to evade the transactions for customers, or to would similarly allow banking entities restrictions of section 13. A banking otherwise provide traditional customer- to provide customer-oriented financial entity and its affiliates would have to facing banking and asset management services through a vehicle when that maintain documentation outlining how services, through a vehicle, even though vehicle’s purpose is to facilitate a the banking entity intends to facilitate such a vehicle may rely on section customer’s exposure to those the customer’s exposure to such 3(c)(1) or 3(c)(7) of the Investment services.174 The agencies believe that transaction, investment strategy, or Company Act or would otherwise be a service. The agencies believe that this covered fund under the implementing 171 See 79 FR 5541 (describing the 2013 rule as condition would support their ability to regulations. While neither section 13 ‘‘permitting banking entities to continue to provide, examine for, and make assessments and to manage and limit the risks associated with regarding, compliance with the nor the implementing regulations would providing, client-oriented financial services that are restrict a banking entity from providing critical to capital generation for businesses of all proposed exclusion. these services to a customer directly, sizes, households and individuals, and that Additional conditions for the commenters have indicated that the facilitate liquid markets. These client-oriented customer facilitation vehicle exclusion financial services, which include underwriting, would include that the banking entity broad definition of ‘‘covered fund’’ in market making, and asset management services, are the 2013 rule has prevented or important to the U.S. financial markets and the and its affiliates: (1) Do not, directly or otherwise impeded banking entities participants in those markets.’’). indirectly, guarantee, assume, or 172 from providing such services to a See 83 FR 33471 (citing 79 FR 5666). otherwise insure the obligations or 173 For example, the agencies in 2019 amended customer through vehicles owned or the exemption for risk-mitigating hedging activities is, the proposed exclusion could be available for an formed by that customer. The agencies to allow banking entities to acquire or retain an issuer that is formed for the purpose of facilitating have previously indicated their intent to ownership interest in a covered fund as a risk- the exposure of a customer of the banking entity avoid unintended results that might mitigating hedge when acting as an intermediary on where the customer relationship begins only in behalf of a customer that is not itself a banking follow from a definition of ‘‘covered connection with the formation of that issuer. The entity to facilitate the exposure by the customer to agencies took a similar approach to this question in fund’’ that is inappropriately the profits and losses of the covered fund. See 2019 describing the exemption for activities related to imprecise,170 and believe that these amendments § l.13(a)(1)(ii). See also 2019 organizing and offering a covered fund under amendments § l.3(d)(11) (excluding from the § l.11(a) of the 2013 rule. See 79 FR 5716. The definition of ‘‘proprietary trading’’ the entering into agencies indicated that section 13(d)(1)(G), under 166 See SIFMA; FSF; and ABA. of customer-driven swaps or customer-driven l 167 which the exemption under § .11(a) was adopted, See SIFMA and FSF. security-based swaps and matched swaps or did not explicitly require that the customer 168 See ABA. security-based swaps under certain conditions). relationship be pre-existing. Similarly, section 169 See BPI. 174 The proposed exclusion would not require 13(d)(1)(D) does not explicitly require a pre-existing 170 See 83 FR 33471; 79 FR 5670–71. that the customer relationship be pre-existing. That customer relationship.

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performance of such issuer; (2) comply agencies believe should facilitate entity or the customer? Why or why with the disclosure obligations under banking entities’ compliance. not? § l.11(a)(8), as if such issuer were a The agencies are not proposing to Question 66. The proposed exclusion covered fund; 175 (3) do not acquire or apply Super 23A to customer would require the banking entity and its retain, as principal, an ownership facilitation vehicles because the affiliates to comply with the interest in the issuer, other than up to agencies understand that the application requirements of § l.14(b) and § l.15, 0.5 percent of the issuer’s outstanding of Super 23A to customer facilitation as if the customer facilitation vehicle ownership interests that may be held by vehicles would prohibit banking entities were a covered fund. Should the the banking entity and its affiliates for from providing the full range of banking exclusion require also that the banking the purpose of and to the extent and asset management services to entity and its affiliates comply with the necessary for establishing corporate customers using these vehicles. requirements of all of § l.14? Why or separateness or addressing bankruptcy, However, the agencies are proposing to why not? insolvency, or similar concerns; (4) apply the prohibition on purchases of Question 67. The proposed exclusion comply with the requirements of low-quality assets under the Board’s would require the banking entity and its § l.14(b) and § l.15, as if such issuer regulations implementing section 23A affiliates to comply with the were a covered fund; and (5) comply of the Federal Reserve Act (12 CFR requirements of 12 CFR 223.15(a), as if with the requirements of 12 CFR 223.15(a)) to help ensure that the such banking entity and its affiliates 223.15(a), as if such banking entity and exclusion for customer facilitation were a member bank and the issuer its affiliates were a member bank and vehicles does not allow banking entities were an affiliate thereof. Should the the issuer were an affiliate thereof. to ‘‘bail out’’ the vehicle. agencies adopt this proposed The agencies believe that, Question 60. Is the proposed requirement? Why or why not? Would collectively, the conditions on the exclusion for customer facilitation this proposed requirement address the proposed exclusion should help to vehicles appropriate? Why or why not? agencies’ concerns about banking ensure that customer facilitation Question 61. Does the proposed entities or their affiliates bailing out a vehicles would be used for customer- exclusion for customer facilitation customer facilitation vehicle? Why or oriented financial services provided on vehicles include the appropriate why not? arms-length, market terms, and should vehicles? Why or why not? If not, how Question 68. Would the proposed help to prevent evasion of the should the agencies expand or narrow exclusion for customer facilitation requirements of section 13 and the the vehicles for which banking entities vehicles create any opportunities for implementing regulations. The agencies would be permitted to make use of the evasion, for example, by allowing a also believe that the conditions would exclusion? What modifications to the banking entity to structure such vehicles be consistent with the purposes of proposed exclusion would be in a manner to evade the restrictions of section 13. In addition, these proposed appropriate and why? section 13 on covered fund activities? conditions are based on existing Question 62. Are the proposed Why or why not? If so, what conditions conditions in other provisions of the conditions on the proposed exclusion could be imposed to address such implementing regulations,176 which the for customer facilitation vehicles concerns? For example, should the appropriate? Why or why not? If not agencies impose a restriction that a 175 The obligations under § l.11(a)(8) apply in appropriate, how should the agencies customer facilitation vehicle only be connection with the exemption for organizing and modify the conditions, and why? able to serve customers who initiate or offering covered funds, which would typically Question 63. Should the agencies request a given transaction, investment require the preparation and distribution of offering require, as a condition for satisfying the strategy, or other service? Do the documents. The agencies understand that offering proposed exclusion, that the customer documents may not be necessary in connection conditions that would be imposed on with most customer facilitation vehicles given the facilitation vehicle be formed at the the proposed exclusion address those vehicles’ purpose and the requirement that interests request of the customer? Why or why concerns? Please explain. in such vehicles will be limited to a banking not? Question 69. Should the agencies take entity’s customer or group of affiliated customers. Question 64. Should the agencies a different approach to enable banking Accordingly, the agencies believe that for purposes of the proposed exclusion, a banking entity could specify to which types of transaction, entities to provide customers with satisfy these written disclosure obligations in a investment strategy, or other service exposure to a transaction, investment number of ways, such as including them in the such a customer facilitation vehicle strategy, or other service provided by customer facilitation vehicle’s governing could be formed to facilitate exposure? the banking entity? For example, would documents, in account opening materials, or in supplementary materials. The condition reflects the Why or why not? modifications to § l.14 of the agencies’ interest in providing customers with the Question 65. The proposed exclusion implementing regulations, whether as substance of the disclosures, rather than a concern would permit a banking entity or its proposed below or otherwise, allow with the document in which they are provided. affiliates to hold up to 0.5 percent of the banking entities to provide customers Similarly, the agencies expect that the specific issuer’s outstanding ownership interests wording of the disclosures under § l.11(a)(8) may with this exposure? Please explain. need to be modified to reflect accurately the only to the extent necessary for Question 70. For banking entities with specific circumstances of the customer facilitation establishing corporate separateness or significant trading assets and liabilities vehicle. addressing bankruptcy, insolvency, or that sponsor funds relying on the 176 See implementing regulations § l.11(a)(5) similar concerns. Instead of permitting (imposing, as a condition of the exemption for proposed exclusion for customer organizing and offering a covered fund, that a such an ownership interest to be held by facilitation vehicles, would it be banking entity and its affiliates do not, directly or a banking entity or its affiliates, should appropriate to require additional indirectly, guarantee, assume, or otherwise insure the agencies permit such an ownership documentation requirements pursuant the obligations or performance of the covered fund interest to be held by a third party that l or of any covered fund in which such covered fund to § .20(e)(2) consistent with other invests); § l.11(a)(8) (imposing, as a condition of is unaffiliated with either the banking sponsored funds relying on certain the exemption for organizing and offering a covered exclusions from the definition of fund, that the banking entity provide certain holding of up to 0.5 percent of outstanding covered fund? Why or why not? disclosures to any prospective and actual investor ownership interests by a third party for limited in the covered fund); § l.10(c)(2)(ii) (allowing, as purposes); and § l.14(b) (subjecting certain Similarly, should the documentation a condition of the exclusion from the covered fund transactions with covered funds to section 23B of requirements of § l.20(e)(2) also be definition for wholly-owned subsidiaries, for the the Federal Reserve Act). applied to sponsored funds relying on

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the other new proposed exclusions for aggregate with respect to all affiliates.178 The agencies addressed the apparent credit funds, venture capital funds, and By contrast, section 13(f)(1) of the BHC conflict between section 13(f)(1) and family wealth management vehicles? Act generally prohibits covered particular provisions in section 13(d)(1) Why or why not? transactions between a banking entity of the BHC Act in the 2013 rule by and a related covered fund, with no interpreting the statutory language to D. Limitations on Relationships With a permit a banking entity ‘‘to acquire or Covered Fund minimum amount of permissible covered transactions.179 Despite this retain an ownership interest in a The agencies are proposing to modify general prohibition, another part of covered fund in accordance with the the regulations implementing section section 13 authorizes a banking entity to requirements of section 13.’’ 183 In doing 13(f)(1) of the BHC Act to permit own an interest in a related covered so, the agencies noted that a contrary banking entities to engage in a limited fund, which would be a ‘‘covered interpretation would make the specific set of covered transactions with covered transaction’’ for purposes of section 23A language that permits covered funds for which the banking entity of the Federal Reserve Act.180 In transactions between a banking entity directly or indirectly serves as addition to this apparent conflict and a related covered fund ‘‘mere investment manager, investment between paragraphs 13(d) and (f) with surplusage.’’ 184 adviser, or sponsor, or that the banking respect to covered fund ownership, In adopting the regulations to entity organizes and offers pursuant to there are other elements of these reconcile the conflict between section 13(d)(1)(G) of the BHC Act (such paragraphs that introduce ambiguity paragraphs (d) and (f) of section 13 of funds, related covered funds). about the interpretation of the term the BHC Act, the agencies did not use Specifically, as described below, the ‘‘covered transaction’’ as used in section their rulemaking authority pursuant to 185 proposal would allow a banking entity 13(f) of the BHC Act. The statute section (d)(1)(J). Instead, the agencies to enter into covered transactions with prohibits a banking entity that organizes used their general rulemaking authority a related covered fund that would be or offers a hedge fund or private equity to interpret section 13 of the BHC Act. permissible without limit for a state fund from directly or indirectly Although the agencies previously member bank to enter into with an guaranteeing, assuming, or otherwise expressed doubt about their ability to affiliate under section 23A of the insuring the obligations or performance permit banking entities to enter into Federal Reserve Act. This would of the fund (or of any hedge fund or covered transactions with related include, for example, intraday private equity fund in which such hedge covered funds pursuant to their authority under section 13(d)(1)(J) of the extensions of credit. The proposal fund or private equity fund invests).181 BHC Act,186 the activities permitted would also allow a banking entity to To the extent that section 13(f) prohibits pursuant to paragraph (d) specifically enter into short-term extensions of all covered transactions between a contemplate allowing a banking entity credit with, and purchase assets from, a banking entity and a related covered to enter into certain covered related covered fund in connection with fund, however, the independent transactions with related funds.187 The payment, clearing, and settlement prohibition on guarantees in section exceptions in section 13(f)(1) are also activities. These proposed amendments 13(d)(1)(G)(v) would seem to be expressly incorporated into the statutory would address certain concerns raised unnecessary and redundant.182 by regulated banking entities and list of permitted activities, specifically commenters with respect to the impact in section 13(d)(1)(G)(iv).188 By virtue of 178 12 U.S.C. 371c. The term ‘‘covered the conflict between paragraphs (d) and of section 13(f)(1) on the practical transaction’’ is defined in section 23A of the ability of banking entities to organize Federal Reserve Act to mean, with respect to an (f) of section 13, and the inclusion of and offer covered funds as permitted by affiliate of a member bank, (1) a loan or extension specific covered transactions within the section 13(d)(1)(G). of credit to the affiliate, including a purchase of permitted activities in paragraph (d) of assets subject to an agreement to repurchase; (2) a section 13, the agencies believe that the Section 13(f)(1) of the BHC Act purchase of or an investment in securities issued by generally prohibits a banking entity the affiliate; (3) a purchase of assets from the authority granted pursuant to paragraph from entering into a transaction with a affiliate, except such purchase of real and personal (d)(1)(J) to determine that other related covered fund that would be a property as may be specifically exempted by the activities are not prohibited by the Board by order or regulation; (4) the acceptance of statute authorizes the agencies to covered transaction as defined in securities or other debt obligations issued by the section 23A of the Federal Reserve affiliate as collateral security for a loan or extension exercise rulemaking authority to Act.177 of credit to any person or company; (5) the issuance determine that banking entities may Section 23A of the Federal Reserve of a guarantee, acceptance, or letter of credit, enter into covered transactions with including an endorsement or standby letter of related covered funds that would Act limits the aggregate amount of credit, on behalf of an affiliate; (6) a transaction covered transactions by a member bank with an affiliate that involves the borrowing or otherwise be prohibited by section to no more than (1) 10 percent of the lending of securities, to the extent that the 13(f)(1) of the BHC Act, provided that capital stock and surplus of the member transaction causes a member bank or a subsidiary the rulemaking complies with to have credit exposure to the affiliate; or (7) a applicable statutory requirements.189 bank in the case of any one affiliate, and derivative transaction, as defined in paragraph (3) (2) 20 percent of the capital stock and of section 5200(b) of the Revised Statutes of the In the 2018 proposal, the agencies surplus of the member bank in the United States (12 U.S.C. 84(b)), with an affiliate, to invited comment from the public on the the extent that the transaction causes a member agencies’ 2013 interpretation of section bank or a subsidiary to have credit exposure to the 190 177 12 U.S.C. 1851(f)(1); see 12 U.S.C. 371c. 13(f)(1) of the BHC Act, and whether affiliate. See 12 U.S.C. 371c(b)(7), as amended by Section 13(f)(3) of the BHC Act also provides an Public Law 111.203, section 608 (July 21, 2010). exemption for prime brokerage transactions 183 Section 13(f) of the BHC Act does not alter the 79 FR 5746. between a banking entity and a covered fund in 184 applicability of section 23A of the Federal Reserve 79 FR 5746. which a covered fund managed, sponsored, or Act and the Board’s Regulation W to covered 185 Id. advised by that banking entity has taken an transactions between insured depository 186 See 76 FR 68912 n.313. ownership interest. 12 U.S.C. 1851(f)(3). In institutions and their affiliates. 187 addition, section 13(f)(2) subjects any transaction 12 U.S.C. 1851(d)(1)(G); (d)(4). 179 permitted under section 13(f) (including a 12 U.S.C. 1851(f)(1). 188 12 U.S.C. 1851(d)(1)(G)(iv). permitted prime brokerage transaction) between a 180 12 U.S.C. 1851(d)(1)(G); (d)(4). 189 12 U.S.C. 1851(b)(2), (d)(1)(J), (d)(2). banking entity and covered fund to section 23B of 181 12 U.S.C. 1851(d)(1)(G)(v). 190 In the preamble to the 2013 rule, the agencies the Federal Reserve Act. 12 U.S.C. 1851(f)(2); see 12 182 See 12 U.S.C. 371c(b)(7)(E); 12 CFR noted that ‘‘[s]ection 13(f) of the BHC Act does not U.S.C. 371c–1. 223.3(h)(4). Continued

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that interpretation should be fund in times of stress and would not pursuant to section 223.42 of the amended.191 Among other things, the otherwise permit the banking entity to Board’s Regulation W.201 Section 23A of agencies invited comment on whether to indirectly engage in proprietary trading the Federal Reserve Act is designed to incorporate some or all of the through the related covered fund.198 For protect against a depository institution exemptions or quantitative limits in example, when a banking entity that suffering losses in transactions with section 23A of the Federal Reserve Act sponsors or advises a covered fund also affiliates, and to limit the ability of a and the Board’s Regulation W, and if so, serves as a broker-dealer to the covered depository institution to transfer to its whether these transactions should be fund, the prohibition on covered affiliates the ‘‘subsidy’’ arising from the subject to any additional limitations.192 transactions between the banking entity depository institution’s access to the However, the agencies did not propose (and its affiliates) and the covered fund Federal safety net.202 specific amendments addressing the may limit the ability of the banking Notwithstanding the statutory interpretation of section 13(f)(1) of the entity and its affiliates to provide other objectives of section 23A of the Federal BHC Act.193 services, such as trade settlement Reserve Act, however, a member bank Several commenters addressed the services, to the covered fund. A broker- may enter into certain ‘‘exempt’’ interpretation of section 13(f)(1) of the dealer providing trade settlement covered transactions set forth in section BHC Act, and the specific questions services may extend intraday credit to 23A of the Federal Reserve Act and the asked by the agencies. Several the fund, or purchase assets from the Board’s Regulation W, without regard to commenters recommended that the fund, in connection with trading the quantitative limits, collateral agencies interpret section 13(f)(1) to activities in the ordinary course of requirements, and low-quality asset include the exemptions provided under business. One group representing prohibition of section 23A and the section 23A of the Federal Reserve banking entities also noted that Board’s Regulation W.203 These exempt Act.194 Some commenters also extensions of credit in connection with transactions do not raise the same encouraged the agencies to permit payment, clearing, and settlement concerns that they could cause the banking entities to engage in a services that were intended to be depository institution to suffer losses or quantitatively limited amount of intraday may become overnight transfer the subsidy arising from the covered transactions with related extensions of credit, for example due to depository institution’s access to the covered funds.195 Conversely, one time zone differences in local settlement Federal safety net. The agencies believe commenter opposed revising the markets.199 Under the interpretation that the same rationales that support the regulations to incorporate the Federal provided in the preamble to the 2013 exemptions in section 23A of the Reserve Act’s section 23A exemptions rule,200 both intraday extensions of Federal Reserve Act and the Board’s or quantitative limits.196 credit and overnight extensions of credit Regulation W also support exempting Banking entities that sponsor or serve are ‘‘covered transactions’’ for purposes such transactions from the prohibition as the investment adviser to covered of section 13(f)(1) of the BHC Act, and on covered transactions between a funds and groups representing such therefore would be impermissible for a banking entity and related covered banking entities have argued that the banking entity with respect to a related funds under section 13(f)(1) of the BHC inability to engage in any covered covered fund. Act. In particular, the agencies note that transactions with such funds, The agencies believe that, under these exemptions generally do not particularly those types of transactions certain circumstances, it would be present significant risks of loss, and that are expressly exempted under appropriate to permit banking entities to serve important public policy section 23A of the Federal Reserve Act enter into certain covered transactions objectives.204 and the Board’s Regulation W, has with related covered funds, and Short-Term Extensions of Credit and limited the services that they or their therefore are proposing to amend § l.14 Acquisitions of Assets in Connection affiliates can provide.197 Some of these of the implementing regulations as With Payment, Clearing, and Settlement commenters have argued that amending described below. The proposed Services the regulations to permit limited amendments would not modify the covered transactions with related definition of ‘‘covered transaction’’ but In addition, the proposal would covered funds would not create any new instead would authorize banking permit a banking entity to provide short- incentives for the banking entity to entities to engage in limited activities term extensions of credit to and financially support the related covered with related covered funds. Any purchase assets from a related covered transactions or activities permitted by fund, subject to appropriate limits. First, incorporate or reference the exemptions contained these revisions would be required to each short-term extension of credit or in section 23A of the FR Act or the Board’s comply with certain conflict of interest, purchase of assets would have to be Regulation W.’’ 79 FR 5746. high-risk, and safety and soundness made in the ordinary course of business 191 83 FR 33486–487. restrictions. 192 Id. at 33487. 201 See 12 U.S.C. 371c(d); 12 CFR 223.42. 193 On March 29, 2017, the CFTC’s Division of Exempt Transactions Under Section 202 For a brief background on section 23A of the Swap Dealer and Intermediary Oversight (DSIO) 23A and the Board’s Regulation W Federal Reserve Act, see Transactions Between issued a letter to a futures commission merchant Member Banks and Their Affiliates, 67 FR 76560– (FCM) stating that the DSIO would not recommend The proposal would permit a banking 765561 (December 12, 2002). that an enforcement action against the FCM be entity to engage in covered transactions 203 See 12 U.S.C. 371c(d); 12 CFR 223.42. initiated in connection with § l.14(a) of the 2013 204 For example, intraday extensions of credit are rule. Although no specific amendments were with a related covered fund that would exempt covered transactions under section 23A of provided in the 2018 proposal, the proposal would be exempt from the quantitative limits, the Federal Reserve Act. The Board previously has permit FCMs that are banking entities to enter into collateral requirements, and low-quality noted that ‘‘[i]ntraday overdrafts and other forms of certain covered transactions with covered funds in asset prohibition under section 23A of intraday credit generally are not used as a means connection with futures, options and swaps of funding or otherwise providing financial support clearing services to covered funds pursuant to the Federal Reserve Act, including for an affiliate. Rather, these credit extensions § l.14(a). transactions that would be exempt typically facilitate the settlement of transactions 194 See, e.g., ABA; BPI; and FSF. between an affiliate and its customers when there 195 See, e.g., BPI and FSF. 198 Id. are mismatches between the timing of funds sent 196 See Public Citizen. 199 See, e.g., SIFMA. and received during the business day.’’ 67 FR 197 See, e.g., BPI; CS; and IAA. 200 See 79 FR 5746. 76596.

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in connection with payment BHC Act substantially limit the ability authorized by rulemaking pursuant to transactions; securities, derivatives, or of a banking entity to both (1) organize section (d)(1)(J).208 futures clearing; or settlement services. and offer a covered fund, or act as an Sections l.14(b) and l.14(c) of the Second, each extension of credit would investment adviser to the covered fund, regulations implementing section 13 of be required to be repaid, sold, or and (2) provide custody or other the BHC Act both generally require that terminated no later than five business services to the fund. As a result, a third a banking entity may enter into certain days after it was originated. The party is required to provide other transactions specified in section 23B of provision of payment, clearing, and necessary services for the fund’s the Federal Reserve Act (including settlement services by a banking entity operation, including payment, clearing, ‘‘covered transactions’’ as defined in (or its affiliates) to an affiliated covered and settlement services that are section 23A of the Federal Reserve Act) fund generally requires the ability to generally provided by the fund’s with related covered funds only on provide such short-term extensions of custodian. This increases the potential terms and under circumstances that are credit, and therefore is a necessary for problems at the third-party service substantially the same (or at least as corollary to the exempt covered provider (e.g., an operational failure or favorable) to the banking entity as those transactions that would allow banking a disruption to normal functioning) to prevailing at the time for comparable entities to provide standard payment, affect the banking entity or the fund, transactions with or involving other clearing, and settlement services to which were required to use the third- nonaffiliated companies, or in the related covered funds. Additionally, the party service provider as a result of the absence of comparable transactions, on proposed five business day criterion restrictions under section 13(f)(1). Those terms and under circumstances that the would be consistent with the Federal problems may then spread among banking entity in good faith would offer banking agencies’ capital rule and financial institutions or markets and to, or would apply to, nonaffiliated would generally require banking entities thereby threaten the stability of the U.S. companies.209 to rely on transactions with normal financial system. By amending Question 71. What impacts would the settlement periods, which have lower § l.14(a), therefore, the proposal may proposed amendments to § l.14 have risk of delayed settlement or failure, allow a banking entity to reduce both on the safety and soundness of banking when providing short-term extensions operational risk and interconnectedness entities, and on the financial stability of of credit.205 Each short-term extension to other financial institutions by directly the United States? Would the activities of credit must also meet the same providing a broader array of services to permitted under the proposed requirements applicable to intraday a fund it organizes and offers, or amendments to § l.14(a) of the extensions of credit under section advises. The agencies believe that implementing regulations promote and 223.42(l)(1)(i) and (ii) of the Board’s reducing these risks could promote and protect safety and soundness of the Regulation W (as if the extension of protect the safety and soundness of banking entity and U.S. financial credit was an intraday extension of banking entities.206 stability, and if so, how? credit, regardless of the duration of the Second, the proposed amendments Question 72. Are there other services extension of credit). In addition, each may promote and protect U.S. financial that a banking entity typically provides extension of credit or purchase of assets stability by reducing interconnectedness to sponsored funds or funds for which permitted by these revisions would be among firms. As described above, the it acts as an investment adviser that required to comply with certain conflict authorized covered transactions would would be prohibited under section of interest, high-risk, and safety and permit banking entities to provide a 13(f)(1) of the BHC Act and § l.14 of soundness restrictions. more comprehensive suite of services to the implementing regulations as Impact of the Proposed Amendments on related covered funds, reducing the proposed to be amended? What would Safety and Soundness and U.S. need to rely on third parties to provide be the impact on the safety and Financial Stability such services. soundness of the banking entity, and the financial stability of the United States, The agencies expect that the proposed This proposal would remain subject of permitting a banking entity to engage amendments described above would to additional limitations on transactions in such transactions with a related generally promote and protect the safety with related covered funds. As specified covered fund? and soundness of banking entities and in the statute, such activities would be permissible only ‘‘to the extent Question 73. Should the agencies U.S. financial stability. amend § l.14 of the implementing First, allowing banking entities to permitted by any other provision of regulations to permit banking entities to engage in these limited covered Federal or state law, and subject to the engage in additional covered transactions with related covered funds limitations under section 13(d)(2) of the transactions in connection with may allow banking entities to reduce BHC Act and any restrictions or payment, clearing, and settlement operational risk. Currently, the limitations that the appropriate Federal services? Why or why not? What would restrictions under section 13(f)(1) of the banking agencies, the Securities and Exchange Commission, and the be the impacts of permitting banking entities to engage in payment, clearing, 205 See 78 FR 62110 (October 11, 2013). While the Commodity Futures Trading Federal banking agencies require firms to track and Commission, may determine . . .’’ 207 and settlement services with related monitor the credit risk exposure for transactions covered funds on the safety and involving securities, foreign exchange instruments, Section 13(d)(2) of the BHC Act also imposes additional restrictions on any soundness of the banking entity? What and commodities that have a risk of delayed would be the impacts of such an settlement, this requirement does not apply to other activities authorized pursuant to section types of transactions which may be used in (d)(1), including those activities approach on U.S. financial stability? providing a short-term extension of credit (e.g., Question 74. Should the agencies repo-style transactions). Additionally, banking impose any additional or different 206 entities typically monitor credit extensions by As noted above, the agencies also believe that qualitative or quantitative limits on the counterparty, and not by transaction type. Thus, the the same rationales that support the exempt covered proposal would remain consistent with the transactions in section 23A of the Federal Reserve approach taken in the Federal banking agencies’ Act and the Board’s Regulation W also support 208 12 U.S.C. 1851(d)(2); see also 2013 rule §§ l.7 capital rule, without imposing an additional permitting a banking entity to engage in exempt and l.15. compliance burden without a corresponding covered transactions with a related covered fund. 209 12 U.S.C. 1851(f)(2); see 12 U.S.C. 371c– benefit. 207 12 U.S.C. 1851(d)(1). 1(a)(1).

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covered transactions contemplated by fund limit), the quantitative limit on a • Any synthetic right to have, receive, the proposed amendments to § l.14(a) banking entity’s investment in all or be allocated any of the rights of the implementing regulations? Why covered funds (the aggregate fund limit), above.212 or why not? For example, should the and the calculation of the applicable This definition focuses on the agencies impose a quantitative limit of capital deductions for investments in attributes of the interest and whether it any kind on the covered transactions covered funds (the covered fund provides a banking entity with that would not be subject to the deduction).211 economic exposure to the profits and prohibition in section 13(f)(1) of the The implementing regulations define losses of the covered fund, rather than BHC Act? If the agencies were to impose an ‘‘ownership interest’’ in a covered its form. Under the 2013 rule, a debt a quantitative limit on such covered fund to mean any equity, partnership, or interest in a covered fund can be an transactions, on what should such limits other similar interest. Some banking ownership interest if it has the same be based (e.g., based on the banking entities have expressed concern about characteristics as an equity or other entity’s tier 1 capital, the size of the the inclusion of the term ‘‘other similar ownership interest (e.g., provides the fund, or some other measurement), and interest’’ in the definition of ‘‘ownership holder with voting rights; the right or what limits would be appropriate? interest,’’ and have indicated that the ability to share in the covered fund’s Question 75. Is the proposed definition of this term could lead to the profits or losses; or the ability, directly approach to addressing transactions that inclusion of debt instruments that have or pursuant to a contract or synthetic are exempt under Section 23A and standard covenants in the measurement interest, to earn a return based on the payment, clearing, and settlement of an ownership interest. Under the performance of the fund’s underlying activities effective? Why or why not? Is 2013 rule, ‘‘other similar interest’’ is holdings or investments). The 2013 rule there a better approach to addressing defined as an interest that: excludes carried interest (restricted these types of transactions? • Has the right to participate in the profit interest) from the definition of Question 76. The proposal would selection or removal of a general ownership interest, although as require that any payment, clearing, or partner, managing member, member of discussed below, only for certain settlement activity be settled within five the board of directors or trustees, purposes. In the 2018 proposal the agencies business days. Is this length of time investment manager, investment requested comment on all aspects of the sufficient to effectuate the proposed adviser, or commodity trading advisor 2013 rule’s application to securitization permitted activities? Why or why not? Is of the covered fund (excluding the transactions, including the definition of another length of time, such as three rights of a creditor to exercise remedies ownership interest. Specifically, the days, more appropriate or consistent upon the occurrence of an event of agencies asked whether there were any with current market practices? Should default or an acceleration event); modifications that should be made to the agencies adopt a limit that adopts • Has the right under the terms of the the 2013 rule’s definition of ownership the shorter of five days or industry interest to receive a share of the income, interest.213 Among other things, the standard settlement time for a particular gains or profits of the covered fund; agencies requested comments on financial instrument? • Has the right to receive the whether they should modify § l.6(i)(A) Question 77. Should the agencies, for underlying assets of the covered fund to provide that the ‘‘rights of a creditor the purposes of § l.14(a)(2)(iv) of the after all other interests have been to exercise remedies upon the proposed amendment, impose on the redeemed and/or paid in full (excluding occurrence of an event of default or an purchase of assets a requirement that the rights of a creditor to exercise acceleration event’’ include the right to the banking entity comply with the remedies upon the occurrence of an participate in the removal of an requirements of 12 CFR 223.15(a), as if event of default or an acceleration investment manager for cause, or to such banking entity and its affiliates event); nominate or vote on a nominated were a member bank and the covered • Has the right to receive all or a fund were an affiliate thereof? replacement manager upon an portion of excess spread (the positive investment manager’s resignation or E. Ownership Interest difference, if any, between the aggregate removal.214 The agencies are proposing changes to interest payments received from the In response to the 2018 proposal, a the definition of ‘‘ownership interest’’ to underlying assets of the covered fund number of commenters supported the clarify that a debt relationship with a and the aggregate interest paid to the agencies’ suggestion to modify § l holders of other outstanding interests); .6(i)(A) and to expressly permit covered fund would typically not • constitute an ownership interest under Provides under the terms of the creditors to participate in the removal of the regulations.210 In addition, the interest that the amounts payable by the an investment manager for cause, or to agencies are proposing amendments to covered fund with respect to the interest nominate or vote on a nominated the manner in which a banking entity could be reduced based on losses arising replacement manager upon an must calculate its ownership interest for from the underlying assets of the investment manager’s resignation or purposes of complying with the limits covered fund, such as allocation of removal without causing an interest to and conditions that apply to losses, write-downs or charge-offs of the become an ownership interest.215 This investments in covered funds organized outstanding principal balance, or notwithstanding, a few of these and offered by a banking entity. reductions in the amount of interest due commenters noted that this and payable on the interest; modification would not address all Specifically, the proposed amendments • are intended to better align the manner Receives income on a pass-through issues with the condition as banks in which ownership limits are basis from the covered fund, or has a sometimes have contractual rights to calculated for purposes of the rate of return that is determined by participate in the selection or removal of quantitative limit on a banking entity’s reference to the performance of the a general partner, managing member or investment in a single fund (the per underlying assets of the covered fund; or 212 2013 rule § l.10(d)(6)(i). 210 See 2013 rule § l.10(d)(6) (defining 213 83 FR 33481. ‘‘ownership interest’’ for purposes of subpart C of 211 See 12 U.S.C. 1851(d)(4)(B)(ii)(I)–(II); 2013 214 Id. the rule). rule §§ l.10(d)(6); l.12(a)(2)(ii)–(iii), (b)–(d). 215 See, e.g., SFIG; JBA; LSTA; and IAA.

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member of the board of directors or occurrence of an event of default, for rule of construction in § l.12(b)(1)(iv), trustees of a borrower that are not example, would not be considered an the proposal would modify §§ l.12(c) limited to the exercise of a remedy upon ownership interest for this reason alone. and l.12(d) to require attribution of an event of default or other default The proposed rule would also provide amounts paid by an employee or event.216 Therefore, these commenters a safe harbor from the definition of director to acquire a restricted profit proposed eliminating the ‘‘other similar ownership interest, as suggested by interest only when the banking entity interest’’ clause from the definition some commenters.221 The safe harbor has financed the acquisition. altogether or, alternatively, replacing the should address commenters’ concerns The 2013 rule excludes from the definition of ownership interest with that some ordinary debt interests could definition of ownership interest certain the definition of ‘‘voting securities’’ be construed as an ownership interest. restricted profit interests.222 As a from the Board’s Regulation Y. Any senior loan or other senior debt threshold matter, the exclusion from the A number of commenters argued that interest that meets all of the following definition of ownership interest is debt interests issued by covered funds characteristics would not be considered limited to restricted profit interests held and loans to third-party covered funds to be an ownership interest under the by an entity, employee, or former not advised or managed by a banking proposed rule: employee in a covered fund for which entity should be excluded from the (1) The holders of such interest do not the entity or employee serves as definition of ownership interest.217 receive any profits of the covered fund investment manager, investment Other commenters suggested reducing but may only receive: (i) Interest adviser, commodity trading advisor, or the scope of the definition of ownership payments which are not dependent on other service provider.223 To be interest to apply only to equity and the performance of the covered fund; excluded from the definition of equity-like interests that are commonly and (ii) fixed principal payments on or ownership interest, the restricted profit understood to indicate a bona fide before a maturity date; interest must also meet various other ownership interest in a covered fund.218 (2) The entitlement to payments on conditions, including that any amounts One other commenter asked the the interest is absolute and may not be invested in the covered fund—including agencies to clarify conditions under the reduced because of the losses arising amounts paid by the entity, an ‘‘other similar interest’’ clause.219 from the covered fund, such as employee of the entity, or former Specifically, the commenter asked the allocation of losses, write-downs or employee of the entity—are within the agencies to clarify whether the right to charge-offs of the outstanding principal applicable limits under § l.12 of the receive all or a portion of the spread balance, or reductions in the principal 2013 rule.224 extends to using the spread to pay and interest payable; and Section l.12 of the 2013 rule principal or the interest that is (3) The holders of the interest are not provides different rules for purposes of otherwise owed or to clarify that any entitled to receive the underlying assets calculating compliance with the per debt repaid from collections on of the covered fund after all other fund limit and for purposes of underlying assets of a special purpose interests have been redeemed and/or calculating compliance with the entity, but is entitled to receive only paid in full (excluding the rights of a aggregate fund limit and covered fund principal and interest, is not an creditor to exercise remedies upon the deduction. Under the 2013 rule, for ownership interest. At least one occurrence of an event of default or an purposes of calculating the per fund commenter asked the agencies not to acceleration event). limit and the aggregate fund limit, a modify the definition of ownership The agencies believe that the banking entity is attributed ownership interest as, the commenter argued, there proposed conditions for the safe harbor interests in a covered fund that are is nothing under section 13 of the BHC would provide more clarity and acquired by an employee or director if Act that limits or restricts the ability of predictability to banking entities and the banking entity, directly or a banking entity or nonbank financial enable them to determine more readily indirectly, extends financing for the company to sell or securitize loans in a whether an interest would be an purpose of enabling the employee or manner permitted by law.220 ownership interest under the director to acquire the ownership In response to comments received and regulations implementing section 13 of interest in the fund, and the financing in order to provide clarity about the the BHC Act. The three conditions is used to acquire such ownership types of interests that would be under the proposed safe harbor would interest.225 As noted in the preamble to considered within the scope of the ensure that debt interests that do not the 2013 rule, the attribution to a definition of ownership interest, the have equity-like characteristics are not banking entity of ownership interests agencies propose to amend the considered ownership interests. At the acquired by an employee or director parenthetical in § l.6(i)(A) to specify same time, the agencies believe that the using financing provided by the banking that creditors’ remedies upon the conditions are rigorous enough to entity ensures that funding provided by occurrence of an event of default or an prevent banking entities from evading the banking entity to acquire ownership acceleration event include the right to the prohibition on acquiring or retaining interests in the fund, whether provided participate in the removal of an an ownership interest in a covered fund. The proposal also would modify the investment manager for cause or to 222 2013 rule § l.10(d)(6)(ii). As noted in the nominate or vote on a nominated implementing regulations to better align preamble to the 2013 rule, the term ‘‘restricted replacement manager upon an the manner in which a banking entity profit interest’’ was used to avoid any confusion from using the term ‘‘carried interest,’’ which is investment manager’s resignation or calculates the aggregate fund limit and covered fund deduction with the used in other contexts. The proposed rule would removal. Accordingly, an interest that focus on the treatment of restricted profit interests allows its holder to remove an manner in which it calculates the per for purposes of calculating compliance with the investment manager for cause upon the fund limit, as it relates to investments aggregate fund limit and covered fund deduction, by employees of the banking entity. but would not address in any way the treatment of Specifically, consistent with how such profit interests under other laws, including 216 See SFIG. under Federal income tax law. See 79 FR 5706, n. 217 See, e.g., Capital One et al. and BPI. investments by employees and directors 2091. 218 See, e.g., ABA and CAE. are treated generally under the existing 223 2013 rule § l.10(d)(6)(ii). 219 See SFIG. 224 2013 rule § l.10(d)(6)(ii)(C). 220 See Data Boiler. 221 See SFIG. 225 2013 rule § l.12(b)(1)(iv).

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directly or indirectly, is counted against investment manager for cause, or to aggregate fund limit and covered fund the per fund limit and aggregate fund nominate or vote on a nominated deduction in the manner proposed? limit.226 replacement manager upon an Why or why not? Would the proposed For purposes of calculating the investment manager’s resignation or revisions pose any risk that a banking aggregate fund limit and the covered removal, would be limited to removal or entity could evade the aggregate fund fund deduction, the 2013 rule includes replacement upon the occurrence of an limit and covered fund deduction, and a different calculation with respect to event of default or an acceleration event. if so, how? Would additional restricted profit interests in a covered Commenters noted in comments on the restrictions on the treatment of fund organized or offered by a banking 2018 proposal that loan securitizations restricted profit interests be entity pursuant to paragraph may include additional ‘‘for cause’’ appropriate? (d)(1)(G).227 Specifically, for purposes of termination events (e.g., the insolvency F. Parallel Investments calculating a banking entity’s of the investment manager; the breach compliance with the aggregate fund by the investment manager of certain The 2013 rule requires that a banking limit and the covered fund deduction, representations or warranties; or the entity hold no more than three percent the banking entity must include any occurrence of a ‘‘key person’’ event or of the total ownership interests of a amounts paid by the banking entity or a change in control with respect to the covered fund that the banking entity an employee in connection with investment manager) that might not organizes and offers pursuant to § l.11 obtaining a restricted profit interest in constitute an event of default. Should of the 2013 rule.229 Section l.12(b)(1)(i) the covered fund.228 The agencies the proposal be expanded to include the of the 2013 rule requires that, for continue to believe that it is appropriate right to participate in any removal of an purposes of this ownership limitation, for a banking entity to count amounts investment manager for cause, or to ‘‘the amount and value of a banking invested by the banking entity (or its nominate or vote on a nominated entity’s permitted investment in any affiliates) to acquire restricted profit replacement manager upon an single covered fund shall include any interests in a fund organized and offered investment manager’s resignation or ownership interest held under § l.12 by the banking entity for purposes of the removal, whether or not an event of directly by the banking entity, including aggregate fund limit and capital default or an acceleration event has any affiliate of the banking entity.’’ 230 deduction. However, the agencies occurred? Why or why not? Section l.12(b) also includes several believe attribution of employee and Question 79. Under the current rule, other rules of construction that address director ownership of restricted profit an interest that has the right to receive circumstances under which an interests to a banking entity may not be a share of the income, gains or profits investment in a covered fund would be necessary in the circumstance when a of the covered fund is considered an attributed to a banking entity. banking entity does not finance, directly ownership interest. Should the agencies The 2011 notice of proposed or indirectly, the employee or director’s modify this condition to clarify that rulemaking included a proposed acquisition of a restricted profit interest only an interest which has the right to provision that would have required in a covered fund organized or offered receive a share of the ‘‘net’’ income, attribution, under certain by the banking entity. Therefore, the gains or profits of the covered fund is an circumstances, of certain direct proposal would limit the attribution of ownership interest? If so, why? investments by a banking entity an employee or director’s restricted Question 80. Is the proposed safe alongside, or otherwise in parallel with, profit interest in a covered fund harbor appropriate? Why or why not? a covered fund.231 When adopting the organized or offered by the banking Do the proposed conditions under the 2013 rule, the agencies declined to entity to only those circumstances when safe harbor sufficiently alleviate adopt the proposed provision governing the banking entity has directly or concerns that a senior debt instrument parallel investments after considering indirectly financed the acquisition of would not be construed as an ownership the language of the statute and the restricted profit interest. This interest? If not, what amendments commenters’ views on that provision. proposed revision would not change the should be made to the proposed Commenters asserted that the provision treatment of the banking entity’s or its conditions under the safe harbor or was inconsistent with the statute, which affiliates’ ownership of a restricted what additional conditions should be limits investments in covered funds and profit interest under the implementing added and why? In particular, should not direct investments.232 In declining regulations. The agencies expect that the the reference to ‘‘fixed principal proposed change may simplify a payments’’ under the safe harbor 229 2013 rule § l.12(a). banking entity’s compliance with the condition in paragraph (d)(6)(ii)(B)(1)(ii) 230 2013 rule § l.12(b)(1)(i). 231 aggregate fund limit and covered fund be replaced with ‘‘contractually See Prohibitions and Restrictions on determined principal payments,’’ Proprietary Trading and Certain Interests in, and deduction provisions of the rule, and Relationships With, Hedge Funds and Private more fully recognize that employees and ‘‘repayment of a fixed principal Equity Funds, 76 FR 68846, 68951–52 (Nov. 7, directors may use their own resources, amount,’’ or any other similar wording 2011) (‘‘To the extent that a covered banking entity not provided by the banking entity, to that may be more representative of is contractually obligated to directly invest in, or is typical principal distributions under found to be acting in concert through knowing invest in ownership interests or participation in a joint activity or parallel action restricted profit interests in a covered various types of debt instruments, toward a common goal of investing in, one or more fund they advise (for example, to align including asset-backed securities? investments with a covered fund that is organized Question 81. Should the safe harbor and offered by the covered banking entity, whether their personal financial interests with be limited only to senior debt or not pursuant to an express agreement, such those of other investors in the covered instruments, as proposed? Why or why investments shall be included in any calculation fund). required under paragraph (a)(2) of this section.’’) Question 78. Under the proposal, the not? If so, do the proposed conditions (2011 proposed rule). right to participate in the removal of an sufficiently distinguish between senior 232 ABA (arguing that there was no basis in the debt instruments and other debt statute for any of the attribution rules proposed in instruments? the 2011 notice of proposed rulemaking, including 226 See 79 FR 5733. the proposed provision regarding the treatment of 227 2013 rule § l.10(d)(6)(C); § l.12(c)(1), (d). Question 82. Should the agencies an investment the banking entity is contractually See also 12 U.S.C. 1851(d)(1)(G). modify the methodology of calculating a obligated to invest in alongside a sponsored covered 228 Id. banking entity’s compliance with the fund).

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to adopt this parallel investment commenters argued that a restriction on provided that those investments comply provision, the agencies noted that parallel investments interferes with with applicable laws and regulations. banking entities rely on a number of banking entities’ ability to make Accordingly, banking entities would not investment authorities and structures to otherwise permissible investments be permitted to engage in prohibited make investments and meet the needs of directly on their balance sheets. These proprietary trading alongside a covered their clients.233 commenters also contended that it is not fund. Moreover, banking entities would The 2013 rule restricts a banking necessary to restrict direct investments need to have authority to make any entity’s investment in a covered fund by a banking entity in this manner investment alongside a covered fund organized and offered pursuant to § l because these investments are subject to under applicable banking and other .11 to three percent of the total number all the capital and safety and soundness laws and regulations, and would need to or value of the outstanding ownership requirements that apply to the banking ensure that the investment complies interests of the fund.234 That regulatory entity.240 Further, two commenters with applicable safety and soundness requirement is consistent with section asserted that such direct investments are standards. For example, national banks 13(d)(4) of the BHC Act, which limits also subject to the proprietary trading are restricted in their ability to make the size of investments by a banking provisions of the 2013 rule.241 direct equity investments under 12 entity in a hedge fund or private equity In light of the comments received, the U.S.C. 24(Seventh) and 12 CFR part 1. fund.235 Neither section 13(d)(4) of the agencies are proposing to add a new Banking entities that rely on the BHC Act nor the text of the 2013 rule rule of construction to § l.12(b) that proposed rule of construction to invest require that a banking entity treat an would address investments made by alongside a covered fund that is otherwise permissible investment the banking entities alongside covered organized and offered by the banking banking entity makes alongside a funds.242 As discussed in more detail entity pursuant to § l.11 would still be covered fund as an investment in the below, these provisions would clarify in required to comply with all of the covered fund. The text of the 2013 rule the rule text that banking entities are not conditions under § l.11 with respect to does not impose any quantitative limits required to treat these types of direct the covered fund, which would, among on any investments by banking entities investments alongside a covered fund as other things, prohibit the banking entity made alongside, or otherwise in parallel an investment in the covered fund as from guaranteeing, assuming, or with, covered funds.236 long as certain conditions are met. otherwise insuring the obligations or However, in the preamble to the 2013 Specifically, proposed § l.12(b)(5) performance of the covered fund. As a rule, the agencies went on to discuss the would provide that: result, the banking entity would not be potential for evasion of the per fund • A banking entity shall not be required to permitted to make a direct investment limit and aggregate fund limit in the include in the calculation of the investment alongside a covered fund that the 2013 rule, and stated that ‘‘if a banking limits under § l.12(a)(2) any investment the banking entity organizes and offers for entity makes investments side by side in banking entity makes alongside a covered the purpose of artificially maintaining substantially the same positions as the fund as long as the investment is made in or increasing the value of the fund’s covered fund, then the value of such compliance with applicable laws and positions. The banking entity would investments shall be included for regulations, including applicable safety and soundness standards. also need to ensure that any such direct purposes of determining the value of the • A banking entity shall not be restricted investment alongside an organized and banking entity’s investment in the under § l.12 in the amount of any offered covered fund does not cause the covered fund.’’ 237 The agencies also investment the banking entity makes sponsoring banking entity’s permitted stated that ‘‘a banking entity that alongside a covered fund as long as the organizing and offering activities to sponsors the covered fund should not investment is made in compliance with violate the prudential backstops under itself make any additional side by side applicable laws and regulations, including § l.15.244 In particular, to the extent the applicable safety and soundness standards. co-investment with the covered fund in investment would result in a material a privately negotiated investment unless As discussed in the preamble to the conflict of interest between the banking the value of such co-investment is less 2013 rule, the agencies recognize that entity and its clients, for example than 3% of the value of the total amount banking entities rely on a number of because the banking entity may exit the co-invested by other investors in such investment authorities and structures to position at a different time or on investment.’’ 238 make investments and meet the needs of different terms than the covered fund, The agencies did not discuss the their clients and shareholders.243 The the banking entity would be required to application of the per fund limit and proposed rule of construction would provide timely and effective disclosure aggregate fund limit in the context of a provide clarity to banking entities that in accordance with § l.15(b) prior to banking entity’s investments alongside a they may make such investments for the making the investment. covered fund in the 2018 proposal. benefit of their clients and shareholders, The 2013 rule imposes certain Nonetheless, in response to the 2018 attribution rules and eligibility proposal, three commenters 240 FSF; Goldman; and SIFMA. requirements for investments by 241 recommended that the rule should not FSF and SIFMA. directors and employees of a banking impose a limit on parallel investments 242 Proposed rule § l.12(b)(5). These kinds of investments could be, for example, parallel entity in covered funds organized and and noted that this restriction is not investments or co-investments. For these purposes, offered by the banking entity. reflected in the 2013 rule text.239 These ‘‘parallel investments’’ generally refers to a series of Specifically, § l.12(b)(1)(iv) of the 2013 investments that are made side-by-side with a rule requires attribution of an 233 79 FR 5734. covered fund, and ‘‘co-investments’’ generally refers to a specific investment opportunity that is made investment by a director or employee of 234 2013 rule § l.12(a). available to third-parties when the general partner a banking entity who acquires an 235 12 U.S.C. 1851(d)(4). or investment manager for the covered fund ownership interest in his or her 236 Any investment by the banking entity would determines that the covered fund does not have personal capacity in a covered fund need to comply with the proprietary trading sufficient capital available to make the entire restrictions in Subpart B of the implementing investment in the target portfolio company or sponsored by the banking entity if the regulations. determines that it would not be suitable for the 237 79 FR 5734 (emphasis added). covered fund to take the entire available 244 The agencies note that the banking entity’s 238 See id. at 5734 Id. investment. direct investment would not itself be subject to 239 FSF; Goldman; and SIFMA. 243 79 FR 5734. § l.15.

