issue-1996-04-15•Federal Register proposed rules — 1996-04-15
Federal Register proposed rules — 1996-04-15
issue-1996-04-15Federal Register proposed rules — 1996-04-15Proposed 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. 96-9319 Uniform Compliance Date for Food Labeling Regulations
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16422-16423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9319]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Chapter I
[Docket No. 96N-0094]
Uniform Compliance Date for Food Labeling Regulations
AGENCY: Food and Drug Administration, HHS.
ACTION: Proposed rule.
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SUMMARY: The Food and Drug Administration (FDA) is proposing to
establish January 1, 1998, as its new uniform compliance date for all
food labeling regulations that are issued after the publication of a
final rule based on this proposal and before January 1, 1997. FDA
periodically has announced uniform compliance dates for new food
labeling requirements to minimize the economic impact of label changes.
In 1992, FDA suspended this practice pending the issuance of
regulations implementing the Nutrition Labeling and Education Act of
1990 (the 1990 amendments). With the adoption and implementation of
those regulations, FDA is proposing to establish a new uniform
compliance date.
DATES: Written comments by July 1, 1996. FDA is proposing that January
1, 1998, be the new uniform compliance date for food labeling
regulations published after the publication of a final rule based on
this proposal and before January 1, 1997, except as otherwise provided
in individual regulations.
FOR FURTHER INFORMATION CONTACT: Gerad L. McCowin, Center for Food
Safety and Applied Nutrition (HFS-150), Food and Drug Administration,
200 C St. SW., Washington, DC 20204, 202-205-4561.
SUPPLEMENTARY INFORMATION: FDA periodically issues regulations
requiring changes in the labeling of packaged food. If these labeling
changes were effective on separate dates, the cumulative economic
impact on the food industry of frequent changes would be substantial.
Therefore, the agency periodically has announced uniform compliance
dates for new food labeling requirements (see, e.g., the Federal
Register of October 19, 1984 (49 FR 41019)). Use of a uniform
compliance date provides for an orderly and economical industry
adjustment to new labeling requirements by allowing sufficient lead
time to plan for the use of existing label inventories and the
development of new labeling materials. This policy serves consumers'
interests as well because the increased cost of multiple short-term
label revisions that would otherwise occur would likely be passed on to
consumers in the form of higher food prices.
-The last uniform compliance date was January 1, 1993, which FDA
established on January 4, 1990 (55 FR 276). The agency did not issue a
new uniform compliance date in 1992 because of the pending issuance of
a number of new final regulations implementing the 1990 amendments. The
regulations implementing the 1990 amendments became effective May 8,
1994.
-The agency has tentatively decided to establish a new uniform
compliance date of January 1, 1998. If adopted, this date will apply to
all FDA regulations requiring changes in food labels, except where
special circumstances require a different compliance date. The agency
has tentatively selected January 1, 1998, to ensure that manufacturers
have adequate time to make any changes in food labeling that may be
required by FDA final regulations published after the publication of a
final rule based on this proposal and before January 1, 1997.
-The agency generally encourages industry to comply with new
labeling regulations as quickly as is feasible, however. Thus, when
industry members voluntarily change their labels, it is appropriate
that they incorporate any new requirements that have been published as
final regulations up to that time.
-The uniform compliance date that FDA adopts in response to this
proposal will apply to final FDA food labeling regulations published
after its adoption and before January 1, 1997. Moreover, FDA will
consider adopting a consistent effective date in any rulemakings in
which it publishes a final rule before it completes the present
proceeding.
-Previously, FDA has established the uniform compliance date by
issuance of a final rule without providing an opportunity for comment.
Because of the passage of time since the agency had last established a
uniform compliance date, the agency believes it appropriate to
establish the new uniform compliance date of January 1, 1998, through
the issuance of this notice of proposed rulemaking and an opportunity
for comment. FDA intends, however, to return to its former practice of
establishing uniform compliance dates through issuance of a final rule
without the opportunity for comment. Thus, for example, on or before
December 31, 1996, FDA intends to issue a final rule establishing
January 1, 2000, as the uniform compliance date for regulations
published in the Federal Register between January 1, 1997, and December
31, 1998.
The agency has determined under 21 CFR 25.24(a)(11) that this
action is of a type that does not individually or cumulatively have a
significant effect on the human environment. Therefore, neither an
environmental assessment nor an environmental impact statement is
required.
-FDA has examined the impacts of the proposed rule under Executive
Order 12866 and the Regulatory Flexibility Act (Pub. L. 96-354).
Executive Order 12866 directs agencies to assess all costs and benefits
of available regulatory alternatives and, when regulation is necessary,
to select regulatory approaches that maximize net benefits (including
potential economic, environmental, public health and safety, and other
advantages; distributive impacts; and equity). The Regulatory
Flexibility Act requires agencies to analyze regulatory options that
would minimize any significant impact of a rule on small entities.
-The agency estimates that this proposed rule would reduce costs by
providing a uniform compliance date that will permit an orderly and
economical industry adjustment to any new labeling requirements by
allowing sufficient lead time to plan for the use of existing label
inventories and the development of new labeling materials. Alternative
approaches that FDA considered include setting a uniform compliance
date such that firms have either more or less time to comply with
labeling regulations. In general, providing a minimum compliance period
of 2 years would be half as expensive as the proposed compliance
[[Page 16423]]
date, but it would delay implementation of labeling changes thus
decreasing the value of any benefits. A minimum compliance period of 6
months, although providing earlier labeling changes that would increase
the value of the benefits, would be twice as expensive as the proposed
1 year.
-Therefore, the agency finds that the proposed rule is not a
significant regulatory action as defined by the Executive Order.
Similarly, the agency certifies that the proposed rule will not have a
significant economic impact on a substantial number of small entities.
Therefore, under the Regulatory Flexibility Act, no further analysis is
required.
-This proposed action is not intended to change existing
requirements for compliance dates contained in final rules published
before the publication of a final rule in this proceeding. Therefore,
all final FDA regulations published in the Federal Register before
April 15, 1996, that have effective dates other than January 1, 1998,
will still go into effect on the date stated in the respective final
rule.
Interested persons may, on or before July 1, 1996, submit to the
Dockets Management Branch (address above) written comments regarding
this proposal. Two copies of any comments are to be submitted, except
that individuals may submit one copy. Comments are to be identified
with the docket number found in brackets in the heading of this
document. Received comments may be seen in the office above between 9
a.m. and 4 p.m., Monday through Friday.
Dated: April 10, 1996.
William K. Hubbard,
Associate Commissioner for Policy Coordination.
[FR Doc. 96-9319 Filed 4-10-96; 5:08 pm]
BILLING CODE 4160-01-F
Complete official Federal Register PDF
FR Doc. 96-9318 Food Labeling; Extension of Comment Periods
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Page 16423]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9318]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
21 CFR Part 101
[Docket Nos. 95N-0282, 95N-0347, 95N-0245]
Food Labeling; Extension of Comment Periods
AGENCY: Food and Drug Administration, HHS.
ACTION: Proposed rules; extension of comment periods.
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SUMMARY: The Food and Drug Administration (FDA) is announcing that it
is extending to June 10, 1996, the comment periods for certain proposed
regulations regarding food labeling that appeared in the Federal
Register of December 28, 1995. This action is being taken in response
to several requests for brief extensions of the comment periods on
these documents.
DATES: Comments by June 10, 1996.
ADDRESSES: Submit written comments to the Dockets Management Branch
(HFA-305), Food and Drug Administration, rm. 1-23, 12420 Parklawn Dr.,
Rockville, MD 20857. Two copies of any comments are to be submitted,
except that individuals may submit one copy. Comments should be
identified with the appropriate docket number found in brackets in the
heading of this document. Received comments may be seen in the office
above between 9 a.m. and 4 p.m., Monday through Friday.
FOR FURTHER INFORMATION CONTACT: Camille Brewer, Center for Food Safety
and Applied Nutrition (HFS-165), Food and Drug Administration, 200 C
St. SW., Washington, DC 20204, 202-205-5966, or Susan Thompson (address
above), 202-205-5587.
SUPPLEMENTARY INFORMATION: In the Federal Register of December 28,
1995, FDA published the following proposed rules:
(1) Food Labeling; Requirements for Nutrient Content Claims, Health
Claims, and Statements of Nutritional Support for Dietary Supplements
(Docket No. 95N-0282 (see 60 FR 67176));
(2) Food Labeling; Nutrient Content Claims: Definition for ``High
Potency'' Claim for Dietary Supplements and Definition of
``Antioxidant'' for Use in Nutrient Content Claims for Dietary
Supplements and Conventional Foods (Docket No. 95N-0347 (see 60 FR
67184)); and
(3) Food Labeling; Statement of Identity, Nutrition Labeling and
Ingredient Labeling of Dietary Supplements (Docket No. 95N-0245 (see 60
FR 67194)).
Interested persons were given until March 13, 1996, to comment on
the proposals. FDA received several requests for brief extensions of
the comment periods to properly respond to the proposals. After careful
consideration, FDA decided to extend the comment periods to April 11,
1996 (61 FR 11349, March 20, 1996). FDA placed a memorandum, dated
March 13, 1996, that reflected that decision in each of the referenced
dockets.
During the extended comment period, FDA has received additional
requests for longer extensions of the comment periods. The dietary
supplement industry has stated that it is conducting consumer research
to determine how consumers perceive nutrition label terms and what
label approaches are most usable by average consumers. Having carefully
considered these requests, the agency has decided to grant a further
extension of the comment period until June 10, 1996.
This extension will mean that it will be extremely difficult for
the agency to publish final rules and the industry to comply with these
final rules before the January 1, 1997 compliance date established in
the Dietary Supplement Health and Education Act (the DSHEA). Given this
fact, FDA is now considering exercising its enforcement discretion with
respect to the DSHEA such that it will not enforce the provisions of
the DSHEA until January 1, 1998, which coincides with the next uniform
compliance date for food labeling regulations that FDA is proposing
elsewhere in this issue of the Federal Register. FDA requests comments
on this use of its enforcement discretion.
Dated: April 10, 1996.
William K. Hubbard,
Associate Commissioner for Policy Coordination.
[FR Doc. 96-9318 Filed 4-10-96; 5:08 pm]
BILLING CODE 4160-01-F
Complete official Federal Register PDF
FR Doc. 96-9240 Examination of Current Policy Concerning the Treatment of Confidential Information Submitted to the Commission
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16424-16432]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9240]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 0
[GC Docket No. 96-55, FCC 96-109]
Examination of Current Policy Concerning the Treatment of
Confidential Information Submitted to the Commission
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
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SUMMARY: The Commission has adopted a Notice of Inquiry and a Notice of
Proposed Rulemaking to begin a proceeding to evaluate its practices and
policies concerning the treatment of competitively sensitive
information that has been provided to the Commission. The Commission's
objective is to develop a policy that will guide it in evaluating an
increasing number of requests that it afford confidential treatment to
information that has been provided to it by regulated entities and
others. The central issue that confronts the Commission is how to avoid
unnecessary competitive harm that could be caused by the disclosures of
such information and still fulfill its regulatory duties in a manner
that is efficient and fair to the parties and members of the public who
have an interest in its proceedings.
DATES: Comments are due on or before June 14, 1996 and Reply comments
are due on or before July 15, 1996.
FOR FURTHER INFORMATION CONTACT: Joel Kaufman, Office of General
Counsel, (202) 418-1720.
SUPPLEMENTARY INFORMATION: The complete text of this Notice of Inquiry
and Notice of Proposed Rulemaking is available for inspection and
copying during normal business hours in the FCC Reference Center (room
239), 1919 M Street, NW., Washington, DC, and also may be purchased
from the Commission's copy contractor, International Transcription
Service at (202) 857-3800, 2100 M Street, NW., Suite 140, Washington,
DC 20037.
Synopsis
I. Background
A. Authority To Disclose and Withhold Competitively Sensitive
Information
1. Freedom of Information Act
1. Under the Freedom of Information Act (FOIA), 5 U.S.C. 552, the
Commission is required to disclose reasonably described agency records
requested by any person, unless the records contain information that
fits within one or more of the nine exemptions from disclosure provided
in the Act. For the purposes of this proceeding, the most important of
the FOIA exemptions is commonly referred to Exemption 4. Exemption 4
provides that the government need not disclose ``trade secrets and
commercial or financial information obtained from a person and
privileged or confidential.'' 5 U.S.C. Sec. 552(b)(4).
2. For many years, the applicable standard for whether commercial
or financial information was ``confidential'' under Exemption 4 of FOIA
was set forth in National Parks and Conservation Association v. Morton,
498 F.2d 765 (D.C. Cir. 1974). In National Parks, the Court set forth a
two-part test, stating that ``[c]ommercial or financial matter is
`confidential' * * * if disclosure of the information is likely * * *
either * * * (1) to impair the Government's ability to obtain necessary
information in the future; or (2) to cause substantial harm to the
competitive position of the person from whom the information was
obtained.'' Id. at 770. In Critical Mass Energy Project v. Nuclear
Regulatory Commission, 975 F.2d 871 (D.C. Cir. 1992), cert. denied, 113
S.Ct. 1579 (1993), the court limited National Parks to situations where
a party must submit information to a federal agency. Under Critical
Mass, ``financial or commercial information provided to the Government
on a voluntary basis is `confidential' for the purpose of Exemption 4
if it is of a kind that would customarily not be released to the public
by the person from whom it was obtained.'' Id. at 879.
2. The Trade Secrets Act and Commission Authority To Disclose Exemption
4 Records
3. While FOIA Exemption 4 allows an agency to withhold business
competitive information from public disclosure, the Trade Secrets Act,
18 U.S.C. 1905, acts as an affirmative restraint on an agency's ability
to release such information. It states:
Whoever, being an officer or employee of the United States or of
any department or
[[Page 16425]]
agency thereof, * * * publishes, divulges, discloses, or makes known
in any manner or to any extent not authorized by law any information
coming to him in the course of his employment or official duties * *
* [that] concerns or relates to the trade secrets, processes,
operations, style of work, or apparatus * * * shall be fined not
more than $1000, or imprisoned not more than one year, or both; and
shall be removed from office or employment.
18 U.S.C. 1905 (emphasis added).
4. In Chrysler Corp. v. Brown, 441 U.S. 281 (1979), the Supreme
Court discussed the relationship between the Trade Secrets Act and
Exemption 4 as follows:
Although there is a theoretical possibility that material might
be outside Exemption 4 yet within the substantive provisions of [the
Trade Secrets Act] * * * that possibility is at most of limited
practical significance in view of the similarity of language between
Exemption 4 and the substantive provisions of [the Trade Secrets
Act].
Id. at 319 n. 49. Thus, if information may be withheld under Exemption
4, the agency is barred from disclosing it by the terms of the Trade
Secrets Act unless the disclosure is otherwise authorized by law.
5. Sections 0.457(d)(1) and 0.457(d)(2)(i) of the Commission's
rules, 47 CFR Secs. 0.457(d)(1), 0.457(d)(2)(i), constitute the
requisite legal authorization for disclosure of competitively sensitive
information under the Trade Secrets Act. These rules permit disclosure
of trade secrets and commercial or financial information upon a
``persuasive showing'' of the reasons in favor of the information's
release.
5. The Commission's legal authority to adopt a rule that permits
disclosure of materials covered by the Trade Secrets Act is grounded in
Section 4(j) of the Communications Act, 47 U.S.C. Sec. 4(j). In Federal
Communications Commission v. Schreiber, 381 U.S. 279, 291-92 (1965),
the Supreme Court expressly addressed the Commission's authority under
that Section, noting: ``Grants of agency authority comparable in scope
to Sec. 4(j) [of the Communications Act] have been held to authorize
public disclosure of information, or receipt of data in confidence, as
the agency may determine to be proper upon a balancing of the public
and private interests involved.''
B. Review of Commission's Policies Governing Disclosure
1. Commission Rules and Procedures
6. The Commission has adopted general rules to implement the
provisions of the FOIA. Section 0.457(d) of the Commission's Rules, 47
CFR Sec. 0.457(d), implements FOIA Exemption 4. Quoting Exemption 4, it
provides that records not routinely available for public inspection
include ``[t]rade secrets and commercial or financial information
obtained from any person and privileged or confidential.'' Section
0.457 of the Commission's rules also provides that certain categories
materials listed therein are deemed to be within Exemption 4 and
therefore are ``not routinely available for public inspection.'' Such
Exemption 4 materials may not be disclosed by Commission employees
unless an appropriate request for inspection is made and, after
weighing the considerations favoring disclosure and non-disclosure, the
Commission determines that a ``persuasive showing'' has been made to
warrant disclosure. 47 CFR Secs. 0.451(b)(5), 0.457(d)(1);
0.457(d)(2)(i); 0.461(f)(4).
7. Any person submitting information or materials to the Commission
not falling within the specific categories set forth in Section 0.457
may also request on an ad hoc basis that such information not be made
routinely available for public inspection under Exemption 4. Each such
request must contain a statement of the reasons for withholding the
materials from inspection and of the facts upon which those reasons are
based. A request that information not be made routinely available for
public inspection will be granted if it presents by a preponderance of
the evidence a case for non-disclosure consistent with the provisions
of FOIA. 47 CFR Sec. 0.459(b). If a request that materials not be
routinely available for public inspection is granted, the material will
be treated the same as those categories of information presumed not
routinely available for public disclosure. 47 CFR Sec. 0.459(h). The
Commission's rules also contain procedures to protect the
confidentiality of information until administrative and judicial
appeals procedures have been completed. 47 CFR Sec. 0.459(g).
2. General Policies Regarding Disclosure of Exemption 4 Records
8. As indicated above, the Commission's rules provide for the
disclosure of Exemption 4 material if a ``persuasive showing is made.''
The Commission generally has exercised its discretion to release FOIA
Exemption 4 information only in very limited circumstances such as
where a party placed its financial condition at issue in a Commission
proceeding or where the Commission has identified a compelling public
interest in disclosure. See e.g., The Western Union Telegraph Company,
2 FCC Rcd 4485, 4487 (1987) (citing Kannapolis Television Co., 80 FCC
2d 307 (1980)); MCI Telecommunications Corporation, 58 RR 2d 187
(1985). In determining whether a public interest in the privacy of
proprietary business data exists, the Commission has adhered to a
policy whereby it ``will not authorize the disclosure of confidential
financial information on the mere chance that it might be helpful, but
insists upon a showing that the information is a necessary link in a
chain of evidence that will resolve a public interest issue.'' E.g.,
Classical Radio for Connecticut, Inc., 69 FCC 2d 1517, 1520 n.4 (1978).
3. The Protective Order Approach
9. In recent years, the Commission also has increasingly relied on
special remedies such as redaction,1 aggregated data or
summaries,2 and protective orders 3 to balance the interests
in disclosure and the interests in preserving the confidentiality of
competitively sensitive materials. In particular, the Commission has
refined the manner in which it releases confidential information by
relying more frequently on protective orders or agreements. Protective
orders or agreements essentially require parties to whom confidential
information is made available to limit the persons who will have access
to the information and the purposes for which the information will be
used. Disclosure under a protective order or agreement may serve the
dual purpose of protecting competitively
[[Page 16426]]
valuable information while still permitting limited disclosure for a
specific public purpose. Cincinnati, 10 FCC Rcd at 10575; Hawaii, 10
FCC Rcd at 2366. While protective orders permit the Commission to make
confidential information available on a limited basis while minimizing
the competitive harm that might ensue from widespread disclosure, the
Commission is mindful of the fact that extensive reliance on protective
orders may also impose burdens on the public and the Commission. See
e.g., Motorola Satellite Communications Inc., 7 FCC Rcd 5062, 5064
(1992) (quoting Letter of Thomas P Stanley, Chief Engineer (June 3,
1992)).
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\1\ Allnet Communications Services, Inc., 8 FCC Rcd 5629, 5630
(1993) (withholding from public release some redacted material
provided to the parties under a protective order, but releasing
other redacted material that did not contain confidential
information).
\2\ Id. (finding certain averaged data not to be competitively
sensitive); Bellsouth Corp., 8 FCC Rcd 8129, 8130 (1993) (releasing
summary of audit findings despite claim of confidentiality since
summary nature of information significantly diminished the
likelihood of competitive harm).
\3\ See, e.g., Cincinnati Bell Telephone Co. (``Cincinnati''),
10 FCC Rcd 10574 (Com. Car. Bur. 1995); Petition of Public Utilities
Commission, State of Hawaii, for Authority to Extend its Rate
Regulation of Commercial Mobile Radio Services in the State of
Hawaii (``Hawaii''), 10 FCC Rcd 2359 and 10 FCC Rcd 2881 (Wireless
Bur. 1995); In re Applications of Craig O. McCaw, Transferor, and
American Telephone and Telegraph Company, Transferee, for Consent to
the Transfer of Control of McCaw Cellular Communications, Inc. and
its Subsidiaries, 9 FCC Rcd 2610 (Com. Car. Bur. 1994); Commission
Requirements for Cost Support Material to be Filed with Open Network
Architecture Access Tariffs (``Open Network Architecture''), 7 FCC
Rcd 1526 (Com. Car. Bur. 1992), aff'd, 9 FCC Rcd 180 (1993);
Motorola Satellite Communications, Inc. Request for Pioneer's
Preference to Establish a Low-Earth Orbit Satellite System in the
1610-1626.5 MHz Band (``Motorola''), 7 FCC Rcd 5062 (1992).
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II. Issues for Comment
A. General Issues
10. The Commission's policies implementing its rules governing
confidentiality affect both the competitive nature of the
telecommunications industry and performance of the Commission's public
responsibilities. The Commission has long been sensitive to the concern
that fulfillment of its regulatory responsibilities does not result in
unnecessary disclosure of confidential information that places
Commission regulatees at an unfair competitive disadvantage. In that
respect, we recognize that the ``private'' interests of regulatees in
ensuring their own competitive vitality generally coincide with the
public interest in promoting a robust and competitive
telecommunications market. Further, allowing confidential submission
increases the willingness of holders of confidential information to
provide that information to the Commission and, even where submission
is mandatory, often avoids the burden and delay of invoking such
mandatory means. For these reasons, the Commission's policy has been to
avoid disclosures of confidential information except where necessary to
the effective performance of its regulatory duties and to employ
protective orders where appropriate.
11. At the same time, allowing confidential submission necessarily
decreases the amount of information publicly available to facilitate
public participation in the regulatory process. Public participation in
Commission proceedings cannot be effective unless meaningful
information is made available to the interested persons. As noted, in
recent years, the Commission also has relied more frequently on
protective orders and agreements. Protective orders and agreements have
the advantage of permitting the release--albeit on a limited basis--of
more information than would be possible without them, given our
obligations to protect trade secrets and commercial or financial
information. On the other hand, protective orders are inconvenient and
sometimes cumbersome and increase the administrative burdens on the
Commission and those subject to them. In addition, protective orders
may make it less likely that the Commission will receive a diversity of
public comment on the protected materials. Given the Commission's
obligation to balance these concerns, we therefore seek comment whether
the Commission should adopt additional policies or rules governing the
treatment of information submitted to the Commission in confidence.
12. Specifically, we seek comment on the standard in the
Commission's current rules that permits disclosure of trade secrets and
confidential commercial or financial information upon a ``persuasive
showing'' of the reasons in favor of the information's release. See 47
CFR Sec. 0.457(d)(1), (d)(2)(i). We ask commenters to address whether
this continues to be the appropriate standard or whether the Commission
should adopt some other standard. Assuming we retain this standard, we
seek comment on what should constitute a ``persuasive showing'' of the
reasons in favor of the information's release. As discussed in more
detail below, we also ask comment on standards that should apply in
particular types of Commission proceedings.
13. We also seek comment on whether the Commission's current
approach to the use of protective orders is the appropriate approach or
whether the Commission should adopt some other approach. Advantages and
disadvantages of the current approach should be discussed. We
specifically request comment on any problems or burdens that commenters
perceive with the current protective order approach and ways in which
these problems or burdens might be minimized. Commenters should also
address whether the Commission's willingness to release confidential
information subject to a protective order reduces submitters
willingness to voluntarily submit information to the Commission. And,
we seek comment on whether the use of protective orders unduly
interferes with the Commission's ability to obtain public comment or
with the public's right to know what actions the Commission is taking
and why it is taking them.
14. As a related matter, we note that a recent D.C. Circuit opinion
suggests that the Commission may have the option of releasing all or
part of an order under seal. SBC Communications, Inc. v. FCC, 56 F.3d
1484, 1492 (D.C. Cir. 1995). We seek comment whether it is appropriate
for the Commission to draft a decision that relies on confidential data
(or data disclosed pursuant to protective order) without publicly
revealing the information. If the Commission determines that the data
is necessary to support the order, should the Commission place the
relevant order under seal or should the information lose protected
status at this point?
15. Commenters also are invited to address and comment on any other
issues relating to the Commission's policies and rules governing
confidential treatment of information submitted to the Commission.
B. Model Protective Order
16. As discussed, release of confidential information under a
protective order or agreement can often serve to resolve the conflict
between safeguarding competitively sensitive information and allowing
interested parties the opportunity to fully respond to assertions put
forth by the submitter of confidential information. We seek comment as
to whether it would be helpful for the Commission to develop a standard
form protective order that could then be modified as appropriate to fit
the circumstances of particular cases. We have supplied, as an
Attachment to this Notice of Proposed Rulemaking, a draft model
protective order. We look forward to receiving comments on this draft
order, and in particular what modifications need to be made to make it
suitable to the varied types of Commission proceedings in which issues
of confidentiality arise.
17. We also seek comment on what procedures the Commission should
use to resolve disputes about the issuance and content of protective
orders and how to ensure compliance with them. We are especially
interested in whether commenters believe that our rules should be
amended to address such issues directly.
