issue-1996-07-11•Federal Register proposed rules — 1996-07-11
Federal Register proposed rules — 1996-07-11
issue-1996-07-11Federal Register proposed rules — 1996-07-11Proposed Regulation
Published Federal Register documents, not public-inspection drafts. The GPO XML/text rendition is a research aid; the linked complete official PDF retains the printed layout and all graphics. Graphics are retained in that PDF and are not independently reproduced in this text rendition. Publication does not establish that every provision remains legally in force.
FR Doc. 96-17675 Proposed establishment of Class E airspace; Canon City, CO
[Federal Register Volume 61, Number 134 (Thursday, July 11, 1996)]
[Proposed Rules]
[Pages 36520-36521]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17675]
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DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 71
[Airspace Docket No. 96-ANM-018]
Proposed establishment of Class E airspace; Canon City, CO
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Notice of Proposed Rulemaking (NPRM).
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SUMMARY: This proposed rule would establish the Canon City, Colorado,
Class E airspace to accommodate a new Global Positioning System (GPS)
standard instrument approach procedure (SIAP) to the Fremont County
Airport. The area would be depicted on aeronautical charts for pilot
reference.
DATES: Comments must be received on or before August 30, 1996.
ADDRESSES: Send comments on the proposal in triplicate to: Manager,
Operations Branch, ANM-530, Federal Aviation Administration, Docket No.
96-ANM-018, 1601 Lind Avenue S.W., Renton, Washington 98055-4056.
The official docket may be examined at the same address.
An informal docket may also be examined during normal business
hours at the address listed above.
[[Page 36521]]
FOR FURTHER INFORMATION CONTACT:
James C. Frala, ANM-532.4, Federal Aviation Administration, Docket No.
96-ANM-018, 1601 Lind Avenue S.W., Renton, Washington 98055-4056;
telephone number: (206) 227-2535.
SUPPLEMENTARY INFORMATION:
Comments Invited
Interested parties are invited to participate in this proposed
rulemaking by submitting such written data, views, or arguments as they
may desire. Comments that provide the factual basis supporting the
views and suggestions presented are particularly helpful in developing
reasoned regulatory decisions on the proposal. Comments are
specifically invited on the overall regulatory, aeronautical, economic,
environmental, and energy related aspects of the proposal.
Communications should identify the airspace docket number and be
submitted in triplicate to the address listed above. Commenters wishing
the FAA to acknowledge receipt of their comments on this notice must
submit with those comments a self-addressed, stamped postcard on which
the following statement is made: ``Comments to Airspace Docket No. 96-
ANM-018.'' The postcard will be date/time stamped and returned to the
commenter. All communications received on or before the specified
closing date for comments will be considered before taking action on
the proposed rule. The proposal contained in this notice may be changed
in the light of comments received. All comments submitted will be
available for examination at the address listed above both before and
after the closing date for comments. A report summarizing each
substantive public contact with FAA personnel concerned with this
rulemaking will be filed in the docket.
Availability of NPRM's
Any person may obtain a copy of this NPRM by submitting a request
to the Federal Aviation Administration, Operations Branch, ANM-530,
1601 Lind Avenue S.W., Renton, Washington 98055-4056. Communications
must identify the notice number of this NPRM. Persons interested in
being placed on a mailing list for future NPRM's should also request a
copy of Advisory Circular No. 11-2A, which describes the application
procedure.
The Proposal
The FAA is considering an amendment to part 71 of the Federal
Aviation Regulations (14 CFR part 71) to establish Class E airspace at
Canon City, Colorado, to accommodate a new GPS SIAP to the Fremont
County Airport. The area would be depicted on aeronautical charts for
pilot reference. The coordinates for this airspace docket are based on
North American Datum 83. Class E airspace areas extending upward from
700 feet or more above the surface of the earth are published in
Paragraph 6005 of FAA Order 7400.9C dated August 17, 1995, and
effective September 16, 1995, which is incorporated by reference in 14
CFR 71.1. The Class E airspace designation listed in this document
would be published subsequently in the Order.
The FAA has determined that this proposed regulation only involves
an established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
It, therefore, (1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under DOT
Regulatory Policies and Procedures (44 FR 11034; February 26, 1979);
and (3) does not warrant preparation of a regulatory evaluation as the
anticipated impact is so minimal. Since this is a routine matter that
will only affect air traffic procedures and air navigation, it is
certified that this rule, when promulgated, will not have a significant
economic impact on a substantial number of small entities under the
criteria of the Regulatory Flexibility Act.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference, Navigation (air).
The Proposed Amendment
In consideration of the foregoing, the Federal Aviation
Administration proposes to amend 14 CFR part 71 as follows:
PART 71--[AMENDED]
1. The authority citation for 14 CFR part 71 continues to read as
follows:
Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389; 14 CFR 11.69.
Sec. 71.1 [Amended]
2. The incorporation by reference in 14 CFR 71.1 of the Federal
Aviation Administration Order 7400.9C, Airspace Designations and
Reporting Points, dated August 17, 1995, and effective September 16,
1995, is amended as follows:
Paragraph 6005 Class E airspace areas extending upward from 700
feet or more above the surface of the earth.
* * * * *
ANM CO E5 Canon City, CO
Fremont County Airport, Canon City, CO
(Lat. 38 deg.25'47''N, long. 105 deg.06'31''W)
That airspace extending upward from 700 feet above the surface
within a 6.5-mile radius of the Fremont County Airport.
* * * * *
Issued in Seattle, Washington, on June 27, 1996.
Richard E. Prang,
Acting Assistant Manager, Air Traffic Division, Northwest Mountain
Region.
[FR Doc. 96-17675 Filed 7-10-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-17672 Importation of Animals and Animal Products
[Federal Register Volume 61, Number 134 (Thursday, July 11, 1996)]
[Proposed Rules]
[Page 36520]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17672]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 61, No. 134 / Thursday, July 11, 1996 /
Proposed Rules
[[Page 36520]]
DEPARTMENT OF AGRICULTURE
Animal and Plant Health Inspection Service
9 CFR Parts 92, 93, 94, 95, 96, and 98
[Docket No. 94-106-4]
RIN 0579-AA71
Importation of Animals and Animal Products
AGENCY: Animal and Plant Health Inspection Service, USDA.
ACTION: Notice of extension of comment period.
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SUMMARY: We are extending the comment period for our proposed rule that
would amend the regulations regarding the importation of animals and
animal products by establishing criteria for foreign ``regions'' based
on risk class levels. We are also announcing the availability, through
the World Wide Web and in our comment reading room, of information
concerning public comments received on the proposed rule, transcripts
of public hearings held on the proposed rule, and other documents that
are part of the administrative record for the proposed rule.
DATES: Consideration will be given only to comments on the proposed
rule received on or before September 16, 1996.
ADDRESSES: Comments may be submitted as paper copies or by electronic
mail. If you submit paper copies, please send an original and three
copies of your comments to Docket No. 94-106-1, Regulatory Analysis and
Development, PPD, APHIS, suite 3C03, 4700 River Road Unit 118,
Riverdale, MD 20737-1238. Please state that your comments refer to
Docket No. 94-106-1. We encourage the submission of copies by
electronic mail, since this both facilitates our analysis of the
comments and allows us to make the text of comments available to the
public via the Internet. The e-mail address for comments on this
proposed rule is [email protected]. Please be sure to include
your full name and organization in any comments you submit by e-mail.
If your e-mail comment is a duplicate of a paper copy you have
submitted, please state this in the first line of your e-mail message.
Comments submitted by e-mail will be posted to the APHIS
Regionalization Proposal Web Page within a few days after receipt. This
Web page also contains copies of the proposed rule in several formats,
lists of persons who have submitted comments, transcripts of public
hearings held on the proposed rule, and other background information
from the administrative record of the proposed rule. The Web page URL
is http://www.aphis.usda.gov/PPD/region. Both paper and e-mail comments
received may be inspected at USDA, room 1141, South Building, 14th
Street and Independence Avenue SW., Washington, DC, between 8 a.m. and
4:30 p.m., Monday through Friday, except holidays. Persons wishing to
inspect comments are requested to call ahead on (202) 690-2817 to
facilitate entry into the comment reading room.
FOR FURTHER INFORMATION CONTACT: Dr. Gary Colgrove, Chief Staff
Veterinarian, National Center for Import and Export, VS, APHIS, 4700
River Road Unit 38, Riverdale, MD 20737-1231, (301) 734-8590.
SUPPLEMENTARY INFORMATION: On April 18, 1996, we published in the
Federal Register (61 FR 16978-17105, Docket No. 94-106-1), a proposal
to amend the regulations in title 9 of the Code of Federal Regulations
regarding the importation of animals and animal products. We proposed
to establish criteria for foreign ``regions'' based on risk class
levels that would apply to the importation of ruminants and swine and
the products of these animals. We also proposed to allow, under certain
conditions, the unloading and reloading at the port of arrival of meat
and other animal products otherwise prohibited entry into the United
States.
Comments on the proposed rule were required to be received on or
before July 17, 1996. We have received four requests to extend the
period during which comments will be accepted. These requests were
received from an advisory committee to the Secretary of Agriculture, a
livestock institute, a veterinary association, and an animal health
association.
In response to these requests, we are extending the comment period
on Docket No. 94-106-1 for an additional 60 days. We believe this
action, along with the series of four public hearings that we have held
regarding the proposal, will allow the organizations requesting
extension of the comment period and all other interested persons
adequate opportunity to prepare and submit comments.
Authority: 7 U.S.C. 1622; 19 U.S.C. 1306; 21 U.S.C. 102-105,
111, 114a, 134a, 134b, 134c, 134d, 134f, 135, 136, and 136a; 31
U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.2(d).
Done in Washington, DC, this 3rd day of July 1996.
Terry L. Medley,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 96-17672 Filed 7-10-96; 8:45 am]
BILLING CODE 3410-34-P
Complete official Federal Register PDF
FR Doc. 96-17646 Control Strategy: Ozone (OINF3); Tennessee
[Federal Register Volume 61, Number 134 (Thursday, July 11, 1996)]
[Proposed Rules]
[Pages 36534-36535]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17646]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[TN-167-9627b; FRL-5529-2]
Control Strategy: Ozone (O3); Tennessee
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: The EPA proposes to approve an exemption request from the
oxides of nitrogen (NOX) reasonably available control technology
(RACT) and NOX conformity requirements of the Clean Air Act as
amended in 1990 (CAA) for the five county Middle Tennessee (Nashville)
moderate ozone (O3) nonattainment area. The NOX exemption
request is based upon the most recent three years of monitoring data,
which demonstrate that additional reductions of NOX would not
contribute to attainment of the National Ambient Air Quality Standards
(NAAQS). In the
[[Page 36535]]
final rules section of this Federal Register, the EPA is approving the
exemption request as a direct final rule without prior proposal because
the Agency views this as a noncontroversial amendment and anticipates
no adverse comments. A detailed rationale for the approval is set forth
in the direct final rule. If no adverse comments are received in
response to this proposed rule, no further activity is contemplated in
relation to this proposed rule. If EPA receives adverse comments, the
direct final rule will be withdrawn and all public comments received
will be addressed in a subsequent final rule based on this proposed
rule. The EPA will not institute a second comment period on this
document. Any parties interested in commenting on this document should
do so at this time.
DATES: To be considered, comments must be received by August 12, 1996.
ADDRESSES: Written comments on this action should be addressed to
William Denman at the Environmental Protection Agency, Region 4 Air
Programs Branch, 345 Courtland Street, NE, Atlanta, Georgia 30365.
Copies of documents relative to this action are available for public
inspection during normal business hours at the following locations. The
interested persons wanting to examine these documents should make an
appointment with the appropriate office at least 24 hours before the
visiting day. Reference file TN167-01-9627. The Region 4 office may
have additional background documents not available at the other
locations.
Air and Radiation Docket and Information Center (Air Docket 6102), U.S.
Environmental Protection Agency, 401 M Street, SW., Washington, DC
20460.
Environmental Protection Agency, Region 4 Air Programs Branch, 345
Courtland Street, NE., Atlanta, Georgia 30365. William Denman, 404/347-
3555 extension 4208.
Tennessee Department of Environment and Conservation, Division of Air
Pollution Control, L & C Annex, 9th Floor, 401 Church Street,
Nashville, Tennessee 37243-1531. 615/532-0554
FOR FURTHER INFORMATION CONTACT: William Denman 404/347-3555 extension
4208.
SUPPLEMENTARY INFORMATION: For additional information see the direct
final rule which is published in the rules section of this Federal
Register.
Dated: June 18, 1996.
A. Stanley Meiburg,
Acting Regional Administrator.
[FR Doc. 96-17646 Filed 7-10-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-17579 Amendments to Beneficial Ownership Reporting Requirements
[Federal Register Volume 61, Number 134 (Thursday, July 11, 1996)]
[Proposed Rules]
[Pages 36521-36534]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17579]
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SECURITIES AND EXCHANGE COMMISSION
17 CFR Part 240
[Release No. 34-37403; File No. S7-16-96; International Series--1001]
RIN 3235-AG81
Amendments to Beneficial Ownership Reporting Requirements
AGENCY: Securities and Exchange Commission.
ACTION: Reproposed rules.
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SUMMARY: In accordance with a recent recommendation of the Report of
the Task Force on Disclosure Simplification published March 5, 1996,
the Securities and Exchange Commission (``Commission'') today is
publishing for comment a proposal to amend the rules relating to the
reporting of beneficial ownership in publicly-held companies. Similar
amendments were proposed in 1989 but were not acted upon by the
Commission. These reproposals would make Schedule 13G available, in
lieu of Schedule 13D, to all investors beneficially owning less than 20
percent of the outstanding class that have not acquired or held the
securities for the purpose of and do not have the effect of changing or
influencing the control of the issuer of the securities. The purposes
of the reproposals are to improve the effectiveness of the beneficial
ownership reporting scheme and to reduce the reporting obligations of
passive investors.
DATES: Comments should be received on or before September 9, 1996.
ADDRESSES: Comments should be submitted in triplicate to Jonathan G.
Katz, Secretary, U.S. Securities and Exchange Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. Comments may also be submitted
electronically at the following e-mail address: [email protected].
Comment letters should refer to File No. S7-16-96; this file number
should be
[[Page 36522]]
included on the subject line if e-mail is used. All comments received
will be available for public inspection and copying in the Commission's
public reference room at the same address. Electronically submitted
comments will be posted on the Commission's Internet web site (http://
www.sec.gov).
FOR FURTHER INFORMATION CONTACT: Dennis O. Garris, Special Counsel,
Office of Mergers and Acquisitions, Division of Corporation Finance,
Securities and Exchange Commission at (202) 942-2920, 450 Fifth Street
N.W., Washington, D.C. 20549.
SUPPLEMENTARY INFORMATION: The Commission is reproposing for comment
amendments to Regulation 13D-G 1 and Schedules 13D and 13G.
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\1\ Rules 13d-1, 13d-2, and 13d-7 [17 CFR 240.13d-1, 240.13d-2,
and 240.13d-7].
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I. Background and Overview
A. Current Regulatory Scheme
The beneficial ownership reporting requirements embodied in
Sections 13(d) 2 and 13(g) 3 of the Securities Exchange Act
of 1934 (``Exchange Act'') 4 and the regulations adopted
thereunder 5 are intended to provide investors and the subject
issuer with information about accumulations of securities that may have
the potential to change or influence control of the issuer. The
statutory and regulatory framework also establishes a comprehensive
reporting system for gathering and disseminating information about the
ownership of equity securities.6 These provisions require, subject
to exceptions, that any person who acquires beneficial ownership of
more than five percent of a class of equity securities registered under
Section 12 of the Exchange Act 7 and other specified equity
securities (collectively, ``subject securities'') report such
acquisition on Schedule 13D within 10 calendar days. That report must
be amended promptly to report any material change in the information
provided, including any acquisition or disposition of one percent or
more of the class.8 Persons holding more than five percent of a
class of subject securities at the end of the calendar year, but who
have not made an acquisition subject to Section 13(d) (``Exempt
Investors''),9 are required instead to file and amend a short-form
Schedule 13G within 45 days after the close of the calendar year. The
Schedule 13G and amendments need only report securities that are
beneficially owned as of the last day of the year.
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\2\ 15 U.S.C. 78m(d).
\3\ 15 U.S.C. 78m(g).
\4\ 15 U.S.C. 78a et seq.
\5\ Regulation 13D-G, Rules 13d-1 through 13d-7 [17 CFR 240.13d-
1 through 240.13d-7].
\6\ For a more extensive discussion of Sections 13(d) and 13(g),
and Regulation 13D-G adopted to implement both statutory provisions,
see Securities Exchange Act Release No. 26598 (March 8, 1989) [54 FR
10552] (``Proposing Release'').
\7\ 15 U.S.C. 781.
\8\ Rule 13d-2(a).
\9\ Persons who acquire all their securities prior to the issuer
registering under the Exchange Act are not subject to Section 13(d),
and persons who acquire not more than two percent of a class of
subject securities within a 12-month period are exempted from
Section 13(d) by Section 13(d)(6)(B), but in both cases are subject
to Section 13(g). Section 13(d)(6)(A) exempts acquisitions of
subject securities acquired in a stock-for-stock exchange which is
registered under the Securities Act of 1933.
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Schedule 13G is also available to specified institutional investors
(``Qualified Institutional Investors'') 10 that acquired or hold
the securities in the ordinary course of business and without a purpose
or effect or in connection with a transaction having a purpose or
effect, of changing or influencing control of the issuer. These
Qualified Institutional Investors likewise only report their greater
than five percent positions held as of the close of the year either in
an initial report or amendment in the case of any change in the
information provided, except if they own more than 10 percent as of the
close of any month, in which case a Schedule 13G must be filed or
amended within 10 calendar days reporting the holdings as of the close
of the month.11 These flexible reporting requirements are designed
to minimize the costs of monitoring positions in securities acquired in
the ordinary course of the investor's business.