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banking entity, directly or indirectly, market a covered fund it organizes and investments alongside a covered fund extends financing for the purpose of offers pursuant to § l.11 on the basis of under the implementing regulations? enabling the director or employee to the banking entity’s expectation that it Why or why not? If not, what additional acquire the ownership interest in the would invest in parallel with the modifications should be made? fund and the financing is used to covered fund in some or all of the same Question 85. Would the proposed rule acquire such ownership interest in the investments, or the expectation that the of construction create any opportunities covered fund. Section l.11(a)(7) banking entity would fund one or more for evasion, for example, by allowing a prohibits investments by any director or co-investment opportunities made banking entity to structure parallel employee of the banking entity (or an available by the covered fund. The investments and co-investments to affiliate thereof) in the covered fund, agencies would expect that any such other than any director or employee investment policies, arrangements or evade the restrictions of section 13? who is directly engaged in providing agreements would ensure that the Why or why not? If so, how could such investment advisory, commodity trading banking entity has the ability to evaluate concerns be addressed? Please explain. advisory, or other services to the each investment on a case-by-case basis Question 86. Do commenters agree covered fund at the time the director or to confirm that the banking entity does that investments made by a director or employee makes the investment. not make any investment unless the employee alongside a covered fund The agencies recognize that directors investment complies with applicable should not be treated as an investment and employees of banking entities may laws and regulations, including any in the covered fund? Why or why not? participate in investments alongside a applicable safety and soundness Do commenters agree that the covered fund, for example on an ad hoc standards. The agencies believe that this requirements under § l.11(a)(7) that basis or as part of a compensation would further ensure that the banking limit the directors and employees that arrangement. Consistent with the entity is not exposed to the types of are eligible to invest in a covered fund agencies’ proposed rule of construction risks that section 13 of the BHC Act was organized and offered by the banking regarding direct investments by banking intended to address. entity to those who are directly engaged entities alongside a covered fund, the The agencies recognize that the 2011 in providing investment advisory, agencies would expect that any direct proposed rule would have required a commodity trading advisory, or other investments (whether a series of parallel banking entity to apply the per fund services to the covered fund should not limit and aggregate fund limit to a direct investments or a co-investment) by a apply to any such investment? Why or investment alongside a covered fund director or employee of a banking entity why not? Should the agencies provide when, among other things, a banking (or an affiliate thereof) made alongside additional rule text addressing director entity is contractually obligated to make a covered fund in compliance with and employee investments alongside applicable laws and regulations would such investment alongside a covered covered funds? Are there any additional not be treated as an investment by the fund. The agencies do not believe such conditions that the agencies should director or employee in the covered a prohibition is necessary given the consider placing on director and fund. Accordingly, such a direct agencies’ expectation that a banking employee investments made alongside a investment would not be attributed to entity would retain the ability to covered fund? Are there any the banking entity as an investment in evaluate each investment on a case-by- the covered fund, regardless of whether case basis to confirm that the banking modifications to the agencies’ proposed the banking entity arranged the entity does not make any investment treatment of director and employee transaction on behalf of the director or unless the investment complies with investments or proposed rule of employee or provided financing for the applicable laws and regulations, construction that commenters believe is investment.245 Similarly, the including any applicable safety and necessary in order to accommodate requirements under § l.11(a)(7) soundness standards. director and employee investments limiting the directors and employees Question 83. Should the agencies alongside a covered fund that are made that are eligible to invest in a covered adopt the proposed rule of construction through employee securities companies fund organized and offered by the in § l.12(b)(5) that would address or other types of employee banking entity to those that are directly direct investments made by banking compensation arrangements? If so, engaged in providing specified services entities alongside covered funds by please explain what modifications to the covered fund would not apply to clarifying in the rule text that banking would be necessary or appropriate and any such direct investment. entities are not required to treat such the rationale for such modifications. direct investments alongside a covered The proposed rule of construction Question 87. The proposed rule of fund as an investment in the covered would not prohibit a banking entity construction would not prohibit a fund as long as the investment is made from having investment policies, banking entity from having investment in compliance with applicable laws and arrangements or agreements to invest policies, arrangements or agreements to regulations? Why or why not? What, if alongside a covered fund in all or invest alongside a covered fund in all or any, modifications to the scope of the substantially all of the investments substantially all of the investments made by the covered fund or to fund all proposed rule of construction should be made? Is the proposed condition on the made by the covered fund or to fund all or any portion of the investment or any portion of the investment opportunities made available by the proposed rule of construction appropriate? If not, how should the opportunities made available by the covered fund to other investors. covered fund to other investors. Should Accordingly, a banking entity could agencies modify the condition, and why? Should the agencies provide any the agencies impose any additional additional guidance or requirements limitations on a banking entity’s 245 See proposed rule § l.12(b)(1)(iv) (requiring investment policies, arrangements or attribution of an investment by a director or regarding the condition? employee in a covered fund where the banking Question 84. Do commenters believe agreements to invest alongside a entity, directly or indirectly, extends financing for that the proposed rule of construction covered fund? Why or why not? If the the purpose of enabling the director or employee to will provide banking entities with agencies were to impose such acquire the ownership interest in the covered fund limitations, should the agencies adopt and the financing is used to acquire such ownership clarity about how a banking entity interest in the covered fund). should treat its otherwise permissible the approach used to define

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‘‘contractual obligation’’ in the B. Paperwork Reduction Act Analysis this notice that may affect reporting, Conformance Rule? 246 Why or why not? Request for Comment on Proposed recordkeeping, or disclosure Information Collection requirements and burden estimates G. Technical Amendments should be sent to the addresses listed in The agencies are proposing five sets of Certain provisions of the proposed rule contain ‘‘collection of information’’ the ADDRESSES section. A copy of the clarifying technical edits to the comments may also be submitted to the implementing regulations. Specifically, requirements within the meaning of the Paperwork Reduction Act (PRA) of 1995 OMB desk officer for the agencies by the agencies are proposing to (1) amend mail to U.S. Office of Management and § l.12(b)(1)(ii) to add a comma after the (44 U.S.C. 3501–3521). In accordance with the requirements of the PRA, the Budget, 725 17th Street NW, #10235, words ‘‘SEC-regulated business Washington, DC 20503, by facsimile to development companies’’ in both places agencies may not conduct or sponsor, _ and a respondent is not required to 202–395–5806, or by email to oira where that phrase is used; (2) amend [email protected], Attention, § l.12(b)(4)(i) to replace the phrase respond to, an information collection unless it displays a currently valid Federal Banking Agency and ‘‘ownership interest of the master fund’’ Commission Desk Officer. with the phrase ‘‘ownership interest in Office of Management and Budget the master fund’’; (3) amend (OMB) control number. The agencies Abstract l reviewed the proposed rule and § .12(b)(4)(ii) to replace the phrase Section 13 of the BHC Act, which ‘‘ownership interest of the fund’’ with determined that the proposed rule creates new recordkeeping requirements generally prohibits any banking entity the phrase ‘‘ownership interest in the from engaging in proprietary trading or l and revises certain disclosure fund;’’ (4) amend §§ .10(c)(3)(i) and from acquiring or retaining an l.10(c)(10)(i) to replace the word requirements that have been previously cleared under various OMB control ownership interest in, sponsoring, or ‘‘comprised’’ with the word having certain relationships with a ‘‘composed;’’ and (5) amend numbers. The agencies are proposing to covered fund, subject to certain § l.10(c)(8)(iv)(A) to replace the word extend for three years, with revision, exemptions. The exemptions allow ‘‘of’’ in the phrase ‘‘contractual rights of these information collections. The certain types of permissible trading other assets’’ with the word ‘‘or.’’ information collection requirements contained in this joint notice of activities such as underwriting, market IV. Administrative Law Matters proposed rulemaking have been making, and risk-mitigating hedging, among others. The 2013 rule A. Solicitation of Comments on Use of submitted by the OCC and FDIC to OMB implementing section 13 became Plain Language for review and approval under section 3507(d) of the PRA (44 U.S.C. 3507(d)) effective on April 1, 2014. Section Section 722 of the Gramm-Leach- and section 1320.11 of the OMB’s l.20(d) and Appendix A of the 2013 Bliley Act requires the Federal banking implementing regulations (5 CFR 1320). final rule require certain of the largest agencies to use plain language in all The Board reviewed the proposed rule banking entities to report to the proposed and final rules published after under the authority delegated to the appropriate agency certain quantitative January 1, 2000.247 The Federal banking measurements. agencies have sought to present the Board by OMB. The Board will submit proposal in a simple and information collection burden estimates Current Actions to OMB and the submission will include straightforward manner, and invite your The proposed rule contains comments on how to make this proposal burden for Federal Reserve-supervised institutions, as well as burden or OCC-, requirements subject to the PRA and the easier to understand. proposed changes relative to the current For example: FDIC-, SEC-, and CFTC-supervised final rule are discussed herein. The new • Have the agencies organized the institutions under a holding company. recordkeeping requirements are found material to suit your needs? If not, how The OCC and the FDIC will take burden l could this material be better organized? for banking entities that are not under in section .10(c)(18)(ii)(B)(1) and the • Are the requirements in the a holding company. modified disclosure requirements are proposal clearly stated? If not, how Comments are invited on: found in section l.11(a)(8)(i). The could the proposal be more clearly a. Whether the collections of modified information collection stated? information are necessary for the proper requirements would implement section • Does the proposal contain language performance of the agencies’ functions, 13 of the BHC Act. The respondents are or jargon that is not clear? If so, which including whether the information has for-profit financial institutions, language requires clarification? practical utility; including small businesses. A covered • Would a different format (e.g., b. The accuracy of the estimates of the entity must retain these records for a grouping and order of sections, use of burden of the information collections, period that is no less than 5 years in a headings, paragraphing) make the including the validity of the form that allows it to promptly produce proposal easier to understand? If so, methodology and assumptions used; such records to the relevant Agency on what changes to the format would make c. Ways to enhance the quality, request. the proposal easier to understand? utility, and clarity of the information to Recordkeeping Requirements • Would more, but shorter, sections be collected; be better? If so, which sections should be d. Ways to minimize the burden of the Section l.10(c)(18)(ii)(B)(1) would changed? information collections on respondents, require a banking entity relying on the • What else could the agencies do to including through the use of automated proposed exclusion from the covered make the regulation easier to collection techniques or other forms of fund definition for customer facilitation understand? information technology; and vehicles to maintain documentation e. Estimates of capital or startup costs outlining how the banking entity 246 See A Conformance Period for Entities and costs of operation, maintenance, intends to facilitate the customer’s Engaged in Prohibited Proprietary Trading or and purchase of services to provide exposure to a transaction, investment Private Equity Fund or Hedge Fund Activities, 76 FR 8265 (Feb. 14, 2011) (the Conformance Rule). information. strategy, or service. The agencies 247 Public Law 106–102, 113 Stat. 1338, 1471, 12 All comments will become a matter of estimate that the new recordkeeping U.S.C. 4809. public record. Comments on aspects of requirement would be incurred once a

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year with an average hour per response Respondents: National banks, state OMB control number: 7100–0360. of 10 hours. member banks, state nonmember banks, Estimated number of respondents: and state and federal savings 255. Disclosure Requirements associations. Proposed revisions estimated annual Section l.11(a)(8)(i), which requires OMB control number: 1557–0309. burden: 7,880 hours. banking entities that organize and offer Estimated number of respondents: 39. Estimated annual burden hours: covered funds to make certain Proposed revisions estimated annual 36,112 hours (4,381 hour for initial set- disclosures to investors in such funds, burden: 302 hours. up and 31,731 hours for ongoing). Estimated annual burden hours: would be expanded to also apply to FDIC banking entities sponsoring credit 20,410 hours (3,681 hour for initial set- funds, venture capital funds, family up and 16,729 hours for ongoing). Title of Information Collection: Volcker Rule Restrictions on Proprietary wealth management vehicles, or Board customer facilitation vehicles, in Trading and Relationships with Hedge reliance on the proposed exclusions for Title of Information Collection: Funds and Private Equity Funds. such funds. The agencies estimate that Reporting, Recordkeeping, and Frequency: Annual, quarterly, and the current average hours per response Disclosure Requirements Associated event driven. of 0.1 would increase to 0.5. with Regulation VV. Affected Public: Businesses or other Frequency: Annual, quarterly, and for-profit. Proposed Revision, With Extension, of event driven. Respondents: State nonmember the Following Information Collections Affected Public: Businesses or other banks, state savings associations, and Estimated average hours per response: for-profit. certain subsidiaries of those entities. Respondents: State member banks, OMB control number: 3064–0184. Reporting bank holding companies, savings and Estimated number of respondents: 10. Section l.4(c)(3)(i)—0.25 hours for loan holding companies, foreign Proposed revisions estimated annual an average of 20 times per year. banking organizations, U.S. State burden: 175 hours. Section l.12(e)—20 hours (Initial set- branches or agencies of foreign banks, Estimated annual burden hours: 3,288 up 50 hours) for an average of 10 times and other holding companies that hours (1,759 hours for initial set-up and per year. control an insured depository 1,529 hours for ongoing). Section l.20(d)—41 hours (Initial set- institution and any subsidiary of the C. Initial Regulatory Flexibility Act up 125 hours) quarterly. foregoing other than a subsidiary for Analysis l which the OCC, FDIC, CFTC, or SEC is Section .20(i)—20 hours. The Regulatory Flexibility Act the primary financial regulatory agency. 248 Recordkeeping The Board will take burden for all (‘‘RFA’’) requires an agency to either provide an initial regulatory flexibility Section l.3(d)(3)—1 hour (Initial set- institutions under a holding company analysis with a proposed rule or certify up 3 hours). including: Section l.4(b)(3)(i)(A)—2 hours • OCC-supervised institutions, that the proposed rule will not have a quarterly. • FDIC-supervised institutions, significant economic impact on a Section l.4(c)(3)(i)—0.25 hours for • Banking entities for which the substantial number of small entities. an average of 40 times per year. CFTC is the primary financial regulatory The U.S. Small Business Administration Section l.5(c)—40 hours (Initial agency, as defined in section 2(12)(C) of (‘‘SBA’’) establishes size standards that the Dodd-Frank Act, and define which entities are small setup 80 hours). 249 Section l.10(c)(18)(ii)(B)(1)—10 • Banking entities for which the SEC businesses for purposes of the RFA. hours. is the primary financial regulatory Except as otherwise specified below, the Section l.11(a)(2)—10 hours. agency, as defined in section 2(12)(B) of size standard to be considered a small Section l.20(b)—265 hours (Initial the Dodd-Frank Act. business for banking entities subject to Legal authorization and the proposal is $600 million or less in set-up 795 hours). 250 Section l.20(c)—100 hours (Initial confidentiality: This information consolidated assets. set-up 300 hours). collection is authorized by section 13 of Board Section l.20(d)– 10 hours. the BHC Act (12 U.S.C. 1851(b)(2) and The Board has considered the Section l.20(e)—200 hours. 12 U.S.C. 1851(e)(1)). The information potential impact of the proposed rule on Section l.20(f)(1)—8 hours. collection is required in order for small entities in accordance with Section l.20(f)(2)—40 hours (Initial covered entities to obtain the benefit of section 603 of the RFA. Based on the set-up 100 hours). engaging in certain types of proprietary trading or investing in, sponsoring, or Board’s analysis, and for the reasons Disclosure having certain relationships with a stated below, the Board believes that Section l.11(a)(8)(i)—0.5 hours for hedge fund or private equity fund, this proposed rule will not have a an average of 26 times per year. under the restrictions set forth in significant economic impact on a section 13 and the final rule. If a substantial of number of small entities. OCC respondent considers the information to The Board welcomes comment on all Title of Information Collection: be trade secrets and/or privileged such aspects of its analysis. In particular, the Reporting, Recordkeeping, and information could be withheld from the 248 Disclosure Requirements Associated public under the authority of the 5 U.S.C. 601 et seq. 249 U.S. SBA, Table of Small Business Size with Restrictions on Proprietary Trading Freedom of Information Act (5 U.S.C. Standards Matched to North American Industry and Certain Relationships with Hedge 552(b)(4)). Additionally, to the extent Classification System Codes, available at https:// Funds and Private Equity Funds. that such information may be contained www.sba.gov/document/support-table-size- Frequency: Annual, quarterly, and in an examination report such standards. 250 See id. Pursuant to SBA regulations, the asset event driven. information could also be withheld from size of a concern includes the assets of the concern Affected Public: Businesses or other the public (5 U.S.C. 552 (b)(8)). whose size is at issue and all of its domestic and for-profit. Agency form number: FR VV. foreign affiliates. 13 CFR 121.103(6).

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Board requests that commenters the total number of such entities to be small entities. Therefore, the OCC describe the nature of any impact on substantial. Accordingly, the Board’s certifies that the proposal, if small entities and provide empirical proposed rule is not expected to have a implemented, would not have a data to illustrate and support the extent significant economic impact on a significant economic impact on a of the impact. substantial number of small entities. substantial number of small entities. As discussed in the SUPPLEMENTARY The Board has not identified any INFORMATION, the agencies are proposing federal statutes or regulations that FDIC revisions to the regulations would duplicate, overlap, or conflict The RFA generally requires that, in implementing section 13 of the BHC Act with the proposed revisions, and the in order to improve and streamline the Board is not aware of any significant connection with a proposed rulemaking, regulations by modifying and clarifying alternatives to the final rule that would an agency prepare and make available requirements related to the covered reduce the economic impact on Board- for public comment an initial regulatory fund provisions.251 Certain of the regulated small entities. flexibility analysis describing the proposed exclusions from the covered impact of the proposed rule on small OCC 255 fund definition may contain entities. However, a regulatory recordkeeping and disclosure The OCC certifies that this regulation, flexibility analysis is not required if the requirements that would apply to if adopted, will not have a significant agency certifies that the proposed rule banking entities relying on the economic impact on a substantial will not have a significant economic exclusion. For example, the proposed number of small entities. Accordingly, a impact on a substantial number of small exclusion for customer facilitation Regulatory Flexibility Analysis is not entities. The SBA—has defined ‘‘small vehicles would require a banking entity required. entities’’ to include banking relying on the exclusion to maintain The Regulatory Flexibility Act organizations with total assets of less documentation outlining how the requires an agency, in connection with than or equal to $600 million that are banking entity intends to facilitate the a proposed rule, to prepare an Initial independently owned and operated or customer’s exposure to a transaction, Regulatory Flexibility Analysis owned by a holding company with less investment strategy, or service. The describing the impact of the proposed than or equal to $600 million in total proposed changes are expected to rule on small entities, or to certify that assets.256 Generally, the FDIC considers reduce regulatory burden on banking the proposed rule would not have a a significant effect to be a quantified entities, and the Board does not expect significant economic impact on a effect in excess of 5 percent of total these proposed recordkeeping substantial number of small entities. For annual salaries and benefits per requirements to result in a significant purposes of the Regulatory Flexibility institution, or 2.5 percent of total non- economic impact. Act, the SBA includes as small entities interest expenses. The FDIC believes The Board’s rule generally applies to those with $600 million or less in assets that effects in excess of these thresholds state-chartered banks that are members for commercial banks and savings typically represent significant effects for of the Federal Reserve System, bank institutions, and $41.5 million or less in FDIC-supervised institutions. For the holding companies, and foreign banking assets for trust companies. reasons described below and under The OCC currently supervises organizations and nonbank financial section 605(b) of the RFA, the FDIC approximately 782 small entities.254 companies supervised by the Board certifies that this rule will not have a (collectively, ‘‘Board-regulated Under the Economic Growth, Regulatory Relief, and Consumer significant economic impact on a entities’’). However, section 203 of the substantial number of small entities. Economic Growth, Regulatory Relief, Protection Act, banking entities with and Consumer Protection Act total consolidated assets of $10 billion As of June 30, 2019, the FDIC (EGRRCPA),252 which was enacted on or less generally are not ‘‘banking supervised 3,424 depository May 24, 2018, amended section 13 of entities’’ within the scope of section 13 institutions,257 of which 2,665 were the BHC Act by narrowing the definition of the BHC Act if their trading assets considered small entities for the of banking entity to exclude certain and trading liabilities do not exceed 5 purposes of RFA. The Economic community banks.253 The Board is not percent of their total consolidated Growth, Regulatory Relief, and aware of any Board-regulated entities assets. In addition, certain trust-only Consumer Protection Act exempted that meet the SBA’s definition of ‘‘small banks are generally not banking entities banking entities from the requirements entity’’ that are subject to section 13 of within the scope of section 13 of the of section 13 of the BHC Act if they have the BHC Act and its implementing BHC Act. Because there are no OCC- total assets below $10 billion and regulations following the enactment of supervised small entities that are trading assets and liabilities comprising EGRRCPA. Furthermore, to the extent banking entities within the scope of less than five percent of total that any Board-regulated entities that section 13 of the BHC Act, the proposal meet the definition of ‘‘small entity’’ are would not impact any OCC-supervised 255 5 U.S.C. 601 et seq. or become subject to section 13 of the 256 The SBA defines a small banking organization BHC Act and its implementing 254 The number of small entities supervised by as having $600 million or less in assets, where an regulations, the Board does not expect the OCC is determined using the SBA’s size organization’s ‘‘assets are determined by averaging thresholds for commercial banks and savings the assets reported on its four quarterly financial institutions, and trust companies, which are $600 statements for the preceding year.’’ See 13 CFR 251 The agencies are explicitly authorized under million and $41.5 million, respectively. Consistent 121.201 (as amended by 84 FR 34261, effective section 13(b)(2) of the BHC Act to adopt rules with the General Principles of Affiliation 13 CFR August 19, 2019). In its determination, the ‘‘SBA implementing section 13. 12 U.S.C. 1851(b)(2). 121.103(a), we count the assets of affiliated counts the receipts, employees, or other measure of 252 Public Law 115–174 (May 24, 2018). financial institutions when determining if we size of the concern whose size is at issue and all 253 Under EGRRCPA, a community bank and its should classify an OCC-supervised institution as a of its domestic and foreign affiliates.’’ See 13 CFR affiliates are generally excluded from the definition small entity. We use December 31, 2018, to 121.103. Following these regulations, the FDIC uses of banking entity, and thus section 13 of the BHC determine size because a ‘‘financial institution’s a covered entity’s affiliated and acquired assets, Act, if the bank and all companies that control the assets are determined by averaging the assets averaged over the preceding four quarters, to bank have total consolidated assets equal to $10 reported on its four quarterly financial statements determine whether the covered entity is ‘‘small’’ for billion or less and trading assets and liabilities for the preceding year.’’ See footnote 8 of the U.S. the purposes of RFA. equal to 5 percent or less of total consolidated Small Business Administration’s Table of Size 257 FDIC-supervised institutions are set forth in 12 assets. Standards. U.S.C. 1813(q)(2).

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consolidated assets.258 Only one small, in a manner consistent with section 13 fund, and clarify certain aspects of the FDIC-supervised institution is subject to of the BHC Act, the agencies are definition of ownership interest. Section 13, because its trading assets proposing to simplify and tailor the rule The proposed revisions would and liabilities exceed five percent of in a manner that would reduce generally apply to banking entities, total consolidated assets.259 compliance costs for banking entities including certain CFTC-registered Section 13 of the BHC Act generally subject to section 13 of the BHC Act and entities. These entities include bank- prohibits any banking entity from the implementing regulations. affiliated CFTC-registered swap dealers, engaging in proprietary trading or from The proposed revisions would futures commission merchants, acquiring or retaining an ownership generally apply to banking entities, commodity trading advisors and interest in, sponsoring, or having certain including certain SEC-registered commodity pool operators.262 The CFTC relationships with a covered fund. As entities. These entities include bank- has previously determined that swap previously discussed, the proposed rule affiliated SEC-registered investment dealers, futures commission merchants would modify existing definitions and advisers, broker-dealers, and security- and commodity pool operators are not exclusions, as well as would introduce based swap dealers. Based on small entities for purposes of the RFA new exclusions to the implementing information in filings submitted by and, therefore, the requirements of the regulations. If adopted, the proposed these entities, the SEC preliminarily RFA do not apply to those entities.263 rule would permit covered entities to believes that there are no banking entity As for commodity trading advisors, the engage in additional activities with registered investment advisers or CFTC has found it appropriate to respect to covered funds, including broker-dealers that are small entities for consider whether such registrants acquiring or retaining an ownership purposes of the RFA. For this reason, should be deemed small entities for interest in, sponsoring, or having certain the SEC believes that the proposed rule purposes of the RFA on a case-by-case relationships with covered funds, would not, if adopted, have a significant basis, in the context of the particular subject to certain restrictions. economic impact on a substantial regulation at issue.264 This proposed rule would exclude number of small entities. In the context of the proposed certain types of institutions from the The SEC encourages written revisions to the implementing definition of a ‘‘covered fund’’ for the comments regarding this certification. regulations, the CFTC believes it is purposes of section 13 of the BHC Act. Specifically, the SEC solicits comment unlikely that a substantial number of the Investments in funds that are affected by as to whether the proposed rule could commodity trading advisors that are this proposed rule could be reported as have an impact on small entities that potentially affected are small entities for deductions from capital on Call Report has not been considered. Commenters purposes of the RFA. In this regard, the schedule RCR Part 1 Lines 11 or 13 if should describe the nature of any CFTC notes that only commodity the investments qualify as ‘‘investments impact on small entities and provide trading advisors that are registered with in the capital of an unconsolidated empirical data to support the extent of the CFTC are covered by the financial institution’’ or as additional such impact. implementing regulations, and generally deductions on Lines 17 or 24 of those that are registered have larger schedule RC–R otherwise.260 The one CFTC businesses. Similarly, the implementing affected small, FDIC-supervised Pursuant to 5 U.S.C. 605(b), the CFTC regulations apply to only those institution did not report any such hereby certifies that the proposed commodity trading advisors that are deductions over the past five years.261 amendments to the 2013 final rule affiliated with banks, which the CFTC Based on this supporting information, would not, if adopted, have a significant expects are larger businesses. The CFTC the FDIC certifies that this rule will not economic impact on a substantial requests that commenters address in have a significant economic impact on number of small entities for which the particular whether any of these a substantial number of small entities. CFTC is the primary financial regulatory commodity trading advisors, or other agency. CFTC registrants covered by the SEC proposed revisions to the implementing As discussed in this SUPPLEMENTARY Pursuant to 5 U.S.C. 605(b), the SEC regulations, are small entities for INFORMATION, the agencies are proposing hereby certifies that the proposed rule purposes of the RFA. specific changes to the restrictions on Because the CFTC believes that there would not, if adopted, have a significant covered fund investments and activities economic impact on a substantial are not a substantial number of and other issues related to the treatment registered, banking entity-affiliated number of small entities. of investment funds in the As discussed in the Supplementary commodity trading advisors that are implementing regulations. The small entities for purposes of the RFA, Information, the proposed rule is proposed rule is intended to improve intended to continue the agencies’ and streamline the covered fund 262 The proposed revisions may also apply to efforts to improve and streamline the provisions and facilitate banking regulations implementing section 13 of other types of CFTC registrants that are banking entities’ permissible activities and entities, such as introducing brokers, but the CFTC the BHC Act by modifying and offering of financial services in a believes it is unlikely that such other registrants clarifying requirements related to the will have significant activities that would implicate manner that is consistent with the the proposed revisions. See 79 FR 5808, 5813 (Jan. covered fund provisions. To minimize requirements of section 13 of the BHC the costs associated with the 2013 rule 31, 2014) (CFTC version of 2013 final rule). Act. The proposal would exempt the 263 See Policy Statement and Establishment of activities of certain qualifying foreign Definitions of ‘‘Small Entities’’ for Purposes of the 258 Public Law 115–174, May 24, 2018. https:// excluded funds from the restrictions of Regulatory Flexibility Act, 47 FR 18618 (Apr. 30, www.congress.gov/bill/115th-congress/senate-bill/ 1982) (futures commission merchants and 2155. the implementing regulations, make commodity pool operators); Registration of Swap 259 Call Report data, June 2019. modifications to several existing Dealers and Major Swap Participants, 77 FR 2613, 260 See ‘‘Supervisory Guidance on the Capital exclusions from the covered funds 2620 (Jan. 19, 2012) (swap dealers and major swap Treatment of Certain Investments in Covered provisions and adopt several new participants). Funds.’’ FDIC FIL–50–2015: November 6, 2015. 264 See Policy Statement and Establishment of https://www.fdic.gov/news/news/financial/2015/ exclusions, permit a banking entity to Definitions of ‘‘Small Entities’’ for Purposes of the fil15050a.pdf. engage in a limited set of covered Regulatory Flexibility Act, 47 FR 18618, 18620 261 Call Report data, March 2014–June 2019. transactions with a related covered (Apr. 30, 1982).

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and the other CFTC registrants that may (adjusted annually for inflation). The dealers (SBSDs), and registered be affected by the proposed revisions UMRA does not apply to regulations investment advisers (RIAs) affiliated have been determined not to be small that incorporate requirements with an insured depository institution, entities, the CFTC believes that the specifically set forth in law. fall under the definition of ‘‘banking proposed revisions to the implementing The proposed rule does not impose entity’’ and are subject to the regulations would not, if adopted, have new mandates. Therefore, the OCC finds prohibitions of section 13 of the BHC a significant economic impact on a that the proposed rule does not trigger Act.268 This economic analysis is substantial number of small entities for the UMRA cost threshold. Accordingly, limited to areas within the scope of the which the CFTC is the primary financial the OCC has not prepared the written SEC’s function as the primary securities regulatory agency. statement described in section 202 of markets regulator in the United States. The CFTC encourages written the UMRA. In particular, the SEC’s economic comments regarding this certification. F. SEC Economic Analysis analysis focuses primarily on the Specifically, the CFTC solicits comment potential effects of the proposed rule on as to whether the proposed amendments 1. Broad Economic Considerations (1) SEC registrants, in their capacity as could have a direct impact on small a. Background such, (2) the functioning and efficiency entities that were not considered. of the securities markets, (3) investor Commenters should describe the nature Section 13 of the Bank Holding protection, and (4) capital formation. of any impact on small entities and Company (BHC) Act generally prohibits SEC registrants that may be affected by provide empirical data to support the banking entities from acquiring or the proposed rule include SEC- extent of such impact. retaining an ownership interest in, registered broker-dealers, SBSDs, and sponsoring, or having certain RIAs. Thus, the below analysis does not D. Riegle Community Development and relationships with, a hedge fund or Regulatory Improvement Act consider the direct effects on broker- private equity fund (covered funds), dealers, SBSDs, and investment advisers Pursuant to section 302(a) of the subject to certain exemptions. Section that are not banking entities, or banking Riegle Community Development and 13(h)(1) of the BHC Act defines the term entities that are not SEC registrants, in Regulatory Improvement Act of 1994 ‘‘banking entity’’ to include (i) any either case for purposes of section 13 of (RCDRIA), 12 U.S.C. 4802(a), in insured depository institution (as the BHC Act. Potential spillover effects determining the effective date and defined by statute), (ii) any company on these and other entities are, on a administrative compliance requirements that controls an insured depository general basis, reflected in the analysis of for new regulations that impose institution, (iii) any company that is effects on efficiency, competition, treated as a bank holding company for additional reporting, disclosure, or other investor protection, and capital purposes of section 8 of the requirements on insured depository formation in securities markets. This International Banking Act of 1978, and institutions, each Federal banking economic analysis also discusses the (iv) any affiliate or subsidiary of such an agency must consider, consistent with impacts of the proposal on private entity.266 In addition, the Economic the principles of safety and soundness funds,269 to the degree that such and the public interest: (1) Any Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), administrative burdens that the 268 Throughout this economic analysis, the terms proposed rule would place on enacted on May 24, 2018, amended ‘‘banking entity’’ and ‘‘entity’’ generally refer only depository institutions, including small section 13 of the BHC Act to exclude to banking entities for which the SEC is the primary depository institutions and customers of from the definition of ‘‘insured financial regulatory agency. While section 13 of the depository institution’’ any institution BHC Act and its associated rules apply to a broader depository institutions, and (2) the set of banking entities, this economic analysis is benefits of the proposed rule. In that does not have and is not controlled limited to those banking entities for which the SEC addition, section 302(b) of RCDRIA, 12 by a company that has (1) more than $10 is the primary financial regulatory agency as U.S.C. 4802(b), requires new regulations billion in total consolidated assets; and defined in section 2(12)(B) of the Dodd-Frank Act. (2) total trading assets and trading See 12 U.S.C. 1851(b)(2), and 5301(12)(B). and amendments to regulations that Compliance with SBSD registration requirements impose additional reporting, liabilities, as reported on the most is not yet required and there are currently no disclosures, or other new requirements recent applicable regulatory filing filed registered SBSDs. However, the SEC has previously on insured depository institutions by the institution, that are more than estimated that as many as 50 entities may generally to take effect on the first day 5% of total consolidated assets.267 potentially register as SBSDs and that as many as Certain SEC-regulated entities, such 16 of these entities may already be SEC-registered of a calendar quarter that begins on or broker-dealers. See Capital, Margin, and Segregation after the date on which the regulations as broker-dealers, security-based swap Requirements for Security-Based Swap Dealers and are published in final form. The Federal Major Security-Based Swap Participants and Capital banking agencies invite any comment 266 See 12 U.S.C. 1851(h)(1). and Segregation Requirements for Broker-Dealers, 267 These and other aspects of the regulatory 84 FR 43872 (Aug. 22, 2019) (‘‘Capital, Margin, and that would inform consideration under baseline against which the SEC is assessing the Segregation Adopting Release’’). RCDRIA. economic effects of the proposed amendments on For the purposes of this economic analysis, the SEC-regulated entities are discussed in the term ‘‘dealer’’ generally refers to SEC-registered E. OCC Unfunded Mandates Reform Act economic baseline. On July 22, 2019, the agencies broker-dealers and SBSDs. The OCC has analyzed the proposed adopted a final rule amending the definition of 269 There is significant overlap between the ‘‘insured depository institution’’ in a manner definitions of ‘‘private fund’’ and ‘‘covered fund.’’ rule under the factors in the Unfunded consistent with EGRRCPA. See Revisions to For purposes of this economic analysis, ‘‘private Mandates Reform Act of 1995 Prohibitions and Restrictions on Proprietary fund’’ means an issuer that would be an investment (UMRA).265 Under this analysis, the Trading and Certain Interests in, and Relationships company, as defined in section 3 of the Investment OCC considered whether the proposed with, Hedge Funds and Private Equity Funds, 84 FR Company Act of 1940 (15 U.S.C. 80a–3(a)), but for 35008 (July 22, 2019) (‘‘EGRRCPA Conforming section 3(c)(1) or section 3(c)(7) of that Act (15 rule includes a Federal mandate that Amendments Adopting Release’’). In November U.S.C. 80a–3(c)(1) or (7)). 15 U.S.C. 80b–2(a)(29). may result in the expenditure by state, 2019, the agencies adopted final rules tailoring Section 13(h)(2) of the BHC Act defines ‘‘hedge local, and tribal governments, in the certain proprietary trading and covered fund fund’’ and ‘‘private equity fund’’ to mean an issuer aggregate, or by the private sector, of restrictions of the 2013 rule. See Prohibitions and that would be an investment company, but for Restrictions on Proprietary Trading and Certain section 3(c)(1) or 3(c)(7) of the Investment Company $100 million or more in any one year Interests in, and Relationships with, Hedge Funds Act, or ‘‘such similar funds’’ as the agencies and Private Equity Funds, 84 FR 61974 (Nov. 14, determine by rule (see 12 U.S.C. 1851(h)(2)). In the 265 2 U.S.C. 1531 et seq. 2019) (‘‘2019 amendments’’). Continued

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impacts may flow through to SEC Banking entities engaged in activities interpretations (e.g., the treatment as registrants, such as RIAs, SEC-registered and investments covered by section 13 ‘‘banking entities’’ of certain foreign broker-dealers and SBSDs, and of the BHC Act and the 2013 rule are excluded funds and the attribution to a securities markets and investors. required to establish a compliance banking entity, in certain circumstances, In this proposal, the SEC is soliciting program reasonably designed to ensure of investments made by the banking comment on all aspects of the costs and and monitor compliance with the 2013 entity alongside a covered fund). benefits associated with the proposed rule.273 Broadly, to the extent that the amendments for SEC registrants, proposed amendments directly change including spillover effects the proposed b. Broad Economic Effects the scope of permissible covered fund amendments may have on efficiency, Certain aspects of the implementing activities, and indirectly reduce costs to competition, and capital formation in regulations may have resulted in a banking entities and covered funds by securities markets. complex and costly compliance regime reducing uncertainty regarding the In implementing section 13 of the that is unduly restrictive and scope of permissible activities, the BHC Act, the agencies sought to burdensome on some affected banking proposed amendments may impact the increase the safety and soundness of entities.274 Distinguishing between economic effects of the 2013 rule as banking entities, promote financial permissible and prohibited activities amended in 2019.276 The SEC’s stability, and reduce conflicts of interest may be complex and costly, resulting in economic analysis continues to between banking entities and their uncertain determinations for some recognize that the overall risk exposure customers.270 The regulatory regime entities. Moreover, the 2013 rule may of banking entities may generally arise created by the 2013 rule may have have included in its scope some groups out of a combination of activities, enhanced regulatory oversight and of market participants that do not including proprietary trading, market compliance with the substantive necessarily engage in the activities or making, traditional banking, asset prohibitions of section 13 of the BHC pose the risks that section 13 of the BHC management and investment activities, Act, but could also have impacted Act intended to address. For example, as well as the volume and structure in capital formation and liquidity, as well the 2013 rule’s definition of the term which banking entities engage in such as the provision by banking entities of ‘‘covered fund’’ may include entities activities, including the extent to which a variety of financial services for that do not engage in the activities banking entities engage in hedging and customers. contemplated by section 13 of the BHC other risk-mitigating activities. As Section 13 of the BHC Act also Act or may include entities that do not discussed elsewhere,277 the SEC provides a number of statutory pose the risks that section 13 is recognizes the complex baseline effects exemptions to the general prohibitions intended to mitigate. of section 13 of the BHC Act, as on proprietary trading and covered The proposed amendments include amended by sections 203 and 204 of funds activities. For example, the statute amendments that reduce the scope of EGRRCPA, and the implementing exempts certain covered funds entities that may be treated as covered regulations, on overall levels and activities, such as organizing and funds (e.g., credit funds, venture capital structure of banking entity risk offering covered funds.271 The 2013 rule funds, family wealth management exposures. implemented these exemptions.272 vehicles, and customer facilitation The proposed amendments may vehicles), those that modify existing benefit the functioning of the broader 2013 rule, the agencies combined the definitions of covered fund exclusions under the 2013 capital markets through, for example, ‘‘hedge fund’’ and ‘‘private equity fund’’ into a increased ability and willingness of single definition ‘‘covered fund’’ (as in the statute) rule (e.g., foreign public funds and small and defined this term to include any issuer that business investment companies),275 and banking entities to facilitate capital formation through sponsorship and would be an investment company as defined in the those that affect the types of permitted Investment Company Act but for section 3(c)(1) or participation in certain types of funds activities between certain banking 3(c)(7) of that Act with a number of express and to transact with certain groups of exclusions and additions as determined by the entities and certain covered funds (e.g., counterparties.278 For example, agencies (See 2013 rule § l.10(c)). restrictions on relationships between 270 exclusions from the ‘‘covered fund’’ See, e.g., Prohibitions and Restrictions on banking entities and covered funds, Proprietary Trading and Certain Interests in, and definition of specific types of entities definition of ‘‘ownership interest,’’ and Relationships With, Hedge Funds and Private may benefit banking entities by treatment of loan securitizations). The Equity Funds, 79 FR 5536, 5541, 5574, 5659, 5666 providing clarity and removing certain (Jan. 31, 2014) (‘‘2013 rule adopting release’’). An proposed amendments would also constraints around potentially profitable extensive body of research has examined moral reduce the burden on affected banking hazard arising out of federal deposit insurance, business opportunities and by reducing entities by addressing certain implicit bailout guarantees, and systemic risk compliance costs, and may benefit issues. See, e.g., Andrew G. Atkeson et al., excluded funds and their banking entity Government Guarantees and the Valuation of 273 See 2013 rule § l.20. See also 2019 American Banks, 33 NBER Macroeconomics Ann. amendments at 62021–25 which, among other sponsors and advisers by increasing the 81 (2018). See also Javier Bianchi, Efficient things, modified these requirements for banking spectrum of available counterparties Bailouts?, 106 Amer. Econ. Rev. 3607 (2016); Bryan entities with limited trading assets and liabilities. and improving the quality or cost of Kelly, Hanno Lustig, & Stijn Van Nieuwerburgh, Banking entities with limited trading assets and financial services available to Too-Systematic-to-Fail: What Option Markets Imply liabilities are presumed to be in compliance with about Sector-Wide Government Guarantees, 106 the proposal and would have had no obligation to customers. Amer. Econ. Rev. 1278 (2016); Deniz Anginer, Asli demonstrate compliance with subpart B and The proposed changes, however, may Demirguc-Kunt, & Min Zhu, How Does Deposit subpart C of the implementing regulations on an also facilitate risk-taking activities of Insurance Affect Bank Risk? Evidence from the ongoing basis. banking entities. They also may change Recent Crisis, 48 J. Banking & Fin. 312 (2014); 274 This SEC Economic Analysis follows earlier aspects of the relationships among Andrea Beltratti & Rene M. Stulz, The Credit Crisis sections by referring to the regulations Around the Globe: Why Did Some Banks Perform implementing section 13 of the BHC Act that are banking entities and certain other Better?, 105 J. Fin. Econ. 1 (2012); Pietro Veronesi effective as of February 28, 2020 as the & Luigi Zingales, Paulson’s Gift, 97 J. Fin. Econ. 339 ‘‘implementing regulations’’. See supra note 8. 276 See, e.g., 2019 amendments at 62037–92. (2010). For a literature review, see, e.g., Sylvain 275 Although no amendment is currently 277 See id. Benoit et al., Where the Risks Lie: A Survey on proposed, the agencies are soliciting comment on 278 See, e.g., U.S. Department of the Treasury, A Systemic Risk, 21 Rev. Fin. 109 (2017). modifying the covered fund exclusion for certain Financial System That Creates Economic 271 See section 13(d)(1)(G) of the BHC Act. other types of entities (e.g., public welfare funds). Opportunities: Banks and Credit Unions (June 2017) 272 See 2013 rule §§ l.4, l.5, l.6, l.11, l.13. See infra section IV.F.3.a. at 77.

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groups of market participants, including factors, including the prevailing sponsoring or investing in more funds potentially introducing new conflicts of macroeconomic conditions, the that would be excluded from the interest and increasing or reducing the financial condition of firms seeking to covered fund provisions by the potential effects of existing conflicts of raise capital and of funds seeking to proposed amendments could adversely interest. To the degree that some transact with banking entities, affect markets through the impact on banking entities may react to the competition between bank and non- financial stability and, therefore, proposed amendments by restructuring bank providers of capital, and many investors. Any such potential effects are activities involving covered funds to others. Moreover, the relative efficiency expected to be mitigated by the various take advantage of the proposed between fund structures and the direct conditions of the proposed exclusions exclusions, there may be shifts in the provision of capital is likely to vary from the definition of covered fund. For structure and levels of activities of widely among banking entities and example, the proposed amendments banking entities involving risk. funds. The SEC recognizes that the would permit the banking entity to However, each of the proposed economic effects of the proposed sponsor or invest in certain excluded exclusions includes a number of amendments may be dampened or funds (e.g., credit funds or qualifying conditions that are aimed at facilitating magnified in different phases of the venture capital funds) only to the extent banking entity compliance while also macroeconomic cycle, depend on the banking entity ensures that the allowing for customer oriented financial monetary and fiscal policy activities of the fund are consistent with services provided on arms-length, developments and other government safety and soundness standards that are market terms, and preventing evasion of actions, and vary across different types substantially similar to those that would the requirements of section 13. of banking entities. apply if the banking entity engaged in Moreover, many of the proposed The SEC also considered the the activities directly. These and other exclusions, such as for credit funds and implications for investors of the conditions of the proposed exclusions venture capital funds, would allow proposed amendments. Broadly, the are discussed in greater detail below. banking entities to engage indirectly proposed amendments should increase through fund structures in the same the number of funds and other entities c. Analytical Approach activities in which they are currently that will be excluded from the covered The SEC’s economic analysis is permitted to engage directly (e.g., fund definition. This is likely to result informed by research 279 on the effects extensions of credit or direct ownership in an increase in offerings of such funds of section 13 of the BHC Act and the stakes). Other exclusions would permit or an increase in banking entities 2013 rule, comments received by the banking entities to provide traditional providing services to customers through agencies from a variety of interested banking and asset management services entities such as client facilitation parties, and experience administering to customers through a legal entity vehicles and family wealth management the 2013 rule since its adoption. structure, with conditions (e.g., vehicles. The ability of investors to Throughout this economic analysis, the limitation on ownership by the banking access public and private markets SEC discusses how different market entity and prohibition on ‘‘bail outs’’) through funds and other entities may participants 280 may respond to various intended to ensure that the risks that relax constraints on their portfolio aspects of the proposed amendments. section 13 of the BHC Act was intended optimization and, thus, enhance the This analysis also considers the to address are mitigated. Finally, efficiency of their portfolio allocations. potential effects of the proposed nothing in the proposal removes or The ability of additional investors to amendments on activities by banking modifies prudential capital, margin, and access these markets through funds and entities that involve risk, their liquidity requirements that are other entities may also benefit the willingness and ability to engage in applicable to banking entities and that issuers of the securities held by those client-facilitation activities, and facilitate the safety and soundness of funds and other entities by potentially competition, market quality, and capital banking entities and the financial increasing demand for those securities. formation. stability of the United States. Increased demand typically results in The proposed amendments would The proposed amendments may also increased liquidity which can be tailor, remove, or alter the scope of impact competition, allocative important to investors as it may enable various covered fund requirements in efficiency, and capital formation. To the investors to exit (in a timely manner and the 2013 rule. Since section 13 of the extent that the implementing at an acceptable price) from their BHC Act and the 2013 rule impose a regulations are currently constraining positions in fund instruments, products, number of different requirements, and, banking entities in their covered fund and portfolios. as discussed above, the type and level activities, including providing Moreover, investors that seek access traditional banking and asset to public markets or other markets of risk exposure of a banking entity is the result of a combination of management services to customers through foreign public funds may 281 through a legal entity structure, the benefit to the extent the proposed activities, it is difficult to attribute proposed exclusions from the definition amendments would result in banking the observed effects to a specific of ‘‘covered fund’’ may increase entities offering more foreign public 279 See 2019 amendments at 62044–54. competition between banking entities funds or offering these funds at a lower 280 The SEC’s economic analysis is focused on the and other entities providing services to cost. Further, investors that prefer to potential effects of the proposed rule on SEC and otherwise transacting with those implement a trading or investing registrants, the functioning and efficiency of the types of funds and other entities. Such strategy through a legal entity structure securities markets, investor protection, and capital competition may reduce costs or may benefit from the proposed formation. Thus, the below analysis does not consider broker-dealers or investment advisers that increase the quality of certain financial amendments, which would allow are not banking entities, or banking entities that are services provided to such funds and banking entities to implement or not SEC registrants, in either case for purposes of their counterparties. facilitate such trading or investing section 13 of the BHC Act, beyond the potential Finally, the magnitude of the strategy while providing other banking spillover effects on these entities and effects on efficiency, competition, investor protection, and proposal’s costs, benefits, and effects on and asset management services to the capital formation in securities markets. See infra efficiency, competition, and capital investor. At the same time, higher risk section IV.F.2.b. formation is influenced by a variety of exposures of banking entities 281 See, e.g., 2013 rule adopting release at 5541.