C. Issues That Arise With Respect to Specific Types of FCC Proceedings
18. As indicated above, we also seek comment on whether different
standards should apply for various categories of proceedings with
respect to (i) what constitutes a ``persuasive showing'' of the reasons
in favor of confidential information's release and (ii) what, if any,
protective conditions we should place upon released material and
whether this should vary depending on the nature of a proceeding.
[[Page 16427]]
Specifically, we seek comment on whether the Commission should apply
different disclosure policies to rulemakings, licensing proceedings,
tariff proceedings and perhaps other categories of proceedings. For
example, we seek comment on whether the Commission should require
public disclosure of information without protective orders in some
types of Commission proceedings even though that information is within
FOIA Exemption 4. Specific issues that arise in connection with various
types of proceedings are discussed below. In addition, we request
comments on whether special disclosure policies should apply to other
categories of proceedings, not specifically mentioned below, and, if
so, what those procedures should be.
1. Title III Licensing Proceedings
19. Section 309 of the Communications Act provides that the
Commission must allow at least 30 days following issuance of a public
notice of certain radio license applications for interested parties to
file petitions to deny an application. 47 U.S.C. 309(b), (d)(1).
Section 309 thus contemplates that interested members of the public
will have a full opportunity to challenge the grant of license
applications. In addition, relevant case law indicates generally that
petitioners to deny must be afforded access to all information
submitted by licensees that bear upon their applications. See, e.g.,
Bilingual Bicultural Coalition on Mass Media, Inc. v. FCC, 595 F.2d
621, 634 (D.C. Cir. 1978) (en banc).
20. We seek comment on whether the fact that the statutory scheme
expressly contemplates public participation in Title III license
application proceedings makes it inappropriate to withhold information
filed in such proceedings from routine public disclosure. In this
regard, we note that Commission rules currently specify that broadcast
and other Title III license applications are routinely available for
public inspection. See 47 CFR Secs. 0.453, 0.455. Nevertheless,
applicants do sometimes request confidential treatment pursuant to
Section 0.459 of our rules for information submitted with their
applications in both contested and uncontested application proceedings.
In light of the special issues regarding public participation that
arise in Section 309 proceedings, we therefore seek comment on whether
our general policy should be to discourage submission of confidential
information in the application context but still to leave the
Commission some discretion to use protective orders where it seems
warranted. Or, is it appropriate to adopt a general policy with regard
to licensing proceedings, permitting disclosure of trade secrets and
commercial or financial information only pursuant to protective orders?
21. If the Commission were to adopt a policy favoring the use of
protective orders in licensing proceedings, we assume that petitioners
would be given an opportunity to supplement their petitions to deny
after reviewing the protected material. We also seek comment on whether
members of the public should be afforded access to such protected
material (pursuant to protective orders) in order to enable them to
determine whether they wish to file petitions to deny. Would such
policies tend to unduly delay Commission action on license
applications? We also seek comment on whether it is ever appropriate to
withhold from release entirely some Exemption 4 information, as has
sometimes been done in the context of licensing proceedings and if so
what standard should be used. See e.g., Application of Mobile
Communications Holdings, Inc. for Authority to Construct the ELLIPSO
Elliptical Orbit Mobile Satellite System, 10 FCC Rcd 1547, 1548 (Int'l
Bur. 1994) (declining to release, even under protective order, detailed
cost and pricing information of applicant for a license). Finally, we
seek comment on whether different policies apply to different
categories of material. For example, commenters should address whether
our policy would be to use protective orders in licensing proceedings
only in instances in which the material in question satisfies the trade
secrets or ``substantial competitive harm'' prongs of Exemption 4 and
to require public disclosure in all other cases in which the Exemption
is invoked.
2. Tariff Proceedings
22. Section 203 of the Communications Act, 47 U.S.C. 203, requires
that common carriers file and maintain tariffs with the Commission.
Section 204, 47 U.S.C. 204, gives the Commission the authority to
review tariffs for lawfulness, which involves, among other things, a
determination of whether the tariff is just and reasonable pursuant to
Section 201(b), 47 U.S.C. 201(b), and is not unjustly discriminatory
pursuant to Section 202, 47 U.S.C. 202. The Commission has adopted
rules specifying what support materials carriers must file to enable it
to carry out its tariff review authority. See 47 CFR Secs. 61.38,
61.49. Pursuant to Section 0.455(b)(11) of the Commission's rules, 47
CFR Sec. 0.455(b)(11), cost support data are routinely available for
public inspection.
23. The Commission has generally made tariff support material
publicly available. See, e.g., Cincinnati, 10 FCC Rcd at 10575. It has
departed from this policy only in a few limited circumstances, for
example, to protect third-party vendor data where the data were made
available subject to a protective agreement. See Letter from Kathleen
M.H. Wallman to Jonathan E. Canis, et al., 9 FCC Rcd 6495 (Com. Car.
Bur. 1994) (denying unrestricted access to cost support data filed in
connection with virtual collocation tariff, but allowing access
pursuant to protective order), application for review pending.
Recently, a number of carriers have filed requests for confidential
treatment of their cost support data with their tariff transmittals.
This presents a number of problems during the tariff review process.
The maximum period for tariff review is defined by statute. The
Commission has a maximum of one hundred and twenty days to determine
the lawfulness of the tariff transmittal. See 47 U.S.C. 203(b)(2); 47
CFR Sec. 61.58(a)(2). The tariff goes into effect on its effective date
unless the Commission issues an order rejecting or suspending and
investigating the tariff. 47 U.S.C. 204. Section 402(b) of the
Telecommunications Act of 1996 provides that, effective one year after
enactment, a local exchange carrier may file charges, classifications,
regulations or practices on a streamlined basis, which shall be
effective 7 days (in the case of a reduction in rates) or 15 days (in
the case of an increase in rates) after the date on which they are
filed unless the Commission takes action before the end of the period.
24. A request for confidential treatment may not be resolved within
the 120 day statutory time frame established for the tariff review
process under current law, especially if a ruling is appealed. A
request for confidentiality is unlikely to be resolved under the 7 or
15 day time frame that is to become effective for streamlined local
exchange carrier filings under the Telecommunications Act of 1996. We
therefore seek comment on how to resolve a request for confidentiality
made in the context of the tariff review process. One possibility that
takes account of the statutory time frame for the tariff review process
is to require that carriers file any confidential information first,
independent of the filing of the tariff transmittal. Under this
alternative, the tariff filing could not be made until the request for
confidentiality was resolved.
[[Page 16428]]
Commenters should also address whether we should continue to make
exceptions to the Commission's rule requiring such data to be made
publicly available. In this regard, we seek comment on how petitioners
will be able to formulate meaningful objections to the proposed tariff
rates, terms and conditions, often a critical part of the tariff review
process, if they are unable to review all support material prior to the
date that petitions are due. One possible solution is to develop a
generic protective agreement that parties can use to protect the
information during the tariff review process.
25. Commenters also should address whether different disclosure
policies should apply to different phases of the tariff review process.
Specifically, should different disclosure policies be applied to the
tariff review and tariff investigation stages? Actions denying
petitions to suspend or reject tariffs, thereby allowing a tariff to go
into effect, are considered non-final, non-judicially reviewable
actions because a party can seek further redress by filing a formal
complaint pursuant to Section 208 of the Act. In contrast, a tariff set
for investigation is assigned a docket number and a pleading cycle is
established providing for direct cases, comments and replies. At the
conclusion of the investigation, the Commission issues an order which
is subject to judicial review. Therefore since decisions to allow
tariffs to go into effect are non-reviewable, non-final orders, should
the Commission's policies focus on the need for disclosure to
petitioners (whether or not pursuant to protective orders) primarily in
instances in which a particular tariff has been set for investigation?
3. Rulemaking Proceedings
26. Section 553(b) of the Administrative Procedure Act (APA), 5
U.S.C. 551 et seq., generally requires notice and an opportunity to
comment before promulgation of a final agency rule. An agency's
decision to withhold information in the context of a rulemaking can
have a significant impact on whether meaningful notice and opportunity
to comment on the bases of an agency's decision have been given. In
addition, issues arise to the extent that an agency relies on
information that has not been made available to commenters. For these
reasons, the Commission generally has not afforded confidential
treatment to material submitted in rulemakings, although it has on rare
occasions utilized protective orders or agreements in the context of
rulemakings. Rulemakings also may create special problems for use of
protective orders, however, because a large number of commenters may be
involved. On the other hand, a blanket refusal to apply protective
orders in the context of rulemakings might cause the Commission to have
access to less information than if it used protective orders. We seek
comment on these issues as well as the general issue of whether it is
ever appropriate to withhold competitively sensitive information filed
in rulemaking proceedings from routine public disclosure. We note that
the Commission has the option of refusing to consider information in a
rulemaking that is submitted along with a request for confidentiality.
4. Requests for Special Relief and Waivers
27. Parties affected by our rules have the right to seek special
relief from the rules' scope or waiver of these rules. In certain
cases, parties may base their request for relief upon--or otherwise put
into issue--information that is confidential. This information may
include financial information explaining cash flow, profitability, or
bankruptcy problems, or corporate or partnership structure designed to
demonstrate insulation from control or interest. For example, in
various cable television special relief proceedings, a party may seek
relief based on severe financial difficulties, or upon corporate or
partnership structure and insulation from control. See 47 CFR
Sec. 76.7(a) (cable petitions for special relief). We seek comment on
whether and under what circumstances it is appropriate to withhold
information filed in such proceedings from routine public disclosure,
particularly when the information is potentially decisional to a point
placed in issue by the party seeking to withhold such information and
may have precedential value for future cases.
5. Formal Complaints
28. Section 208 of the Communications Act, 47 U.S.C. Sec. 208,
permits any party to bring before the Commission a complaint against a
common carrier for acts or omissions in violation of either the Act or
a Commission rule or order. Our rules, in turn, establish both informal
and formal procedures for handling such complaints. 47 CFR Sec. 1.711
et seq. Confidentiality issues frequently arise in formal complaint
proceedings, especially in connection with discovery. See 47 CFR
Sec. 1.731; see also Amendment of Rules Governing Procedures to Be
Followed When Formal Complaints Are Filed Against Common Carriers, 58
FR 25569 (1993), 8 FCC Rcd 2614, 2621-22 (1993).
29. We ask commenters to consider the most effective means of
balancing our sometimes conflicting obligations to ensure protection of
proprietary business data, to prevent undue delay in resolving formal
complaints, and to produce decisions that adequately explain, by
reference to a specific record, the basis for our disposition of a
complaint. For instance, in some cases, a factually and legally sound
decision cannot be drafted without referring to information subject to
a claim of confidentiality. The particular information deemed by the
staff as necessary for resolution may be only a small portion of
voluminous materials that are subject to a protective order and
provided to the Commission in confidence. Thus, considerable time might
be necessary for the staff to examine all materials subject to claims
of confidentiality and rule on those claims. If the staff were to rule
on the confidentiality of only the particular information determined to
be decisionally significant, however, this ruling might prematurely
indicate to the parties the staff's recommendation for Commission or
Bureau disposition of the complaint. In either instance, the complaint
process could be delayed by administrative and judicial appeals of a
confidentiality ruling. We ask commenters to consider whether any such
delays and burden on Commission resources could or should be mitigated
by issuing parts of adjudicatory decisions that rely on confidential
information under seal. We seek comment on whether such a procedure
would serve the public interest, given that complaint cases--although
adjudications of disputes between particular parties--may result in
rulings that indirectly, through the establishment of precedent,
determine the legality of the practices of non-parties. We welcome
suggestions as to how we can preserve the broad utility of the formal
complaint process to elucidate the Commission's judgments regarding
carrier conduct without either compromising sensitive business data or
miring complaint proceedings in protracted peripheral disputes
involving confidentiality.
6. Audits
30. The Commission has a statutory right of access to all accounts,
records and memoranda, including all documents, papers, and
correspondence kept or required to be kept by common carriers. 47
U.S.C. 220(c). The detailed financial and commercial information
[[Page 16429]]
inspected during an audit is generally sensitive in nature and is not
customarily released to the public. This fact is highlighted by section
Sec. 220(f) of the Communications Act, 47 U.S.C. Sec. 220(f), which
expressly prohibits the release of information gathered during an audit
absent a Commission or court order. The Commission has held that the
public disclosure of data gathered in an audit is likely to impair its
future ability to obtain such data because while the Commission could
rely on compulsory measures to obtain the desired materials, such
measures would involve significant expense and delay. J. David Stoner,
5 FCC Rcd 6458, 6459 (1990); Martha H. Platt, 5 FCC Rcd 5742, 5743
(1990); Scott J Rafferty, 5 FCC Rcd 4138, 4138 (1990); Western Union
Telegraph Co., 2 FCC Rcd 4485, 4486 (1987).
31. The Commission has departed from its general policy and
publicly released audit reports only in extraordinary circumstances
when (i) the summary nature of the data contained in a particular
report is not likely to cause the providing carrier substantial
competitive injury, (ii) the release of the summary data and
information is not likely to impair our ability to obtain information
in future audits and (iii) overriding public interest concerns favor
release of the report. See Bell Telephone Operating Companies, FCC 94-
418 (released Oct. 17, 1995); see also, e.g., Bell Communications
Research, Inc, 7 FCC Rcd 891 (1992); BellSouth Corp., 8 FCC Rcd 8129,
8130 (1990). In the past, we have normally allowed submitters to
request confidentiality for such data and have dealt with such requests
on a case-by-case basis, consistent with the applicable standards in
FOIA. See id. We seek comment on whether we should continue to follow
this policy and on whether and in what circumstances information
gathered during an audit should be released even under a protective
order.
7. Surveys and Studies.
32. The Commission has authority to conduct studies and surveys
needed to fulfill its regulatory functions. See, e.g., 47 U.S.C. 403.
Unlike information submitted in support of a specific regulatory action
involving the submitting entity, surveys may request information from a
broad category of regulated entities who are only submitting data
because they were selected as part of a survey sample. Because these
studies may involve the submission of information deemed competitively
sensitive by responding entities, we seek comment on standards that
should be applied to protect the confidentiality of information
submitted in this context. We also seek comment regarding the treatment
of such information when the information is used ultimately in the
development of Commission rules or policies.
D. Scope of Materials Not Routinely Available for Public Inspection
33. The need for and burdens associated with protective orders are
necessarily affected by the amount of information eligible for
protected status. Accordingly, we seek comment on several issues raised
by our current rules on materials not routinely available for public
release.
34. Categories of Materials that are not Routinely Available for
Public Inspection. Section 0.457(d) of our rules, 47 CFR Sec. 0.457(d),
contains a list of categories of materials that are not routinely
available for public inspection and as such do not require a request
for such treatment under Section 0.459, 47 CFR Sec. 0.459. To the
extent it is possible to define broad categories of information that
should not be routinely available for public inspection, we can reduce
administrative burdens on the Commission and submitters. On the other
hand, over-inclusive categories would not be consistent with the
presumption FOIA creates in favor of disclosure. We seek comment
whether the current list of materials that are not routinely available
for public inspection is appropriate or whether the list ought to be
expanded or contracted.
35. Substantiating Confidentiality Claims. Section 0.461(a) of the
Commission's confidentiality regulations, 47 CFR Sec. 0.461(a),
provides that a person submitting information or materials to the
Commission may request that the information not be made routinely
available to the public. Section 0.461(b), 47 CFR Sec. 0.461(b),
requires that each such request contain a statement of the reasons for
withholding the materials from inspection and of the facts upon which
those reasons are based. Because the Commission sometimes receives
frivolous or unsubstantiated requests for confidentiality, we seek
comment on whether the Commission should establish a policy or rule
specifying more explicitly types of information that should be provided
to comply with Section 0.461(b).
36. Information that the submitter could be required to provide to
substantiate requests for confidentiality might include:
(1) What portion of the information the submitter believes is
entitled to confidential treatment;
(2) The length of time for which confidential treatment is desired;
(3) Measures taken by the business to prevent undesired disclosure
to others;
(4) The extent to which the information has already been disclosed
to others;
(5) Specific information showing the degree to which the
information concerns a service that is subject to competition; and
(6) Specific information concerning why disclosure would result in
substantial harmful effects to the business' competitive position.
37. Establishing a policy specifying what types of information
should be provided to comply with Section 0.461(b) might be beneficial
for several reasons. First, it would enable the Commission to deal in a
more efficient fashion with requests that materials not be made
routinely available to the public and with requests to release
materials not made routinely available to the public. For example, even
though our rules provide for seeking confidential treatment for only
portions of documents when other portions of documents are
nonconfidential, 47 CFR Sec. 0.459(a), submitters frequently assert an
entire submission as confidential, even though many documents are not
composed entirely of confidential business information. When the
Commission is dealing with masses of data from multiple submitters,
uncertainty as to what specific confidentiality claims are being
asserted can be a significant barrier to efficient action. In addition,
a policy specifying what types of information should be provided to
comply with Section 0.461(b) might help reduce those confidentiality
claims made as a matter of course and induce submitters to be more
selective in their confidentiality claims. We seek comment on these
benefits and on whether more precise substantiation requirements might
burden a submitter's assertion of a claim for information which is
truly entitled to confidential treatment. We also seek comment on what
measures might be appropriate to deter frivolous requests for
confidential treatment.
38. Aggregated or Sanitized Information. The Commission sometimes
finds it beneficial to disclose to the public non-confidential
information derived from data supplied by businesses and claimed as
confidential. Such releases might take the form of industry-wide data
aggregated into a non-confidential figure, or sanitized documents where
all information that could identify the submitters has been removed. We
seek comment on procedures the
[[Page 16430]]
Commission could use to ensure that the portions of the sanitized or
aggregated documents which are disclosed do not contain information
claimed as confidential and whether the rules should be amended to
incorporate such procedures.
E. Proposed Clarifications to Commission Rules
39. Any person submitting information or materials to the
Commission that do not fall within the specific categories of
information not subject to routine disclosure may also request, on an
ad hoc basis, that such information not be made routinely available for
public inspection under Exemption 4. 47 CFR Sec. 0.459(a). The
Commission is considering amending Section 0.459 of its rules to make
express in the rules an existing practice whereby the Commission
sometimes defers acting on a request for confidentiality if no request
for inspection has been made. This practice conserves Commission
resources because Exemption 4 determinations are often complex and
require substantial Commission analysis. In such instances, the party
submitting the information for which confidentiality is claimed is not
harmed because the information is not available for public inspection
pending Commission action on the confidentiality request. Likewise, the
public is not harmed, because, under the FOIA, the Commission would be
required to rule on any request that the information be disclosed. We
seek comment on codifying this practice of deferring action on requests
for confidentiality in the absence of a FOIA or other request for the
information.
40. The Commission also proposes a clarifying amendment to the
title of Section 0.457(d) of its rules, 47 CFR Sec. 0.457(d), to better
describe the Section's contents. The amended title would read:
``Certain trade secrets and commercial or financial information
obtained from any person and privileged or confidential--categories of
materials not routinely available for public inspection.''
Administrative Matters
Initial Regulatory Flexibility Act Analysis
41. Pursuant to Section 603 of the Regulatory Flexibility Act, the
Commission has prepared the following initial regulatory flexibility
analysis (IRFA) of the expected impact of these proposed policies and
rules on small entities. Written public comments are requested on the
IRFA. These comments must be filed in accordance with the same filing
deadlines as comments on the rest of the Notice of Proposed Rulemaking,
but they must have a separate and distinct heading designating them as
responses to the regulatory flexibility analysis. The Secretary shall
cause a copy of the Notice of Proposed Rulemaking, including the
initial regulatory flexibility analysis, to be sent to the Chief
Counsel for Advocacy of the Small Business Administration in accordance
with Section 603(a) of the Regulatory Flexibility Act, Pub. L. No. 96-
354, 94 Stat. 1164, 5 U.S.C. Section 601 et seq. (1981).
Reason for Action
42. The Communications Act of 1934 and the Commission's rules
require the Commission to balance various factors in determining
whether and under what conditions to withhold or to disclose
competitively sensitive information that has been submitted to the
Commission and that is not required to be publicly disclosed under the
Freedom of Information Act. This Notice of Proposed Rulemaking proposes
to examine the Commission's regulations and policies to determine
whether the Commission should modify its existing disclosure policies
and rules.
Objectives
43. To implement the Communications Act of 1934 and the Freedom of
Information Act and to develop a policy that will guide the Commission
in evaluating the increasing number of requests that it afford
confidential treatment to information that has been provided to it by
regulated entities and others.
Legal Basis. Action as proposed for this rulemaking is contained in
Sections 4(i), 4(j), 303(r) and 403 of the Communications Act of 1934,
as amended.
Description, Potential Impact and Number of Small Entities Affected
44. The Commission's policies and rules regarding the disclosure of
confidential commercial and financial information affects small
entities that are regulated by the Commission and small entities that
participate in Commission proceedings. We are presently unable to
estimate the
Reporting, Record Keeping and Other Compliance Requirements
45. None.
Federal Rules Which Overlap, Duplicate or Conflict With This Rule
46. None.
Any Significant Alternatives Minimizing Impact on Small Entities and
Consistent with Stated Objectives
47. None.
Paperwork Reduction Act
48. The requirements proposed herein have been analyzed with
respect to the Paperwork Reduction Act of 1995 and found to impose no
new or modified information collection requirement on the public.
Procedural Provisions
49. This Notice of Inquiry and Notice of Proposed Rulemaking is
issued pursuant to authority contained in Sections 4(i), 4(j), 303(r)
and 403 of the Communications Act of 1934, as amended, 47 U.S.C.
154(i), 154(j), 303(r) and 403. Pursuant to applicable procedures set
forth in Sections 1.415, 1.419 and 1.430 of the Commission's Rules, 47
CFR Secs. 1.415, 1.419 and 1.430, interested parties may file comments
on or before June 14, 1996, and reply comments on or before July 15,
1996. To file formally in this proceeding, participants must file an
original and four copies of all comments, reply comments and supporting
comments. If participants want each Commissioner to receive a personal
copy of their comments, an original plus ten copies must be filed.
Comments and reply comments should be sent to the Office of the
Secretary, Federal Communications Commission, Washington, DC 20554.
Comments and reply comments will be available for public inspection
during regular business hours in the FCC Reference Center (Room 239) of
the Federal Communications Commission, 1919 M Street, NW., Washington,
DC 20554.
50. Ex parte Rules--Non-Restricted Proceeding. This is a non-
restricted notice and comment rulemaking proceeding. Ex parte
presentations are permitted, except during the Sunshine Agenda period,
provided that they are disclosed as provided in Commission rules. See
generally 47 CFR Sections 1.1202, 1.1203, and 1.1206(a).
Ordering Clauses
51. It is ordered that, pursuant to Sections 4(i), 4(j), 303(r) and
403 of the Communications Act of 1934, 47 U.S.C. Secs. 154 (i), 154
(j), 303(r) and 403, notice is hereby given of proposed amendments to
Part 0, in accordance with the proposals and discussions, in this
Notice of Proposed Rulemaking, and that comment is sought regarding
such proposals, discussion, and statement of issues.
52. It is further ordered that, the Secretary shall send a copy of
this
[[Page 16431]]
Notice of Proposed Rulemaking, including the Initial Regulatory
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small
Business Administration in accordance with paragraph 603(a) of the
Regulatory Flexibility Act. Pub. L. No. 96-354, 94 Stat. 1164, 5 U.S.C.
601 et seq. (1981).
List of Subjects in 47 CFR Part 0
Freedom of information, Public information and inspection of
records.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Not to be published in the Code of Federal Regulations.
Attachment--Model Protective Order and Declaration
Before the Federal Communications Commission, Washington, DC 20554
In the Matter of [Name of Proceeding], Docket No. ______.
Protective Order
This Protective Order is a device to facilitate and expedite the
review of documents containing trade secrets and commercial or
financial information obtained from a person and privileged or
confidential. It reflects the manner in which ``Confidential
Information,'' as that term is defined herein, is to be treated. The
Order is not intended to constitute a resolution of the merits
concerning whether any Confidential Information would be released
publicly by the Commission upon a proper request under the Freedom
of Information Act or otherwise.
1. For purposes of this Order, ``Confidential Information''
shall in the first instance mean either (i) information submitted to
the Commission by the Submitting Party that has been so designated
by the Submitting Party and which the Submitting Party has
determined in good faith constitutes trade secrets and commercial or
financial information which is privileged or confidential within the
meaning of Exemption 4 of the Freedom of Information Act, 5 U.S.C.
Sec. 552(b)(4) or (ii) information submitted to the Commission by
the Submitting Party that has been so designated by the Submitting
Party and which the Submitting Party has determined in good faith
falls within the terms of [cite Commission order designating items
for treatment as Confidential Information]. Confidential Information
shall be deemed to include additional copies of and information
derived from Confidential Information.
2. The Commission may sua sponte or upon petition determine that
all or part of the information claimed as ``Confidential
Information'' is not entitled to such treatment.
3. Confidential Information submitted to the Commission shall
bear on the front page in bold print, ``CONTAINS PRIVILEGED AND
CONFIDENTIAL INFORMATION--DO NOT RELEASE.'' Confidential Information
shall be segregated by the Submitting Party from all non-
confidential information submitted to the Commission. To the extent
a document contains both Confidential Information and non-
confidential information, the submitting party shall designate the
specific portions of the document claimed to contain Confidential
Information and shall, where feasible, also submit a redacted
version not containing Confidential Information.
4. The Secretary of the Commission or other Commission staff to
whom Confidential Information is submitted shall place the
Confidential Information in a non-public file. In the event that any
person requests that Confidential Information be released publicly,
the Commission will treat the request pursuant to 47 CFR Sec. 0.461.