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\10\ Such specified institutional investors include a broker or
dealer registered under Section 15(b) of the Exchange Act [15 U.S.C.
78o(b)], a bank as defined in Section 3(a)(6) of the Exchange Act
[15 U.S.C. 78c(a)(6)], an insurance company as defined in Section
3(a)(19) of the Exchange Act [15 U.S.C. 78c(a)(19)], an investment
company registered under Section 8 of the Investment Company Act of
1940 [15 U.S.C. 80a-8], an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940 [15 U.S.C. 80b-1
et seq.], an employee benefit plan or pension fund that is subject
to the provisions of the Employee Retirement Income Security Act of
1974 [codified principally in 29 U.S.C. 1001-1461], and related
holding companies and groups (collectively, ``institutional
investors''). Rule 13d-1(b)(1)(ii) [17 CFR 240.13d-1(b)(1)(ii)].
\11\ Rule 13d-1(b)(2).
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B. Proposals for Reform
In 1989, the Commission proposed amendments to Regulation 13D-G to
improve the effectiveness of the reporting scheme and to lessen the
compliance costs to investors that have not acquired or held the
securities with the purpose or effect of changing or influencing the
control of the issuer.12 The 1989 proposed amendments were not
acted upon by the Commission. The amendments proposed today are similar
to the 1989 proposals except, as more fully discussed below, the
Commission is not reproposing a limitation on the amount of securities
that a Qualified Institutional Investor can report on Schedule 13G and
the Commission is proposing that the new class of persons that would be
eligible to use Schedule 13G would have the same amendment requirements
that currently apply to Schedule 13D filings, as opposed to the more
liberal amendment requirements currently applicable to Schedule 13G.
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\12\ Exchange Act Release No. 26598 (March 8, 1989) [54 FR
10552]. The Commission received fifteen comment letters which are
available for public inspection and copying at the Commission's
Public Reference Room in Washington, D.C. (File No. S7-8-89).
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The current reporting scheme requires most persons other than
institutions to file detailed disclosure reports regardless of the
reasons for the acquisition. As a result, the current reporting scheme
may place unnecessary disclosure burdens on persons whose acquisitions
do not implicate the Williams Act's concern with transactions affecting
the control of issuers. To further the Commission's goals of disclosure
simplification and efficiency, as stated in the Report of the Task
Force on Disclosure Simplification published March 5, 1996, the
amendments are being reproposed at this time to improve the
effectiveness of the beneficial ownership reporting scheme and to
reduce the reporting obligations of all investors that acquire or hold
the securities without the purpose or the effect of changing or
influencing control of the issuer by permitting them for the first time
to report on Schedule 13G. Since the Commission first proposed to
exempt investors that do not have a disqualifying purpose or effect
from the Schedule 13D filing requirements, initial Schedule 13D filings
have increased from 2,850 in fiscal 1988 to 3,347 in fiscal 1995, a 17
percent increase. Data provided by the Commission's Office of Economic
Analysis indicates that 76 percent of the Schedules 13D studied by that
office did not disclose a purpose or effect of changing or influencing
control of the issuer and, therefore, would benefit from the amendments
proposed today.13 The reduced number of Schedule 13D filings would
allow the marketplace, as well as the staff of the Commission, to focus
more quickly on acquisitions
[[Page 36523]]
involving the potential to change or influence control.
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\13\ The sample included 110 Schedules 13D filed from November
10, 1994 to December 30, 1994.
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Accordingly, in addition to the two existing categories of Schedule
13G filers (Qualified Institutional Investors and Exempt Investors), a
third category (``Passive Investors'') 14 would be created,
significantly expanding the classes of persons eligible to file on the
short form. Any person who acquires or holds more than five percent of
a class of subject securities and does not have a disqualifying purpose
or effect would be permitted to file a short-form report on Schedule
13G within 10 calendar days after the acquisition, rather than the
long-form report on Schedule 13D.15 A Qualified Institutional
Investor would remain eligible to file a short-form report on Schedule
13G 45 days after the year's end, provided that the requirements of
amended Rule 13d-1(b)(1) are satisfied. Exempt Investors would continue
to file their initial Schedule 13G within 45 calendar days after the
calendar year in which they became subject to Section 13(g) and Rule
13d-1(c).
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\14\ The term ``Passive Investors'' is used in this release to
refer to shareholders beneficially owning more than five percent of
the class of subject securities and who can certify that the subject
securities were not acquired or held for the purpose of and do not
have the effect of changing or influencing the control of the issuer
of such securities and were not acquired in connection with or as a
participant in any transaction having such purpose or effect. See
proposed Rule 13d-1(b)(2) and revised Item 10 of Schedule 13G.
Shareholders that are unable to certify to this effect are
considered to have, for purposes of this release, a ``disqualifying
purpose or effect''.
\15\ Schedule 13D requires more disclosure than Schedule 13G.
The following are the primary disclosures required by Schedule 13D
that are not required by Schedule 13G: (i) the source and amount of
funds used to purchase the securities; (ii) the purpose of the
acquisition of the securities and any plans or proposals that the
reporting person has involving the issuer including, among other
things, extraordinary transactions and changes of control; (iii) a
description of transactions in the securities reported on in the
sixty days prior to the filing of the schedule; (iv) a description
of any contracts or arrangements involving the securities of the
issuer; and, (v) a requirement to file copies of any written
contracts or arrangements described in the Schedule 13D as exhibits
to the schedule.
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The rule amendments would subject Passive Investors filing Schedule
13G in lieu of Schedule 13D to the same amendment requirements that
currently apply to Schedule 13D. Additionally, Passive Investors would
be subject to a proposed 20 percent limit on the amount of an issuer's
securities that may be reported on Schedule 13G and would be required
to file a Schedule 13D within 10 calendar days of acquiring 20 percent
or more of the securities. Upon acquiring 20 percent or more, the
investor would be prohibited from acquiring additional securities or
from voting or directing the voting of the securities until filing that
schedule (a ``standstill period''). The Commission is not reproposing a
percentage limit to reporting on Schedule 13G for Qualified
Institutional Investors.
Under the proposed amendments, Passive Investors that are no longer
able to certify that they did not acquire or do not hold with a
disqualifying purpose or effect would be required to file a Schedule
13D within 10 calendar days of the change in purpose. An investor
required to file a Schedule 13D because it has changed its investment
purpose would be subject to a waiting period (``cooling-off period'')
from the time of the change in investment purpose until the expiration
of the tenth calendar day from the date of the filing of a Schedule
13D, during which time such person could not vote or direct the voting
of the subject securities, or acquire an additional beneficial
ownership interest in any securities either of the issuer or of any
person controlling the issuer.
In 1992 the Commission revised the proxy rules to exempt certain
communications from the proxy regulation and disclosure requirements.
The 1992 proxy rule amendments were justified in part because Section
13(d) would continue to require disclosure of concerted activities by
and among groups of significant shareholders regarding voting
matters.16 Following the 1992 proxy reform, some commentators have
continued to express the concern that Section 13(d) has a potential
chilling effect on a shareholder's ability to take full advantage of
the proxy rule exemptions, since actions taken pursuant to the proxy
exemptions may be interpreted to be inconsistent with the
certifications necessary for Qualified Institutional Investors to file
on Schedule 13G or such actions may lead to a finding of a ``group''
under Rule 13d-5(b)(1).17 Comment is requested as to whether
Section 13(d) reporting obligations restrict a shareholder's ability to
use the proxy rule exemptions and whether relief, in addition to that
proposed today, from Schedule 13D filing obligations with respect to
soliciting activities is necessary and appropriate.
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\16\ See Exchange Act Release No. 31326, Section I (October 16,
1992) [57 FR 48276]; testimony of Richard C. Breeden, Chairman of
the Securities and Exchange Commission, before the Subcommittee on
Securities of the Committee on Banking, Housing, and Urban Affairs,
United States Senate (October 17, 1991).
\17\ In April 1994, the Council of Institutional Investors
submitted a rulemaking petition to allow institutions that incur a
Schedule 13D filing obligation as a result of exempt soliciting
activities to report their beneficial ownership on a short form
instead. The petition requested relief from Section 13(d) filing
obligations for Schedule 13G eligible shareholders participating in
communications covered by the two principal exemptions from the
proxy rules. Under the petition, persons engaged in exempt
solicitations would only be required to file a new short form
disclosure statement and they would not lose their Schedule 13G
eligibility. The petition is available for inspection and copying at
the Commission's Public Reference Room in Washington, D.C. (File 4-
372).
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Finally, the Commission is proposing amendments to the schedules
and technical amendments to the beneficial ownership rules along with
additional related and clarifying amendments.
II. Proposed Amendments to Regulation 13D-G
A. Expansion of the Class of Investors Eligible to Report on Schedule
13G
The Commission is reproposing that Regulation 13D-G be amended to
permit Passive Investors to use the short-form Schedule 13G.18
Passive Investors would file the Schedule within 10 calendar days after
acquiring beneficially more than five percent of a class of subject
securities. Persons unable or unwilling to certify that they do not
have a disqualifying purpose or effect because, for example, the
possibility exists that they may seek to exercise or influence control,
would be ineligible to file a Schedule 13G and would be required to
file a Schedule 13D. The comment letters on the 1989 proposals
reflected significant consensus supporting the Commission's expansion
of the eligible class of Schedule 13G filers.19
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\18\ Proposed Rule 13d-1(b)(2).
\19\ Of the 15 comment letters received by the Commission on the
proposals, 13 commenters generally supported the expansion and two
commenters opposed the expansion.
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The Commission is reproposing that Passive Investors be allowed to
choose whether to report on Schedule 13G or Schedule 13D.20 The
Commission preliminarily believes that Passive Investors should be
given the flexibility to determine which Schedule is most appropriate
given their circumstances. The fact that an investor can represent
[[Page 36524]]
that it does not have a disqualifying purpose or effect but still
chooses to file on a Schedule 13D may provide important information
concerning the filing person's intent. Accordingly, the Commission is
reproposing that the use of Schedule 13G, in lieu of Schedule 13D,
remain optional for those persons eligible to use Schedule 13G.
However, the Commission requests comment as to the appropriateness of
this approach and whether Schedule 13G eligible persons would choose to
file on Schedule 13D to avoid the cooling-off period upon a change in
investment purpose. Comment is also requested as to whether a mandatory
filing approach would better serve the market by allowing investors to
focus on those acquisitions that presently represent an attempt to
influence or change control of the issuer.
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\20\ In the 1989 Proposing Release the Commission requested
comment upon whether reporting on a Schedule 13G (as opposed to
Schedule 13D) should be permissive or mandatory for investors that
do not have a disqualifying purpose or effect. Commenters opposing a
mandatory filing requirement suggested that the detailed disclosures
contained in a Schedule 13D may be more appropriate in situations
where the investor's purpose or effect may abruptly change to a
disqualifying purpose or effect and, accordingly, the use of the
Schedule 13D, in lieu of the Schedule 13G, should be optional.
Commenters supporting mandatory use of Schedule 13G believed that
such a requirement would enhance the marketplace's ability to focus
on those acquisitions representing a disqualifying purpose or effect
and would deter Schedule 13G eligible filers from filing on Schedule
13D in order to avoid the cooling-off period upon a change in
purpose or effect.
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B. Filing Periods for Passive Investors Filing on Schedule 13G
As reproposed, Passive Investors choosing to file a Schedule 13G
would file the schedule within 10 calendar days of crossing the five
percent threshold. Requiring the filing within 10 days, rather than the
45 days following year end currently applicable to Schedule 13G filers,
would provide more timely notice to the market and shareholders of the
existence of voting blocks that have the potential of affecting control
of the issuer.
Under the proposed rules, however, Passive Investors filing on
Schedule 13G would still be subject to the same amendment requirements
currently applicable to Schedule 13D.21 This approach differs from
the 1989 proposals, which proposed that Passive Investors filing on
Schedule 13G be subject merely to the more liberal amendment
requirements currently applicable to Qualified Institutional Investors
filing on Schedule 13G.22 One commenter on the 1989 proposals
expressed the concern that the 1989 proposals would not have required
timely disclosure of material changes, including increases in ownership
of the issuer's securities. For example, under the 1989 proposals, a
Passive Investor would only have been required to file an amendment to
the Schedule 13G to disclose an acquisition of ownership in excess of
10 percent of such securities within 10 days after the end of the month
in which the person's ownership exceeded 10 percent of the class as of
the end of the month. The Commission preliminarily believes that,
although Passive Investors do not have a disqualifying purpose or
effect, the market may benefit from more timely notice of material
changes in ownership and material changes in the information previously
reported by such persons.
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\21\ Rule 13d-2(a) requires that an amendment to Schedule 13D be
filed promptly upon any material change in the facts set forth in
the schedule, including any material increase or decrease in the
percentage of the class beneficially owned. Acquisitions or
dispositions of one percent or more of the class are deemed to be
``material'' for the purposes of this rule. Acquisitions or
dispositions of less than one percent of the class may be material
depending upon the facts and circumstances.
\22\ Under Rule 13d-2(b) an amendment to the Schedule 13G would
be due 45 calendar days after the close of the year to report only
any change that occurred in the information previously reported on
Schedule 13G as of the last day of the year. However, under Rule
13d-1(b)(2) if their beneficial ownership exceeds 10 percent of the
class at the end of any month, an amendment would be required to be
filed within 10 days after the end of that month, as well as within
10 days after the end of any month in which their ownership
increases or decreases by more than five percent of such class.
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In addition, by providing that the market will receive notice of
material changes in the amount beneficially owned by persons filing
under this new category of ``Passive Investors'', there is less of an
incentive for those who may ultimately have a control intent to use
Schedule 13G for the purpose of being able to acquire, for example, up
to 9.9 percent of an issuer's stock without ever triggering any
reporting requirement or disclosure to the market other than, perhaps,
a prior filing of a five percent ownership interest. Likewise, without
this amendment requirement a Passive Investor could increase a
securities holding from just over 10 percent to just under 20 percent
without any reporting or disclosure to the market until 10 days after
the end of the month in which the 15 percent threshold was crossed. In
the past, stock accumulation programs have taken advantage of the
current statutory ``window'' in the Section 13(d) reporting regime.
Comment is requested as to whether providing for current Schedule 13G
amendment procedures as opposed to the more stringent Schedule 13D
amendment procedures, for persons who qualify as Passive Investors,
would exacerbate that problem, thereby decreasing investor protection
and the availability of timely information provided to the market.
Comment is requested as to whether it is necessary to require that
Passive Investors filing on Schedule 13G be subject to the more
stringent amendment requirements currently applicable to Schedule 13D.
Would more frequent amendments by Passive Investors provide
sufficiently useful information to investors, the market and issuers to
justify the filing burden on Passive Investors? Would the proposed
standstill 23 and cooling-off 24 provisions provide
sufficient protection from the abuse noted if the more lenient
amendment requirements were adopted? If so, please explain.
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\23\ Under the proposed rules, Passive Investors would be
required to file a Schedule 13D within 10 days of the date their
beneficial ownership equals or exceeds 20 percent of the class and
would, upon such acquisition, be subject to a standstill period
during which they could not vote their shares or acquire additional
shares of the class until the Schedule 13D is filed. See Section
II.D. infra.
\24\ Under the proposed rules, if a Passive Investor develops a
disqualifying purpose or effect, the investor would be subject to a
cooling-off period until 10 days after the filing of a Schedule 13D
during which period they could not vote their shares or acquire
additional securities. See Section II.C. infra.
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Alternatively, would it be more appropriate to require Passive
Investors to file an annual amendment for any material change in the
information previously reported (like a Qualified Institutional
Investor) but also file an amendment promptly upon acquiring 10 percent
or more? Thereafter, the Passive Investor would promptly report any
change in position of five percent or more (rather than, as with
Qualified Institutional Investors, only five percent changes in
position as of the last day of the month and amending within 10 days
thereafter).25 Should crossing each of these thresholds trigger a
requirement that the Passive Investor cease voting and acquiring
additional securities until the amendment is filed? Would that have any
deterrent effect to the use of Schedule 13G where substantial
acquisitions are planned? Conversely, does the proposed requirement to
report promptly any material changes in position render the proposed 20
percent limitation on the use of Schedule 13G by Passive Investors and
accompanying standstill period unnecessary? The Commission is
considering for adoption each of these combinations of amendment
requirements, cooling-off periods, and standstill periods.
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\25\ One commenter on the 1989 proposals suggested requiring an
amendment at two percent intervals.
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The rules would continue to permit Qualified Institutional
Investors to file the Schedule 13G within 45 days after calendar year
end and without being subject to a 20 percent limitation on their
holdings. Qualified Institutional Investors would continue to be
required to certify that the subject securities were acquired in the
ordinary course of business and not with the purpose nor with the
effect of changing or influencing the control of the issuer.26
[[Page 36525]]
Even where an institutional investor is unable to make the ``ordinary
course of business'' certification 27 it would still be permitted
to file on Schedule 13G under the Passive Investor provision so long as
it does not have a disqualifying purpose or effect. The Passive
Investor provision, however, would require both types of investors,
institutional and non-institutional, to file the Schedule 13G within 10
calendar days of the acquisition. Furthermore, such institutions would
be required to file an amendment to their Schedule 13G within 10
calendar days of that change in status to disclose the change.28
Comment is requested as to whether such institutional investors should
be subject to a standstill period until the filing of the Schedule 13G
amendment. Likewise, an institution unable to make the ``ordinary
course of business'' certification would also be subject to the 20
percent limitation.
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\26\ The Commission proposes to revise the certification on the
Schedule 13G for Qualified Institutional Investors to provide that
such investors certify that the securities were acquired and held in
the ordinary course of business and were not acquired or held for
the purpose of and do not have the effect of changing or influencing
the control of the issuer of such securities and were not acquired
or held in connection with or as a participant in any transaction
having such purpose or effect (emphasis added). This proposed
amendment to the certification is to conform the language of the
certification to proposed Rule 13d-1(b)(4)(i)(A).