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provision or subset of requirements. In markets while potentially increasing 2. Economic Baseline 282 addition, analysis of the effects of the access to capital. In the context of this economic implementation of the 2013 rule is Where possible, the SEC has analysis, the economic costs and confounded by macroeconomic factors, attempted to quantify the costs and benefits, and the impact of the proposed other policy interventions, and post- benefits expected to result from the amendments on efficiency, competition, crisis changes to market participants’ proposed amendments. In many cases, and capital formation, are considered risk aversion and return expectations. however, the SEC is unable to quantify relative to a baseline that includes the Because of the extended timeline of these potential economic effects. Some 2013 rule; the 2019 amendments; implementation of section 13 of the of the primary economic effects, such as legislative amendments in EGRRCPA 283 BHC Act and the overlap of the period the effect on incentives that may give and conforming amendments to the during which the 2013 rule was in effect rise to conflicts of interest in various implementing regulations, as applicable; with other post-crisis changes affecting regulated entities and the degree to and current practices aimed at the same group or certain sub-groups of which the 2013 rule may be impeding compliance with these regulations. activity of banking entities with respect SEC registrants, the SEC cannot rely on a. Regulation frequently utilized quantitative methods to certain investment vehicles, are The economic baseline against which that might otherwise enable causal inherently difficult to quantify. Moreover, some of the benefits of the the SEC is assessing the economic attribution and quantification of the impact of the proposed amendments effects of section 13 of the BHC Act and 2013 rule’s definitions and prohibitions that the agencies propose to amend, includes the legal and regulatory the 2013 rule on measures of capital such as the potential benefits for framework as it exists at the time of this formation, liquidity, competition, and resilience during a crisis or periods of release. Thus, the regulatory baseline for informational or allocative efficiency. market stress, are less readily observable the SEC’s economic analysis includes Moreover, empirical measures of capital under strong economic conditions, section 13 of the BHC Act as amended formation or liquidity are substantially particularly when markets are less by EGRRCPA, and the 2013 rule. limited by the fact that they do not volatile and are functioning well. Further, the baseline accounts for the provide insight into security issuance Further, it is difficult to quantify the net fact that since the adoption of the 2013 and transaction activity that does not economic effects of any individual rule, the agencies have adopted the 2019 occur as a result of the 2013 rule. proposed amendment because of amendments, which, among other Accordingly, it is difficult to quantify overlapping implementation periods of things, related to the ability of banking the primary security issuance and various post-crisis regulations affecting entities to engage in certain activities, secondary market liquidity that would the same group of SEC registrants, the including underwriting, market-making, have been observed following the long implementation timeline of the and risk-mitigating hedging, with financial crisis absent various 2013 rule and the implementing respect to ownership interests in provisions of section 13 of the BHC Act regulations, and the fact that many covered funds, as well as amendments and the 2013 rule. market participants changed their conforming the 2013 rule to Sections 203 and 204 of EGRRCPA. In addition, Importantly, the existing securities behavior in anticipation of future changes in regulation. the staffs of the agencies have provided markets—including market participants, FAQ responses related to the regulatory In some instances, the SEC lacks the their business models, market structure, obligations of banking entities, information or data necessary to provide etc.—differ in significant ways from the including SEC-regulated entities that are reasonable estimates for the economic securities markets that existed prior to also banking entities under the 2013 effects of the proposed amendments. For enactment of section 13 of the BHC Act rule, which likely influenced these example, the SEC lacks information and and the implementation of the 2013 entities’ decisions about how to comply data on how market participants may rule. For example, the role of dealers in with the 2013 rule.284 The Federal choose to restructure their relationships intermediating trading activity has banking agencies also issued policy with various types of entities in changed in important ways, including statements in 2017 and 2019 with response to the proposed amendments; respect to foreign excluded funds.285 the following: (1) In recent years, on the amount of capital formation in Although the 2013 rule also included both an absolute and relative basis, bank covered funds that does not occur restrictions on proprietary trading and dealers generally committed less capital because of current covered fund compliance requirements (as modified to intermediation activities while non- provisions, including those concerning by the 2019 amendments), the most bank dealers generally committed more, the definition of covered fund, relevant portion of the 2013 rule for although not always in the same manner restrictions on relationships with establishing an economic baseline is or on the same terms as bank dealers; (2) covered funds, the definition of that involving covered fund the volume and profitability of certain ownership interest, and the exclusion restrictions.286 The features of the trading activities after the financial for loan securitizations; the volume of regulatory framework under the 2013 crisis may have decreased for bank loans, guarantees, securities lending, rule most relevant to the baseline dealers while it may have increased for and derivatives activity dealers may include the definition of the term other intermediaries, including non- wish to engage in with related covered bank entities that provide intraday funds; as well as the extent of risk 283 See supra note 267. liquidity, but generally not overnight reduction associated with the covered 284 See id. liquidity, using sophisticated electronic fund provision of the 2013 rule. Where 285 See, e.g., Board of Governors of the Federal trading algorithms and high speed the SEC cannot quantify the relevant Reserve System, Statement regarding Treatment of economic effects, they are discussed in Certain Foreign Funds under the Rules access to data and trading venues; and Implementing Section 13 of the Bank Holding (3) the introduction of alternative credit qualitative terms. Company Act (July 17, 2019), available at https:// markets, including non-bank direct www.federalreserve.gov/newsevents/pressreleases/ lending markets, may have contributed 282 See U.S Sec. & Exch. Comm’n, Access to files/bcreg20190717a1.pdf (‘‘2019 Policy Capital and Market Liquidity (Aug. 2017) (‘‘SEC Statement’’). to liquidity fragmentation across Report 2017’’). 286 See 2019 amendments at 61974.

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‘‘covered fund’’; restrictions on a certain relationships. Banking entities fund.293 The 2013 rule defines an banking entity’s relationships with that serve, directly or indirectly, as the ‘‘ownership interest’’ in a covered fund covered funds; and restrictions on investment manager, adviser, or sponsor to mean any equity, partnership, or parallel investment, co-investment, and to a covered fund are prohibited from other similar interest. Under the 2013 investments in the fund by banking engaging in a ‘‘covered transaction,’’ as rule, ‘‘other similar interest’’ is defined entity employees. defined in section 23A of the Federal as an interest that: (A) Has the right to participate in the Scope of the Covered Fund Definition Reserve Act, with the covered fund or with any other covered fund that is selection or removal of a general The definition of ‘‘covered fund’’ controlled by such covered fund.290 partner, managing member, member of impacts the scope of the substantive Similarly, a banking entity that the board of directors or trustees, prohibitions on banking entities organizes and offers a covered fund investment manager, investment acquiring or retaining an ownership pursuant to § l.11 or that continues to adviser, or commodity trading advisor interest in, sponsoring, and having hold an ownership interest in a covered of the covered fund (excluding the certain relationships with, covered fund in accordance with § l.11(b) is rights of a creditor to exercise remedies funds. The covered fund provisions of prohibited from engaging in such a upon the occurrence of an event of the 2013 rule may reduce the ability and ‘‘covered transaction.’’ This prohibits all default or an acceleration event); incentives of banking entities to bail out ‘‘covered transactions’’ that cause the (B) Has the right under the terms of affiliated funds to mitigate reputational banking entity to have credit exposure the interest to receive a share of the risk, limit conflicts of interest with to the affiliated covered fund, including income, gains or profits of the covered clients, customers, and counterparties, short-term extensions of credit, and fund; and reduce the ability of banking various other transactions required for a (C) Has the right to receive the entities to engage in proprietary trading banking entity to provide an affiliated underlying assets of the covered fund indirectly through funds. The 2013 rule covered fund payment, clearing, and after all other interests have been defines covered funds, in part, as issuers settlement services. redeemed and/or paid in full (excluding that would be investment companies the rights of a creditor to exercise but for section 3(c)(1) or 3(c)(7) of the Definition of ‘‘Banking Entity’’ remedies upon the occurrence of an Investment Company Act and then For foreign banking entities,291 certain event of default or an acceleration excludes specific types of entities from funds organized under foreign law and event); the definition. The definition also offered to foreign investors (‘‘foreign (D) Has the right to receive all or a includes certain commodity pools as excluded funds’’) are not ‘‘covered portion of excess spread (the positive well as certain foreign funds. Funds that funds’’ under the 2013 rule, but may be difference, if any, between the aggregate rely on the exclusions in sections 3(c)(1) subject to the 2013 rule as ‘‘banking interest payments received from the or 3(c)(7) of the Investment Company entities’’ under certain circumstances. underlying assets of the covered fund Act are covered funds unless an The banking agencies (in consultation and the aggregate interest paid to the exclusion from the covered fund with the staffs of the SEC and the CFTC) holders of other outstanding interests); definition is available. Funds that rely have provided temporary relief for (E) Provides under the terms of the on any exclusion or exemption from the qualifying foreign excluded funds that interest that the amounts payable by the definition of ‘‘investment company’’ will expire in July 2021.292 covered fund with respect to the interest under the Investment Company Act, could be reduced based on losses arising other than the exclusion contained in Definition of ‘‘Ownership Interest’’ from the underlying assets of the section 3(c)(1) or 3(c)(7), such as real The 2013 rule prohibits a banking covered fund, such as allocation of estate and mortgage funds that rely on entity, as principal, from directly or losses, write-downs or charge-offs of the the exclusion in section 3(c)(5)(C), are indirectly acquiring or retaining an outstanding principal balance, or not covered funds under the 2013 ‘‘ownership interest’’ in a covered reductions in the amount of interest due rule.287 and payable on the interest; The broad definition of covered funds 290 See 2013 rule § l.14(a). (F) Receives income on a pass-through encompasses many different types of 291 For purposes of this analysis, ‘‘foreign banking vehicles, and the 2013 rule excludes entity’’ has the same meaning as used in the 2019 basis from the covered fund, or has a some of them from the definition of a Policy Statement, i.e., a banking entity that is not— rate of return that is determined by covered fund.288 The excluded fund and is not controlled directly or indirectly by a reference to the performance of the banking entity that is—located in or organized types relevant to the baseline are funds underlying assets of the covered fund; under the laws of the United States or any state. or that are regulated by the SEC under the 292 See 2019 Policy Statement. For purposes of Investment Company Act: RICs and the 2019 Policy Statement, a ‘‘qualifying foreign (G) Any synthetic right to have, BDCs. Seeding vehicles for these funds excluded fund’’ means, with respect to a foreign receive, or be allocated any of the rights 294 are also excluded from the covered fund banking entity, a banking entity that (1) is organized above. or established outside the United States and the The 2013 rule permits a banking definition during their seeding ownership interests of which are offered and sold period.289 solely outside the United States; (2) would be a entity to acquire and retain an covered fund were the entity organized or ownership interest in a covered fund Restrictions on Relationships Between established in the United States, or is, or holds itself that the banking entity organizes and Banking Entities and Covered Funds out as being, an entity or arrangement that raises offers pursuant to section l.11, but money from investors primarily for the purpose of Under the baseline, banking entities investing in financial instruments for resale or other limits such ownership interests to three are limited in the types of transactions disposition or otherwise trading in financial percent of the total number or value of in which they are able to engage with instruments; (3) would not otherwise be a banking the outstanding ownership interests of covered funds with which they have entity except by virtue of the foreign banking such fund (the per-fund limit).295 entity’s acquisition or retention of an ownership interest in, or sponsorship of, the entity; (4) is 287 See 2013 rule § l.10(c)(12)(ii). established and operated as part of a bona fide asset 293 2013 rule § l.10(a). 288 The exclusions from the covered fund management business; and (5) is not operated in a 294 2013 rule § l.10(d)(6)(i). definition are set forth in § l.10(c) of the 2013 rule. manner that enables the foreign banking entity to 295 2013 rule § l.12(a) (1)(ii) and 289 See 2013 rule § l.10(c)(12) (i) and evade the requirements of section 13 or § l.12(a)(2)(ii)(A). The 2013 rule also requires that § l.10(c)(12)(iii). implementing regulations. Continued

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Loan Securitizations side by side in substantially the same The sections that follow discuss rule As discussed above, section 13 of the positions as a covered fund, then the provisions currently in effect, how each BHC Act provides a rule of construction value of such investments shall be proposed amendment would change that explicitly allows the sale and included for purposes of determining those provisions, and the anticipated securitization of loans as otherwise the value of the banking entity’s costs and benefits of the proposed permitted by law.296 Accordingly, the investment in the covered fund.’’ 301 amendments, subject to the caveat that 2013 rule excludes from the covered The agencies also stated that a banking not all anticipated costs and benefits fund definition entities that issue asset- entity that sponsors a covered fund can be meaningfully quantified. backed securities and meet specified should not make any additional side-by- b. Affected Participants conditions, including that they hold side co-investment with the covered only loans, certain rights and assets, and fund in a privately negotiated The SEC-regulated entities directly a small set of other financial investment unless the value of such co- affected by the proposed amendments instruments (permissible assets).297 In investment is less than 3% of the value include broker-dealers, security-based addition, the baseline includes the of the total amount co-invested by other swap dealers, and investment advisers. 302 FAQs issued by agencies’ staff in June investors in such investment. The The 2013 rule, as amended in 2019, 2014 regarding the servicing asset 2019 amendments eliminated the imposed a range of restrictions and provision of the loan securitization aggregate fund limit and capital compliance obligations on banking l exclusion, as discussed in section III.B.2 deduction requirement under § .12(d) entities with respect to their covered above. for the value of ownership interests in fund activities and investments. To the Public Welfare and SBIC Exclusions third-party covered funds (e.g., covered degree that the proposed amendments funds that banking entities do not Under the 2013 rule, issuers in the reduce or otherwise alter the scope of organize or offer), acquired or retained private funds subject to covered fund business of making investments that are as a result of certain underwriting or restrictions, SEC-registered banking designed primarily to promote the market-making activities. However, the entities, including broker-dealers, public welfare, of the type permitted 2019 amendments did not change or security-based swap dealers, and under paragraph (11) of section 5136 of amend the application of the per-fund investment advisers may be affected by the Revised Statutes of the United States limit or aggregate funds limit to co- 298 the proposal. (12 U.S.C. 24), are excluded from the investments alongside a covered fund. covered fund definition. Similarly, the Broker-Dealers 305 2013 rule excludes from the covered For purposes of calculating the aggregate fund limit and capital fund definition small business Under the 2013 rule, some of the deduction requirement, the 2013 rule investment companies (SBICs) and largest SEC-regulated broker-dealers are requires attribution to a banking entity issuers that have received notice from banking entities. Table 1 reports the with respect to restricted profit interests the Small Business Administration to number, total assets, and holdings of in a covered fund for which the banking proceed to qualify for a license as a broker-dealers affiliated with banks and entity serves as investment manager, SBIC and for which the notice or license broker-dealers that are not. has not been revoked.299 investment adviser, commodity trading advisor, or other service provider.303 While the 3,504 domestic broker- Attribution of Certain Investments to a Under the 2013 rule, for purposes of dealers that are not affiliated with banks Banking Entity calculating a banking entity’s greatly outnumber the 198 banking As discussed above, the 2013 rule compliance with the aggregate fund entity broker-dealers subject to the 2013 includes a per fund limit and aggregate limit and the capital deduction rule, banking entity broker-dealers fund limit on a banking entity’s requirement, a banking entity must dominate non-banking entity broker- ownership of covered funds that the include any amounts paid by the dealers in terms of total assets (73% of banking entity organizes and offers.300 banking entity or an employee in total broker-dealer assets) and aggregate The preamble to the 2013 rule stated, connection with obtaining a restricted holdings (68% of total broker-dealer ‘‘[I]f a banking entity makes investments profit interest in the covered fund.304 holdings).

TABLE 1—BROKER-DEALER COUNT, ASSETS, AND HOLDINGS BY AFFILIATION

Holdings Broker-dealer affiliation Number Total assets, Holdings, (alternative), $mln 306 $mln 307 $mln 308

Affected bank broker-dealers 309 ...... 198 3,340,366 804,354 640,779 Non-bank broker-dealers 310 ...... 3,504 1,242,246 385,137 218,777

the aggregate value of all ownership interests of a 300 2013 rule § l.12(a). FR Y–9C for domestic holding companies on a banking entity and its affiliates in all covered funds 301 2013 rule adopting release at 5734. consolidated basis and Report of Condition and l acquired or retained under § .12 may not exceed 302 Id. Income for banks regulated by the Board, FDIC, and three percent of the tier 1 capital of the banking OCC for the most recent available four-quarter 303 2013 rule § l.10(d)(6)(ii); § l.12(c)(1), (d); entity. 2013 rule § l.12(a)(2)(iii) (the aggregate average, as well as data from S&P Market See also 12 U.S.C. 1851(d)(1)(G). funds limit). Intelligence LLC on the estimated amount of global 304 296 13 U.S.C. 1851(g)(2). See supra section III.B.2. 2013 rule § l.12(c)(1), (d). trading activity of U.S. and non-U.S. bank holding 297 See 2013 rule § l.10(c)(8). Loan is further 305 These estimates differ from those in the companies. Broker-dealer bank affiliations were defined as any loan, lease, extension of credit, or EGRRCPA Conforming Amendments Adopting obtained from the Federal Financial Institutions secured or unsecured receivable that is not a Release, as these estimates rely on more recent data Examination Council’s (FFIEC) National security or derivative. § l.2(t). and information about both U.S. and global trading Information Center (NIC). Broker-dealer assets and 298 See 2013 rule § l.10(c)(11)(ii). assets and liabilities of bank holding companies. holdings were obtained from FOCUS Report data 299 See 2013 rule § l.10(c)(11)(i). This analysis is based on data from Reporting Form for Q3 2019.

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TABLE 1—BROKER-DEALER COUNT, ASSETS, AND HOLDINGS BY AFFILIATION—Continued

Holdings, Holdings Broker-dealer affiliation Number Total assets, (alternative), $mln 306 $mln 307 $mln 308

Total ...... 3,702 4,582,612 1,189,491 859,556

Security-Based Swap Dealers of the analysis of TIW data, the SEC the proposed amendments. Using Form The proposed amendments may also estimates that none of the entities that ADV data, Table 2 reports the number affect bank-affiliated SBSDs. As may register with the SEC as Major of RIAs advising private funds by fund compliance with SBSD registration Security-Based Swap Participants are type, as those types are defined in Form requirements is not yet required, there affected by the final rule. ADV.315 Private funds rely on either are currently no registered SBSDs. Importantly, because registration is section 3(c)(1) or 3(c)(7) of the However, the SEC has previously not yet required, compliance with Investment Company Act and so meet estimated that as many as 50 entities capital and other substantive the 2013 rule’s definition of ‘‘covered may potentially register with the SEC as requirements for SBSDs under Title VII fund.’’ Table 3 reports the number and security-based swap dealers and that as of the Dodd-Frank Act is also not yet gross assets of private funds advised by many as 16 may already be SEC- required.313 The SEC recognizes that RIAs and separately reports these registered broker-dealers.311 Given the firms may choose to move security- statistics for banking entity RIAs. As can analysis of DTCC Derivatives Repository based swap trading activity into (or out be seen from Table 2, the two largest Limited Trade Information Warehouse of) an affiliated bank or an affiliated categories of private funds advised by (‘‘TIW’’) transaction and positions data broker-dealer instead of registering as a RIAs are hedge funds and private equity on single-name credit-default swaps and standalone SBSD if bank or broker- funds.316 consistent with other recent SEC dealer capital and other regulatory rulemakings, the SEC preliminarily requirements are less (or more) costly Banking entity RIAs advise a total of believes that 41 entities that may than those that may be imposed on 4,274 private funds with approximately register with the SEC as SBSDs are SBSDs under Title VII. As a result, the $1.97 trillion in gross assets. From Form bank-affiliated firms, including those above figures may overestimate or ADV data, banking entity RIAs’ gross that are SEC-registered broker-dealers. underestimate the number of SBSDs that private fund assets under management Therefore, the SEC preliminarily are not broker-dealers and that may are concentrated in hedge funds and estimates that, in addition to the bank- become SEC-registered entities affected private equity funds. The SEC estimates affiliated SBSDs that are already by the proposed amendments. on the basis of this data that banking registered as broker-dealers and entity RIAs advise 879 hedge funds with Private Funds and Private Fund included in the discussion above, as approximately $668 billion in gross Advisers 314 many as 25 other bank-affiliated SBSDs assets and 1,430 private equity funds may be affected by the proposed This section describes RIAs advising with approximately $397 billion in amendments.312 Similarly, on the basis private funds that may be affected by assets.

306 Broker-dealer total assets are based on FOCUS 314 These estimates are calculated from Form a hedge fund, liquidity fund, real estate fund, report data for ‘‘Total Assets.’’ ADV data as of September 30, 2019. An investment securitized asset fund, or venture capital fund and 307 Broker-dealer holdings are based on FOCUS adviser is defined as a ‘‘private fund adviser’’ for does not provide investors with redemption rights report data for securities and spot commodities the purposes of this economic analysis if it in the ordinary course.’’ See Form ADV: owned at market value, including bankers’ indicates that it is an adviser to any private fund Instructions for Part 1A, Instruction 6. For purposes acceptances, certificates of deposit and commercial on Form ADV Item 7.B. An investment adviser is of Form ADV, ‘‘hedge fund’’ is defined as ‘‘any paper, state and municipal government obligations, defined as a ‘‘banking entity RIA’’ if it indicates on private fund (other than a securitized asset fund): corporate obligations, stocks and warrants, options, Form ADV Item 6.A.(7) that it is actively engaged (a) with respect to which one or more investment arbitrage, other securities, U.S. and Canadian in business as a bank, or it indicates on Form ADV advisers (or related persons of investment advisers) Item 7.A.(8) that it has a ‘‘related person’’ that is government obligations, and spot commodities. may be paid a performance fee or allocation a banking or thrift institution. For purposes of Form 308 This alternative measure excludes U.S. and calculated by taking into account unrealized gains ADV, a ‘‘related person’’ is any advisory affiliate Canadian government obligations and spot (other than a fee or allocation the calculation of commodities. and any person that is under common control with the adviser. The definition of ‘‘control’’ for which may take into account unrealized gains 309 This category includes all bank-affiliated purposes of Form ADV, which is used in solely for the purpose of reducing such fee or broker-dealers except those exempted by section identifying related persons on the form, differs from allocation to reflect net unrealized losses); (b) that 203 of EGRRCPA. the definition of ‘‘control’’ under the BHC Act. In may borrow an amount in excess of one-half of its 310 This category includes both bank affiliated addition, this analysis does not exclude SEC- net asset value (including any committed capital) or broker-dealers subject to section 203 of EGRRCPA registered investment advisers affiliated with banks may have gross notional exposure in excess of twice and broker-dealers that are not affiliated with banks that have consolidated total assets less than or equal its net asset value (including any committed or holding companies. to $10 billion and trading assets and liabilities less capital); or (c) that may sell securities or other 311 See Recordkeeping and Reporting than or equal to 5% of total assets. Those banks are assets short or enter into similar transactions (other Requirements for Security-Based Swap Dealers, no longer subject to the requirements of the 2013 than for the purpose of hedging currency exposure Major Security-Based Swap Participants, and rule following enactment of the EGRRCPA. Thus, or managing duration). Broker-Dealers, 84 FR 68550, 68607 (Dec. 16, 2019) these figures may overestimate or underestimate the 317 This table includes only the advisers that list (‘‘Recordkeeping and Reporting Adopting Release’’). number of banking entity RIAs. private funds on Section 7.B.(1) of Form ADV. The 312 See id. 315 RIAs may also advise foreign public funds that number of advisers in the ‘‘Any Private Fund’’ row 313 See Capital, Margin, Segregation Adopting are excluded from the covered fund definition in is not the sum of the rows that follow since an Release at 43954. See also Rule Amendments and the 2013 rule, are the subject of proposed adviser may advise multiple types of private funds. Guidance Addressing Cross-Border Application of amendments discussed below, and are not reported Each listed private fund type (e.g., real estate funds Certain Security-Based Swap Requirements, on Form ADV. and liquidity funds) is defined in Form ADV, and Exchange Act Release No. 34–87780 (Dec. 18, 2019) 316 For purposes of Form ADV, ‘‘private equity those definitions are the same for purposes of the (‘‘Cross Border Amendments Adopting Release’’). fund’’ is defined as ‘‘any private fund that is not SEC’s Form PF.

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TABLE 2—SEC-REGISTERED INVESTMENT ADVISERS ADVISING PRIVATE FUNDS BY FUND TYPE 317

Banking Fund type All RIA entity RIA

Hedge Funds ...... 2,695 149 Private Equity Funds ...... 1,707 96 Real Estate Funds ...... 540 52 Securitized Asset Funds ...... 226 44 Venture Capital Funds ...... 207 8 Liquidity Funds ...... 47 15 Other Private Funds ...... 1,071 143

Total Private Fund Advisers ...... 4,854 285

TABLE 3—THE NUMBER AND GROSS ASSETS OF PRIVATE FUNDS ADVISED BY SEC-REGISTERED INVESTMENT ADVISERS 318

Number of private funds Gross assets, $bln Fund type Banking Banking All RIA entity RIA All RIA entity RIA

Hedge Funds ...... 10,602 879 7,478 668 Private Equity Funds ...... 15,144 1,430 3,541 397 Real Estate Funds ...... 3,546 321 656 100 Securitized Asset Funds ...... 1,836 355 674 131 Venture Capital Funds ...... 1,286 43 158 3 Liquidity Funds ...... 89 29 1,339 195 Other Private Funds ...... 4,505 1,218 1,386 478

Total Private Funds ...... 37,002 4,274 15,231 1,971

In addition, the SEC’s economic and BDCs are generally not themselves amendments would provide relief with analysis is informed by private fund banking entities subject to the 2013 rule, respect to banking entity investments in statistics submitted by certain RIAs of they may be indirectly affected by the SBICs during the wind-down process by private funds through Form PF as 2013 rule and the proposed excluding from the definition of summarized in quarterly ‘‘Private Fund amendments, for example, if their ‘‘covered fund’’ those SBICs.323 While Statistics.’’ 319 sponsors or advisers are banking the SEC does not have data to quantify the number of SBICs undergoing wind- Registered Investment Companies and entities. For instance, bank-affiliated down, trends in the number of SBIC Business Development Companies RIAs or their affiliates may reduce their level of investment in the RICs or BDCs licenses can be indicative of the The baseline also reflects the potential they advise, or potentially close those turnover in the total number of SBIC that a registered investment company funds, to eliminate the risk of those licensees. For example, according to (RIC) or a business development funds becoming banking entities SBA data, there were 302 SBIC licensees company (BDC) would be treated as a themselves. as of June 30, 2019 324 and 300 SBIC banking entity where the RIC or BDC’s licensees as of September 30, 2019.325 sponsor is a banking entity that holds Small Business Investment Companies By contrast, as of June 30, 2017, there 25% or more of the RIC or BDC’s voting Small business investment companies were 315 SBICs licensed by the SBA.326 320 securities after a seeding period. On (SBICs) are generally ‘‘privately owned the basis of SEC filings and public data, and managed investment funds, has not been revoked, or (C) an applicant that is the SEC estimates that, as of September affiliated with 1 or more licensed small business licensed and regulated by the Small investment companies described in subparagraph 2019, there were approximately 15,500 Business Administration (SBA), that use 321 (A) and that has applied for another license under RICs and 106 BDCs. Although RICs their own capital plus funds borrowed the SBIA, which application remains pending. with an SBA guarantee to make equity 323 Specifically, the proposed amendments would 318 Gross assets include uncalled capital and debt investments in qualifying exclude from the definition of ‘‘covered fund’’ any commitments on Form ADV. SBIC that has voluntarily surrendered its license to 322 319 See U.S. Securities and Exchange small businesses.’’ The proposed operate as an SBIC in accordance with 13 CFR Commission, Division of Investment Management 107.1900 and does not make any new investments Analytics Office, Private Fund Statistics, First 322 See U.S. Small Business Administration, SBIC (with some exceptions) after such voluntary Calendar Quarter 2019, (Oct. 25, 2019), available at Program Overview, available at https:// surrender. Proposed rule § __.10(c)(11)(i). https://www.sec.gov/divisions/investment/private- www.sba.gov/content/sbic-program-overview. 324 See U.S. Small Business Administration, SBIC funds-statistics/private-funds-statistics-2019-q1.pdf. Pursuant to Advisers Act section 203(b)(7), an Program Overview as of June 30, 2019, available at Statistics for preceding quarters are available at SBIC is (other than an entity that has elected to be https://www.sba.gov/sites/default/files/2019-09/ https://www.sec.gov/divisions/investment/private- regulated or is regulated as a business development SBIC%20Quarterly%20Report%20as%20of%20 funds-statistics.shtml. company pursuant to section 54 of the Investment June_30_2019.pdf. 320 See, e.g., 2019 amendments at 61979. Company Act of 1940): (A) A small business 325 See U.S. Small Business Administration, SBIC 321 This estimate includes open-end companies, investment company that is licensed under the Program Overview as of September 30, 2019, exchange-traded funds, closed-end funds, and non- Small Business Investment Act of 1958 (‘‘SBIA’’), available at https://www.sba.gov/sites/default/files/ insurance unit investment trusts and does not (B) an entity that has received from the Small 2019-11/SBIC%20Quarterly%20Report%20as%20 include fund of funds. The inclusion of fund of Business Administration notice to proceed to of%20September_30_2019.pdf. funds increases this estimate to approximately qualify for a license as a small business investment 326 See U.S. Small Business Administration, SBIC 17,000. company under the SBIA, which notice or license Quarterly Report as of March, 31 2017, available at

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The agencies are requesting comment 90 percent of their assets in designated amendments permit banking entities to on whether they should provide relief to low-income zones.333 In this regard, provide a full range of traditional rural business investment companies QOFs are similar to SBICs and public customer-facing banking and asset (‘‘RBICs’’) from the 2013 rule that is welfare companies. The agencies are management services to certain entities, similar to the relief provided to requesting comment on whether they such as customer facilitation vehicles SBICs.327 As the SEC has discussed should provide relief to QOFs from the and family wealth management elsewhere,328 an RBIC is defined in 2013 rule that is similar to the relief vehicles. Fifth, to the extent that the Section 384A of the Consolidated Farm provided to SBICs.334 SEC staff are not proposed amendments impact and Rural Development Act as a aware of an official source for data efficiency, competition, and capital company that is approved by the regarding QOFs that are available for formation in covered funds or Secretary of Agriculture and that has investment, but some private firms underlying securities, investors in, and entered into a participation agreement collect and report such data. One such sponsors of, covered funds and with the Secretary.329 Because SBICs firm reports that, as of January 2020, underlying securities and issuers may and RBICs share the common purpose of there were 292 QOFs that report raising be affected as well. promoting capital formation in their $6.72 billion in equity, and have a As discussed below, careful respective sectors, advisers to SBICs and fundraising goal of $27.9 billion.335 consideration was given to the RBICs are treated similarly under the competing effects that could potentially 3. Costs and Benefits Advisers Act in that they have the result from the proposed amendments opportunity to take advantage of Section 13 of the BHC Act generally and alternatives. For example, the expanded exemptions from investment prohibits banking entities from proposed amendments could result in adviser registration.330 As of August acquiring or retaining an ownership enhanced competition among, and 2019, there were 5 RBICs who were interest in, sponsoring, or having certain capital formation driven by, entities that licensed by the USDA managing relationships with covered funds, would be treated as covered funds approximately $352 million in assets.331 subject to certain exemptions.336 The under the 2013 rule. The proposed The Tax Cuts and Jobs Act established SEC’s economic analysis concerns the amendments could also potentially the ‘‘opportunity zone’’ program to potential costs, benefits, and effects on increase (or decrease) moral hazard and provide tax incentives for long-term efficiency, competition, and capital other financial risks posed by investing in designated economically formation of the proposed amendments investments in covered funds; however, distressed communities.332 The program for five groups of market participants. the agencies have sought to mitigate the allows taxpayers to defer and reduce First, the proposed amendments may potential for increased risk and other taxes on capital gains by reinvesting impact SEC-registered investment concerns by imposing various gains in ‘‘qualified opportunity funds’’ advisers that are banking entities, conditions on the proposed exclusions (QOFs) that are required to have at least including those that sponsor or advise designed to address such risks. To the covered funds and those that do not, as extent that the current covered fund https://www.sba.gov/sites/default/files/files/ well as SEC-registered investment provisions limit fund formation, the Quarterly_Data_as_of_March_31_2017_0.pdf. advisers that are not banking entities proposed amendments and other 327 Under the implementing regulations, an SBIC that sponsor or advise covered funds amendments on which the agencies seek is excluded from the ‘‘covered fund’’ definition. See 2013 rule § l.10(c)(11)(i). and compete with banking entity RIAs. comment could provide greater ability 328 See Amending the ‘‘Accredited Investor’’ Second, the proposed amendments for banking entities to organize funds Definition, 85 FR 2574 (Jan. 15, 2020) (‘‘Accredited would permit dealers greater flexibility and attract capital from third party Investor Definition Proposing Release’’). in providing services to more types of investors, which could increase 329 See the RBIC Advisers Relief Act of 2018, funds since dealers could provide a Public Law 115–417 (2019) (the ‘‘RBIC Advisers revenues for banking entities while Relief Act’’). To be eligible to participate as an broader array of services to funds that reducing long-term compliance costs; RBIC, the company must be a newly formed for- would be excluded from the covered increase the availability of venture, profit entity or a newly formed for-profit subsidiary fund definition. Third, banking entities credit, and other financing, including of such an entity, have a management team with experience in community development financing or that are broker-dealers or RIAs may for small businesses and start-ups; and, relevant venture capital financing, and invest in enjoy reduced uncertainty and greater as a result, increase capital formation. enterprises that will create wealth and job flexibility with respect to direct The SEC is not currently aware of any opportunities in rural areas, with an emphasis on investments they make alongside information or data that would allow a smaller enterprises. See 7 U.S.C. 2009cc–3(a). covered funds. Fourth, the proposed 330 Following enactment of the RBIC Advisers quantification of the extent to which the Relief Act, advisers to solely RBICs and advisers to amendments may impact private funds covered fund provisions of the 2013 rule solely SBICs are exempt from investment adviser and other vehicles, including those are inhibiting capital formation via registration pursuant to Advisers Act Sections entities scoped in or out of the covered funds. Therefore, the bulk of the 203(b)(8) and 203(b)(7), respectively. The venture fund provisions of the 2013 rule, as well capital fund adviser exemption deems RBICs and analysis below is necessarily qualitative. SBICs to be venture capital funds for purposes of as private funds competing with such To the extent that the current covered the registration exemption 15 U.S.C. 80b–3(l). funds. One such impact may be seen to fund provisions limit alignment of Accordingly, the proposed exclusion for certain the extent that the proposed interests between banking entities and venture capital funds discussed below (see infra text accompanying notes 380 and 381) which would their clients, customers, or require that a fund be a venture capital fund as 333 See U.S. Securities and Exchange Commission counterparties, and to the extent the defined in the SEC regulations implementing the and NASAA, Staff Statement on Opportunity proposed amendments would alter the registration exemption, could include RBICs and Zones: Federal and State Securities Laws alignment of interests, the proposed SBICs to the extent that they satisfy the other Considerations, available at https://www.sec.gov/ _ _ _ elements of the proposed exclusion. 2019 Opportunity-Zones FINAL 508v2.pdf amendments could have a positive or 331 Rural Business Investment Company (‘‘Opportunity Zone Statement’’). negative effect on conflict of interest Applications filed with the USDA. To contact the 334 See supra note 328. concerns. USDA for data about Rural Business Investment 335 As reported by Novogradac, a national The proposed amendments create Company Applications filed with the USDA see professional services organization that collects and new recordkeeping requirements and https://www.rd.usda.gov/programs-services/rural- reports information on QOFs. See https:// business-investment-program. www.novoco.com/resource-centers/opportunity- revise certain disclosure requirements. 332 Tax Cuts and Jobs Act of 2017, Public Law zone-resource-center/opportunity-funds-listing. Specifically, a banking entity may only 115–97, 131 Stat. 2054 (2017). 336 See 12 U.S.C. 1851. rely on the exclusion for customer

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facilitation vehicles if the banking entity foreign excluded funds, foreign public whole.346 The covered fund provisions and its affiliates maintain funds, and loan securitizations). of the 2013 rule, as currently in effect, documentation outlining how the Broadly, such modifications reduce may impose significant costs on some banking entity intends to facilitate the the number and types of funds that are banking entities.347 The breadth of the customer’s exposure to a transaction, within the scope of the 2013 rule, covered fund definition requires market investment strategy or service offered by impacting the economic effects of participants to review a large number of the banking entity. As discussed in section 13 of the BHC Act and the 2013 issuers to determine if they are covered section IV.B 337and below, these new rule.342 funds as defined in the 2013 rule. For recordkeeping burdens may impose an Form ADV data is not sufficiently example, the SEC understands that this initial burden of $1,078,650 338 and an granular to allow the SEC to estimate has included a review of hundreds of ongoing annual burden of the number of funds and fund advisers thousands of CUSIPs issued by common $1,078,650.339 In addition, under certain affected by the different proposed types of securitizations for covered fund 348 circumstances, a banking entity must exclusions from the covered fund status. The need to perform an in- make certain disclosures with respect to definition and other relief on which the depth analysis and make covered funds an excluded credit fund, venture capital agencies are seeking comment. determinations across a large number of fund, family wealth vehicle, or customer However, Table 2 and Table 3 in the entities involves costs and may facilitation vehicle, as if the entity were economic baseline quantify the number adversely affect the willingness of a covered fund. As discussed in section and asset size of private funds advised banking entities to acquire or retain IV.B, these disclosure requirements may by banking entity RIAs by the type of ownership interests in, sponsor, and impose an initial burden of $53,933 340 private fund they advise, as those fund have relationships with entities that and an ongoing burden of $1,402,245.341 types are defined in Form ADV.343 may be treated as covered funds under the 2013 rule. Moreover, the 2013 rule’s Using Form ADV data, the SEC a. Amendments Related to Specific limitations on banking entities’ preliminarily estimates that Types of Funds investment in covered funds may be approximately 149 banking entity RIAs more significant for covered funds that As discussed elsewhere in this advise hedge funds and 96 banking are typically small in size, with SUPPLEMENTARY INFORMATION, the entity RIAs advise private equity funds proposed amendments modify a number potentially more negative spillover (as those terms are defined in Form effects on capital formation in of the provisions of the 2013 rule related ADV).344 As can be seen from Table 2 to the treatment of certain types of funds underlying securities.349 in the economic baseline, 44 banking The proposed amendments could (e.g., credit funds, family wealth entity RIAs advise securitized asset management vehicles, small business reduce the scope of funds that need to funds. Table 3 shows that banking entity be analyzed for covered fund status or investment companies, venture capital RIAs advise 355 securitized asset funds funds, customer facilitation vehicles, could simplify this analysis and enable with $131 billion in gross assets. banking entities to own, sponsor, and Another 52 banking entity RIAs advise 337 For the purposes of the burden estimates in have relationships with the types of this release, we are assuming the cost of $423 per real estate funds, and banking entity entities that the proposed amendments hour for an attorney, from SIFMA’s ‘‘Management RIAs advise 321 real estate funds with would exclude from the covered fund & Professional Earnings in the Securities Industry $100 billion in gross assets. Venture definition. Accordingly, the proposed 2013,’’ modified to account for an 1,800-hour work capital funds are advised by only 8 year and multiplied by 5.35 to account for bonuses, amendments may reduce costs of firm size, employee benefits, and overhead, and banking entity RIAs, and all 43 venture banking entity ownership in, adjusted for inflation. capital funds advised by banking entity sponsorship of, and transactions with 338 In the 2019 amendments, amendments that RIAs have in aggregate approximately certain funds; may promote greater sought, among other things, to provide greater $3 billion in gross assets. clarity and certainty about what activities are capital formation in, and competition prohibited by the 2013 rule—in particular, under As noted elsewhere in this among such funds; and may improve the prohibition on proprietary trading—and to SUPPLEMENTARY INFORMATION, the access to capital for issuers of better tailor the compliance requirements based off covered fund provisions of the 2013 rule underlying debt or equity that possibly of the risk of a banking entity’s activities, banking may limit the ability of banking entities entity PRA-related burdens were apportioned to will be purchased by those funds. SEC-regulated entities on the basis of the average to use covered funds to circumvent the The proposed amendments may also weight of broker-dealer assets in holding company proprietary trading prohibition, reduce benefit banking entity dealers through assets. See 2019 amendments at 62074. SEC staff bank incentives to bail out their covered higher profits or greater demand for preliminarily believe that such an approach would funds, and mitigate conflicts of interest derivatives, margin, payment, clearing, be inappropriate for the PRA-related burdens associated with the proposed amendments because between banking entities and their and settlement services. Reducing we do not have a comparable proxy for an clients, customers, or counterparties. investment adviser’s significance within the However, the covered fund definition is 346 See, e.g., AAF; Credit Suisse; JBA; NVCA; holding company. Since we do not have sufficient broad,345 and some commenters have Chamber. information to determine the extent to which the 347 See, e.g., SIFMA; JBA; ACG; 10 Regional costs associated with any of the new recordkeeping stated that the 2013 rule may limit the ability of banking entities to conduct Banks; BPI; ICI; IIB; ABA; LTSA; SBIA; SFIG 2017. and disclosure requirements would be borne by 348 See comment letters responding to OCC Notice SEC registrants specifically, we report the entire traditional asset management activities Seeking Public Input on the Volcker Rule (Aug. burden estimated based on information in section and reduce the availability of capital to 2017), available at https://www.regulations.gov/ IV.B. docketBrowser?rpp=25&so=DESC&sb=commentDue × entrepreneurs and the market as a Initial recordkeeping burdens: (10 hours) (255 Date&po=0&dct=PS&D=OCC-2017-0014. A × entities) (Attorney at $423 per hour) = $1,078,650. summary of the comment letters is available at 339 Annual recordkeeping burdens: (10 hours) × 342 See, e.g., 2019 amendments at 62037–92. https://occ.gov/topics/capital-markets/financial- (255 entities) × (Attorney at $423 per hour) = 343 These fund types include hedge funds, private markets/trading-volcker-rule/volcker-notice- $1,078,650. equity funds, real estate funds, securitized asset comment-summary.pdf. 340 Initial recordkeeping burdens: (0.5 hours) × funds, venture capital funds, liquidity, and other 349 The median venture capital fund size in some (255 entities) × (Attorney at $423 per hour) = private funds. See supra note 317. locations is approximately $15 million. One fund $53,933. 344 As noted in the economic baseline, a single may have lost as much as $50 million dollars in 341 Annual recordkeeping burdens: (0.5 hours) × RIA may advise multiple types of funds. See supra investment because of the prohibitions of section 13 (255 entities) × (26 disclosures per year) × (Attorney note 318. of the BHC Act and implementing regulations. See at $423 per hour) = $1,402,245. 345 See, e.g., ABA; AAF; FSF; SIFMA; JBA. NVCA.

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restrictions on banking entities by substantively similar to the temporary or systemic risk to the U.S. financial further tailoring the covered fund no-action relief currently provided to system. definition may encourage more qualifying foreign excluded funds.352 Foreign Public Funds launches of funds that are excluded The SEC recognizes that failing to from the definition, capital formation exclude such funds from the definition The 2013 rule excludes from the and, possibly, competition in those of ‘‘banking entity’’ in the 2013 rule covered fund definition any foreign types of funds. If competition increases imposes proprietary trading restrictions, public fund that satisfies three sets of the quality of funds available to covered fund prohibitions, and conditions. First, the issuer must be investors or reduces the fees they are compliance obligations on qualifying organized or established outside of the charged, investors in funds may benefit. foreign excluded funds that may be United States, be authorized to offer and Moreover, to the degree that the more burdensome than the requirements sell ownership interests to retail proposed amendments may increase the that would apply under the 2013 rule to investors in the issuer’s home spectrum of funds available to investors, covered funds. The SEC has also jurisdiction (the ‘‘home jurisdiction’’ the proposal may relax constraints received comment opposing carving out requirement), and sell ownership around investor portfolio optimization qualifying foreign excluded funds from interests predominantly through one or and increase the efficiency of capital the definition of banking entity.353 The more public offerings outside of the allocation. SEC preliminarily believes that, absent United States. Second, for funds that are The sections that follow further the proposed amendments and upon sponsored by a U.S. banking entity, or discuss these possible overarching expiry of the temporary relief, the 2013 by a banking entity controlled by a U.S. economic costs, benefits, and effects of rule may have significant adverse effects banking entity, the ownership interests competition, efficiency, and capital on the ability of foreign banking entities in the issuer must be sold formation with respect to specific types to organize and offer certain private ‘‘predominantly’’ (the ‘‘predominantly’’ of funds and proposed amendments. funds for foreign investments, requirement) to persons other than the Foreign Excluded Funds disrupting foreign asset management sponsoring banking entity, the issuer, Under the baseline, foreign excluded activities. The SEC recognizes that the their affiliates, directors of such entities, funds are excluded from the covered exemption of qualifying foreign or employees of such entities (the fund definition, but could be considered excluded funds from the proprietary employee sales limitation). Third, such banking entities if a foreign banking trading and covered fund prohibitions public offerings must occur outside the entity controls the foreign fund in that apply to ‘‘banking entities’’ may United States, must comply with certain circumstances. As discussed result in increased activity by foreign applicable jurisdictional requirements, above, the federal banking agencies banking entities in organizing and may not restrict availability to investors released a policy statement on July 17, offering such funds, and that such having a minimum level of net worth or 2019, which provides that the federal activity may involve risk for those net investment assets, and must have banking agencies would not propose to banking entities. At the same time, the publicly available offering disclosure take action during the two-year period SEC recognizes a statutory purpose of documents filed or submitted with the ending on July 21, 2021 (i) against a certain portions of section 13 of the BHC relevant jurisdiction. foreign banking entity based on Act is to limit the extraterritorial impact The proposed amendments would attribution of the activities and on foreign banking entities.354 make five changes to the foreign public investments of a qualifying foreign Accordingly, the proposed amendments fund exclusion. First, the proposal excluded fund to the foreign banking may benefit foreign banking entities and would remove the home jurisdiction entity 350 or (ii) against a qualifying their foreign counterparties seeking to requirement.355 Second, the proposal foreign excluded fund as a banking transact with and through such funds. would make the exclusion available entity, in each case where the foreign The proposed amendments may with respect to issuers authorized to banking entity’s acquisition or retention increase the incentive for some foreign offer and sell ownership interests of any ownership interest in, or banking entities seeking to organize and through one or more public offerings, sponsorship of, the qualifying foreign offer qualifying foreign excluded funds removing the requirement that the excluded fund would meet the to reorganize their activities so that issuer sells ownership interests requirements for permitted covered these funds’ activities qualify for the ‘‘predominantly’’ through such public fund activities and investments solely proposed exemptions. The costs and offerings.356 Third, the agencies are also outside the United States, as provided feasibility of such reorganization will proposing to modify the definition of in section 13(d)(1)(I) of the BHC Act and depend on the complexity and existing ‘‘public offering’’ from the 2013 rule to § l.13(b) of the 2013 rule, as if the compliance structures for banking add a new requirement that the qualifying foreign excluded fund were a entities, the degree to which there is distribution is subject to substantive covered fund.351 The proposed unmet demand for investment funds disclosure and retail investor protection amendment would provide a permanent that may be organized as qualifying laws or regulations in one or more exemption from the proprietary trading foreign excluded funds, and the jurisdictions where ownership interests and covered fund prohibitions for profitability of such banking activities. are sold.357 Fourth, the proposal would certain foreign excluded funds that is Importantly, the principal risk of foreign apply the condition that the distribution banking entities’ activities related to comply with all applicable requirements 350 Foreign banking entity was defined for foreign excluded funds generally resides in the jurisdiction where it is made only purposes of the policy statement to mean a banking to instances in which the banking entity entity that is not, and is not controlled directly or outside the United States and is indirectly by, a banking entity that is located in or unlikely to affect negatively the safety serves as the investment manager, organized under the laws of the United States or and soundness of U.S. banking entities investment adviser, commodity trading any State. advisor, commodity pool operator, or 351 See 2019 Policy Statement. This policy statement continued the position of the Federal 352 See proposed rule §§ l.6(f) and l.13(d). banking agencies that was released on July 21, 2017, 353 See Data Boiler. 355 See proposed rule § l.10(c)(1)(i)(B). and the position that the agencies expressed in the 354 See supra note 30 and the referencing 356 See proposed rule § l.10(c)(1)(i)(B). 2018 proposal. paragraph. 357 See proposed rule § l.10(c)(1)(iii)(A).