5. Confidential Information shall only be made available to
Commission staff, Commission consultants and to counsel to the
Reviewing Parties or if a Reviewing Party has no counsel to a person
designated by the Reviewing Party. Reviewing Party shall mean a
party to a Commission proceeding or any person or entity filing a
pleading in a Commission proceeding. Before counsel to a Reviewing
Party or such other designated person may obtain access to
Confidential Information, counsel or such other designated person
must execute the attached Declaration.
6. Counsel to a Reviewing Party or such other person designated
pursuant to Paragraph 5 may disclose Confidential Information to
other Authorized Representatives to whom disclosure is permitted
under the terms of paragraph 7 of this Protective Order only after
advising such Authorized Representatives of the terms and
obligations of the Order. In addition, before Authorized
Representatives may obtain access to Confidential Information,
Authorized Representatives must execute the attached Declaration.
7. Authorized Representatives shall be limited to:
a. Counsel for the Reviewing Parties to this proceeding
including in-house counsel actively engaged in the conduct of this
proceeding and their associated attorneys, paralegals, clerical
staff and other employees, to the extent reasonably necessary to
render professional services in this proceeding, provided that such
persons are not representing or advising or otherwise assisting * *
*;
b. Specified persons, including employees of the Reviewing
Parties, requested by counsel to furnish technical or other expert
advice or service, or otherwise engaged to prepare material for the
express purpose of formulating filings in this proceeding except
that disclosure to persons in a position to use this information for
competitive commercial or business purposes shall require the
approval of the Commission; or
c. Any person designated by the Commission in the public
interest, upon such terms as the Commission may deem proper.
8. Confidential Information shall be maintained by a Submitting
Party for inspection in at least two locations, one of which shall
be in Washington, D.C. Inspection shall be carried out by Authorized
Representatives by appointment during normal business hours. The
Submitting Party shall provide copies of the Confidential Material
to Authorized Representatives upon request and may charge a
reasonable copying fee not to exceed twenty five cents per page.
9. Authorized Representatives may make additional copies of
Confidential Information but only to the extent required and solely
for the preparation and use in this proceeding, and provided further
that the original copy and all other copies of the Confidential
Information shall remain in the care and control of Authorized
Representatives at all times and shall not pass to any other persons
except as provided herein.
10. Counsel for Reviewing Parties shall provide to the
Submitting Party and the Commission with a copy of the attached
Declaration for each Authorized Representative within five (5)
business days after the attached Declaration is executed, or by any
other deadline prescribed by the Commission.
11. Confidential Information shall not be used by any person
granted access under this Protective Order for any purpose other
than for use in this proceeding (including any subsequent
administrative or judicial review), shall not be used for
competitive business purposes, and shall not be disclosed except in
accordance with this Order. This shall not preclude the use of any
material or information that is in the public domain or has been
developed independently by any other person who has not had access
to the Confidential Information nor otherwise learned of its
contents.
12. Reviewing Parties may, in any pleadings that they file in
this proceeding, reference the Confidential Information, but only if
they comply with the following procedures:
a. Any portions of the pleadings that contain or disclose
Confidential Information must be physically segregated from the
remainder of the pleadings;
b. The portions containing or disclosing Confidential
Information must be covered by a separate letter referencing this
Protective Order;
c. Each page of any Party's filing that contains or discloses
Confidential Information subject to this Order must be clearly
marked: ``Confidential Information included pursuant to Protective
Order, [cite proceeding];'' and
d. The confidential portion(s) of the pleading shall be served
upon the Secretary of the Commission, the Submitting Party, and
those Reviewing Parties that have signed the attached Declaration.
Such confidential portions shall be served under seal, and shall not
be placed in the Commission's Public File unless the Commission
directs otherwise (with notice to the Submitting Party and an
opportunity to comment on such proposed disclosure). A Reviewing
Party filing a pleading containing Confidential Information shall
also file a redacted copy of the pleading containing no Confidential
Information, which copy shall be placed in the Commission's public
files. Reviewing Parties may provide courtesy copies of pleadings
containing Confidential Information to Commission staff.
13. Should a Reviewing Party that has properly obtained access
to Confidential
[[Page 16432]]
Information under this Protective Order violate any of its terms, it
shall immediately convey that fact to the Commission and to the
Submitting Party. Further, should such violation consist of improper
disclosure of Confidential Information, the violating party shall
take all necessary steps to remedy the improper disclosure. The
Commission retains its full authority to fashion appropriate
sanctions for violations of this Protective Order, including but not
limited to denial of further access to Confidential Information in
this proceeding.
14. Within two weeks after final resolution of this proceeding
(which includes any administrative or judicial appeals), Authorized
Representatives of Reviewing Parties shall destroy all Confidential
Information as well as all copies and derivative materials made, and
shall certify that no material whatsoever derived from such
Confidential Information has been retained by any person having
access thereto, except that counsel to a Reviewing Party may retain
two copies of pleadings submitted on behalf of the Reviewing Party.
15. Disclosure of Confidential Information as provided herein
shall not be deemed a waiver by the Submitting Party of any
privilege or entitlement to confidential treatment of such
Confidential Information. Reviewing Parties, by viewing these
materials: (a) agree not to assert any such waiver; (b) agree not to
use information derived from any confidential materials to seek
disclosure in any other proceeding; and (c) agree that accidental
disclosure of privileged information shall not be deemed a waiver of
the privilege.
16. The entry of this Protective Order is without prejudice to
the rights of the Submitting Party to apply for additional or
different protection where it is deemed necessary or to the rights
of Reviewing Parties to request further or renewed disclosure of
Confidential Information. Moreover, it in no way precludes the
Commission from disclosing any Confidential Information where it
determines the public interest so requires.
17. This Protective Order is issued pursuant to Section 4(i) of
the Communications Act as amended, 47 U.S.C. Sec. 154(i) and 47 CFR
Sec. 0.457(d).
18. As used in this Order, the term ``Commission'' shall also
include any arm of the Commission acting pursuant to delegated
authority.
Declaration
[Cite Proceeding]
I, __________, hereby declare under penalty of perjury that I
have read the foregoing Protective Order that has been entered by
the Commission in this proceeding, and that I agree that I will be
bound by its terms pertaining to the treatment of Confidential
Information submitted by parties to this proceeding. I understand
that the Confidential Information shall not be disclosed to anyone
except in accordance with the terms of the Protective Order and
shall be used only for purposes of the proceedings in this matter. I
acknowledge that a violation of the Protective Order is a violation
of an order of the Federal Communications Commission.
(signed)---------------------------------------------------------------
(printed name)---------------------------------------------------------
(title)----------------------------------------------------------------
(affiliation)----------------------------------------------------------
(address)--------------------------------------------------------------
----------------------------------------------------------------------
(phone)----------------------------------------------------------------
(date)-----------------------------------------------------------------
[FR Doc. 96-9240 Filed 4-12-96; 8:45 am]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-9237 Airworthiness Directives; Boeing Model 727 Series Airplanes
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16412-16413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9237]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. 94-NM-197-AD]
Airworthiness Directives; Boeing Model 727 Series Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Proposed rule; withdrawal.
-----------------------------------------------------------------------
SUMMARY: This action withdraws a notice of proposed rulemaking (NPRM)
that proposed a new airworthiness directive (AD), applicable to Boeing
Model 727 series airplanes. That action would have superseded an
existing AD to require repetitive visual inspections to detect cracking
in the elevator rear spar and repair, if necessary; provide for an
optional terminating action for the repetitive inspections; and add a
one-time inspection of certain airplanes for clearance between the
shear plate and the radii of the rear spar. Since the issuance of the
NPRM, the Federal Aviation Administration (FAA) has issued other
rulemaking that requires actions equivalent to those proposed.
Accordingly, the proposed rule is withdrawn.
FOR FURTHER INFORMATION CONTACT: Walter Sippel, Aerospace Engineer,
Airframe Branch (ANM-121S), Seattle Aircraft Certification Office, FAA,
Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton,
Washington 98055-4056; telephone (206) 227-2774; fax (206) 227-1181.
SUPPLEMENTARY INFORMATION: A proposal to amend part 39 of the Federal
Aviation Regulations (14 CFR part 39) to add a new airworthiness
directive (AD), applicable to Boeing Model 727 series airplanes, was
published in the Federal Register as a Notice of Proposed Rulemaking
(NPRM) on January 4, 1995 (60 FR 386). The proposed rule would have
superseded AD 87-24-03, amendment 39-5769 (52 FR 43742, November 16,
1987), which was issued in 1987 to require repetitive visual
inspections to detect cracking in the elevator rear spar and repair, if
necessary. AD 87-24-03 also provided for an optional terminating action
for the repetitive visual inspections. The issuance of AD 87-24-03 was
prompted by reports of cracking in the rear spar of the elevator at the
hinge fitting attachment of the control tab and reports of loose hinge
fittings at the crack locations.
The NPRM would have superseded AD 87-24-03 to continue to require
the repetitive visual inspections, but also to add an additional one-
time inspection of certain airplanes for clearance between the shear
plate and the radii of the rear spar. The NPRM also would have provided
additional instructions for the terminating action. The actions
specified by both the NPRM and AD 87-24-03 were intended to prevent
cracking of the elevator rear spar, which could cause excessive free
play of the elevator control tab and possible tab flutter, and could
result in loss of controllability of the airplane.
Since the issuance of that NPRM, the FAA has issued AD 96-06-05,
amendment 39-9542 (61 FR 11529, March 21, 1996), which is applicable to
Boeing Model 727 series airplanes. That AD supersedes AD 87-24-03, as
well as AD 84-22-02, amendment 39-4951 (49 FR 45743, November 20,
1984). It requires various repetitive inspections to detect cracks and
loose brackets of the elevator rear spar, and repair, if necessary; and
provides for a terminating modification for the inspections. That AD
was prompted by reports of cracking in the spar radii at the tab hinge
location of the elevator rear spar on certain airplanes. The actions
specified by that AD are intended to prevent cracking in elements of
the elevator rear spar assembly, which could result in excessive free
play of the elevator control tab and possible tab flutter.
[[Page 16413]]
The requirements of AD 96-06-05 incorporate and implement the same
actions that were proposed by the NPRM issued as Docket 94-NM-197-AD.
In light of this, the issuance of a final action for that NPRM is
unnecessary. Accordingly, the proposed rule is hereby withdrawn.
Withdrawal of this NPRM constitutes only such action, and does not
preclude the agency from issuing another notice in the future, nor does
it commit the agency to any course of action in the future.
Since this action only withdraws a notice of proposed rulemaking,
it is neither a proposed nor a final rule and therefore, is not covered
under Executive Order 12866, the Regulatory Flexibility Act, or DOT
Regulatory Policies and Procedures (44 FR 11034, February 26, 1979).
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Safety.
The Withdrawal
Accordingly, the notice of proposed rulemaking, Docket 94-NM-197-
AD, published in the Federal Register on January 4, 1995 (60 FR 386),
is withdrawn.
Issued in Renton, Washington, on April 9, 1996.
Darrell M. Pederson,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-9237 Filed 4-12-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-9236 Airworthiness Directives; McDonnell Douglas Model DC-9-80 Series Airplanes and Model MD-88 Airplanes
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16413-16414]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9236]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 39
[Docket No. 95-NM-221-AD]
Airworthiness Directives; McDonnell Douglas Model DC-9-80 Series
Airplanes and Model MD-88 Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Notice of proposed rulemaking (NPRM).
-----------------------------------------------------------------------
SUMMARY: This document proposes the adoption of a new airworthiness
directive (AD) that is applicable to certain McDonnell Douglas Model
DC-9-80 series airplanes and Model MD-88 airplanes. This proposal would
require a one-time inspection to detect cracking of the main landing
gear (MLG) pistons, and repair or replacement of the pistons with new
or serviceable parts, if necessary. This proposal is prompted by
reports of failure of the MLG pistons that occurred during towing of
the airplanes. The actions specified by the proposed AD are intended to
prevent fatigue cracking of the MLG pistons, which could result in
failure of the pistons and subsequent damage to the airplane structure
or injury to airplane occupants.
DATES: Comments must be received by June 10, 1996.
ADDRESSES: Submit comments in triplicate to the Federal Aviation
Administration (FAA), Transport Airplane Directorate, ANM-103,
Attention: Rules Docket No. 95-NM-221-AD, 1601 Lind Avenue, SW.,
Renton, Washington 98055-4056. Comments may be inspected at this
location between 9:00 a.m. and 3:00 p.m., Monday through Friday, except
Federal holidays.
The service information referenced in the proposed rule may be
obtained from McDonnell Douglas Corporation, 3855 Lakewood Boulevard,
Long Beach, California 90846, Attention: Technical Publications
Business Administration, Department C1-L51 (2-60). This information may
be examined at the FAA, Transport Airplane Directorate, 1601 Lind
Avenue, SW., Renton, Washington; or at the FAA, Transport Airplane
Directorate, Los Angeles Aircraft Certification Office, 3960 Paramount
Boulevard, Lakewood, California.
FOR FURTHER INFORMATION CONTACT: Brent Bandley, Aerospace Engineer,
Airframe Branch, ANM-120L, FAA, Los Angeles Aircraft Certification
Office, 3960 Paramount Boulevard, Lakewood, California 90712; telephone
(310) 627-5237; fax (310) 627-5210.
SUPPLEMENTARY INFORMATION:
Comments Invited
Interested persons are invited to participate in the making of the
proposed rule by submitting such written data, views, or arguments as
they may desire. Communications shall identify the Rules Docket number
and be submitted in triplicate to the address specified above. All
communications received on or before the closing date for comments,
specified above, will be considered before taking action on the
proposed rule. The proposals contained in this notice may be changed in
light of the comments received.
Comments are specifically invited on the overall regulatory,
economic, environmental, and energy aspects of the proposed rule. All
comments submitted will be available, both before and after the closing
date for comments, in the Rules Docket for examination by interested
persons. A report summarizing each FAA-public contact concerned with
the substance of this proposal will be filed in the Rules Docket.
Commenters wishing the FAA to acknowledge receipt of their comments
submitted in response to this notice must submit a self-addressed,
stamped postcard on which the following statement is made: ``Comments
to Docket Number 95-NM-221-AD.'' The postcard will be date stamped and
returned to the commenter.
Availability of NPRMs
Any person may obtain a copy of this NPRM by submitting a request
to the FAA, Transport Airplane Directorate, ANM-103, Attention: Rules
Docket No. 95-NM-221-AD, 1601 Lind Avenue, SW., Renton, Washington
98055-4056.
Discussion
The FAA has received two reports of failure of the main landing
gear (MLG) pistons that occurred during towing of a McDonnell Douglas
Model DC-9-82 series airplane and a Model MD-88 airplane. In both
cases, the fracture surface extended around the barrel section at the
piston/axle transition. The fractures originated at a fatigue crack.
Fatigue cracking occurred due to vibration-induced high stress loads on
the pistons and a blending induced stress concentration in the
transition area of the piston/axle transition. Such vibration occurs
primarily during landing and rejected takeoff during moderate to heavy
braking. Fatigue cracking of the MLG pistons, if not detected and
corrected in a timely manner, could result in failure of the pistons
and subsequent damage to the airplane structure or injury to airplane
occupants.
The FAA has reviewed and approved McDonnell Douglas Service
Bulletin MD80-32-277, Revision 01, dated February 23, 1996, which
describes procedures for a one-time dye penetrant and magnetic particle
inspection to detect cracking of the MLG pistons, and repair or
replacement of cracked pistons with new or serviceable parts.
Since an unsafe condition has been identified that is likely to
exist or develop on other products of this same type design, the
proposed AD would require a one-time dye penetrant and magnetic
particle inspection to detect cracking of the MLG pistons, and repair
or replacement of the pistons with new or serviceable parts, if
necessary. The actions would be required to be accomplished in
accordance with the service bulletin described previously.
This is considered to be interim action until final action is
identified, at which time the FAA may consider further rulemaking. -
[[Page 16414]]
There are approximately 1,119 Model DC-9-80 series airplanes and
Model MD-88 airplanes of the affected design in the worldwide fleet.
The FAA estimates that 609 airplanes of U.S. registry would be affected
by this proposed AD, that it would take approximately 2 work hours per
airplane to accomplish the proposed actions, and that the average labor
rate is $60 per work hour. Based on these figures, the cost impact of
the proposed AD on U.S. operators is estimated to be $73,080, or $120
per airplane. -
The cost impact figure discussed above is based on assumptions that
no operator has yet accomplished any of the proposed requirements of
this AD action, and that no operator would accomplish those actions in
the future if this AD were not adopted. -
The regulations proposed herein would not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this
proposal would not have sufficient federalism implications to warrant
the preparation of a Federalism Assessment. -
For the reasons discussed above, I certify that this proposed
regulation (1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under the DOT
Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
and (3) if promulgated, will not have a significant economic impact,
positive or negative, on a substantial number of small entities under
the criteria of the Regulatory Flexibility Act. A copy of the draft
regulatory evaluation prepared for this action is contained in the
Rules Docket. A copy of it may be obtained by contacting the Rules
Docket at the location provided under the caption ADDRESSES.
List of Subjects in 14 CFR Part 39 -
Air transportation, Aircraft, Aviation safety, Safety.
The Proposed Amendment -
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration proposes to amend
part 39 of the Federal Aviation Regulations (14 CFR part 39) as
follows:
PART 39--AIRWORTHINESS DIRECTIVES -
1. The authority citation for part 39 continues to read as follows:
Authority: 49 U.S.C. 106(g), 40113, 44701.
Sec. 39.13 [Amended] -
2. Section 39.13 is amended by adding the following new
airworthiness directive:
McDonnell Douglas: Docket 95-NM-221-AD.
-Applicability: Model DC-9-81 (MD-81), DC-9-82 (MD-82), DC-9-83
(MD-83), and DC-9-87 (MD-87) series airplanes, and Model MD-88
airplanes; as listed in McDonnell Douglas Service Bulletin MD80-32-
277, Revision 01, dated February 23, 1996; certificated in any
category.
-Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must request approval for an
alternative method of compliance in accordance with paragraph (f) of
this AD. The request should include an assessment of the effect of
the modification, alteration, or repair on the unsafe condition
addressed by this AD; and, if the unsafe condition has not been
eliminated, the request should include specific proposed actions to
address it.
-Compliance: Required as indicated, unless accomplished
previously. -
To prevent fatigue cracking of the main landing gear (MLG)
pistons, which could result in failure of the pistons and subsequent
damage to the airplane structure or injury to airplane occupants,
accomplish the following: -
(a) Perform a one-time dye penetrant and magnetic particle
inspection to detect cracking of the MLG pistons, in accordance with
McDonnell Douglas Service Bulletin MD80-32-277, Revision 01, dated
February 23, 1996, at the later of the times specified in paragraphs
(a)(1) and (a)(2) of this AD. -
(1) Prior to the accumulation of 4,000 total landings on the MLG
piston. -
(2) Within 1,500 landings or 12 months after the effective date
of this AD, whichever occurs first. -
(b) If no cracking is found, no further action is required by
this AD. -
(c) If any cracking is found that is within the limits specified
in McDonnell Douglas Service Bulletin MD80-32-277, Revision 01,
dated February 23, 1996, prior to further flight, repair in
accordance with the service bulletin. -
(d) If any cracking is found that is outside the limits
specified in McDonnell Douglas Service Bulletin MD80-32-277,
Revision 01, dated February 23, 1996, prior to further flight,
replace the MLG piston with a new or serviceable part in accordance
with the service bulletin. -
(e) As of the effective date of this AD, no person shall install
an MLG piston having part number 5935347-1 through 5935347-509
inclusive on any airplane unless that piston has been inspected in
accordance with McDonnell Douglas Service Bulletin MD80-32-277,
Revision 01, dated February 23, 1996, and found to be crack-free; or
unless it is repaired or modified in accordance with the service
bulletin. -
(f) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, Los Angeles Aircraft Certification
Office (ACO), FAA, Transport Airplane Directorate. Operators shall
submit their requests through an appropriate FAA Principal
Maintenance Inspector, who may add comments and then send it to the
Manager, Los Angeles ACO.
-Note 2: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the Los Angeles ACO.
(g) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to a location where
the requirements of this AD can be accomplished.
Issued in Renton, Washington, on April 9, 1996.
Darrell M. Pederson,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-9236 Filed 4-12-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-9235 Airworthiness Directives; Airbus Model A320 Series Airplanes
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16414-16416]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9235]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 39
[Docket No. 95-NM-216-AD]
Airworthiness Directives; Airbus Model A320 Series Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Notice of proposed rulemaking (NPRM).
-----------------------------------------------------------------------
SUMMARY: This document proposes the supersedure of an existing
airworthiness directive (AD), applicable to certain Airbus Model A320
series airplanes, that currently requires a one-time inspection to
detect cracking of the floor beams and the side box-beams between
frames 42 and 43, and repair of cracks. It also requires modification
of the pressure floor. That AD was prompted by the results of a full-
scale fatigue test. This action would add a new improved modification
requirement for the pressure floor at section 15 of the fuselage. The
actions specified by the proposed AD are intended to prevent reduced
structural integrity of the fuselage.
DATES: Comments must be received by May 28, 1996.
ADDRESSES: Submit comments in triplicate to the Federal Aviation
Administration (FAA), Transport Airplane Directorate, ANM-103,
Attention: Rules Docket No. 95-NM-216-AD, 1601 Lind Avenue, SW.,
Renton, Washington 98055-4056. Comments may be inspected at this
[[Page 16415]]
location between 9:00 a.m. and 3:00 p.m., Monday through Friday, except
Federal holidays. -
The service information referenced in the proposed rule may be
obtained from Airbus Industrie, 1 Rond Point Maurice Bellonte, 31707
Blagnac Cedex, France. This information may be examined at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton,
Washington.
FOR FURTHER INFORMATION CONTACT: Tim Backman, Aerospace Engineer,
Standardization Branch, ANM-113, FAA, Transport Airplane Directorate,
1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone (206)
227-2797; fax (206) 227-1149.
SUPPLEMENTARY INFORMATION:
Comments Invited -
Interested persons are invited to participate in the making of the
proposed rule by submitting such written data, views, or arguments as
they may desire. Communications shall identify the Rules Docket number
and be submitted in triplicate to the address specified above. All
communications received on or before the closing date for comments,
specified above, will be considered before taking action on the
proposed rule. The proposals contained in this notice may be changed in
light of the comments received. -
Comments are specifically invited on the overall regulatory,
economic, environmental, and energy aspects of the proposed rule. All
comments submitted will be available, both before and after the closing
date for comments, in the Rules Docket for examination by interested
persons. A report summarizing each FAA-public contact concerned with
the substance of this proposal will be filed in the Rules Docket. -
Commenters wishing the FAA to acknowledge receipt of their comments
submitted in response to this notice must submit a self-addressed,
stamped postcard on which the following statement is made: ``Comments
to Docket Number 95-NM-216-AD.'' The postcard will be date stamped and
returned to the commenter.
Availability of NPRMs -
Any person may obtain a copy of this NPRM by submitting a request
to the FAA, Transport Airplane Directorate, ANM-103, Attention: Rules
Docket No. 95-NM-216-AD, 1601 Lind Avenue, SW., Renton, Washington
98055-4056.
Discussion -
On July 9, 1993, the FAA issued AD 93-14-04, amendment 39-8628 (58
FR 39440, July 23, 1993), applicable to certain Airbus Model A320
series airplanes, to require a one-time inspection to detect cracking
of the floor beams and the side box-beams between frames 42 and 43, and
repair of cracks. It also requires modification of the pressure floor.
That action was prompted by the results of a full-scale fatigue test,
which indicated that fatigue cracking can occur in those areas. The
requirements of that AD are intended to prevent reduced structural
integrity of the fuselage due to problems associated with fatigue
cracking. -
Since the issuance of that AD, Airbus has issued Revision 1 of
Service Bulletin A320-53-1024, dated March 31, 1994. This service
bulletin is essentially identical to the original version of the
service bulletin (which was referenced in AD 93-14-04), but contains
certain editorial changes. This service bulletin permits further flight
with cracks in various areas around the fastener/bolt holes, provided
that those cracks do not exceed certain limits. The Direction Generale
de l'Aviation Civile (DGAC), which is the airworthiness authority for
France, classified this service bulletin as mandatory and issued French
airworthiness directive 92-205-033(B)R1, dated June 22, 1994, in order
to assure the continued airworthiness of these airplanes in France. -
In addition, Airbus has issued Revision 3 of Service Bulletin A320-
53-1023, dated March 18, 1994. This service bulletin describes new
improved procedures for modification of the pressure floor at section
15 of the fuselage. The modification involves the following actions: -
1. Removing components of the free-fall extension system of the
main landing gear and removing specified fasteners from various areas;
2. Cleaning the fastener holes;
3. Performing an eddy current (rotary probe) non-destructive test
inspection of the fastener holes;
4. Drilling/Reaming the fasteners holes;
5. Cold expanding the crack-free fastener holes;
6. Installing new fittings with the oversize fasteners; and
7. Installing the bell crank assembly and the pulley of the free-
fall extension system of the main landing gear.
Implementation of the new improved modification will positively
address the unsafe condition identified as reduced structural integrity
of the fuselage.
This airplane model is manufactured in France and is type
certificated for operation in the United States under the provisions of
section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and
the applicable bilateral airworthiness agreement. Pursuant to this
bilateral airworthiness agreement, the DGAC has kept the FAA informed
of the situation described above. The FAA has examined the findings of
the DGAC, reviewed all available information, and determined that AD
action is necessary for products of this type design that are
certificated for operation in the United States.