\27\ In 1989, the Commission requested comment on the
appropriateness of continuing to require the ordinary course of
business certification. The sole commenter expressing a view on this
matter stated that the ordinary course of business requirement is
unnecessary when institutional investors acquire subject securities
for passive purposes.
Congress recognized that the Section 13(d) statutory framework
could have a significant impact on the reporting obligations of
certain institutional investors and professionals in the securities
business. Because such persons often acquire securities in the
ordinary course of business and not with a view toward influencing
control, in 1970 Congress specifically provided in Section 13(d)(5)
that the Commission could permit the filing of a short form
acquisition notice upon the determination that the securities were
acquired in the ordinary course of business. Although the Commission
proposes to eliminate that requirement for Passive Investors relying
on proposed Rule 13d-1(b)(2), the certification in its present form
will be retained with respect to institutions relying on the more
liberal filing requirement under Rule 13d-1(b)(1). As a result,
institutions would only have to report beneficial ownership of
equity securities acquired and held in the ordinary course of
business to the extent they owned more than five percent of the
class at year end (or more than 10 percent at the end of any month).
Proposed Rules 13d-1(b)(1) and (3).
\28\ Proposed Rule 13d-1(b)(6)(ii).
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In addition, as reproposed, all Exempt Investors would continue to
be able to file Schedule 13G within 45 days after the close of the
calendar year, and would not be subject to the 20 percent
limitation.29 The exempt holdings do not appear to present a
potential for affecting control of the issuer that should require
earlier notice to the market and shareholders.
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\29\ Proposed Rule 13d-1(c).
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C. 13D Filing Requirement and Cooling-Off Period for Changes in
Investment Purpose or Effect
As reproposed, Qualified Institutional Investors and Passive
Investors that can no longer certify that they do not hold with a
disqualifying purpose or effect must file a Schedule 13D no later than
10 calendar days after the change in investment purpose.30 A
``cooling-off'' period would commence at the time the reporting person
determines that it holds the subject securities with a disqualifying
purpose or effect until the expiration of the tenth calendar day from
the date of the filing of a Schedule 13D. This ``cooling-off'' period
differs from the period currently required for Qualified Institutional
Investors.31 That period does not commence until the date of the
filing of the Schedule 13D and creates a potential window between the
time of the change in the purpose or effect and the ``prompt'' filing
of a Schedule 13D during which the reporting person could acquire
additional shares. As reproposed, the new rule would prohibit any such
purchases from the moment of the change until the expiration of the
tenth calendar day from the date of the filing of the Schedule 13D.
During the cooling-off period, the rule would prohibit a person from
voting or directing the voting of the subject securities or acquiring
beneficial ownership of any equity securities of the issuer or any
person controlling the issuer.32
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\30\ Proposed Rule 13d-1(b)(4)(i).
\31\ See Rule 13d-1(b)(3)(ii).
\32\ In connection with the 1989 proposals, the Commission
requested comment on the necessity of a cooling-off period and
whether 10 calendar days was the appropriate period. Seven
commenters addressed this issue, and all seven generally supported
the concept of a cooling-off period. Four fully supported the 10 day
time frame while two suggested a five day period, and a third
advocated a 20 day period. The Commission also requested comment on
whether the provision would discourage improper Schedule 13G filings
by persons seeking to influence control. Four commenters generally
believed that such a timing requirement would have such an effect;
two other commenters did not agree, in part because of a concern
that investor ``raiders'' may initially characterize themselves as
``passive investors'' and subsequently delay acknowledging their
control intent.
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The Commission preliminarily believes that the reproposed cooling-
off period is necessary and appropriate when the beneficial owner
determines that it now holds the securities with a disqualifying
purpose or effect and may seek to influence control. The earlier
commencement of the cooling-off period would encourage the prompt
filing of a Schedule 13D.33 The cooling-off period would prevent
further acquisitions or the voting of the subject securities until the
market and investors have been given time to react to the information
in the Schedule 13D filing.
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\33\ The sooner the Schedule 13D filing is made, the sooner the
cooling-off period will end since the cooling-off period ends 10
calendar days from the date the Schedule 13D is filed.
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Comment is again requested on the necessity of the 10 calendar day
cooling-off period. Is the dissemination of information concerning
these filings, even for smaller companies, so rapid and widespread in
the media that such period could be shortened (e.g., to 3 or 5 days)?
One commenter on the 1989 proposals suggested a longer cooling-off
period. Should such period be lengthened (e.g., 15 or 20 days)? Comment
is requested as to the time at which the cooling-off period should
begin--upon the change in purpose or effect, or upon the filing of the
Schedule 13D. If the cooling-off period begins upon the change in
purpose or effect, should it end upon the filing of the Schedule 13D?
D. Twenty-Percent Limit on Ownership Interest Reportable on Schedule
13G and Related Standstill Period
As originally proposed, the amendments to Regulation 13D-G would
have restricted the use of Schedule 13G for all 13G eligible filers
(other than Exempt Investors) by limiting the aggregate amount of
securities that an investor could report on that Schedule to less than
20 percent. An investor would have been required to report on Schedule
13D within 10 calendar days after reaching the 20 percent threshold.
The proposed amendments would have subjected the investor to a
standstill period commencing at the time the threshold was reached and
continuing until the filing of the Schedule 13D.
The original proposals reflected the Commission's concern regarding
the need for prompt disclosure of sizeable blocks of securities because
of inherent control implications corresponding to such ownership
positions.34 In this regard, the Commission specifically requested
comment on the appropriateness of the 20 percent threshold level and
the appropriateness and length of the standstill period.35
[[Page 36526]]
Most of the commenters strongly opposed subjecting institutional
investors to the 20 percent threshold and the corresponding standstill
period. Although recognizing the Commission's concerns regarding the
need for prompt disclosure of sizeable blocks of securities, these
commenters questioned the usefulness of an expedited Schedule 13D
reporting obligation based solely upon reaching the 20 percent
threshold level. The commenters stressed that the increased disclosure
requirements of Schedule 13D are unwarranted where securities are
purchased by otherwise eligible institutions in the ordinary course of
business and that such a provision would impose too many costs with
little, if any, benefit to the market.
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\34\ As stated in the Proposing Release, the Commission does not
intend these proposed rules to create a presumption that beneficial
ownership of 20 percent or more of subject securities indicates
control or a control purpose.
\35\ Three commenters favored a threshold limiting the
availability of Schedule 13G to those filers whose securities
holdings fall below a certain level and also favored the proposed
standstill period. All three, however, believed that a 20 percent
level is too high. One believed that a 10 percent threshold is the
correct level because of the increasingly important role large
institutional investors play in contested voting situations. Another
suggested a 15 percent limit for non-institutional investors because
of the possibility of abuse by those investors and suggested that
such a requirement would not impose undue burdens on institutional
investors.
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In particular, one commenter asserted that (1) where sizeable
blocks are held by institutional investors, such disclosure is already
fulfilled pursuant to the current requirement that a Schedule 13G
filing be made within 10 days after the end of the month where either
an excess of 10 percent ownership or an increase or decrease of more
than five percent ownership occurs, computed as of the last of the
month 36 and (2) institutions cross the 20 percent level most
often because the institutional investor holds convertible stock.
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\36\ Rule 13d-1(b)(2) [17 CFR 240.13d-1(b)(2)].
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Certain commenters strongly opposed the 20 percent threshold level
as it would apply to registered broker-dealers. One noted that a
marketmaker's function is to provide the issuer with an efficient
pricing mechanism and to provide purchasers and sellers with liquidity
thereby enabling them to dispose of or acquire securities.
The Commission is proposing today that the 20 percent limit would
apply only with respect to Passive Investors reporting on Schedule 13G
pursuant to new Rule 13d-1(b)(2). Consistent with the current
regulatory scheme, Qualified Institutional Investors would not be
subject to the 20 percent limitation. The Commission recognizes that
institutions that purchase securities in the ordinary course of
business may be burdened by a limitation on the amount of securities
that can be reported on the short-form Schedule 13G. Further, the
Commission preliminarily believes that Schedule 13G strikes an
appropriate balance between furnishing disclosure to the market and the
burdens placed on such institutions.
Upon reaching the 20 percent level, Passive Investors would be
required to report the acquisition within 10 calendar days on Schedule
13D, and would be subject to a standstill period during which time such
investor would not be permitted to vote or direct the voting of the
securities or acquire an additional beneficial ownership interest in
any equity securities of the issuer until the investor files the
Schedule 13D.37 Comment is requested on the appropriateness of
adopting a 20 percent limit on reporting on Schedule 13G and a
standstill period with respect to Passive Investors and with respect to
institutional investors who acquire securities other than in the
ordinary course of business that remain eligible to file on Schedule
13G as Passive Investors. Comment is also requested on whether a higher
or lower threshold should be adopted (e.g., 10 or 15 percent, or 25 or
30 percent.). Is a cap on ownership reported on Schedule 13G by Passive
Investors or the proposed standstill period necessary if the Commission
applies, as proposed, the current Schedule 13D amendment requirements
to Passive Investors? Would a lower threshold, for example 10 percent,
be more appropriate in the event the Commission instead decides to
permit Passive Investors to take advantage of the more liberal Schedule
13G amendment requirements?
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\37\ As proposed, the acquisition that causes the reporting
person to hold 20 percent or more and therefore triggers the
Schedule 13D filing obligation, may also trigger an amendment
requirement for such person's Schedule 13G (e.g., an acquisition of
one percent or more of the class). The Schedule 13G amendment would
be required to be filed promptly upon such acquisition and the
Schedule 13D would be required to be filed within 10 days of the
acquisition. The reporting person may forego filing the amendment to
the Schedule 13G if the Schedule 13D is filed promptly.
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E. Re-establishing Schedule 13G Eligibility
The Commission is proposing to amend Regulation 13D-G to allow
persons who have lost their eligibility to file on Schedule 13G to re-
establish their Schedule 13G-eligibility and file on Schedule
13G.38 Specifically, a Qualified Institutional Investor who has
lost its Schedule 13G eligibility because it is no longer a qualified
entity under Rule 13d-1(b)(1)(ii) or cannot certify that it acquired or
holds the securities in the ordinary course of business and not with
the purpose or effect of changing or influencing control would be
allowed to switch back to Schedule 13G pursuant to the Qualified
Institutional Investor provision 39 once it re-establishes its
status under Rule 13d-1(b)(1)(ii) or can again make the necessary
certifications. Similarly, a Passive Investor that has lost its
Schedule 13G-eligibility under proposed Rule 13d-1(b)(2) because it can
no longer certify that it does not have a disqualifying purpose or
effect or because it exceeded the 20 percent threshold, would be able
to switch back to Schedule 13G when it is once again able to make the
certification or when its beneficial ownership falls below 20 percent.
The Commission preliminarily believes that investors and the market
would be better informed if reporting persons were able to switch back
to Schedule 13G after re-establishing their eligibility, since the
filing of a Schedule 13D would be a clearer indicator of an investor
that currently has a disqualifying purpose or effect or an investor
that holds 20 percent or more of the class. Comment is requested on
whether the proposal would provide better information or whether it
would lead to abuse by filing persons.
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\38\ Proposed Rule 13d-1(b)(7).
\39\ Rule 13d-1(b)(1).
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F. Expansion of the Class of Qualified Institutional Investors
As reproposed, the use of the short-form Schedule 13G pursuant to
the Qualified Institutional Investor provisions of Rule 13d-1(b)(1)
would continue to be limited essentially to institutions such as
brokers, dealers, investment companies, and investment advisers
registered with the Commission, or regulated banks or insurance
companies. Use of the Schedule 13G by similar non-domestic institutions
has been limited in the past to those institutions that have obtained
an exemptive order from the Commission 40 or, under the current
practice, a no-action position from the Division of Corporation Finance
based on the requester's undertaking to grant the Commission access to
information that would otherwise be disclosed in a Schedule 13D and the
comparability of the foreign regulatory scheme applicable to the
particular category of institutional investor.
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\40\ See Exchange Act Release No. 14692 (April 21, 1978) [43 FR
18484].
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Since the Passive Investor provisions of proposed Rule 13d-1(b)(2)
would make Schedule 13G available to all investors that do not have a
disqualifying purpose or effect, including foreign investors, it is
unclear whether foreign institutions would still seek relief to file on
Schedule 13G under the Qualified Institutional
[[Page 36527]]
Investor provisions of Rule 13d-1(b)(1). The use of Schedule 13G
pursuant to the Passive Investor provisions would require the schedule
to be filed within 10 calendar days of the acquisition as opposed to
within 45 days after the calendar year in which the institution holds
more than five percent at year end under the Qualified Institutional
Investor provision, and could not be used to report beneficial
ownership of 20 percent or more. Similarly, a prompt amendment
requirement may make reliance on the Passive Investor provision less
useful for foreign institutions than the Qualified Institutional
Investor provision. Comment is requested as to whether the accelerated
filing and amendment requirement, and the 20 percent limit under
proposed Rule 13d-1(b)(2) would discourage foreign investors from using
that provision and cause those foreign institutional investors to
continue to seek relief to file pursuant to Rule 13d-1(b)(1).
The Commission continues to believe that a non-U.S. institution
seeking relief to file pursuant to Rule 13d-1(b)(1) should be subject
to a regulatory scheme in its country comparable to the U.S. regulatory
scheme for the particular category of institution and that such
institutions should undertake to grant the Commission access to
information that would otherwise be disclosed on Schedule 13D.41
Accordingly, no change to current practice is proposed. However,
comment is requested as to whether Rule 13d-1(b)(1) should be amended
expressly to allow foreign institutional investors that are the
functional equivalent of the domestic institutions enumerated in Rule
13d-1(b)(1)(ii) (A)-(G) to file on Schedule 13G pursuant to that
provision without having to obtain individual relief from the
Commission. In this regard, should the foreign institution be required
to certify on the Schedule 13G that it is subject to a regulatory
scheme comparable to the U.S. for the particular category of
institution? Additionally, should filing on Schedule 13G under either
provision only be available to non-U.S. persons who consent on the
Schedule 13G to furnish the Commission with information, at its
request, that would otherwise be disclosed in a Schedule 13D?
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\41\ Under the Qualified Institutional Investor provision, the
initial Schedule 13G is filed based upon the amount beneficially
owned as of the last day of the calendar year unless the beneficial
ownership exceeded 10 percent of the outstanding securities at any
time during the year. Consequently, issuers and the market are not
informed during the year that such an investor holds more than five
percent of the issuer's securities. The Commission preliminarily
believes that since the Qualified Institutional Investor provision
do not require disclosure of such initial acquisitions or the
existence of such investors until the end of the year, these more
lenient filing requirements should be limited to regulated
institutions as enumerated in Rule 13d-1(b)(1)(ii).
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Additionally, the Commission is proposing that control persons of
Qualified Institutional Investors be allowed to report indirect
beneficial ownership through the controlled entity on Schedule 13G so
long as the control person does not own directly, or indirectly through
an ineligible entity or affiliate, more than one percent of the subject
company's stock and is not seeking to change or influence control of
the subject company.42 Control persons filing on Schedule 13G
pursuant to this provision would not be subject to the 20 percent
limitation as they would if they filed on Schedule 13G pursuant to the
Passive Investor provision.43 The Commission is also proposing to
make a conforming change under Section 16 of the Exchange Act.44
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\42\ Proposed Rule 13d-1(b)(1)(ii)(G). This proposed amendment
codifies the no-action position set forth in Warren E. Buffet &
Berkshire Hathaway, Inc., (available December 5, 1986). Under the
original proposals, the no-action position would have continued to
be necessary because of the timing difference (45-day versus 10-day)
in the filing of the Schedule 13G by eligible institutions and
individuals. However, the current proposal would allow the
qualifying control person to file its Schedule 13G within the same
filing period as the qualifying institution it controls.
\43\ Proposed Rule 13d-1(b)(2).
\44\ The Commission proposes to amend Rule 16a-1(a)(1)(vii) to
include control persons of institutions in the list of persons that
are not deemed to be beneficial owners of securities held for the
benefit of third parties or in customer or fiduciary accounts in the
ordinary course of business as long as the shares are acquired
without the purpose or effect of changing or influencing control of
the issuer or engaging in any arrangement subject to Rule 13d-3(b).
This proposed amendment codifies the interpretive position set forth
in Edward C. Johnson 3d., (available August 20, 1991).
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Finally, under the current requirements, only pension funds that
are subject to the Employee Retirement Income Security Act of 1974
(``ERISA'') are eligible to use Schedule 13G.45 The Commission
limited the category of pension funds eligible to use Schedule 13G to
pension funds subject to ERISA because such funds are subject to
uniform regulatory controls.46 The staff has granted no-action
relief to a state pension fund to use Schedule 13G based upon a showing
that the fund's fiduciaries were subject to similar regulatory
standards as those imposed by ERISA.47 The Commission
preliminarily believes that employee benefit plans maintained primarily
for the benefit of state or local government employees are now
generally subject to fiduciary obligations and standards for investment
that are substantially similar to those imposed by ERISA. Therefore,
the Commission proposes to amend Rule 13d-1(b)(1)(ii)(F) to allow
employee benefit plans maintained primarily for the benefit of
employees of a state or local government or instrumentality to report
beneficial ownership on Schedule 13G for securities acquired or held in
the ordinary course of business and not with the purpose or effect of
influencing the control of the issuer. Comment is requested as to
whether such proposal is necessary or appropriate. The Commission is
proposing to revise the current language in Rule 13d-1(b)(1)(ii)(F) to
clarify that employee benefit plans and pension funds must both be
subject to ERISA. The language will also be modified to eliminate a
redundancy. The Commission is proposing to eliminate the phrase
``pension fund'' because such entities are included in the definition
of employee benefit plan in Section 3(3) of ERISA. The Commission is
also proposing to make a conforming change under Section 16 to amend
Rule 16a-1(a)(1)(vi) to include state and local government employee
benefit plans in the list of persons that are not deemed to be the
beneficial owners of securities held for the benefit of third parties.