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sponsor.358 Finally, the proposal would listed on exchanges, or sold through less relief with respect to foreign public narrow the employee sales limitation to third-party intermediaries or funds. For example, the agencies could senior executive officers as defined in distributors.365 To the degree that some have proposed eliminating altogether section 225.71(c) of the Board’s banking entities are currently unable to the limit on sales to affiliated entities, Regulation Y.359 quantify the volumes of distributions directors and employees, which would The SEC has received comments through foreign public offerings relative have provided even greater alignment of indicating that the foreign public fund to, for instance, foreign private treatment between foreign public funds exclusion under the 2013 rule is placements, the proposed amendment and RICs.370 Alternatives providing impractical, overly narrow, and may enable greater activity of banking greater relief with respect to foreign prescriptive, and results in competitive entities relating to foreign public funds. public funds may facilitate greater disparities between foreign public funds Similar to the above discussion, this banking entity activity and and RICs.360 The SEC has also received aspect of the proposed amendment also intermediation of such funds on the one comment supporting the preservation of provides for a similar treatment of RICs hand, but they may also strengthen the the existing conditions of the (which are not required to monitor or competitive positioning of foreign exclusion.361 assess distributions) and foreign public public funds relative to U.S. registered The SEC has received comment that funds, with corresponding competitive funds. Moreover, providing greater relief the home jurisdiction requirement effects. with respect to foreign public funds may under the 2013 rule is narrow and fails The proposed amendments to the allow banking entities greater flexibility to recognize the prevalence of non-U.S. foreign public funds provisions tailor in the formation and operation of retail funds organized in one the scope of disclosure and compliance foreign public funds, but may also jurisdiction and authorized to sell obligations for those jurisdictions where increase the risk that banking entities interests in other jurisdictions.362 For ownership interests are sold in are able to use foreign public funds to example, the SEC received comment recognition of the prevalence of foreign engage in activities that the restrictions that a banking entity sponsor may retail fund sales across jurisdictions. on covered funds were intended to choose the domicile of a foreign public Similarly, the proposal would limit the prohibit, thereby reducing the fund based on tax treatment, investment compliance obligation to settings in magnitude of the expected economic strategy, or flexibility to distribute into which the banking entity serves as the benefits of section 13 of the BHC Act multiple markets (for instance, in the investment manager, investment and the 2013 rule. Similarly, relative to European Union).363 The SEC adviser, commodity trading advisor, the proposed amendments, alternatives recognizes that the home jurisdiction commodity pool operator, or sponsor— providing less relief with respect to requirement may be impeding activity settings that may involve greater foreign public funds may strengthen the in foreign public funds that are conflicts of interest between banking competitive positioning of U.S. RICs organized and sold across different entities and fund investors. relative to foreign public funds and pose jurisdictions. While such offerings may The proposed amendments also lower compliance or evasion risks, but not be subject to the laws and would replace the employee sales may also reduce the benefits of the relief regulations of the foreign public fund’s limitation with a limitation on sales to for capital formation in foreign public home jurisdiction, they are subject to senior officers.366 The SEC has received funds and their investors. the local laws and regulations of the comment that banking entities may face Credit Funds jurisdictions in which the foreign public significant costs and logistical and fund is authorized to sell ownership interpretive challenges monitoring Under the baseline, funds that raise interests. The elimination of the home investments by their employees, capital to engage in loan originations or jurisdiction requirement may benefit including those who transact in fund extensions of credit or purchase and such foreign public funds and may shares through unaffiliated brokers or hold debt instruments that a banking facilitate greater capital formation through independent exchange entity would be permitted to acquire through such funds, with the potential trading.367 The SEC has also received directly may be ‘‘covered funds’’ under to create more capital allocation choices comment that the employee sales the 2013 rule. As a result, banking for investors. To the degree that the limitation serves no discernible anti- entities currently face limitations on 2013 rule may currently be evasion purpose.368 In addition, sponsoring or investing in credit funds disadvantaging foreign public funds commenters noted that employee that engage in traditional banking relative to otherwise comparable RICs, ownership interest can be a meaningful activities—activities that banking the elimination of the home jurisdiction mechanism of promoting incentive entities are able to engage in directly requirement may dampen such alignment.369 The proposed outside of the fund structure. Banking competitive disparities. amendments would replace the entities may also be restricted in their The SEC has also received comment employee sales limitation with a relationships with credit funds that are that the ‘‘predominantly’’ requirement corresponding sales limitation with related covered funds, as well as in their has been burdensome and poses respect only to senior officers. This underwriting and market making significant compliance burdens.364 For change may reduce these reported activities relating to such funds. The example, banking entities may not fully compliance challenges and burdens proposal would create a separate observe and predict both historical and while preserving in part the original exclusion from the covered fund potential future distributions of funds anti-evasion purpose of the limitations definition for credit funds that meet that are sponsored by third parties, on employee ownership. certain conditions, including several The agencies could have proposed a conditions that are similar to certain 358 See proposed rule § l.10(c)(1)(iii)(B). variety of alternatives offering more or conditions of the loan securitization 359 See proposed rule § l.10(c)(1)(ii)(D). exclusion, but that reflect the structure 360 See, e.g., ABA; BPI; FSF; SIFMA; ICI; IIB; JPMAM. 365 See id. and operation of credit funds. 361 See, e.g., Data Boiler. 366 See proposed rule § l.10(c)(1)(ii)(D). Credit funds are likely to carry similar 362 See, e.g., ABA; BPI. 367 See, e.g., SIFMA; JPMAM. returns and risks as direct extensions of 363 See, e.g., FSF; SIFMA. 368 See id. 364 See, e.g., BPI. 369 See BPI. 370 See, e.g., FSF.

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credit and loan origination outside of exclusions are not sufficient to conditions on the credit fund exclusion, the fund structure, including the accommodate the full range of credit including limitations on banking possibility of losses or gains related to funds and activities.376 entities’ guarantees, assumption or other changes in interest rates, borrower The SEC preliminarily believes that insurance of the obligations or default or delinquent payments, the proposed credit fund exclusion may performance of the fund,377 and fluctuations in foreign currencies, and allow banking entities to engage, compliance with applicable safety and overall market conditions. While the indirectly, in more loan origination and soundness standards.378 presence of a fund structure may traditional extension of credit relative to Importantly, extensions of credit and introduce risks, e.g., those related to the current baseline. To the degree that loan origination by banking entities, governance of the fund and those banking entities are currently whether directly or indirectly, are related to relying on third-party constrained in their ability to engage in influenced by a wide variety of factors, investors providing capital to the fund, extension of credit through credit funds including the prevailing macroeconomic the SEC preliminarily believes those because of the 2013 rule, the proposed conditions, the creditworthiness of risks to banking entities to be limited. exclusion may increase the volume of borrowers and potential borrowers, Moreover, fund structures may entail intermediation of credit by banking competition between bank and non- risk mitigating features (such as entities and make it more efficient and bank credit providers, and many others. diversification across a larger number of less costly. In addition, permitting Moreover, the efficiencies of credit borrowers) as well as significant cost banking entities to extend financing to funds relative to direct extensions of efficiencies for banking entities. The businesses through credit funds could credit described above are likely to vary SEC has received comment supporting allow banking entities to compete more considerably among banking entities an exclusion for credit funds. For effectively with non-banking entities and funds. The SEC recognizes that the example, some commenters suggested that are not subject to the same potential effects described above of the that a fund or partnership structure prudential regulation or supervision as proposed credit fund exclusion may be enables banking entities to engage in banking entities subject to section 13 of dampened or magnified in different permissible activities more the BHC Act and thereby likely result in phases of the macroeconomic cycle and efficiently.371 Specifically, one an increase in lending activity in across various types of banking entities. commenter indicated that credit funds banking entity-sponsored credit funds As an alternative to the proposed facilitate investments by third parties, without negatively affecting capital amendment, the agencies could have leading to the creation of a broader and formation or the availability of proposed a credit fund exclusion that deeper pool of capital, which may allow financing. In this respect, the proposed imposes additional restrictions. For for more diversification in lending amendments could result in greater example, as discussed above, the portfolios, the pooling of expertise of competition between bank and non- agencies could have imposed a groups of market participants, and bank provision of credit with both quantitative limit on the amount of otherwise reduce the risk for banking expected lower costs that typically equity securities (or rights to acquire entities and the financial system.372 In result from increased competition and a equity securities) that a credit fund may addition, to the degree that credit funds larger volume of permissible banking acquire in connection with its loans or require precommitments of capital, they and financial activities to occur in the debt instruments, rather than to require may dampen cyclical fluctuations in regulated banking system. In addition, only that such securities and rights be loan originations and may facilitate since cost reductions and increased received on customary terms. The SEC ongoing extensions of credit during efficiencies are commonly passed along understands that in certain times of market stress.373 to customers, the proposed exclusion circumstances it is customary for Another commenter indicated that may also benefit banking entities’ lenders to receive a limited amount of debt instruments are generally held for borrowers and facilitate the extension of warrants issued by the borrower or its the purpose of generating income, credit in the real economy. affiliate in connection with certain which may come both from interest and The SEC continues to recognize that extensions of credit, and that such a price appreciation, whether held banking entities already engage in a structure (e.g., a note with warrants directly on a banking entity’s balance variety of permissible activities attached) can facilitate the availability sheet or indirectly through a fund involving risk, including extensions of of financing for small businesses and structure.374 credit, underwriting, and market- early stage companies that may be Further, commenters have stated that making. To the degree that credit funds provided through credit funds. The SEC some RICs and BDCs may engage in may enable greater formation of capital believes that there may be practical similar investment activities as credit by banking entities through various debt challenges to imposing and calculating funds.375 The risks and returns of the instruments, this may influence the a quantitative limit (for example, upon core activities of credit funds may be risks and returns of banking entities issuance, warrants could be worth similar to those of RICs and publicly individually and of banking entities as relative little but the value could grow offered business development a whole. However, the SEC recognizes substantially over time). To the degree companies that have an investment that the activities of credit funds largely that a quantitative limit may result in strategy to buy and hold debt replicate permissible and traditional unintended consequences and may instruments. The SEC has also received activities of banking entities. Moreover, impede the ability of some credit funds comment that, while some credit funds banking entities subject to the 2013 rule to provide financing to certain may be able to avail themselves of the may also be subject to multiple borrowers, particularly small businesses existing exclusions for loan prudential, capital, margin, and and early stage companies, the proposed securitizations and joint ventures, those liquidity requirements that facilitate the condition could provide greater relief safety and soundness of banking entities with respect to credit funds and 371 See, e.g., ABA. and promote the financial stability of potential borrowers relative to the 372 See id. the United States. In addition, the alternative. At the same time, the 373 See id. proposed amendments include a set of 374 See Credit Suisse. 377 See proposed rule § l.10(c)(15)(iv)(A). 375 See id. 376 See, e.g., FSF; GS. 378 See proposed rule § l.10(c)(15)(v)(B).

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alternative would impose greater amount of borrowing, debt obligations, where venture capital and other types of restrictions on the credit fund guarantees or other incurrence of financing are less readily available to exclusion, reducing the above benefits leverage was appropriate to differentiate businesses to provide this type of and potentially increasing costs for venture capital funds from other types financing in those areas, further banking entities and borrowers. of private funds that may engage in promoting capital formation. trading strategies that use financial The SEC remains cognizant of the fact Venture Capital Funds leverage and may contribute to systemic that the overall level and structure of As discussed elsewhere in this risk.384 The SEC preliminarily believes activities of banking entities that SUPPLEMENTARY INFORMATION, the that this definition includes criteria involve risk stems from a variety of agencies are proposing to exclude reflecting the characteristics of venture permissible sources, including certain venture capital funds from the capital funds that may pose less traditional capital provision, definition of ‘‘covered fund,’’ which potential risk to a banking entity underwriting, and market-making. To would allow banking entities to acquire sponsoring or investing in venture the degree that qualifying venture or retain an ownership interest in, or capital funds and to the financial capital funds may enable greater sponsor, those venture capital funds to system—specifically, the smaller role of formation of capital by banking entities, the extent the banking entity is leverage financing and a lesser degree of this may influence the risks and returns otherwise permitted to engage in such interconnectedness with public markets. of such entities individually and of activities under applicable law.379 The A number of commenters supported banking entities as a whole. However, exclusion would be available with an exclusion for venture capital funds the proposed exclusion has a number of respect to qualifying venture capital and stated that venture capital funds do conditions, including a prohibition on funds, which would include an issuer not commonly engage in short-term, direct or indirect guarantees by the that meets the definition of ‘‘venture high-risk activities, and that, by their banking entity, disclosures to investors, capital fund’’ in 17 CFR 275.203(l)-1 nature, venture capital funds make long- and compliance with applicable safety and that meets several additional term investments in private firms.385 and soundness standards. criteria.380 Moreover, the SEC received comment The SEC has also received comment A qualifying venture capital fund that venture capital funds promote opposing any exclusion for venture would be an issuer that, among other economic growth and competitiveness capital funds.389 The SEC recognizes criteria, is a venture capital fund as of the U.S. more effectively than that venture capital funds commonly defined in 17 CFR 275.203(l)–1.381 In investments in expressly permissible invest in illiquid private firms with few the preamble to the regulations adopting vehicles, such as small business sources of market price information, this definition of venture capital fund, investment companies.386 The SEC has with corresponding risks and returns. the SEC explained that the definition’s also received comment that, by virtue of To the degree that the proposed criteria distinguish venture capital their investment strategy, long-term exclusion for venture capital funds funds from other types of funds, investment horizon, and intermediation could facilitate banking entity activities including private equity funds and between companies in need of capital related to venture capital funds, this hedge funds.382 Moreover, the SEC and institutional investors seeking to proposed exclusion could increase the explained that these criteria reflect the deploy capital in efficient ways, venture volume and alter the structure of Congressional understanding that capital funds may play a significant role banking entities’ activities, affecting the venture capital funds are less connected in capital formation, economic growth, risks associated with those activities. At with the public markets and therefore and efficient market function.387 The the same time, as discussed may have less potential for systemic proposed venture capital fund exclusion elsewhere,390 many other traditional risk.383 The SEC further explained that may provide banking entities with and permissible activities of banking its regulation’s restriction on the greater flexibility in their investments in entities involve risk, and the provision private firms and private firms with a of capital to private firms is an 379 See proposed rule § l.10(c)(16). broader range of financing sources. important function of banking entities 380 See supra section III.C.2. In addition, it is widely noted that the within the financial system and 381 See id for a discussion of the SEC’s definition availability of venture capital and other of ‘‘venture capital fund’’ in 17 CFR 275.203(l)–1. securities markets that benefits the real Following enactment of the RBIC Advisers Relief financing from funds is not uniform economy. Act, the SEC’s definition of ‘‘venture capital fund’’ throughout the United States and is As an alternative to the proposed includes any RBIC and any SBIC. See 15 U.S.C. generally available on a competitive amendment, the agencies are 80b–3(l). The agencies are requesting comment on whether they should provide a separate, specific basis for companies with a significant considering an additional restriction for exclusion from the definition of ‘‘covered fund’’ for presence in certain geographic regions which they are seeking specific RBICs. See supra note 328. (e.g., the New York metropolitan area, comment. Under this additional 382 See, e.g., Exemptions for Advisers to Venture the Boston metropolitan area, and restriction, and notwithstanding 17 CFR Capital Funds, Private Fund Advisers With Less Than $150 Million in Assets Under Management, ‘‘Silicon Valley’’ and surrounding 275.203(1)–1(a)(2), the venture capital 388 and Foreign Private Advisers, 76 FR 39645, 39656 areas). In this respect, the proposal fund exclusion would be limited to (July 6, 2011). could allow banking entities with a funds that do not invest in companies 383 See id. at 39648 (‘‘[T]he proposed definition presence in and knowledge of the areas that, at the time of the investment, have of venture capital fund was designed to . . . address concerns expressed by Congress regarding more than a limited dollar amount of 384 the potential for systemic risk.’’); and at 39656 See id.at 39662. See also id. at 39657 (‘‘We total annual revenue. The agencies are (‘‘Congressional testimony asserted that these funds proposed these elements of the qualifying portfolio considering what specific threshold company definition because of the focus on may be less connected with the public markets and would be appropriate to differentiate may involve less potential for systemic risk. This leverage in the Dodd-Frank Act as a potential appears to be a key consideration by Congress that contributor to systemic risk as discussed by the venture capital funds from other types led to the enactment of the venture capital Senate Committee report, and the testimony before of private funds. The potential benefit of Congress that stressed the lack of leverage in exemption. As we discussed in the Proposing venture capital investing.’’). including a revenue or other similar test Release, the rule we proposed sought to incorporate 385 is that it could be more difficult for this Congressional understanding of the nature of See, e.g., ABA; BPI; Federated; Hultgren. investments of a venture capital fund, and these 386 See id. principles guided our consideration of the proposed 387 See, e.g., BPI. 389 See, e.g., Data Boiler. venture capital fund definition.’’). 388 See, supra note 152. 390 See 2019 amendments at 62037–92.

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banking entities to use the exclusion for make a determination whether or not soundness regulations and qualifying venture capital funds to make the SBIC that is winding-down is a requirements. investments that the agencies may not covered fund. If the banking entity Public Welfare Funds have intended to be permitted by this determines that when the SBIC that is exclusion. However, any such anti- winding-down and has voluntarily Similarly, as discussed elsewhere in evasion benefits of this alternative could surrendered its license no longer this SUPPLEMENTARY INFORMATION, the be offset by the extent to which anti- qualifies for the exclusion from the SEC has received comment that the evasion concerns are already addressed covered fund definition, then the 2013 2013 rule’s exclusion for public welfare by the other conditions of the proposed rule applies and the banking entity’s funds may not capture community exclusion for qualifying venture capital existing investment in, and relationship development investments made through funds. with, the SBIC is prohibited. This investment vehicles and comment Such an additional restriction as potential result may discourage banking supporting an exclusion of investments contemplated in the alternative would entities from making investments in that qualify for Community make it more difficult for banking SBICs. Reinvestment Act (CRA) credit, entities to sponsor and invest in venture The SEC has received comment that including direct and indirect capital funds by limiting the pool of the 2013 rule is limiting banking entity investments in a community possible investments permitted for development fund, SBIC, or similar activities in SBICs that may spur 394 venture capital funds that qualify for the economic growth, and that banking fund. The agencies are requesting exclusion. This difficulty may be entities face significant regulatory comment on, among others, a separate exclusion from the covered fund particularly pronounced for banking burdens that are not commensurate with definition for CRA-qualified entities that would use the proposed the risk of the underlying activities.392 investments or the incorporation of such venture capital fund exclusion to make Another commenter indicated that, in an exclusion in the exclusion for public investments in third-party venture the ordinary course of business, SBIC welfare investments. To the degree that capital funds, which may not be willing fund managers often relinquish or some banking entities face uncertainty to restrict—and could be prohibited voluntarily surrender a license during about their ability to make CRA- from restricting under other applicable the wind-down of the fund while qualified investments and qualify for laws—the fund’s investments in liquidating assets in the dissolution the exclusion, an explicit exclusion for companies that meet any such process (since the license is no longer such funds may increase the willingness additional revenue or other similar test. necessary or an efficient use of As a result, such an additional of banking entities to intermediate such partnership funds).393 condition could diminish the benefits community development investments. discussed above, both by limiting the SBICs are an important mechanism At the same time, to the degree that utility of the exclusion for banking for capital allocation by banking entities banking entities currently finance entities to make permissible long-term and one important channel of capital community development projects investments and potentially reducing raising for issuers. The proposed eligible for the CRA through other fund the availability of financing for amendment would clarify that banking structures and rely on corresponding businesses, including small businesses entities are able to continue to exemptions, the economic effects of a and start-ups in areas outside of certain participate in SBIC-related activities potential exclusion for CRA-qualified major metropolitan areas. during the dissolution of such funds, as investments may be limited to the long as certain conditions are met. To difference in compliance burdens Small Business Investment Companies the degree that banking entities may between such a new exclusion and The 2013 rule excludes from the currently be reluctant to invest in SBICs existing covered fund exclusions. covered fund definition small business to avoid the risk of an SBIC being The agencies are requesting comment investment companies (SBICs). The treated as a covered fund during SBIC on providing a separate specific 2013 rule includes within the scope of dissolution, the proposal may increase exclusion for RBICs, similar to the the exclusion SBICs and issuers that the willingness of some banking entities separate, specific exclusion for SBICs. have received notice to proceed to to participate in SBICs. The proposed 395 As the SEC discussed elsewhere,396 qualify for a license as an SBIC and amendment would require that SBICs RBICs are intended to promote which have not received a revocation of that have voluntarily surrendered their economic development and the creation the notice or license. The proposal license may not make new investments of wealth and job opportunities in rural would expand the exclusion to during the wind-down process. This areas and among individuals living in incorporate SBICs that have voluntarily aspect of the proposed amendment such areas,397 and their purpose is surrendered their licenses to operate seeks to address the possibility of similar to the purpose of SBICs and and do not make new investments banking entities becoming exposed to public welfare companies.398 Because (other than investments in cash greater risk as part of their participation SBICs and RBICs share the common equivalents) after such voluntary in SBICs during their wind-down purpose of promoting capital formation surrender.391 process, even though such exposure in their respective sectors, advisers to Clarifying that SBICs that have may not be common in an SBIC’s SBICs and RBICs are treated similarly voluntarily surrendered their licenses ordinary course of business. In any case, and are winding-down remain excluded both the risks and the returns arising out 394 See ABA. from the covered fund definition would of banking entity investments in SBICs 395 See supra note 328. eliminate regulatory uncertainty for at all stages of the vehicle’s lifecycle are 396 See Accredited Investor Definition Proposing Release, at 2586–7. banking entities. Currently, because it is likely to flow through to banking entity 397 See U.S. Department of Agriculture, Rural unclear whether an SBIC that has shareholders. Moreover, banking Business Investment Program Overview, available voluntarily surrendered its license is entities participating in SBICs would at http://www.rd.usda.gov/programs-services/rural- still excluded from the definition of remain subject to applicable safety and business-investment-program. 398 SBICs are intended to increase access to ‘‘covered fund,’’ banking entities must capital for growth stage businesses. See U.S. Small 392 See, e.g., SBIA; Capital One. Business Administration, SBIC Program Overview, 391 See proposed rule § __.10(c)(11)(i). 393 See, e.g., BB&T. available at https://www.sba.gov/partners/sbics.

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under the Advisers Act (in that they Investment Company Act.402 To the discussed in detail above, the proposed have the opportunity to take advantage extent that QOFs may already be exclusion would only be available of exemptions from investment adviser excluded from the definition of covered under a number of conditions. registration).399 This alternative would fund, an express exclusion for QOFs Specifically, if the entity is a trust, the expand the economic effects of the would provide clarity and certainty and grantor(s) of the entity must all be proposed SBIC exclusion discussed reduce costs for banking entities, which family customers; if the entity is not a above and may facilitate capital may otherwise be required to conduct a trust, a majority of the voting interests formation by banking entities in growth case-by-case analysis of each QOF to in the entity must be owned by family stage businesses. determine whether it qualifies for an customers, and the entity must be RBICs may already be excluded from exclusion or exemption under the 2013 owned only by family customers and up the definition of covered fund under the rule. to 3 closely related persons of the family 2013 rule.400 For example, RBICs may 406 Family Wealth Management Vehicles customers. In addition, banking qualify for the public welfare exclusion entities may rely on this exclusion only under the 2013 rule or an exclusion or As discussed above, the proposed if they: provide bona fide trust, exemption from the definition of amendments would exclude from the fiduciary, investment advisory, or covered fund definition certain family ‘‘investment company’’ under the commodity trading advisory services to wealth management vehicles. Family Investment Company Act other than the entity; 407 do not, directly or wealth management vehicles commonly section 3(c)(1) or 3(c)(7). To the extent indirectly, guarantee, assume, or engage in asset management activities, that RBICs may already be excluded otherwise insure the obligations or from the definition of covered fund, an as well as estate planning and other performance of such entity; 408 comply express exclusion for RBICs would related activities.403 The SEC with the disclosure obligations under provide clarity and certainty and reduce understands that some banking entities § l.11(a)(8), as if such entity were a costs for banking entities, which may may currently be constrained in covered fund; 409 do not acquire or otherwise be required to conduct a case- providing traditional banking and asset retain, as principal, an ownership by-case analysis of each RBIC to management services, including, for determine whether it qualifies for an example, investment advice, brokerage interest in the entity, other than up to exclusion or exemption under the 2013 execution, financing, clearing, and 0.5 percent of the entity’s outstanding rule. settlement services, to family wealth ownership interests that may be held by The agencies are also requesting management vehicles due to the 2013 the banking entity and its affiliates for comment on providing a specific rule.404 In addition, the SEC the purpose of and to the extent exclusion for QOFs. As discussed above, understands that certain family wealth necessary for establishing corporate the program allows taxpayers to defer management vehicles that are structured separateness or addressing bankruptcy, 410 and reduce taxes on capital gains by as trusts may prefer to appoint banking insolvency, or similar concerns; reinvesting gains in QOFs that are entities as trustees acting in a fiduciary comply with the requirements of §§ l required to have at least 90 percent of capacity.405 By specifically excluding .14(b) and l.15, as if such entity were their assets in designated low-income family wealth management vehicles, the a covered fund; 411 and comply with the zones. In this regard, QOFs are similar proposal may benefit such banking requirements of 12 CFR 223.15(a), as if to SBICs and public welfare companies. entities by permitting them to offer such banking entity and its affiliates The alternative could expand the services to and engage in transactions were a member bank and the issuer economic effects of the proposed with family wealth management vehicle were an affiliate thereof.412 amendments to the SBIC exclusion and customers. Importantly, the proposed The proposed definition of ‘‘family public welfare exclusion discussed amendment may benefit family wealth customer’’ would include any ‘‘family above, and may facilitate capital management vehicles and their client’’ as defined in Rule 202(a)(11)(G)- formation by banking entities. investment advisers by increasing the 1(d)(4) of the Investment Advisers Act QOFs may already be excluded from spectrum of banking entity of 1940, and any natural person who is the definition of covered fund under the counterparties willing to provide a father-in-law, mother-in-law, brother- 2013 rule. For example, QOFs may traditional client-oriented financial and in-law, sister-in-law, son-in-law or qualify for the public welfare exclusion asset management services. Thus, the daughter-in-law of a family client, or a under the 2013 rule or an exclusion or proposed amendment may enhance spouse or a spousal equivalent of any of exemption from the definition of competition among banking and non- the foregoing.413 The SEC believes that ‘‘investment company’’ under the banking entities providing financial the conditions for the proposed Investment Company Act other than services to family wealth management exclusion and the proposed definition section 3(c)(1) or 3(c)(7), such as section vehicles and may lead to more efficient of ‘‘family customer’’ would require 3(c)(5)(C).401 In addition, depending on capital allocation of family wealth family wealth management vehicles to the facts and circumstances, an issuer management vehicles’ funds. To the be used on arms-length, market terms that holds securities issued by a QOF degree banking entities pass compliance for customer-oriented financial services, may not meet the definition of costs on to customers, family wealth and the SEC preliminarily believes that ‘‘investment company’’ under Section vehicles may experience costs savings this will reduce the risk that banking 3(a)(1) of the Investment Company Act, from the proposed amendment as well. entities’ involvement in these vehicles may be excluded under Rule 3a–1 The SEC recognizes that some will give rise to the types of risks that thereunder, or may qualify for the banking entities may respond to the exclusion under Section 3(c)(6) of the proposed exclusion by seeking to 406 See proposed rule § l.10(c)(17)(i). structure other entities as family wealth 407 See proposed rule § l.10(c)(17)(ii)(A). 399 See supra note 331. The private fund adviser management vehicles. However, as 408 exemption excludes the assets of RBICs and SBICs See proposed rule § l.10(c)(17)(ii)(B). from counting towards the $150 million threshold. 409 See proposed rule § l.10(c)(17)(ii)(C). 15 U.S.C. 80b–3(m). 402 See id. 410 See proposed rule § l.10(c)(17)(ii)(D). 400 RBICs may be excluded under the proposed 403 See e.g., IAI; SIFMA. 411 See proposed rule § l.10(c)(17)(ii)(E). venture capital exclusion. See supra note 331. 404 See e.g., BPI; IAI; SIFMA. 412 See proposed rule § l.10(c)(17)(ii)(F). 401 See Opportunity Zone Statement. 405 See SIFMA. 413 See proposed rule § l.10(c)(17)(iii).

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the covered funds provisions are meant with respect to vehicles provided for entities’ ongoing compliance with to mitigate. customers, even though banking entities section 13 of the BHC Act and the Alternative forms of relief with are otherwise able to provide such implementing regulations. Moreover, respect to family wealth management exposures and services to customers the SEC continues to believe that the vehicles—for example, alternatives that directly (outside of the fund provision of customer-oriented financial define ‘‘family customers’’ more broadly structure).415 The SEC has also received services by banking entities may benefit or narrowly, or alternatives removing comment that some clients, particularly customers, counterparties, and some of the proposed conditions for the clients in markets such as Brazil, securities markets. exclusion—would increase or reduce Germany, Hong Kong, and Japan, prefer The proposed amendments create the availability of the exclusion relative to transact with or through such new recordkeeping requirements for a to the proposal. Alternatively, the vehicles rather than banking entities banking entity that relies on the agencies could have proposed amending directly because of a variety of legal, exclusion for customer facilitation the limitations on relationships with a counterparty risk management, and vehicles.420 The banking entity may covered fund to permit banking entity accounting factors.416 Moreover, the only rely on the exclusion if it and its transactions with family wealth SEC is aware that limitations of the 2013 affiliates maintain documentation management vehicles that would rule on the activities of such vehicles outlining how the banking entity otherwise be considered covered may be disrupting client relationships, intends to facilitate the customer’s transactions (e.g., ordinary extensions of reducing the efficiency of customer- exposure to a transaction, investment credit) without subjecting them to 12 facing financial services, and raising strategy or service offered by the CFR 223.15(a) or section 23B of the compliance costs of banking entities.417 banking entity. As discussed in section Federal Reserve Act, as if such banking The proposed exclusion may eliminate IV.B 421 and above, these recordkeeping entity were a member bank and such these baseline costs and inefficiencies burdens may impose a total initial family wealth management fund were by allowing banking entities to provide burden of $1,078,650 422 and a total an affiliate thereof. Broader (narrower) customer-oriented financial services ongoing annual burden of alternative forms of relief may increase through vehicles, the purpose of which $1,078,650.423 (decrease) the magnitude of the is providing such customers with The agencies could have proposed economic benefits for capital formation, exposure to a transaction, investment alternative forms of relief with respect allocative efficiency, and the ability of strategy, or other service. As a result, to customer facilitation vehicles. For banking entities to provide traditional banking entities may become better able example, the agencies could have customer oriented services to family to engage in the full range of customer proposed a higher banking entity wealth management vehicles. At the facilitation activities through special ownership limit (of, for example, 5% or same time, such broader relief may purpose vehicles and fund structures, 10%). Alternatively, the agencies could increase the risk that some banking which may benefit banking entities, have proposed a 0.5% ownership entities may respond to the relief by their customers, and securities markets interest limit, but without specifying a attempting to evade the intent of the more broadly. list of purposes for which such interest rule, increasing the volume of their At the same time, financial services may be held, leading to banking entities activities with family wealth related to customer facilitation vehicles accumulating greater ownership management vehicles. Nevertheless, may involve market risk, and the interests in such vehicles. As another such risks of the alternatives relative to proposed exclusion may enable banking example, the agencies could have the proposed exclusion may be entities to provide a greater array of proposed an exclusion for customer mitigated by the fact that banking financial services to, and otherwise facilitation vehicles without subjecting entities would remain subject to the full transact with, such vehicles. The SEC the banking entity relying on the scope of broker-dealer and prudential preliminarily believes that such risks exclusion to 12 CFR 223.15(a) or section capital, margin, and other rules aimed at may be mitigated by at least two of the 23B of the Federal Reserve Act, as if facilitating safety and soundness. proposed conditions of the proposed such banking entity were a member Moreover, as discussed above, the SEC exclusion. First, a banking entity and its bank and such customer facilitation preliminarily believes that traditional affiliates can hold only a de minimis (up vehicles were an affiliate thereof. Such banking and asset management services to 0.5%) interest in the customer alternatives would remove or loosen the involving family wealth management facilitation vehicle for the purpose of conditions for the availability of the vehicles do not involve the types of and to the extent necessary for exclusion, which may increase the risk risks that section 13 of the BHC Act was establishing corporate separateness or that customer facilitation vehicles could designed to address. addressing bankruptcy, insolvency, or be used for evasion purposes or expose Customer Facilitation Vehicles similar concerns.418 Second, a banking banking entities to additional risk, but entity and its affiliates may not directly could also further reduce compliance The proposal would also exclude or indirectly guarantee, assume, or burdens and provide greater flexibility from the covered fund definition issuers otherwise insure the obligations or to banking entities and their customers. acting as customer facilitation vehicles. performance of the vehicle.419 These The SEC understands that banking proposed conditions, among the other b. Restrictions on Relationships entities commonly use special purpose conditions in the proposal, may mitigate Between Banking Entities and Covered vehicles to accommodate exposure to risks that may be borne by individual Funds securities, transactions, and services of As discussed above, under the 2013 414 banking entities and by banking entities a client or group of affiliated clients. as a whole as a result of the proposed rule, banking entities that either: (1) The SEC has received comment that, exclusion, and may facilitate banking Serve as a sponsor, adviser, or manager because of the 2013 rule’s covered fund of a covered fund; (2) organize and offer restrictions, some banking entities have 415 See, e.g., SIFMA; FSF; ABA. been unable to engage in traditional 416 See, e.g., ABA; BPI. 420 See proposed rule § l.10(c)(18)(ii)(B)(1). banking and asset management services 417 See, e.g., ABA; FSF. 421 See supra note 338. 418 See proposed rule § l.10(c)(18)(ii)(B)(4). 422 See supra note 339. 414 See, e.g., ABA. 419 See proposed rule § l.10(c)(18)(ii)(B)(2). 423 See supra note 340.

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a covered fund under l.11; or (3) hold relationships for custody, clearing, and the economic effects of the proposed an ownership interest under l.11(b) are other transactions. amendments discussed above. unable to engage in any covered The SEC has also received a comment c. Definition of Ownership Interest transactions with such funds.424 This opposing incorporating the Federal prohibition may be limiting the services Reserve Act section 23A exemptions or As discussed above, the 2013 rule that such banking entities and their quantitative limits.427 To the extent that defines ‘‘ownership interest’’ in a affiliates are able to provide to certain the proposed approach may increase covered fund to mean any equity, entities that are covered funds under the transactions between banking entities partnership, or ‘‘other similar interest,’’ 2013 rule. For example, as noted above, which is an interest that exhibits any of and related covered funds, banking 430 banking entities are significantly limited entities could incur risks associated several characteristics. This in their ability to both organize and offer with these transactions. However, as definition focuses on the attributes of a covered fund, as well as to provide discussed above, the proposed the interest and whether it provides a custody services to the fund. The amendments impose a number of banking entity with voting rights or proposed amendments would authorize conditions aimed at reducing overall economic exposure to the profits and banking entities to engage in certain risks to banking entities, the ability of losses of the covered fund. The agencies transactions, such as extensions of banking entities to lever up related are proposing to amend the definition of intraday credit, payment, clearing, and covered funds, and the incentive of ownership interest in two ways. First, settlement services, with covered banking entities to bail out related the proposed amendment would specify funds—activities that could otherwise covered funds, while enhancing their that certain creditors’ rights are be covered transactions.425 ability to provide ordinary-course excluded from the prong of the definition that defines an ownership The SEC has received comments banking, custody, and asset interest to mean an interest that has the suggesting that section 13(f)(1) of the management services, and facilitate right to participate in the selection or BHC Act should be interpreted to capital formation in covered funds. removal of a general partner, investment include the exemptions provided under The agencies could have proposed adviser, or other service provider to the section 23A of the Federal Reserve Act, broader or narrower forms of relief. For covered fund. Specifically, the proposed and that banking entities should be example, in addition to the proposed amendment would provide that an permitted to engage in a limited amount relief, the agencies could have proposed excluded creditors’ right upon the of covered transactions with related permitting banking entities to engage in occurrence of an event of default or an covered funds.426 The SEC recognizes additional covered transactions in acceleration event can include the right that outsourcing such activities to third connection with payment, clearing, and to participate in the removal of an parties may be adversely affecting settlement services beyond extensions investment manager for cause or to customer relationships, increasing costs, of credit and purchases of assets. nominate or vote on a nominated and decreasing operational efficiency Further, under the proposal, each replacement manager upon an for banking entities and covered funds. extension of credit would be required to investment manager’s resignation or The proposed amendments would be repaid, sold, or terminated by the end removal.431 Accordingly, having this provide banking entities greater 428 of 5 business days. As another right would be recognized as a creditors’ flexibility to provide these and other alternative, the agencies could have right that is excluded from the services directly to covered funds. If proposed allowing extensions of credit definition of ownership interest. being able to provide custody, clearing, in connection with payment Second, the proposed amendment and other services to related covered transactions, clearing, or settlement would add to the list of interests that are funds reduces the costs of these services services for periods that are longer than excluded from the definition of and risks of operational failure of fund 5 business days. However, the proposed ownership interest. Specifically, the custodians, then fund advisers and, 5 business day criteria is consistent with proposed amendment would provide indirectly, fund investors, may benefit the federal banking agencies’ capital that any senior loan or senior debt from the proposed amendments. Many rule and would generally require interest would not be an ownership direct benefits are likely to accrue to banking entities to rely on transactions interest, if such senior loan or senior banking entity advisers to covered funds with normal settlement periods, which debt interest had specific that are currently relying on third-party have lower risk of delayed settlement or characteristics.432 Those characteristics service providers as a result of the failure, when providing short-term would be: (1) Under the terms of the 429 requirements of the 2013 rule. extensions of credit. In addition, the interest, the holders do not have the The proposed amendments may agencies could have imposed right to receive a share of the income, increase banking entities’ ability to quantitative limits on the newly gains, or profits of the covered fund, but engage in custody, clearing, and other permitted covered transactions tied to are entitled to receive only certain transactions with related covered funds bank capital or fund size. Relative to the interest and fees, and fixed principal and benefit banking entities that are proposed amendments, alternatives payments on or before a maturity date; currently unable to engage in otherwise providing greater relief with respect to (2) the right to payments are absolute profitable or efficient activities with covered transactions with covered funds and cannot be reduced because of the related covered funds. Moreover, this could magnify the cost savings and losses arising from the covered fund’s may enhance operational efficiency and operational risk benefits described underlying assets; and (3) the holders of reduce operational risks and costs above, but may also increase risk to the interest do not have the right to incurred by covered funds, which are banking entities or the incentives for receive the underlying assets of the currently unable to rely on banking banking entities to bail out related covered fund after all other interests entities with which they have certain covered funds. Similarly, narrower have been redeemed or paid in full alternative forms of relief may dampen 424 See 12 U.S.C. 1851(f)(1). 430 See 2013 rule § l.10(d)(6). See also, supra, 425 See proposed rule § l.14(a)(2)(iii) and 427 See Public Citizen. section III.E. proposed rule § l.14(a)(2)(iv). 428 See proposed rule § l.14(a)(2)(iv)(B). 431 Proposed rule § l.10(d)(6)(i)(A). 426 See, e.g., BPI; FSF. 429 See supra note 205. 432 Proposed rule § l.10(d)(6)(ii)(B).

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(excluding the rights of a creditor to The SEC recognizes that such debt (permissible assets), and meets other exercise remedies upon the occurrence instrument investments carry risk,439 criteria.440 The SEC has received of an event of default or an acceleration and that the risks and returns of such comment that, as a result of the 2013 event).433 investments flow through to banking rule, some banking entities may have The SEC has received comment that entities’ shareholders. While the divested or restructured their interests the 2013 rule’s definition of ownership proposed amendments to the ownership in loan securitizations due to the interest captures instruments that do not interest definition may permit banking narrowly-drawn conditions of the have equity-like features and constrains entities to increase exposures related to exclusion, and that a limited holding of banking entity investments in debt certain debt instrument transactions, non-loan assets may enable banking securitizations and client facilitation three key considerations may mitigate entities to provide traditional services.434 For example, one the risks associated with such activities. securitization products and services commenter indicated that analyzing the First, the proposed amendments would demanded by customers, clients, and ownership interest definition in the not change any of the applicable counterparties.441 Moreover, context of securitizations has resulted in prudential capital, margin, or liquidity commenters indicated that the ability to added time and costs of executing requirements intended to ensure safety hold non-loan assets may allow loan transactions, as well as impeded and soundness of banking entities. securitizations to increase securitization transactions.435 Moreover, Second, to the degree that the diversification and enable asset the commenter indicated that the ‘‘other ownership interest definition has managers to be more responsive to similar interest’’ prong of the definition actually discouraged banking entities changing market demand for the precludes some banking entities from from obtaining credit enhancements to underlying debt products.442 Another investing in collateralized loan avoid triggering the ownership interest commenter acknowledged the strong obligation (CLO) senior debt restrictions, the proposed amendments statutory and public policy arguments instruments, which affects lending to may result in banking entities receiving in favor of excluding credit CLOs, and that banking entities with stronger credit enhancements. Finally, securitizations.443 Yet another pre-existing CLO exposures had to the proposed amendments would commenter suggested that expanding waive credit-enhancing remedies to include a number of conditions and permitted bank activities adds to the avoid triggering the ownership interest restrictions aimed at reducing the risk to complexity of the 2013 rule, and that restrictions.436 In addition, the SEC banking entities while facilitating securitizations and asset-backed received comment that the ownership traditional lending activity. vehicles were involved directly in the interest definition in the 2013 rule may The agencies could have proposed 2008 financial crisis.444 broader relief by limiting the particular require an extensive legal analysis and The staffs of the agencies released a documentation review and that, as a forms of a banking entity’s interest (e.g., equity or partnership shares) that would frequently asked question addressing result, some banking entities may the servicing asset provision of the loan default to treating interests without qualify as an ownership interest or by limiting the definition of ownership securitization exclusion in June 2014.445 controlling positions or equity-like The agencies are proposing to codify the 437 interest to ‘‘voting securities’’ as defined features as ownership interests. staff-level approach to the loan The SEC recognizes that banking by the Board’s Regulation Y. By providing broader relief relative to the securitization exclusion in the Loan entities may have contractual rights to Securitization Servicing FAQ.446 To the participate in the selection or removal of proposed amendments, such an alternative may produce greater degree that market participants may a general partner, managing member, or reductions in uncertainty and have restructured their activities member of the board of directors or compliance burdens, and a greater consistent with the Loan Securitization trustees of their borrower that are not willingness of banking entities to Servicing FAQ, an effect of the proposed limited to the exercise of a remedy upon become involved in certain debt amendments may be to reduce an event of default or other default transactions. However, such greater uncertainty. However, the economic event.438 The proposed amendments involvement in certain debt transactions effects of the proposed amendments on may provide greater clarity and may also give rise to greater risks being enabling greater capital formation predictability to banking entities and borne by banking entities. The proposed through loan securitizations on the one enable them to determine whether they amendments are intended to provide hand, and potential risks related to such have an ownership interest under sufficient safeguards to prevent banking activities on the other, may be limited. section 13 of the BHC Act and the entities from acquiring interests in implementing regulations. Moreover, to The agencies are also proposing to covered funds that run counter to the the degree that banking entities may allow loan securitizations to hold up to intentions of the 2013 rule and limit a have responded to the ownership five percent of the entity’s assets in non- banking entity’s exposure to the interest definition in the 2013 rule by economic risks of covered funds and reducing their investments in certain 440 See 2013 rule § l.10(c)(8). Loan is further their underlying assets, while reducing debt instruments, the proposed defined as any loan, lease, extension of credit, or compliance uncertainty and increasing secured or unsecured receivable that is not a amendments may result in greater the willingness of banking entities to security or derivative. See also 2013 rule § l.2(t). banking entity investments in covered 441 participate in covered funds. See, e.g., ABA; BPI. funds and greater ability of covered 442 See, e.g., IAA; LTSA. funds to allocate capital to the d. Loan Securitizations 443 See Federated. 444 underlying assets. As discussed above, the 2013 rule See AFR. 445 U.S. Securities and Exchange Commission, excludes from the definition of covered Responses to Frequently Asked Questions 433 See supra note 431. fund any loan securitization that issues Regarding the Commission’s Rule under Section 13 434 See, e.g., BPI; SIFMA; ABA; Center for asset-backed securities, holds only of the Bank Holding Company Act (the ‘‘Volcker American Entrepreneurship; LSTA. Rule’’) (June 10, 2014), available at https:// 435 loans, certain rights and assets, and a See, e.g., SFIG. www.sec.gov/divisions/marketreg/faq-volcker-rule- 436 See id. small set of other financial instruments section13.htm (‘‘Loan Securitization Servicing 437 See, e.g., SIFMA. FAQ’’). See also, supra, section III.B.2. 438 See, e.g., SFIG. 439 See, e.g., Occupy the SEC. 446 Proposed rule § l.10(c)(8)(i)(B).

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loan assets.447 Several commenters on may continue to exclude non-loan assets organized and offered by the banking the 2018 proposal supported expanding from securitizations. Further, such an entity. Supporting a fund in such a the range of permissible assets that alternative would not affect the manner would increase these banking could be held by an excluded loan applicable prudential requirements entities’ exposures to the fund’s assets securitization.448 Many commenters aimed at safety and soundness of and would generally be inconsistent recommended allowing loan banking entities. Banking entities with the 2013 rule’s restriction on a securitizations to hold up to five or ten currently take on a variety of risks banking entity guaranteeing, assuming, percent of non-loan assets.449 arising out of a broad range of or otherwise insuring the obligations or Commenters argued that banking permissible activities, including the performance of such a covered fund.455 entities would use such authority to core traditional banking activity related Further, as stated above, the agencies incorporate into securitizations to the extension of credit and direct and would expect that any investments corporate bonds, interests in letters of indirect extension of credit by banking made alongside a covered fund by a credit, cash and short-term highly liquid entities flows through to the real director or employee of a banking entity investments, derivatives, and senior economy in the form of greater access to or its affiliate, if made in compliance secured bonds that do not significantly capital. with applicable laws and regulations, change the nature and risk profile of the e. Parallel Investments would not be treated as an investment securitization.450 Authorizing loan by the director or employee in the securitizations to hold small amounts of As discussed above, the preamble to covered fund. the 2013 rule stated that if a banking non-loan assets could, consistent with The SEC recognizes, however, that a the statute, permit loan securitizations entity makes investments side by side in substantially the same positions as a restriction on investments made to respond to market demand and alongside a covered fund may interfere reduce compliance costs associated with covered fund, then the value of such investments would be included for the with banking entities’ ability to make the securitization process without otherwise permissible investments significantly increasing risk to banking purposes of determining the value of the 456 banking entity’s investment in the directly on their balance sheets. In entities and the financial system. The particular, as noted by commenters, proposed limits on the amount of non- covered fund.451 The agencies also stated that a banking entity that including the value of parallel loan assets also would reduce the investments within the ownership potential risk that allowing certain non- sponsors a covered fund should not make any additional side-by-side co- limits imposed on a banking entity or loan assets could lead to evasion, otherwise restricting a co-investment indirect proprietary trading, and other investment with the covered fund in a privately negotiated investment unless could prevent the banking entity from impermissible activities. Moreover, loan making investments that would securitizations provide an important the value of such co-investment is less than three percent of the value of the otherwise be permissible under avenue for banking entities to fund applicable laws and regulations.457 In lending programs, and allowing loan total amount co-invested by other investors in such investment.452 addition to removing impediments for securitizations to hold a small amount banking entities’ otherwise permissible of non-loan assets in response to In response to the 2018 proposal, the agencies received comments that argued investments, the proposed rule of customer and market demand may construction may enable banking increase a banking entity’s capacity to the implementing regulations should not impose a limit on parallel entities to make investments alongside a provide financing and lending. covered fund that will signal the quality The agencies could have proposed investments and noted that such a restriction is not reflected in the text of of the investment(s) to the banking expanding the types of permissible entities’ clients and investors in the assets beyond what is described in the the 2013 rule.453 The agencies are proposing a rule of construction that (1) fund, and may also help align the 2013 rule and the Loan Securitization incentives of banking entities, and their Servicing FAQ. For example, the a banking entity will not be required to include in the calculation of the directors and employees, with those of agencies could have proposed the covered funds and their investors. expanding the range of permissible investment limits under § l.12(a)(2) assets in an excluded loan any investment the banking entity 4. Efficiency, Competition, and Capital securitization. Such alternatives could makes alongside a covered fund, as long Formation potentially allow banking entities to as the investment is made in As discussed above, the proposed incorporate into securitizations compliance with applicable laws and amendments would exclude certain corporate bonds, interests in letters of regulations, and (2) a banking entity groups of private funds and other credit, cash and short-term highly liquid shall not be restricted in the amount of entities from the scope of the covered investments, derivatives, and senior any investment the banking entity fund definition and modify other secured bonds that do not significantly makes alongside a covered fund as long covered fund restrictions applicable to change the nature and risk profile of the as the investment is made in banking entities subject to the securitization. compliance with applicable laws and However, the SEC recognizes that the regulations, including applicable safety implementing regulations. Moreover, loan securitization industry may have and soundness standards.454 the proposed amendments would evolved since the issuance of the 2013 The SEC recognizes that the proposed reduce compliance obligations of rule. As a result, the SEC preliminarily approach may increase the risk that banking entities subject to the believes that, even if the scope of non- some banking entities may seek to use implementing regulations. The SEC loan assets permitted to be held were parallel investments for the purpose of preliminarily believes that the proposed expanded, loan securitization issuers artificially maintaining or increasing the amendments may impact competition, value of the assets of a fund that is capital formation, and allocative 447 Proposed rule § l.10(c)(8)(i)(E). efficiency. 448 See e.g., IAA; LSTA; ABA; SFIG; GS; BPI; JBA; 451 See supra section III.F and references therein. SIFMA. 452 See id. 455 See 2013 rule § l.11(a)(5). 449 See e.g., LSTA; JBA. 453 See FSF; Goldman; SIFMA. 456 See supra note 454. 450 See id. 454 Proposed rule § l.12(b)(5)(i). 457 See id.