Since an unsafe condition has been identified that is likely to
exist or develop on other airplanes of the same type design registered
in the United States, the proposed AD would supersede AD 93-14-04 to
continue to require a one-time eddy current and detailed visual
inspection to detect cracks of various areas around the fastener/bolt
holes of the pressure floor. However, this proposal would add a new
improved modification of the pressure floor at section 15 of the
fuselage. The actions would be required to be accomplished in
accordance with the service bulletins described previously.
Operators should note that, unlike the procedures described in
Airbus Service Bulletin A320-53-1024, Revision 1, dated March 31, 1994,
this proposed AD would not permit further flight with cracking detected
in various areas around the fastener/bolt holes. The FAA has determined
that, due to the safety implications and consequences associated with
such cracking, all areas around the fastener/bolt holes that are found
to be cracked must be repaired prior to further flight. The repair
would be required to be accomplished in accordance with a method
approved by the FAA.
Furthermore, the FAA has determined that long term continued
operational safety will be better assured by design changes to remove
the source of the problem, rather than by repetitive inspections. Long
term inspections may not be providing the degree of safety assurance
necessary for the transport airplane fleet. This, coupled with a better
understanding of the human factors associated with numerous continual
inspections, has led the FAA to consider placing less emphasis on
inspections and more emphasis on design improvements. The proposed
modification requirement is in consonance with these considerations.
There are approximately 24 Airbus Model A320 series airplanes of
U.S. registry would be affected by this proposed AD.
The inspections that are currently required by AD 93-14-04 take
approximately 37 work hours per
[[Page 16416]]
airplane to accomplish, at an average labor rate of $60 per work hour.
Based on these figures, the cost impact on U.S. operators of the
inspections currently required is estimated to be $53,280, or $2,220
per airplane.
The new modification that is proposed in this AD action would take
approximately 241 work hours per airplane to accomplish, at an average
labor rate of $60 per work hour. Required parts would cost
approximately $5,603 per airplane. Based on these figures, the cost
impact on U.S. operators of the proposed modification requirements of
this AD is estimated to be $481,512, or $20,063 per airplane.
The cost impact figures discussed above are based on assumptions
that no operator has yet accomplished any of the current or proposed
requirements of this AD action, and that no operator would accomplish
those actions in the future if this AD were not adopted.
The regulations proposed herein would not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this
proposal would not have sufficient federalism implications to warrant
the preparation of a Federalism Assessment.
For the reasons discussed above, I certify that this proposed
regulation (1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under the DOT
Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
and (3) if promulgated, will not have a significant economic impact,
positive or negative, on a substantial number of small entities under
the criteria of the Regulatory Flexibility Act. A copy of the draft
regulatory evaluation prepared for this action is contained in the
Rules Docket. A copy of it may be obtained by contacting the Rules
Docket at the location provided under the caption ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Safety.
The Proposed Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration proposes to amend
part 39 of the Federal Aviation Regulations (14 CFR part 39) as
follows:
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
Authority: 49 USC 106(g), 40113, 44701.
Sec. 39.13 [Amended]
2. Section 39.13 is amended by removing amendment 39-8628 (58 FR
39440, July 23, 1993), and by adding a new airworthiness directive
(AD), to read as follows:
Airbus Industrie: Docket 95-NM-216-AD. Supersedes AD 93-14-04,
Amendment 39-8628.
Applicability: Model A320 series airplanes, manufacturer's
serial numbers 002 through 008 inclusive, 010 through 078 inclusive,
and 080 through 107 inclusive; certificated in any category.
Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
otherwise modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must request approval for an
alternative method of compliance in accordance with paragraph (d) of
this AD. The request should include an assessment of the effect of
the modification, alteration, or repair on the unsafe condition
addressed by this AD; and, if the unsafe condition has not been
eliminated, the request should include specific proposed actions to
address it.
Compliance: Required as indicated, unless accomplished
previously.
To prevent reduced structural integrity of the fuselage,
accomplish the following:
(a) Prior to the accumulation of 12,000 total landings, or 6
months after August 23, 1993 (the effective date of AD 93-14-04,
amendment 39-8628), whichever occurs later, accomplish the
requirements of paragraphs (a)(1) and (a)(2) of this AD, in
accordance with Airbus Industrie Service Bulletin A320-53-1024,
dated September 23, 1992, or Revision 1, dated March 31, 1994. As of
the effective date of this new AD, only Revision 1 of this service
bulletin shall be used.
(1) Conduct an eddy current inspection to detect cracking around
the fastener/bolt holes at the top horizontal flange of the floor
beams and side box-beams, at the two sides of the pressure floor,
and at the vertical integral stiffener of the side box-beams; and
(2) Conduct a detailed visual inspection to detect cracking
around the fastener/bolt holes at the fillet radius and riveted area
of the top outboard flange of the side box-beams, and at the flange-
corner radius of the slanted inboard flange of the side box-beam and
fittings.
(b) If any crack is detected during the inspections required by
paragraph (a) of this AD, prior to further flight, repair the crack
in accordance with a method approved by the Manager, Standardization
Branch, ANM-113, FAA, Transport Airplane Directorate.
(c) Modify the pressure floor at section 15 of the fuselage in
accordance with Airbus Service Bulletin A320-53-1023, Revision 3,
dated March 18, 1994, at the time specified in either paragraph
(c)(1) or (c)(2) of this AD, as applicable. Accomplishment of the
modification terminates the requirements of this AD.
(1) For airplanes on which the modification specified in Airbus
Service Bulletin A320-53-1023, dated September 23, 1992, as amended
by Service Bulletin Change Notice 0A, dated January 20, 1993;
Revision 1, dated March 23, 1993; or Revision 2, dated October 22,
1993; has been accomplished: Modify prior to the accumulation of
24,000 total landings, or 6 months after the effective date of this
AD, whichever occurs later.
(2) For all other airplanes not subject to paragraph (c)(1) of
this AD: Modify prior to the accumulation of 18,000 total landings,
or 6 months after the effective date of this AD, whichever occurs
later.
(d) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, Standardization Branch, ANM-113,
FAA, Transport Airplane Directorate. Operators shall submit their
requests through an appropriate FAA Principal Maintenance Inspector,
who may add comments and then send it to the Manager,
Standardization Branch, ANM-113.
Note 2: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the Standardization Branch, ANM-113.
(e) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to a location where
the requirements of this AD can be accomplished.
Issued in Renton, Washington, on April 9, 1996.
Darrell M. Pederson,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-9235 Filed 4-12-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-9234 Airworthiness Directives; Beech Model 400, 400A, MU-300-10, and 2000 Airplanes, and Model 200, B200, 300, and B300 Series Airplanes
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16416-16418]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9234]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 39
[Docket No. 95-NM-255-AD]
Airworthiness Directives; Beech Model 400, 400A, MU-300-10, and
2000 Airplanes, and Model 200, B200, 300, and B300 Series Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Notice of proposed rulemaking (NPRM).
-----------------------------------------------------------------------
SUMMARY: This document proposes the adoption of a new airworthiness
directive (AD) that is applicable to certain Beech Model 400, 400A, MU-
300-10, and 2000 airplanes, and Model 200, B200, 300, and B300 series
airplanes. This proposal would require replacement of outflow/safety
valves
[[Page 16417]]
with serviceable valves. This proposal is prompted by a report of
cracking and subsequent failure of outflow safety valves in the
pressurization system. The actions specified by the proposed AD are
intended to prevent such cracking and subsequent failure of the
outflow/safety valves, which could result in rapid decompression of the
airplane.
DATES: Comments must be received by May 28, 1996.
ADDRESSES: Submit comments in triplicate to the Federal Aviation
Administration (FAA), Transport Airplane Directorate, ANM-103,
Attention: Rules Docket No. 95-NM-255-AD, 1601 Lind Avenue, SW.,
Renton, Washington 98055-4056. Comments may be inspected at this
location between 9:00 a.m. and 3:00 p.m., Monday through Friday, except
Federal holidays.
The service information referenced in the proposed rule may be
obtained from AlliedSignal Aerospace, Technical Publications, Dept. 65-
70, P.O. Box 52170, Phoenix, Arizona 85072-2170. This information may
be examined at the FAA, Transport Airplane Directorate, 1601 Lind
Avenue, SW., Renton, Washington; or at the FAA, Transport Airplane
Directorate, Los Angeles Aircraft Certification Office, 3960 Paramount
Boulevard, Lakewood, California.
FOR FURTHER INFORMATION CONTACT: Walter Eierman, Aerospace Engineer,
Systems and Equipment Branch, ANM-130L, FAA, Los Angeles Aircraft
Certification Office, 3960 Paramount Boulevard, Lakewood, California
90712; telephone (310) 627-5336; fax (310) 627-5210.
SUPPLEMENTARY INFORMATION:
Comments Invited
Interested persons are invited to participate in the making of the
proposed rule by submitting such written data, views, or arguments as
they may desire. Communications shall identify the Rules Docket number
and be submitted in triplicate to the address specified above. All
communications received on or before the closing date for comments,
specified above, will be considered before taking action on the
proposed rule. The proposals contained in this notice may be changed in
light of the comments received.
Comments are specifically invited on the overall regulatory,
economic, environmental, and energy aspects of the proposed rule. All
comments submitted will be available, both before and after the closing
date for comments, in the Rules Docket for examination by interested
persons. A report summarizing each FAA-public contact concerned with
the substance of this proposal will be filed in the Rules Docket.
Commenters wishing the FAA to acknowledge receipt of their comments
submitted in response to this notice must submit a self-addressed,
stamped postcard on which the following statement is made: ``Comments
to Docket Number 95-NM-255-AD.'' The postcard will be date stamped and
returned to the commenter.
Availability of NPRMs
Any person may obtain a copy of this NPRM by submitting a request
to the FAA, Transport Airplane Directorate, ANM-103, Attention: Rules
Docket No. 95-NM-255-AD, 1601 Lind Avenue, SW., Renton, Washington
98055-4056.
Discussion
The FAA has received a report of the failure of a safety valve in
the pressurization system on a Learjet Model 31A airplane. Failure of
the valve resulted in depressurization of the cabin. Investigation
revealed that the poppets of certain outflow/safety valves were
cracked. These discrepant valves, including the safety valve installed
on the incident airplane, had been manufactured since January 1, 1989.
Certain valves manufactured since that date have been found to be
susceptible to cracking due to an improper molding process during their
manufacture. Cracking in the poppets of the outflow/safety valves in
the pressurization system can result in an open valve with an effective
flow area of 4.4 square inches; additionally, the valve may close and
remain closed. This condition, if not corrected, could result in
cracking and subsequent failure of the airflow/safety valves, which
could lead to rapid decompression of the airplane.
On September 20, 1995, the FAA issued AD 95-20-03, amendment 39-
9381 (60 FR 51709, October 3, 1995), to address this unsafe condition
on certain Learjet Model 24, 25, 28, 29, 31, 35, 36, and 55 series
airplanes. Subsequently, on December 5, 1995, the FAA issued AD 95-25-
10, amendment 39-9456, (60 FR 66484, December 22, 1995), to address the
unsafe condition on certain Cessna Model 441, 500, 550, and 560 series
airplanes. The outflow/safety valves installed on these Cessna and
Learjet airplane models are similar to the valves installed on Beech
Model 400, 400A, MU-300-10, and 2000 airplanes, and Model 200, B200,
300, and B300 series airplanes. Therefore, the FAA has determined that
the latter airplane models also are subject to the unsafe condition
described previously.
The FAA has reviewed and approved Allied Signal Aerospace Service
Bulletins 103570-21-4012 (for airplanes equipped with valves having
part number 103570-25, 103570-26, or 103570-27) and 103648-21-4022 (for
airplanes equipped with valves having part number 103648-1, 103648-3,
103648-4, 103648-5, 103648-6, 103648-7, or 103648-13), both Revision 1,
both dated May 30, 1995, which describe procedures for replacement of
certain discrepant outflow/safety valves with serviceable valves.
Since an unsafe condition has been identified that is likely to
exist or develop on other products of this same type design, the
proposed AD would require replacement of certain discrepant outflow/
safety valves with serviceable valves. The actions would be required to
be accomplished in accordance with the service bulletins described
previously.
Operators should note that Allied Signal Aerospace Service Bulletin
103570-21-4012 recommends accomplishing the replacement within 150
flight hours (after the release of the service bulletin), but no later
than June 30, 1996. Allied Signal Aerospace Service Bulletin 103648-21-
4022 recommends accomplishing the replacement within 200 flight hours
(after the release of the service bulletin), but no later than June 30,
1996. However, the FAA has determined that an interval of 18 months
will address the identified unsafe condition in a timely manner. This
proposed compliance time of 18 months was determined to be appropriate
in consideration of the safety implications, the average utilization
rate of the affected fleet, the practical aspects of accomplishment of
the replacement during regular maintenance periods, and the
availability of required replacement parts.
There are approximately 150 Model 400, 400A, MU-300-10, and 2000
airplanes, and Model 200, B200, 300, and B300 series airplanes of the
affected design in the worldwide fleet. The FAA estimates that 105
airplanes of U.S. registry would be affected by this proposed AD, that
it would take approximately 12 work hours per airplane to accomplish
the proposed actions, and that the average labor rate is $60 per work
hour. The parts manufacturer has advised that it will provide
replacement parts at no cost to operators. Based on these figures, the
cost impact of the proposed AD on U.S. operators is estimated to be
$75,600, or $720 per airplane.
The cost impact figure discussed above is based on assumptions that
no
[[Page 16418]]
operator has yet accomplished any of the proposed requirements of this
AD action, and that no operator would accomplish those actions in the
future if this AD were not adopted.
The regulations proposed herein would not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this
proposal would not have sufficient federalism implications to warrant
the preparation of a Federalism Assessment.
For the reasons discussed above, I certify that this proposed
regulation (1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under the DOT
Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
and (3) if promulgated, will not have a significant economic impact,
positive or negative, on a substantial number of small entities under
the criteria of the Regulatory Flexibility Act. A copy of the draft
regulatory evaluation prepared for this action is contained in the
Rules Docket. A copy of it may be obtained by contacting the Rules
Docket at the location provided under the caption ``ADDRESSES.''
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Safety.
The Proposed Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration proposes to amend
part 39 of the Federal Aviation Regulations (14 CFR part 39) as
follows:
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
Authority: 49 USC 106(g), 40113, 44701.
Sec. 39.13 [Amended]
2. Section 39.13 is amended by adding the following new
airworthiness directive:
Beech Aircraft Corporation: Docket 95-NM-255-AD.
Applicability: Model 400, 400A, MU-300-10, and 2000 airplanes,
Model 200 and B200 series airplanes having a maximum altitude
capability of greater than 31,000 feet, and Model 300 and B300
series airplanes; equipped with Allied Signal outflow/safety valves,
as identified in Allied Signal Aerospace Service Bulletins 103570-
21-4012 and 103648-21-4022, both Revision 1, both dated May 30,
1995; certificated in any category.
Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must request approval for an
alternative method of compliance in accordance with paragraph (c) of
this AD. The request should include an assessment of the effect of
the modification, alteration, or repair on the unsafe condition
addressed by this AD; and, if the unsafe condition has not been
eliminated, the request should include specific proposed actions to
address it.
Compliance: Required as indicated, unless accomplished
previously.
To prevent cracking and subsequent failure of the outflow/safety
valves, which could result in rapid decompression of the airplane,
accomplish the following:
(a) Within 18 months after the effective date of this AD,
replace the outflow/safety valve in accordance with Allied Signal
Aerospace Service Bulletin 103570-21-4012 (for airplanes equipped
with valves having part number 103570-25, 103570-26, or 103570-27),
or 103648-21-4022 (for airplanes equipped with valves having part
number 103648-1, 103648-3, 103648-4, 103648-5, 103648-6, 103648-7,
or 103648-13), both Revision 1, both dated May 30, 1995, as
applicable.
(b) As of the effective date of this AD, no person shall install
an outflow/safety valve, having a part number and serial number
identified in Allied Signal Aerospace Service Bulletin 103570-21-
4012 (for airplanes equipped with valves having part number 103570-
25, 103570-26, or 103570-27), or 103648-21-4022 (for airplanes
equipped with valves having part number 103648-1, 103648-3, 103648-
4, 103648-5, 103648-6, 103648-7, or 103648-13), both Revision 1,
both dated May 30, 1995, on any airplane unless that valve is
considered to be serviceable in accordance with the applicable
service bulletin.
(c) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, Los Angeles Aircraft Certification
Office (ACO), FAA, Transport Airplane Directorate. Operators shall
submit their requests through an appropriate FAA Principal
Maintenance Inspector, who may add comments and then send it to the
Manager, Los Angeles ACO.
Note 2: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the Los Angeles ACO.
(d) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to a location where
the requirements of this AD can be accomplished.
Issued in Renton, Washington, on April 9, 1996.
Darrell M. Pederson,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-9234 Filed 4-12-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-9233 Airworthiness Directives; Airbus Model A300-600 Series Airplanes
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16418-16420]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9233]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 39
[Docket No. 95-NM-228-AD]
Airworthiness Directives; Airbus Model A300-600 Series Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Notice of proposed rulemaking (NPRM).
-----------------------------------------------------------------------
SUMMARY: This document proposes the adoption of a new airworthiness
directive (AD) that is applicable to all Airbus Model A300-600 series
airplanes. This proposal would require an inspection to detect cracks
of certain attachment holes; and installation of a new fastener and
follow-on inspections or repair, if necessary. This proposal is
prompted by reports of fatigue cracking found on the forward fitting of
frame 47 at the level of the last fastener of the external angle
fitting. The actions specified by the proposed AD are intended to
prevent such fatigue cracking, which could result in reduced structural
integrity of the airframe.
DATES: Comments must be received by May 28, 1996.
ADDRESSES: Submit comments in triplicate to the Federal Aviation
Administration (FAA), Transport Airplane Directorate, ANM-103,
Attention: Rules Docket No. 95-NM-228-AD, 1601 Lind Avenue, SW.,
Renton, Washington 98055-4056. Comments may be inspected at this
location between 9:00 a.m. and 3:00 p.m., Monday through Friday, except
Federal holidays.
The service information referenced in the proposed rule may be
obtained from Airbus Industrie, 1 Rond Point Maurice Bellonte, 31707
Blagnac Cedex, France. This information may be examined at the FAA,
Transport Airplane Directorate, 1601 Lind Avenue, SW., Renton,
Washington.
FOR FURTHER INFORMATION CONTACT: Tim Backman, Aerospace Engineer,
Standardization Branch, ANM-113, FAA, Transport Airplane Directorate,
1601 Lind Avenue, SW., Renton, Washington 98055-4056; telephone (206)
227-2797; fax (206) 227-1149.
[[Page 16419]]
SUPPLEMENTARY INFORMATION:
Comments Invited
Interested persons are invited to participate in the making of the
proposed rule by submitting such written data, views, or arguments as
they may desire. Communications shall identify the Rules Docket number
and be submitted in triplicate to the address specified above. All
communications received on or before the closing date for comments,
specified above, will be considered before taking action on the
proposed rule. The proposals contained in this notice may be changed in
light of the comments received.
Comments are specifically invited on the overall regulatory,
economic, environmental, and energy aspects of the proposed rule. All
comments submitted will be available, both before and after the closing
date for comments, in the Rules Docket for examination by interested
persons. A report summarizing each FAA-public contact concerned with
the substance of this proposal will be filed in the Rules Docket.
Commenters wishing the FAA to acknowledge receipt of their comments
submitted in response to this notice must submit a self-addressed,
stamped postcard on which the following statement is made: ``Comments
to Docket Number 95-NM-228-AD.'' The postcard will be date stamped and
returned to the commenter.
Availability of NPRMs
Any person may obtain a copy of this NPRM by submitting a request
to the FAA, Transport Airplane Directorate, ANM-103, Attention: Rules
Docket No. 95-NM-228-AD, 1601 Lind Avenue, SW., Renton, Washington
98055-4056.
Discussion
The Direction Generale de l'Aviation Civile (DGAC), which is the
airworthiness authority for France, recently notified the FAA that an
unsafe condition may exist on all Airbus Model A300-600 series
airplanes. The DGAC advises that it has received reports of cracking on
the forward fitting of frame 47 at the level of the last fastener of
the external angle fitting on Airbus Model A300 B2 and B4 series
airplanes. The incidents occurred on airplanes that had accumulated
approximately 20,000 total flights. The cause of such cracking has been
attributed to fatigue. Fatigue cracking on the forward fitting of frame
47 at the level of the last fastener of the external angle fitting, if
not detected and corrected in a timely manner, could result in reduced
structural integrity of the airframe.
The subject area on certain Model A300-600 series airplanes is
identical to that on the affected Model A300 B2 and B4 series
airplanes. Therefore, those Model A300-600 series airplanes may be
subject to the same unsafe condition revealed on the Model A300 B2 and
B4 series airplanes. [AD 93-01-24, amendment 39-8478 (58 FR 6703,
February 2, 1993) requires inspections of the subject area for affected
Airbus Model A300 B2 and B4 series airplanes.] Explanation of Relevant
Service Information
Explanation of Relevant Service Information
Airbus has issued Service Bulletin A300-57-6049, dated September 9,
1994, which describes procedures for performing a rotating probe
inspection to detect cracks of the attachment holes H and I, and
various follow-on actions. (These follow-on actions include installing
new fasteners and reaming/drilling holes.) The service bulletin permits
further flight, under certain conditions, with attachment holes that
are cracked within certain limits. The DGAC classified this service
bulletin as mandatory and issued French airworthiness directive 94-241-
170(B), dated November 9, 1994, in order to assure the continued
airworthiness of these airplanes in France.
Explanation of the Proposed Rule
This airplane model is manufactured in France and is type
certificated for operation in the United States under the provisions of
section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and
the applicable bilateral airworthiness agreement. Pursuant to this
bilateral airworthiness agreement, the DGAC has kept the FAA informed
of the situation described above. The FAA has examined the findings of
the DGAC, reviewed all available information, and determined that AD
action is necessary for products of this type design that are
certificated for operation in the United States.
Since an unsafe condition has been identified that is likely to
exist or develop on other airplanes of the same type design, the
proposed AD would require a rotating probe inspection to detect cracks
of the attachment holes H and I, and installation of a new fastener and
follow-on inspections, if necessary. The actions would be required to
be accomplished in accordance with the service bulletin described
previously.
Differences Between the Proposed Rule and Relevant Service
Information
Operators should note that, unlike the procedures described in the
referenced service bulletin, this proposed AD would not permit further
flight with cracking detected in the attachment holes. The FAA has
determined that, due to safety implications and consequences associated
with such cracking, the subject attachment holes that are found to be
cracked must be repaired. Certain repairs would be required to be
accomplished in accordance with a method approved by the FAA.
In addition, the service bulletin specifies that inspection
thresholds and intervals may be adjusted based on certain average
flight operations of the airplane. However, the FAA has determined that
in certain cases such adjustments would not address the unsafe
condition in a timely manner. Therefore, this proposed AD does not
permit such adjustments. In developing the appropriate compliance time
for the proposed rule, the FAA considered not only the manufacturer's
recommendation, but the safety implications involved with cracking on
the forward fitting of frame 47 at the level of the last fastener of
the external angle fitting and the number of landings that had been
accumulated when cracking was detected. In light of these factors, the
FAA finds the compliance times specified in the proposed AD for
initiating the required actions to be warranted, in that they represent
an appropriate interval of time allowable for the affected airplanes to
continue to operate without compromising safety.
Furthermore, the service bulletin specifies that operators need not
count touch-and-go landings in determining the total number of landings
between two consecutive inspections, even if those landings are less
than five percent of the landings between inspection intervals. Since
fatigue cracking that was found on the forward fitting of frame 47 at
the level of the last fastener of the external angle fitting is
aggravated by landing, the FAA finds that all touch-and-go landings
must be counted in determining the total number of landings between two
consecutive inspections.
Cost Impact
The FAA estimates that 35 Airbus Model A300-600 series airplanes of
U.S. registry would be affected by this proposed AD, that it would take
approximately 37 work hours per airplane to accomplish the proposed
actions, and that the average labor rate is $60 per work hour. The
required kits for accomplishing the inspection would cost approximately
$75 per airplane. Based on these figures, the cost impact of the
proposed AD on U.S. operators is
[[Page 16420]]
estimated to be $80,325, or $2,295 per airplane.
The cost impact figure discussed above is based on assumptions that
no operator has yet accomplished any of the proposed requirements of
this AD action, and that no operator would accomplish those actions in
the future if this AD were not adopted.
Regulatory Impact
The regulations proposed herein would not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this
proposal would not have sufficient federalism implications to warrant
the preparation of a Federalism Assessment.
For the reasons discussed above, I certify that this proposed
regulation (1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under the DOT
Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
and (3) if promulgated, will not have a significant economic impact,
positive or negative, on a substantial number of small entities under
the criteria of the Regulatory Flexibility Act. A copy of the draft
regulatory evaluation prepared for this action is contained in the
Rules Docket. A copy of it may be obtained by contacting the Rules
Docket at the location provided under the caption ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Safety.
The Proposed Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration proposes to amend
part 39 of the Federal Aviation Regulations (14 CFR part 39) as
follows:
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
Authority: 49 U.S.C. 106(g), 40113, 44701.
Sec. 39.13 [Amended]
2. Section 39.13 is amended by adding the following new
airworthiness directive:
Airbus Industrie: Docket 95-NM-228-AD.
Applicability: All Model A300-600 series airplanes, certificated
in any category.
Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must request approval for an
alternative method of compliance in accordance with paragraph (f) of
this AD. The request should include an assessment of the effect of
the modification, alteration, or repair on the unsafe condition
addressed by this AD; and, if the unsafe condition has not been
eliminated, the request should include specific proposed actions to
address it.