Comment is requested on the appropriateness of conforming the list of
institutional investors in Rule 16a-1(a)(1) (i)-(viii) to reflect the
changes made to the list of Qualified Institutional Investors in Rule
13d-1(b)(1)(ii) (A)-(H).
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\45\ See Rule 13d-1(b)(1)(ii)(F).
\46\ See Exchange Act Release No. 14692, Section II(A)(1)(b)
(April 21, 1978) [43 FR 18484].
\47\ See State of Wisconsin Investment Board and Wisconsin
Retirement System, (available December 8, 1992); see also, Ontario
Teachers' Pension Plan Board, (available May 6, 1992).
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G. Related and Clarifying Amendments
The Commission is also proposing amendments to clarify the
beneficial ownership reporting requirements. Amendments are proposed to
eliminate the redundancies that currently exist in Regulation 13D-G
regarding the filing and dissemination requirements by setting forth
such requirements in one rule, proposed Rule 13d-7(b). Amendments are
also proposed to revise the dissemination requirements of Schedule 13G.
Since the Commission believes that a majority of investors will file
Schedule 13G in lieu of Schedule 13D as a result of the proposed
amendments to Regulation 13D-G, Schedule 13G will become the primary
reporting document for beneficial ownership. Therefore, amended Rule
13d-7(b) would require that the original and amendments to Schedules
13G be provided to each exchange where the
[[Page 36528]]
security is traded as is currently required for Schedules 13D. Comment
is requested as to whether it is necessary or appropriate to require
that copies of Schedules 13G be provided to each exchange since such
filings are required to be filed electronically on the Commission's
Electronic Data Gathering and Retrieval System and therefore available
in the electronic media, such as the Commission's World Wide Web site.
Additionally, Schedules 13G for exempt acquisitions would continue to
be sent only to the issuer at its principal executive offices and be
filed with the Commission. Amendments to Schedule 13G relating to
exempt acquisitions would no longer be required to be sent to an
exchange.
The Commission is also reproposing that a copy of a Schedule 13D,
Schedule 13G or amendment filed to report ownership of a class of
securities quoted on the National Association of Securities Dealers
Automated Quotation System be provided to the National Association of
Securities Dealers (``NASD'') to parallel the requirements for
exchange-traded securities.48 Comment is requested as to whether
it is necessary or appropriate to require that copies of the schedules
be provided to the NASD.
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\48\ Proposed Rule 13d-7(b).
---------------------------------------------------------------------------
Amendments to Regulation 13D-G are proposed to clarify the number
of copies required to be filed. Additionally, Rule 13d-7 would be
revised to clarify that a Schedule 13D filed with respect to holdings
reported until then on Schedule 13G, and vice versa, does not require
an additional fee, if beneficial ownership had not fallen below five
percent.49 Finally, technical amendments to Schedules 13D and 13G
are being reproposed to conform the schedules to the proposed rules and
to amend the filing deadlines and the number of copies in the
instruction.
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\49\ The Commission has proposed eliminating the filing fee
required for Schedules 13D and 13G. See Exchange Act Release No.
37220 (May 16, 1996) [61 FR 25601]. If such fee is eliminated, Rule
13d-7 will be revised accordingly.
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H. Effects of Proposed Amendments to Regulation 13D-G
----------------------------------------------------------------------------------------------------------------
Proposed schedule
Issue Current schedule 13D 13D Current schedule 13G Proposed schedule 13G
----------------------------------------------------------------------------------------------------------------
Person Filing.... Any person acquiring No change.......... Qualified Institutional Qualified Institutional
more than 5% of an Investors--Eligible Investors--Expanded to
equity security. institutions acquiring include control persons
Rule 13d-1(a). more than 5% of an of qualified
equity security. Rule institutions and state
13d-1(b). and local employee
benefit plans.
Exempt Investors-- Exempt Investors--No
Persons holding more change.
than 5% of an equity
security who are not
subject to, or whose
acquisitions are exempt
from Section 13(d).
Rule 13d-1(c).
Passive Investors--Any
person holding more
than 5% but less than
20% of an equity
security and did not
acquire such securities
with a purpose or
effect of changing or
influencing control of
the issuer or in a
transaction having such
effect. Proposed Rule
13d-1(b)(2).
Initial Filing... Within 10 days after No change.......... Qualified Institutional Qualified Institutional
the acquisition. Investors--45 days Investors--No change.
Rule 13d-1(a). after calendar year in
which the person
becomes obligated to
file, Rule 13d-1(b)(1),
or within 10 days after
the end of the first
month in which such
person's beneficial
ownership exceeds 10%
of the class of equity
securities. Rule 13d-
1(b)(2).
Exempt Investors--45 Exempt Investors--No
days after calendar change. Passive
year in which the Investors--Within 10
person becomes days after the
obligated to file. Rule acquisition. Proposed
13d-1(c). Rule 13d-1(b)(2).
Amendment........ Filed promptly to No change.......... All Filers--45 days
reflect any after the end of the
material change calendar year to report
including a change any change in the
in investment information. Rule 13d-
intent. An 2(b).
acquisition or
disposition of
beneficial
ownership of
securities equal to
1% or more of the
class is deemed a
material change.
Rule 13d-2(a).
[[Page 36529]]
Qualified Institutional Qualified Institutional
Investors only--In Investors--No Change.
addition to the
requirement stated
above, within 10 days
after the end of the
first month in which
such person's
beneficial ownership
exceeds 10% of the
class of equity
securities, and
thereafter within 10
days of the end of any
month in which such
person's beneficial
ownership increases or
decreases more than 5%,
computed as of the end
of the month. Rule 13d-
1(b)(2).
Exempt Investors--No
change.
Passive Investors--Same
as requirement for
persons filing Schedule
13D. Proposed Rule 13d-
2(a).
Purpose of Disclose purpose of No change.......... Qualified Institutional Qualified Institutional
Acquisition. the transaction. Investors--Requires Investors--No change
Schedule 13D, Item certification that the except for a technical
4. securities were change to the
acquired in the certification.
ordinary course of
business, were not
acquired for the
purpose of and not have
the effect of changing
or influencing control
of the issuer, and were
not acquired in a
transaction having such
an effect. Schedule
13G, Item 10. Rule 13d-
1(b).
Exempt Investors--No Exempt Investors--No
certification required. change.
Passive Investors--Same
certification as
Qualified Institutional
Investors except that
acquisitions need not
occur in the ordinary
course of business.
Schedule 13G, proposed
Item 10(b). Proposed
Rule 13d-1(b)(2).
Initial Schedule Qualified Qualified Note: Ability to refile
13D following Institutional Institutional on Schedule 13G once
filing on Investors--Promptly Investors--No disqualification has
Schedule 13G. , but no later than change. Proposed lapsed clarified.
10 days after such Rules 13d-1(b)(4)
person ceases to be and (b)(6).
an eligible
institution or
determines that it
no longer holds
such securities in
the ordinary course
of business or not
with the purpose or
effect of changing
or influencing the
control of the
issuer. Rule 13d-
FR Doc. 96-17579 Amendments to Beneficial Ownership Reporting Requirements
1(b)(3).
Exempt Investors-- Exempt Investors--
Within 10 days upon No change.
making an
acquisition subject
to, or not exempt
from Section 13(d).
Passive Investors--
Within 10 days of:
(1) acquiring or
holding the
securities with
the purpose or
effect of changing
or influencing
control of the
issuer or in a
transaction having
such effect.
Proposed Rule 13d-
1(b)(4), or.
[[Page 36530]]
(2) the person's
beneficial
ownership equals
or exceeds 20% of
the class of
equity securities.
Proposed Rule 13d-
1(b)(5).
Cooling-Off Qualified Qualified
Period. Institutional Institutional
Investors--10 day Investors--From
period after the the time the
filing of a person no longer
Schedule 13D holds the
because the person securities without
no longer holds the purpose or
such securities in effect of changing
the ordinary course or influencing
of business or not control of the
with the purpose or issuer until the
effect of changing tenth day from the
or influencing the date the Schedule
control of the 13D is filed.
issuer. Rule 13d- Proposed Rule 13d-
1(b)(3). 1(b) (4)(ii).
Passive Investors--
Same as Qualified
Institutional
Investors.
Proposed Rule 13d-
1(b) (4)(ii).
Standstill Period Passive Investors--
From the time the
person's
beneficial
ownership equals
or exceeds 20% of
the class of
equity securities
until the filing
of the Schedule
13D. Proposed Rule
13d-1(b)(5).
----------------------------------------------------------------------------------------------------------------
III. Initial Regulatory Flexibility Analysis
An Initial Regulatory Flexibility Analysis has been prepared in
accordance with 5 U.S.C. 603 concerning the proposed amendments to the
beneficial ownership rules and related Schedules 13D and 13G and the
proposed amendments to Rules 16a-1(a)(1)(vi) and (vii). The analysis
notes that the principal effect of the revisions to Regulation 13D-G
will be to reduce the disclosure obligations and associated costs to a
majority of persons, including small entities, required to report
beneficial ownership under Sections 13(d) and 13(g) of the Exchange Act
and would eliminate the reporting obligations under Section 16 of the
Exchange Act of certain state and local government employee benefit
plans and certain control persons of Qualified Institutional Investors.
The analysis also indicates that there are no current federal rules
that duplicate, overlap or conflict with the rules and forms to be
amended.
As stated in the analysis, alternatives to the proposed amendments
were considered, including, among other things, changing or simplifying
the compliance or reporting requirements for small entities or
exempting small entities from all requirements to file the schedules
under Regulation 13D-G. As discussed in the analysis, there is no less
restrictive alternative to the proposed rule amendments that would
serve the purposes of the beneficial ownership provisions of the
Exchange Act.
Written comments are encouraged with respect to any aspect of the
analysis. Such comments will be considered in the preparation of the
Final Regulatory Flexibility Analysis if the proposed revisions are
adopted. A copy of the Initial Regulatory Flexibility Analysis may be
obtained by contacting Dennis O. Garris in the Office of Mergers and
Acquisitions, Division of Corporation Finance, Securities and Exchange
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
IV. Paperwork Reduction Act
Certain provisions of Regulation 13D-G contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act of 1995 (44 U.S.C. 3501 et seq.), and the Commission has
submitted proposed revisions to Regulation 13D-G to the Office of
Management and Budget (``OMB'') for review in accordance with 44 U.S.C.
3507(d) and 5 C.F.R. Sec. 1320.11. The titles for the collections of
information are ``Schedule 13D'' and ``Schedule 13G''.
The beneficial ownership reporting requirements are intended to
provide investors and the subject issuer with information about
accumulations of securities that may have the ability to change or
influence control of the issuer. Regulation 13D-G currently requires
that most persons file a detailed disclosure statement on Schedule 13D
upon acquiring more than five percent of the subject securities.
Certain qualified institutions (Qualified Institutional Investors) and
persons who
[[Page 36531]]
have not made an acquisition subject to Section 13(d) (Exempt
Investors) may file the short-form disclosure statement Schedule 13G
which requires less detailed disclosure than Schedule 13D.50
---------------------------------------------------------------------------
\50\ See fn. 13 supra for a comparison of the primary
differences between the disclosure required by Schedules 13D and
13G.
---------------------------------------------------------------------------
The Commission anticipates that the proposal to make Schedule 13G
available, in lieu of Schedule 13D, to all Passive Investors
beneficially owning less than 20 percent would reduce the existing
information collection requirements associated with Regulation 13D-G
and Schedules 13D and 13G. The proposed amendments will allow more
individuals and non-institutional investors to file the short-form
Schedule 13G. It is estimated that 803 Schedules 13D would be filed
each year if the proposals were adopted.51 Each Schedule 13D would
impose an estimated burden of 14.75 hours for a total annual burden of
11,844.25 hours.52 It is estimated that 9,065 Schedules 13G would
be filed each year if the proposals were adopted.53 Each Schedule
13G would impose an estimated burden of 10 hours for a total annual
burden of 90,650 hours.
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\51\ This estimated number of respondents is based upon the
number of Schedules 13D filed in fiscal year 1995 and assumes no
increase each year. This represents an estimated 76 percent
reduction from the 3,347 Schedules 13D filed in fiscal year 1995.
The estimated 76 percent reduction in Schedule 13D filings is based
upon the sample data provided by the Office of Economic Analysis.
\52\ Total annual burden hours are determined by multiplying the
estimated average burden hours for completing the particular
schedule by the estimated number of respondents that file that
schedule.
\53\ This number of respondents is based upon the number of
Schedules 13G filed in fiscal year 1995 (6,521) plus the additional
2,544 respondents that are expected to file on Schedule 13G under
the proposed rules and assumes no increase each year.
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Providing the information required by Schedules 13D and 13G is
mandatory under Sections 13(d) and 13(g) and Regulation 13D-G of the
Exchange Act. The information will not be kept confidential. Unless a
currently valid OMB control number is displayed on the Schedules 13D
and 13G, the Commission may not sponsor or conduct or require response
to an information collection.
Pursuant to 44 U.S.C. 3506(c)(2)(B), the Commission solicits
comments to: (i) evaluate whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (ii) evaluate the accuracy of the Commission's estimate of the
burden of the proposed collection of information; (iii) enhance the
quality, utility, and clarity of the information to be collected; and,
(iv) minimize the burden of collection of information on those who are
to respond, including through the use of automated collection
techniques or other forms of information technology.
Persons desiring to submit comments on the collection of
information requirements should direct the comments to the Office of
Management and Budget, Attention: Desk Officer for the Securities and
Exchange Commission, Office of Information and Regulatory Affairs,
Washington, D.C. 20503, and should send a copy to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, with reference to File No. S7-16-96. The Office
of Management and Budget is required to make a decision concerning the
collection of information between 30 and 60 days after publication of
this release. Consequently, a comment to OMB is best assured of having
its full effect if OMB receives it within 30 days of publication.
V. Cost-Benefit Analysis
No specific data was provided in response to the Commission's
original request regarding the costs and benefits associated with
amending the filing requirements under Regulation 13D-G.54 It
appears that making Schedule 13G available to all Passive Investors
holding less than 20 percent of subject securities should significantly
reduce the reporting costs incurred by those investors. Regulation 13D-
G applies to any person that acquires more than five percent of a class
of equity securities. Although it is difficult to determine reasonably
the number of small entities and the costs to small entities of
complying with the proposed amendments, the Commission believes that
the proposed amendments would not result in a substantial economic
impact to a significant number of small entities but rather should
result in a substantial savings to entities (both small and large) that
qualify to file Schedule 13G in lieu of Schedule 13D. The proposed
amendments would decrease the disclosure obligations of a significant
number of persons currently required to file the long-form Schedule
13D. Based upon data provided by the Commission's Office of Economic
Analysis, 76 percent of Schedules 13D studied by that office did not
disclose a purpose or effect for changing or influencing control of the
issuer and, therefore, would benefit from the amendments proposed
today.55
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\54\ However, eight commenters expressed general views as to the
costs and benefits associated with the amendments, without
attempting to quantify either the costs or benefits. Five commenters
stated that the proposed amendments would reduce passive filers'
reporting burdens and associated costs. Seven commenters expressed
concern that the proposed 20 percent limitation upon the
availability of Schedule 13G to passive institutional investors
would impose increased compliance burdens and costs without
providing any useful information to the public. Finally, three
commenters believed that requiring Schedule 13G filers to provide
each exchange upon which the security is traded a copy of the
Schedule would be overly burdensome because such information is not
readily available.
\55\ See Section I.B. supra.
---------------------------------------------------------------------------
In response to comments in connection with the potential increased
costs that institutional investors could incur if subject to the 20
percent threshold level, the Commission is not reproposing the
amendment with respect to Qualified Institutional Investors.
The Commission again requests commenters to provide views and data
as to the costs and benefits associated with amending the filing
requirements for beneficial ownership statements.
VI. Request for Comment
Any interested persons wishing to submit written comments on the
proposals, to suggest additional changes, or to submit comments on
other matters that might have an impact on the proposals, are requested
to do so. In addition to the specific inquiries made throughout this
release, the Commission solicits comments on the usefulness of the
proposed revisions to the Regulation 13D-G reporting scheme and the
conforming changes under Section 16 to reporting persons, registrants,
and the marketplace at large.
The Commission also requests comment on whether the proposed rules,
if adopted, would have an adverse effect on competition or would impose
a burden on competition that is neither necessary nor appropriate in
furthering the purposes of the Exchange Act. Comments on this inquiry
will be considered by the Commission in complying with its
responsibilities under Section 23(a)(2) of the Exchange Act.56
---------------------------------------------------------------------------
\56\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------
The Commission also encourages the submission of written comments
with respect to any aspect of the initial regulatory flexibility
analysis. Such written comments will be considered in the preparation
of the final regulatory flexibility analysis if the proposed rules are
adopted.
Persons wishing to submit written comments should file three copies
thereof with Jonathan G. Katz, Secretary,
[[Page 36532]]
Securities and Exchange Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549. Comments may also be submitted electronically at the
following e-mail address: [email protected]. Comment letters should
refer to File No. S7-16-96; this file number should be included on the
subject line if e-mail is used. All comments received will be available
for public inspection and copying in the Commission's public reference
room at the same address. Electronically submitted comments will be
posted on the Commission's Internet web site (http://www.sec.gov).
VII. Statutory Basis and Text of Amendments
The amendments to Rules 13d-1, 13d-2 and 13d-7 and Schedules 13D
and 13G and Rule 16a-1 are being proposed pursuant to the authority set
forth in Sections 3(b), 13, 16 and 23 of the Securities Exchange Act of
1934.