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The proposed amendments may have The possible effects of the proposed organizes or offers the covered fund and three groups of competitive effects. amendments on allocative efficiency are satisfies other requirements. One such First, the proposed amendments may related to the proposal’s likely impacts requirement is that the banking entity make it easier for bank affiliated broker- on capital formation. Specifically, as provide specified disclosures to dealers, SBSDs, and RIAs to compete discussed above, the SEC preliminarily prospective and actual investors in the with bank unaffiliated broker-dealers, believes that the proposed amendments covered fund.459 Under the proposed SBSDs, and RIAs in their activities with may result in a greater number and amendments, the disclosures specified certain groups of private funds and variety of private funds launched by by § l.11(a)(8) would be required to other entities. Second, the proposal may banking entities. To the degree that satisfy the exclusions for credit funds reduce competitive disparities between banking entities may be able to provide and venture capital funds if the banking banking entities subject to the superior private funds due to their entity is a sponsor, investment adviser, implementing regulations and affected expertise or economies of scale or scope, or commodity trading advisor of the by the proposed amendments, and and to the degree that fund structures fund, and for family wealth vehicles and banking entities that are not. Third, may be more efficient than direct customer facilitation vehicles under all certain aspects of the proposed investments (due to, e.g., superior risk circumstances. To the extent that the amendments (such as the amendments sharing and pooling of expertise across proposed amendments lead banking related to foreign excluded funds and fund investors), the proposed entities to establish or provide services foreign public funds) may reduce amendments may enhance the ability of to more of these vehicles, the volume of competitive disparities between U.S. market participants, investors, and information available to market banking entities and foreign banking issuers to allocate their capital participants could increase. entities in their covered fund activities. efficiently. Specifically, if banking entities respond Because competition may reduce costs The SEC recognizes that the proposed to the proposed amendments by or increase quality, and because some amendments may increase the ability of establishing or providing services to affected banking entities may face banking entities to engage in certain more of these vehicles because they are economies of scale or scope in the types of activities involving risk, and excluded from the definition of provision of services to certain private that increases in risk exposures of large ‘‘covered fund,’’ then the amount of funds, these competitive effects may groups of banking entities may such disclosures would increase flow through to customers, clients, and negatively impact capital formation, accordingly. However, the SEC investors in the form of reduced securities markets, and the real preliminarily believes that the change in transaction costs and greater quality of economy, particularly during adverse volume and type of information private fund and other offerings and economic conditions. Moreover, losses available to market participants is related financial services. on investment portfolios may unlikely to have a significant impact on The proposed amendments may also discourage capital market participation informational efficiency. impact capital formation. For example, by various groups of investors. Three Importantly, the magnitude of the by reducing the scope of application of important considerations may mitigate above effects on competition, capital covered fund restrictions in the these potential risks. First, as discussed formation, and allocative efficiency implementing regulations, the proposal throughout this economic analysis, would be influenced by a large number relaxes restrictions related to banking banking entities already engage in a of factors, such as prevailing entity underwriting and market-making variety of permissible activities macroeconomic conditions, the of certain private funds. Moreover, the involving risk, including extensions of financial condition of firms seeking to proposal would amend certain credit, underwriting, and market- raise capital, and of funds seeking to restrictions related to banking entity making, and the activities of many types transact with banking entities, market relationships with certain covered of private funds that would be excluded saturation, and search for higher yields funds. Further, as discussed above, under the proposal largely replicate by investors during low interest rate many of the proposed amendments permissible and traditional activities of environments. Moreover, the relative would enable banking entities to engage banking entities. Second, banking efficiency between fund structures and indirectly (through a fund structure) in entities subject to the implementing the direct provision of capital is likely certain of the same activities that they regulations may also be subject to to vary widely among banking entities are currently able to engage in directly multiple prudential capital, margin, and and funds. The SEC recognizes that (extending credit or direct ownership liquidity requirements that facilitate the such economic effects may be stakes). To the degree that the safety and soundness of banking entities dampened or magnified in different implementing regulations impede or and promote financial stability. Third, phases of the macroeconomic cycle and otherwise constrain banking entity the proposed exclusions from the across various types of banking entities. activities in such funds, the proposed definition of covered fund each would The SEC is unable to observe the amendments may result in a greater include a number of conditions aimed at amount of capital formation in different number of such private funds being preventing evasion of section 13 of the types of covered funds or underlying launched by banking entities, increasing BHC Act and the implementing equity and debt securities that did not capital formation via private funds. The regulations, promoting safety and occur because of the 2013 rule. Because effects of the proposed amendments on soundness, and/or allowing for of the prolonged and overlapping capital formation are likely to flow customer oriented financial services implementation timeline of various through to investors (in the form of provided on arms-length, market terms. post-crisis reforms, and because market greater availability or variety or private Under the implementing regulations, participants restructured their trading funds available for investors) as well as a banking entity is not prohibited from and covered funds activities in to firms seeking to raise capital or obtain acquiring or retaining an ownership anticipation of the 2013 rule being effective, the SEC cannot measure the financing from private funds.458 interest in, or acting as sponsor to, a covered fund if the banking entity counterfactual levels of capital 458 For example, the proposed amendments could formation and liquidity that would have result in additional venture capital being available available. See supra, section IV.F.3.a (Venture in geographic areas where it is relatively less Capital Funds). 459 2013 rule § l.11(a)(8).

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been observed after the financial crisis, identify any costs associated with the Credit, Derivatives, Government absent the covered fund restrictions proposed amendments that we have not securities, Insurance, Insurance currently in place. Similarly, the SEC identified. If possible, please provide companies, Investments, Penalties, cannot quantify the degree to which quantification or data that would enable Reporting and recordkeeping competition in covered funds is a quantification of such effects. requirements, Risk, Risk retention, adversely affected by the covered fund Question SEC–5. What are the Securities, Trusts and trustees. definition currently in effect. The SEC economic effects of the discussed solicits any information, particularly reasonable alternatives? Are there any 17 CFR Part 75 quantitative data that would allow us to additional reasonable alternatives that Banks, Banking, Compensation, estimate the magnitudes of the potential the SEC should consider? If so, please Credit, Derivatives, Federal branches costs and benefits of the proposed identify such alternatives and any and agencies, Federal savings amendments on banking entity-affiliated economic effects associated with such associations, Government securities, broker-dealers and on banking entity- alternatives. If possible, please provide Hedge funds, Insurance, Investments, affiliated investment advisers advising quantification or data that would enable National banks, Penalties, Proprietary the different types of funds discussed a quantification of such effects. trading, Reporting and recordkeeping above. The SEC also solicits any Question SEC–6. Would permitting requirements, Risk, Risk retention, information that would allow it to banking entities to invest in or sponsor Securities, Swap dealers, Trusts and estimate any effects on efficiency, a qualifying venture capital fund be trustees, Volcker rule. competition, and capital formation in likely to result in additional venture different types of funds and their capital becoming available to start-ups 17 CFR Part 255 underlying securities. and young, growing firms in geographic Banks, Brokers, Dealers, Investment 5. Request for Comment regions of the United States where such advisers, Recordkeeping, Reporting, capital is relatively less available? Securities. The SEC is requesting comment regarding all aspects of the economic G. SEC Small Business Regulatory DEPARTMENT OF THE TREASURY Enforcement Fairness Act analysis set forth here. To the extent Office of the Comptroller of the possible, the SEC requests that market For purposes of the Small Business Currency participants and other commenters Regulatory Enforcement Fairness Act of provide supporting data and analysis 1996, or ‘‘SBREFA,’’ 460 the SEC 12 CFR Chapter I with respect to the benefits, costs, and requests comment on the potential effect Authority and Issuance effects on competition, efficiency, and of the proposed rule on the U.S. For the reasons stated in the Common capital formation of adopting the economy on an annual basis; any Preamble, the Office of the Comptroller proposed amendments or any potential increase in costs or prices for of the Currency proposes to amend reasonable alternatives. In addition, the consumers or individual industries; and chapter I of Title 12, Code of Federal SEC asks commenters to consider the any potential effect on competition, Regulations as follows: following questions: investment or innovation. Commenters Question SEC–1. What additional are requested to provide empirical data PART 44—PROPRIETARY TRADING qualitative or quantitative information and other factual support for their views AND CERTAIN INTERESTS IN AND should the SEC consider as part of the to the extent possible. RELATIONSHIPS WITH COVERED baseline for its economic analysis of the FUNDS proposed amendments? List of Subjects Question SEC–2. What additional 12 CFR Part 44 ■ 1. The authority citation for part 44 considerations can the SEC use to continues to read as follows: estimate the costs and benefits of Banks, Banking, Compensation, implementing the proposed Credit, Derivatives, Government Authority: 7 U.S.C. 27 et seq., 12 U.S.C. amendments for SEC-regulated banking securities, Insurance, Investments, 1, 24, 92a, 93a, 161, 1461, 1462a, 1463, 1464, entities? National banks, Penalties, Reporting and 1467a, 1813(q), 1818, 1851, 3101, 3102, 3108, Question SEC–3. Is it likely that recordkeeping requirements, Risk, Risk 5412. retention, Securities, Trusts and certain potential benefits or costs Subpart B—Proprietary Trading associated with the proposed trustees. amendments will not be recognized by 12 CFR Part 248 ■ 2. Amend § 44.6 by adding paragraph SEC-regulated banking entities because (f) to read as follows: Administrative practice and of the nature of their activities or procedure, Banks, banking, Conflict of because of new conditions or § 44.6 Other permitted proprietary trading interests, Credit, Foreign banking, activities. restrictions the proposal would impose Government securities, Holding on these activities? Why or why not? * * * * * companies, Insurance, Insurance Are there other benefits or costs (f) Permitted trading activities of companies, Investments, Penalties, associated with the proposed qualifying foreign excluded funds. The Reporting and recordkeeping amendments that will impact SEC- prohibition contained in § 44.3(a) does requirements, Securities, State regulated banking entities differently not apply to the purchase or sale of a nonmember banks, State savings than other types of banking entities? financial instrument by a qualifying Question SEC–4. Has the SEC associations, Trusts and trustees. foreign excluded fund. For purposes of considered all relevant aspects of the 12 CFR Part 351 this paragraph (f), a qualifying foreign proposed amendments? Have we excluded fund means a banking entity Banks, banking, Capital, accurately described the costs and that: Compensation, Conflicts of interest, benefits of the proposed amendments? (1) Is organized or established outside Why or why not? Please identify any 460 Public Law 104–121, Title II, 110 Stat. 857 the United States, and the ownership other benefits associated with the (1996) (codified in various sections of 5 U.S.C., 15 interests of which are offered and sold proposed amendments in detail. Please U.S.C. and as a note to 5 U.S.C. 601). solely outside the United States;

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(2)(i) Would be a covered fund if the any issuer for which such banking (C) Interest rate or foreign exchange entity were organized or established in entity acts as sponsor, the sponsoring derivatives that meet the requirements the United States, or banking entity may not rely on the of paragraph (c)(8)(iv) of this section; (ii) Is, or holds itself out as being, an exemption in paragraph (c)(1)(i) of this and entity or arrangement that raises money section for such issuer unless ownership (D) Special units of beneficial interest from investors primarily for the purpose interests in the issuer are sold and collateral certificates that meet the of investing in financial instruments for predominantly to persons other than: requirements of paragraph (c)(8)(v) of resale or other disposition or otherwise (A) Such sponsoring banking entity; this section. trading in financial instruments; (B) Such issuer; (E) Any other assets, provided that the (3) Would not otherwise be a banking (C) Affiliates of such sponsoring aggregate value of any such other assets entity except by virtue of the acquisition banking entity or such issuer; and that do not meet the criteria specified in or retention of an ownership interest in, (D) Directors and senior executive paragraphs (c)(8)(i)(A) through sponsorship of, or relationship with the officers as defined in section 225.71(c) (c)(8)(i)(D) of this section do not exceed entity, by another banking entity that of the Board’s Regulation Y (12 CFR five percent of the aggregate value of the meets the following: 225.71(c)) of such entities. issuing entity’s assets. (i) The banking entity is not (iii) For purposes of paragraph (ii) Impermissible assets. For purposes organized, or directly or indirectly (c)(1)(i)(B) of this section, the term of this paragraph (c)(8), except as controlled by a banking entity that is ‘‘public offering’’ means a distribution permitted under paragraph (c)(8)(i)(E) of organized, under the laws of the United (as defined in § 44.4(a)(3)) of securities this section, the assets or holdings of the States or of any State; and in any jurisdiction outside the United issuing entity shall not include any of (ii) The banking entity’s acquisition or States to investors, including retail the following: retention of an ownership interest in or investors, provided that: (A) A security, including an asset- sponsorship of the fund meets the (A) The distribution is subject to backed security, or an interest in an requirements for permitted covered substantive disclosure and retail equity or debt security other than as fund activities and investments solely investor protection laws or regulations; permitted in paragraphs (c)(8)(iii), (iv), outside the United States, as provided (B) With respect to an issuer for or (v) of this section; in § 44.13(b); which the banking entity serves as the (B) A derivative, other than a (4) Is established and operated as part investment manager, investment derivative that meets the requirements of a bona fide asset management adviser, commodity trading advisor, of paragraph (c)(8)(iv) of this section; or business; and commodity pool operator, or sponsor, (C) A commodity forward contract. (5) Is not operated in a manner that the distribution complies with all (iii) Permitted securities. enables any other banking entity to applicable requirements in the Notwithstanding paragraph (c)(8)(ii)(A) evade the requirements of section 13 of jurisdiction in which such distribution of this section, the issuing entity may the BHC Act or this part. is being made; hold securities if those securities are: (C) The distribution does not restrict (A) Cash equivalents—which, for the Subpart C—Covered Funds Activities availability to investors having a purposes of this paragraph, means high and Investments minimum level of net worth or net quality, highly liquid investments whose maturity corresponds to the ■ investment assets; and 3. Amend § 44.10 by: securitization’s expected or potential ■ a. Revising paragraph (c)(1); (D) The issuer has filed or submitted, ■ with the appropriate regulatory need for funds and whose currency b. Revising paragraph (c)(3)(i); corresponds to either the underlying ■ c. Revising paragraph (c)(8); authority in such jurisdiction, offering loans or the asset-backed securities—for ■ d. Revising paragraph (c)(10)(i); disclosure documents that are publicly purposes of the rights and assets in ■ e. Revising paragraph (c)(11)(i); available. ■ f. Adding paragraphs (c)(15), (16), paragraph (c)(8)(i)(B) of this section; or * * * * * (B) Securities received in lieu of debts (17), and (18); and (3) * * * previously contracted with respect to ■ g. Revising paragraph (d)(6). (i) Is composed of no more than 10 the loans supporting the asset-backed The revisions and additions read as unaffiliated co-venturers; follows: securities. * * * * * (iv) Derivatives. The holdings of § 44.10 Prohibition on acquiring or (8) Loan securitizations—(i) Scope. derivatives by the issuing entity shall be retaining an ownership interest in and An issuing entity for asset-backed limited to interest rate or foreign having certain relationships with a covered securities that satisfies all the exchange derivatives that satisfy all of fund. conditions of this paragraph (c)(8) and the following conditions: * * * * * the assets or holdings of which are (A) The written terms of the (c) * * * composed solely of: derivatives directly relate to the loans, (1) Foreign public funds. (i) Subject to (A) Loans as defined in § 44.2(t); the asset-backed securities, or the paragraphs (c)(1)(ii) and (iii) of this (B) Rights or other assets designed to contractual rights or other assets section, an issuer that: assure the servicing or timely described in paragraph (c)(8)(i)(B) of (A) Is organized or established outside distribution of proceeds to holders of this section; and of the United States; and such securities and rights or other assets (B) The derivatives reduce the interest (B) Is authorized to offer and sell that are related or incidental to rate and/or foreign exchange risks ownership interests, and such interests purchasing or otherwise acquiring and related to the loans, the asset-backed are offered and sold, through one or holding the loans, provided that each securities, or the contractual rights or more public offerings. asset that is a security (other than other assets described in paragraph (ii) With respect to a banking entity special units of beneficial interest and (c)(8)(i)(B) of this section. that is, or is controlled directly or collateral certificates meeting the (v) Special units of beneficial interest indirectly by a banking entity that is, requirements of paragraph (c)(8)(v) of and collateral certificates. The assets or located in or organized under the laws this section) meets the requirements of holdings of the issuing entity may of the United States or of any State and paragraph (c)(8)(iii) of this section; include collateral certificates and

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special units of beneficial interest this section, an issuer that satisfies the (B) Ensures that the activities of the issued by a special purpose vehicle, asset and activity requirements of issuer are consistent with safety and provided that: paragraphs (c)(15)(i) and (ii) of this soundness standards that are (A) The special purpose vehicle that section. substantially similar to those that would issues the special unit of beneficial (i) Asset requirements. The issuer’s apply if the banking entity engaged in interest or collateral certificate meets assets must be composed solely of: the activities directly. the requirements in this paragraph (A) Loans as defined in § 44.2(t); (iv) Additional Banking Entity (c)(8); (B) Debt instruments, subject to Requirements. A banking entity may not (B) The special unit of beneficial paragraph (c)(15)(iv) of this section; rely on this exclusion with respect to an interest or collateral certificate is used (C) Rights and other assets that are issuer that meets the conditions in for the sole purpose of transferring to related or incidental to acquiring, paragraphs (c)(15)(i) and (ii) of this the issuing entity for the loan holding, servicing, or selling such loans section unless: securitization the economic risks and or debt instruments, provided that: (A) The banking entity does not, benefits of the assets that are (1) Each right or asset that is a directly or indirectly, guarantee, permissible for loan securitizations security is either: assume, or otherwise insure the under this paragraph (c)(8) and does not (i) A cash equivalent (which, for the obligations or performance of the issuer directly or indirectly transfer any purposes of this paragraph, means high or of any entity to which such issuer interest in any other economic or quality, highly liquid investments extends credit or in which such issuer financial exposure; whose maturity corresponds to the invests; and (C) The special unit of beneficial issuer’s expected or potential need for (B) Any assets the issuer holds interest or collateral certificate is funds and whose currency corresponds pursuant to paragraphs (c)(15)(i)(B) or created solely to satisfy legal to either the underlying loans or the (c)(15)(i)(C)(1)(iii) of this section would requirements or otherwise facilitate the debt instruments); be permissible for the banking entity to structuring of the loan securitization; (ii) A security received in lieu of debts acquire and hold directly. and previously contracted with respect to (v) Investment and Relationship (D) The special purpose vehicle that such loans or debt instruments; or Limits. A banking entity’s investment in, (iii) An equity security (or right to issues the special unit of beneficial and relationship with, the issuer must: acquire an equity security) received on interest or collateral certificate and the (A) Comply with the limitations customary terms in connection with issuing entity are established under the imposed in §§ 44.14 (except the banking such loans or debt instruments; and direction of the same entity that entity may acquire and retain any (2) Rights or other assets held under initiated the loan securitization. ownership interest in the issuer) and this paragraph (c)(15)(i)(C) of this * * * * * 44.15, as if the issuer were a covered section may not include commodity (10) Qualifying covered bonds—(i) fund; and Scope. An entity owning or holding a forward contracts; and (D) Interest rate or foreign exchange (B) Be conducted in compliance with, dynamic or fixed pool of loans or other derivatives, if: and subject to, applicable banking laws assets as provided in paragraph (c)(8) of (1) The written terms of the derivative and regulations, including applicable this section for the benefit of the holders directly relate to the loans, debt safety and soundness standards. of covered bonds, provided that the instruments, or other rights or assets (16) Qualifying venture capital funds. assets in the pool are composed solely described in paragraph (c)(15)(i)(C) of (i) Subject to paragraphs (c)(16)(ii) of assets that meet the conditions in this section; and through (iv) of this section, an issuer paragraph (c)(8)(i) of this section. (2) The derivative reduces the interest that: * * * * * rate and/or foreign exchange risks (A) Is a venture capital fund as (11) * * * related to the loans, debt instruments, or defined in 17 CFR 275.203(l)–1; and (i) That is a small business investment other rights or assets described in (B) Does not engage in any activity company, as defined in section 103(3) of paragraph (c)(15)(i)(C) of this section. that would constitute proprietary the Small Business Investment Act of (ii) Activity requirements. To be trading under § 44.3(b)(1)(i), as if the 1958 (15 U.S.C. 662), or that has eligible for the exclusion of paragraph issuer were a banking entity. received from the Small Business (c)(15) of this section, an issuer must: (ii) A banking entity that acts as a Administration notice to proceed to (A) Not engage in any activity that sponsor, investment adviser, or qualify for a license as a small business would constitute proprietary trading commodity trading advisor to an issuer investment company, which notice or under § 44.3(b)(l)(i) of subpart A of this that meets the conditions in paragraph license has not been revoked, or that has part, as if the issuer were a banking (c)(16)(i) of this section may not rely on voluntarily surrendered its license to entity; and this exclusion unless the banking entity: operate as a small business investment (B) Not issue asset-backed securities. (A) Provides in writing to any company in accordance with 13 CFR (iii) Requirements for a sponsor, prospective and actual investor in the 107.1900 and does not make any new investment adviser, or commodity issuer the disclosures required under investments (other than investments in trading advisor. A banking entity that § 44.11 (a)(8), as if the issuer were a cash equivalents, which, for the acts as a sponsor, investment adviser, or covered fund; and purposes of this paragraph, means high commodity trading advisor to an issuer (B) Ensures that the activities of the quality, highly liquid investments that meets the conditions in paragraphs issuer are consistent with safety and whose maturity corresponds to the (c)(15)(i) and (ii) of this section may not soundness standards that are issuer’s expected or potential need for rely on this exclusion unless the substantially similar to those that would funds and whose currency corresponds banking entity: apply if the banking entity engaged in to the issuer’s assets) after such (A) Provides in writing to any the activities directly. voluntary surrender; or prospective and actual investor in the (iii) The banking entity must not, * * * * * issuer the disclosures required under directly or indirectly, guarantee, (15) Credit funds. Subject to § 44.11(a)(8), as if the issuer were a assume, or otherwise insure the paragraphs (c)(15)(iii), (iv), and (v) of covered fund; and obligations or performance of the issuer.

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(iv) A banking entity’s ownership estate planning vehicles of such person) (6) Ownership interest—(i) Ownership interest in or relationship with the who has longstanding business or interest means any equity, partnership, issuer must: personal relationships with any family or other similar interest. An ‘‘other (A) Comply with the limitations customer. similar interest’’ means an interest that: imposed in §§ 44.14 (except the banking (B) ‘‘Family customer’’ means: (A) Has the right to participate in the entity may acquire and retain any (1) A family client, as defined in Rule selection or removal of a general ownership interest in the issuer) and 202(a)(11)(G)–1(d)(4) of the Investment partner, managing member, member of 44.15, as if the issuer were a covered Advisers Act of 1940 (17 CFR the board of directors or trustees, fund; and 275.202(a)(11)(G)–1(d)(4)); or investment manager, investment (B) Be conducted in compliance with, (2) Any natural person who is a adviser, or commodity trading advisor and subject to, applicable banking laws father-in-law, mother-in-law, brother-in- of the covered fund (excluding the and regulations, including applicable law, sister-in-law, son-in-law or rights of a creditor to exercise remedies safety and soundness standards. daughter-in-law of a family client, or a upon the occurrence of an event of (17) Family wealth management spouse or a spousal equivalent of any of default or an acceleration event, which vehicles. (i) Subject to paragraph the foregoing. includes the right to participate in the (c)(17)(ii) of this section, any entity that (18) Customer facilitation vehicles. (i) removal of an investment manager for is not, and does not hold itself out as Subject to paragraph (c)(18)(ii) of this cause or to nominate or vote on a being, an entity or arrangement that section, an issuer that is formed by or nominated replacement manager upon raises money from investors primarily at the request of a customer of the an investment manager’s resignation or for the purpose of investing in securities banking entity for the purpose of removal); for resale or other disposition or providing such customer (which may (B) Has the right under the terms of otherwise trading in securities, and: include one or more affiliates of such the interest to receive a share of the (A) If the entity is a trust, the customer) with exposure to a income, gains or profits of the covered grantor(s) of the entity are all family transaction, investment strategy, or fund; customers; and other service provided by the banking (C) Has the right to receive the (B) If the entity is not a trust: entity. underlying assets of the covered fund (1) A majority of the voting interests (ii) A banking entity may rely on the after all other interests have been in the entity are owned (directly or exclusion in paragraph (c)(18)(i) of this redeemed and/or paid in full (excluding indirectly) by family customers; and section with respect to an issuer the rights of a creditor to exercise (2) The entity is owned only by family provided that: remedies upon the occurrence of an customers and up to 3 closely related (A) All of the ownership interests of event of default or an acceleration persons of the family customers. the issuer are owned by the customer event); (ii) A banking entity may rely on the (which may include one or more of its (D) Has the right to receive all or a exclusion in paragraph (c)(17)(i) of this affiliates) for whom the issuer was portion of excess spread (the positive section with respect to an entity created, subject to paragraph difference, if any, between the aggregate provided that the banking entity (or an interest payments received from the affiliate): (c)(18)(ii)(B)(4) of this section; and (A) Provides bona fide trust, fiduciary, (B) The banking entity and its underlying assets of the covered fund investment advisory, or commodity affiliates: and the aggregate interest paid to the (1) Maintain documentation outlining trading advisory services to the entity; holders of other outstanding interests); (B) Does not, directly or indirectly, how the banking entity intends to (E) Provides under the terms of the guarantee, assume, or otherwise insure facilitate the customer’s exposure to interest that the amounts payable by the the obligations or performance of such such transaction, investment strategy, or covered fund with respect to the interest entity; service; could be reduced based on losses arising (C) Complies with the disclosure (2) Do not, directly or indirectly, from the underlying assets of the obligations under § 44.11(a)(8), as if guarantee, assume, or otherwise insure covered fund, such as allocation of such entity were a covered fund; the obligations or performance of such losses, write-downs or charge-offs of the (D) Does not acquire or retain, as issuer; outstanding principal balance, or principal, an ownership interest in the (3) Comply with the disclosure reductions in the amount of interest due entity, other than up to 0.5 percent of obligations under § 44.11(a)(8), as if and payable on the interest; the entity’s outstanding ownership such issuer were a covered fund; (F) Receives income on a pass-through interests that may be held by the (4) Do not acquire or retain, as basis from the covered fund, or has a banking entity and its affiliates for the principal, an ownership interest in the rate of return that is determined by purpose of and to the extent necessary issuer, other than up to 0.5 percent of reference to the performance of the for establishing corporate separateness the issuer’s outstanding ownership underlying assets of the covered fund; or addressing bankruptcy, insolvency, interests that may be held by the or or similar concerns; banking entity and its affiliates for the (G) Any synthetic right to have, (E) Complies with the requirements of purpose of and to the extent necessary receive, or be allocated any of the rights §§ 44.14(b) and 44.15, as if such entity for establishing corporate separateness in paragraphs (d)(6)(i)(A) through (F) of were a covered fund; and or addressing bankruptcy, insolvency, this section. (F) Complies with the requirements of or similar concerns; (ii) Ownership interest does not 12 CFR 223.15(a), as if such banking (5) Comply with the requirements of include: entity and its affiliates were a member §§ 44.14(b) and 44.15, as if such issuer (A) Restricted profit interest which is bank and the issuer were an affiliate were a covered fund; and an interest held by an entity (or an thereof. (6) Comply with the requirements of employee or former employee thereof) (iii) For purposes of paragraph (c)(17) 12 CFR 223.15(a), as if such banking in a covered fund for which the entity of this section, the following definitions entity and its affiliates were a member (or employee thereof) serves as apply: bank and the issuer were an affiliate investment manager, investment (A) ‘‘Closely related person’’ means a thereof. adviser, commodity trading advisor, or natural person (including the estate and (d) * * * other service provider, so long as:

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(1) The sole purpose and effect of the (2) The entitlement to payments shall include any investment by the interest is to allow the entity (or under the terms of the interest are banking entity in the master fund, as employee or former employee thereof) absolute and could not be reduced well as the banking entity’s pro-rata to share in the profits of the covered based on losses arising from the share of any ownership interest in the fund as performance compensation for underlying assets of the covered fund, master fund that is held through the the investment management, investment such as allocation of losses, write- feeder fund; and advisory, commodity trading advisory, downs or charge-offs of the outstanding (ii) Fund-of-funds investments. If a or other services provided to the principal balance, or reductions in the banking entity organizes and offers a covered fund by the entity (or employee amount of interest due and payable on covered fund pursuant to § 44.11 of this or former employee thereof), provided the interest; and subpart for the purpose of investing in that the entity (or employee or former (3) The holders of the interest are not other covered funds (a ‘‘fund of funds’’) employee thereof) may be obligated entitled to receive the underlying assets and that fund of funds itself invests in under the terms of such interest to of the covered fund after all other another covered fund that the banking return profits previously received; interests have been redeemed or paid in entity is permitted to own, then the (2) All such profit, once allocated, is full (excluding the rights of a creditor to banking entity’s permitted investment distributed to the entity (or employee or exercise remedies upon the occurrence in that other fund shall include any former employee thereof) promptly after of an event of default or an acceleration investment by the banking entity in that being earned or, if not so distributed, is event). other fund, as well as the banking retained by the covered fund for the sole ■ 4. Amend § 44.12 by: entity’s pro-rata share of any ownership purpose of establishing a reserve ■ a. Revising paragraph (b)(1)(ii); interest in the fund that is held through amount to satisfy contractual obligations ■ b. Revising paragraph (b)(4); the fund of funds. The investment of the with respect to subsequent losses of the ■ c. Adding paragraph (b)(5); banking entity may not represent more ■ covered fund and such undistributed d. Revising paragraph (c)(1); and than 3 percent of the amount or value ■ profit of the entity (or employee or e. Revising paragraphs (d) and (e). of any single covered fund. former employee thereof) does not share The revisions and addition read as (5) Parallel Investments and Co- in the subsequent investment gains of follows: Investments—(i) A banking entity shall the covered fund; not be required to include in the § 44.12 Permitted investment in a covered calculation of the investment limits (3) Any amounts invested in the fund. under paragraph (a)(2) of this section covered fund, including any amounts * * * * * any investment the banking entity paid by the entity in connection with (b) * * * makes alongside a covered fund as long obtaining the restricted profit interest, (1) * * * as the investment is made in are within the limits of § 44.12 of this (ii) Treatment of registered investment compliance with applicable laws and subpart; and companies, SEC-regulated business regulations, including applicable safety (4) The interest is not transferable by development companies, and foreign and soundness standards. the entity (or employee or former public funds. For purposes of paragraph (ii) A banking entity shall not be employee thereof) except to an affiliate (b)(1)(i) of this section, a registered restricted under this section in the thereof (or an employee of the banking investment company, SEC-regulated amount of any investment the banking entity or affiliate), to immediate family business development companies, or entity makes alongside a covered fund members, or through the intestacy, of foreign public fund as described in as long as the investment is made in the employee or former employee, or in § 44.10(c)(1) of this subpart will not be compliance with applicable laws and connection with a sale of the business considered to be an affiliate of the regulations, including applicable safety that gave rise to the restricted profit banking entity so long as the banking and soundness standards. interest by the entity (or employee or entity: (c) * * * former employee thereof) to an (A) Does not own, control, or hold (1)(i) For purposes of paragraph unaffiliated party that provides with the power to vote 25 percent or (a)(2)(iii) of this section, the aggregate investment management, investment more of the voting shares of the value of all ownership interests held by advisory, commodity trading advisory, company or fund; and a banking entity shall be the sum of all or other services to the fund. (B) Provides investment advisory, amounts paid or contributed by the (B) Any senior loan or senior debt commodity trading advisory, banking entity in connection with interest that has the following administrative, and other services to the acquiring or retaining an ownership characteristics: company or fund in compliance with interest in covered funds (together with (1) Under the terms of the interest the the limitations under applicable any amounts paid by the entity in holders of such interest do not have the regulation, order, or other authority. connection with obtaining a restricted right to receive a share of the income, * * * * * profit interest under § 44.10(d)(6)(ii)), on gains, or profits of the covered fund, but (4) Multi-tier fund investments—(i) a historical cost basis; are entitled to receive only: Master-feeder fund investments. If the (ii) Treatment of employee and (i) Interest at a stated interest rate, as principal investment strategy of a director restricted profit interests well as commitment fees or other fees, covered fund (the ‘‘feeder fund’’) is to financed by the banking entity. For which are not determined by reference invest substantially all of its assets in purposes of paragraph (c)(1)(i) of this to the performance of the underlying another single covered fund (the section, an investment by a director or assets of the covered fund; and ‘‘master fund’’), then for purposes of the employee of a banking entity who (ii) Fixed principal payments on or investment limitations in paragraphs acquires a restricted profit interest in before a maturity date (which may (a)(2)(i)(B) and (a)(2)(ii) of this section, their personal capacity in a covered include prepayment premiums intended the banking entity’s permitted fund sponsored by the banking entity solely to reflect, and compensate investment in such funds shall be will be attributed to the banking entity holders of the interest for, foregone measured only by reference to the value if the banking entity, directly or income resulting from an early of the master fund. The banking entity’s indirectly, extends financing for the prepayment); permitted investment in the master fund purpose of enabling the director or

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employee to acquire the restricted profit (iii) Explain the banking entity’s plan regulated by another Federal banking interest in the fund and the financing is for reducing the permitted investment agency, the SEC, or the CFTC, the Board used to acquire such ownership interest in a covered fund through redemption, will consult with such agency prior to in the covered fund. sale, dilution or other methods as acting on an application by the banking * * * * * required in paragraph (a)(2) of this entity for an extension under paragraph (d) Capital treatment for a permitted section. (e)(1) of this section. investment in a covered fund. For (3) Factors governing the Board ■ 5. Amend § 44.13 by adding paragraph purposes of calculating compliance with determinations. In reviewing any (d) to read as follows: the applicable regulatory capital application under paragraph (e)(1) of this section, the Board may consider all § 44.13 Other permitted covered fund requirements, a banking entity shall activities and investments. deduct from the banking entity’s tier 1 the facts and circumstances related to the permitted investment in a covered * * * * * capital (as determined under paragraph (d) Permitted covered fund activities (c)(2) of this section) the greater of: fund, including: (i) Whether the investment would and investments of qualifying foreign (1)(i) The sum of all amounts paid or excluded funds. (1) The prohibition contributed by the banking entity in result, directly or indirectly, in a material exposure by the banking entity contained in § 44.10(a) does not apply to connection with acquiring or retaining a qualifying foreign excluded fund. an ownership interest (together with any to high-risk assets or high-risk trading strategies; (2) For purposes of this paragraph (d), amounts paid by the entity in a qualifying foreign excluded fund connection with obtaining a restricted (ii) The contractual terms governing the banking entity’s interest in the means a banking entity that: profit interest under § 44.10(d)(6)(ii)), on (i) Is organized or established outside a historical cost basis, plus any earnings covered fund; (iii) The date on which the covered the United States, and the ownership received; and fund is expected to have attracted interests of which are offered and sold (ii) The fair market value of the sufficient investments from investors solely outside the United States; banking entity’s ownership interests in unaffiliated with the banking entity to (ii)(A) Would be a covered fund if the the covered fund as determined under enable the banking entity to comply entity were organized or established in paragraph (b)(2)(ii) or (b)(3) of this with the limitations in paragraph the United States, or section (together with any amounts paid (a)(2)(i) of this section; (B) Is, or holds itself out as being, an by the entity in connection with (iv) The total exposure of the covered entity or arrangement that raises money obtaining a restricted profit interest banking entity to the investment and the from investors primarily for the purpose under § 44.10(d)(6)(ii)), if the banking risks that disposing of, or maintaining, of investing in financial instruments for entity accounts for the profits (or losses) the investment in the covered fund may resale or other disposition or otherwise of the fund investment in its financial pose to the banking entity and the trading in financial instruments; statements. financial stability of the United States; (iii) Would not otherwise be a banking (2) Treatment of employee and (v) The cost to the banking entity of entity except by virtue of the acquisition director restricted profit interests divesting or disposing of the investment or retention of an ownership interest in, financed by the banking entity. For within the applicable period; sponsorship of, or relationship with the purposes of paragraph (d)(1) of this (vi) Whether the investment or the entity, by another banking entity that section, an investment by a director or divestiture or conformance of the meets the following: employee of a banking entity who investment would involve or result in a (A) The banking entity is not acquires a restricted profit interest in his material conflict of interest between the organized, or directly or indirectly or her personal capacity in a covered banking entity and unaffiliated parties, controlled by a banking entity that is fund sponsored by the banking entity including clients, customers, or organized, under the laws of the United will be attributed to the banking entity counterparties to which it owes a duty; States or of any State; and if the banking entity, directly or (vii) The banking entity’s prior efforts (B) The banking entity’s acquisition of indirectly, extends financing for the to reduce through redemption, sale, an ownership interest in or sponsorship purpose of enabling the director or dilution, or other methods its ownership of the fund by the foreign banking entity employee to acquire the restricted profit interests in the covered fund, including meets the requirements for permitted interest in the fund and the financing is activities related to the marketing of covered fund activities and investments used to acquire such ownership interest interests in such covered fund; solely outside the United States, as in the covered fund. (viii) Market conditions; and provided in § 44.13(b); (e) Extension of time to divest an (ix) Any other factor that the Board (iv) Is established and operated as part ownership interest. (1) Extension Period. believes appropriate. of a bona fide asset management Upon application by a banking entity, (4) Authority to impose restrictions on business; and the Board may extend the period under activities or investment during any (v) Is not operated in a manner that paragraph (a)(2)(i) of this section for up extension period. The Board may enables any other banking entity to to 2 additional years if the Board finds impose such conditions on any evade the requirements of section 13 of that an extension would be consistent extension approved under paragraph the BHC Act or this part. ■ with safety and soundness and not 6. Amend § 44.14 by: (e)(1) of this section as the Board ■ detrimental to the public interest. determines are necessary or appropriate a. Revising paragraph (a)(2)(i); ■ b. Revising paragraph (a)(2)(ii)(C); (2) Application Requirements. An to protect the safety and soundness of ■ c. Adding paragraphs (a)(2)(iii), application for extension must: the banking entity or the financial (a)(2)(iv); and (a)(3); and (i) Be submitted to the Board at least stability of the United States, address ■ d. Revising paragraph (c). 90 days prior to the expiration of the material conflicts of interest or other The revisions and additions read as applicable time period; unsound banking practices, or otherwise follows: (ii) Provide the reasons for further the purposes of section 13 of the application, including information that BHC Act and this part. § 44.14 Limitations on relationships with a addresses the factors in paragraph (e)(3) (5) Consultation. In the case of a covered fund. of this section; and banking entity that is primarily (a) * * *

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(2) * * * Subpart B—Proprietary Trading § 248.10 Prohibition on acquiring or (i) Acquire and retain any ownership retaining an ownership interest in and ■ interest in a covered fund in accordance 8. Amend § 248.6 by adding paragraph having certain relationships with a covered fund. with the requirements of §§ 44.11, (f) to read as follows: 44.12, or 44.13; § 248.6 Other permitted proprietary trading * * * * * (ii) * * * activities. (c) * * * (C) The Board has not determined that (1) Foreign public funds. (i) Subject to * * * * * paragraphs (c)(1)(ii) and (iii) of this such transaction is inconsistent with the (f) Permitted trading activities of section, an issuer that: safe and sound operation and condition qualifying foreign excluded funds. The (A) Is organized or established outside of the banking entity; and prohibition contained in § 248.3(a) does of the United States; and (iii) Enter into a transaction with a not apply to the purchase or sale of a (B) Is authorized to offer and sell covered fund that would be an exempt financial instrument by a qualifying ownership interests, and such interests covered transaction under 12 U.S.C. foreign excluded fund. For purposes of are offered and sold, through one or 371c(d) or § 223.42 of the Board’s this paragraph (f), a qualifying foreign more public offerings. Regulation W (12 CFR 223.42); and excluded fund means a banking entity (ii) With respect to a banking entity that: (iv) Extend credit to or purchase that is, or is controlled directly or (1) Is organized or established outside assets from a covered fund, provided: indirectly by a banking entity that is, the United States, and the ownership (A) Each extension of credit or located in or organized under the laws interests of which are offered and sold purchase of assets is in the ordinary of the United States or of any State and solely outside the United States; course of business in connection with any issuer for which such banking (2)(i) Would be a covered fund if the payment transactions; settlement entity acts as sponsor, the sponsoring entity were organized or established in services; or futures, derivatives, and banking entity may not rely on the securities clearing; the United States, or (ii) Is, or holds itself out as being, an exemption in paragraph (c)(1)(i) of this (B) Each extension of credit is repaid, section for such issuer unless ownership sold, or terminated by the end of five entity or arrangement that raises money from investors primarily for the purpose interests in the issuer are sold business days; and predominantly to persons other than: (C) The banking entity making each of investing in financial instruments for resale or other disposition or otherwise (A) Such sponsoring banking entity; extension of credit meets the (B) Such issuer; requirements of § 223.42(l)(1)(i) and (ii) trading in financial instruments; (3) Would not otherwise be a banking (C) Affiliates of such sponsoring of the Board’s Regulation W (12 CFR banking entity or such issuer; and 223.42(l)(1)(i) and(ii)), as if the entity except by virtue of the acquisition or retention of an ownership interest in, (D) Directors and senior executive extension of credit was an intraday officers as defined in § 225.71(c) of the extension of credit, regardless of the sponsorship of, or relationship with the entity, by another banking entity that Board’s Regulation Y (12 CFR 225.71(c)) duration of the extension of credit. of such entities. (3) Any transaction or activity meets the following: (i) The banking entity is not (iii) For purposes of paragraph permitted under paragraphs (a)(2)(iii) or organized, or directly or indirectly (c)(1)(i)(B) of this section, the term (iv) must comply with the limitations in controlled by a banking entity that is ‘‘public offering’’ means a distribution § 44.15. organized, under the laws of the United (as defined in § 248.4(a)(3)) of securities * * * * * States or of any State; and in any jurisdiction outside the United (c) Restrictions on other permitted (ii) The banking entity’s acquisition or States to investors, including retail transactions. Any transaction permitted retention of an ownership interest in or investors, provided that: under paragraphs (a)(2)(ii), (a)(2)(iii), or sponsorship of the fund meets the (A) The distribution is subject to (a)(2)(iv) of this section shall be subject requirements for permitted covered substantive disclosure and retail to section 23B of the Federal Reserve fund activities and investments solely investor protection laws or regulations; Act (12 U.S.C. 371c–1) as if the outside the United States, as provided (B) With respect to an issuer for counterparty were an affiliate of the in § 248.13(b); which the banking entity serves as the banking entity. (4) Is established and operated as part investment manager, investment adviser, commodity trading advisor, BOARD OF GOVERNORS OF THE of a bona fide asset management commodity pool operator, or sponsor, FEDERAL RESERVE business; and (5) Is not operated in a manner that the distribution complies with all 12 CFR Chapter II enables any other banking entity to applicable requirements in the Authority and Issuance evade the requirements of section 13 of jurisdiction in which such distribution the BHC Act or this part. is being made; For the reasons stated in the Common (C) The distribution does not restrict Preamble, the Board proposes to amend Subpart C—Covered Funds Activities availability to investors having a chapter I of Title 12, Code of Federal and Investments minimum level of net worth or net Regulations as follows: investment assets; and ■ 9. Amend § 248.10 is amended by: (D) The issuer has filed or submitted, ■ PART 248—PROPRIETARY TRADING a. Revising paragraph (c)(1); with the appropriate regulatory AND CERTAIN INTERESTS IN AND ■ b. Revising paragraph (c)(3)(i); ■ authority in such jurisdiction, offering RELATIONSHIPS WITH COVERED c. Revising paragraph (c)(8); disclosure documents that are publicly ■ d. Revising paragraph (c)(10)(i); FUNDS (Regulation VV) available. ■ e. Revising paragraph (c)(11)(i); ■ 7. The authority citation for part 248 ■ f. Adding paragraphs (c)(15), (16), * * * * * continues to read as follows: (17), and (18); and (3) * * * Authority: 12 U.S.C. 1851, 12 U.S.C. 221 ■ g. Revising paragraph (d)(6). (i) Is composed of no more than 10 et seq., 12 U.S.C. 1818, 12 U.S.C. 1841 et seq., The revisions and additions read as unaffiliated co-venturers; and 12 U.S.C. 3103 et seq. follows: * * * * *

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(8) Loan securitizations—(i) Scope. (iv) Derivatives. The holdings of received from the Small Business An issuing entity for asset-backed derivatives by the issuing entity shall be Administration notice to proceed to securities that satisfies all the limited to interest rate or foreign qualify for a license as a small business conditions of this paragraph (c)(8) and exchange derivatives that satisfy all of investment company, which notice or the assets or holdings of which are the following conditions: license has not been revoked, or that has composed solely of: (A) The written terms of the voluntarily surrendered its license to (A) Loans as defined in § 248.2(t); derivatives directly relate to the loans, operate as a small business investment (B) Rights or other assets designed to the asset-backed securities, or the company in accordance with 13 CFR assure the servicing or timely contractual rights or other assets 107.1900 and does not make any new distribution of proceeds to holders of described in paragraph (c)(8)(i)(B) of investments (other than investments in such securities and rights or other assets this section; and cash equivalents, which, for the that are related or incidental to (B) The derivatives reduce the interest purposes of this paragraph, means high purchasing or otherwise acquiring and rate and/or foreign exchange risks quality, highly liquid investments holding the loans, provided that each related to the loans, the asset-backed whose maturity corresponds to the asset that is a security (other than securities, or the contractual rights or issuer’s expected or potential need for special units of beneficial interest and other assets described in paragraph funds and whose currency corresponds collateral certificates meeting the (c)(8)(i)(B) of this section. to the issuer’s assets) after such requirements of paragraph (c)(8)(v) of (v) Special units of beneficial interest voluntary surrender; or this section) meets the requirements of and collateral certificates. The assets or * * * * * paragraph (c)(8)(iii) of this section; holdings of the issuing entity may (15) Credit funds. Subject to (C) Interest rate or foreign exchange include collateral certificates and paragraphs (c)(15)(iii), (iv), and (v) of derivatives that meet the requirements special units of beneficial interest this section, an issuer that satisfies the of paragraph (c)(8)(iv) of this section; issued by a special purpose vehicle, asset and activity requirements of and provided that: paragraphs (c)(15)(i) and (ii) of this (D) Special units of beneficial interest (A) The special purpose vehicle that section. and collateral certificates that meet the issues the special unit of beneficial (i) Asset requirements. The issuer’s requirements of paragraph (c)(8)(v) of interest or collateral certificate meets assets must be composed solely of: the requirements in this paragraph this section. (A) Loans as defined in § 248.2(t); (E) Any other assets, provided that the (c)(8); (B) The special unit of beneficial (B) Debt instruments, subject to aggregate value of any such other assets paragraph (c)(15)(iv) of this section; that do not meet the criteria specified in interest or collateral certificate is used (C) Rights and other assets that are paragraphs (c)(8)(i)(A) through for the sole purpose of transferring to related or incidental to acquiring, (c)(8)(i)(D) of this section do not exceed the issuing entity for the loan holding, servicing, or selling such loans five percent of the aggregate value of the securitization the economic risks and or debt instruments, provided that: issuing entity’s assets. benefits of the assets that are (1) Each right or asset that is a (ii) Impermissible assets. For purposes permissible for loan securitizations security is either: of this paragraph (c)(8), except as under this paragraph (c)(8) and does not permitted under paragraph (c)(8)(i)(E) of directly or indirectly transfer any (i) A cash equivalent (which, for the this section, the assets or holdings of the interest in any other economic or purposes of this paragraph, means high issuing entity shall not include any of financial exposure; quality, highly liquid investments the following: (C) The special unit of beneficial whose maturity corresponds to the (A) A security, including an asset- interest or collateral certificate is issuer’s expected or potential need for backed security, or an interest in an created solely to satisfy legal funds and whose currency corresponds equity or debt security other than as requirements or otherwise facilitate the to either the underlying loans or the permitted in paragraphs (c)(8)(iii), (iv), structuring of the loan securitization; debt instruments); or (v) of this section; and (ii) A security received in lieu of debts (B) A derivative, other than a (D) The special purpose vehicle that previously contracted with respect to derivative that meets the requirements issues the special unit of beneficial such loans or debt instruments; or of paragraph (c)(8)(iv) of this section; or interest or collateral certificate and the (iii) An equity security (or right to (C) A commodity forward contract. issuing entity are established under the acquire an equity security) received on (iii) Permitted securities. direction of the same entity that customary terms in connection with Notwithstanding paragraph (c)(8)(ii)(A) initiated the loan securitization. such loans or debt instruments; and of this section, the issuing entity may * * * * * (2) Rights or other assets held under hold securities if those securities are: (10) Qualifying covered bonds—(i) this paragraph (c)(15)(i)(C) of this (A) Cash equivalents—which, for the Scope. An entity owning or holding a section may not include commodity purposes of this paragraph, means high dynamic or fixed pool of loans or other forward contracts; and quality, highly liquid investments assets as provided in paragraph (c)(8) of (D) Interest rate or foreign exchange whose maturity corresponds to the this section for the benefit of the holders derivatives, if: securitization’s expected or potential of covered bonds, provided that the (1) The written terms of the derivative need for funds and whose currency assets in the pool are composed solely directly relate to the loans, debt corresponds to either the underlying of assets that meet the conditions in instruments, or other rights or assets loans or the asset-backed securities—for paragraph (c)(8)(i) of this section. described in paragraph (c)(15)(i)(C) of purposes of the rights and assets in * * * * * this section; and paragraph (c)(8)(i)(B) of this section; or (11) * * * (2) The derivative reduces the interest (B) Securities received in lieu of debts (i) That is a small business investment rate and/or foreign exchange risks previously contracted with respect to company, as defined in section 103(3) of related to the loans, debt instruments, or the loans supporting the asset-backed the Small Business Investment Act of other rights or assets described in securities. 1958 (15 U.S.C. 662), or that has paragraph (c)(15)(i)(C) of this section.