Compliance: Required as indicated, unless accomplished
previously.
To prevent fatigue cracking on the forward fitting of frame 47
at the level of the last fastener of the external angle fitting,
which could result in reduced structural integrity of the airframe,
accomplish the following:
(a) Perform a rotating probe inspection to detect cracks of the
attachment holes H and I in accordance with Airbus Service Bulletin
A300-57-6049, dated September 9, 1994, at the applicable time
specified in paragraph (a)(1) or (a)(2) of this AD.
(1) For airplanes on which Airbus Modification 10454 (reference
Airbus Service Bulletin A300-57-6050) has not been installed:
Inspect prior to the accumulation of 13,800 total landings, or
within 750 landings after the effective date of this AD.
(2) For airplanes on which Airbus Modification 10454 (reference
Airbus Service Bulletin A300-57-6050) or Airbus Modification 10155
has been installed: Inspect prior to the accumulation of 18,700
total landings, or within 750 landings after the effective date of
this AD.
(b) If no crack is found, prior to further flight, install a new
fastener in accordance with Airbus Service Bulletin A300-57-6049,
dated September 9, 1994. Repeat the rotating probe inspection
thereafter at intervals not to exceed 5,600 landings.
(c) If any crack in hole I is found to be greater than 0.196
inches in length and/or depth, prior to further flight, repair it in
accordance with a method approved by the Manager, Standardization
Branch, ANM-113, FAA, Transport Airplane Directorate.
(d) If any crack in hole H is found to be greater than .062
inches in length, prior to further flight, repair it in accordance
with a method approved by the Manager, Standardization Branch, ANM-
113.
(e) If any crack in hole H or hole I is found to be less than or
equal to the limits specified in paragraphs (c) and (d) of this AD,
prior to further flight, repair it in accordance with Airbus Service
Bulletin A300-57-6049, dated September 9, 1994.
(f) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, Standardization Branch, ANM-113,
FAA, Transport Airplane Directorate. Operators shall submit their
requests through an appropriate FAA Principal Maintenance Inspector,
who may add comments and then send it to the Manager,
Standardization Branch, ANM-113.
Note 2: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the Standardization Branch, ANM-113.
(g) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to a location where
the requirements of this AD can be accomplished.
Issued in Renton, Washington, on April 9, 1996.
Darrell M. Pederson,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-9233 Filed 4-12-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-9231 Airworthiness Directives; CFM International CFM56-5 Series Turbofan Engines
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16420-16422]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9231]
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
14 CFR Part 39
[Docket No. 95-ANE-63]
Airworthiness Directives; CFM International CFM56-5 Series
Turbofan Engines
AGENCY: Federal Aviation Administration, DOT.
ACTION: Notice of proposed rulemaking (NPRM).
-----------------------------------------------------------------------
SUMMARY: This document proposes the adoption of a new airworthiness
directive (AD) that is applicable to CFM International CFM56-5 series
turbofan engines. This proposal would require rework of the air turbine
engine starter. This proposal is prompted by three reports of air
turbine engine starter failures. The actions specified by the proposed
AD are intended to prevent an air turbine engine starter failure, which
could result in damage to the engine electrical harnesses.
DATES: Comments must be received by June 14, 1996.
ADDRESSES: Submit comments in triplicate to the Federal Aviation
Administration (FAA), New England Region, Office of the Assistant Chief
Counsel, Attention: Rules Docket No. 95-ANE-63, 12 New England
Executive Park, Burlington, MA 01803-5299. Comments may be inspected at
this location between 8:00 a.m. and 4:30 p.m., Monday through Friday,
except Federal holidays.
The service information referenced in the proposed rule may be
obtained from CFM International, Technical Publications Department, One
Neumann Way, Cincinnati, OH 45215; telephone (513)552-2981, fax
(513)552-2816. This information may be examined at the FAA, New England
Region, Office of the Assistant Chief Counsel, 12 New England Executive
Park, Burlington, MA.
[[Page 16421]]
FOR FURTHER INFORMATION CONTACT: Robert J. Ganley, Aerospace Engineer,
Engine Certification Office, FAA, Engine and Propeller Directorate, 12
New England Executive Park, Burlington, MA 01803-5299; telephone (617)
238-7138, fax (617) 238-7199.
SUPPLEMENTARY INFORMATION:
Comments Invited
Interested persons are invited to participate in the making of the
proposed rule by submitting such written data, views, or arguments as
they may desire. Communications should identify the Rules Docket number
and be submitted in triplicate to the address specified above. All
communications received on or before the closing date for comments,
specified above, will be considered before taking action on the
proposed rule. The proposals contained in this notice may be changed in
light of the comments received.
Comments are specifically invited on the overall regulatory,
economic, environmental, and energy aspects of the proposed rule. All
comments submitted will be available, both before and after the closing
date for comments, in the Rules Docket for examination by interested
persons. A report summarizing each FAA-public contact concerned with
the substance of this proposal will be filed in the Rules Docket.
Commenters wishing the FAA to acknowledge receipt of their comments
submitted in response to this notice must submit a self-addressed,
stamped postcard on which the following statement is made: ``Comments
to Docket Number 95-ANE-63.'' The postcard will be date stamped and
returned to the commenter.
Availability of NPRMs
Any person may obtain a copy of this NPRM by submitting a request
to the FAA, New England Region, Office of the Assistant Chief Counsel,
Attention: Rules Docket No. 95-ANE-63, 12 New England Executive Park,
Burlington, MA 01803-5299.
Discussion
This proposed airworthiness directive (AD) is applicable to CFM
International (CFMI) CFM56-5 series turbofan engines. The Federal
Aviation Administration (FAA) has received three reports of air turbine
engine starter failures. During high speed clutch engagements, the
clutch pawls can fail and liberate into several pieces. These liberated
pieces can then jam in between the driveshaft and the hub gear. This
jamming can permit the engine to backdrive the starter, resulting in
failure of the starter. The resulting heat from the failure may cause
damage to the engine electrical harnesses. The installation of a pawl
retaining plate on the driveshaft will assure the pawl remains in the
correct position during high impact re-engagements. This condition, if
not corrected, could result in an air turbine engine starter failure,
which could result in damage to the engine electrical harnesses.
The FAA has reviewed and approved the technical contents of CFMI
CFM56-5 Service Bulletin (SB) No. 80-003, Revision 5, dated October 25,
1994, that describes procedures for the air turbine engine starter
rework.
Since an unsafe condition has been identified that is likely to
exist or develop on other products of this same type design, the
proposed AD would require rework of the air turbine engine starter
prior to October 31, 1996. This compliance end-date has been determined
based on shop visit rates. The actions would be required to be
accomplished in accordance with the SB described previously.
The FAA estimates that 190 engines installed on aircraft of U.S.
registry would be affected by this proposed AD, that it would take
approximately 2 work hours per engine to accomplish the proposed
actions, and that the average labor rate is $60 per work hour. Required
parts would cost approximately $2,400 per engine. Based on these
figures, the total cost impact of the proposed AD on U.S. operators is
estimated to be $478,800.
The regulations proposed herein would not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this
proposal would not have sufficient federalism implications to warrant
the preparation of a Federalism Assessment.
For the reasons discussed above, I certify that this proposed
regulation (1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under the DOT
Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
and (3) if promulgated, will not have a significant economic impact,
positive or negative, on a substantial number of small entities under
the criteria of the Regulatory Flexibility Act. A copy of the draft
regulatory evaluation prepared for this action is contained in the
Rules Docket. A copy of it may be obtained by contacting the Rules
Docket at the location provided under the caption ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Safety.
The Proposed Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration proposes to amend
part 39 of the Federal Aviation Regulations (14 CFR part 39) as
follows:
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
Authority: 49 U.S.C. 106(g), 40113, 44701.
Sec. 39.13 [Amended]
2. Section 39.13 is amended by adding the following new
airworthiness directive:
CFM International: Docket No. 95-ANE-63.
Applicability: CFM International (CFMI) CFM56-5 series turbofan
engines, installed with air turbine engine starter, Part Number 301-
781-201-0, installed on but not limited to Airbus A320 series
aircraft.
Note: This airworthiness directive (AD) applies to each engine
identified in the preceding applicability provision, regardless of
whether it has been modified, altered, or repaired in the area
subject to the requirements of this AD. For engines that have been
modified, altered, or repaired so that the performance of the
requirements of this AD is affected, the owner/operator must use the
authority provided in paragraph (b) to request approval from the
Federal Aviation Administration (FAA). This approval may address
either no action, if the current configuration eliminates the unsafe
condition, or different actions necessary to address the unsafe
condition described in this AD. Such a request should include an
assessment of the effect of the changed configuration on the unsafe
condition addressed by this AD. In no case does the presence of any
modification, alteration, or repair remove any engine from the
applicability of this AD.
-Compliance: Required on or before October 31, 1996, unless
accomplished previously.
To prevent an air turbine engine starter failure, which could
result in damage to the engine electrical harnesses, accomplish the
following:
(a) For air turbine engine starters, Part Number 301-781-201-0,
that have not been previously reworked in accordance with any
revision level of CFMI CFM56-5 Service Bulletin (SB) No. 80-003,
rework the air turbine engine starter in accordance with the
Accomplishment Instructions of CFMI CFM56-5 SB No. 80-003, Revision
5, dated October 25, 1994.
(b) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
[[Page 16422]]
used if approved by the Manager, Engine Certification Office. The
request should be forwarded through an appropriate FAA Principal
Maintenance Inspector, who may add comments and then send it to the
Manager, Engine Certification Office.
Note: Information concerning the existence of approved
alternative methods of compliance with this airworthiness directive,
if any, may be obtained from the Engine Certification Office.
(c) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the aircraft to a location where
the requirements of this AD can be accomplished.
Issued in Burlington, Massachusetts, on March 29, 1996.
Jay J. Pardee,
Manager, Engine and Propeller Directorate, Aircraft Certification
Service.
[FR Doc. 96-9231 Filed 4-12-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-9200 North Pacific Fishery Management Council; Agenda Addition
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16455-16456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9200]
=======================================================================
-----------------------------------------------------------------------
[[Page 16456]]
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Parts 671, 672, 674, and 675
[I.D. 031896B]
North Pacific Fishery Management Council; Agenda Addition
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Addition to meeting agenda.
-----------------------------------------------------------------------
SUMMARY: The agenda for the meetings of the North Pacific Fishery
Management Council (Council) and its advisory bodies, which are
scheduled for April 17-22, 1996, in Anchorage, AK, and that was
published on March 26, 1996, has been amended to include a discussion
of proposed regulations.
DATES: April 17-22, 1996.
ADDRESSES: Anchorage Hilton Hotel, 500 W. 3rd Avenue, Anchorage, AK
99501.
Council address: North Pacific Fishery Management Council, 605 W.
4th Ave., Suite 306, Anchorage, AK 99501-2252.
FOR FURTHER INFORMATION CONTACT: Council staff, Phone: 907-271-2809.
SUPPLEMENTARY INFORMATION: The initial agenda published on March 26,
1996 (61 FR 13155) and is now amended to include Council discussion of
proposed consolidation of regulations for groundfish and crab fisheries
off Alaska and a review of a proposed rule to repeal the Council's
Salmon Fishery Management Plan.
Special Accommodations
This meeting is physically accessible to people with disabilities.
Requests for sign language interpretation or other auxiliary aids
should be directed to Helen Allen, 907-271-2809, at least 5 working
days prior to the meeting date.
Dated: April 9, 1996.
Richard H. Schaefer,
Director, Office of Fisheries Conservation and Management, National
Marine Fisheries Service.
[FR Doc. 96-9200 Filed 4-12-96; 8:45 am]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-9199 Federal Fisheries off Alaska; Salmon Donation Program
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Page 16456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9199]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
DEPARTMENT OF COMMERCE
50 CFR Parts 672 and 675
[I.D. 040996A]
RIN 0648-AH03
Federal Fisheries off Alaska; Salmon Donation Program
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Notice of availability of amendments to fishery management
plans; request for comments.
-----------------------------------------------------------------------
SUMMARY: The North Pacific Fishery Management Council (Council) has
submitted Amendment 26 to the Fishery Management Plan for the
Groundfish Fishery of the Bering Sea and Aleutian Island Area and
Amendment 29 to the Fishery Management Plan for Groundfish of the Gulf
of Alaska (FMPs). These amendments would authorize a voluntary Salmon
Donation Program (SDP) for distribution of Pacific salmon taken as
bycatch in the groundfish trawl fisheries off Alaska to economically
disadvantaged individuals by tax-exempt organizations through a NMFS
authorized distributor. Comments are requested from the public.
DATES: Comments on the proposed amendments to the FMPs must be
submitted by June 10, 1996.
ADDRESSES: Comments on the proposed amendments to the FMPs must be
submitted to Ronald J. Berg, Chief, Fisheries Management Division,
Alaska Region, NMFS, P.O. Box 21668, Juneau, AK, 99802, Attn: Lori
Gravel, or delivered to the Federal Building, 709 West 9th Street,
Juneau, AK. Copies of the proposed amendments and the environmental
assessment/regulatory impact review prepared for the proposed action
may be obtained from the North Pacific Fishery Management Council, 605
West 4th Avenue, Suite 306, Anchorage, AK 99510-2252, telephone 907-
271-2809.
FOR FURTHER INFORMATION CONTACT: Susan J. Salveson, 907-586-7229.
SUPPLEMENTARY INFORMATION: The Magnuson Fishery Conservation and
Management Act (Magnuson Act) requires that each Regional Fishery
Management Council submit any fishery management plan or plan amendment
it prepares to NMFS for review and approval, disapproval, or partial
disapproval. The Magnuson Act also requires that NMFS, after receiving
a fishery management plan or amendment, immediately publish a notice in
the Federal Register that the fishery management plan or amendment is
available for public review and comment. NMFS will consider the public
comments received during the comment period in determining whether to
approve these amendments.
Amendments 26 and 29 would authorize a voluntary SDP. The SDP's
objective is to distribute salmon taken as bycatch in the groundfish
trawl fisheries off Alaska to economically disadvantaged individuals by
tax-exempt organizations, thereby reducing waste from discards in the
groundfish trawl fisheries. Participants in the SDP would voluntarily
retain and process salmon bycatch for delivery to an authorized
distributor selected by NMFS. Vessels and processors would incur the
costs of handling, processing, storing, and delivering donated salmon
to tax-exempt organizations. Vessel operators and processors seeking to
participate in the SDP must receive a Salmon Retention Permit from a
NMFS-authorized distributor prior to retaining or processing salmon for
donation purposes.
Federal regulations to implement Amendments 26 and 29 are scheduled
to be published within 15 days of the date of publication of this
document.
Authority: 16 U.S.C. 1801 et seq.
Dated: April 9, 1996.
Richard H. Schaefer,
Director, Office of Fisheries Conservation and Management, National
Marine Fisheries Service.
[FR Doc. 96-9199 Filed 4-9-96; 4:51 pm]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-9195 Cable Television Leased Commercial Access
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16447-16455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9195]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 76
[CS Docket No. 96-60; FCC 96-122]
Cable Television Leased Commercial Access
AGENCY: Federal Communications Commission.
ACTION: Further Notice of Proposed Rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Commission has adopted an Order on Reconsideration of the
First Report and Order and Further Notice of Proposed Rulemaking
regarding implementation of the leased commercial access provisions of
the 1992 Cable Act. The Order on Reconsideration segment of this
decision may be found elsewhere in this issue of the Federal Register.
The Further Notice of Proposed Rulemaking (``Further Notice'') segment
invites comment on whether the Commission should amend its commercial
leased access rules regarding maximum reasonable rates, part-time
rates, preferential access, tier and channel placement, operators'
obligation to open new leased access channels and bump existing non-
leased access services, selection of leased access programmers,
minority and educational programmers, procedures for resolution of
disputes, and resale of leased access time. The Further Notice is
intended to respond to certain petitions for reconsideration of the
Commission's current leased access rules.
DATES: Comments are due on or before May 15, 1996, and reply comments
are due on or before May 31, 1996. Written comments by the public on
the proposed and/or modified information collections are due May 15,
1996. Written comments must be submitted by the Office of Management
and Budget (``OMB'') on the proposed and/or modified information
collections on or before June 14, 1996.
ADDRESSES: Office of Secretary, Federal Communications Commission, 1919
M Street, NW., Washington, DC 20554. In addition to filing comments
with the Secretary, a copy of any comments on the information
collections contained herein should be submitted to Dorothy Conway,
Federal Communications Commission, Room 234, 1919 M Street, NW.,
Washington, DC 20554, or via the Internet to [email protected], and to
Timothy Fain, OMB Desk Officer, 10236 NEOB, 725--17th Street, NW.,
Washington, DC 20503 or via the Internet to [email protected].
FOR FURTHER INFORMATION, CONTACT: Lynn Crakes, Cable Services Bureau,
(202) 416-0800. For additional information concerning the information
collections contained in this Further Notice, contact Dorothy Conway at
(202) 418-0217, or via the Internet at [email protected].
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Further Notice of Proposed Rulemaking, CS Docket No. 96-60, adopted
March 21, 1996, and released March 29, 1996. The full text of this
decision is available for inspection and copying during normal business
hours in the FCC Reference Center, Room 239, 1919 M Street, NW.,
Washington, DC 20554, and may be purchased from the Commission's copy
contractor, International Transcription Services, Inc., (202) 857-3800,
1919 M Street, NW., Washington, DC 20554.
Synopsis of the Further Notice of Proposed Rulemaking
I. Maximum Rate Formula
1. The Commission believes that its goal in determining a maximum
reasonable rate should be to promote the statutory objectives of
competition and diversity in programming sources without financially
burdening the operators, rather than to develop a price that will
necessarily be lower or higher than rates derived under the current
highest implicit fee formula. The Commission believes that, if the
maximum rate for leased access is reasonable, the resulting demand for
leased access channels will also be reasonable. It is in this context
that the Commission is re-examining the highest implicit fee formula.
The Commission believes that the highest implicit fee formula is likely
to overcompensate
[[Page 16448]]
cable operators and does not sufficiently promote the goals underlying
the leased access provisions. The Commission has therefore developed an
alternative that it believes may better promote the goals of leased
access.
A. Economic Justification for the Proposed Cost/Market Rate Formula
2. The Commission tentatively concludes that its approach to
setting a maximum rate should (a) encourage the use of the set-aside
channels without giving programmers a subsidy, and (b) allocate the
channels to the leased access programmers that value the channels most
(i.e., are willing to pay the most) when the demand for leased access
channels exceeds the statutory set-aside requirement. The Commission
therefore tentatively concludes that the maximum rate for leased access
should depend on whether a cable operator is leasing its full statutory
set-aside requirement. The Commission requests comment on these
tentative conclusions.
3. The Commission also tentatively concludes that, when the set-
aside capacity is not fully leased to unaffiliated programmers (or
minority or educational programmers pursuant to Section 612(i) of the
Communications Act), the maximum rate should be based on the operator's
reasonable costs (i.e., the costs of operating the cable system plus
the additional costs related to leased access), including a reasonable
profit. The Commission believes that a cost-based pricing scheme can
promote leased access without providing a subsidy to programmers. The
purpose of the cost formula is not to lower rates; it does not ensure
that leased access programming will increase or that the maximum rate
for leased access programmers will decrease. Programmers who cannot
afford the cost-based rate will not and should not gain access because
they would impose a financial burden on operators.
4. In addition, the cost formula is not intended to guarantee that
all operating costs will be fully recovered, but is intended to permit
the operator to continue to recover the same proportion of operating
costs from subscriber revenues as were recovered before the channel was
used for leased access. Thus, under the proposed cost formula, the
operator would not be adversely affected in terms of its ability to pay
operating costs. The Commission asks for comment on these tentative
conclusions.
5. The portion of the maximum rate for leased access channels
included in a tier of programming which the Commission proposes be paid
by the leased access programmer (the ``programmer charge'') would be
based on the reasonable costs (including reasonable profits) that
leased access imposes on the operator. Operators would be allowed to
recover only those types of opportunity costs which can reasonably be
attributed to carriage of the leased access programming and which are
reasonably quantifiable.
6. On the other hand, the Commission tentatively concludes that if
the operator satisfies its set-aside requirement, the maximum rate
should be a market rate determined by negotiation between the operator
and the leased access programmer. The Commission believes that market
rates will most effectively determine which programmers should receive
leased access on the system when the operator's set-aside is satisfied.
Within the leased access market, those programmers who are able to pay
the most for channel capacity would presumably be able to acquire the
set-aside channels. The higher price which some leased access
programmers may offer to pay for the channel capacity reflects the
greater ability and willingness of consumers to pay for the programming
to be carried on each of these channels. Thus, relying on market prices
to allocate channel capacity provides consumers with an efficient
mechanism to communicate their preferences about which leased access
programming should be carried by the operator. The Commission seeks
comment on these tentative conclusions.
7. The Commission recognizes that the market rate may rise above
the operator's costs; such prices, however, are the result of
competition among unaffiliated programmers to use the statutory leased
access channel capacity. The Commission believes that, so long as the
operator is accommodating leased access to the full extent required by
Congress and Section 612, any price increase would be reasonable. Under
the Commission's proposal, the operator cannot charge market rates if
the number of channels leased falls below the number designated by the
statute. Thus, a higher rate would reflect excess demand by programmers
for the operator's statutory channel capacity.
8. In general, market power refers to the ability of a seller to
restrict output below the desirable level and to set a price above
costs (i.e., to set an unreasonable rate). In the leased access
context, Congress has defined the appropriate level of output by
establishing the set-aside requirement, and the operator cannot
restrict the output below this level. Therefore, even if the market
rate rises above the operator's costs, the Commission does not believe
that the operator is charging unreasonable rates since Congress has
determined the appropriate level of output. The Commission seeks
comment on these tentative conclusions.
9. The Commission seeks comment on the extent to which negotiated
rates are adequate to address Congress' mandate that the Commission set
a maximum reasonable rate and the extent to which negotiated rates
could be used to exercise editorial control over the leased access
channels, contrary to Congress' intent. The Commission also asks for
comment on how operators may choose between competing programmers. For
instance, the Commission asks if operators should be required to select
the highest bidder. The Commission also seeks comment on any
alternatives for setting maximum rates when an operator is leasing its
full set-aside capacity.
10. The Commission does not propose to maintain the programmer
categories established under the highest implicit fee formula under the
proposed cost formula. Our proposed cost formula is based purely on the
operator's costs associated with its system and leased access
programming. and does not base the maximum rate on the economics which
the leased access programmer faces. The Commission therefore does not
believe that treating different programmers differently is appropriate
under the cost formula. Accordingly, the Commission tentatively
concludes that it will not establish programmer categories for
implementation of the cost formula, and requests comment on this
tentative conclusion.
B. Calculation of the Maximum Rate Under the Proposed Cost Formula
1. Designating Channels
11. The Commission proposes that the cost formula determine a
maximum leased access rate based on the cost of the channels designated
to be used for leased access by an operator. The opportunity costs
would be derived from the programming that is actually bumped from the
operator's programming line-up.
12. To derive the channel cost under the proposed cost formula, an
operator would first select the specific channels it would use for
leased access programming, as demand arises, in order to meet its set-
aside requirement. The Commission proposes that the operator would be
required to place these channel designations, including the channel
numbers and the programming carried on each channel at
[[Page 16449]]
the time the operator calculates the maximum rate under the cost
formula, in its public file. The operator would be required to
designate enough channels to satisfy its full set-aside requirement.
Basing the rate on the actual designated channels would be attractive
from an economic perspective because the compensation to the operator
would be based on its actual costs of leasing the designated channels.
The Commission requests comment on this proposal generally. The
Commission also requests comment on how the Commission might restrict
an operator's ability to manipulate its designation of channels so as
to derive a prohibitively high rate in an effort to impede leased
access. For example, the Commission asks whether there should be a
presumption against an operator designating only its highest valued
channels in such a way as to inflate its maximum leased access rate.
The Commission also asks whether operators should be permitted to base
their maximum rate calculation on affiliated programming, if the
operator designates channels that carry such affiliated programming.
2. Operating Costs
13. The first component of the proposed cost formula is the
operating costs. The Commission tentatively defines operating costs to
include fixed and variable costs that the cable operator incurs
regardless of what programming is carried over the channel. Commission
data shows that, in the tier context, this component, including a
reasonable rate of return, is substantially covered by the revenue the
operator receives from subscribers. Using subscriber revenue as a proxy
for the operating costs for tiered channels allows the operator to
recover its operating costs to the same extent as it did with non-
leased access programming on the channel. The Commission therefore
tentatively concludes that it is appropriate for purposes of the
proposed cost formula to designate subscriber revenue as the operator's
payment toward its operating costs. Thus, the operator would not need
to calculate its operating costs for channels that are currently on
programming tiers (or dark), and would instead use the amount
representing the average subscriber revenue per channel as its
operating costs per channel in calculating the cost formula.
14. Similarly, the Commission proposes that operators would not
need to calculate their operating costs for channels that are currently
carried as premium services or on unregulated programming tiers. As
with channels carried on regulated programming tiers, the Commission
believes that using the subscriber revenue for an unregulated channel
as its payment toward its operating costs will allow the operator to
recover its operating costs to the same extent as it does with the non-
leased access programming carried on the channel. The Commission
recognizes that unregulated subscriber revenue might recover more than
the operator's operating costs; however, the Commission believes that
any profit which is generated from subscriber revenue could be viewed
as an opportunity cost imposed on the operator who forgoes these
profits when this channel is used to carry leased access programming.
For simplicity, the Commission proposes not to require the operator to
deduct this lost profit from the operating cost portion of the formula
simply to add it back to the opportunity cost portion. The Commission
seeks comment on these tentative conclusions.