Lists of Subjects in 17 CFR Part 240
Reporting and recordkeeping requirements, Securities.
Text of Proposed Amendments
In accordance with the foregoing, Title 17, Chapter II of the Code
of Federal Regulations is proposed to be amended as follows:
PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF
1934
1. The authority citation for Part 240 continues to read, in part,
as follows:
Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77eee, 77ggg,
77nnn, 77sss, 77ttt, 78c, 78d, 78i, 78j, 78l, 78m, 78n, 78o, 78p,
78q, 78s, 78w, 78x, 78ll(d), 79q, 79t, 80a-20, 80a-23, 80a-29, 80a-
37, 80b-3, 80b-4 and 80b-11, unless otherwise noted.
* * * * *
2. By amending Sec. 240.13d-1 to revise paragraph (a), the
introductory text of paragraph (b)(1), paragraphs (b)(1)(ii)(F) and
(G), and paragraphs (b)(2), (b)(3), (b)(4), and (c) and to add
paragraphs (b)(5), (b)(6) and (b)(7) to read as follows:
Sec. 240.13d-1 Filing of Schedules 13D and 13G.
(a) Any person who, after acquiring directly or indirectly the
beneficial ownership of any equity security of a class which is
specified in paragraph (d) of this section, is directly or indirectly
the beneficial owner of more than five percent of such class shall,
within 10 days after such acquisition, file with the Commission, a
statement containing the information required by Schedule 13D
(Sec. 240.13d-101).
(b)(1) A person who would otherwise be obligated under paragraph
(a) of this section to file a statement on Schedule 13D (Sec. 240.13d-
101) may, in lieu thereof, file with the Commission, within 45 days
after the end of the calendar year in which such person became so
obligated, a short-form statement on Schedule 13G (Sec. 240.13d-102):
Provided, That it shall not be necessary to file a Schedule 13G unless
the percentage of the class of equity security specified in paragraph
(d) of this section beneficially owned as of the end of the calendar
year is more than five percent: And provided further, That:
* * * * *
(ii) * * *
(F) An employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C.
1001 et seq. (``ERISA'') which is subject to the provisions of ERISA,
or any such plan that is not subject to ERISA that is maintained
primarily for the benefit of the employees of a state or local
government or instrumentality, or an endowment fund;
(G) A parent holding company or control person, provided the
aggregate amount held directly by the parent or control person, and
directly and indirectly by their subsidiaries or affiliates that are
not persons specified in Sec. 240.13d-1(b)(1)(ii) (A) through (F), does
not exceed one percent of the securities of the subject class;
* * * * *
(2) A person who would otherwise be obligated under paragraph (a)
of this section to file a statement on Schedule 13D (Sec. 240.13d-101)
may, in lieu thereof, file with the Commission, within 10 days after an
acquisition described in paragraph (a) of this section, a short-form
statement on Schedule 13G (Sec. 240.13d-102): Provided, That such
person:
(i) Has not acquired such securities with any purpose, or with the
effect of, changing or influencing the control of the issuer, or in
connection with or as a participant in any transaction having such
purpose or effect, including any transaction subject to Sec. 240.13d-
3(b);
(ii) Is not a person reporting pursuant to paragraph (b)(1) of this
section; and
(iii) Is not directly or indirectly the beneficial owner of 20
percent or more of such class.
(3) Any person relying on Sec. 240.13d-1(b)(1) or Sec. 240.13d-2(b)
shall, in addition to filing any statements thereunder, file a
statement on Schedule 13G (Sec. 240.13d-101), or amendment thereto,
within 10 days after the end of the first month in which such person's
direct or indirect beneficial ownership exceeds 10 percent of a class
of equity securities specified in Sec. 240.13d-1(d), computed as of the
last day of the month, and thereafter within 10 days after the end of
any month in which such person's beneficial ownership of securities of
such class, computed as of the last day of the month, increases or
decreases by more than five percent of such class of equity securities.
Once an amendment has been filed reflecting beneficial ownership of
five percent or less of the class of securities, no additional filings
are required by this paragraph (b)(3) unless the person thereafter
becomes the beneficial owner of more than 10 percent of the class,
computed as of the last day of the month.
(4)(i) Notwithstanding paragraphs (b)(1), (b)(2) and (b)(3) of this
section and Sec. 240.13d-2(b), a person that has reported that it is
the beneficial owner of more than five percent of a class of equity
securities in a statement on Schedule 13G (Sec. 240.13d-102) pursuant
to paragraph (b)(1), (b)(2) or (b)(3) of this section, or is required
to report such acquisition but has not yet filed the schedule, shall
immediately become subject to Secs. 240.13d-1(a) and 240.13d-2(a) and
shall file a statement on Schedule 13D (Sec. 240.13d-101) within 10
days if, and shall remain subject to such requirements for so long as,
such person:
(A) Has acquired or holds such securities with a purpose or effect
of changing or influencing control of the issuer, or in connection with
or as a participant in any transaction having such purpose or effect,
including any transaction subject to Sec. 240.13d-3(b); and
(B) Is at that time the beneficial owner of more than five percent
of a class of equity securities described in Sec. 240.13d-1(d).
(ii) From the time such person has acquired or holds such
securities with a purpose or effect of changing or influencing control
of the issuer, or in connection with or as a participant in any
transaction having such purpose or effect until the expiration of the
tenth day from the date of the filing of a Schedule 13D (Sec. 240.13d-
101) pursuant to this section, such person shall not:
(A) Vote or direct the voting of the securities described therein;
or
(B) Acquire an additional beneficial ownership interest in any
equity securities of the issuer of such securities, nor of any person
controlling such issuer.
(5) Notwithstanding paragraph (b)(2) of this section and
Sec. 240.13d-2(b),
[[Page 36533]]
persons reporting on Schedule 13G (Sec. 240.13d-102) pursuant to
paragraph (b)(2) of this section shall immediately become subject to
Secs. 240.13d-1(a) and 240.13d-2(a) and shall remain subject to such
requirements for so long as, and shall file a statement on Schedule 13D
(Sec. 240.13d-101) within 10 days of the date on which, such person's
beneficial ownership equals or exceeds 20 percent of the class of
equity securities. Until the filing of a statement on Schedule 13D
pursuant to this paragraph, such person shall not:
(i) Vote or direct the voting of the securities described therein,
or
(ii) Acquire an additional beneficial ownership interest in any
equity securities of the issuer of such securities, nor of any person
controlling such issuer.
(6)(i) Any person who has reported an acquisition of securities in
a statement on Schedule 13G (Sec. 240.13d-102) pursuant to paragraph
(b)(1) or (b)(3) of this section and thereafter ceases to be a person
specified in paragraph (b)(1)(ii) of this section shall immediately
become subject to Sec. 240.13d-1(a) or Sec. 240.13d-1(b)(2) (if such
person satisfies the requirements specified in Sec. 240.13d-1(b)(2)),
and Secs. 240.13d-2 (a) or (b) and shall remain subject to such
requirements for so long as, and shall file, within 10 days thereafter,
a statement on Schedule 13D (Sec. 240.13d-101) or amendment to Schedule
13G, as applicable, if such person is a beneficial owner at that time
of more than five percent of the class of equity securities.
(ii) Any person that has reported beneficial ownership on Schedule
13G (Sec. 240.13d-102) pursuant to Sec. 240.13d-1(b)(1) shall file an
amendment on Schedule 13G within 10 days of the date that such person
determines that it no longer has acquired or holds such securities in
the ordinary course of business, Provided That such person may continue
to file on Schedule 13G pursuant to Sec. 240.13d-1(b)(2).
(7) Any person who has filed a Schedule 13D (Sec. 240.13d-101)
pursuant to paragraph (b)(4), (b)(5) or (b)(6) of this section may
again report its beneficial ownership on Schedule 13G (Sec. 240.13d-
102) pursuant to paragraphs (b)(1), (b)(2) or (b)(3) of this section
provided such person qualifies thereunder, as applicable, by filing a
Schedule 13G (Sec. 240.13d-102) once the person determines that the
provisions of paragraph (b)(4), (b)(5) or (b)(6) of this section no
longer apply.
(c) Any person who is or becomes directly or indirectly the
beneficial owner of more than five percent of any equity security of a
class specified in paragraph (d) of this section and who is not
required to file a statement under paragraph (a) of this section by
virtue of the exemption provided by Section 13(d)(6) (A) or (B) of the
Act (15 U.S.C. 78m(d)(6)(A) or 78m(d)(6)(B)), or because such
beneficial ownership was acquired prior to December 22, 1970, or
because such person otherwise (except for the exemption provided by
Section 13(d)(6)(C) of the Act (15 U.S.C. 78m(d)(6)(C))) is not
required to file such a statement, shall file with the Commission,
within 45 days after the end of the calendar year in which such person
became obligated to report under this paragraph (c), a statement
containing the information required by Schedule 13G (Sec. 240.13d-102).
* * * * *
3. By amending Sec. 240.13d-2 by revising paragraphs (a), (b), and
the note following paragraph (c) to read as follows:
Sec. 240.13d-2 Filing of amendments to Schedules 13D or 13G.
(a) If any material change occurs in the facts set forth in the
Schedule 13D (Sec. 240.13d-101) required by Sec. 240.13d-1(a) or the
Schedule 13G (Sec. 240.13d-102) filed pursuant to Sec. 240.13d-1(b)(2),
including, but not limited to, any material increase or decrease in the
percentage of the class beneficially owned, the person or persons who
were required to file such statement shall promptly file or cause to be
filed with the Commission an amendment disclosing such change. An
acquisition or disposition of beneficial ownership of securities in an
amount equal to one percent or more of the class of securities shall be
deemed ``material'' for purposes of this section; acquisitions or
dispositions of less than such amounts may be material, depending upon
the facts and circumstances.
(b) Notwithstanding paragraph (a) of this section, and provided
that the person filing a Schedule 13G (Sec. 240.13d-102) pursuant to
Sec. 240.13d-1(b)(1) continues to meet the requirements set forth
therein, any person who has filed a Schedule 13G pursuant to
Sec. 240.13d-1(b)(1) or Sec. 240.13d-1(c) shall amend such statement
within forty-five days after the end of each calendar year if, as of
the end of such calendar year, there are any changes in the information
reported in the previous filing on that Schedule; Provided, however,
That such amendment need not be filed with respect to a change in the
percent of class outstanding previously reported if such change results
solely from a change in the aggregate number of securities outstanding.
Once an amendment has been filed reflecting beneficial ownership of
five percent or less of the class of securities, no additional filings
are required unless the person thereafter becomes the beneficial owner
of more than five percent of the class and is required to file pursuant
to Sec. 240.13d-1.
(c) * * *
Note to Sec. 240.13d-2: For persons filing a short-form
statement pursuant to Rule 13d-1(b) (1) or (2), see also Rules 13d-
1(b) (3), (4), (5), and (6).
4. By amending Sec. 240.13d-7 by revising the section heading,
designating the current text as paragraph (a), revising the last
sentence of newly designated paragraph (a) and adding paragraph (b) to
read as follows:
Sec. 240.13d-7 Fees for filing Schedules 13D or 13G; Number of Copies;
Dissemination.
(a) * * * No fees shall be required with respect to the filing of
any amended Schedule 13D (Sec. 240.13d-101) or amended Schedule 13G
(Sec. 240.13d-102), and no fees shall be required with respect to an
initial Schedule 13D or initial Schedule 13G if the filing person
previously has filed a Schedule 13D or Schedule 13G reporting
beneficial ownership of more than five percent of such class of equity
securities and has not subsequently filed an amendment reporting
beneficial ownership of five percent or less of such class; Provided,
however, That once an amendment has been filed reflecting beneficial
ownership of five percent or less of such class, an additional fee of
$100 shall be paid with the next filing of that person that reflects
ownership of more than five percent.
(b) Schedules filed with the Commission pursuant to Secs. 240.13d-1
and 240.13d-2 in paper format shall include a signed original and five
copies of the schedule, including all exhibits. One copy of the
Schedule filed pursuant to Secs. 240.13d-1 and 240.13d-2 shall be sent
to the issuer of the security at its principal executive office, by
registered or certified mail, and (except with respect to persons
filing pursuant to Sec. 240.13d-1(c)) to each national securities
exchange or the securities association that operates the automated
inter-dealer quotation system where the security is traded or
authorized to be quoted.
5. By amending Sec. 240.13d-101 by revising the language preceding
the first box on the cover page, and revising the note on the cover
page to read as follows:
[[Page 36534]]
Sec. 240.13d-101 Schedule 13D--Information to be included in
statements filed pursuant to Sec. 240.13d-1(a) and amendments thereto
filed pursuant to Sec. 240.13d-2(a).
* * * * *
If the filing person has previously filed a statement on Schedule
13G to report the acquisition that is the subject of this Schedule 13D,
and is filing this schedule because of Secs. 240.13d-1(b)(4), 240.13d-
1(b)(5) or 240.13d-1(b)(6), check the following box.
* * * * *
Note: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits.
See Sec. 240.13d-7(b) for other parties to whom copies are to be
sent.
* * * * *
6. By amending Sec. 240.13d-102 by revising the section heading,
adding a line for the date of the reportable event following the line
for CUSIP Number, revising Instruction A, revising Items 3, 4, and 10,
and revising the note at the end of the schedule, to read as follows:
Sec. 240.13d-102 Schedule 13G--Information to be included in
statements filed pursuant to Sec. 240.13d-1 (b) and (c) and amendments
thereto filed pursuant to Sec. 240.13d-1(b)(3) or Sec. 240.13d-2.
* * * * *
(Date of Event Which Requires Filing of this Statement)
* * * * *
Instructions. A. Statements filed pursuant to Sec. 240.13d-1(b)(1)
containing the information required by this schedule shall be filed not
later than February 14 following the calendar year in which the person
became obligated to report or within the time specified in
Sec. 240.13d-1(b)(3), if applicable. Statements filed pursuant to
Sec. 240.13d-1(b)(2) shall be filed not later than 10 days after the
event requiring the filing.
* * * * *
Item 3. If this statement is filed pursuant to Secs. 240.13d-
1(b)(1) or 240.13d-2(b), check whether the person filing is a:
(a) [ ] Broker or dealer registered under section 15 of the Act.
(b) [ ] Bank as defined in section 3(a)(6) of the Act.
(c) [ ] Insurance company as defined in section 3(a)(19) of the
Act.
(d) [ ] Investment company registered under section 8 of the
Investment Company Act of 1940.
(e) [ ] Investment adviser registered under section 203 of the
Investment Advisers Act of 1940.
(f) [ ] Employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C.
1001 et seq. (``ERISA'') which is subject to the provisions of ERISA,
or any such plan that is not subject to ERISA that is maintained
primarily for the benefit of the employees of a state or local
government or instrumentality, or an endowment fund.
(g) [ ] Parent holding company or control person, in accordance
with Sec. 240.13d-1(b)(1)(ii)(G).
If this statement is filed pursuant to Sec. 240.13d-1(b)(2), check
this box. ______
Item 4. Ownership.
Provide the following information regarding the aggregate number
and percentage of the class of securities of the issuer identified in
Item 1.
(a) Amount beneficially owned: ____________.
(b) Percent of class: ____________.
(c) Number of shares as to which such person has:
(i) Sole power to vote or to direct the vote ____________.
(ii) Shared power to vote or to direct the vote ____________.
(iii) Sole power to dispose or to direct the disposition of
____________.
(iv) Shared power to dispose or to direct the disposition of
____________.
Instruction. For computations regarding securities which represent
a right to acquire an underlying security see Sec. 240.13d-3(d)(1).
* * * * *
Item 10. Certification.
(a) The following certification shall be included if the statement
is filed pursuant to Sec. 240.13d-1(b)(1):
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were acquired and held in the
ordinary course of business and were not acquired or held for the
purpose of and do not have the effect of changing or influencing the
control of the issuer of such securities and were not acquired or held
in connection with or as a participant in any transaction having such
purpose or effect.
(b) The following certification shall be included if the statement
is filed pursuant to Sec. 240.13d-1(b)(2):
By signing below I certify that, to the best of my knowledge and
belief, the securities referred to above were not acquired or held for
the purpose of and do not have the effect of changing or influencing
the control of the issuer of such securities and were not acquired or
held in connection with or as a participant in any transaction having
such purpose or effect.
* * * * *
Note: Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits.
See Sec. 240.13d-7(b) for other parties for whom copies are to be
sent.
* * * * *
2. By amending Sec. 240.16a-1 to revise paragraphs (a)(1)(vi) and
(vii) to read as follows:
Sec. 240.16a-1 Definition of terms.
* * * * *
(a) * * *
(1) * * *
(vi) An employee benefit plan as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C.
1001 et seq. (``Employee Retirement Income Security Act'') which is
subject to the provisions of the Employee Retirement Income Security
Act, or any such plan that is not subject to the Employee Retirement
Income Security Act that is maintained primarily for the benefit of the
employees of a state or local government or instrumentality, or an
endowment fund;
(vii) A parent holding company or control person, provided the
aggregate amount held directly by the parent or control person, and
directly and indirectly by its subsidiaries or affiliates that are not
persons specified in Sec. 240.16a-1(a)(1) (i) through (vi), does not
exceed one percent of the subject class; and
* * * * *
Dated: July 3, 1996.
By the Commission.
Jonathan G. Katz,
Secretary.
[FR Doc. 96-17579 Filed 7-10-96; 8:45 am]
BILLING CODE 8010-01-P
Complete official Federal Register PDF
FR Doc. 96-17566 Licensing and Manning for Officers of Towing Vessels; Corrections
[Federal Register Volume 61, Number 134 (Thursday, July 11, 1996)]
[Proposed Rules]
[Pages 36543-36544]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17566]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Coast Guard
46 CFR Parts 10 and 15
[CGD 94-055]
RIN 2115-AF23
Licensing and Manning for Officers of Towing Vessels; Corrections
AGENCY: Coast Guard, DOT.