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(ii) Activity requirements. To be (ii) A banking entity that acts as a entity, other than up to 0.5 percent of eligible for the exclusion of paragraph sponsor, investment adviser, or the entity’s outstanding ownership (c)(15) of this section, an issuer must: commodity trading advisor to an issuer interests that may be held by the (A) Not engage in any activity that that meets the conditions in paragraph banking entity and its affiliates for the would constitute proprietary trading (c)(16)(i) of this section may not rely on purpose of and to the extent necessary under § 248.3(b)(l)(i), as if the issuer this exclusion unless the banking entity: for establishing corporate separateness were a banking entity; and (A) Provides in writing to any or addressing bankruptcy, insolvency, (B) Not issue asset-backed securities. prospective and actual investor in the or similar concerns; (iii) Requirements for a sponsor, issuer the disclosures required under (E) Complies with the requirements of investment adviser, or commodity § 248.11 (a)(8), as if the issuer were a §§ 248.14(b) and 248.15, as if such trading advisor. A banking entity that covered fund; and entity were a covered fund; and acts as a sponsor, investment adviser, or (B) Ensures that the activities of the (F) Complies with the requirements of commodity trading advisor to an issuer issuer are consistent with safety and 12 CFR 223.15(a), as if such banking that meets the conditions in paragraphs soundness standards that are entity and its affiliates were a member (c)(15)(i) and (ii) of this section may not substantially similar to those that would bank and the issuer were an affiliate rely on this exclusion unless the apply if the banking entity engaged in thereof. banking entity: the activities directly. (iii) For purposes of paragraph (c)(17) (A) Provides in writing to any (iii) The banking entity must not, of this section, the following definitions prospective and actual investor in the directly or indirectly, guarantee, apply: assume, or otherwise insure the issuer the disclosures required under (A) ‘‘Closely related person’’ means a § 248.11(a)(8) of this subpart, as if the obligations or performance of the issuer. (iv) A banking entity’s ownership natural person (including the estate and issuer were a covered fund; and estate planning vehicles of such person) (B) Ensures that the activities of the interest in or relationship with the issuer must: who has longstanding business or issuer are consistent with safety and personal relationships with any family soundness standards that are (A) Comply with the limitations imposed in §§ 248.14 (except the customer. substantially similar to those that would (B) ‘‘Family customer’’ means: apply if the banking entity engaged in banking entity may acquire and retain any ownership interest in the issuer) (1) A family client, as defined in Rule the activities directly. 202(a)(11)(G)–1(d)(4) of the Investment (iv) Additional Banking Entity and 248.15, as if the issuer were a Advisers Act of 1940 (17 CFR Requirements. A banking entity may not covered fund; and 275.202(a)(11)(G)–1(d)(4)); or rely on this exclusion with respect to an (B) Be conducted in compliance with, (2) Any natural person who is a issuer that meets the conditions in and subject to, applicable banking laws father-in-law, mother-in-law, brother-in- paragraphs (c)(15)(i) and (ii) of this and regulations, including applicable law, sister-in-law, son-in-law or section unless: safety and soundness standards. daughter-in-law of a family client, or a (A) The banking entity does not, (17) Family wealth management spouse or a spousal equivalent of any of directly or indirectly, guarantee, vehicles. (i) Subject to paragraph the foregoing. assume, or otherwise insure the (c)(17)(ii) of this section, any entity that obligations or performance of the issuer is not, and does not hold itself out as (18) Customer facilitation vehicles. (i) being, an entity or arrangement that or of any entity to which such issuer Subject to paragraph (c)(18)(ii) of this raises money from investors primarily extends credit or in which such issuer section, an issuer that is formed by or for the purpose of investing in securities invests; and at the request of a customer of the (B) Any assets the issuer holds for resale or other disposition or banking entity for the purpose of pursuant to paragraphs (c)(15)(i)(B) or otherwise trading in securities, and: providing such customer (which may (A) If the entity is a trust, the (i)(C)(1)(iii) of this section would be include one or more affiliates of such grantor(s) of the entity are all family permissible for the banking entity to customer) with exposure to a customers; and transaction, investment strategy, or acquire and hold directly. (B) If the entity is not a trust: (v) Investment and Relationship other service provided by the banking (1) A majority of the voting interests entity. Limits. A banking entity’s investment in, in the entity are owned (directly or and relationship with, the issuer must: (ii) A banking entity may rely on the indirectly) by family customers; and exclusion in paragraph (c)(18)(i) of this (A) Comply with the limitations (2) The entity is owned only by family imposed in §§ 248.14 (except the section with respect to an issuer customers and up to 3 closely related provided that: banking entity may acquire and retain persons of the family customers. (A) All of the ownership interests of any ownership interest in the issuer) (ii) A banking entity may rely on the the issuer are owned by the customer and 248.15, as if the issuer were a exclusion in paragraph (c)(17)(i) of this covered fund; and section with respect to an entity (which may include one or more of its (B) Be conducted in compliance with, provided that the banking entity (or an affiliates) for whom the issuer was and subject to, applicable banking laws affiliate): created, subject to paragraph and regulations, including applicable (A) Provides bona fide trust, fiduciary, (c)(18)(ii)(B)(4) of this section; and safety and soundness standards. investment advisory, or commodity (B) The banking entity and its (16) Qualifying venture capital trading advisory services to the entity; affiliates: funds.(i) Subject to paragraphs (c)(16)(ii) (B) Does not, directly or indirectly, (1) Maintain documentation outlining through (iv) of this section, an issuer guarantee, assume, or otherwise insure how the banking entity intends to that: the obligations or performance of such facilitate the customer’s exposure to (A) Is a venture capital fund as entity; such transaction, investment strategy, or defined in 17 CFR 275.203(l)–1; and (C) Complies with the disclosure service; (B) Does not engage in any activity obligations under § 248.11(a)(8), as if (2) Do not, directly or indirectly, that would constitute proprietary such entity were a covered fund; guarantee, assume, or otherwise insure trading under § 248.3(b)(1)(i), as if the (D) Does not acquire or retain, as the obligations or performance of such issuer were a banking entity. principal, an ownership interest in the issuer;

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(3) Comply with the disclosure losses, write-downs or charge-offs of the investment management, investment obligations under § 248.11(a)(8), as if outstanding principal balance, or advisory, commodity trading advisory, such issuer were a covered fund; reductions in the amount of interest due or other services to the fund. (4) Do not acquire or retain, as and payable on the interest; (B) Any senior loan or senior debt principal, an ownership interest in the (F) Receives income on a pass-through interest that has the following issuer, other than up to 0.5 percent of basis from the covered fund, or has a characteristics: the issuer’s outstanding ownership rate of return that is determined by (1) Under the terms of the interest the interests that may be held by the reference to the performance of the holders of such interest do not have the banking entity and its affiliates for the underlying assets of the covered fund; right to receive a share of the income, purpose of and to the extent necessary or gains, or profits of the covered fund, but for establishing corporate separateness (G) Any synthetic right to have, are entitled to receive only: or addressing bankruptcy, insolvency, receive, or be allocated any of the rights (i) Interest at a stated interest rate, as or similar concerns; in paragraphs (d)(6)(i)(A) through (F) of well as commitment fees or other fees, (5) Comply with the requirements of this section. which are not determined by reference §§ 248.14(b) and 248.15, as if such (ii) Ownership interest does not to the performance of the underlying issuer were a covered fund; and include: assets of the covered fund; and (6) Comply with the requirements of (A) Restricted profit interest which is (ii) Fixed principal payments on or an interest held by an entity (or an 12 CFR 223.15(a), as if such banking before a maturity date (which may employee or former employee thereof) entity and its affiliates were a member include prepayment premiums intended in a covered fund for which the entity bank and the issuer were an affiliate solely to reflect, and compensate (or employee thereof) serves as thereof. holders of the interest for, foregone investment manager, investment income resulting from an early * * * * * adviser, commodity trading advisor, or prepayment); (d) * * * other service provider, so long as: (2) The entitlement to payments (6) Ownership interest—(i) Ownership (1) The sole purpose and effect of the under the terms of the interest are interest means any equity, partnership, interest is to allow the entity (or absolute and could not be reduced or other similar interest. An ‘‘other employee or former employee thereof) based on losses arising from the similar interest’’ means an interest that: to share in the profits of the covered underlying assets of the covered fund, (A) Has the right to participate in the fund as performance compensation for such as allocation of losses, write- selection or removal of a general the investment management, investment downs or charge-offs of the outstanding partner, managing member, member of advisory, commodity trading advisory, principal balance, or reductions in the the board of directors or trustees, or other services provided to the amount of interest due and payable on investment manager, investment covered fund by the entity (or employee the interest; and adviser, or commodity trading advisor or former employee thereof), provided (3) The holders of the interest are not of the covered fund (excluding the that the entity (or employee or former entitled to receive the underlying assets rights of a creditor to exercise remedies employee thereof) may be obligated of the covered fund after all other upon the occurrence of an event of under the terms of such interest to interests have been redeemed or paid in default or an acceleration event, which return profits previously received; full (excluding the rights of a creditor to includes the right to participate in the (2) All such profit, once allocated, is exercise remedies upon the occurrence removal of an investment manager for distributed to the entity (or employee or of an event of default or an acceleration cause or to nominate or vote on a former employee thereof) promptly after event). nominated replacement manager upon being earned or, if not so distributed, is ■ 10. Amend § 248.12 by: an investment manager’s resignation or retained by the covered fund for the sole ■ a. Revising paragraph (b)(1)(ii); removal); purpose of establishing a reserve ■ b. Revising paragraph (b)(4); (B) Has the right under the terms of amount to satisfy contractual obligations ■ c. Adding paragraph (b)(5); ■ the interest to receive a share of the with respect to subsequent losses of the d. Revising paragraph (c)(1); and ■ income, gains or profits of the covered covered fund and such undistributed e. Revising paragraphs (d) and (e). The revisions and addition read as fund; profit of the entity (or employee or follows: (C) Has the right to receive the former employee thereof) does not share underlying assets of the covered fund in the subsequent investment gains of § 248.12 Permitted investment in a after all other interests have been the covered fund; covered fund. redeemed and/or paid in full (excluding (3) Any amounts invested in the * * * * * the rights of a creditor to exercise covered fund, including any amounts (b) * * * remedies upon the occurrence of an paid by the entity in connection with (1) * * * event of default or an acceleration obtaining the restricted profit interest, (ii) Treatment of registered investment event); are within the limits of § 248.12 of this companies, SEC-regulated business (D) Has the right to receive all or a subpart; and development companies, and foreign portion of excess spread (the positive (4) The interest is not transferable by public funds. For purposes of paragraph difference, if any, between the aggregate the entity (or employee or former (b)(1)(i) of this section, a registered interest payments received from the employee thereof) except to an affiliate investment company, SEC-regulated underlying assets of the covered fund thereof (or an employee of the banking business development companies, or and the aggregate interest paid to the entity or affiliate), to immediate family foreign public fund as described in holders of other outstanding interests); members, or through the intestacy, of § 248.10(c)(1) will not be considered to (E) Provides under the terms of the the employee or former employee, or in be an affiliate of the banking entity so interest that the amounts payable by the connection with a sale of the business long as the banking entity: covered fund with respect to the interest that gave rise to the restricted profit (A) Does not own, control, or hold could be reduced based on losses arising interest by the entity (or employee or with the power to vote 25 percent or from the underlying assets of the former employee thereof) to an more of the voting shares of the covered fund, such as allocation of unaffiliated party that provides company or fund; and

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(B) Provides investment advisory, a banking entity shall be the sum of all purpose of enabling the director or commodity trading advisory, amounts paid or contributed by the employee to acquire the restricted profit administrative, and other services to the banking entity in connection with interest in the fund and the financing is company or fund in compliance with acquiring or retaining an ownership used to acquire such ownership interest the limitations under applicable interest in covered funds (together with in the covered fund. regulation, order, or other authority. any amounts paid by the entity in (e) Extension of time to divest an * * * * * connection with obtaining a restricted ownership interest. (1) Extension Period. (4) Multi-tier fund investments—(i) profit interest under § 248.10(d)(6)(ii)), Upon application by a banking entity, Master-feeder fund investments. If the on a historical cost basis; the Board may extend the period under principal investment strategy of a (ii) Treatment of employee and paragraph (a)(2)(i) of this section for up covered fund (the ‘‘feeder fund’’) is to director restricted profit interests to 2 additional years if the Board finds invest substantially all of its assets in financed by the banking entity. For that an extension would be consistent another single covered fund (the purposes of paragraph (c)(1)(i) of this with safety and soundness and not ‘‘master fund’’), then for purposes of the section, an investment by a director or detrimental to the public interest. investment limitations in paragraphs employee of a banking entity who (2) Application Requirements. An (a)(2)(i)(B) and (a)(2)(ii) of this section, acquires a restricted profit interest in application for extension must: the banking entity’s permitted their personal capacity in a covered (i) Be submitted to the Board at least investment in such funds shall be fund sponsored by the banking entity 90 days prior to the expiration of the measured only by reference to the value will be attributed to the banking entity applicable time period; (ii) Provide the reasons for of the master fund. The banking entity’s if the banking entity, directly or application, including information that permitted investment in the master fund indirectly, extends financing for the addresses the factors in paragraph (e)(3) shall include any investment by the purpose of enabling the director or of this section; and banking entity in the master fund, as employee to acquire the restricted profit (iii) Explain the banking entity’s plan well as the banking entity’s pro-rata interest in the fund and the financing is for reducing the permitted investment share of any ownership interest in the used to acquire such ownership interest in a covered fund through redemption, master fund that is held through the in the covered fund. sale, dilution or other methods as feeder fund; and * * * * * required in paragraph (a)(2) of this (ii) Fund-of-funds investments. If a (d) Capital treatment for a permitted section. banking entity organizes and offers a investment in a covered fund. For (3) Factors governing the Board covered fund pursuant to § 248.11 for purposes of calculating compliance with determinations. In reviewing any the purpose of investing in other the applicable regulatory capital application under paragraph (e)(1) of covered funds (a ‘‘fund of funds’’) and requirements, a banking entity shall this section, the Board may consider all that fund of funds itself invests in deduct from the banking entity’s tier 1 the facts and circumstances related to another covered fund that the banking capital (as determined under paragraph the permitted investment in a covered entity is permitted to own, then the (c)(2) of this section) the greater of: fund, including: banking entity’s permitted investment (1)(i) The sum of all amounts paid or (i) Whether the investment would in that other fund shall include any contributed by the banking entity in result, directly or indirectly, in a investment by the banking entity in that connection with acquiring or retaining material exposure by the banking entity other fund, as well as the banking an ownership interest (together with any to high-risk assets or high-risk trading entity’s pro-rata share of any ownership amounts paid by the entity in strategies; interest in the fund that is held through connection with obtaining a restricted (ii) The contractual terms governing the fund of funds. The investment of the profit interest under § 248.10(d)(6)(ii) of the banking entity’s interest in the banking entity may not represent more subpart C of this part), on a historical covered fund; than 3 percent of the amount or value cost basis, plus any earnings received; (iii) The date on which the covered of any single covered fund. and fund is expected to have attracted (5) Parallel Investments and Co- (ii) The fair market value of the sufficient investments from investors Investments—(i) A banking entity shall banking entity’s ownership interests in unaffiliated with the banking entity to not be required to include in the the covered fund as determined under enable the banking entity to comply calculation of the investment limits paragraph (b)(2)(ii) or (b)(3) of this with the limitations in paragraph under paragraph (a)(2) of this section section (together with any amounts paid (a)(2)(i) of this section; any investment the banking entity by the entity in connection with (iv) The total exposure of the covered makes alongside a covered fund as long obtaining a restricted profit interest banking entity to the investment and the as the investment is made in under § 248.10(d)(6)(ii) of subpart C of risks that disposing of, or maintaining, compliance with applicable laws and this part), if the banking entity accounts the investment in the covered fund may regulations, including applicable safety for the profits (or losses) of the fund pose to the banking entity and the and soundness standards. investment in its financial statements. financial stability of the United States; (ii) A banking entity shall not be (2) Treatment of employee and (v) The cost to the banking entity of restricted under this section in the director restricted profit interests divesting or disposing of the investment amount of any investment the banking financed by the banking entity. For within the applicable period; entity makes alongside a covered fund purposes of paragraph (d)(1) of this (vi) Whether the investment or the as long as the investment is made in section, an investment by a director or divestiture or conformance of the compliance with applicable laws and employee of a banking entity who investment would involve or result in a regulations, including applicable safety acquires a restricted profit interest in his material conflict of interest between the and soundness standards. or her personal capacity in a covered banking entity and unaffiliated parties, (c) * * * fund sponsored by the banking entity including clients, customers, or (1)(i) For purposes of paragraph will be attributed to the banking entity counterparties to which it owes a duty; (a)(2)(iii) of this section, the aggregate if the banking entity, directly or (vii) The banking entity’s prior efforts value of all ownership interests held by indirectly, extends financing for the to reduce through redemption, sale,

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dilution, or other methods its ownership of the fund by the foreign banking entity counterparty were an affiliate of the interests in the covered fund, including meets the requirements for permitted banking entity. activities related to the marketing of covered fund activities and investments FEDERAL DEPOSIT INSURANCE interests in such covered fund; solely outside the United States, as CORPORATION (viii) Market conditions; and provided in § 248.13(b); (ix) Any other factor that the Board (iv) Is established and operated as part 12 CFR Part 351 believes appropriate. of a bona fide asset management Authority and Issuance (4) Authority to impose restrictions on business; and activities or investment during any (v) Is not operated in a manner that For the reasons set forth in the extension period. The Board may enables any other banking entity to Common Preamble, the Federal Deposit impose such conditions on any evade the requirements of section 13 of Insurance Corporation proposes to extension approved under paragraph the BHC Act or this part. amend chapter III of Title 12, Code of (e)(1) of this section as the Board ■ 12. Amend § 248.14 by: Federal Regulations as follows: determines are necessary or appropriate ■ a. Revising paragraph (a)(2)(i); to protect the safety and soundness of ■ b. Revising paragraph (a)(2)(ii)(C); PART 351—PROPRIETARY TRADING the banking entity or the financial ■ c. Adding paragraphs (a)(2)(iii), AND CERTAIN INTERESTS IN AND stability of the United States, address (a)(2)(iv); and (a)(3); and RELATIONSHIPS WITH COVERED material conflicts of interest or other ■ d. Revising paragraph (c). FUNDS unsound banking practices, or otherwise The revisions and additions read as ■ 13. The authority citation for part 351 further the purposes of section 13 of the follows: continues to read as follows: BHC Act and this part. § 248.14 Limitations on relationships with Authority: 12 U.S.C. 1851; 1811 et seq.; (5) Consultation. In the case of a a covered fund. 3101 et seq.; and 5412. banking entity that is primarily (a) * * * regulated by another Federal banking (2) * * * Subpart B—Proprietary Trading agency, the SEC, or the CFTC, the Board (i) Acquire and retain any ownership will consult with such agency prior to ■ 14. Amend § 351.6 by adding interest in a covered fund in accordance paragraph (f) to read as follows: acting on an application by the banking with the requirements of §§ 248.11, entity for an extension under paragraph 248.12, or 248.13; § 351.6 Other permitted proprietary trading (e)(1) of this section. (ii) * * * activities. ■ 11. Amend § 248.13 by adding (C) The Board has not determined that * * * * * paragraph (d) to read as follows: such transaction is inconsistent with the (f) Permitted trading activities of § 248.13 Other permitted covered fund safe and sound operation and condition qualifying foreign excluded funds. The activities and investments. of the banking entity; and prohibition contained in § 351.3(a) does * * * * * (iii) Enter into a transaction with a not apply to the purchase or sale of a (d) Permitted covered fund activities covered fund that would be an exempt financial instrument by a qualifying and investments of qualifying foreign covered transaction under 12 U.S.C. foreign excluded fund. For purposes of excluded funds. (1) The prohibition 371c(d) or § 223.42 of the Board’s this paragraph (f), a qualifying foreign contained in § 248.10(a) does not apply Regulation W (12 CFR 223.42); and excluded fund means a banking entity to a qualifying foreign excluded fund. (iv) Extend credit to or purchase that: (2) For purposes of this paragraph (d), assets from a covered fund, provided: (1) Is organized or established outside a qualifying foreign excluded fund (A) Each extension of credit or the United States, and the ownership means a banking entity that: purchase of assets is in the ordinary interests of which are offered and sold (i) Is organized or established outside course of business in connection with solely outside the United States; the United States, and the ownership payment transactions; settlement (2)(i) Would be a covered fund if the interests of which are offered and sold services; or futures, derivatives, and entity were organized or established in solely outside the United States; securities clearing; the United States, or (ii)(A) Would be a covered fund if the (B) Each extension of credit is repaid, (ii) Is, or holds itself out as being, an entity were organized or established in sold, or terminated by the end of five entity or arrangement that raises money the United States, or business days; and from investors primarily for the purpose (B) Is, or holds itself out as being, an (C) The banking entity making each of investing in financial instruments for entity or arrangement that raises money extension of credit meets the resale or other disposition or otherwise from investors primarily for the purpose requirements of § 223.42(l)(1)(i) and (ii) trading in financial instruments; of investing in financial instruments for of the Board’s Regulation W (12 CFR (3) Would not otherwise be a banking resale or other disposition or otherwise 223.42(l)(1)(i) and(ii)), as if the entity except by virtue of the acquisition trading in financial instruments; extension of credit was an intraday or retention of an ownership interest in, (iii) Would not otherwise be a banking extension of credit, regardless of the sponsorship of, or relationship with the entity except by virtue of the acquisition duration of the extension of credit. entity, by another banking entity that or retention of an ownership interest in, (3) Any transaction or activity meets the following: sponsorship of, or relationship with the permitted under paragraphs (a)(2)(iii) or (i) The banking entity is not entity, by another banking entity that (iv) must comply with the limitations in organized, or directly or indirectly meets the following: § 248.15. controlled by a banking entity that is (A) The banking entity is not * * * * * organized, under the laws of the United organized, or directly or indirectly (c) Restrictions on other permitted States or of any State; and controlled by a banking entity that is transactions. Any transaction permitted (ii) The banking entity’s acquisition or organized, under the laws of the United under paragraphs (a)(2)(ii), (a)(2)(iii), or retention of an ownership interest in or States or of any State; and (a)(2)(iv) of this section shall be subject sponsorship of the fund meets the (B) The banking entity’s acquisition of to section 23B of the Federal Reserve requirements for permitted covered an ownership interest in or sponsorship Act (12 U.S.C. 371c–1) as if the fund activities and investments solely

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outside the United States, as provided (B) With respect to an issuer for (B) A derivative, other than a in § 351.13(b); which the banking entity serves as the derivative that meets the requirements (4) Is established and operated as part investment manager, investment of paragraph (c)(8)(iv) of this section; or of a bona fide asset management adviser, commodity trading advisor, (C) A commodity forward contract. business; and commodity pool operator, or sponsor, (iii) Permitted securities. (5) Is not operated in a manner that the distribution complies with all Notwithstanding paragraph (c)(8)(ii)(A) enables any other banking entity to applicable requirements in the of this section, the issuing entity may evade the requirements of section 13 of jurisdiction in which such distribution hold securities if those securities are: the BHC Act or this part. is being made; (A) Cash equivalents—which, for the (C) The distribution does not restrict purposes of this paragraph, means high Subpart C—Covered Funds Activities availability to investors having a quality, highly liquid investments and Investments minimum level of net worth or net whose maturity corresponds to the ■ investment assets; and securitization’s expected or potential 15. Amend § 351.10 by: (D) The issuer has filed or submitted, ■ a. Revising paragraph (c)(1); need for funds and whose currency with the appropriate regulatory ■ b. Revising paragraph (c)(3)(i); corresponds to either the underlying authority in such jurisdiction, offering ■ c. Revising paragraph (c)(8); loans or the asset-backed securities—for disclosure documents that are publicly ■ d. Revising paragraph (c)(10)(i); purposes of the rights and assets in ■ e. Revising paragraph (c)(11)(i); available. paragraph (c)(8)(i)(B) of this section; or ■ f. Adding paragraphs (c)(15), (16), * * * * * (B) Securities received in lieu of debts (17), and (18); and (3) * * * previously contracted with respect to ■ g. Revising paragraph (d)(6). (i) Is composed of no more than 10 the loans supporting the asset-backed The revisions and additions read as unaffiliated co-venturers; securities. follows: * * * * * (iv) Derivatives. The holdings of (8) Loan securitizations—(i) Scope. derivatives by the issuing entity shall be § 351.10 Prohibition on acquiring or An issuing entity for asset-backed retaining an ownership interest in and limited to interest rate or foreign securities that satisfies all the exchange derivatives that satisfy all of having certain relationships with a covered conditions of this paragraph (c)(8) and fund. the following conditions: the assets or holdings of which are (A) The written terms of the * * * * * composed solely of: (c) * * * derivatives directly relate to the loans, (A) Loans as defined in § 351.2(t); the asset-backed securities, or the (1) Foreign public funds. (i) Subject to (B) Rights or other assets designed to contractual rights or other assets paragraphs (c)(1)(ii) and (iii) of this assure the servicing or timely described in paragraph (c)(8)(i)(B) of section, an issuer that: distribution of proceeds to holders of this section; and (A) Is organized or established outside such securities and rights or other assets (B) The derivatives reduce the interest of the United States; and that are related or incidental to rate and/or foreign exchange risks (B) Is authorized to offer and sell purchasing or otherwise acquiring and related to the loans, the asset-backed ownership interests, and such interests holding the loans, provided that each securities, or the contractual rights or are offered and sold, through one or asset that is a security (other than other assets described in paragraph more public offerings. special units of beneficial interest and (c)(8)(i)(B) of this section. (ii) With respect to a banking entity collateral certificates meeting the that is, or is controlled directly or requirements of paragraph (c)(8)(v) of (v) Special units of beneficial interest indirectly by a banking entity that is, this section) meets the requirements of and collateral certificates. The assets or located in or organized under the laws paragraph (c)(8)(iii) of this section; holdings of the issuing entity may of the United States or of any State and (C) Interest rate or foreign exchange include collateral certificates and any issuer for which such banking derivatives that meet the requirements special units of beneficial interest entity acts as sponsor, the sponsoring of paragraph (c)(8)(iv) of this section; issued by a special purpose vehicle, banking entity may not rely on the and provided that: exemption in paragraph (c)(1)(i) of this (D) Special units of beneficial interest (A) The special purpose vehicle that section for such issuer unless ownership and collateral certificates that meet the issues the special unit of beneficial interests in the issuer are sold requirements of paragraph (c)(8)(v) of interest or collateral certificate meets predominantly to persons other than: this section. the requirements in this paragraph (A) Such sponsoring banking entity; (E) Any other assets, provided that the (c)(8); (B) Such issuer; aggregate value of any such other assets (B) The special unit of beneficial (C) Affiliates of such sponsoring that do not meet the criteria specified in interest or collateral certificate is used banking entity or such issuer; and paragraphs (c)(8)(i)(A) through for the sole purpose of transferring to (D) Directors and senior executive (c)(8)(i)(D) of this section do not exceed the issuing entity for the loan officers as defined in § 225.71(c) of the five percent of the aggregate value of the securitization the economic risks and Board’s Regulation Y (12 CFR 225.71(c)) issuing entity’s assets. benefits of the assets that are of such entities. (ii) Impermissible assets. For purposes permissible for loan securitizations (iii) For purposes of paragraph of this paragraph (c)(8), except as under this paragraph (c)(8) and does not (c)(1)(i)(B) of this section, the term permitted under paragraph (c)(8)(i)(E) of directly or indirectly transfer any ‘‘public offering’’ means a distribution this section, the assets or holdings of the interest in any other economic or (as defined in § 351.4(a)(3)) of securities issuing entity shall not include any of financial exposure; in any jurisdiction outside the United the following: (C) The special unit of beneficial States to investors, including retail (A) A security, including an asset- interest or collateral certificate is investors, provided that: backed security, or an interest in an created solely to satisfy legal (A) The distribution is subject to equity or debt security other than as requirements or otherwise facilitate the substantive disclosure and retail permitted in paragraphs (c)(8)(iii), (iv), structuring of the loan securitization; investor protection laws or regulations; or (v) of this section; and

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(D) The special purpose vehicle that (iii) An equity security (or right to (v) Investment and Relationship issues the special unit of beneficial acquire an equity security) received on Limits. A banking entity’s investment in, interest or collateral certificate and the customary terms in connection with and relationship with, the issuer must: issuing entity are established under the such loans or debt instruments; and (A) Comply with the limitations direction of the same entity that (2) Rights or other assets held under imposed in §§ 351.14 (except the initiated the loan securitization. this paragraph (c)(15)(i)(C) of this banking entity may acquire and retain * * * * * section may not include commodity any ownership interest in the issuer) (10) Qualifying covered bonds—(i) forward contracts; and and 351.15, as if the issuer were a Scope. An entity owning or holding a (D) Interest rate or foreign exchange covered fund; and dynamic or fixed pool of loans or other derivatives, if: (B) Be conducted in compliance with, assets as provided in paragraph (c)(8) of (1) The written terms of the derivative and subject to, applicable banking laws this section for the benefit of the holders directly relate to the loans, debt and regulations, including applicable of covered bonds, provided that the instruments, or other rights or assets safety and soundness standards. (16) Qualifying venture capital funds. assets in the pool are composed solely described in paragraph (c)(15)(i)(C) of (i) Subject to paragraphs (c)(16)(ii) of assets that meet the conditions in this section; and through (iv) of this section, an issuer paragraph (c)(8)(i) of this section. (2) The derivative reduces the interest * * * * * that: rate and/or foreign exchange risks (A) Is a venture capital fund as (11) * * * related to the loans, debt instruments, or (i) That is a small business investment defined in 17 CFR 275.203(l)–1; and other rights or assets described in (B) Does not engage in any activity company, as defined in section 103(3) of paragraph (c)(15)(i)(C) of this section. the Small Business Investment Act of that would constitute proprietary (ii) Activity requirements. To be 1958 (15 U.S.C. 662), or that has trading under § 351.3(b)(1)(i), as if the eligible for the exclusion of paragraph received from the Small Business issuer were a banking entity. (c)(15) of this section, an issuer must: Administration notice to proceed to (ii) A banking entity that acts as a qualify for a license as a small business (A) Not engage in any activity that sponsor, investment adviser, or investment company, which notice or would constitute proprietary trading commodity trading advisor to an issuer license has not been revoked, or that has under § 351.3(b)(l)(i) of subpart A of this that meets the conditions in paragraph voluntarily surrendered its license to part, as if the issuer were a banking (c)(16)(i) of this section may not rely on operate as a small business investment entity; and this exclusion unless the banking entity: company in accordance with 13 CFR (B) Not issue asset-backed securities. (A) Provides in writing to any 107.1900 and does not make any new (iii) Requirements for a sponsor, prospective and actual investor in the investments (other than investments in investment adviser, or commodity issuer the disclosures required under cash equivalents, which, for the trading advisor. A banking entity that § 351.11(a)(8), as if the issuer were a purposes of this paragraph, means high acts as a sponsor, investment adviser, or covered fund; and quality, highly liquid investments commodity trading advisor to an issuer (B) Ensures that the activities of the whose maturity corresponds to the that meets the conditions in paragraphs issuer are consistent with safety and issuer’s expected or potential need for (c)(15)(i) and (ii) of this section may not soundness standards that are funds and whose currency corresponds rely on this exclusion unless the substantially similar to those that would to the issuer’s assets) after such banking entity: apply if the banking entity engaged in voluntary surrender; or (A) Provides in writing to any the activities directly. (iii) The banking entity must not, * * * * * prospective and actual investor in the (15) Credit funds. Subject to issuer the disclosures required under directly or indirectly, guarantee, paragraphs (c)(15)(iii), (iv), and (v) of § 351.11(a)(8), as if the issuer were a assume, or otherwise insure the this section, an issuer that satisfies the covered fund; and obligations or performance of the issuer. (iv) A banking entity’s ownership asset and activity requirements of (B) Ensures that the activities of the interest in or relationship with the paragraphs (c)(15)(i) and (ii) of this issuer are consistent with safety and section. issuer must: soundness standards that are (A) Comply with the limitations (i) Asset requirements. The issuer’s substantially similar to those that would assets must be composed solely of: imposed in §§ 351.14 (except the apply if the banking entity engaged in banking entity may acquire and retain (A) Loans as defined in § 351.2(t); the activities directly. (B) Debt instruments, subject to any ownership interest in the issuer) (iv) Additional Banking Entity and 351.15, as if the issuer were a paragraph (c)(15)(iv) of this section; Requirements. A banking entity may not (C) Rights and other assets that are covered fund; and rely on this exclusion with respect to an related or incidental to acquiring, (B) Be conducted in compliance with, issuer that meets the conditions in holding, servicing, or selling such loans and subject to, applicable banking laws or debt instruments, provided that: paragraphs (c)(15)(i) and (ii) of this and regulations, including applicable (1) Each right or asset that is a section unless: safety and soundness standards. security is either: (A) The banking entity does not, (17) Family wealth management (i) A cash equivalent (which, for the directly or indirectly, guarantee, vehicles. (i) Subject to paragraph purposes of this paragraph, means high assume, or otherwise insure the (c)(17)(ii) of this section, any entity that quality, highly liquid investments obligations or performance of the issuer is not, and does not hold itself out as whose maturity corresponds to the or of any entity to which such issuer being, an entity or arrangement that issuer’s expected or potential need for extends credit or in which such issuer raises money from investors primarily funds and whose currency corresponds invests; and for the purpose of investing in securities to either the underlying loans or the (B) Any assets the issuer holds for resale or other disposition or debt instruments); pursuant to paragraphs (c)(15)(i)(B) or otherwise trading in securities, and: (ii) A security received in lieu of debts (i)(C)(1)(iii) of this section would be (A) If the entity is a trust, the previously contracted with respect to permissible for the banking entity to grantor(s) of the entity are all family such loans or debt instruments; or acquire and hold directly. customers; and

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(B) If the entity is not a trust: other service provided by the banking income, gains or profits of the covered (1) A majority of the voting interests entity. fund; in the entity are owned (directly or (ii) A banking entity may rely on the (C) Has the right to receive the indirectly) by family customers; and exclusion in paragraph (c)(18)(i) of this underlying assets of the covered fund (2) The entity is owned only by family section with respect to an issuer after all other interests have been customers and up to 3 closely related provided that: redeemed and/or paid in full (excluding persons of the family customers. (A) All of the ownership interests of the rights of a creditor to exercise (ii) A banking entity may rely on the the issuer are owned by the customer remedies upon the occurrence of an exclusion in paragraph (c)(17)(i) of this (which may include one or more of its event of default or an acceleration section with respect to an entity affiliates) for whom the issuer was event); provided that the banking entity (or an created, subject to paragraph (D) Has the right to receive all or a affiliate): (c)(18)(ii)(B)(4) of this section; and portion of excess spread (the positive (A) Provides bona fide trust, fiduciary, (B) The banking entity and its difference, if any, between the aggregate investment advisory, or commodity affiliates: interest payments received from the trading advisory services to the entity; (1) Maintain documentation outlining underlying assets of the covered fund (B) Does not, directly or indirectly, how the banking entity intends to and the aggregate interest paid to the guarantee, assume, or otherwise insure facilitate the customer’s exposure to holders of other outstanding interests); the obligations or performance of such such transaction, investment strategy, or (E) Provides under the terms of the entity; service; interest that the amounts payable by the (C) Complies with the disclosure (2) Do not, directly or indirectly, covered fund with respect to the interest obligations under § 351.11(a)(8), as if guarantee, assume, or otherwise insure could be reduced based on losses arising such entity were a covered fund; the obligations or performance of such from the underlying assets of the (D) Does not acquire or retain, as issuer; covered fund, such as allocation of principal, an ownership interest in the (3) Comply with the disclosure losses, write-downs or charge-offs of the entity, other than up to 0.5 percent of obligations under § 351.11(a)(8), as if outstanding principal balance, or the entity’s outstanding ownership such issuer were a covered fund; reductions in the amount of interest due interests that may be held by the (4) Do not acquire or retain, as and payable on the interest; banking entity and its affiliates for the principal, an ownership interest in the (F) Receives income on a pass-through purpose of and to the extent necessary issuer, other than up to 0.5 percent of basis from the covered fund, or has a for establishing corporate separateness the issuer’s outstanding ownership rate of return that is determined by or addressing bankruptcy, insolvency, interests that may be held by the reference to the performance of the or similar concerns; banking entity and its affiliates for the underlying assets of the covered fund; (E) Complies with the requirements of purpose of and to the extent necessary or (G) Any synthetic right to have, §§ 351.14(b) and 351.15, as if such for establishing corporate separateness receive, or be allocated any of the rights entity were a covered fund; and or addressing bankruptcy, insolvency, (F) Complies with the requirements of in paragraphs (d)(6)(i)(A) through (F) of or similar concerns; 12 CFR 223.15(a), as if such banking this section. (5) Comply with the requirements of entity and its affiliates were a member (ii) Ownership interest does not §§ 351.14(b) and 351.15, as if such bank and the issuer were an affiliate include: issuer were a covered fund; and thereof. (A) Restricted profit interest which is (6) Comply with the requirements of (iii) For purposes of paragraph (c)(17) an interest held by an entity (or an 12 CFR 223.15(a), as if such banking of this section, the following definitions employee or former employee thereof) entity and its affiliates were a member apply: in a covered fund for which the entity (A) ‘‘Closely related person’’ means a bank and the issuer were an affiliate (or employee thereof) serves as natural person (including the estate and thereof. investment manager, investment estate planning vehicles of such person) * * * * * adviser, commodity trading advisor, or who has longstanding business or (d) * * * other service provider, so long as: personal relationships with any family (6) Ownership interest—(i) Ownership (1) The sole purpose and effect of the customer. interest means any equity, partnership, interest is to allow the entity (or (B) ‘‘Family customer’’ means: or other similar interest. An ‘‘other employee or former employee thereof) (1) A family client, as defined in Rule similar interest’’ means an interest that: to share in the profits of the covered 202(a)(11)(G)–1(d)(4) of the Investment (A) Has the right to participate in the fund as performance compensation for Advisers Act of 1940 (17 CFR selection or removal of a general the investment management, investment 275.202(a)(11)(G)–1(d)(4)); or partner, managing member, member of advisory, commodity trading advisory, (2) Any natural person who is a the board of directors or trustees, or other services provided to the father-in-law, mother-in-law, brother-in- investment manager, investment covered fund by the entity (or employee law, sister-in-law, son-in-law or adviser, or commodity trading advisor or former employee thereof), provided daughter-in-law of a family client, or a of the covered fund (excluding the that the entity (or employee or former spouse or a spousal equivalent of any of rights of a creditor to exercise remedies employee thereof) may be obligated the foregoing. upon the occurrence of an event of under the terms of such interest to (18) Customer facilitation vehicles. (i) default or an acceleration event, which return profits previously received; Subject to paragraph (c)(18)(ii) of this includes the right to participate in the (2) All such profit, once allocated, is section, an issuer that is formed by or removal of an investment manager for distributed to the entity (or employee or at the request of a customer of the cause or to nominate or vote on a former employee thereof) promptly after banking entity for the purpose of nominated replacement manager upon being earned or, if not so distributed, is providing such customer (which may an investment manager’s resignation or retained by the covered fund for the sole include one or more affiliates of such removal); purpose of establishing a reserve customer) with exposure to a (B) Has the right under the terms of amount to satisfy contractual obligations transaction, investment strategy, or the interest to receive a share of the with respect to subsequent losses of the

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covered fund and such undistributed ■ e. Revising paragraphs (d) and (e). (5) Parallel Investments and Co- profit of the entity (or employee or The revisions and addition read as Investments—(i) A banking entity shall former employee thereof) does not share follows: not be required to include in the in the subsequent investment gains of calculation of the investment limits § 351.12 Permitted investment in a the covered fund; covered fund. under paragraph (a)(2) of this section (3) Any amounts invested in the any investment the banking entity covered fund, including any amounts * * * * * makes alongside a covered fund as long paid by the entity in connection with (b) * * * as the investment is made in (1) * * * obtaining the restricted profit interest, (ii) Treatment of registered investment compliance with applicable laws and are within the limits of § 351.12 of this companies, SEC-regulated business regulations, including applicable safety subpart; and development companies, and foreign and soundness standards. (4) The interest is not transferable by (ii) A banking entity shall not be public funds. For purposes of paragraph the entity (or employee or former restricted under this section in the (b)(1)(i) of this section, a registered employee thereof) except to an affiliate amount of any investment the banking investment company, SEC-regulated thereof (or an employee of the banking entity makes alongside a covered fund business development companies, or entity or affiliate), to immediate family as long as the investment is made in foreign public fund as described in members, or through the intestacy, of compliance with applicable laws and § 351.10(c)(1) will not be considered to the employee or former employee, or in regulations, including applicable safety be an affiliate of the banking entity so connection with a sale of the business and soundness standards. long as the banking entity: that gave rise to the restricted profit (c) * * * (A) Does not own, control, or hold (1)(i) For purposes of paragraph interest by the entity (or employee or with the power to vote 25 percent or former employee thereof) to an (a)(2)(iii) of this section, the aggregate more of the voting shares of the value of all ownership interests held by unaffiliated party that provides company or fund; and investment management, investment a banking entity shall be the sum of all (B) Provides investment advisory, amounts paid or contributed by the advisory, commodity trading advisory, commodity trading advisory, or other services to the fund. banking entity in connection with administrative, and other services to the acquiring or retaining an ownership (B) Any senior loan or senior debt company or fund in compliance with interest that has the following interest in covered funds (together with the limitations under applicable any amounts paid by the entity in characteristics: regulation, order, or other authority. (1) Under the terms of the interest the connection with obtaining a restricted holders of such interest do not have the * * * * * profit interest under § 351.10(d)(6)(ii)), (4) Multi-tier fund investments—(i) right to receive a share of the income, on a historical cost basis; Master-feeder fund investments. If the gains, or profits of the covered fund, but (ii) Treatment of employee and principal investment strategy of a are entitled to receive only: director restricted profit interests (i) Interest at a stated interest rate, as covered fund (the ‘‘feeder fund’’) is to financed by the banking entity. For well as commitment fees or other fees, invest substantially all of its assets in purposes of paragraph (c)(1)(i) of this which are not determined by reference another single covered fund (the section, an investment by a director or to the performance of the underlying ‘‘master fund’’), then for purposes of the employee of a banking entity who assets of the covered fund; and investment limitations in paragraphs acquires a restricted profit interest in (ii) Fixed principal payments on or (a)(2)(i)(B) and (a)(2)(ii) of this section, their personal capacity in a covered before a maturity date (which may the banking entity’s permitted fund sponsored by the banking entity include prepayment premiums intended investment in such funds shall be will be attributed to the banking entity solely to reflect, and compensate measured only by reference to the value if the banking entity, directly or holders of the interest for, foregone of the master fund. The banking entity’s indirectly, extends financing for the income resulting from an early permitted investment in the master fund purpose of enabling the director or prepayment); shall include any investment by the employee to acquire the restricted profit (2) The entitlement to payments banking entity in the master fund, as interest in the fund and the financing is under the terms of the interest are well as the banking entity’s pro-rata used to acquire such ownership interest absolute and could not be reduced share of any ownership interest in the in the covered fund. based on losses arising from the master fund that is held through the * * * * * underlying assets of the covered fund, feeder fund; and (d) Capital treatment for a permitted such as allocation of losses, write- (ii) Fund-of-funds investments. If a investment in a covered fund. For downs or charge-offs of the outstanding banking entity organizes and offers a purposes of calculating compliance with principal balance, or reductions in the covered fund pursuant to § 351.11 for the applicable regulatory capital amount of interest due and payable on the purpose of investing in other requirements, a banking entity shall the interest; and covered funds (a ‘‘fund of funds’’) and deduct from the banking entity’s tier 1 (3) The holders of the interest are not that fund of funds itself invests in capital (as determined under paragraph entitled to receive the underlying assets another covered fund that the banking (c)(2) of this section) the greater of: of the covered fund after all other entity is permitted to own, then the (1)(i) The sum of all amounts paid or interests have been redeemed or paid in banking entity’s permitted investment contributed by the banking entity in full (excluding the rights of a creditor to in that other fund shall include any connection with acquiring or retaining exercise remedies upon the occurrence investment by the banking entity in that an ownership interest (together with any of an event of default or an acceleration other fund, as well as the banking amounts paid by the entity in event). entity’s pro-rata share of any ownership connection with obtaining a restricted ■ 16. Amend § 351.12 by: interest in the fund that is held through profit interest under § 351.10(d)(6)(ii)), ■ a. Revising paragraph (b)(1)(ii); the fund of funds. The investment of the on a historical cost basis, plus any ■ b. Revising paragraph (b)(4); banking entity may not represent more earnings received; and ■ c. Adding paragraph (b)(5); than 3 percent of the amount or value (ii) The fair market value of the ■ d. Revising paragraph (c)(1); and of any single covered fund. banking entity’s ownership interests in