3. Net Opportunity Costs
15. The Commission proposes that the second component of the cost
formula, ``net opportunity costs,'' would include the reasonable costs
(or cost savings) that the operator incurs by leasing the channel to
the leased access programmer that it would not have incurred had it
continued with the current use of the channel. In other words, the net
opportunity cost portion of the cost formula would include reasonably
quantifiable costs (or savings) associated with carrying the leased
access programming instead of other programming. The Commission
recognizes that our proposed formula does not incorporate all
opportunity costs. As discussed below, some costs are not easily
quantified; other costs the Commission does not believe are appropriate
to include in the leased access fee. In order to provide some
uniformity in the calculation of opportunity costs, the Commission
proposes to identify categories of quantifiable costs which operators
may include in calculating the cost formula.
16. The first category of opportunity costs for which the
Commission proposes to allow recovery is lost advertising revenues.
This type of lost revenue would be a quantifiable opportunity cost when
the operator is forced to bump a non-leased access programmer to
accommodate the leased access programmer, or when the operator is
forced to forego placing new programming on a dark channel. The
Commission does not propose to reduce the opportunity cost for lost
advertising revenue by the value of any advertising time the operator
may receive from the leased access programmer. The Commission believes
that the leased access programmer is entitled to pay no more than the
maximum rate, regardless of whether the operator receives advertising
time. If the leased access programmer does not want to give the
operator advertising time, the Commission tentatively concludes that
the programmer is not required to do so. On the other hand, if the
programmer wishes to bargain for a lower rate in exchange for
advertising time, the Commission believes such bargaining is fully
permitted by our rules and is a matter to be negotiated between the
parties. The Commission requests comment on these tentative
conclusions.
17. The Commission proposes that the second opportunity cost
category should be lost commissions. If, for example, to accommodate a
leased access channel, an operator were to bump a direct sales
programmer from which the operator receives a percentage of the
programmer's revenues, those commissions constitute a quantifiable
opportunity cost which the Commission proposes be factored into the
cost formula. The Commission requests comment on this proposal.
18. On the other hand, the Commission also believes that any
program license fee that the operator does not have to pay because the
non-leased access programming is not being carried is a cost savings.
The Commission believes that such a cost savings should be factored
into the calculation of the operator's net opportunity cost. The
Commission tentatively concludes that cable operators should be
required to deduct any license or programming fees that the operator
does not have to pay due to the carriage of the leased access
programming. One possible concern is the extent to which either the
operator or the programmer can influence the license fees paid for non-
leased access programming. The Commission asks how, if at all, the
operator or programmer can influence the programming license fee and
how that influence might affect the Commission's measurement of
programming cost savings under the proposed cost formula.
19. Another cost category which the Commission believes may be
appropriate relates to technical costs (e.g., the cost of scrambling)
incurred by the operator in offering leased access programming. If, for
example, a programmer asks to lease channel capacity for a premium
service, an operator may incur additional costs of
[[Page 16450]]
limiting that programming to subscribers of the leased access service.
Thus, under our proposed cost formula, those costs could be included in
calculating the maximum rate. The Commission proposes to distinguish
these technical costs from those for technical support for which the
operator is permitted to charge separately. The Commission requests
comment on these proposals.
20. Another potential opportunity cost category could be any
reduction in the tier charge that the operator charges the subscriber
when the reduction is caused by substituting the leased access
programming for non-leased access programming. Although the Commission
believes that there would be no such lost subscriber revenue under the
Commission's going forward methodology, it seeks comment on how an
operator might be able to demonstrate that its subscriber revenue is
quantifiably reduced on a specific designated channel because of the
leased access programming carried on that same channel, and, if this is
possible, whether the operator should be permitted to include this loss
in the cost formula.
21. The Commission tentatively concludes that the cost formula
should not explicitly include revenue lost because of a purported loss
in subscribership to a particular tier because particular programming
is dropped. The Commission tentatively concludes that, in the tier
context, any such subscriber loss is too speculative to measure
accurately. In the premium context, however, the Commission believes
that this subscriber loss is included by allowing the operator to
include an amount in the proposed cost formula equal to the total
subscriber revenue for the bumped channel. In addition, operators would
be able to consider any potential loss of subscribership in deciding
which channels to designate for leased access. Nonetheless, the
Commission requests comment on how our cost formula might measure
changes in subscriber penetration due to the addition of leased access
programming.
22. The Commission also recognizes that there may be opportunity
costs associated with using a channel for leased access which does not
currently carry programming, i.e., a dark channel. The Commission
believes that the presence of dark channels on a system does not
necessarily indicate a lack of available programming. As an example, an
operator might reserve a dark channel in anticipation of more desirable
programming becoming available in the future. The Commission proposes
to allow operators to approximate the opportunity costs of dark
channels by assigning dark channels the per channel opportunity cost of
the programmed channels on the system with opportunity costs that have
the lowest positive values, not including programmed channels that the
operators are required to carry such as must-carry stations, public,
educational and governmental (``PEG'') access channels, or any leased
access channels already being carried. If one designated channel is
dark, the operator would assign it the opportunity cost of the
programmed channel on the system which has the opportunity cost with
the lowest positive value; if an operator designates two dark channels
for leased access, it would assign the opportunity cost of the two
programmed channels on the system which have the lowest opportunity
cost with a positive value, and so on. The Commission seeks comment on
this proposal.
23. The Commission believes that it is necessary to use only
channels with positive opportunity costs as proxies for dark channels,
because operators generally will not carry programming that has a
negative economic benefit to them, which is what a negative opportunity
cost value would indicate. The Commission suspects that, if a channel
has a negative net opportunity cost, it may be because the cost formula
does not include an approximation of the value of subscriber
penetration. Although the Commission does not believe that it can
accurately measure loss in subscriber penetration that may be caused by
substituting leased access programming for non-leased access
programming for purposes of the cost formula, the Commission
tentatively concludes that using only those channels with a positive
opportunity cost as proxies for dark channels will compensate for this
limitation. As also stated above, however, the Commission requests
comment on how it might measure changes in subscriber penetration due
to the addition of leased access programming. The Commission asks how
it might identify which channels should not be deemed to have the
lowest opportunity cost for purposes of approximating the opportunity
costs of dark channels.
4. Averaging the Per Channel Costs for All Designated Channels
24. Because the operator may select designated channels from the
basic service tier (``BST''), any cable programming service tier
(``CPST''), or premium services, the Commission believes that the
corresponding per channel costs will vary depending on the number of
subscribers that receive each service. Consequently, the Commission
proposes that all costs must be computed on a per channel basis rather
than on a per subscriber basis. As discussed below, the per channel
costs for each designated channel could then be used to determine the
average channel costs of a designated channel.
25. The Commission tentatively concludes that applying an average
channel cost to leased access will promote fairness because all leased
access programmers will be subject to the same maximum rate. The
Commission notes that an operator's designation of leased access
channels is made independently of the leased access programmer's
request for access. The Commission does not believe that the operator
should be required to bump the same type of service (i.e., a channel on
the BST, a CPST, or a premium channel) that is requested by the leased
access programmer. The Commission also believes that averaging the
channel costs would mitigate against the operator's ability to
manipulate the cost formula by designating one high cost channel and
requiring a particular leased access programmer that the operator wants
to keep off its system to pay the opportunity costs for that particular
programming.
26. Therefore, the Commission proposes that, after the operator has
calculated the per channel opportunity costs and added the
corresponding subscriber revenue (as a proxy for operating costs) to
obtain a total per channel cost, the operator should average these per
channel costs by adding them all together and dividing by the number of
designated channels. The result would be the Commission's proposed
cost-based maximum rate for a leased access channel if the operator has
not fulfilled its leased access set-aside requirement. The Commission
seeks comment on whether averaging the per channel costs is appropriate
under the proposed cost formula.
5. Calculating the Leased Access Programmer Charge
27. Under our proposed cost formula, once the operator determines
the maximum rate as set forth above, the operator would determine how
much of that maximum rate it could charge the leased access programmer.
If the leased access programming is to be carried on a programming
tier, the proposed cost formula would allow the operator to collect and
retain revenue for that channel from the subscribers to the tier as
payment for its operating costs. However, to avoid a double recovery by
[[Page 16451]]
the operator, the operator would not be permitted to include these
operating costs in computing the portion of the maximum rate that the
operator may charge the leased access programmer. The operator would
therefore be required to subtract the total subscriber revenue for the
channel from the maximum rate. The difference would be the programmer
charge, i.e., the maximum amount that the operator would be permitted
to charge the leased access programmer directly. The Commission
requests comment on this proposal.
28. The Commission tentatively concludes that if a leased access
channel is to be carried as a premium service, the full maximum rate
derived from the cost formula could be charged to the leased access
programmer, to the extent that all of the monthly subscriber revenue
for the leased access channel flows to the leased access programmer.
The Commission believes that this is appropriate because the Commission
cannot assume that the leased access premium service will attract the
same subscribership as the non-leased access programming. Thus, the
operator would be allowed to charge the full maximum rate which
recovers its costs. In return, the programmer would receive all the
subscriber revenues from its premium service. The Commission requests
comment on these tentative conclusions.
6. Adjustment for Part-Time Administrative Costs
29. Regardless of whether the leased access programming is carried
on a tier or as a premium service, the Commission recognizes that there
may be additional costs associated with part-time leases. The
Commission therefore tentatively concludes that operators should be
permitted to charge a part-time leased access programmer the actual
incurred costs of negotiating and administering the programmer's part-
time contract which exceed what normally would be spent in negotiating
and administering a full-time leased access programming contract. The
Commission does not believe that it is more expensive for an operator
to negotiate and administer a full-time leased access programming
contract than it is for them to negotiate and administer a full-time
non-leased access programming contract. The Commission therefore
proposes not to allow operators to charge full-time leased access
programmers for administrative costs. Under our proposal, the
additional costs associated with part-time leasing would be added to
the programmer charge derived in accordance with the procedures
described above for determining rates for leased access programming
carried on a tier or as a premium service. The Commission asks for
comment on these tentative conclusions.
C. Market Rate as the Maximum Rate
30. As discussed above, the Commission believes that, once an
operator fulfills its set-aside requirement, the maximum cost-based
rate should be replaced by a market based rate and not capped by the
proposed cost formula. Under this proposal, the operator would be
allowed to charge whatever rate it could negotiate with the leased
access programmers, as long as the operator continues to meet its
statutory set-aside requirement. Whether the operator retains the
subscriber revenue would be a matter negotiated between the parties.
Leased access programmers would then be forced to compete against each
other for limited channel space, much the same as non-leased access
programmers do. The Commission tentatively concludes that the pressure
on the operator to meet its set-aside requirement and the competition
between the programmers seeking leased access will determine an
appropriate market rate.
31. The Commission proposes that operators would be permitted to
renegotiate the rate charged leased access programmers upon renewal of
each programmer's contract, as long as the operator continues to
fulfill its set-aside requirement. Thus, if the set-aside requirement
has been filled, a current leased access programmer who gained access
at the cost formula rate would have an opportunity at the end of its
contract to bid against rival leased access programmers to obtain the
right to continue to be carried on the system. If the amount of leased
access programming being carried drops below the set-aside requirement,
the operator would be required to return to the cost formula to
determine the maximum rate on new programming contracts, as well as on
contracts that are renewed at any time while the set-aside requirement
is not met. The Commission seeks comment on this proposal generally,
and asks whether this proposal complies with our statutory mandate to
establish maximum reasonable rates. The Commission also seeks comment
on whether operators could exercise editorial control over leased
access programmers contrary to Congress' intent, if rates for leased
access were market based. In addition, the Commission requests comment
on alternatives for setting maximum reasonable rates when an operator
has satisfied its set-aside requirement.
D. Transition Period
32. The Commission tentatively concludes that, on the effective
date of the maximum rate-setting rules which the Commission will adopt
in response to this Further Notice, operators should be required to
implement the adopted formula, whatever it may be, for (a) programmers
that are currently leasing channel capacity from an operator and (b)
programmers demanding leased access on a system that has unused (or
dark) channel capacity. The Commission requests comment on this
tentative conclusion. The Commission believes, however, that transition
relief may be appropriate in the case of new leased access requests
with respect to systems that do not have any dark channels, where
operators would be forced to bump existing programming in order to
accommodate a leased access request. The Commission recognizes that,
when an operator places non-leased access programming on a channel
designated for leased access, the operator and programmer generally
assume the risk that the programming may have to be bumped for a leased
access programmer. The risk of having to bump, however, may increase
with the introduction of whatever formula the Commission adopts,
depending on the extent to which rates using the adopted formula affect
the utilization of leased access. A transition to the new formula might
(a) avoid unduly penalizing operators and programmers for decisions to
use designated channels for non-leased access programming that were
reasonably based on circumstances created by the Commission's previous
rules, and (b) mitigate against the sudden disruption to subscribers'
programming line-ups. The Commission therefore requests comment on
whether it should phase in the proposed cost formula, or any other rate
setting formula which the Commission may adopt, for those leased access
requests that can only be accommodated by bumping existing non-leased
access programming. The Commission also asks whether such transition
relief should be applied to dark channels for which the operator has
programming contracts in place. The Commission asks for comment on how
a transition might be accomplished and the specific mechanism the
Commission should employ. In this context, commenters should explain
how any proposed transition period would be consistent with the
Commission's obligation to establish maximum reasonable rates for
leased access.
[[Page 16452]]
E. Adjusting Leased Access Rates Over Time
33. As described above, the proposed cost formula would require
operators to designate the specific channels they will use to satisfy
their set-aside requirement. The Commission proposes that an operator's
selections are binding and the designated channels must be the ones
that are in fact used to accommodate leased access requests. The
Commission does not believe, however, that operators should be required
to adhere to their initial designations indefinitely, since the
popularity and profitability of a designated channel could unexpectedly
increase and the operator might no longer want to use it for leased
access. The Commission tentatively concludes that, in order to account
for change, operators should be allowed to redesignate their unused
leased access channel capacity on an annual basis. The Commission
requests comment on these tentative conclusions, and asks how an
operator's maximum leased access rates should be adjusted over time.
Our presumption in allowing operators this flexibility is that
operators generally will want to use their least profitable channels
for leased access, and so will redesignate a channel that is less
profitable than the one that is being replaced. If an operator
redesignates a channel that is significantly more profitable than the
previously selected channel, and the redesignation would raise the
operator's maximum rate, the Commission tentatively concludes that the
redesignation would be evidence of an attempt to inflate the maximum
rate in contravention of the purposes of our rules and the statute.
34. In addition to permitting redesignation of leased access
channels, the Commission tentatively concludes that operators should be
permitted to recalculate their maximum rates annually, in order to
account for changes in the allowable opportunity costs of designated
channels that currently are not being used for leased access. The
Commission requests comment on whether this annual recalculation is
appropriate, and on whether it should occur on the anniversary of the
effective date of our modified rules, each calendar year, or on some
anniversary which is most appropriate for an individual operator (to
coincide with its annual audits, for example). The Commission believes
that allowing an operator to update its rates will better approximate
the operator's changing costs of satisfying its leased access
requirement. The Commission requests comment on whether our maximum
rate should be cumulative over the life of the leased access contract
so that an operator and a leased access programmer have the option, if
mutually agreed upon, to establish a rate below the maximum rate during
the first part of the contract term and a rate above the maximum rate
during a subsequent part of the contract term, and asks whether such an
option would provide operators with the opportunity to evade the
maximum rate.
II. Part-Time Rates
35. The Commission's current rules permit prorating the maximum
monthly rate as one method of deriving rates for shorter periods. The
rules the Commission adopted on reconsideration provide that operators
may establish a schedule of rates, or rate card, for different times of
day, pursuant to which, if all times were used, the sum of the part-
time charges for any single leased access channel within a 24-hour
period would not exceed its maximum rate for the leased access channel
if the daily rate were prorated evenly from the monthly maximum rate
and were calculated in accordance with the Commission's rules. The
Commission requests comment, however, on whether such proration is
appropriate under our proposed cost formula, and, more specifically, if
it is, whether the restriction that the part-time rates for a 24 hour
time period total no more than the maximum rate is appropriate under
the proposed cost formula. The Commission seeks comment on whether, if
the cost/market rate formula were to be adopted for full-time leased
access use, an entirely different method of calculating the maximum
reasonable rate for part-time use would be more appropriate. If so, the
Commission requests comment on how to define part-time leased access
use, e.g., leases for less than a 24 hour channel, for 12 hours, for
eight hours, or fewer.
III. Preferential Access
36. The Commission is concerned that not-for-profit programmers are
being excluded from leased access, but the record lacks sufficient
evidence to make a determination of whether the goal of diversity is
being achieved and, if it is not being achieved, whether one of the
reasons is that rates are unaffordable for not-for-profit entities. The
Commission therefore invites interested parties to demonstrate, with
specific examples, whether current leased access programming sources
are sufficiently diverse and whether preferential treatment for not-
for-profit programmers would significantly affect the diversity of
current programming sources. The Commission requests commenters to
provide precise data indicating whether or not rates charged to leased
access programmers are affordable for not-for-profit entities.
Commenters in support of preferential treatment for not-for-profit
programmers should explain their position within the context of our
previously stated belief that operators should not have to subsidize
leased access programmers and the statutory requirement that leased
access use should not adversely affect the operation, financial
condition, or market development of the cable system. Those commenters
should also address the extent to which preferential treatment is
necessary given that public access is already provided for under
current PEG requirements.
37. The Commission seeks comment on whether, if the Commission
concludes that some form of preferential treatment is appropriate, a
lower maximum rate should apply to not-for-profit leased access
programmers, and if so, what rate should apply and why. Alternatively,
if the proposed cost formula is adopted, the Commission seeks comment
on whether operators should be required to exclude lost advertising
revenues or lost commissions from maximum rates charged to not-for-
profit leased access programmers. In addition, the Commission solicits
comment on whether not-for-profit leased access programmers should be
entitled to preferential rates during any transition period that might
be adopted for the cost formula.
38. Preferential rates, if adopted, would provide no relief if not-
for-profit leased access programmers are denied access to a system
because the operator has met its set-aside requirement. The Commission
seeks comment on whether the statute would permit us to consider a set-
aside requirement for not-for-profit programmers. If so, the Commission
asks whether the public interest would be served by such a set-aside
requirement and how it should be structured. For example, would a
reservation of 25% of leased access capacity be appropriate? Should a
set-aside requirement be temporary or permanent, and if temporary, what
length of time would be appropriate? Furthermore, if the proposed cost
formula were adopted, how would the need for a set-aside requirement be
affected, given that the formula allows market rates to prevail when
demand for leased access exceeds an operator's set-aside requirement?
If a such a set-aside requirement were imposed, the Commission would
stipulate that until a
[[Page 16453]]
not-for-profit leased access programmer demanded access to a not-for-
profit set-aside channel, the operator must use the channel for for-
profit leased access programming, unless no demand exists, in which
case it may use it for its own programming.
39. The Commission also seeks comment on whether preferential
treatment should be limited to not-for-profit programmers or whether
certain types of for-profit programmers should also receive
preferential treatment. The Commission believes that there is
insufficient evidence on the record for us to indicate that LPTV
stations and minority and educational programmers should receive
preferential treatment, but the Commission invites commenters to
demonstrate with specific evidence why a preference for certain types
of for-profit programmers may be appropriate. The Commission also seeks
comment on whether a ``not-for-profit programmer'' should be defined as
a programmer with Section 501(c)(3) tax-exempt status or whether
another classification should apply.
IV. Tier and Channel Placement
40. The statutory commercial leased access provisions are intended
to provide programmers with a ``genuine outlet'' for their programming.
According to the legislative history of the 1992 amendments to Section
612, the Commission should ensure that programmers are carried on
channel locations that ``most subscribers actually use,'' a guideline
that should be interpreted in light of the statutory provision that
leased access use should not adversely affect the market development of
a cable system. The Commission tentatively concludes that, absent some
compelling reason (such as technical considerations), leased access
programmers have the right to be placed on a tier, as opposed to being
carried as a premium service. The Commission believes that, if an
operator were permitted to force leased access programming to be
offered as a premium service, the programmer would not be assured
access to most subscribers.
41. Our 1995 Competition Report states that a large percentage of
subscribers (more than 90%) receive CPSTs. The Commission tentatively
concludes that both the BST and the CPST with the highest subscriber
penetration qualify as genuine outlets because most subscribers
actually use them. However, the Commission seeks comment on whether a
CPST that does not boast the highest subscriber penetration could
qualify as a genuine outlet, and under what circumstances. For example,
should the Commission interpret the term ``most subscribers'' as
greater than 50%? In order to permit flexibility in the market
development of an operator's cable system, the Commission would allow
the operator to decide whether it is appropriate for its particular
system to carry the leased access channel on the BST or on a CPST that
qualifies as a genuine outlet. To ease technical burdens on operators,
the Commission proposes to permit operators to place leased access
programming that it must scramble or trap out with other programming
that is also scrambled or trapped out. The Commission also proposes to
allow operators to consider these technical concerns when deciding
whether to place leased access programming on either the BST or a CPST
that qualifies as a genuine outlet. The Commission seeks comment on
these tentative conclusions.
V. Obligation to Open New Channels and Bump Existing Non-Leased Access
Services
42. Although cable operators that have not fulfilled their
statutory leased access set-aside requirement are generally required to
accommodate requests for leased access time, the Commission recognizes
that there may be circumstances in which substantially greater harm to
the subscribers, the operator, and the non-leased access programmer may
result if the leased access request is accommodated than would result
for the leased access programmer if the leased access request is not
accommodated. The Commission seeks comment on whether, when a specific
time slot requested by a part-time leased access programmer is already
leased, an operator should be required to open up another leased access
channel, if the operator can otherwise reasonably accommodate the
leased access request in a comparable time slot. The Commission
believes that the possible disruption of existing programming or the
preclusion of future programming in order to accommodate only a few
hours of leased access demand, where adequate and comparable capacity
is available on an existing leased access channel, will not advance the
goal of assuring that the widest possible diversity of information
sources are made available to the public from cable systems in a manner
consistent with the growth and development of cable systems. However,
the Commission solicits comment on whether it is sufficient to require
a ``reasonable accommodation in a comparable time slot'' or whether the
standard should be further defined. The Commission also seeks comment
on whether the operator should be required to remove an existing full-
channel programmer if the leased access programmer agrees to a minimum
time increment. The Commission tentatively concludes that the guarantee
of a minimum time increment of eight hours within a 24-hour period
would be a reasonable pre-condition for requiring an operator to open
up an additional channel for leased access.
VI. Selection of Programmers
43. The Commission has not specifically addressed the manner in
which lessees are to be selected for placement on leased access
channels. The Commission tentatively concludes that a first-come,
first-served approach is preferable so long as available leased access
channel capacity is sufficient to accommodate incoming leased access
requests. However, if an operator's available leased access channel
capacity is insufficient to accommodate all pending leased access
requests, the Commission seeks comment on whether operators should be
allowed to accept leased access programmers on a basis other than
first-come, first-served. The Commission believes that allowing cable
operators limited ability to make content-neutral selections from among
leased access programmers may be appropriate in order to enable them to
avoid certain situations that might ``adversely affect the operation,
financial condition, or market development of the cable system.''
44. For example, operators may wish to give priority to leased
access programmers that request a full-time lease over a programmer
seeking to lease only part-time, thus minimizing the disruption to the
subscriber, as well as easing the administrative burdens on the
operator. The Commission is not suggesting that an operator would be
allowed to completely refuse part-time requests for leased access, but
is asking whether, when the operator cannot accommodate all leased
access requests within its set-aside requirement, the operator should
be allowed to select a full-time applicant over a part-time applicant.
At the same time, the Commission is concerned that allowing a
preference for full-time programmers may not further the statutory goal
of promoting the widest possible diversity of programming sources,
since encouraging part-time use could result in a wider variety of
programmers. To that end, the Commission seeks comment on whether
certain circumstances favor shifting the preference to the competing
part-time applicant, for example if the part-time applicant is a not-
for-profit entity.
[[Page 16454]]
Alternatively, instead of allowing a preference for the last available
leased access channel, the Commission seeks comment on whether it
should require one or two leased access channels to be used exclusively
for part-time use. The Commission further seeks comment on whether it
should allow operators to base their selections on any content-neutral
criteria other than the full-time/part-time distinction.
VII. Minority and Educational Programmers
45. Section 612(i) of the Communications Act permits a cable
operator to place programming from a qualified minority or educational
programming source on up to 33% of the cable system's designated leased
access channels. The Commission seeks comment on whether the
requirements for tier and channel placement, as proposed above, should
apply to minority and educational programming that is carried as a
substitute for leased access programming. Specifically, should
operators be required to carry minority and educational programming on
the BST or a CPST that qualifies as a genuine outlet, if they are
claiming it as a substitute for leased access? There is no explicit
language in the statute or legislative history stipulating that
minority and educational programming should be received by most
subscribers. However, Section 612(i)(1) provides that ``a cable
operator required by this section to designate channel capacity for
commercial use may use any such channel capacity'' for minority and
educational programming (emphasis added), suggesting that Congress
envisioned that the same channels that would have been used for leased
access should be used for any substituted minority and educational
programming. Moreover, to allow a less stringent standard for minority
and educational programming would seem to defeat the use of such
programming as a substitute for leased access. Therefore, the
Commission tentatively concludes that minority and educational
programming should not qualify as a replacement for leased access
programming unless it is carried on the BST or a CPST that qualifies as
a genuine outlet. As with leased access, the operator could choose on
which qualifying tier to carry the programming.