ACTION: Corrections to notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: This document contains corrections to the notice of proposed
rulemaking (NPRM) in CGD 94-055, published on Wednesday, June 19, 1996,
at 61 FR 31332. The rulemaking relates to licensing and manning for
officers of towing vessels.
DATE: These corrections are made on July 11, 1996.
FOR FURTHER INFORMATION CONTACT:
Lieutenant Commander Don Darcy, Operating and Environmental Standards
Division, (202) 267-0221.
SUPPLEMENTARY INFORMATION: The NPRM that is the subject of these
corrections proposes a major restructuring of the licensing scheme for
officers of towing vessels.
Need for Corrections
As published, the NPRM contains typographical errors and omissions
that may prove to be misleading and that therefore need corrections.
[[Page 36544]]
Corrections to Publication
Accordingly, the NPRM published on June 19, 1996 [CGD 94-055],
which was the subject of FR Doc. 96-15346, is corrected as follows:
1. On page 31337, in the second column, in the first paragraph, in
line 3, remove ``operators'' and add, in its place, ``operator ''.
2. On page 31338, in the second column, in paragraph 21, in lines 1
and 2, remove ``be revised by requiring'' and add, in its place,
``require''.
3. On page 31340, in the second column, in the line second from the
bottom, remove the control-number ``2115 AF23'' and add, in its place,
``2115 0623''.
4. On page 31341, in the second column, in the lines fourth and
fifth from the bottom, remove ``master, mate, or pilot of towing
vessels'' and add, in its place, ``master or mate (pilot) of towing
vessels.''
Dated: July 3, 1996.
G.F. Wright,
Acting Captain, USCG, Director of Standards, Marine Safety and
Environmental Protection.
[FR Doc. 96-17566 Filed 7-10-96; 8:45 am]
BILLING CODE 4910-14-M
Complete official Federal Register PDF
FR Doc. 96-17550 Registration of Fuels and Fuel Additives: Changes in Requirements, and Applicability to Blenders of Deposit Control Gasoline Additives
[Federal Register Volume 61, Number 134 (Thursday, July 11, 1996)]
[Proposed Rules]
[Pages 36535-36543]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17550]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 79
[FRL-5532-5]
Registration of Fuels and Fuel Additives: Changes in
Requirements, and Applicability to Blenders of Deposit Control Gasoline
Additives
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: This document proposes several specific changes to regulations
requiring the registration and testing of designated motor vehicle
fuels and fuel additives (F/FAs) by their manufacturers. The objectives
are to reduce the number of respondents, streamline program
requirements, further ease small business burdens, and clarify some
specific technical provisions in the existing registration regulations.
Included in the proposed group of respondents no longer required to be
registered as fuel manufacturers are those who solely blend deposit
control additives into gasoline.
DATES: Written comments on the issues presented in this document will
be accepted until August 12, 1996.
ADDRESSES: Comments should be sent in duplicate to EPA Air Docket
Section (LE-131); Attention: Public Docket No. A-90-07; Room M-1500,
401 M Street S.W., Washington, DC 20460; Phone 202-260-7548 or 7549;
FAX 202-260-4000. The docket is open for public inspection from 8:00
a.m. until 5:30 p.m., Monday through Friday, except on government
holidays. Previous rulemaking documents and other materials related to
this proposal are available in the docket. As provided in 40 CFR part
2, a reasonable fee may be charged by EPA for photocopying services.
FOR FURTHER INFORMATION CONTACT: Jim Caldwell (202-233-9303) or Joseph
Fernandes (202-233-9016), U.S. EPA, Office of Mobile Sources, Fuels and
Energy Division, Mail Code 6406J, 401 M Street SW, Washington, DC
20460.
Electronic copies of this proposed rule, the regulatory text for
this proposed rule, and earlier rulemaking documents related to the F/
FA Registration Program are available free of charge on EPA's
Technology Transfer Network Bulletin Board System (TTNBBS). For
specific instructions, contact Joseph Fernandes at the phone number or
address above. These documents are also available in the public docket
referenced above.
SUPPLEMENTARY INFORMATION:
I. Regulated Entities
Regulated categories and entities potentially affected by this
action include:
------------------------------------------------------------------------
Category Examples of regulated entities
------------------------------------------------------------------------
Industry............................ Manufacturers of gasoline and
diesel fuel.
Manufacturers of additives for
gasoline and diesel fuel.
------------------------------------------------------------------------
This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that EPA is now aware
could be potentially regulated by this action. Other types of entities
not listed in the table could also be regulated. To determine whether
your entity would be regulated by this action, you should carefully
examine this preamble and the proposed changes to the regulatory text.
You should also carefully examine the existing provisions of the
registration program at 40 CFR part 79.
II. Introduction
A. Background
The F/FA registration program is authorized by section 211 of the
Clean Air Act (CAA) and codified in 40 CFR part 79. In accordance with
CAA sections 211(a) and (b)(1), basic registration requirements
applicable to gasoline and diesel fuels and their additives were issued
in 1975. These regulations require manufacturers to submit information
on their F/FA products, such as the commercial identity, chemical
composition, purpose-in-use, and range of concentration, in order to
have such products registered by the EPA.
Additional registration requirements, implementing sections
211(b)(2) and (e), were proposed in April 1992 and February 1994 (57 FR
13168 and 59 FR 8886, respectively) and were finalized on May 27, 1994
(59 FR 33042, June 27, 1994). The additional regulations require
manufacturers, as part of their F/FA registration responsibilities, to
conduct tests and submit information on the health effects of their F/
FA products. These requirements are organized within three tiers. Tier
1 requires analysis of the combustion and evaporative emissions of F/
FAs and a survey of existing scientific information on the public
health and welfare effects
[[Page 36536]]
of these emissions. To the extent that adequate test data are not
already available (as defined in the regulations), Tier 2 requires
manufacturers to conduct specified toxicology tests to screen for
potential adverse health effects of the F/FA emissions. Under Tier 3,
follow-up testing may be required at EPA's discretion to further
evaluate concerns identified in the earlier tiers.
The rule also includes several provisions to reduce the information
collection and testing burdens. Among these provisions is a voluntary
grouping and cost sharing program which allows manufacturers of similar
F/FAs to pool their resources and efforts in complying with the
requirements. Special provisions for small manufacturers are also
included.
In subsequent sections of this notice, EPA proposes several
specific changes to the F/FA registration regulations. These proposals
would not impact the overall structure nor (with minor exceptions) the
scientific requirements of the current program. Rather, EPA is
proposing to revise and/or add certain definitions and provisions, with
the intended result of decreasing or, in some cases, removing the
requirements altogether for many F/FA registration respondents. EPA
believes that the proposed changes would significantly reduce the
overall burdens of the F/FA registration program without having an
appreciable impact on its monitoring, control, and information
collection objectives.
B. Public Participation
EPA desires full public participation in arriving at its final
decisions and solicits comments focused specifically on the proposals
in this notice. Wherever applicable, full supporting data and detailed
analysis should be submitted to allow maximum use of the comments.
Written materials already submitted in regard to the issues addressed
by these proposals will be fully considered by EPA, and need not be
resubmitted in response to this notice. At this time, EPA is not
seeking comments on issues other than those specifically addressed in
this notice, and is under no obligation to respond to any such comments
it may receive. EPA is not planning to hold a public hearing on this
proposed rule. However, a hearing will be held if requested within 10
days after publication. Requests for a public hearing should be
submitted in writing to Joseph Fernandes at the address provided above.
Any proprietary information being submitted for the Agency's
consideration should be markedly distinguished from other submittal
information and clearly labeled ``Confidential Business Information.''
Proprietary information should be sent directly to the contact persons
listed above, and not to the public docket, to ensure that it is not
placed in the docket. Information thus labeled and directed shall be
covered by a claim of confidentially and will be disclosed by EPA only
to the extent allowed and by the procedures set forth in 40 CFR Part 2.
If no claim of confidentiality accompanies a submission when it is
received by EPA, it may be made available to the public without further
notice to the commenter.
III. Fuel Manufacturer and Additive Definitions
A. Background
Section 211(a) of the Clean Air Act authorizes EPA to designate
fuels and fuel additives, and prohibits manufacturers or processors of
designated fuels and additives from introducing them into commerce
without having them registered. Section 211(b) describes the
registration requirement for designated fuels and fuel additives.
Pursuant to Sec. 211(b)(1), the manufacturer of any designated fuel or
additive must provide EPA with certain identifying information about
the fuel or additive to obtain registration. Section 211(b)(2) provides
EPA with discretionary authority to require health effects testing
information from manufacturers of designated fuels and additives for
the purpose of registration.
In the 1977 amendments to the Clean Air Act, Congress included a
provision that directed EPA to issue regulations to implement
Sec. 211(b)(2). These regulations were issued in May 1994, and included
an amendment to EPA's previous definition of fuel manufacturer to
include importers. 59 FR 33042 (June 27, 1994). In today's notice, EPA
is proposing to amend the definition of fuel manufacturer to exclude
parties that add additives in amounts less than 1% by volume of the
resulting fuel/additive mixture, and to exclude oxygenate blenders who
meet the regulatory definition of a small business. In addition, EPA is
proposing to amend the definition of ``additive'' to exclude substances
composed solely of carbon and/or hydrogen.
The term ``manufacturer of a fuel or fuel additive'' is used in
Sec. 211(a), 211(b), and 211(e), but the Act is silent on the
definition of ``manufacturer'' and ``additive.'' Promulgating
regulatory definitions of ``fuel manufacturer'' and ``additive'' for
purposes of implementing these subsections is within the Agency's
discretion to interpret the statute it administers where that statute
is silent with respect to a specific issue. See Chevron U.S.A., Inc. v.
NRDC, 467 U.S. 837 (1984). A clear definition of ``fuel manufacturer''
is necessary for EPA to implement its authority effectively under
Sec. 211(a), (b), and (e), and to provide certainty as to which parties
are subject to statutory requirements that apply to fuel manufacturers.
In addition, it is necessary for EPA to define ``additive'' to clarify
which products are covered by EPA's regulations under Sec. 211(e)
covering registration and health effects testing requirements.
EPA believes it is reasonable and appropriate to define ``fuel
manufacturer'' to exclude parties that add additives in amounts less
than 1% by volume of the resulting fuel/additive mixture. The health
effects information that such parties would be required to submit will
also be obtained from the manufacturers of the additive, who would not
be exempted under the proposed amendment. Therefore, excluding these
parties from the definition of fuel manufacturer would reduce the
generation and collection of duplicative information. For similar
reasons, EPA also believes it is reasonable and appropriate to define
``fuel manufacturer'' to exclude oxygenate blenders who meet the
regulatory definition of a small business. As discussed below, EPA
believes that it is reasonable and appropriate to define ``additive''
to exclude substances composed solely of carbon and/or hydrogen.
According to Sec. 79.1, the F/FA registration regulations apply to
all manufacturers of designated fuels and fuel additives. Designated F/
FAs, specified in Secs. 79.30-79.33, are currently limited to motor
vehicle gasoline and diesel fuels and to additives intended for use in
these fuels. The applicable definition of a ``fuel manufacturer'' is
provided in Sec. 79.2(d):
Fuel manufacturer means any person who, for sale or introduction
into commerce, produces, manufactures, or imports a fuel or causes
or directs the alteration of the chemical composition of, or the
mixture of chemical compounds in, a bulk fuel by adding to it an
additive.
The comprehensiveness of this definition has led to some redundancy
in registration requirements. It has also led to problems and confusion
arising from the fact that registration and testing responsibilities
are sometimes transitive, i.e., they pass along from one manufacturer
to another, generally from
[[Page 36537]]
bulk additive manufacturers to their fuel manufacturer customers. A
number of manufacturers have contacted EPA about these problems (e.g.,
see docket items VI-D-01, VI-D-05, VI-D-06, and VI-D-11).
For example, terminal owners and others who buy and blend bulk
additives into fuel are, according to the definition cited above, fuel
manufacturers.1 These parties are therefore subject to the product
registration and testing responsibilities applicable to fuel
manufacturers. Under the current regulations, they are required to
register their fuel products, including the identity, purpose, and
amount of bulk additive(s) which they blend (or intend to blend) into
the fuel. Furthermore, they are responsible for any testing applicable
to the resulting fuel/additive mixture, or for participating in one or
more testing groups based on the composition of this mixture. In
effect, their registration and testing responsibilities, and their
grouping and cost-sharing opportunities, are defined by the composition
of the bulk additives they mix into fuel, though in many instances they
may not even know the actual composition of the additive products they
buy and use.
---------------------------------------------------------------------------
\1\ However, independent terminal operators which blend
additives into their customers' fuels at the specific direction of
such customers are not considered fuel manufacturers. Also, end
users, such as fleet owners/operators who blend additives into bulk
fuel for their own fleet use, are not considered fuel manufacturers.
---------------------------------------------------------------------------
The transitivity of registration and testing requirements from
additive manufacturers to their fuel manufacturer customers has caused
the number of parties subject to registration requirements to multiply
and has led to confusion among the various parties along the F/FA
production-blending-distribution chain. It may also have unintended
affects on the F/FA commercial marketplace. In some cases, for example,
blenders may stop using certain kinds of additives rather than
incurring the responsibilities of a fuel manufacturer, or may switch
from their traditional suppliers to new suppliers based on the grouping
properties (set forth in Sec. 79.56) of the competing additives. A
particularly awkward result may occur when the direct manufacturer of
an additive is exempt from testing requirements under the program's
small business provisions (Sec. 79.58(d)), but the fuel manufacturers
who buy and blend the additive into fuel do not qualify for the
exemption and must still test the additive/fuel mixture. To keep their
customer base, some small manufacturers of ``atypical'' additives
(defined in Sec. 79.56(e)) state that they may find it necessary to
waive their small business exemptions and shield their customers from
additive testing requirements by fully funding the testing themselves
(see, for example, docket item VI-D-06). Clearly, this outcome would
undermine the special allowances which EPA intended to grant to small
businesses. A revised Sec. 79.58(d)(3) is proposed to remedy this
situation, by exempting a fuel manufacturer from Tier 2 requirements
for the use of an additive which is exempt from Tier 2.
Another problem associated with the definition of ``fuel
manufacturer'' has arisen as a result of a recent change in the
definition of ``fuel additive''. The final rule which added health
effects testing to the registration requirements for F/FAs (59 FR
33042) also changed the definition of an additive, as specified in
Sec. 79.2(e). Previously, substances composed solely of carbon and/or
hydrogen had been specifically excluded from the definition of an
additive,2 and thus did not have to be registered. Since these
substances were not considered additives, parties which blended them
into fuels were not considered fuel manufacturers and were not subject
to the F/FA registration requirements on the basis of that blending
activity.
---------------------------------------------------------------------------
\2\ The presence of trace contamination with elements other than
carbon and hydrogen did not factor into this exclusion.
---------------------------------------------------------------------------
Recognizing that all-hydrocarbon substances may have toxic
properties, the new rule removed the exclusion of all-hydrocarbon
substances from the definition of an additive. At the time, EPA was
particularly concerned about potential increased use of benzene and
other aromatic hydrocarbon additives. However, the change in the
definition of an additive has raised some unintended concerns. Under
the new definition, hydrocarbon fuel blending stocks (e.g., kerosene,
butane, propane), commonly used on a seasonal basis to change the
evaporative or flow properties of conventional fuels, could now be
considered as additives. Thus, parties which blend these fuel
substances into gasoline or diesel fuel could be considered to fit the
definition of ``fuel manufacturer.'' Potentially, hundreds of
additional parties could be required to register as F/FA manufacturers,
creating a substantial regulatory paperwork burden while providing
little incremental information to EPA. This was not EPA's intent.
Furthermore, the concern about benzene and other aromatics, which
originally motivated EPA to delete the all-hydrocarbon exclusion from
the additive definition, has now been largely addressed by the
reformulated gasoline/anti-dumping rules and other regulatory
mechanisms which limit the aromatic composition of gasoline and diesel
fuels. In sum, therefore, the change in the additive definition has
created a potentially large number of unintended new ``fuel
manufacturer'' respondents among those who add commonplace blending
stocks to gasoline and diesel fuels, while achieving little in regard
to EPA's original intent.
A substantial number of registrants is composed of persons who fit
the definition of ``fuel manufacturer'' because they blend ethanol into
gasoline. In the case of oxygenates other than ethanol, the oxygenate
is generally added to gasoline at the fuel refinery, before the
gasoline is distributed through the pipeline. These ``upstream''
oxygenate blenders tend to be relatively limited in number, and often
are large fuel manufacturing businesses. Ethanol, on the other hand, is
generally prohibited from transport through the pipeline (pipeline
policy, technical reasons), and must be added to the fuel downstream.
Thus, rather than being blended by relatively few fuel refiners,
ethanol is added to fuel by large numbers of terminal operators, fuel
haulers, and some fuel retailers. Many such ethanol blenders qualify as
small businesses under the definition in Sec. 79.58(d)(2) and thus are
excused from the Tier 1 and Tier 2 health effects testing provisions of
the F/FA registration regulations. Nevertheless, as fuel manufacturers,
they must still comply with the basic reporting requirements of the F/
FA registration program. This combination of circumstances maintains a
significant paperwork burden for such respondents, while adding little
information to EPA in regard to oxygenated fuels beyond that which is
currently available through other program reporting mechanisms.
B. Proposed Changes
EPA proposes to address the problems summarized above by modifying
the definitions of ``additive'' and ``fuel manufacturer.'' First, EPA
proposes to revise the current definition of an additive (at
Sec. 79.2(e)) to exclude substances composed solely of carbon and/or
hydrogen, thus reinstating the definition which was in effect prior to
the final rule of May 27, 1994. As described previously, this action
would provide regulatory relief to perhaps hundreds of companies which
are now considered ``fuel manufacturers'' because they add common
hydrocarbon
[[Page 36538]]
stocks to finished fuels. It should be noted that persons who blend
hydrocarbon stocks together to produce a usable motor vehicle fuel
(rather than adding hydrocarbons to a finished fuel) would continue to
be considered fuel manufacturers.