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the covered fund as determined under enable the banking entity to comply (ii)(A) Would be a covered fund if the paragraph (b)(2)(ii) or (b)(3) of this with the limitations in paragraph entity were organized or established in section (together with any amounts paid (a)(2)(i) of this section; the United States, or by the entity in connection with (iv) The total exposure of the covered (B) Is, or holds itself out as being, an obtaining a restricted profit interest banking entity to the investment and the entity or arrangement that raises money under § 351.10(d)(6)(ii)), if the banking risks that disposing of, or maintaining, from investors primarily for the purpose entity accounts for the profits (or losses) the investment in the covered fund may of investing in financial instruments for of the fund investment in its financial pose to the banking entity and the resale or other disposition or otherwise statements. financial stability of the United States; trading in financial instruments; (2) Treatment of employee and (v) The cost to the banking entity of (iii) Would not otherwise be a banking director restricted profit interests divesting or disposing of the investment entity except by virtue of the acquisition financed by the banking entity. For within the applicable period; or retention of an ownership interest in, purposes of paragraph (d)(1) of this (vi) Whether the investment or the sponsorship of, or relationship with the section, an investment by a director or divestiture or conformance of the entity, by another banking entity that employee of a banking entity who investment would involve or result in a meets the following: acquires a restricted profit interest in his material conflict of interest between the (A) The banking entity is not or her personal capacity in a covered banking entity and unaffiliated parties, organized, or directly or indirectly fund sponsored by the banking entity including clients, customers, or controlled by a banking entity that is will be attributed to the banking entity counterparties to which it owes a duty; organized, under the laws of the United if the banking entity, directly or (vii) The banking entity’s prior efforts States or of any State; and indirectly, extends financing for the to reduce through redemption, sale, (B) The banking entity’s acquisition of purpose of enabling the director or dilution, or other methods its ownership an ownership interest in or sponsorship employee to acquire the restricted profit interests in the covered fund, including of the fund by the foreign banking entity interest in the fund and the financing is activities related to the marketing of meets the requirements for permitted used to acquire such ownership interest interests in such covered fund; covered fund activities and investments in the covered fund. (viii) Market conditions; and solely outside the United States, as (e) Extension of time to divest an (ix) Any other factor that the Board provided in § 351.13(b); ownership interest. (1) Extension Period. believes appropriate. (iv) Is established and operated as part Upon application by a banking entity, (4) Authority to impose restrictions on of a bona fide asset management the Board may extend the period under activities or investment during any business; and paragraph (a)(2)(i) of this section for up (v) Is not operated in a manner that extension period. The Board may to 2 additional years if the Board finds enables any other banking entity to impose such conditions on any that an extension would be consistent evade the requirements of section 13 of extension approved under paragraph with safety and soundness and not the BHC Act or this part. (e)(1) of this section as the Board detrimental to the public interest. ■ 18. Amend § 351.14 by: determines are necessary or appropriate (2) Application Requirements. An ■ a. Revising paragraph (a)(2)(i); to protect the safety and soundness of application for extension must: ■ b. Revising paragraph (a)(2)(ii)(C); (i) Be submitted to the Board at least the banking entity or the financial ■ c. Adding paragraphs (a)(2)(iii), 90 days prior to the expiration of the stability of the United States, address (a)(2)(iv); and (a)(3); and applicable time period; material conflicts of interest or other ■ d. Revising paragraph (c). (ii) Provide the reasons for unsound banking practices, or otherwise The revisions and additions read as application, including information that further the purposes of section 13 of the follows: addresses the factors in paragraph (e)(3) BHC Act and this part. of this section; and (5) Consultation. In the case of a § 351.14 Limitations on relationships with (iii) Explain the banking entity’s plan banking entity that is primarily a covered fund. for reducing the permitted investment regulated by another Federal banking (a) * * * in a covered fund through redemption, agency, the SEC, or the CFTC, the Board (2) * * * sale, dilution or other methods as will consult with such agency prior to (i) Acquire and retain any ownership required in paragraph (a)(2) of this acting on an application by the banking interest in a covered fund in accordance section. entity for an extension under paragraph with the requirements of §§ 351.11, (3) Factors governing the Board (e)(1) of this section. 351.12, or 351.13; determinations. In reviewing any ■ 17. Amend § 351.13 by adding (ii) * * * application under paragraph (e)(1) of paragraph (d) to read as follows: (C) The Board has not determined that this section, the Board may consider all such transaction is inconsistent with the § 351.13 Other permitted covered fund safe and sound operation and condition the facts and circumstances related to activities and investments. the permitted investment in a covered of the banking entity; and fund, including: * * * * * (iii) Enter into a transaction with a (i) Whether the investment would (d) Permitted covered fund activities covered fund that would be an exempt result, directly or indirectly, in a and investments of qualifying foreign covered transaction under 12 U.S.C. material exposure by the banking entity excluded funds. (1) The prohibition 371c(d) or § 223.42 of the Board’s to high-risk assets or high-risk trading contained in § 351.10(a) does not apply Regulation W (12 CFR 223.42); and strategies; to a qualifying foreign excluded fund. (iv) Extend credit to or purchase (ii) The contractual terms governing (2) For purposes of this paragraph (d), assets from a covered fund, provided: the banking entity’s interest in the a qualifying foreign excluded fund (A) Each extension of credit or covered fund; means a banking entity that: purchase of assets is in the ordinary (iii) The date on which the covered (i) Is organized or established outside course of business in connection with fund is expected to have attracted the United States, and the ownership payment transactions; settlement sufficient investments from investors interests of which are offered and sold services; or futures, derivatives, and unaffiliated with the banking entity to solely outside the United States; securities clearing;

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(B) Each extension of credit is repaid, (ii) Is, or holds itself out as being, an exemption in paragraph (c)(1)(i) of this sold, or terminated by the end of five entity or arrangement that raises money section for such issuer unless ownership business days; and from investors primarily for the purpose interests in the issuer are sold (C) The banking entity making each of investing in financial instruments for predominantly to persons other than: extension of credit meets the resale or other disposition or otherwise (A) Such sponsoring banking entity; requirements of section 223.42(l)(1)(i) trading in financial instruments; (B) Such issuer; and (ii) of the Board’s Regulation W (12 (3) Would not otherwise be a banking (C) Affiliates of such sponsoring CFR 223.42(l)(1)(i) and (ii)), as if the entity except by virtue of the acquisition banking entity or such issuer; and extension of credit was an intraday or retention of an ownership interest in, (D) Directors and senior executive extension of credit, regardless of the sponsorship of, or relationship with the officers as defined in § 225.71(c) of the duration of the extension of credit. entity, by another banking entity that Board’s Regulation Y (12 CFR 225.71(c)) (3) Any transaction or activity meets the following: of such entities. permitted under paragraphs (a)(2)(iii) or (i) The banking entity is not (iii) For purposes of paragraph (iv) must comply with the limitations in organized, or directly or indirectly (c)(1)(i)(B) of this section, the term § 351.15 of this section. controlled by a banking entity that is ‘‘public offering’’ means a distribution (as defined in § 75.4(a)(3)) of securities * * * * * organized, under the laws of the United (c) Restrictions on other permitted States or of any State; and in any jurisdiction outside the United transactions. Any transaction permitted (ii) The banking entity’s acquisition or States to investors, including retail under paragraphs (a)(2)(ii), (a)(2)(iii), or retention of an ownership interest in or investors, provided that: (A) The distribution is subject to (a)(2)(iv) of this section shall be subject sponsorship of the fund meets the substantive disclosure and retail to section 23B of the Federal Reserve requirements for permitted covered investor protection laws or regulations; Act (12 U.S.C. 371c–1) as if the fund activities and investments solely outside the United States, as provided (B) With respect to an issuer for counterparty were an affiliate of the which the banking entity serves as the banking entity. in § 75.13(b); (4) Is established and operated as part investment manager, investment COMMODITY FUTURES TRADING of a bona fide asset management adviser, commodity trading advisor, COMMISSION business; and commodity pool operator, or sponsor, the distribution complies with all 17 CFR Chapter I (5) Is not operated in a manner that enables any other banking entity to applicable requirements in the Authority and Issuance evade the requirements of section 13 of jurisdiction in which such distribution For the reasons set forth in the the BHC Act or this part. is being made; Common Preamble, the Commodity (C) The distribution does not restrict Futures Trading Commission proposes Subpart C—Covered Funds Activities availability to investors having a to amend part 75 to chapter I of Title 17 and Investments minimum level of net worth or net of the Code of Federal Regulations as investment assets; and ■ 21. Amend § 75.10 by: follows: (D) The issuer has filed or submitted, ■ a. Revising paragraph (c)(1); with the appropriate regulatory ■ PART 75—PROPRIETARY TRADING b. Revising paragraph (c)(3)(i); authority in such jurisdiction, offering ■ AND CERTAIN INTERESTS IN AND c. Revising paragraph (c)(8); disclosure documents that are publicly ■ RELATIONSHIPS WITH COVERED d. Revising paragraph (c)(10)(i); available. ■ e. Revising paragraph (c)(11)(i); FUNDS ■ f. Adding paragraphs (c)(15), (16), * * * * * (3) * * * ■ 19. The authority citation for part 75 (17), and (18); and ■ (i) Is composed of no more than 10 continues to read as follows: g. Revising paragraph (d)(6). unaffiliated co-venturers; The revisions and additions read as Authority: 12 U.S.C. 1851. follows: * * * * * (8) Loan securitizations—(i) Scope. Subpart B—Proprietary Trading § 75.10 Prohibition on acquiring or An issuing entity for asset-backed ■ 20. Amend § 75.6 by adding paragraph retaining an ownership interest in and securities that satisfies all the (f) to read as follows: having certain relationships with a covered conditions of this paragraph (c)(8) and fund. the assets or holdings of which are § 75.6 Other permitted proprietary trading * * * * * composed solely of: activities. (c) * * * (A) Loans as defined in § 75.2(t); * * * * * (1) Foreign public funds. (i) Subject to (B) Rights or other assets designed to (f) Permitted trading activities of paragraphs (c)(1)(ii) and (iii) of this assure the servicing or timely qualifying foreign excluded funds. The section, an issuer that: distribution of proceeds to holders of prohibition contained in § 75.3(a) does (A) Is organized or established outside such securities and rights or other assets not apply to the purchase or sale of a of the United States; and that are related or incidental to financial instrument by a qualifying (B) Is authorized to offer and sell purchasing or otherwise acquiring and foreign excluded fund. For purposes of ownership interests, and such interests holding the loans, provided that each this paragraph (f), a qualifying foreign are offered and sold, through one or asset that is a security (other than excluded fund means a banking entity more public offerings. special units of beneficial interest and that: (ii) With respect to a banking entity collateral certificates meeting the (1) Is organized or established outside that is, or is controlled directly or requirements of paragraph (c)(8)(v) of the United States, and the ownership indirectly by a banking entity that is, this section) meets the requirements of interests of which are offered and sold located in or organized under the laws paragraph (c)(8)(iii) of this section; solely outside the United States; of the United States or of any State and (C) Interest rate or foreign exchange (2)(i) Would be a covered fund if the any issuer for which such banking derivatives that meet the requirements entity were organized or established in entity acts as sponsor, the sponsoring of paragraph (c)(8)(iv) of this section; the United States, or banking entity may not rely on the and

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(D) Special units of beneficial interest (A) The special purpose vehicle that paragraphs (c)(15)(i) and (ii) of this and collateral certificates that meet the issues the special unit of beneficial section. requirements of paragraph (c)(8)(v) of interest or collateral certificate meets (i) Asset requirements. The issuer’s this section. the requirements in this paragraph assets must be composed solely of: (E) Any other assets, provided that the (c)(8); (A) Loans as defined in § 75.2(t); aggregate value of any such other assets (B) The special unit of beneficial (B) Debt instruments, subject to that do not meet the criteria specified in interest or collateral certificate is used paragraph (c)(15)(iv) of this section; paragraphs (c)(8)(i)(A) through for the sole purpose of transferring to (C) Rights and other assets that are (c)(8)(i)(D) of this section do not exceed the issuing entity for the loan related or incidental to acquiring, five percent of the aggregate value of the securitization the economic risks and holding, servicing, or selling such loans issuing entity’s assets. benefits of the assets that are or debt instruments, provided that: (ii) Impermissible assets. For purposes permissible for loan securitizations (1) Each right or asset that is a of this paragraph (c)(8), except as under this paragraph (c)(8) and does not security is either: permitted under paragraph (c)(8)(i)(E) of directly or indirectly transfer any (i) A cash equivalent (which, for the this section, the assets or holdings of the interest in any other economic or purposes of this paragraph, means high issuing entity shall not include any of financial exposure; quality, highly liquid investments whose maturity corresponds to the the following: (C) The special unit of beneficial issuer’s expected or potential need for (A) A security, including an asset- interest or collateral certificate is funds and whose currency corresponds backed security, or an interest in an created solely to satisfy legal to either the underlying loans or the equity or debt security other than as requirements or otherwise facilitate the debt instruments); permitted in paragraphs (c)(8)(iii), (iv), structuring of the loan securitization; (ii) A security received in lieu of debts or (v) of this section; and previously contracted with respect to (B) A derivative, other than a (D) The special purpose vehicle that derivative that meets the requirements such loans or debt instruments; or issues the special unit of beneficial (iii) An equity security (or right to of paragraph (c)(8)(iv) of this section; or interest or collateral certificate and the acquire an equity security) received on (C) A commodity forward contract. issuing entity are established under the customary terms in connection with (iii) Permitted securities. direction of the same entity that such loans or debt instruments; and Notwithstanding paragraph (c)(8)(ii)(A) initiated the loan securitization. (2) Rights or other assets held under of this section, the issuing entity may * * * * * this paragraph (c)(15)(i)(C) of this hold securities if those securities are: (10) Qualifying covered bonds—(i) section may not include commodity (A) Cash equivalents—which, for the Scope. An entity owning or holding a forward contracts; and purposes of this paragraph, means high dynamic or fixed pool of loans or other (D) Interest rate or foreign exchange quality, highly liquid investments assets as provided in paragraph (c)(8) of derivatives, if: whose maturity corresponds to the this section for the benefit of the holders (1) The written terms of the derivative securitization’s expected or potential of covered bonds, provided that the directly relate to the loans, debt need for funds and whose currency assets in the pool are composed solely instruments, or other rights or assets corresponds to either the underlying of assets that meet the conditions in described in paragraph (c)(15)(i)(C) of loans or the asset-backed securities—for paragraph (c)(8)(i) of this section. this section; and purposes of the rights and assets in (2) The derivative reduces the interest paragraph (c)(8)(i)(B) of this section; or * * * * * (11) * * * rate and/or foreign exchange risks (B) Securities received in lieu of debts related to the loans, debt instruments, or (i) That is a small business investment previously contracted with respect to other rights or assets described in company, as defined in section 103(3) of the loans supporting the asset-backed paragraph (c)(15)(i)(C) of this section. the Small Business Investment Act of securities. (ii) Activity requirements. To be 1958 (15 U.S.C. 662), or that has (iv) Derivatives. The holdings of eligible for the exclusion of paragraph received from the Small Business derivatives by the issuing entity shall be (c)(15) of this section, an issuer must: limited to interest rate or foreign Administration notice to proceed to (A) Not engage in any activity that exchange derivatives that satisfy all of qualify for a license as a small business would constitute proprietary trading the following conditions: investment company, which notice or under § 75.3(b)(l)(i), as if the issuer were (A) The written terms of the license has not been revoked, or that has a banking entity; and derivatives directly relate to the loans, voluntarily surrendered its license to (B) Not issue asset-backed securities. the asset-backed securities, or the operate as a small business investment (iii) Requirements for a sponsor, contractual rights or other assets company in accordance with 13 CFR investment adviser, or commodity described in paragraph (c)(8)(i)(B) of 107.1900 and does not make any new trading advisor. A banking entity that this section; and investments (other than investments in acts as a sponsor, investment adviser, or (B) The derivatives reduce the interest cash equivalents, which, for the commodity trading advisor to an issuer rate and/or foreign exchange risks purposes of this paragraph, means high that meets the conditions in paragraphs related to the loans, the asset-backed quality, highly liquid investments (c)(15)(i) and (ii) of this section may not securities, or the contractual rights or whose maturity corresponds to the rely on this exclusion unless the other assets described in paragraph issuer’s expected or potential need for banking entity: (c)(8)(i)(B) of this section. funds and whose currency corresponds (A) Provides in writing to any (v) Special units of beneficial interest to the issuer’s assets) after such prospective and actual investor in the and collateral certificates. The assets or voluntary surrender; or issuer the disclosures required under holdings of the issuing entity may * * * * * § 75.11(a)(8), as if the issuer were a include collateral certificates and (15) Credit funds. Subject to covered fund; and special units of beneficial interest paragraphs (c)(15)(iii), (iv), and (v) of (B) Ensures that the activities of the issued by a special purpose vehicle, this section, an issuer that satisfies the issuer are consistent with safety and provided that: asset and activity requirements of soundness standards that are

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substantially similar to those that would (A) Comply with the limitations personal relationships with any family apply if the banking entity engaged in imposed in §§ 75.14 (except the banking customer. the activities directly. entity may acquire and retain any (B) ‘‘Family customer’’ means: (iv) Additional Banking Entity ownership interest in the issuer) and (1) A family client, as defined in Rule Requirements. A banking entity may not 75.15, as if the issuer were a covered 202(a)(11)(G)–1(d)(4) of the Investment rely on this exclusion with respect to an fund; and Advisers Act of 1940 (17 CFR issuer that meets the conditions in (B) Be conducted in compliance with, 275.202(a)(11)(G)–1(d)(4)); or paragraphs (c)(15)(i) and (ii) of this and subject to, applicable banking laws (2) Any natural person who is a section unless: and regulations, including applicable father-in-law, mother-in-law, brother-in- (A) The banking entity does not, safety and soundness standards. law, sister-in-law, son-in-law or directly or indirectly, guarantee, (17) Family wealth management daughter-in-law of a family client, or a assume, or otherwise insure the vehicles. (i) Subject to paragraph spouse or a spousal equivalent of any of obligations or performance of the issuer (c)(17)(ii) of this section, any entity that the foregoing. or of any entity to which such issuer is not, and does not hold itself out as (18) Customer facilitation vehicles. (i) extends credit or in which such issuer being, an entity or arrangement that Subject to paragraph (c)(18)(ii) of this invests; and raises money from investors primarily section, an issuer that is formed by or (B) Any assets the issuer holds for the purpose of investing in securities at the request of a customer of the pursuant to paragraphs (c)(15)(i)(B) or for resale or other disposition or banking entity for the purpose of (i)(C)(1)(iii) of this section would be otherwise trading in securities, and: providing such customer (which may permissible for the banking entity to (A) If the entity is a trust, the include one or more affiliates of such acquire and hold directly. grantor(s) of the entity are all family customer) with exposure to a (v) Investment and Relationship customers; and transaction, investment strategy, or Limits. A banking entity’s investment in, (B) If the entity is not a trust: other service provided by the banking and relationship with, the issuer must: (1) A majority of the voting interests entity. (A) Comply with the limitations in the entity are owned (directly or (ii) A banking entity may rely on the imposed in §§ 75.14 (except the banking indirectly) by family customers; and exclusion in paragraph (c)(18)(i) of this (2) The entity is owned only by family entity may acquire and retain any section with respect to an issuer customers and up to 3 closely related ownership interest in the issuer) and provided that: persons of the family customers. 75.15, as if the issuer were a covered (A) All of the ownership interests of (ii) A banking entity may rely on the fund; and the issuer are owned by the customer exclusion in paragraph (c)(17)(i) of this (B) Be conducted in compliance with, (which may include one or more of its section with respect to an entity and subject to, applicable banking laws affiliates) for whom the issuer was provided that the banking entity (or an and regulations, including applicable created, subject to paragraph affiliate): safety and soundness standards. (c)(18)(ii)(B)(4) of this section; and (A) Provides bona fide trust, fiduciary, (B) The banking entity and its (16) Qualifying venture capital funds. investment advisory, or commodity (i) Subject to paragraphs (c)(16)(ii) affiliates: trading advisory services to the entity; (1) Maintain documentation outlining through (iv) of this section, an issuer (B) Does not, directly or indirectly, how the banking entity intends to that: guarantee, assume, or otherwise insure facilitate the customer’s exposure to (A) Is a venture capital fund as the obligations or performance of such such transaction, investment strategy, or defined in 17 CFR 275.203(l)–1; and entity; service; (B) Does not engage in any activity (C) Complies with the disclosure (2) Do not, directly or indirectly, that would constitute proprietary obligations under § 75.11(a)(8), as if guarantee, assume, or otherwise insure trading under § 75.3(b)(1)(i), as if the such entity were a covered fund; issuer were a banking entity. (D) Does not acquire or retain, as the obligations or performance of such (ii) A banking entity that acts as a principal, an ownership interest in the issuer; sponsor, investment adviser, or entity, other than up to 0.5 percent of (3) Comply with the disclosure commodity trading advisor to an issuer the entity’s outstanding ownership obligations under § 75.11(a)(8), as if that meets the conditions in paragraph interests that may be held by the such issuer were a covered fund; (c)(16)(i) of this section may not rely on banking entity and its affiliates for the (4) Do not acquire or retain, as this exclusion unless the banking entity: purpose of and to the extent necessary principal, an ownership interest in the (A) Provides in writing to any for establishing corporate separateness issuer, other than up to 0.5 percent of prospective and actual investor in the or addressing bankruptcy, insolvency, the issuer’s outstanding ownership issuer the disclosures required under or similar concerns; interests that may be held by the § 75.11 (a)(8), as if the issuer were a (E) Complies with the requirements of banking entity and its affiliates for the covered fund; and §§ 75.14(b) and 75.15, as if such entity purpose of and to the extent necessary (B) Ensures that the activities of the were a covered fund; and for establishing corporate separateness issuer are consistent with safety and (F) Complies with the requirements of or addressing bankruptcy, insolvency, soundness standards that are 12 CFR 223.15(a), as if such banking or similar concerns; substantially similar to those that would entity and its affiliates were a member (5) Comply with the requirements of apply if the banking entity engaged in bank and the issuer were an affiliate §§ 75.14(b) and 75.15, as if such issuer the activities directly. thereof. were a covered fund; and (iii) The banking entity must not, (iii) For purposes of paragraph (c)(17) (6) Comply with the requirements of directly or indirectly, guarantee, of this section, the following definitions 12 CFR 223.15(a), as if such banking assume, or otherwise insure the apply: entity and its affiliates were a member obligations or performance of the issuer. (A) ‘‘Closely related person’’ means a bank and the issuer were an affiliate (iv) A banking entity’s ownership natural person (including the estate and thereof. interest in or relationship with the estate planning vehicles of such person) * * * * * issuer must: who has longstanding business or (d) * * *

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(6) Ownership interest—(i) Ownership (1) The sole purpose and effect of the (2) The entitlement to payments interest means any equity, partnership, interest is to allow the entity (or under the terms of the interest are or other similar interest. An ‘‘other employee or former employee thereof) absolute and could not be reduced similar interest’’ means an interest that: to share in the profits of the covered based on losses arising from the (A) Has the right to participate in the fund as performance compensation for underlying assets of the covered fund, selection or removal of a general the investment management, investment such as allocation of losses, write- partner, managing member, member of advisory, commodity trading advisory, downs or charge-offs of the outstanding the board of directors or trustees, or other services provided to the principal balance, or reductions in the investment manager, investment covered fund by the entity (or employee amount of interest due and payable on adviser, or commodity trading advisor or former employee thereof), provided the interest; and of the covered fund (excluding the that the entity (or employee or former (3) The holders of the interest are not rights of a creditor to exercise remedies employee thereof) may be obligated entitled to receive the underlying assets upon the occurrence of an event of under the terms of such interest to of the covered fund after all other default or an acceleration event, which return profits previously received; interests have been redeemed or paid in includes the right to participate in the (2) All such profit, once allocated, is full (excluding the rights of a creditor to removal of an investment manager for distributed to the entity (or employee or exercise remedies upon the occurrence cause or to nominate or vote on a former employee thereof) promptly after of an event of default or an acceleration nominated replacement manager upon being earned or, if not so distributed, is event). an investment manager’s resignation or retained by the covered fund for the sole ■ 22. Amend § 75.12 is amended by: removal); purpose of establishing a reserve ■ a. Revising paragraph (b)(1)(ii); (B) Has the right under the terms of amount to satisfy contractual obligations ■ b. Revising paragraph (b)(4); the interest to receive a share of the with respect to subsequent losses of the ■ c. Adding paragraph (b)(5); income, gains or profits of the covered covered fund and such undistributed ■ d. Revising paragraph (c)(1); and ■ fund; profit of the entity (or employee or e. Revising paragraph (d) and (e). (C) Has the right to receive the former employee thereof) does not share The revisions and addition read as underlying assets of the covered fund in the subsequent investment gains of follows: after all other interests have been the covered fund; § 75.12 Permitted investment in a covered redeemed and/or paid in full (excluding (3) Any amounts invested in the fund. the rights of a creditor to exercise covered fund, including any amounts * * * * * remedies upon the occurrence of an paid by the entity in connection with event of default or an acceleration (b) * * * obtaining the restricted profit interest, (1) * * * event); are within the limits of § 75.12 of this (D) Has the right to receive all or a (ii) Treatment of registered investment subpart; and portion of excess spread (the positive companies, SEC-regulated business (4) The interest is not transferable by difference, if any, between the aggregate development companies, and foreign the entity (or employee or former interest payments received from the public funds. For purposes of paragraph employee thereof) except to an affiliate underlying assets of the covered fund (b)(1)(i) of this section, a registered thereof (or an employee of the banking and the aggregate interest paid to the investment company, SEC-regulated entity or affiliate), to immediate family holders of other outstanding interests); business development companies, or (E) Provides under the terms of the members, or through the intestacy, of foreign public fund as described in interest that the amounts payable by the the employee or former employee, or in § 75.10(c)(1) of this subpart will not be covered fund with respect to the interest connection with a sale of the business considered to be an affiliate of the could be reduced based on losses arising that gave rise to the restricted profit banking entity so long as the banking from the underlying assets of the interest by the entity (or employee or entity: covered fund, such as allocation of former employee thereof) to an (A) Does not own, control, or hold losses, write-downs or charge-offs of the unaffiliated party that provides with the power to vote 25 percent or outstanding principal balance, or investment management, investment more of the voting shares of the reductions in the amount of interest due advisory, commodity trading advisory, company or fund; and (B) Provides investment advisory, and payable on the interest; or other services to the fund. (F) Receives income on a pass-through (B) Any senior loan or senior debt commodity trading advisory, basis from the covered fund, or has a interest that has the following administrative, and other services to the rate of return that is determined by characteristics: company or fund in compliance with reference to the performance of the (1) Under the terms of the interest the the limitations under applicable underlying assets of the covered fund; holders of such interest do not have the regulation, order, or other authority. or right to receive a share of the income, * * * * * (G) Any synthetic right to have, gains, or profits of the covered fund, but (4) Multi-tier fund investments—(i) receive, or be allocated any of the rights are entitled to receive only: Master-feeder fund investments. If the in paragraphs (d)(6)(i)(A) through (F) of (i) Interest at a stated interest rate, as principal investment strategy of a this section. well as commitment fees or other fees, covered fund (the ‘‘feeder fund’’) is to (ii) Ownership interest does not which are not determined by reference invest substantially all of its assets in include: to the performance of the underlying another single covered fund (the (A) Restricted profit interest which is assets of the covered fund; and ‘‘master fund’’), then for purposes of the an interest held by an entity (or an (ii) Fixed principal payments on or investment limitations in paragraphs employee or former employee thereof) before a maturity date (which may (a)(2)(i)(B) and (a)(2)(ii) of this section, in a covered fund for which the entity include prepayment premiums intended the banking entity’s permitted (or employee thereof) serves as solely to reflect, and compensate investment in such funds shall be investment manager, investment holders of the interest for, foregone measured only by reference to the value adviser, commodity trading advisor, or income resulting from an early of the master fund. The banking entity’s other service provider, so long as: prepayment); permitted investment in the master fund

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shall include any investment by the employee to acquire the restricted profit (iii) Explain the banking entity’s plan banking entity in the master fund, as interest in the fund and the financing is for reducing the permitted investment well as the banking entity’s pro-rata used to acquire such ownership interest in a covered fund through redemption, share of any ownership interest in the in the covered fund. sale, dilution or other methods as master fund that is held through the * * * * * required in paragraph (a)(2) of this feeder fund; and (d) Capital treatment for a permitted section. (ii) Fund-of-funds investments. If a investment in a covered fund. For (3) Factors governing the Board banking entity organizes and offers a purposes of calculating compliance with determinations. In reviewing any covered fund pursuant to § 75.11 of this the applicable regulatory capital application under paragraph (e)(1) of subpart for the purpose of investing in requirements, a banking entity shall this section, the Board may consider all other covered funds (a ‘‘fund of funds’’) deduct from the banking entity’s tier 1 the facts and circumstances related to and that fund of funds itself invests in capital (as determined under paragraph the permitted investment in a covered another covered fund that the banking (c)(2) of this section) the greater of: fund, including: entity is permitted to own, then the (1)(i) The sum of all amounts paid or (i) Whether the investment would banking entity’s permitted investment contributed by the banking entity in result, directly or indirectly, in a in that other fund shall include any connection with acquiring or retaining material exposure by the banking entity investment by the banking entity in that an ownership interest (together with any to high-risk assets or high-risk trading other fund, as well as the banking amounts paid by the entity in strategies; entity’s pro-rata share of any ownership connection with obtaining a restricted (ii) The contractual terms governing interest in the fund that is held through profit interest under § 75.10(d)(6)(ii)), on the banking entity’s interest in the the fund of funds. The investment of the a historical cost basis, plus any earnings covered fund; banking entity may not represent more (iii) The date on which the covered received; and than 3 percent of the amount or value fund is expected to have attracted (ii) The fair market value of the of any single covered fund. sufficient investments from investors banking entity’s ownership interests in (5) Parallel Investments and Co- unaffiliated with the banking entity to the covered fund as determined under Investments—(i) A banking entity shall enable the banking entity to comply paragraph (b)(2)(ii) or (b)(3) of this not be required to include in the with the limitations in paragraph section (together with any amounts paid calculation of the investment limits (a)(2)(i) of this section; under paragraph (a)(2) of this section by the entity in connection with (iv) The total exposure of the covered any investment the banking entity obtaining a restricted profit interest banking entity to the investment and the makes alongside a covered fund as long under § 75.10(d)(6)(ii)), if the banking risks that disposing of, or maintaining, as the investment is made in entity accounts for the profits (or losses) the investment in the covered fund may compliance with applicable laws and of the fund investment in its financial pose to the banking entity and the regulations, including applicable safety statements. financial stability of the United States; and soundness standards. (2) Treatment of employee and (v) The cost to the banking entity of (ii) A banking entity shall not be director restricted profit interests divesting or disposing of the investment restricted under this section in the financed by the banking entity. For within the applicable period; amount of any investment the banking purposes of paragraph (d)(1) of this (vi) Whether the investment or the entity makes alongside a covered fund section, an investment by a director or divestiture or conformance of the as long as the investment is made in employee of a banking entity who investment would involve or result in a compliance with applicable laws and acquires a restricted profit interest in his material conflict of interest between the regulations, including applicable safety or her personal capacity in a covered banking entity and unaffiliated parties, and soundness standards. fund sponsored by the banking entity including clients, customers, or (c) * * * will be attributed to the banking entity counterparties to which it owes a duty; (1)(i) For purposes of paragraph if the banking entity, directly or (vii) The banking entity’s prior efforts (a)(2)(iii) of this section, the aggregate indirectly, extends financing for the to reduce through redemption, sale, value of all ownership interests held by purpose of enabling the director or dilution, or other methods its ownership a banking entity shall be the sum of all employee to acquire the restricted profit interests in the covered fund, including amounts paid or contributed by the interest in the fund and the financing is activities related to the marketing of banking entity in connection with used to acquire such ownership interest interests in such covered fund; acquiring or retaining an ownership in the covered fund. (viii) Market conditions; and interest in covered funds (together with (e) Extension of time to divest an (ix) Any other factor that the Board any amounts paid by the entity in ownership interest. (1) Extension Period. believes appropriate. connection with obtaining a restricted Upon application by a banking entity, (4) Authority to impose restrictions on profit interest under § 75.10(d)(6)(ii) of the Board may extend the period under activities or investment during any this subpart), on a historical cost basis; paragraph (a)(2)(i) of this section for up extension period. The Board may (ii) Treatment of employee and to 2 additional years if the Board finds impose such conditions on any director restricted profit interests that an extension would be consistent extension approved under paragraph financed by the banking entity. For with safety and soundness and not (e)(1) of this section as the Board purposes of paragraph (c)(1)(i) of this detrimental to the public interest. determines are necessary or appropriate section, an investment by a director or (2) Application Requirements. An to protect the safety and soundness of employee of a banking entity who application for extension must: the banking entity or the financial acquires a restricted profit interest in (i) Be submitted to the Board at least stability of the United States, address their personal capacity in a covered 90 days prior to the expiration of the material conflicts of interest or other fund sponsored by the banking entity applicable time period; unsound banking practices, or otherwise will be attributed to the banking entity (ii) Provide the reasons for further the purposes of section 13 of the if the banking entity, directly or application, including information that BHC Act and this part. indirectly, extends financing for the addresses the factors in paragraph (e)(3) (5) Consultation. In the case of a purpose of enabling the director or of this section; and banking entity that is primarily

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regulated by another Federal banking § 75.14 Limitations on relationships with a Authority: 12 U.S.C. 1851. agency, the SEC, or the CFTC, the Board covered fund. will consult with such agency prior to (a) * * * Subpart B—Proprietary Trading acting on an application by the banking (2) * * * ■ 26. Amend § 255.6 by adding (i) Acquire and retain any ownership entity for an extension under paragraph paragraph (f) to read as follows: (e)(1) of this section. interest in a covered fund in accordance ■ 23. In subpart C, section 75.13 is with the requirements of §§ 75.11, § 255.6 Other permitted proprietary trading amended by adding paragraph (d) to 75.12, or 75.13; activities. read as follows: (ii) * * * * * * * * (C) The Board has not determined that (f) Permitted trading activities of § 75.13 Other permitted covered fund such transaction is inconsistent with the qualifying foreign excluded funds. The activities and investments. safe and sound operation and condition prohibition contained in § 255.3(a) does * * * * * of the banking entity; and not apply to the purchase or sale of a (d) Permitted covered fund activities (iii) Enter into a transaction with a financial instrument by a qualifying and investments of qualifying foreign covered fund that would be an exempt foreign excluded fund. For purposes of excluded funds. covered transaction under 12 U.S.C. this paragraph (f), a qualifying foreign (1) The prohibition contained in 371c(d) or § 223.42 of the Board’s excluded fund means a banking entity § 75.10(a) does not apply to a qualifying Regulation W (12 CFR 223.42); and that: (iv) Extend credit to or purchase foreign excluded fund. (1) Is organized or established outside (2) For purposes of this paragraph (d), assets from a covered fund, provided: (A) Each extension of credit or the United States, and the ownership a qualifying foreign excluded fund purchase of assets is in the ordinary interests of which are offered and sold means a banking entity that: course of business in connection with solely outside the United States; (i) Is organized or established outside payment transactions; settlement (2)(i) Would be a covered fund if the the United States, and the ownership services; or futures, derivatives, and entity were organized or established in interests of which are offered and sold securities clearing; the United States, or solely outside the United States; (B) Each extension of credit is repaid, (ii) Is, or holds itself out as being, an (ii)(A) Would be a covered fund if the sold, or terminated by the end of five entity or arrangement that raises money entity were organized or established in business days; and from investors primarily for the purpose the United States, or (C) The banking entity making each of investing in financial instruments for (B) Is, or holds itself out as being, an extension of credit meets the resale or other disposition or otherwise entity or arrangement that raises money requirements of section 223.42(l)(1)(i) trading in financial instruments; from investors primarily for the purpose and (ii) of the Board’s Regulation W (12 (3) Would not otherwise be a banking of investing in financial instruments for CFR 223.42(l)(1)(i) and(ii)), as if the entity except by virtue of the acquisition resale or other disposition or otherwise extension of credit was an intraday or retention of an ownership interest in, trading in financial instruments; extension of credit, regardless of the sponsorship of, or relationship with the (iii) Would not otherwise be a banking duration of the extension of credit. entity, by another banking entity that entity except by virtue of the acquisition (3) Any transaction or activity meets the following: or retention of an ownership interest in, permitted under paragraphs (a)(2)(iii) or (i) The banking entity is not sponsorship of, or relationship with the (iv) must comply with the limitations in organized, or directly or indirectly entity, by another banking entity that § 75.15. controlled by a banking entity that is meets the following: * * * * * organized, under the laws of the United (A) The banking entity is not (c) Restrictions on other permitted States or of any State; and organized, or directly or indirectly transactions. Any transaction permitted (ii) The banking entity’s acquisition or controlled by a banking entity that is under paragraphs (a)(2)(ii), (a)(2)(iii), or retention of an ownership interest in or organized, under the laws of the United (a)(2)(iv) of this section shall be subject sponsorship of the fund meets the States or of any State; and to section 23B of the Federal Reserve requirements for permitted covered (B) The banking entity’s acquisition of Act (12 U.S.C. 371c–1) as if the fund activities and investments solely an ownership interest in or sponsorship counterparty were an affiliate of the outside the United States, as provided of the fund by the foreign banking entity banking entity. in § 255.13(b); meets the requirements for permitted (4) Is established and operated as part covered fund activities and investments SECURITIES AND EXCHANGE of a bona fide asset management solely outside the United States, as COMMISSION business; and provided in § 75.13(b); 17 CFR Chapter II (5) Is not operated in a manner that (iv) Is established and operated as part enables any other banking entity to Authority and Issuance of a bona fide asset management evade the requirements of section 13 of business; and For the reasons set forth in the the BHC Act or this part. (v) Is not operated in a manner that Common Preamble, the Securities and enables any other banking entity to Exchange Commission proposes to Subpart C—Covered Funds Activities evade the requirements of section 13 of amend part 255 to chapter II of Title 17 and Investments the BHC Act or this part. of the Code of Federal Regulations as ■ 27. Amend § 255.10 by: ■ 24. Amend § 75.14 by: follows: ■ a. Revising paragraph (c)(1); ■ a. Revising paragraph (a)(2)(i); ■ PART 255—PROPRIETARY TRADING b. Revising paragraph (c)(3)(i); ■ b. Revising paragraph (a)(2)(ii)(C); ■ AND CERTAIN INTERESTS IN AND c. Revising paragraph (c)(8); ■ c. Adding paragraphs (a)(2)(iii), ■ RELATIONSHIPS WITH COVERED d. Revising paragraph (c)(10)(i); (a)(2)(iv); and (a)(3); and ■ FUNDS e. Revising paragraph (c)(11)(i); ■ d. Revising paragraph (c). ■ f. Adding paragraphs (c)(15), (16), The revisions and additions read as ■ 25. The authority citation for part 255 (17), and (18); and follows: continues to read as follows: ■ g. Revising paragraph (d)(6).

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The revisions and additions read as (i) Is composed of no more than 10 the loans supporting the asset-backed follows: unaffiliated co-venturers; securities. * * * * * (iv) Derivatives. The holdings of § 255.10 Prohibition on acquiring or derivatives by the issuing entity shall be retaining an ownership interest in and (8) Loan securitizations—(i) Scope. having certain relationships with a covered An issuing entity for asset-backed limited to interest rate or foreign fund. securities that satisfies all the exchange derivatives that satisfy all of conditions of this paragraph (c)(8) and the following conditions: * * * * * (A) The written terms of the (c) * * * the assets or holdings of which are composed solely of: derivatives directly relate to the loans, (1) Foreign public funds. (i) Subject to (A) Loans as defined in § 255.2(t); the asset-backed securities, or the paragraphs (c)(1)(ii) and (iii) of this (B) Rights or other assets designed to contractual rights or other assets section, an issuer that: assure the servicing or timely described in paragraph (c)(8)(i)(B) of (A) Is organized or established outside distribution of proceeds to holders of this section; and of the United States; and such securities and rights or other assets (B) The derivatives reduce the interest (B) Is authorized to offer and sell that are related or incidental to rate and/or foreign exchange risks ownership interests, and such interests purchasing or otherwise acquiring and related to the loans, the asset-backed are offered and sold, through one or holding the loans, provided that each securities, or the contractual rights or more public offerings. asset that is a security (other than other assets described in paragraph (ii) With respect to a banking entity special units of beneficial interest and (c)(8)(i)(B) of this section. that is, or is controlled directly or collateral certificates meeting the (v) Special units of beneficial interest indirectly by a banking entity that is, requirements of paragraph (c)(8)(v) of and collateral certificates. The assets or located in or organized under the laws this section) meets the requirements of holdings of the issuing entity may of the United States or of any State and paragraph (c)(8)(iii) of this section; include collateral certificates and any issuer for which such banking (C) Interest rate or foreign exchange special units of beneficial interest entity acts as sponsor, the sponsoring derivatives that meet the requirements issued by a special purpose vehicle, banking entity may not rely on the of paragraph (c)(8)(iv) of this section; provided that: exemption in paragraph (c)(1)(i) of this and (A) The special purpose vehicle that section for such issuer unless ownership (D) Special units of beneficial interest issues the special unit of beneficial interests in the issuer are sold and collateral certificates that meet the interest or collateral certificate meets predominantly to persons other than: requirements of paragraph (c)(8)(v) of the requirements in this paragraph (A) Such sponsoring banking entity; this section. (c)(8); (B) Such issuer; (E) Any other assets, provided that the (B) The special unit of beneficial (C) Affiliates of such sponsoring aggregate value of any such other assets interest or collateral certificate is used banking entity or such issuer; and that do not meet the criteria specified in for the sole purpose of transferring to (D) Directors and senior executive paragraphs (c)(8)(i)(A) through the issuing entity for the loan officers as defined in section 225.71(c) (c)(8)(i)(D) of this section do not exceed securitization the economic risks and of the Board’s Regulation Y (12 CFR five percent of the aggregate value of the benefits of the assets that are 225.71(c)) of such entities. issuing entity’s assets. permissible for loan securitizations (iii) For purposes of paragraph (ii) Impermissible assets. For purposes under this paragraph (c)(8) and does not (c)(1)(i)(B) of this section, the term of this paragraph (c)(8), except as directly or indirectly transfer any ‘‘public offering’’ means a distribution permitted under paragraph (c)(8)(i)(E) of interest in any other economic or (as defined in § 255.4(a)(3)) of securities this section, the assets or holdings of the financial exposure; in any jurisdiction outside the United issuing entity shall not include any of (C) The special unit of beneficial States to investors, including retail the following: interest or collateral certificate is investors, provided that: (A) A security, including an asset- created solely to satisfy legal (A) The distribution is subject to backed security, or an interest in an requirements or otherwise facilitate the substantive disclosure and retail equity or debt security other than as structuring of the loan securitization; investor protection laws or regulations; permitted in paragraphs (c)(8)(iii), (iv), and (B) With respect to an issuer for or (v) of this section; (D) The special purpose vehicle that which the banking entity serves as the (B) A derivative, other than a issues the special unit of beneficial investment manager, investment derivative that meets the requirements interest or collateral certificate and the adviser, commodity trading advisor, of paragraph (c)(8)(iv) of this section; or issuing entity are established under the (C) A commodity forward contract. direction of the same entity that commodity pool operator, or sponsor, (iii) Permitted securities. initiated the loan securitization. the distribution complies with all Notwithstanding paragraph (c)(8)(ii)(A) applicable requirements in the of this section, the issuing entity may * * * * * jurisdiction in which such distribution hold securities if those securities are: (10) Qualifying covered bonds—(i) is being made; (A) Cash equivalents—which, for the Scope. An entity owning or holding a (C) The distribution does not restrict purposes of this paragraph, means high dynamic or fixed pool of loans or other availability to investors having a quality, highly liquid investments assets as provided in paragraph (c)(8) of minimum level of net worth or net whose maturity corresponds to the this section for the benefit of the holders investment assets; and securitization’s expected or potential of covered bonds, provided that the (D) The issuer has filed or submitted, need for funds and whose currency assets in the pool are composed solely with the appropriate regulatory corresponds to either the underlying of assets that meet the conditions in authority in such jurisdiction, offering loans or the asset-backed securities—for paragraph (c)(8)(i) of this section. disclosure documents that are publicly purposes of the rights and assets in * * * * * available. paragraph (c)(8)(i)(B) of this section; or (11) * * * * * * * * (B) Securities received in lieu of debts (i) That is a small business investment (3) * * * previously contracted with respect to company, as defined in section 103(3) of

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the Small Business Investment Act of (ii) Activity requirements. To be trading under § 255.3(b)(1)(i), as if the 1958 (15 U.S.C. 662), or that has eligible for the exclusion of paragraph issuer were a banking entity. received from the Small Business (c)(15) of this section, an issuer must: (ii) A banking entity that acts as a Administration notice to proceed to (A) Not engage in any activity that sponsor, investment adviser, or qualify for a license as a small business would constitute proprietary trading commodity trading advisor to an issuer investment company, which notice or under § 255.3(b)(l)(i) of subpart A of this that meets the conditions in paragraph license has not been revoked, or that has part, as if the issuer were a banking (c)(16)(i) of this section may not rely on voluntarily surrendered its license to entity; and this exclusion unless the banking entity: operate as a small business investment (B) Not issue asset-backed securities. (A) Provides in writing to any company in accordance with 13 CFR (iii) Requirements for a sponsor, prospective and actual investor in the 107.1900 and does not make any new investment adviser, or commodity issuer the disclosures required under investments (other than investments in trading advisor. A banking entity that § 255.11(a)(8), as if the issuer were a cash equivalents, which, for the acts as a sponsor, investment adviser, or covered fund; and purposes of this paragraph, means high commodity trading advisor to an issuer (B) Ensures that the activities of the quality, highly liquid investments that meets the conditions in paragraphs issuer are consistent with safety and whose maturity corresponds to the (c)(15)(i) and (ii) of this section may not soundness standards that are issuer’s expected or potential need for rely on this exclusion unless the substantially similar to those that would funds and whose currency corresponds banking entity: apply if the banking entity engaged in to the issuer’s assets) after such the activities directly. (A) Provides in writing to any (iii) The banking entity must not, voluntary surrender; or prospective and actual investor in the directly or indirectly, guarantee, * * * * * issuer the disclosures required under assume, or otherwise insure the (15) Credit funds. Subject to § 255.11(a)(8) of this subpart, as if the obligations or performance of the issuer. paragraphs (c)(15)(iii), (iv), and (v) of issuer were a covered fund; and (iv) A banking entity’s ownership this section, an issuer that satisfies the (B) Ensures that the activities of the interest in or relationship with the asset and activity requirements of issuer are consistent with safety and issuer must: paragraphs (c)(15)(i) and (ii) of this soundness standards that are (A) Comply with the limitations section. substantially similar to those that would imposed in §§ 255.14 (except the (i) Asset requirements. The issuer’s apply if the banking entity engaged in banking entity may acquire and retain assets must be composed solely of: the activities directly. any ownership interest in the issuer) (A) Loans as defined in § 255.2(t); (iv) Additional Banking Entity and 255.15, as if the issuer were a (B) Debt instruments, subject to Requirements. A banking entity may not covered fund; and paragraph (c)(15)(iv) of this section; rely on this exclusion with respect to an (B) Be conducted in compliance with, (C) Rights and other assets that are issuer that meets the conditions in and subject to, applicable banking laws related or incidental to acquiring, paragraphs (c)(15)(i) and (ii) of this and regulations, including applicable holding, servicing, or selling such loans section unless: safety and soundness standards. or debt instruments, provided that: (A) The banking entity does not, (17) Family wealth management (1) Each right or asset that is a directly or indirectly, guarantee, vehicles. (i) Subject to paragraph security is either: assume, or otherwise insure the (c)(17)(ii) of this section, any entity that (i) A cash equivalent (which, for the obligations or performance of the issuer is not, and does not hold itself out as purposes of this paragraph, means high or of any entity to which such issuer being, an entity or arrangement that quality, highly liquid investments extends credit or in which such issuer raises money from investors primarily whose maturity corresponds to the invests; and for the purpose of investing in securities issuer’s expected or potential need for (B) Any assets the issuer holds for resale or other disposition or funds and whose currency corresponds pursuant to paragraphs (c)(15)(i)(B) or otherwise trading in securities, and: to either the underlying loans or the (i)(C)(1)(iii) of this section would be (A) If the entity is a trust, the debt instruments); grantor(s) of the entity are all family (ii) A security received in lieu of debts permissible for the banking entity to acquire and hold directly. customers; and previously contracted with respect to (B) If the entity is not a trust: such loans or debt instruments; or (v) Investment and Relationship Limits. A banking entity’s investment in, (1) A majority of the voting interests (iii) An equity security (or right to in the entity are owned (directly or acquire an equity security) received on and relationship with, the issuer must: (A) Comply with the limitations indirectly) by family customers; and customary terms in connection with (2) The entity is owned only by family imposed in §§ 255.14 (except the such loans or debt instruments; and customers and up to 3 closely related banking entity may acquire and retain (2) Rights or other assets held under persons of the family customers. this paragraph (c)(15)(i)(C) of this any ownership interest in the issuer) (ii) A banking entity may rely on the section may not include commodity and 255.15, as if the issuer were a exclusion in paragraph (c)(17)(i) of this forward contracts; and covered fund; and section with respect to an entity (D) Interest rate or foreign exchange (B) Be conducted in compliance with, provided that the banking entity (or an derivatives, if: and subject to, applicable banking laws affiliate): (1) The written terms of the derivative and regulations, including applicable (A) Provides bona fide trust, fiduciary, directly relate to the loans, debt safety and soundness standards. investment advisory, or commodity instruments, or other rights or assets (16) Qualifying venture capital funds. trading advisory services to the entity; described in paragraph (c)(15)(i)(C) of (i) Subject to paragraphs (c)(16)(ii) (B) Does not, directly or indirectly, this section; and through (iv) of this section, an issuer guarantee, assume, or otherwise insure (2) The derivative reduces the interest that: the obligations or performance of such rate and/or foreign exchange risks (A) Is a venture capital fund as entity; related to the loans, debt instruments, or defined in 17 CFR 275.203(l)–1; and (C) Complies with the disclosure other rights or assets described in (B) Does not engage in any activity obligations under § 255.11(a)(8), as if paragraph (c)(15)(i)(C) of this section. that would constitute proprietary such entity were a covered fund;