VIII. Procedures for Resolution of Disputes
46. In order to streamline the Commission's complaint process, the
Commission proposes to stipulate that a leased access programmer may
not file a complaint alleging that an operator's maximum rate was
calculated incorrectly unless an independent certified public
accountant has first reviewed the operator's calculations and made an
independent determination of the maximum rate. If the operator and
leased access programmer cannot agree on a mutually acceptable
accountant, the operator may select any independent certified public
accountant. The review must be conducted within 60 days of the leased
access programmer's request to the operator for a review. The operator
would be expected to provide the accountant with all information
necessary to support its rate calculation, including an explanation of
how the rate was calculated. The findings of the accountant would be
certified in a final report and provided to both parties. The
Commission seeks comment on whether, in the absence of any evidence to
the contrary, the Commission should consider a determination by the
accountant that the operator's rate exceeds the permissible rate to
constitute clear and convincing evidence that the rate is unreasonable.
47. The Commission tentatively concludes that, in order to provide
notice to other potential leased access programmers, the accountant's
final report should be filed in the cable system's local public file.
The Commission seeks comment on this proposal. Alternatively, the
Commission seeks comment on whether operators should be required to
provide the report upon request to potential leased access programmers.
The Commission seeks comment on what type of information should be
contained in the accountant's final report and what type of information
would be proprietary and thus kept confidential. The Commission also
seeks comment on how the accountant's expenses should be paid. For
example, should the parties share the expenses equally or should the
full amount be paid by the party that the accountant's report proved
was incorrect?
48. In light of the streamlining proposed above, the Commission
does not believe that it is necessary for the Commission to set a time
limit within which complaints will be decided by the Commission. Each
leased access complaint proceeding differs in complexity and requires
varying amounts of Commission time and resources. In addition, the
Commission believes that shortening the operator's response period
would be unfair to the operator.
IX. Resale of Leased Access Time
49. The Commission seeks comment on whether the Commission should
permit leased access time to be resold by the lessee. Leased access
programmers are of course entitled to sell time to advertisers. The
question here is whether the Commission should allow persons
unaffiliated with the operator to lease time from the operator and then
sell it as programming time to other unaffiliated persons for a profit.
The Commission seeks comment on the advisability of allowing the resale
of leased access time. If the Commission were to prohibit resale, the
Commission asks whether an exception should apply for not-for-profit
leased access programmers.
X. Initial Regulatory Flexibility Act Analysis
50. Pursuant to Section 603 of the Regulatory Flexibility Act, the
Commission has prepared the following initial regulatory flexibility
analysis (``IRFA'') of the expected impact of these proposed policies
and rules on small entities. Written public comments are requested on
the IRFA. These comments must be filed in accordance with the same
filing deadlines as comments on the rest of the Further Notice, but
they must have a separate and distinct heading designating them as
responses to the regulatory flexibility analysis. The Secretary shall
send a copy of the Further Notice, including the IRFA, to the Chief
Counsel for Advocacy of the Small Business Administration in accordance
with Section 603(a) of the Regulatory Flexibility Act, Pub. L. No. 96-
354, 94 Stat. 1164, 5 U.S.C. Sec. 601 et seq. (1981).
51. Reason for Action. Section 612 of the Communications Act of
1934, as amended, 47 U.S.C. Sec. 532, requires the Commission to
prescribe rules and regulations regarding commercial use of channel
capacity for unaffiliated persons. The Commission is using this Further
Notice to seek comment on various issues concerning implementation of
this statute.
52. Objectives. To propose rules which implement Section 612 of the
Communications Act of 1934, as amended, 47 U.S.C. Sec. 532, and further
its goals of promoting competition in the delivery of diverse sources
of video programming and to assure that the widest possible diversity
of information sources are made available to the public from cable
systems in a manner consistent with the growth and development of cable
systems.
53. Legal Basis. Action as proposed for this rulemaking is
contained in
[[Page 16455]]
Sections 1, 4(i), 4(j) and 612 of the Communications Act of 1934, as
amended, 47 U.S.C. Secs. 151, 154(i), 154(j) and 532.
54. Description, Potential Impact and Number of Small Entities
Affected. The Commission anticipates a possible impact on small
entities, as defined in Section 601(3) of the Regulatory Flexibility
Act, including cable operators and leased access programmers, but the
Commission does not currently have information pertaining to the extent
of such impact or the number of small entities that may be affected.
55. Reporting, Recordkeeping and Other Compliance Requirements.
Action as proposed in this rulemaking may impose new reporting
requirements on cable operators.
56. Federal Rules which Overlap, Duplicate or Conflict with these
Rules. None.
57. Any Significant Alternatives Minimizing Impact on Small
Entities and Consistent with Stated Objectives. The Further Notice
solicits comments on alternatives.
XI. Ex Parte
58. This is a non-restricted notice and comment rulemaking
proceeding. Ex parte presentations are permitted, except during the
Sunshine Agenda period, provided that they are disclosed as provided in
Commission's rules. See generally 47 CFR 1.1202, 1.1203, and 1.1206(a).
XII. Comment Dates
59. Pursuant to applicable procedures set forth in Sections 1.415
and 1.419 of the Commission's Rules, 47 CFR 1.415 and 1.419, interested
parties may file comments on or before May 15, 1996 and reply comments
on or before May 31, 1996. All relevant and timely comments will be
considered before final action is taken in this proceeding. To file
formally in this proceeding, participants must file an original plus
six copies of all comments, reply comments, and supporting comments. If
participants want each Commissioner to receive a personal copy of your
comments and reply comments, you must file an original plus eleven
copies. Comments and reply comments should be sent to Office of the
Secretary, Federal Communications Commission, 1919 M Street, NW.,
Washington, DC 20554. Comments and reply comments will be available for
public inspection during regular business hours in the FCC Reference
Center, Room 239, Federal Communications Commission, 1919 M Street,
NW., Washington DC 20554.
60. Written comments by the public on the proposed and/or modified
information collections are due on or before May 15, 1996. Written
comments must be submitted by OMB on the proposed and/or modified
information collections on or before 60 days after publication of the
Order and Further Notice in the Federal Register. In addition to filing
comments with the Secretary, a copy of any comments on the information
collections contained herein should be submitted to Dorothy Conway,
Federal Communications Commission, Room 234, 1919 M Street, NW.,
Washington, DC 20054, or via the Internet to [email protected], and to
Timothy Fain, OMB Desk Officer, 10236 NEOB, 725-17th Street, NW.,
Washington, DC 20503 or via the Internet to [email protected].
61. Accordingly, pursuant to Sections 4(i), 4(j) and 612 of the
Communications Act of 1934, as amended, 47 U.S.C. Secs. 154(i), 154(j)
and 532, comment is sought regarding such proposals, discussion, and
statement of issues.
Paperwork Reduction Act
62. This Further Notice contains either a proposed or modified
information collection. The Commission, as part of its continuing
effort to reduce paperwork burdens, invites the general public and the
Office of Management and Budget (``OMB'') to comment on the information
collections contained in this Further Notice, as required by the
Paperwork Reduction Act of 1995, Pub. L. No. 104-13. Public and agency
comments are due at the same time as other comments on this Further
Notice; OMB notification of action is due 60 days from date of
publication of this Further Notice in the Federal Register. Comments
should address: (a) Whether the proposed collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology.
OMB Approval Number: 3060-0568.
Title: Section 76.970 Commercial leased access rates; 76.971
Commercial leased access terms and conditions.
Type of Review: Revision of existing collection.
Respondents: Business and other for profit.
Number of Respondents: 6,270 cable systems.
Estimated Time Per Response: 1 hour per respondent for
recordkeeping and sending the leased access schedule and other
information to prospective leased access programmers. 1 hour per
respondent to implement 76.971 third party disclosure requirements. 12
hours per respondent for completing the proposed ``cost schedule'',
instead of the existing ``maximum rate schedule''. If the proposed
``cost schedule'' is not adopted by the Commission, the burden for
completing the ``maximum rate schedule'' is 4 hours per respondent.
Total Annual Burden: 87,780 hours. If the proposed ``cost
schedule'' is not adopted, the Commission will further adjust the
burden for this collection from 12 hours per respondent in completing
the ``cost schedule'' to 4 hours per respondent to continue to use the
existing ``maximum rate schedule''. This would result in an adjustment
reduction of 50,160 hours (6,270 x 8 hours), leaving a total burden
of 87,780-50,160=37,620 hours.
Estimated costs per respondent: We estimate the postage and
stationery costs incurred by cable operators for record keeping
activities and for sending out leased access information to prospective
programmers, as required, to be roughly $4.00 per respondent. We
therefore report a total annual cost of $25,000 for all respondents.
Needs and Uses: The information collected is used by the
prospective leased access programmers and the Commission to verify rate
calculations for leased access channels. The Commission's leased access
requirements were designed to promote diversity of programming sources
and competition in programming delivery as required by Section 612 of
the Communications Act, and serve to eliminate uncertainty in
negotiations for leased commercial access.
List of Subjects in 47 CFR Part 76
Cable television.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
[FR Doc. 96-9195 Filed 4-12-96; 8:45 am]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-9192 Assessment and Collection of Regulatory Fees For Fiscal Year 1996
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16432-16447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9192]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Chapter I
[MD Docket No. 96-84; FCC 96-153]
Assessment and Collection of Regulatory Fees For Fiscal Year 1996
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Commission is proposing to revise its Schedule of
Regulatory Fees in order to recover the amount of regulatory fees that
Congress has required it to collect for fiscal year 1996. Section 9 of
the Communications Act of 1934, as amended, provides for the annual
assessment and collection of regulatory fees. For fiscal year 1996
sections 9(b) (2) and (3) provide for annual ``Mandatory Adjustments''
and ``Permitted Amendments'' to the Schedule of Regulatory Fees. The
proposed revisions will further the National Performance Review goals
of reinventing Government by requiring beneficiaries of Commission
services to pay for such services.
DATES: Comments must be filed on or before April 29, 1996 and reply
comments must be filed on or before May 9, 1996.
ADDRESSES: Federal Communications Commission, 1919 M Street, NW.,
Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: Peter W. Herrick, Office of Managing
Director at (202) 418-0443, or Terry D. Johnson, Office of Managing
Director at (202) 418-0445.
SUPPLEMENTARY INFORMATION:
Adopted: April 5, 1996.
Released: April 9, 1996.
By the Commission.
Table of Contents
Topic/Paragraph Numbers
I. Introduction 1-4
II. Background 5-7
III. Discussion 8-60
A. Overall Methodology and Format--8-10
B. Adjustment of Payment Units--11
C. Recalculation of Fees--12
D. Cost Accounting System--13-17
E. Other Proposed Changes--18-51
1. Commercial Mobile Radio Service--19
2. Commercial AM/FM Radio--20-21
3. Commercial AM/FM/TV Construction Permits--22-26
4. Commercial VHF/UHF Television Stations--27
5. Auxiliary Broadcast Stations--28-33
6. Interstate Telephone Service Providers--34
7. Earth Stations--35
8. Wireless Cable--36-38
9. Direct Broadcast Satellite (DBS) Service--39-42
10. Intelsat & Inmarsat Signatory--43-47
11. Low Earth Orbit (LEO) Satellite Systems--48-49
12. Minimum Fee Payment Liability--50-51
F. Procedures for Payment of Regulatory Fees--52-59
1. Annual Payments of Standard Fees--53
2. Installment Payments for Large Fees--54-55
3. Advance Payments of Small Fees--56
4. Minimum Fee Payment Liability--57
5. Standard Fee Calculations and Payment Dates--58-59
G. Schedule of Regulatory Fees--60
IV. Procedural Matters--61-69
A. Comment Period and Procedures--61
B. Ex Parte Rules--62
C. Initial Regulatory Flexibility Analysis--63
D. Paperwork Reduction Act Compliance--64-67
E. Authority and Further Information--68-69
Appendix A--Initial Regulatory Flexibility Analysis
Appendix B--Sources of Payment Unit Estimates for FY 1996
Appendix C--Calculation of Pro-Rata Adjustments
Appendix D--FY 1996 Schedule of Regulatory Fees
Appendix E--Comparison Between FY 1995 and FY 1996 Regulatory Fees
Appendix F--FY 1996 Guidelines for Regulatory Fee Categories
I. Introduction
1. By this Notice of Proposed Rulemaking, the Commission commences
a proceeding to revise its Schedule of Regulatory Fees in order to
recover the amount of regulatory fees that Congress, pursuant to
Section 9(a) of the Communications Act, has required it to collect for
Fiscal Year (FY) 1996. See 47 U.S.C. Sec. 159 (a).
2. For FY 1996, Congress has required that we collect $116,400,000
through regulatory fees in order to recover the costs of our
enforcement, policy and rulemaking, international and user information
activities for FY 1996. P.L. 104-99 and 47 U.S.C. Sec. 159(a)(2). This
is the same amount that Congress designated for recovery through
regulatory fees for FY 1995. See Assessment and Collection of
Regulatory Fees for Fiscal Year 1995, FCC 95-227, released June 19,
1995, 60 FR 34004 (June 29, 1995). The current
[[Page 16433]]
Schedule of Regulatory Fees is set forth in sections 1.1152 through
1.1156 of the Commission's rules. 47 CFR Secs. 1.1152-1.1156.
3. Because the amount that Congress requires that we recover for FY
1996 is the same amount as we were required to recover for FY 1995, we
are not proposing to revise the Schedule of Fees to collect more or
less in total fees. However, we are proposing adjustments to the
Schedule and associated payment procedures to reflect changes in the
estimated number of payment units associated with services subject to a
fee and to incorporate certain public interest considerations. See 47
U.S.C. 159 (b).
4. Finally, we propose to amend the Schedule in order to assess
regulatory fees upon licensees and/or regulatees of services not now
subject to payment of a fee, to simplify and streamline the Schedule
and to clarify and/or revise certain payment procedures. 47 U.S.C.
Sec. 159(b)(3).
II. Background
5. Section 9(a) of the Communications Act of 1934, as amended,
authorizes the Commission to assess and collect annual regulatory fees
to recover the costs, as determined annually by Congress, that it
incurs in carrying out enforcement, policy and rulemaking,
international, and user information activities. 47 U.S.C. 159(a). In
our FY 1994 Fee Order, 59 FR 30984 (June 16, 1994), we adopted the
Schedule of Regulatory Fees that Congress established and we prescribed
rules to govern payment of the fees, as required by Congress. 47 U.S.C.
Sec. 159(b), (f)(1). Subsequently, in our FY 1995 Fee Order, we
modified the Schedule to increase by approximately 93 percent the
revenue generated by these fees in accordance with the amount Congress
required us to collect in FY 1995 over FY 1994. 60 FR 34004 (June 29,
1995). Also, in the FY 1995 Fee Order, we amended certain rules
governing our regulatory fee program based upon our experience
administering the program in FY 1994. See 47 CFR Secs. 1.1151 et seq.
6. As noted above, for FY 1994 we adopted the Schedule of
Regulatory Fees established in Section 9(g) of the Act. For fiscal
years after FY 1994, however, Sections 9(b) (2) and (3), respectively,
provide for ``Mandatory Adjustments'' and ``Permitted Amendments'' to
the Schedule of Regulatory Fees. 47 U.S.C. Sec. 159(b)(2), (b)(3).
Section 9(b)(2), entitled ``Mandatory Adjustments'', requires that we
revise the Schedule of Regulatory Fees whenever Congress changes the
amount that we are to recover through regulatory fees. 47 U.S.C.
Sec. 159(b)(2).
7. Section 9(b)(3), entitled ``Permitted Amendments'', requires
that we determine annually whether adjustments of the fees are
warranted based upon criteria established in 47 U.S.C. 159(b)(3). Also,
pursuant to Section 9(b)(3), we are to adjust the fees to take into
account factors that are reasonably related to the payor of the fee and
factors that are in the public interest. In making these amendments, we
are to ``add, delete, or reclassify services in the Schedule to reflect
additions, deletions or changes in the nature of its services.'' 47
U.S.C. Sec. 159(b)(3). Section 9(i) requires that we develop accounting
systems necessary to making permitted amendments. 47 U.S.C.
Sec. 159(i). Finally, we are required to notify Congress of any
permitted amendments 90 days before those amendments go into effect. 47
U.S.C. Sec. 159(b)(4)(B).
III. Discussion
A. Overall Methodology and Format
8. As noted above, Congress has required the recovery of
$116,400,000 for FY 1996 through the collection of regulatory fees,
representing the costs applicable to our enforcement, policy and
rulemaking, international, and user information activities. 47
Sec. U.S.C. 159(a).
9. Our approach to developing a FY 1996 fee schedule required that
we first adjust our estimates of payment units so that we could
determine how much revenue we would collect even if we did not change
any individual fee amounts. We then compared the total estimated
revenue that we would collect at the existing fee rates to the $116.4
million that we are required to collect in FY 1996 and pro-rated the
difference among all the existing fee categories. We then intended to
compare these projected revenues with cost data gathered from our new
cost accounting system and to make whatever adjustments were deemed
necessary to ensure that costs generally equated to revenues in each
fee category. As discussed elsewhere in this NPRM, this particular step
was not performed due to implementation problems associated with our
new cost accounting system. A substitute mechanism was, however, put in
place to provide assurances that estimated costs and revenues were
reasonable.
10. We next considered various proposals made by Commission Bureaus
and Offices for additions, deletions or other adjustments to the fees
and to our collection procedures. The results of these actions were
factored into our final schedule. That schedule is contained in
Appendix D. Finally, we incorporated, as Appendix F, proposed Guidance
which provides detailed descriptions of each fee category, information
on who is responsible for paying each fee and other critical
information designed to assist potential fee payers in determining the
extent of fee liability, if any, in FY 1996, assuming that our proposed
fees set forth in Appendix D are ultimately adopted.1 The steps
which we followed in the development of our FY 1996 regulatory fee
proposals are discussed in more detail in the following paragraphs.
---------------------------------------------------------------------------
\1\ We also will incorporate a similar Appendix in the Report
and Order concluding this rulemaking. That Appendix will contain
updated information concerning any changes made to the proposed fees
adopted by the Report and Order.
---------------------------------------------------------------------------
B. Adjustment of Payment Units
11. In order to calculate individual service fees for FY 1996, we
first adjusted the estimated payment units for each service because, in
many services, payment units have changed substantially since last
year. We obtained our estimates through a variety of means. For
example, we used Commission licensee data bases, actual prior year
payment records and industry and trade group projections, when
available. We tried to verify these estimates from multiple sources to
ensure that our estimates were reasonable. Appendix B provides a
summary of how these revised payment units were determined for each fee
category.
C. Recalculation of Fees
12. We next multiplied the revised payment units for FY 1996 by the
FY 1995 fee amounts in each fee category to determine how much revenue
the Commission would collect in FY 1996 if it made no changes to the
existing Schedule of Regulatory Fees. Next, we adjusted these revenue
requirements for each fee category on a proportional basis, consistent
with Section 9(b)(2) of the Act, to insure that we would collect only
the $116.4 million prescribed by Congress. Then we recalculated the
individual fee amounts required to collect the adjusted amount in each
service and rounded each fee amount as provided by Section 9(b)(2).
Appendix C provides detailed calculations showing how these revised fee
amounts were determined.
D. Cost Accounting System
13. On October 1, 1995, the Commission established a cost
accounting system which was designed, in part, to assist in the
development of
[[Page 16434]]
our regulatory fees, specifically to help determine whether and to what
extent additional revisions to the Schedule of Regulatory Fees might be
required. See 47 U.S.C. Secs. 159(i). Our objective in establishing the
cost accounting system was to provide us with data that we could use,
in combination with other information, to ensure that fees closely
reflected our actual costs of regulation.
14. We had intended to compare extrapolated data from the cost
accounting system with the adjusted revenue requirements described
above in order to help assure that the adjusted fees we developed for
each service were reasonably related to the regulatory costs of each
service. It was our intention to propose further adjustments to the
fees in instances where the variance between the estimated costs of
each service and its estimated revenues appeared appropriate.
15. While there would be inherent deficiencies to any cost
accounting system relative to meeting the requirements of the Act, we
nonetheless believed that we would have enough useful information from
our new cost accounting system to warrant consideration of such data in
formulating our proposed FY 1996 fees. Unfortunately, several factors
have prevented us from relying on data derived from the cost accounting
system for the development of FY 1996 regulatory fees.
16. First, immediately following implementation of our cost
accounting system, it was discovered that the system contained a
significant amount of erroneous data due to technical complications
encountered during the start-up of the system. Although this data was
later corrected, the delay in obtaining useful output from the system
has prevented a thorough analysis of the data. Additionally, the
lengthy government shutdown and subsequent weather emergency in
Washington, D.C. prevented the accumulation of critical cost data for
several weeks. Consequently, we lack the confidence that we originally
anticipated we would have relative to FY 1996 cost data and, therefore,
will not utilize such data in the development of our proposed FY 1996
Regulatory Fee Schedule.
17. However, because our overall costs incident to the activities
described in Section 9(a)(1) of the Act remain unchanged from FY 1995,
we are satisfied that our revenue estimates for FY 1996 generally
reflect the relative costs applicable to our regulatory activities. As
a result, many individual fees remain unchanged from last fiscal year.
E. Other Proposed Changes
18. We examined the results of our calculations made in Paragraph
12 to determine if further adjustments of the fees and/or changes to
payment procedures were warranted based upon the public interest and
other criteria established in 47 U.S.C. 159(b)(3). As a result of this
review, we have proposed the following:
1. Commercial Mobile Radio Service (CMRS)
19. The Commercial Mobile Radio Service (CMRS) includes various
services authorized to provide interconnected mobile radio services for
profit to the public, or to such classes of eligible users as to be
effectively available to a substantial portion of the public. CMRS
includes certain licensees which formerly were licensed as part of the
Private Radio Services (e.g., Specialized Mobile Radio Services and
Private Paging), others formerly licensed as part of the Common Carrier
Radio Services (e.g., Public Mobile Services and Cellular Radio
Service) and one new service, the Personal Communications Service (PCS)
2. While specific rules pertaining to each covered service remain
in separate Parts 22, 80 and 90 of the Commission's rules; general
rules governing CMRS are contained in Part 20 of the rules. See 47 CFR
Parts 20, 22, 80 and 90. We are proposing to replace the Public Mobile/
Cellular Radio regulatory fee category with a CMRS Mobile Services
category and replace the Public Mobile One-Way Paging fee category with
a CMRS One-Way Paging Services category for regulatory fee collection
purposes. CMRS Mobile Services will include: qualifying Business Radio
Services, 220-222 MHz Land Mobile Systems, Specialized Mobile Radio
Services (Part 90); Public Coast Stations (Part 80); Public Mobile
Radio, Cellular, 800 MHz Air-Ground Radiotelephone, and Offshore Radio
Services (Part 22). We propose that licensees in the CMRS Mobile
Services pay annual regulatory fees on a per mobile or cellular unit
(mobile or cellular call sign or telephone number), or on a per unit
(two-way pager) basis. We propose that CMRS One-Way Paging Services
licensees pay annual regulatory fees on a per unit (pager) basis. See
Appendix F, Paragraphs 14-16.
---------------------------------------------------------------------------
\2\ Although PCS is a CMRS service, we are not proposing that
PCS licensees pay a regulatory fee for FY 1996 because the service
is, at most, in the very early start-up phase with few subscribers
on the date (December 31, 1995) established for determining
liability for such a fee and, therefore, it is premature to assess a
fee.
---------------------------------------------------------------------------
2. Commercial AM/FM Radio
20. In our FY 1995 NPRM, we considered an alternative methodology
for assessing regulatory fees for Commercial AM and FM radio licensees
based on market rankings. This methodology, based on markets, was
ultimately rejected as incomplete and insufficiently accurate for fee
determination. Other possible alternatives to using the existing class
designations to differentiate various types of stations and take into
consideration ability to pay were also eliminated due to a lack of
vital data necessary for establishing and verifying these fees. We were
particularly interested in a proposal which would associate population
density and service area contours with license data. Unfortunately,
this proposal appears to not be cost effective because it would require
a significant expenditure of funds to develop the required database and
additional funds to provide the results to our licensees to use for fee
payment purposes.
21. In our FY 1995 Order, we invited commenters to propose viable
alternatives to using designated class of station as the fee qualifier
in our FY 1996 NPRM. See FY 1995 Report and Order released June 19,
1995, Paragraph 54. We reiterate our invitation in this NPRM. In the
absence of a viable alternative, however, we are proposing to continue
to base the fees for AM and FM broadcast stations on station class for
FY 1996. See Appendix F, Paragraph 18.
3. Commercial AM/FM/TV Construction Permits
22. These categories of fees apply to holders of permits to
construct new commercial AM, FM, UHF and VHF Television stations
covered under Part 73 of the Commission's rules. Construction permit
(CP) fees are based on the type of commercial broadcasting service
(i.e., AM, FM or TV) for which the station is being constructed.
23. Because of the small number of construction permits relative to
overall stations and the modest amount of revenue collected from these
licensees, we considered elimination of construction permits as a
separate fee category with the costs attributed to regulation of
construction permits to be subsumed in the overall costs for regulation
of broadcast stations. This approach would simplify the fee schedule
and provide ``one stop'' fee payment by reducing or eliminating the
need for a broadcaster, in certain instances, to submit multiple
payments (e.g., when an existing broadcaster is
[[Page 16435]]
also the holder of a construction permit). More generally, it would
eliminate the fee on stations that are not yet operational and
producing income.
24. To recoup revenues lost by the elimination of the construction
permit fee, we would aggregate the revenue requirements associated with
construction permits and distribute this revenue requirement on a pro
rata basis to the primary station fee categories for AM/FM/TV
commercial broadcast stations. New, slightly higher, primary station
fees would result from this methodology.