Second, EPA proposes to add provisos to the definition of a fuel
manufacturer (at Sec. 79.2(d)) such that the addition of a small volume
of any additive 3 to fuel would not in itself cause any party to
be considered a fuel manufacturer, nor would the addition of an
oxygenating additive by a party qualifying for the small business
provisions of the registration program. The proposed new definition of
a fuel manufacturer is as follows:
\3\ Of course, the additive itself must still be registered.
Fuel manufacturer means any person who, for sale or introduction
into commerce, produces, manufactures, or imports a fuel or causes
or directs the alteration of the chemical composition of a bulk
fuel, or the mixture of chemical compounds in a bulk fuel, by adding
to it an additive, except that (1) a party who adds a quantity of
additive(s) amounting to less than 1.0 percent by volume of the
resultant additive(s)/fuel mixture is not thereby considered a fuel
manufacturer, and (2) a party who qualifies as a small business
under the criteria in Sec. 79.58(d)(2) of this subpart, and who adds
an oxygenate compound(s) to fuel is not thereby considered a fuel
---------------------------------------------------------------------------
manufacturer.
This proposed definition would significantly reduce the number of
F/FA registration respondents and would address the problems described
above that result from the ``transitivity'' of registration and testing
requirements under the current regulations. Under this definition, the
addition of most ``baseline'' and ``atypical'' additives at ordinary
treatment rates would not cause the blending party to be a fuel
manufacturer because such additives are added in amounts less than 1%
of the resultant mixture. In the general case, parties which add
oxygenates to fuel, in an amount sufficient to produce a fuel mixture
categorized as non-baseline,4 would still be considered fuel
manufacturers. EPA believes this to be appropriate because the
relatively large added volumes can cause substantive changes in the
basic characteristics, emission properties, and toxic potential of the
fuel. However, to reduce the number of respondents required only to
submit redundant registration paperwork, the proposed definition of a
fuel manufacturer excludes oxygenate blenders who qualify for the small
business provisions of the registration program (chiefly, small ethanol
blenders).
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\4\ As specified in Sec. 79.56(e)(3)(I) and (ii), non-baseline
F/FAs contain (among other criteria) no elements in addition to
carbon, hydrogen, oxygen, nitrogen, and sulfur, and, in the case of
gasoline F/FAs, contain 1.5 percent or more oxygen by weight, and,
in the case of diesel F/FAs, contain 1.0 percent or more oxygen by
weight.
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For convenience, it is proposed that the definition of ``oxygenate
compound'' at 40 CFR 79.50 also be incorporated at 40 CFR 79.2(k). EPA
requests comments on the proposed changes to the definitions of
``additive'' and ``fuel manufacturer.''
C. Relationship to the Gasoline Detergent Additive Program
An interface exists between the F/FA registration program and the
detergent additive program.5 In order to avoid duplicate reporting
requirements, the detergent additive program interim regulations in 40
CFR Part 80 make use of the existing F/FA registration system as the
mechanism for collecting much of the information required of detergent
additive blenders. However, if the definition of a fuel manufacturer is
changed as proposed above, then detergent additive blenders would no
longer be considered fuel manufacturers and would no longer be required
to register under the F/FA registration program. Thus, the source of
information on which EPA relies for the interim detergent additive
program would no longer be available. However, as will be discussed in
the upcoming final detergent rule, EPA has concluded that this
information is no longer necessary. Therefore, there would be no
adverse effect on the detergent additive program.
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\5\ Regulation of Fuels and Fuel Additives: Standards for
Deposit Control Gasoline Additives. Proposed Rule: 59 FR 64213, Dec.
6, 1993. Interim Program Final Rule: 59 FR 54678, Nov. 1, 1994.
Certification Program Final Rule expected in 1996. These documents
are available on EPA's TTNBBS bulletin board. See ``For Further
Information. . .,'' at the beginning of this notice.
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IV. Small Business Definition
In the F/FA registration program, qualification for special small
business provisions is based in part on total annual sales revenue,
specifically, a $50 million limit for manufacturers of baseline and
non-baseline F/FAs, and a $10 million limit for manufacturers of
atypical F/FAs (see Secs. 79.58(d) (2) and (3), respectively).
Communications from trade organizations which represent fuel retailers
(docket item VI-D-05) suggest that these total sales criteria should be
revised to take tax effects into account. These organizations point out
that sales and excise taxes accumulate as the fuel passes along the
refining-distribution-marketing chain, but are generally not included
in the price paid for the fuel (nor in the gross sales revenue of the
seller) until the fuel is marketed at the retail level. In some
instances, the accumulated sales and excise taxes on fuel, including
applicable taxes at the local, state, and federal levels, may exceed 40
percent of the price paid by consumers, and thus represents a
comparable portion of the retailer's fuel-related sales revenues. The
commenters argue that, since these tax effects are not reflected in the
small business definition, small marketers are disadvantaged in
comparison with small refiners and other upstream businesses.
EPA agrees and proposes that the term ``total annual sales'' at
Sec. 79.58(d) be modified by adding the following: ``excluding any
revenue which represents the collection of federal, state and/or local
excise taxes and/or sales taxes''. A revised Sec. 79.59(b)(5)(ii) is
proposed to require the submittal, at EPA's request, of applicable
bills of lading or other valid documentation to support the legitimacy
of any fuel sales amounts excluded as taxes. Comments are requested
concerning these proposed revisions.
V. Biodiesel Provisions
Biodiesel fuels and most blends of bio- and conventional diesel
fuel contain more than 1.0 weight percent oxygen and thus, according to
Sec. 79.56(e)(3)(ii)(B), fall into the non-baseline diesel category.
Furthermore, under Sec. 79.56(e)(4)(ii)(B)(2), biodiesel fuels derived
from vegetable oil (``mixed alkyl esters of plant origin'') are grouped
separately from biodiesel fuels derived from animal fat (``mixed alkyl
esters of animal origin'').
EPA established these two separate biodiesel groups because of
concern that the composition of animal-derived and vegetable derived
fuels might differ considerably, and thus might demonstrate different
toxicologic properties. Both vegetable oil and animal fat are composed
of triglycerides, and the esterification process used to convert the
triglycerides to fuel (i.e., methyl esters) is the same for both.
However, up to 3.0 percent of the resulting chemical mixture is
composed of nonesterified reactants, other reaction products, and
possible contaminants, and EPA has been concerned that these could vary
significantly between the different feedstocks.
In subsequent communications with EPA (docket item VI-E-01),
representatives of the industry have asserted that the composition of
biodiesel fuels of animal and plant origin have similar physical
properties. As a result of their arguments, EPA is
[[Page 36539]]
considering a change to the grouping rules which would permit animal-
and vegetable-derived biodiesel fuels to be grouped together.6 A
revised Sec. 79.56(e)(4)(ii)(B)(2) is proposed. EPA requests comments
on this potential action. Data demonstrating the qualitative and
quantitative differences between biodiesel fuels from different
feedstocks, including the identity and amount of contaminants, would be
particularly helpful to EPA's determination of the most appropriate
grouping rules for these fuels. Available data comparing the speciated
emissions of these fuels would also be of interest.
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\6\ It is important to note that, notwithstanding any grouping
arrangements permitted under the program's grouping rules, EPA
retains the authority in Sec. 79.54(a) to require Tier 3 testing
either on an individual or group basis, and to require different
representative(s) of a group to be tested than may have been tested
at the Tier 1 and/or Tier 2 level. Thus, even if the regulations
were to be changed to allow biodiesel fuels to group together, EPA
would not be precluded from requiring vegetable-derived and animal-
derived biodiesel fuels to undergo separate Tier 3 testing.
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Section 79.56(e)(4)(ii)(B)(2)(ii) of the current regulations
contains generic requirements for choosing the representative to be
used in testing for the health effects of biodiesel and other defined
groups of oxygenating compounds. EPA is considering a requirement
specific to biodiesel which would require that 100 percent biodiesel
fuel be used as the biodiesel group's test representative. This would
maximize the likelihood of detecting any differences in the emissions
and/or toxicologic properties between conventional diesel and biodiesel
fuels. Under the existing regulations, it is likely that a 20 percent
biodiesel formulation will be selected as the test representative;
thus, lower exposures to biodiesel emissions would occur during the
testing. On the other hand, a 20 percent formulation does currently
appear to be the more likely formulation to be introduced into
commerce, at least in the near future. Thus, EPA requests comment on
which biodiesel fuel specification (20 percent, 100 percent, or some
other percentage) would be most appropriate in the context of the
testing program. Comments are also requested on the practicality of
each option with respect to test vehicle/engine compatibility.
VI. Synthetic Fuel Provisions
A. Background
According to Secs. 79.56(e)(3)(I)(B) and (3)(ii)(B), a fuel derived
from any synthetic crude source, such as shale, coal, or tar sands, is
assigned to a non-baseline category. The regulation does not specify a
minimum amount of synthetic component which would cause a fuel to fall
into the non-baseline category. Sections 79.56(e)(4)(ii)(A)(3) and
(ii)(B)(3), for gasoline and diesel F/FAs respectively, define separate
non-baseline groups for ``formulations derived from each particular
non-conventional petroleum source or process'' (italics added for
emphasis), and lists the following types of fuel formulations as
examples of such groups: ``coal-derived formulations; chemically-
synthesized formulations (including those using recycled chemical or
petrochemical products); tar sand-derived formulations; shale-derived
formulations; and other types of soil-recovered products used in
formulating (fuel)''.
Since publication of these regulations, EPA has received
communications and information from the affected industry (see docket
items VI-D-02 and VI-D-03) claiming that synthetic fuels should be
categorized as baseline rather than non-baseline products. They point
out that the current regulations do not reflect the fact that finished
motor vehicle fuels are rarely, if ever, refined solely from synthetic
crude. Rather, when synthetic crude is used, it generally comprises a
relatively small fraction (e.g., 10-15 percent) of the total crude
which is refined into motor vehicle fuel. Moreover, the industry claims
that such fuels, once refined, are not significantly different from
conventional fuels. They are not labeled differently or stored
separately from fuels derived wholly from conventional crude sources.
In fact, they are commonly distributed by way of the conventional fuel
pipeline system. Downstream parties may therefore buy and sell,
additize, and otherwise handle fuels with some synthetic derivation,
without even knowing when or if this is the case.
The F/FA registration program covers only designated motor vehicle
fuels and their associated additives. It does not require the
registration of crude feedstocks from which these F/FAs are made. Thus,
in the case of conventional fuels, it is not the entity which takes
crude oil from the ground who is responsible for fuel registration;
rather, it is the entity which refines finished fuel from crude oil who
is required to have that fuel registered prior to placing it in
commerce.7 Similarly, synfuel registration is not the
responsibility of parties who mine (or otherwise obtain) a synthetic
crude source and subject it to upgrading and purification processes
prior to actual fuel refining. Only after the synthetic crude is
refined (alone or as part of a synthetic/conventional crude mixture) is
the product subject to registration.
---------------------------------------------------------------------------
\7\ Of course, this distinction is moot if the two activities
are accomplished by the same business entity.
---------------------------------------------------------------------------
Clearly, the responsibility for registering synfuel falls to those
business entities (usually fuel refiners) which are the first parties
along their respective production chains to introduce into commerce a
designated motor vehicle fuel derived in whole or in part from a
nonconventional source, and conforming to standard specifications for
the designated fuel. These manufacturers are responsible for testing
the synfuel products they have had registered. Thus it is incumbent on
these manufacturers to take steps to determine if any of the materials
from which they produce designated fuels are of synthetic origin. Under
the current grouping provisions, those who manufacture synfuel derived
from the same non-conventional source are able to form testing groups
within the applicable (gasoline or diesel) non-baseline categories.
B. Proposed Changes
In the event that such synfuel groups are formed, the current
regulations do not contain adequate guidelines for choosing synfuel
group representatives. To facilitate detection of differences between a
synthetic fuel and the respective conventional fuel, EPA proposes that,
for any synfuel group, the representative should be a fuel derived
totally from the relevant synthetic source. If production of a useable
100 percent synfuel is impractical, then the group representative could
be a fuel reflecting the highest percentage of syncrude feedstock that
is practical and suitable for operating the relevant engine type.
Revised Secs. 79.56(e)(4)(ii)(A)(3)(ii) and (B)(3)(ii) are proposed.
Alternatively, the synfuel group representative could be specified as a
fuel reflecting the highest percentage of synthetic crude which is
actually input to any member refinery's crude distillation unit(s). The
test fuel would otherwise be required to conform to the additization
requirements and any other relevant base fuel specifications in
Sec. 79.55. Comments on these proposals for selecting synfuel group
representatives are requested.
EPA also requests comments on some potential changes to the synfuel
grouping rules themselves. First, EPA proposes to delete the phrase
``..or process'' from Secs. 79.56(e)(4)(ii)(A)(3) and (ii)(B)(3) of the
registration regulations. The inclusion in these sections of non-
conventional processes in addition to non-conventional sources
[[Page 36540]]
as delineaters of non-conventional fuels is potentially misleading. For
example, the current language can be interpreted as meaning that heavy,
but otherwise conventional crude feedstocks should be considered non-
conventional (and therefore non-baseline) because they need slight
modification prior to sale and transport. The proposed changes at
Secs. 79.56(e)(3)(I)(B) and (3)(ii)(B) to delete the phases ``heavy oil
deposits'' would narrow these provisions so that they focus on fuels of
greater concern to EPA, i.e., fuels derived from non-conventional
sources, not from mechanical or chemical production processes on
otherwise conventional feedstocks. Comments are requested on this
proposed revision.
In developing the current regulations, EPA sought to segregate non-
conventional fuels into separate non-baseline groups because of
concerns that they were likely to contain unknown contaminants and
relatively high levels of trace or background elements. However,
limited published information and other data received from the industry
suggest that, after processing, some mined syncrude feedstocks may not
be significantly different from more conventional crudes.
Because they must be compatible with conventional refinery
processes and must be fungible with conventional fuels, synthetic
crudes are reportedly subjected to extensive upgrading to remove heavy
residual oils (``tank bottoms''), sulfur, inorganic elements, organo-
metallic compounds, and clays prior to shipping to refineries. In
preparing its product for sale, the syncrude manufacturer typically
subjects the mined material to de-salting and coking processes (to
remove metal contaminants) and atmospheric and vacuum distillations (to
remove tank bottoms and asphaltic residues). Limited product assay
results provided to EPA (docket item VI-D-02) indicate that syncrude
feedstocks may be lower than typical petroleum crudes in vanadium,
nickel, and iron. The industry monitors these characteristics because
several catalytic refinery processes are intolerant of metallic
contaminants.
For these reasons, EPA is considering options that would further
ease or, possibly, remove some of the current provisions which
distinguish some fuels derived from synthetic sources from conventional
petroleum fuels. Substantive comments and additional data are needed to
help EPA decide whether any of these additional options should be
adopted and, if so, to which crude sources they should apply (i.e.,
some or all mined crude sources, other petrochemical crude sources, or
all types of crude feedstocks).
One alternative provision under consideration would permit a
synfuel manufacturer (or group) to submit the results of a thorough
chemical analysis of the raw synfuel in conjunction with the Tier 1
emission characterization data. This special analysis would emphasize
the identification of elevated levels of trace elements or compounds as
compared with the base fuel for the respective fuel family. The data
would need to include sufficient numbers of fuel samples to be viewed
as a valid sampling of the range of the particular crude feedstock and,
likewise, would need to cover a broad range of measurable feedstock
characteristics. Based on the special Tier 1 analysis, EPA would
determine, on a case-by-case basis, whether the synfuel in question
should be permitted to join the baseline group for purposes of Tier 2,
or whether the synfuel would continue to be categorized as non-
baseline.
Another possibility under consideration would simply delete some or
all synthetic crude sources from the list of non-conventional sources.
This would mean that fuels from these feedstocks would be classified as
baseline products. This choice would recognize that it is in the vital
interest of the fuels industry to continue to monitor the quality of
the synfuels that are transported in the existing pipeline systems. The
demands of fungibility would thus be assumed to maintain the quality
and similarity of syncrude products on a par with that of more
conventional F/FAs.
Comments are requested on these possible provisions. To the degree
that such comments are substantive and provide objective data
supporting these alternative provisions, EPA may be more persuaded that
its original concerns about synfuel composition may have been
exaggerated. Comments are also requested on whether shale-derived
synfuels should continue to be categorized as non-baseline, even if
fuels from other mined sources (coal, tar sands) are re-categorized as
baseline.
C. Other Alternatives
Under a different approach, the grouping system's current
definition of synthetic fuels would be retained, but a particular
manufacturer's synfuel product would be categorized as baseline or non-
baseline depending on the proportion of synthetic crude represented in
the finished product. As mentioned earlier, the current F/FA
regulations do not establish a minimum amount of synthetic crude
feedstock which causes a fuel to be categorized as non-baseline. Given
the variability in syncrude proportion and the apparent fungibility of
many synfuel products with conventional fuels, such a minimum would
appear to be appropriate. Under this approach, for example, EPA could
specify that a synfuel product will be considered non-baseline only if
more than 15 percent by volume of the crude unit charge (i.e., the
input to a refinery's crude distillation unit(s)) is composed of
synthetic crude or mixed synthetic-conventional crude feedstock.8
The choice of 15 percent as the cutoff volume would mean that most of
the synfuels produced today would be classified as baseline. Since
their manufacturers could thus join the respective baseline group(s),
it is likely that some types of synfuel would not routinely undergo
testing.9 In practice, any cutoff point adopted in the regulations
would probably function as a cap on the syncrude proportion used by
synfuel manufacturers.