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(D) Does not acquire or retain, as the obligations or performance of such from the underlying assets of the principal, an ownership interest in the issuer; covered fund, such as allocation of entity, other than up to 0.5 percent of (3) Comply with the disclosure losses, write-downs or charge-offs of the the entity’s outstanding ownership obligations under § 255.11(a)(8), as if outstanding principal balance, or interests that may be held by the such issuer were a covered fund; reductions in the amount of interest due banking entity and its affiliates for the (4) Do not acquire or retain, as and payable on the interest; purpose of and to the extent necessary principal, an ownership interest in the (F) Receives income on a pass-through for establishing corporate separateness issuer, other than up to 0.5 percent of basis from the covered fund, or has a or addressing bankruptcy, insolvency, the issuer’s outstanding ownership rate of return that is determined by or similar concerns; interests that may be held by the reference to the performance of the (E) Complies with the requirements of banking entity and its affiliates for the underlying assets of the covered fund; §§ 255.14(b) and 255.15, as if such purpose of and to the extent necessary or entity were a covered fund; and for establishing corporate separateness (G) Any synthetic right to have, (F) Complies with the requirements of or addressing bankruptcy, insolvency, receive, or be allocated any of the rights 12 CFR 223.15(a), as if such banking or similar concerns; in paragraphs (d)(6)(i)(A) through (F) of entity and its affiliates were a member (5) Comply with the requirements of this section. bank and the issuer were an affiliate §§ 255.14(b) and 255.15, as if such (ii) Ownership interest does not thereof. issuer were a covered fund; and include: (A) Restricted profit interest which is (iii) For purposes of paragraph (c)(17) (6) Comply with the requirements of an interest held by an entity (or an 12 CFR 223.15(a), as if such banking of this section, the following definitions employee or former employee thereof) entity and its affiliates were a member apply: in a covered fund for which the entity bank and the issuer were an affiliate (A) ‘‘Closely related person’’ means a (or employee thereof) serves as thereof. natural person (including the estate and investment manager, investment estate planning vehicles of such person) * * * * * adviser, commodity trading advisor, or who has longstanding business or (d) * * * other service provider, so long as: personal relationships with any family (6) Ownership interest—(i) Ownership (1) The sole purpose and effect of the customer. interest means any equity, partnership, interest is to allow the entity (or (B) ‘‘Family customer’’ means: or other similar interest. An ‘‘other employee or former employee thereof) (1) A family client, as defined in Rule similar interest’’ means an interest that: to share in the profits of the covered 202(a)(11)(G) 1(d)(4) of the Investment (A) Has the right to participate in the fund as performance compensation for Advisers Act of 1940 (17 CFR selection or removal of a general the investment management, investment 275.202(a)(11)(G)–1(d)(4)); or partner, managing member, member of advisory, commodity trading advisory, (2) Any natural person who is a the board of directors or trustees, or other services provided to the father-in-law, mother-in-law, brother-in- investment manager, investment covered fund by the entity (or employee law, sister-in-law, son-in-law or adviser, or commodity trading advisor or former employee thereof), provided daughter-in-law of a family client, or a of the covered fund (excluding the that the entity (or employee or former spouse or a spousal equivalent of any of rights of a creditor to exercise remedies employee thereof) may be obligated the foregoing. upon the occurrence of an event of under the terms of such interest to (18) Customer facilitation vehicles. (i) default or an acceleration event, which return profits previously received; Subject to paragraph (c)(18)(ii) of this includes the right to participate in the (2) All such profit, once allocated, is section, an issuer that is formed by or removal of an investment manager for distributed to the entity (or employee or at the request of a customer of the cause or to nominate or vote on a former employee thereof) promptly after banking entity for the purpose of nominated replacement manager upon being earned or, if not so distributed, is providing such customer (which may an investment manager’s resignation or retained by the covered fund for the sole include one or more affiliates of such removal); purpose of establishing a reserve customer) with exposure to a (B) Has the right under the terms of amount to satisfy contractual obligations transaction, investment strategy, or the interest to receive a share of the with respect to subsequent losses of the other service provided by the banking income, gains or profits of the covered covered fund and such undistributed entity. fund; profit of the entity (or employee or (ii) A banking entity may rely on the (C) Has the right to receive the former employee thereof) does not share exclusion in paragraph (c)(18)(i) of this underlying assets of the covered fund in the subsequent investment gains of section with respect to an issuer after all other interests have been the covered fund; provided that: redeemed and/or paid in full (excluding (3) Any amounts invested in the (A) All of the ownership interests of the rights of a creditor to exercise covered fund, including any amounts the issuer are owned by the customer remedies upon the occurrence of an paid by the entity in connection with (which may include one or more of its event of default or an acceleration obtaining the restricted profit interest, affiliates) for whom the issuer was event); are within the limits of § 255.12 of this created, subject to paragraph (D) Has the right to receive all or a subpart; and (c)(18)(ii)(B)(4) of this section; and portion of excess spread (the positive (4) The interest is not transferable by (B) The banking entity and its difference, if any, between the aggregate the entity (or employee or former affiliates: interest payments received from the employee thereof) except to an affiliate (1) Maintain documentation outlining underlying assets of the covered fund thereof (or an employee of the banking how the banking entity intends to and the aggregate interest paid to the entity or affiliate), to immediate family facilitate the customer’s exposure to holders of other outstanding interests); members, or through the intestacy, of such transaction, investment strategy, or (E) Provides under the terms of the the employee or former employee, or in service; interest that the amounts payable by the connection with a sale of the business (2) Do not, directly or indirectly, covered fund with respect to the interest that gave rise to the restricted profit guarantee, assume, or otherwise insure could be reduced based on losses arising interest by the entity (or employee or

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former employee thereof) to an (A) Does not own, control, or hold (c) * * * unaffiliated party that provides with the power to vote 25 percent or (1)(i) For purposes of paragraph investment management, investment more of the voting shares of the (a)(2)(iii) of this section, the aggregate advisory, commodity trading advisory, company or fund; and value of all ownership interests held by or other services to the fund. (B) Provides investment advisory, a banking entity shall be the sum of all (B) Any senior loan or senior debt commodity trading advisory, amounts paid or contributed by the interest that has the following administrative, and other services to the banking entity in connection with characteristics: company or fund in compliance with acquiring or retaining an ownership (1) Under the terms of the interest the the limitations under applicable interest in covered funds (together with holders of such interest do not have the regulation, order, or other authority. any amounts paid by the entity in right to receive a share of the income, * * * * * connection with obtaining a restricted gains, or profits of the covered fund, but (4) Multi-tier fund investments—(i) profit interest under § 255.10(d)(6)(ii)), are entitled to receive only: Master-feeder fund investments. If the on a historical cost basis; (i) Interest at a stated interest rate, as principal investment strategy of a (ii) Treatment of employee and well as commitment fees or other fees, covered fund (the ‘‘feeder fund’’) is to director restricted profit interests which are not determined by reference invest substantially all of its assets in financed by the banking entity. For to the performance of the underlying another single covered fund (the purposes of paragraph (c)(1)(i) of this assets of the covered fund; and ‘‘master fund’’), then for purposes of the section, an investment by a director or (ii) Fixed principal payments on or investment limitations in paragraphs employee of a banking entity who before a maturity date (which may (a)(2)(i)(B) and (a)(2)(ii) of this section, acquires a restricted profit interest in include prepayment premiums intended the banking entity’s permitted their personal capacity in a covered solely to reflect, and compensate investment in such funds shall be fund sponsored by the banking entity holders of the interest for, foregone measured only by reference to the value will be attributed to the banking entity income resulting from an early of the master fund. The banking entity’s if the banking entity, directly or prepayment); permitted investment in the master fund indirectly, extends financing for the (2) The entitlement to payments shall include any investment by the purpose of enabling the director or under the terms of the interest are banking entity in the master fund, as employee to acquire the restricted profit absolute and could not be reduced well as the banking entity’s pro-rata interest in the fund and the financing is based on losses arising from the share of any ownership interest in the used to acquire such ownership interest underlying assets of the covered fund, master fund that is held through the in the covered fund. such as allocation of losses, write- feeder fund; and * * * * * (ii) Fund-of-funds investments. If a downs or charge-offs of the outstanding (d) Capital treatment for a permitted banking entity organizes and offers a principal balance, or reductions in the investment in a covered fund. For amount of interest due and payable on covered fund pursuant to § 255.11 of this subpart for the purpose of investing purposes of calculating compliance with the interest; and the applicable regulatory capital (3) The holders of the interest are not in other covered funds (a ‘‘fund of funds’’) and that fund of funds itself requirements, a banking entity shall entitled to receive the underlying assets deduct from the banking entity’s tier 1 of the covered fund after all other invests in another covered fund that the banking entity is permitted to own, then capital (as determined under paragraph interests have been redeemed or paid in (c)(2) of this section) the greater of: full (excluding the rights of a creditor to the banking entity’s permitted investment in that other fund shall (1)(i) The sum of all amounts paid or exercise remedies upon the occurrence contributed by the banking entity in of an event of default or an acceleration include any investment by the banking entity in that other fund, as well as the connection with acquiring or retaining event). an ownership interest (together with any ■ banking entity’s pro-rata share of any 28. Amend § 255.12 by: amounts paid by the entity in ■ a. Revising paragraph (b)(1)(ii); ownership interest in the fund that is connection with obtaining a restricted ■ b. Revising paragraph (b)(4); held through the fund of funds. The profit interest under § 255.10(d)(6)(ii)), ■ c. Adding paragraph (b)(5); investment of the banking entity may on a historical cost basis, plus any ■ d. Revising paragraph (c)(1); and not represent more than 3 percent of the ■ e. Revising paragraphs (d) and (e). amount or value of any single covered earnings received; and The revisions and addition read as fund. (ii) The fair market value of the follows: (5) Parallel Investments and Co- banking entity’s ownership interests in Investments—(i) A banking entity shall the covered fund as determined under § 255.12 Permitted investment in a not be required to include in the paragraph (b)(2)(ii) or (b)(3) of this covered fund. calculation of the investment limits section (together with any amounts paid * * * * * under paragraph (a)(2) of this section by the entity in connection with (b) * * * any investment the banking entity obtaining a restricted profit interest (1) * * * makes alongside a covered fund as long under § 255.10(d)(6)(ii) of subpart C of (ii) Treatment of registered investment as the investment is made in this part), if the banking entity accounts companies, SEC-regulated business compliance with applicable laws and for the profits (or losses) of the fund development companies, and foreign regulations, including applicable safety investment in its financial statements. public funds. For purposes of paragraph and soundness standards. (2) Treatment of employee and (b)(1)(i) of this section, a registered (ii) A banking entity shall not be director restricted profit interests investment company, SEC-regulated restricted under this section in the financed by the banking entity. For business development companies, or amount of any investment the banking purposes of paragraph (d)(1) of this foreign public fund as described in entity makes alongside a covered fund section, an investment by a director or § 255.10(c)(1) of this subpart will not be as long as the investment is made in employee of a banking entity who considered to be an affiliate of the compliance with applicable laws and acquires a restricted profit interest in his banking entity so long as the banking regulations, including applicable safety or her personal capacity in a covered entity: and soundness standards. fund sponsored by the banking entity

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will be attributed to the banking entity including clients, customers, or organized, under the laws of the United if the banking entity, directly or counterparties to which it owes a duty; States or of any State; and indirectly, extends financing for the (vii) The banking entity’s prior efforts (B) The banking entity’s acquisition of purpose of enabling the director or to reduce through redemption, sale, an ownership interest in or sponsorship employee to acquire the restricted profit dilution, or other methods its ownership of the fund by the foreign banking entity interest in the fund and the financing is interests in the covered fund, including meets the requirements for permitted used to acquire such ownership interest activities related to the marketing of covered fund activities and investments in the covered fund. interests in such covered fund; solely outside the United States, as (e) Extension of time to divest an (viii) Market conditions; and provided in § 255.13(b); ownership interest. (1) Extension Period. (ix) Any other factor that the Board (iv) Is established and operated as part Upon application by a banking entity, believes appropriate. of a bona fide asset management the Board may extend the period under (4) Authority to impose restrictions on business; and paragraph (a)(2)(i) of this section for up activities or investment during any (v) Is not operated in a manner that to 2 additional years if the Board finds extension period. The Board may enables any other banking entity to that an extension would be consistent impose such conditions on any evade the requirements of section 13 of with safety and soundness and not extension approved under paragraph the BHC Act or this part. detrimental to the public interest. (e)(1) of this section as the Board ■ 30. Amend § 255.14 by: (2) Application Requirements. An determines are necessary or appropriate ■ a. Revising paragraph (a)(2)(i); application for extension must: to protect the safety and soundness of ■ b. Revising paragraph (a)(2)(ii)(C); ■ (i) Be submitted to the Board at least the banking entity or the financial c. Adding paragraphs (a)(2)(iii), 90 days prior to the expiration of the stability of the United States, address (a)(2)(iv); and (a)(3); and ■ applicable time period; material conflicts of interest or other d. Revising paragraph (c). (ii) Provide the reasons for unsound banking practices, or otherwise The revisions and additions read as application, including information that further the purposes of section 13 of the follows: addresses the factors in paragraph (e)(3) BHC Act and this part. § 255.14 Limitations on relationships with of this section; and (5) Consultation. In the case of a a covered fund. banking entity that is primarily (iii) Explain the banking entity’s plan (a) * * * regulated by another Federal banking for reducing the permitted investment (2) * * * agency, the SEC, or the CFTC, the Board in a covered fund through redemption, (i) Acquire and retain any ownership will consult with such agency prior to sale, dilution or other methods as interest in a covered fund in accordance acting on an application by the banking required in paragraph (a)(2) of this with the requirements of §§ 255.11, entity for an extension under paragraph section. 255.12, or 255.13; (e)(1) of this section. (3) Factors governing the Board (ii) * * * ■ 29. Amend § 255.13 by adding determinations. In reviewing any (C) The Board has not determined that paragraph (d) to read as follows: application under paragraph (e)(1) of such transaction is inconsistent with the this section, the Board may consider all § 255.13 Other permitted covered fund safe and sound operation and condition the facts and circumstances related to activities and investments. of the banking entity; and the permitted investment in a covered * * * * * (iii) Enter into a transaction with a fund, including: (d) Permitted covered fund activities covered fund that would be an exempt (i) Whether the investment would and investments of qualifying foreign covered transaction under 12 U.S.C. result, directly or indirectly, in a excluded funds. (1) The prohibition 371c(d) or § 223.42 of the Board’s material exposure by the banking entity contained in § 255.10(a) does not apply Regulation W (12 CFR 223.42); and to high-risk assets or high-risk trading to a qualifying foreign excluded fund. (iv) Extend credit to or purchase strategies; (2) For purposes of this paragraph (d), assets from a covered fund, provided: (ii) The contractual terms governing a qualifying foreign excluded fund (A) Each extension of credit or the banking entity’s interest in the means a banking entity that: purchase of assets is in the ordinary covered fund; (i) Is organized or established outside course of business in connection with (iii) The date on which the covered the United States, and the ownership payment transactions; settlement fund is expected to have attracted interests of which are offered and sold services; or futures, derivatives, and sufficient investments from investors solely outside the United States; securities clearing; unaffiliated with the banking entity to (ii)(A) Would be a covered fund if the (B) Each extension of credit is repaid, enable the banking entity to comply entity were organized or established in sold, or terminated by the end of five with the limitations in paragraph the United States, or business days; and (a)(2)(i) of this section; (B) Is, or holds itself out as being, an (C) The banking entity making each (iv) The total exposure of the covered entity or arrangement that raises money extension of credit meets the banking entity to the investment and the from investors primarily for the purpose requirements of section 223.42(l)(1)(i) risks that disposing of, or maintaining, of investing in financial instruments for and (ii) of the Board’s Regulation W (12 the investment in the covered fund may resale or other disposition or otherwise CFR 223.42(l)(1)(i) and(ii)), as if the pose to the banking entity and the trading in financial instruments; extension of credit was an intraday financial stability of the United States; (iii) Would not otherwise be a banking extension of credit, regardless of the (v) The cost to the banking entity of entity except by virtue of the acquisition duration of the extension of credit. divesting or disposing of the investment or retention of an ownership interest in, (3) Any transaction or activity within the applicable period; sponsorship of, or relationship with the permitted under paragraphs (a)(2)(iii) or (vi) Whether the investment or the entity, by another banking entity that (iv) must comply with the limitations in divestiture or conformance of the meets the following: § 255.15 of this section. investment would involve or result in a (A) The banking entity is not * * * * * material conflict of interest between the organized, or directly or indirectly (c) Restrictions on other permitted banking entity and unaffiliated parties, controlled by a banking entity that is transactions. Any transaction permitted

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under paragraphs (a)(2)(ii), (a)(2)(iii), or financial instruments subject to the Volcker banks are not expected to bail out the funds (a)(2)(iv) of this section shall be subject Rule.2 Today, the Commission and the other if they lose money.6 to section 23B of the Federal Reserve agencies take aim at the second prohibition, While a few of the proposed changes are Act (12 U.S.C. 371c–1) as if the and propose to significantly weaken the consistent with this statutory purpose prohibition on ownership of covered funds. because they correct unintended counterparty were an affiliate of the consequences from the original regulation, banking entity. When the agencies approved the changes on proprietary trading in September, the late the Proposal goes much further than Dated: January 29, 2020. Paul Volcker himself sent a letter to the reasonably necessary and appears to create substantial loopholes without effectively Joseph M. Otting, Chairman of the Federal Reserve stating that analyzing the potential risks. There is no the amended rule ‘‘amplifies risk in the Comptroller of the Currency. quantitative analysis of those risks. The financial system, increases moral hazard and By order of the Board of Governors of the rationales provided to support these Federal Reserve System, January 30, 2020. erodes protections against conflicts of rollbacks are qualitative, legalistic, and interest that were so glaringly on display summary in nature. They purport to provide Ann E. Misback, 3 during the last crisis.’’ I can imagine that he ‘‘clarity,’’ allow banks to ‘‘diversify’’ Secretary of the Board. would say something very similar about the investments, or improve bank Federal Deposit Insurance Corporation. further changes that we propose today, competitiveness—none of which advance the By order of the Board of Directors. particularly the erosion of the existing goals articulated by Congress. protections regarding conflicts of interest. I I am concerned that the proposed changes, Dated at Washington, DC, on January 30, fear that, if we continue to roll back the along with the other regulatory reductions 2020. Volcker Rule, we will soon reach a stage implemented in the proprietary trading Annmarie H. Boyd, where, sadly, there is nothing left. provisions of the Volcker regulations in Assistant Executive Secretary. November 2019,7 may together substantially Appendix 3—Dissenting Statement of Issued in Washington, DC, on February 3, reduce the safety measures instituted in the 2020 by the Commission. CFTC Commissioner Dan M. Berkovitz Dodd-Frank Act. Are the large banks that are subject to Volcker profitable? Definitely. Are Let’s start by calling the Volcker Covered Christopher Kirkpatrick, the banks less competitive as compared to Secretary of the Commission. Fund Proposal (‘‘Proposal’’) what it is: A their international competitors? No.8 Do we 4 regulatory rollback. Virtually every change need to give them more rein to take on more By the Securities and Exchange in the Proposal creates a new exclusion from Commission. risk? A case for that has not been made. I fear the rules, or eliminates or reduces existing Dated: January 30, 2020. that we are putting the United States requirements. The changes to the regulations taxpayer at risk of once again bailing out the Eduardo A. Aleman, run counter to the statutory purpose of banks when we as regulators fail to take a Deputy Secretary. prohibiting banks from owning hedge funds reasoned, thoughtful approach; one that and private equity funds. The Proposal fails seeks to reach an appropriate balance of free Note: The following appendices will not to analyze or discuss the risks inherent in the appear in the Code of Federal Regulations. markets with regulatory guard rails for risk- banking activities it would permit. It presents taking. After all, the banks that are subject to a thin veneer of a rationale for many of the Appendices to Prohibitions and the Volcker regulations are insured by the changes that were precipitated by complaints FDIC and/or have access to Federal Reserve Restrictions on Proprietary Trading from the banking industry. The agencies Bank support. We should have a say in the and Certain Interests in, and should be making reasoned decisions to risks they take when the U.S. taxpayer is Relationships With, Hedge Funds and improve the effectiveness of the regulations standing behind them. Private Equity Funds—CFTC Voting for the purposes mandated by Congress, not Specific Changes of Concern Summary and CFTC Commissioners’ implementing industry-driven rollbacks. I Statements therefore dissent. Much of the Proposal addresses regulations that will not impact, or will have only Appendix 1—CFTC Voting Summary The general purpose of the Volcker Rule is to eliminate excessive risk taking by banks indirect impacts on, the CFTC’s core mandate On this matter, Chairman Tarbert and that enjoy the benefits of U.S. taxpayer to regulate the derivatives markets. Commissioners Quintenz and Stump voted in support while still preserving their ability to the affirmative. Commissioners Behnam and undertake banking activities that serve the 6 The classic example of this risk is the collapse Berkovitz voted in the negative. The public interest.5 The covered fund provisions of two Bear Stearns-sponsored hedge funds in 2007. Bear Stearns provided loans intended to shore up document submitted to the CFTC are intended to prevent banking entities from Commissioners for a vote did not include two Cayman Islands hedge funds established by circumventing the proprietary trading Bear Stearns. Bear Stearns was not legally obligated Section IV.F. SEC Economic Analysis. prohibition in the Volcker rule through to back the funds financially, but as a business Appendix 2—Dissenting Statement of covered fund investments and limit bank matter, it felt compelled to support them because involvement in covered funds so that the of its sponsorship of the funds. Those actions were CFTC Commissioner Rostin Behnam part of a chain of events that eventually led to the I respectfully dissent as to the fire sale of Bear Stearns to J.P. Morgan in March 2 Prohibitions and Restrictions on Proprietary 2008. To entice J.P. Morgan to buy a distressed Bear Commission’s decision to propose more Trading and Certain Interests in, and Relationships Stearns, the Federal Reserve System provided revisions to the Volcker Rule. The Volcker With, Hedge Funds and Private Equity Funds, 84 financial support for the purchase. See Reuters, Rule, in simple terms, contains two basic FR 61974 (Nov. 14, 2019). Timeline: A dozen key dates in the demise of Bear prohibitions for banking entities: (1) They 3 Jesse Hamilton and Yalman Onaran, ‘‘Vocker the Stearns (Mar. 17, 2008), available at https://www. may not engage in proprietary trading; and Man Blasts Volcker the Rule in Letter to Fed Chair,’’ reuters.com/article/us-bearstearns-chronology/ (2) they cannot have an ownership interest Bloomberg (Sep. 10, 2019), https:// timeline-a-dozen-key-dates-in-the-demise-of-bear- in, sponsor, or have certain relationships www.bloomberg.com/news/articles/2019-09-10/ stearns-idUSN1724031920080317. with a covered fund. Last September, the volcker-the-man-blasts-volcker-the-rule-in-letter-to- 7 Prohibitions and Restrictions on Proprietary Commission, along with other Federal fed-chair. Trading and Certain Interests in, and Relationships 4 agencies,1 approved changes that ‘‘Rollback’’ is defined as ‘‘reduc[ing] (something, with, Hedge Funds and Private Equity Funds, 84 FR such as a commodity price) to or toward a previous 61974 (Nov. 14, 2019). significantly weakened the prohibition on level on a national scale.’’ https://www.merriam- 8 U.S. banks are the strongest in the world. The propriety trading by narrowing the scope of webster.com/dictionary/rollback. recent Global League Tables ranking global banks 5 See Statement of Sen. Dodd, 156 Cong. Rec. by amount of banking business activity shows that 1 The Office of the Comptroller of the Currency, S6242 (July 26, 2010) (‘‘The purpose of the Volcker three or four U.S. banks are in the top five banks Treasury; the Board of Governors of the Federal rule is to eliminate excessive risk taking activities in almost every category, including for banking Reserve System; the Federal Deposit Insurance by banks and their affiliates while at the same time business in foreign markets. See GlobalCapital.com, Corporation; and the Securities and Exchange preserving safe, sound investment activities that Global League Tables, available at https:// Commission. serve the public interest.’’). www.globalcapital.com/data/all-league-tables.

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Nonetheless, I cannot vote in favor of ‘‘diversification’’ is in fact a good thing. effect, a bank could now create a fund of proposed regulations that are presented to Allowing banks to invest in anything and investments that it wants to hold, put the this agency for review that broadly fail to everything would greatly increase underlying instruments into a ‘‘vehicle’’ and follow congressional intent—limiting risky diversification, but that absurd approach then market the other side of the investments behavior by banks connected with hedge would not likely protect the safety and to customers in the form of security funds and private equity funds. soundness of banks or our financial system. ownership in the vehicle. This exclusion has The Proposal states: ‘‘The proposed rule is A simple Google search reveals data the potential to create a large loophole for intended to improve and streamline the indicating that venture capital investments creative bankers to exploit. covered fund provisions and provide clarity historically have been high risk. One study Finally, there is a special exclusion created to banking entities so that they can offer found that about 75% of venture capital- for billionaires: The new ‘‘Family Wealth financial services and engage in other backed firms in the United States did not Management Vehicles’’ exclusion. This permissible activities in a manner that is return capital to investors.12 A 2013 article in provision would exclude so called ‘‘family consistent with the requirements of section the Harvard Business Review noted that ‘‘VC offices’’ from Volcker covered funds 13 of the BHC Act.’’ 9 This benign fac¸ade funds haven’t significantly outperformed the regulation. Unlike the prior two examples, masks the true purpose and effect of the public markets since the late 1990s, and this exclusion is not likely to materially Proposal, which is a regulatory rollback. It since 1997 less cash has been returned to VC increase undesirable risk taking by banks.15 adds five new, substantive exclusions from investors than they have invested.’’ 13 The Rather, it is concerning because it allows covered funds regulation; 10 expands three author goes on to note that ‘‘[v]enture capital banks and wealth vehicles to avoid Volcker existing and significant exclusions; reduces investments are generally perceived as high- compliance. In my view, wealth vehicles for what constitutes ‘‘ownership’’ in a covered risk and high-reward. The data in our report ultra-wealthy individuals do not need special fund in numerous ways; and significantly reveal that although investors in VC take on regulatory relief. reduces limitations on banking relationships high fees, illiquidity, and risk, they rarely As I noted recently in a statement opposing with covered funds. reap the reward of high returns.’’ Although family office exemptions from several CFTC The Volcker covered fund provisions could venture capital performs an important rules, family offices are not used by ordinary benefit from tailored revisions to fix some function in providing capital to new families who may have a modest degree of unintended consequences. The so called technologies, and has been critical in wealth. Rather, the extraordinarily wealthy— ‘‘super 23A’’ provisions restrict regular bank boosting our economy and global including hedge fund operators, bankers, and clearing activities for certain covered funds competitiveness, I do not think we should be super wealthy entrepreneurs—create these organizations to preserve, grow, and pass on for which an affiliate provides services, such permitting such investments by banks backed their wealth to their descendants.16 as investment management. Clearing services by U.S. taxpayers without analyzing the risks According to the Global Family Office Report are not risk-taking activities. As another involved. 2019, ‘‘[t]he average family wealth of those example, the existing regulations The Proposal would add another new exclusion from covered fund regulation for surveyed for this report stands at USD 1.2 inadvertently convert some foreign covered billion, while the average family office has funds into banking entities subject to the ‘‘customer facilitation vehicles.’’ This exclusion is concerning because it is not well USD 917 million in [assets under entire rule set when the statute intended to 17 defined and could potentially become an end management].’’ The aggregate amount of exclude those activities if they take place wealth managed by family offices is outside the United States. The Proposal run around the Volcker rule. In effect, a bank could be the counterparty for the instruments staggering. By one estimate, the total assets would properly address these issues. under management by family offices is over Unfortunately, it also goes much further in in the vehicle sold to customers and thereby take on substantial risks permitted as a result $4 trillion, and the number of family offices proposing regulatory reductions without has grown ten-fold in the last decade.18 A careful consideration of the risks involved. of the exclusion. These risks are not addressed in the Proposal. recent Forbes article noted that ‘‘[f]amily I will discuss three particular provisions to offices are now capable of making illustrate my concerns. First, the Proposal The Proposal states that such funds or ‘‘vehicles’’ would be used to facilitate transactions that were traditionally reserved would exclude ‘‘venture capital funds’’ from for big companies or private-equity firms and the covered funds definition with some customer needs. The brief example given is of accommodating a bank customer that therefore are becoming a disruptive force in minor limitations that are not based on the the market-place.’’ 19 risks involved. The Proposal acknowledges wants to purchase structured notes issued through a vehicle, not the bank, ‘‘for certain Furthermore, there are indications that that, as stated in the final release for the family offices for U.S. persons may be located current Volcker regulations, venture capital legal, counterparty risk management, or funds are private equity funds. The Proposal accounting reasons specific to the 14 15 The Proposal would only allow a de minimis states that the venture capital fund exclusion customer.’’ However, unlike the ‘‘credit fund exclusion,’’ which limits the assets that investment in such vehicles by banking entities. is based in part on several statements by 16 may be held in such funds, the Proposal has Registration and Compliance Requirements for members of Congress regarding venture Commodity Pool Operators (CPOs) and Commodity capital funds. However, a close reading of the no restrictions as to what instruments can be Trading Advisors: Family Offices and Exempt four statements cited in the Proposal shows in the vehicle and whether the banking entity CPOs, 84 FR 67355, 67369 (Dec. 10, 2019). that three of the four do not call for a can be the counterparty for those According to one guide to family offices: complete exclusion of venture capital funds. instruments. A portfolio of complex [T]he modern concept of the family office Congress could have excluded venture derivatives or synthetic ‘‘investments’’ could developed in the 19th century. In 1838, the family capital funds if that were the intent. It did be placed in the vehicle with the bank taking of financier and art collector J.P. Morgan founded the other side of the trades. the House of Morgan to manage the family assets. not. In 1882, the Rockefellers founded their own family The justification for the broad venture Furthermore, the Proposal acknowledges that the so called ‘‘customer facilitation’’ office, which is still in existence and provides capital fund exclusion is flimsy. The services to other families. vehicles can in fact be ginned up by the Proposal asserts the exclusion could EY Family Office Guide, Pathway to successful ‘‘promote and protect the safety and banks themselves and that ‘‘marketing’’ the family and wealth management, at 4, available at soundness of banking entities and the vehicles to the customers is not restricted. In https://www.ey.com/en_us/tax/family-office- financial stability of the United States’’ by advisory-services. allowing banks to ‘‘diversify their 12 Deborah Gage, The Venture Capital Secret: 3 17 Campden Research and UBS, The Global 11 out of 4 Start-Ups Fail, Wall Street Journal (Sept. Family Office Report 2019, at 10, available at permissible investment activities.’’ _ Unfortunately, virtually no analysis or 20, 2012), (citing research by Shikhar Ghosh, a https://www.ey.com/en us/tax/family-office- senior lecturer at Harvard Business School), advisory-services. information is provided as to whether such available at https://www.wsj.com/articles/SB100008 18 Francois Botha, The Rise of the Family Office: 72396390443720204578004980476429190. Where Do They Go Beyond 2019?, Forbes (Dec. 17, 9 Proposal, section II. 13 Diane Mulcahy, Six Myths About Venture 2018), available at https://www.forbes.com/sites/ 10 While the Proposal lists four exclusions, the Capitalists, Harvard Business Review (May 2013), francoisbotha/2018/12/17/the-rise-of-the-family- parallel investments permission is, in effect, an available at https://hbr.org/2013/05/six-myths- office-where-do-they-go-beyond-2019/ exclusion from regulation. about-venture-capitalists. #426044f55795. 11 Proposal, section III.C.2. 14 Proposal, section III.C.4. 19 Id (emphasis added).

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in offshore tax havens to avoid paying U.S. Conclusion made to assess the risks that the Proposal taxes.20 Financial regulators should not The Volcker Rule and related regulations will now allow banks to assume. I cannot provide special and favorable regulatory are complicated. The regulations deserve support the proposed changes to the Volcker treatment to benefit those who seek to avoid careful, reasoned reassessment to maintain rule because they do not conform to the paying their fair share of U.S. taxes. their effectiveness. Unfortunately, the statutory mandate for the rule and the Proposal is neither reasoned nor careful. It Proposal does not carefully analyze the effect ignores the risk-reducing public policy for of the changes on the safety and soundness 20 Kirby Rosplock, The Complete Family Office the Volcker rule and effectively of our financial system. I therefore dissent. Handbook, A Guide for Affluent Families and the acknowledges the fact that this rollback is Advisors Who Serve Them, at 5 (Bloomberg Press driven by complaints from the very banks the [FR Doc. 2020–02707 Filed 2–27–20; 8:45 am] 2014). rule is intended to make safer. No effort is BILLING CODE P

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Reader Aids Federal Register Vol. 85, No. 40 Friday, February 28, 2020

CUSTOMER SERVICE AND INFORMATION CFR PARTS AFFECTED DURING FEBRUARY

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. 932...... 11312 Presidential Documents 3 CFR 966...... 10096 Executive orders and proclamations 741–6000 Proclamations: 984...... 7669 The United States Government Manual 741–6000 9983...... 6698 985...... 9699 9984...... 6709 Other Services 9985...... 6715 8 CFR 741–6020 Electronic and on-line services (voice) 9986...... 6717 Proposed Rules: Privacy Act Compilation 741–6050 9987...... 6719 1003...... 11866 Executive Orders: 1103...... 11866 ELECTRONIC RESEARCH 13803 (Amended by 1208...... 11866 EO 13906)...... 10031 1216...... 11866 World Wide Web 13903...... 6721 1235...... 11866 13904...... 6725 1240...... 11866 Full text of the daily Federal Register, CFR and other publications 13905...... 9359 1244...... 11866 is located at: www.govinfo.gov. 13906...... 10031 1245...... 11866 Federal Register information and research tools, including Public Administrative Orders: 9 CFR Inspection List and electronic text are located at: Memorandums: www.federalregister.gov. Memorandum of 92...... 11833 January 29, 2020 ...... 10031, 160...... 10562 E-mail 10033 161...... 10562 FEDREGTOC (Daily Federal Register Table of Contents Electronic Memorandum of 162...... 10562 February 19, 2020 ...... 11273 Mailing List) is an open e-mail service that provides subscribers 10 CFR with a digital form of the Federal Register Table of Contents. The Notices: digital form of the Federal Register Table of Contents includes Notice of January 27, 2...... 9661 HTML and PDF links to the full text of each document. 2017 ...... 11825, 11827 430...... 8626 Notice of February 13, 431...... 8626 To join or leave, go to https://public.govdelivery.com/accounts/ 2020 ...... 8715 Proposed Rules: USGPOOFR/subscriber/new, enter your email address, then Orders: Ch. I ...... 6103 follow the instructions to join, leave, or manage your Order of February 10, 170...... 9328 subscription. 2020 ...... 8129 171...... 9328 PENS (Public Law Electronic Notification Service) is an e-mail Presidential 429...... 6102 service that notifies subscribers of recently enacted laws. Determinations: 430 ...... 6102, 8483, 9407 To subscribe, go to http://listserv.gsa.gov/archives/publaws-l.html No. 2020–05 of 590...... 7672 January 6, 2020 ...... 6731 and select Join or leave the list (or change settings); then follow 12 CFR the instructions. 5 CFR 1...... 10968 FEDREGTOC and PENS are mailing lists only. We cannot Proposed Rules: 3...... 10968 respond to specific inquiries. 532...... 8205 5...... 10968 Reference questions. Send questions and comments about the 1600...... 8767 6...... 10968 Federal Register system to: [email protected] 1650...... 8482, 8767 23...... 10968 2641...... 7252 24...... 10968 The Federal Register staff cannot interpret specific documents or 32...... 10968 regulations. 6 CFR 34...... 10968 5...... 11829 160...... 10968 FEDERAL REGISTER PAGES AND DATE, FEBRUARY 192...... 10968 7 CFR 204...... 7855 5903–6022...... 3 10959–11274...... 26 Ch. I ...... 7443 206...... 10968 6023–6418...... 4 11275–11828...... 27 210...... 7853 208...... 10968 6419–6730...... 5 11829–12206...... 28 220...... 7853 211...... 10968 6731–7190...... 6 226...... 7853 215...... 10968 7191–7442...... 7 930...... 11830 217...... 10968 7443–7652...... 10 1416...... 10959 223...... 10968 7653–7852...... 11 1464...... 8131 225...... 10968 7853–8128...... 12 1471...... 6419 238...... 10968 1752...... 10555 8129–8372...... 13 251...... 10968 Proposed Rules: 303...... 10968 8373–8716...... 14 54...... 9399 324...... 10968 8717–9362...... 18 56...... 9399 337...... 10968 9363–9660...... 19 62...... 9399 347...... 10968 9661–10032...... 20 70...... 9399 362...... 10968 10033–10268...... 21 90...... 9399 365...... 10968 10269–10554...... 24 91...... 9399 390...... 10968 10555–10958...... 25 930...... 6102 Ch. VI...... 10035

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600...... 6421 Proposed Rules: 92...... 8215 33 CFR 604...... 6421 255...... 10104 578...... 8215 1...... 8169 622...... 6023 303...... 8781 25 CFR 3...... 6804 Ch. X...... 6733 453...... 8490 100 .....6428, 6804, 8169, 8397, Proposed Rules: 140...... 9366 17 CFR 11844 25...... 10996 141...... 9366 110...... 8169 44...... 12120 201...... 6270 211...... 9366 117 ...... 6806, 8173, 8747 195...... 10996 211...... 10568 213...... 9366 165 .....6428, 6804, 8169, 8175, 248...... 12120 231...... 10568 225...... 9366 8177, 9372, 9663, 10981, 303...... 7453 232...... 9365 226...... 9366 11294, 11846 328...... 10997 240...... 6270, 6359 227...... 9366 Proposed Rules: 337...... 7453 241...... 10568 243...... 9366 100 ...... 8499, 8504, 11031, 345...... 10996 Proposed Rules: 249...... 9366 11900 351...... 12120 1...... 11596 273...... 10938 165 .....5909, 5911, 8225, 8507, 15...... 11596 575...... 8395 13 CFR 8509, 10640, 11031, 11904 17...... 11596 Proposed Rules: 103...... 7622 19...... 11596 82...... 10349 34 CFR 120...... 7622 36...... 9407 361...... 11848 121...... 7622 37...... 9407 26 CFR 302...... 8373 Proposed Rules: 40...... 11596 1 ...... 6424, 8725, 8726, 9369, Ch. II ...... 11322 315...... 8373 43...... 9407 11841 Proposed Rules: 75...... 12120 25...... 6803 36 CFR 119...... 7254 140...... 11596 Proposed Rules: 254...... 8180 125...... 6106 150...... 11596 1...... 11020 Proposed Rules: 134...... 7893 151...... 11596 31...... 8344 242...... 9430 210...... 12068 14 CFR 254...... 11041 229...... 12068 27 CFR 404...... 8783 25 ...... 6025, 6026, 6028, 11836 239...... 12068 Proposed Rules: 1192...... 8516, 11329 27...... 9363 240...... 12068 39 ...... 6738, 6741, 6744, 6747, 9...... 11894 249...... 12068 37 CFR 6749, 6752, 6755, 6757, 255...... 12120 28 CFR 7191, 7653, 7655, 7857, 201 ...... 9374, 10603, 11294 14...... 10266, 10267 7860, 7863, 7865, 7868, 18 CFR 205...... 10603 8145, 8148, 8150, 8153, 380...... 11857 2...... 10571 29 CFR 383...... 9663 8383, 8386, 8717, 10036, 11...... 6760 103...... 11184 Proposed Rules: 10043, 10047, 10969, 10971, 38...... 10571 1601...... 11293 1...... 6476 10974, 10978, 11275, 11277, 40 ...... 7197, 8155, 8161 1904...... 8726 201...... 10349 11280, 11282, 11284, 11286, 375...... 9661 11289, 11291 1910...... 8726 202...... 10349 61...... 10896 Proposed Rules: 1915...... 8726 Ch. III ...... 6121 35...... 10107 71 ...... 6030, 6422, 7192, 7445, 1918...... 8726 40...... 6831 7447, 7871, 8388, 10049, 1926...... 8726 38 CFR 342...... 11890 10050, 10052, 10054, 10055, 4001...... 6046 36...... 7230 343...... 11890 11841 4003...... 10279 42...... 7230 357...... 11890 91...... 10896 4006...... 6046 Proposed Rules: 4010...... 6046 97 ....7194, 7195, 10269, 10270 19 CFR 1...... 9435 121...... 10896 4022...... 8396 9...... 7683 135...... 10896 Ch. I...... 6044, 7214 4041...... 6046 14...... 9435 12 ...... 7204, 7209, 7214, 8389 4043...... 6046 Proposed Rules: 17...... 10118 351...... 6031 21...... 5905 4233...... 6046 21...... 11906 Proposed Rules: 39 ...... 5906, 6107, 6110, 7256, 20 CFR 70...... 10118 7894, 7897, 7899, 8207, 103...... 6120 404 ...... 7661, 10278, 10586 39 CFR 8209, 8768, 8771, 8773, 30 CFR 8776, 10099, 10344, 10346, 408...... 7661 111...... 10605 11000, 11003, 11315, 11319, 416...... 7661, 10586 550...... 7218 Ch. III ...... 9614 553...... 7218 3020...... 10285 11876, 11879 21 CFR 71 ...... 6115, 6118, 7472, 7474, 1241...... 7221 Proposed Rules: 7681, 8212, 8779, 10102, 101...... 6045 Proposed Rules: 501...... 6838 10625, 10626, 11005, 11006 600...... 10057 917...... 10633, 10634 Ch. III ...... 8789 382...... 6448 866...... 7215 935...... 10636, 10638 3010...... 10120 399...... 11881 Proposed Rules: 938...... 8494, 8495 1...... 11893 948...... 7475, 8497 40 CFR 15 CFR 11...... 11893 52 ...... 6430, 6808, 7232, 7449, 738...... 10274 16...... 11893 31 CFR 8181, 8185, 8405, 8406, 740...... 10274 129...... 11893 27...... 10063 8408, 8411, 8740, 9664, 742...... 10274 130...... 10107 50...... 10063 9666, 10064, 10070, 10292, 744...... 8722 172...... 10632 555...... 7223 10295, 10301, 10304, 10611, 762...... 8722 573...... 7682 800...... 8747 10613, 10983, 10986, 10989, 2013...... 7448 866...... 10110 802...... 8747 11812, 11814, 11817 Proposed Rules: 1300...... 11008 1010...... 9370 60...... 8751 287...... 7258 1301...... 11008 61...... 8751 801...... 10628 1304...... 11008 32 CFR 62...... 9388, 9673 922...... 8213 85...... 11842 63 ...... 6064, 8751, 10828 24 CFR 232...... 11842 70...... 6431 16 CFR Proposed Rules: 903...... 10284 79...... 7016 1224...... 10565 5...... 8215 1288...... 6803 80...... 7016

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81 ...... 8411, 9666, 10989 Proposed Rules: 535...... 9676 49 CFR 180 .....8428, 8433, 8441, 8447, 37...... 8521 Proposed Rules: 93...... 10619 8454, 8457, 8461, 8468 88...... 9441 530...... 8527 191...... 8104 272...... 6810 402...... 8793 192...... 8104 281...... 8472 405...... 9002 47 CFR 195...... 8104 282...... 8472 417...... 9002 271...... 9262 721...... 10615 422...... 9002 64...... 9390, 9392 367...... 8192 1604...... 10074 423...... 9002 73...... 7880 380...... 6088 Proposed Rules: 431...... 9990 Proposed Rules: 383...... 6088 9...... 11909 433...... 9990 0...... 8531 384...... 6088 22...... 9940 435...... 9990 1...... 8804 385...... 10307 51...... 10121 441...... 9990 2...... 6841 Ch. XII ...... 6044, 7214 52 ...... 6121, 6123, 6125, 6482, 455...... 9002 15...... 6841 460...... 9002 Proposed Rules: 6491, 7262, 7480, 7491, 54 ...... 8533, 8804, 9704, 10646 192...... 7162 483...... 9990 7494, 7496, 7686, 7692, 64...... 8531, 9444 195...... 7162 7695, 8227, 8229, 8230, 510...... 10516 76...... 9446 8233, 8240, 8520, 8791, 600...... 7500 90...... 6841 50 CFR 10127, 10350, 10357, 10360, 43 CFR 95...... 6841 11928, 11931 11...... 10310 60...... 8793 10...... 8189 17...... 11238, 11297 48 CFR 61...... 8793 3160...... 10617 21...... 10621 63...... 8793, 11043 Proposed Rules: 2...... 11746 218...... 10312 70...... 8240, 10357 2...... 7515 4...... 11746 300...... 6101, 8198 7...... 11746, 11859 622 .....6816, 6819, 6825, 9398, 81...... 6491, 10360 44 CFR 122...... 11909 8...... 11746 9684, 10328, 10331, 10624, 123...... 11909 64...... 9675, 11295 9...... 11746 11307, 11937 124...... 9940 Proposed Rules: 10...... 11746 635 ...... 6828, 10341, 10993 127...... 11909 59...... 7902 13...... 11746 648 .....6446, 7414, 8199, 8765, 174...... 6129 64...... 7902 15...... 11746 11309, 11939 180 .....6129, 7499, 7698, 7708, 16...... 11746 660...... 7246, 8200 45 CFR 10642 19...... 11746 665...... 7892 257...... 9940 1611...... 8190 42...... 11746 679 ...... 8477, 9687, 10342, 271...... 10643 Proposed Rules: 52...... 11746 10994 320...... 10128 102...... 8793 Ch. I...... 11746, 11773 Proposed Rules: 403...... 11909 146...... 7088 1552...... 9393 10...... 5913, 5915 503...... 11909 149...... 7088 Proposed Rules: 17 ...... 6856, 10371, 11458 721...... 10364 155...... 7088 19...... 7910 100...... 9430 156...... 7088 28...... 7910 300...... 6883 41 CFR 158...... 7088 32...... 7910 622...... 11861 102-82...... 5903 1610...... 7518 52...... 7910 648 .....6494, 7520, 8534, 9705, 1630...... 7518 53...... 7910 9707 42 CFR 804...... 8242 655...... 6131 71...... 7874 46 CFR 805...... 8242 660...... 6135 410...... 8475 503...... 9676 849...... 8242 665...... 7521 414...... 7666 515...... 9676 852...... 8242 679...... 6890, 11863

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in today’s List of Public enacted public laws. To Laws. subscribe, go to http:// LIST OF PUBLIC LAWS Public Laws Electronic listserv.gsa.gov/archives/ Last List February 14, 2020 Notification Service publaws-l.html (PENS) Note: No public bills which Note: This service is strictly have become law were for E-mail notification of new received by the Office of the PENS is a free electronic mail laws. The text of laws is not Federal Register for inclusion notification service of newly available through this service. PENS cannot respond to specific inquiries sent to this address.

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