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\8\ This statement assumes there are no other conditions (e.g.,
high oxygen content) that would cause the fuel to be non-baseline.
\9\ However, under the Tier 3 provisions of the F/FA
registration regulations, EPA could still require any emission
speciation and/or health effects testing it deems necessary if, at
some future time, EPA finds that a synfuel or other F/FA is not well
represented by the test fuel designated to represent its F/FA group.
---------------------------------------------------------------------------
As a variation on this approach, different baseline/non-baseline
cutoff points could be established for different kinds of synfuels.
Under this variation, fuels containing more than 15 percent content
derived from mined sources (e.g., coal, shale, and tar sands) would be
considered non-baseline, while fuels containing more than 2 percent
content derived from other petrochemical sources (e.g., used motor
oils, recovered chemical spills, recycled plastics, and industrial
waste streams) would be considered non-baseline. Other cutoff points
might also be appropriate.
EPA requests comment as to the appropriateness of using 15 percent
of crude unit charge as the cutoff point for all syncrude feedstocks in
determining whether a fuel belongs in a non-baseline group. Comments
are also requested on the alternative approach of setting different
cutoff points for different types of synfuel. Suggestions for other
cutoff points than the ones discussed above, with support and
justification for such suggestions, are welcome. In addition, EPA
requests information on the amount of syncrude typically represented in
synfuels as they leave the refinery, as well as the usual maximum
amount of syncrude used in such fuels today. Information is also sought
on any differences in these formulation
[[Page 36541]]
practices which may occur as a function of the type of syncrude in
question.
VII. De Minimis Provisions
A. Background
In the NPRM published April 15, 1992, EPA raised the possibility of
setting de minimis levels for some atypical F/FAs,10 i.e., maximum
concentrations or emission rates for atypical elements below which the
manufacturers of F/FAs containing such elements would be excused from
some or all of the testing requirements for the product. EPA recognized
that the extra emission testing requirements proposed for atypical F/
FAs and the relatively scarce grouping opportunities among such
products could subject manufacturers of atypical F/FAs to considerably
higher registration costs than other manufacturers. De minimis
provisions were discussed as a possible way to reduce these burdens
when atypical F/FAs could reasonably be anticipated to have no adverse
effects on the public health or the environment (i.e., having no
incremental effects relative to the effects of the associated base
fuel). The proposed de minimis provision would be limited to specific
atypical elements which were generally regarded as not producing overt
toxicological effects when inhaled and were present in the product and
its emissions in very low quantities.
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\10\In the gasoline and diesel fuel families, an atypical F/FA
is one which contains one or more elements other than carbon,
hydrogen, oxygen, nitrogen, and/or sulfur.
---------------------------------------------------------------------------
When the F/FA test rule was promulgated in May 1994, however, these
special de minimis provisions were not finalized. EPA noted that very
little speciated chemical compound information was available on
atypical F/FAs or their emission products, from which possible atypical
F/FA candidates and de minimis levels could be identified. Likewise,
little data existed regarding the potential toxicities, exposures, or
health risks associated with atypical F/FAs or their emissions.
Finally, there was a concern that, in promulgating de minimis levels
for atypical elements, EPA's actions would be misinterpreted as setting
``safe'' levels for exposure to various atypical compounds when, in
fact, very few applicable, reliable health and safety exposure
standards exist for any of the substances of concern.
However, the practical effect of not promulgating de minimis levels
for some atypical F/FAs has been to subject all atypical F/FAs to the
same level of scrutiny, even though the overall level of concern about
their potential health effects may be markedly different. Thus, under
the existing regulations, manufacturers of F/FAs containing such unlike
elements as, say, mercury and sodium each have to comply with the same
detailed emissions characterization and health effects testing
requirements under the same set of conservative assumptions.
In an attempt to improve this outcome, EPA is thus again proposing
a de minimis provision. This proposed provision, described in the next
section, differs somewhat from the previous de minimis proposal;
however, it does not solve all of the original objections. Reliable
quantitative data on the toxicity of most atypical F/FAs and their
emission products is still lacking. Nevertheless, the proposal
described below is conservative in approach and applicability, and EPA
believes it to be a reasonable and prudent alternative to the current
program, which allows for no distinctions to be made based on the
anticipated health effects and exposures associated with substances
which, in fact, vary greatly in chemical composition and rate of usage.
EPA wishes to emphasize once again that, in proposing de minimis
provisions for certain atypical F/FAs, the Agency is not setting a
safety level for these F/FAs or their emissions that is meaningful or
valid outside a very limited context. The proposal recognizes that a
relatively lower level of overall health-related concern exists for
some of the atypical elements used in F/FAs, especially under limited
exposure conditions at very low concentrations.11 The relatively
low production volumes of most atypical F/FAs means that the population
at large would potentially be exposed to exceedingly small amounts of
the elements for which EPA is proposing to set de minimis levels,
particularly after they undergo combustion in motor vehicle engines and
the emissions are diluted in air. In combination, these factors make it
extremely unlikely that the proposed de minimis provisions could result
in adverse public health or welfare outcomes. Nevertheless, should such
concerns arise in the future, the proposed de minimis provisions would
in no way limit EPA's flexibility under its Tier 3 testing authority to
require additional emission characterization and/or toxicologic testing
of any affected F/FA, and to take any follow-up regulatory action
warranted by the results.
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\11\ However, recent studies suggest that pulmonary injury may
be caused by inhalation exposure to substances generally regarded as
biologically inactive, if the exposure to such substances is in the
form of ``ultrafine'' particles (less than 20nm). See, for example,
Oberdorster, G., et al., ``Role of the Alveolar Macrophage in Lung
Injury: Studies with Ultrafine Particles,'' Environmental Health
Perspectives, 97: 193-199, 1992. While testing to detect the
potential occurrence of ultrafine particles of atypical elements in
F/FA combustion emissions is outside the scope of Tiers 1 and 2,
such testing could be required under Tier 3 if deemed necessary by
EPA. EPA's authority to require such testing would not be affected
by any de minimis provision for which a fuel or additive might
otherwise qualify.
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B. Proposed Provisions
1. Selection of Elements
A number of atypical elements are reported by their manufacturers
to be components of one or more F/FAs occurring on EPA's F/FA
registration database. 12 EPA is today proposing de minimis
provisions applicable to the following nine atypical elements:
\12\ These elements occur on EPA's F/FA registration database as
constituents of some diesel F/FAs, or in aftermarket gasoline
additives which were ``grandfathered'' when restrictions on such
atypical elements were implemented. These ``grandfathering''
provisions were previously reviewed in the NPRM and Reopening
Notices for the F/FA Registration rulemaking (see 57 FR 13168 and 59
FR 8886).
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Aluminum (Al)
Boron (B)
Calcium (Ca)
Sodium (Na)
Zinc (Zn)
Magnesium (Mg)
Phosphorus (P)
Potassium (K)
Iron (Fe)
These nine elements were selected by evaluating a number of
factors. First, any element (alone or in compound form) known or
believed to have significant inhalation-related health effects or to be
a precursor to emission species of particular concern was eliminated as
a candidate for the de minimis provision. For example, elements in the
halogen family were eliminated because of their occurrence in toxic
chemical species (e.g., halogenated methane compounds) and/or their
potential role in forming dioxin and dioxin-like compounds. Other
examples include manganese, mercury, tin, and lead, which were
eliminated from consideration because of their neurologic effects, and
cobalt, platinum, silicon, and antimony, which were eliminated because
of concerns about their potential respiratory effects in some chemical
forms.
EPA also examined any existing exposure assessment values which may
exist for the atypical elements (or compounds containing them),
including industrial exposure guidelines such as Threshold Limit Value
(TLV), Permissible Exposure Limit (PEL),
[[Page 36542]]
Recommended Exposure Limit (REL), and Health Effects Assessment Summary
Table (HEAST) values. Recognizing that none of these values is
specifically intended for use in estimating the toxic potential of
long-term continuous exposures to the general population, EPA looked at
them only as general, relative indicators of potential toxicity, to be
viewed in conjunction with each other and subject to conservatively-
applied scientific judgment. In this way, EPA divided the atypical
elements into two groups. For one group, containing the nine elements
listed above, it appeared that limited exposures to ambient
concentrations of at least 0.1 milligrams of the elements per cubic
meter of air (mg/m3) could occur without raising appreciable
concerns. For all the remaining atypical elements, specific public
health and/or welfare effects issues were identified and/or the
exposure assessment values generally indicated that health-related
concerns may arise at exposure levels considerably lower than 0.1 mg/
m3. EPA decided that de minimis provisions would therefore not be
proposed to apply to any of the elements in the latter group.
EPA requests comments on the appropriateness of establishing a de
minimis provision for atypical F/FAs, given the acknowledged lack of
reliable quantitative toxicity data for most of the substances
concerned. Specific comments are also requested on the approach
described above for differentiating between high- and low-concern
atypical elements, and on the nine elements proposed as candidates for
the potential de minimis provision. Should some of these nine elements
be deleted from the list?
2. de minimis Level
The de minimis provision could theoretically be structured to apply
either to (1) the amount of an atypical element in the ``raw'' state
(i.e., in the uncombusted fuel/additive mixture), or (2) the amount
occurring in the combustion emissions. While the emissions approach
might appear to provide a more direct measurement of the substances of
concern, EPA believes that, in this instance, the raw mixture approach
provides a simpler and ultimately more effective mechanism for
manufacturers to apply and for EPA to evaluate and enforce. Basing the
de minimis provision on the concentration of atypical elements in the
raw state avoids a number of complicated issues that would arise if the
provision were based on measurement of atypical elements in the
emissions, e.g.: (1) How much accumulated mileage would be required
before generating, sampling, and analyzing the emissions for possible
de minimis qualification; (2) how many samples would be needed; (3)
once sampled, what kinds of emissions analyses would be required; (4)
how accurate and sensitive would the detection equipment have to be;
and (5) how EPA could efficiently confirm the results?
As discussed above, for the group of nine candidate elements, it
appears that ambient air concentrations of at least 0.1 mg/m \3\ (100
g/m3) could occur for limited exposures without raising
significant concerns. The concentration of a particular elemental
constituent of a fuel/additive mixture which, after combustion in an
engine, would yield a given concentration of the element in air depends
on a number of factors and relationships, e.g., the chemical
characteristics of the element and its host compound(s), the nature of
the base fuel, engine type, and driving cycle involved, the scale and
complexity of the ambient environment, etc. Thus, corresponding fuel
and air concentrations cannot be calculated with precision. However,
based on a series of approximations and conservative assumptions, EPA
estimates that a concentration of 25 parts per million (ppm) of
atypical element(s) in a base fuel (i.e., 0.0025 percent by weight)
13 should generally yield a concentration in air of less than 0.1
mg/m3, even under the theoretical assumption that the
characteristics of the ambient air are a direct function of the
combustion emissions of a single vehicle operating on the atypical F/FA
mixture.14
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\13\ These measurements refer to the specified elements
themselves, not to the weights of the compounds in which these
elements may be bound.
\14\ Specifically, the very conservative assumption is made that
the ambient air consists of fully-passed-through emissions of the
atypical element(s) diluted by a factor of 1 to 2,000.
---------------------------------------------------------------------------
Thus, EPA is today proposing a de minimis provision based on a
qualifying level of 25 ppm in base fuel, disregarding trace amounts of
these elements which may exist in the unadditized base fuel.
Specifically, if an atypical additive contains no atypical elements
other than Al, B, Ca, Fe, Mg, P, K, Na, and/or Zn, and if the total of
these elements added to base fuel does not exceed 25 ppm by weight when
the additive is mixed into the applicable base fuel at the highest
treatment rate recommended by the additive manufacturer, then the
additive (and F/FA mixture) would qualify for the de minimis provision.
Comments on this general approach and on the proposed de minimis level
are requested. The special allowances for which such F/FAs would
qualify are described in the next section.
3. Allowances for Qualifying F/FAs
EPA proposes that manufacturers of atypical F/FAs which qualify for
the de minimis provision, under the criteria specified above, would be
excused from the testing requirements included in Tier 2 (Sec. 79.53).
This is the same allowance provided by the existing regulation
(Sec. 79.58(d)(3)) for atypical F/FAs produced by small manufacturers
(i.e., those with less than $10 million in annual revenue). The de
minimis provision would not excuse manufacturers from the Tier 1
emission characterization requirements that pertain specifically to
atypical F/FAs, i.e., the identification and measurement of individual
emission products containing the atypical elements
(Sec. 79.52(b)(2)(iv) and, if applicable, Sec. 79.52(b)(3)(iv)).
Notwithstanding the de minimis provision nor any other special
provisions for which a F/FA may qualify, the provisions of Tier 3
permit EPA to require any additional testing at its discretion,
including testing which might have been required in the absence of the
special provision.
Comments on this proposal to excuse qualifying F/FAs from Tier 2
requirements are requested. See the proposed regulatory language at
Sec. 79.58(f). Comments are also requested on the scope and specific
details of the proposed de minimis provision in general. Any
suggestions for easing the provision (i.e., adding elements or
increasing the de minimis level) should be accompanied by data to
justify such a change. This proposal is deliberately based on
conservative assumptions and, EPA requests that commenters provide
solid supporting data to justify any suggested changes which would
widen the applicability of the proposed provision. EPA is unlikely to
adopt any such suggestions from commenters without such data.
VIII. Minor Changes to the Testing Requirement for Registration
Minor changes to the testing requirements are proposed. In the
final rules section of this Federal Register, these changes are being
promulgated as a direct final rule without prior proposal, because they
are viewed as noncontroversial and no adverse comments are anticipated.
A detailed rationale for these proposed changes is set forth in the
direct final rule. If an adverse comment on request for hearing is not
received in response to the direct final rule, no further activity is
contemplated in relation to this
[[Page 36543]]
proposed rule. If an adverse comment or hearing request is received,
the portion of the direct final rule at issue will be withdrawn and all
public comments received will be addressed in a subsequent final rule
based on this proposed rule. EPA will not institute a second comment
period on these minor changes. Any parties interested in commenting
should do so at this time.
IX. Tier 1 Exposure Analysis
Section 79.52(c) requires a manufacturer, using annual and
projected production volume, marketing, and distribution data (already
required to submitted as a condition for registration), to provide a
qualitative discussion of the potential public health exposures to the
emission products of its fuels and/or additives. Upon review, EPA has
concluded that this qualitative discussion will add little relevant
information beyond the registration data. Therefore, it is proposed to
delete Sec. 79.52(c) and modify introductory paragraph 79.52(a)
accordingly.
X. Environmental and Economic Impacts
The environmental impacts of today's action are minimal, as
discussed above. Additionally, economic impacts are beneficial to
affected manufacturers due to the additional flexibility afforded in
today's notice. Minimal anti-competitive effects are expected. A
regulatory support document which presents EPA's analysis of the cost
impacts of the May 1994 rule is available in Public Docket A-90-07
located at Room M-1500, Waterside Mall (ground floor), U.S.
Environmental Protection Agency, 401 M St. S.W., Washington, D.C.
20460.
XI. Regulatory Flexibility Analysis
EPA has determined that it is not necessary to prepare a regulatory
flexibility analysis in connection with this rule. This rule will
reduce regulatory burdens on small businesses by reducing or
eliminating the reporting and testing requirements for many small
businesses. EPA has determined that this rule will not have a
significant adverse economic impact on a substantial number of small
businesses.
XII. Administrative Designation
Pursuant to Executive Order 12866 (58 FR 51735 [October 4, 1993]),
the Agency must determine whether a regulatory action is
``significant'' and therefore subject to OMB review and the
requirements of the executive order. The order defines ``significant
regulatory actions as one that is likely to result in a rule that may:
(1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local or tribal governments or communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlement, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
Pursuant to the terms of Executive Order 12866, it has been
determined that this notice is proposal rulemaking is not a
``significant regulatory action''. The proposals in this notice will
decrease the number of parties to which these regulations apply and
will reduce the requirements and costs of other parties subject to the
regulations.
XIII. Paperwork Reduction Act
The Paperwork Reduction Act of 1980, 44 U.S.C. 3501 et seq., and
implementing regulations, 5 CFR Part 1320, do not apply to this action
as it does not involve the collection of information as defined
therein.
XIV. Unfunded Mandates Act
Under section 202 of the Unfunded Mandates Reform Act of 1995
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA
must prepare a budgetary impact statement to accompany any proposed or
final rule that includes a Federal mandate that may result in
expenditure by State, local, and tribal governments, in the aggregate;
or by the private sector, of $100 million or more. Under Section 205,
EPA must select the most cost-effective and least burdensome
alternative that achieves the objectives of the rule and is consistent
with statutory requirements. Section 203 requires EPA to establish a
plan for informing and advising any small governments that may be
significantly or uniquely impacted by the rule.
EPA has determined that the action promulgated today does not
include a federal mandate that may result in estimated costs of $100
million or more to either State, local, or tribal governments in the
aggregate, or to the private sector. This proposed action does not
establish regulatory requirements that may significantly or uniquely
affect small governments. In fact, this proposed action has the net
effect of reducing the burden of the fuel and fuel additive
registration program on regulated entities. Therefore, the requirements
of the Unfunded Mandates Act do not apply to this action.
XV. Statutory Authority
The statutory authority for this proposed rule is provided by
sections 205 (b) and (c), 211, and 301(a) of the Clean Air Act as
amended (42 U.S.C. 7524 (b) and (c), 7545, and 7601(a), Public Law 95-
95).
List of Subjects in 40 CFR Part 79
Environmental protection, Fuel, Fuel additive, Gasoline, Motor
vehicle pollution, Penalties.
Dated: June 27, 1996.
Carol M. Browner,
Administrator.
[FR Doc. 96-17550 Filed 7-10-96; 8:45 am]
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