25. In reviewing this issue, we determined that subsuming the fee
for construction permits under the primary station fees is inherently
inequitable since it would result in currently operating broadcast
stations subsidizing stations under construction, some of which would
eventually provide direct competition to the existing stations.
Additionally, the impact on the FM Radio Service is particularly
apparent. In this service, the impact of a large number of pending
construction permits combined with the relatively high construction
permit fee (compared to construction permit fees in the AM and TV
services) produces a situation where significant costs would have to be
absorbed by a limited number of operational commercial FM stations,
resulting in a much greater impact on these broadcasters.
26. Based on these factors, we propose to retain separate fee
categories for construction permits for AM/FM/TV commercial broadcast
stations in FY 1996. We do, however, welcome comments on this issue.
See Appendix F, Paragraphs 19, 20, 23-25.
4. Commercial VHF/UHF Television Stations
27. In our FY 1995 Order, we specified that VHF and UHF television
fees be determined in accordance with the station market rankings
published by Warren Publishing in the 1994 Edition of the Television
and Cable Factbook (No. 62). This ranking was based on Areas of
Dominant Influence (ADIs) as determined by the Arbitron Rating Co.
(``Arbitron''). Arbitron has now ceased publication of ADI market
areas. However, the A.C. Nielsen Co. (``Nielsen'') has published
Designated Market Areas (DMAs) which approximate the same coverage
areas as the Arbitron ADIs. The Nielsen DMAs also have the advantage of
including stations in Alaska and Hawaii which Arbitron did not.
Finally, the 1995 Edition of the Television and Cable Factbook (No. 63)
has replaced the Arbitron ADI listing with the Nielsen DMA listing. In
view of the above considerations, we propose for FY 1996 to require
television licensees to use Nielsen DMA rankings to determine the
appropriate regulatory fee. See Appendix F, Paragraph 21.
5. Auxiliary Broadcast Stations
28. This fee category includes licensees of Remote Pickup Stations,
Aural Broadcast Auxiliary Stations, Television Broadcast Auxiliary
Stations, and Low Power Auxiliary Stations, authorized under Part 74 of
the Commission's Rules. These stations are generally associated with a
particular television or radio broadcast station or cable television
system.
29. In an effort to simplify the FY 1996 Fee Schedule, we examined
the feasibility and equity of combining auxiliary broadcast station
fees with the primary fees paid by broadcast station licensees and
cable television operators. Combining these fees appeared to be an
efficient approach due to the modest auxiliary fee relative to the fees
assessed on broadcast stations and cable television systems.
30. Calculating a new fee encompassing both the auxiliary fee and
station fee is relatively simple. We would add the auxiliary service
revenue requirement to the AM/FM/TV and cable television revenue
requirements on a pro-rata basis and then recompute each AM/FM/TV and
cable television fee. This would result in slightly higher fees for
each of these entities, but would also reduce the number of individual
fee payments required from many of these payors.
31. Although a single consolidated fee has certain advantages, we
identified some significant problems with using this approach. One
problem is that the number of auxiliary stations per parent station
varies greatly, with some broadcast stations or cable systems having
none of these licenses while others have more than a dozen. Also, it
appears that no more than ten percent of current regulatees own and
operate auxiliary facilities. Moreover, since applications for
auxiliary stations currently do not identify the parent station, nor
does the Commission maintain records providing this information, it is
impossible to determine the actual number of auxiliaries by license
category (AM/FM/TV, cable).
32. Finally, we determined that this proposal would likely result
in serious inequities since the larger commercial broadcast stations
and cable systems in the most profitable markets are most likely to
utilize multiple auxiliary stations. While a consolidated fee would
have little impact on them, it would result in smaller, less profitable
stations subsidizing part of the larger stations' operating costs.
33. For these reasons, we propose to retain Auxiliary Broadcast
Station fees as a separate category in FY 1996. We would, however,
welcome any suggestions on alternative methods for assessing these
fees. See Appendix F, Paragraph 27.
6. Interstate Telephone Service Providers
34. For FY 1995, all interstate telephone service providers were
assessed regulatory fees based on a percentage of their adjusted gross
revenue as computed from revenue data reported to the
Telecommunications Relay Service (TRS) Fund. Our FY 1995 Schedule of
Regulatory Fees listed each type of interstate telephone service
provider separately (e.g., Inter-exchange Carriers, Local Exchange
Carriers, Competitive Access Providers, Operator Services Providers)
causing some inadvertent confusion for payees. Because we are proposing
once again that all interstate telephone service providers compute
their fee based on the same adjusted gross revenue method, we are
proposing to consolidate Inter-Exchange Carriers, Local Exchange
Carriers, Competitive Access Providers, Operator Service Providers/Pay
Telephone Operators, Resellers, and Other Interstate Providers into a
single fee category labeled ``Interstate Telephone Service Providers.''
Details concerning who must pay interstate telephone service provider
fees can be found in Appendix F, Paragraph 32.
7. Earth Stations
35. For FY 1995, all earth stations were assessed the same fee
based on the number of authorizations or registrations. Our FY 1995
Schedule of Fees listed each type of earth station separately, causing
some inadvertent confusion for payees. Because we are proposing that
all earth stations (except receive only earth stations for which we
propose to not assess a regulatory fee) continue to pay the same fee
based on the number of authorizations or registrations, we are
proposing to simplify the structure of the Schedule by combining VSATs/
Equivalent C-Band/Mobile, Transmit/Receive, and Transmit Only Earth
Stations into a single fee category labeled ``Earth Stations.'' Further
details concerning earth station fees may be found in Appendix F,
Paragraphs 33-34.
[[Page 16436]]
8. Wireless Cable
36. Multi-Channel Multipoint Distribution Service Stations (MMDS;
a.k.a. ``Wireless Cable.''), along with Multipoint Distribution Service
Stations (MDS), are authorized under Part 21 of the Commission's Rules
to use microwave frequencies for video and data distribution. These
services were included in the Domestic Public Fixed Radio Service
category in the FY 1995 Regulatory Fee Schedule.
37. When operated as a Multichannel Video Programming Distribution
service (MVPD), MMDS licensees compete directly with cable television
and with other MVPDs. Current industry estimates indicate that Wireless
Cable has 800,000 subscribers or 1.19% of the MVPD market.
38. We propose to assess regulatory fees on MMDS licensees based on
an individual call sign. We seek comment on this proposal. See Appendix
F, Paragraph 28.
9. Direct Broadcast Satellite (DBS) Service
39. The Direct Broadcast Satellite (DBS) Service offers a wide
range of programming options to its subscribers distributed via
geosynchronous satellite. DBS service is expanding rapidly with total
viewership currently estimated at 1,500,000 subscribers.
40. For FY 1995, we decided not to assess a fee for the DBS service
because our resources devoted to regulation of DBS, other than those
involving application processing, were negligible and because DBS
operators then served few subscribers. See FY 1995 Report and Order,
Paragraph 15. For FY 1996, however, we are proposing to assess a fee
upon licensees in the DBS service since the service is operational,
serving numerous subscribers and, therefore, subject to the regulatory
activities (additional resources devoted to policy and rulemaking,
enforcement and public information) whose costs are recovered by
assessment of a regulatory fee.
41. We propose to assess DBS licensees the fee applicable to all
geosynchronous satellite licensees and, therefore, to include DBS for
regulatory fee purposes in the Space Station fee category. In
developing our proposed DBS fee, we considered assessing DBS licensees
a per subscriber fee rather than including them within the
geosynchronous satellite fee category. We currently assess per
subscriber fees in several fee categories, including a per subscriber
fee for cable television systems. However, we propose that DBS
satellites be included in the geosynchronous satellite category.
Despite the fact that DBS is a subscriber-based service, costs
attributable to regulating DBS operators are more similar to those
attributable to regulation of other geosynchronous space stations.
Regulatory responsibilities related to space stations focus on policy
and rulemaking activities, and are unrelated to the number of end users
of satellite services. Moreover, DBS rules do not impose additional
regulatory requirements on video service providers that are
specifically related to the individual subscriber. Thus, the number of
subscribers to a DBS service does not significantly affect the
regulatory costs arising from DBS services. By contrast, cable service
providers are subject to rate regulation, customer service standards,
and certain programming obligations. In addition, a subscriber-based
formula would penalize DBS licensees who win more subscribers with less
space station capacity (and hence lower regulatory costs). Moreover,
because DBS licensees are not restricted to the provision of video
programming, but rather may provide various non-video services, we
concluded that a facility-based fee would ensure that each DBS licensee
contributed equitably to the cost of DBS regulation without the need to
impose possibly burdensome and overly intrusive reporting requirements
necessary to gather information identifying the services offered by
individual DBS operators.
42. In light of the factors discussed above, we propose to assess
fees on these licensees on a per station basis. See Appendix F,
Paragraph 35.
10. Intelsat & Inmarsat Signatory
43. For FY 1995, we determined that Comsat was not subject to
payment of a geosynchronous satellite regulatory fee for its Intelsat
and Inmarsat satellites because the legislative history of Section 9
states that regulatory fees should not be assessed upon space stations
operated by international bodies. See FY 1995 Report and Order,
Paragraph 110. Instead, we propose to explore other ways to recover our
regulatory costs incurred due to Comsat's participation in the Intelsat
and Inmarsat programs. Thus, we are proposing to assess a new fee to
recover our costs of regulation of the U.S. Signatory to Intelsat and
Inmarsat. We believe that the fee is appropriate in view of the unique
role of the U.S. Signatory in Intelsat's and Inmarsat's structure and
our unique regulatory role with respect to these entities.
44. We propose to establish the separate Signatory fee because our
geosynchronous space station fee now recovers a significant amount of
costs directly attributable to our resource burden related to
conducting our oversight of the U.S. Signatory to these international
operations.3 Currently, we are conducting several proceedings
regarding the U.S. Signatories' authority to provide services via
Intelsat and Inmarsat, the U.S. Signatories' authority to participate
in the procurement or leasing of various Intelsat and Inmarsat space
stations, and their authority to participate in certain Intelsat and
Inmarsat-associated businesses. There also are proceedings pending
before us related to whether the U.S. Signatory has conformed to
applicable structural and financial separation rules. In addition, we
actively participate on an ongoing basis with the Executive Branch in
the oversight of the U.S. Signatories' representations of U.S. policy
at the Intelsat and Inmarsat governing boards through the U.S.
Government instructional process and participate directly in the
Assembly of Parties meetings of the two intergovernmental
organizations. Finally, we maintain public files of Intelsat and
Inmarsat governing board and other organizational documents.
---------------------------------------------------------------------------
\3\ The U.S. Signatory to Intelsat is the Communications
Satellite Corporation (COMSAT), the entity designated, pursuant to
the Communications Satellite Act, as the sole operating entity to
participate in the International Telecommunications Satellite
Organization (Intelsat) in order to construct and operate the space
segment of the global commercial telecommunications satellite system
established under the Interim Agreement and Special Agreement signed
by Governments on August 20, 1964. See 47 U.S.C. Sec. 301. Also, the
U.S. Signatory to Inmarsat is Comsat, solely designated, pursuant to
the Communications Satellite Act, to participate in the
International Mobile Satellite Organization (Inmarsat).
---------------------------------------------------------------------------
45. Because our regulation of the U.S. Signatories is substantially
different from our regulatory activities related to satellite systems
licensed by us, we are persuaded that the costs of our activities
related to the signatories should be recovered directly from the U.S.
Signatories rather than from space station licensees generally.
Moreover, we do not believe that it is necessary or appropriate to base
the Signatory fee on the number of space stations owned by the two
intergovernmental satellite systems. Rather, we will formulate the
Signatory fee pursuant to our cost of oversight of the Signatory's
activities.
46. Our review of our signatory activities discloses that
approximately 14.7% of the costs attributable to space station
regulatory oversight ($2,960,100), as determined in
[[Page 16437]]
Appendix C, is directly related to Intelsat and Inmarsat Signatory
activities (5.25 FTEs 4 out of a total of 35.7 direct FTEs). This
means that approximately $435,135 must be collected from the
signatories to offset the regulatory costs attributed to them
($2,960,100 x 14.7%). Dividing this revenue requirement by two (there
are signatories to two separate organizations), yields a signatory fee
of $217,575 (rounded). Therefore, we are proposing to add a new
regulatory fee of $217,575 for each designation as a signatory. See
Appendix F, Paragraph 37. Comment is requested on our proposal to
charge a signatory fee and on the methodology for calculating such a
fee.
---------------------------------------------------------------------------
\4\ Full Time Equivalent (FTE) employment is the total number of
regular straight-time hours (i.e., not including overtime or holiday
hours) worked or to be worked by current and future employees
divided by the number of compensable hours applicable to each fiscal
year.
---------------------------------------------------------------------------
47. Since the proposed Signatory fee will recover our costs
attributable to our signatory oversight, we are also proposing, in
conjunction with that proposal, to reduce the corresponding space
station fee. The new space station fee is computed by reducing the
revenue requirement for space stations calculated in Appendix C
($2,960,100) by the $435,150 to be collected from signatories and
dividing the reduced space station revenue requirement ($2,524,950) by
the number of payment units (39 operational space stations). The result
of these calculations is a new fee of $64,750 (rounded) for each
operational space station.5
---------------------------------------------------------------------------
\5\ This fee is further adjusted in Paragraph 51.
---------------------------------------------------------------------------
11. Low Earth Orbit (LEO) Satellite Systems
48. The FY 1994 statutory regulatory fee schedule (see 47 U.S.C.
159(g)) proposed a $90,000 regulatory fee for licensees in the Low
Earth Orbit (LEO) Satellite service. However, the Commission found that
there were no operational LEO systems on the effective date of the FY
1994 Schedule and suspended the fee for that year and again for FY
1995. See FY 1995 Report and Order, Paragraph 15. For FY 1996, however,
there are licensed and operational LEO systems. Therefore, we propose
to include a Low Earth Orbit Satellite System fee in the Schedule of
Regulatory Fees.
49. In developing a LEO System regulatory fee for FY 1996, we
propose to apportion the total revenue requirement for all space
stations between LEO systems and geosynchronous space station
licensees. In so doing, we also propose to preserve the same relative
relationship between the fees established by the Congress in Section
9(g) of the Act for geosynchronous space stations and LEO systems;
i.e., an approximate 38.5% differential between the fee for LEO systems
and the fee for geosynchronous space stations. 47 U.S.C. Sec. 159(g).
Reliance on this methodology will reduce the revenue which must be
collected from space stations other than LEOs and the corresponding
fees for space stations which had been calculated in Appendix C and
subsequently adjusted in Paragraph 49. As a result of our calculations,
we are proposing a new LEO system regulatory fee of $87,725 and a new
geosynchronous space station fee of $63,500 for FY 1996.6 See
Appendix F, Paragraphs 35-36.
---------------------------------------------------------------------------
\6\ The FY 1996 adjusted revenue requirement for all space
stations has been determined to be $2,524,950. See Paragraph 49. For
FY 1996, there are two LEO systems and 37 geosynchronous space
stations subject to fee payment. The formula for computing the new
LEO and geosynchronous space station fees is as follows:
(a) We have assigned ``L'' to represent the proposed LEO system
fee and ``G'' to represent the proposed geosynchronous space station
fee. I.e.,
L = LEO System Fee
G = Geosynchronous Space Station Fee
(b) The relationship between the LEO fee and the geosynchronous
fee may be expressed as:
L = 1.385G (i.e., the LEO fee needs to be 38.5% higher than the
corresponding geosynchronous space station fee).
(c) The total revenue to be collected from LEOs and
geosynchronous space stations may be expressed as:
2L + 37G = $2,524,950 (i.e., the two existing LEO systems and 37
geosynchronous stations together must account for $2,524,950 in
revenues).
(d) Substituting the value of ``L'' in (b) above into the
formula in (c) above yields the following:
2(1.385G) + 37G = $2,524,950
2.77G + 37G = $2,524,950
39.77G = $2,524,950
G = $63,489
(e) Therefore, ``G'' (Geosynchronous space station fee) is
$63,500 (after rounding).
(f) Substituting the computed value of ``G'' in (d) above into
the formula in (c) above yields the following:
2L + 37(63,500) = 2,524,950
2L + 2,349,500 = 2,524,950
2L = 175,450
L = 87,725
(g) Therefore, ``L'' (LEO fee) is $87,725.
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12. Minimum Fee Payment Liability
50. In FY 1995 the Commission received several small fee payments
that cost more to deposit and process than the actual amount collected.
Such payments occur in fee categories where there is a per unit or per
subscriber charge, such as the fee for cable television (per
subscriber) or CMRS one-way paging (per unit).
51. Our collection and verification costs for small payments is
considerably more than any revenue generated from these collections.
Thus, we are proposing for FY 1996 a minimum fee liability for payees
of Commission regulatory fees. Our minimum fee liability policy would
exempt fee payment for any licensee whose total fee liability was less
than $10. This exemption would apply only when the total fee due from
an entity, including all categories of fees for which a payment is due
by an entity, is less than $10. To ensure that this exemption is
utilized as envisioned, we are also proposing to continue to require
that licensees complete and submit FCC Form 159, ``FCC Remittance
Advice'' so that we may verify that a fee payment is not required of
these entities.
F. Procedures for Payment of Regulatory Fees
52. Generally, we propose to retain the procedures that we have
established for the payment of regulatory fees. Section 9(f) requires
that we permit ``payment by installments in the case of fees in large
amounts, and in the case of small amounts, shall require the payment of
the fee in advance for a number of years not to exceed the term of the
license held by the payor.'' See 47 U.S.C. Sec. 159(f)(1). Consistent
with the section, we are again establishing three categories of fee
payments, based upon the category of service for which the fee payment
is due and the amount of the fee to be paid. The fee categories are (1)
``Standard'' fees, (2) ``large'' fees, and (3) ``small'' fees.
1. Annual Payments of Standard Fees
53. Standard fees are those regulatory fees that are payable in
full on an annual basis. Payers of standard fees are not required to
make advance payments for their full license term and are not eligible
for installment payments. All standard fees are payable in full on the
date we establish for payment of fees in their regulatory fee category.
The payment dates for each regulatory fee category will be announced
either in the Report and Order in this proceeding or by public notice
in the Federal Register following the termination of the proceeding.
2. Installment Payments for Large Fees
54. In our FY 1995 NPRM, we proposed that regulatees in any
category of service with a payment liability of $12,000 or more would
be eligible to make installment payments. Further, we proposed that
eligibility for payment by installment would be based upon the amount
of either a single regulatory fee payment or combination of fee
payments by the same licensee or regulatee. However, in our FY 1995
[[Page 16438]]
Order, we declined to adopt our installment payment proposals because,
as a practical matter, there would be insufficient time following the
effective date of our FY 1995 Schedule of Fees to permit a meaningful
implementation of an installment payment program.
55. For FY 1996, while we are mindful that time constraints may
preclude an opportunity for installment payments, we will once more
propose that regulatees in any category of service with a payment
liability of $12,000 or more be eligible to make installment payments
and that eligibility for payment by installment be based upon the
amount of either a single regulatory fee payment or combination of fee
payments by the same licensee or regulatee. Therefore, we propose that
regulatees eligible to pay by installment payments may submit their
required fee in two equal payments (on dates to be announced in the
Report and Order terminating this proceeding or in the Federal Register
following the proceeding's termination), or, in the alternative, may
submit a single full payment on the date that their final installment
payment is due.
3. Advance Payments of Small Fees
56. As we have in the past, we are proposing to treat regulatory
fee payments by certain licensees as small fees subject to advance
payments. Advance payments will be required from licensees of those
services that we decided would be subject to advance payments in our FY
1994 Order.7 Payers of advance fees will submit the entire fee due
for the full term of their licenses when filing their initial, renewal
or reinstatement application. Regulatees subject to a payment of small
fees shall pay the amount due for the current fiscal year multiplied by
the number of years in the term of their requested license. In the
event that the required fee is adjusted following their payment of the
fee, the payor would not be subject to the payment of a new fee until
filing an application for renewal or reinstatement of the license.
Thus, payment for the full license term would be made based upon the
regulatory fee applicable at the time the application is filed. The
Commission will announce by public notice in the Federal Register the
effective date for the payment of small fees pursuant to the FY 1996
fee schedule.
---------------------------------------------------------------------------
\7\ Applicants for new, renewal and reinstatement licenses in
the following services will be required to pay their regulatory fees
in advance: Land Mobile Services, Microwave services, Interactive
Video Data Services (IVDS), Marine (Ship) Service, Marine (Coast)
Service, Private Land Mobile (Other) Services, Aviation (Aircraft)
Service, Aviation (Ground) Service, General Mobile Radio Service
(GMRS). In addition, applicants for Amateur Radio vanity call signs
will be required to submit an advance payment.
---------------------------------------------------------------------------
4. Minimum Fee Payment Liability
57. As discussed above, regulatees whose total fee liability is
less than ten dollars are exempted from fee payment in 1996. See
Paragraphs 54-55. However, such regulatees must complete and submit FCC
Form 159, ``FCC Remittance Advice'' so that we may verify that a fee
payment is not due. The Commission will announce by public notice in
the Federal Register the effective date for the submission of this fee
form.
5. Standard Fee Calculations and Payment Dates
58. As noted, the time for payment of standard fees and any
installment payments will be published in the Federal Register. For
licensees, permittees and holders of other authorizations in the Common
Carrier, Mass Media, and Cable Services, whose fees are not based on a
subscriber, line or circuit count, fees should be submitted for any
authorization held as of October 1, 1995. October 1 is the date to be
used for establishing liability for payment of standard fees since it
is the first day of the federal government's fiscal year.
59. In the case of regulatees whose fees are based upon a
subscriber, line or circuit count, the number of a regulatees'
subscribers, licenses or circuits on December 31, 1995, will be used to
calculate the fee payment.8 We have selected the last date of the
calendar year because many of these entities file reports with us as of
that date. Others calculate their subscriber numbers as of that date
for internal purposes. Therefore, calculation of the regulatory fee as
of that date will facilitate both an entity's computation of its fee
payment and our verification that the correct fee payment has been
submitted.
---------------------------------------------------------------------------
\8\ Cable systems calculate their regulatory fees using
subscriber data submitted to the Commission in their Annual Report
of Cable Television Systems (FCC Form 325). Accordingly, the number
of cable subscribers will not neccessarily be based on account as of
December 31, 1995, but rather on ``a typical day in the last full
week'' of December 1995.
---------------------------------------------------------------------------
G. Schedule of Regulatory Fees
60. The Commission's proposed Schedule of Regulatory Fees for FY
1996 is contained in Appendix D of this NPRM.
IV. Procedural Matters
A. Comment Period and Procedures
61. Pursuant to the procedures set forth in sections 1.415 and
1.419 of the Commission's rules, interested parties may file comments
on or before April 29, 1996, and reply comments on or before May 9,
1996. All relevant comments will be considered by the Commission before
final action is taken in this proceeding. To file formally in this
proceeding, participants must file an original and four copies of all
comments, reply comments and supporting materials. If participants want
each Commissioner to receive a personal copy of their comments, an
original and nine copies must be filed. Comments and reply comments
should be sent to the Office of the Secretary, Federal Communications
Commission, Washington, D.C. 20554. Interested parties, who do not wish
to formally participate in this proceeding, may file informal comments
to the same address. Comments and reply comments will be available for
public inspection during regular business hours in the FCC Reference
Center (Room 239) of the Federal Communications Commission, 1919 M
Street, N.W., Washington, D.C. 20554.
[[Page 16439]]
B. Ex Parte Rules
62. This is a non-restricted notice and comment rulemaking
proceeding. Ex parte presentations are permitted, except during the
Sunshine Agenda period, provided they are disclosed pursuant to the
Commission's rules. See 47 CFR Secs. 1.1202, 1.1203 and 1026(a).
C. Initial Regulatory Flexibility Analysis
63. As required by section 603 of the Regulatory Flexibility Act
(Pub. L. No. 96-354, 94 Stat. 1165, 5 U.S.C. Sec. 601 et seq. (1981),
the Commission has prepared an Initial Regulatory Flexibility Analysis
(IRFA) of the expected impact on small entities of the proposals
suggested in this document. The IRFA is set forth in Appendix A.
Written public comments are requested with respect to the IRFA. These
comments must be filed in accordance with the same filing deadlines for
comments on the rest of the NPRM, but they must have a separate and
distinct heading, designating the comments as responses to the IRFA.
The Secretary shall send a copy of this NPRM, including the IRFA, to
the Chief Counsel for Advocacy of the Small Business Administration in
accordance with section 603(a) of the Regulatory Flexibility Act.
D. Authority and Further Information
64. Authority for this proceeding is contained in sections 4 (i)
and (j), 9, and 303(r) of the Communications Act of 1934 as amended, 47
U.S.C. Secs. 154 (i) and (j) and 159 and 303(r).
65. Further information about this proceeding may be obtained by
contacting the Fees Hotline at (202) 418-0192.
Federal Communications Commission.
William F. Caton,
Acting Secretary.
Appendix A--Initial Regulatory Flexibility Analysis
Reason for Action
This rulemaking proceeding is initiated to obtain comment
regarding the Commission's proposed amendment of its Schedule of
Regulatory Fees in order to collect regulatory fees in the amount of
$116,400,000, the amount that Congress has required the Commission
to recover through regulatory fees in Fiscal Year 1996.
Objectives
The Commission seeks to collect the necessary amount through its
proposed revised regulatory fees, as contained in the attached
Schedule of Regulatory Fees, in the most efficient manner possible
and without undue burden to the public.
Legal Basis
The proposed action is authorized under sections (4) (i) and
(j), 9 and 303(r) of the Communications Act of 1934, as amended, 47
U.S.C. Secs. 154 (i) and (j), 159, and 303(r).
Reporting, Recordkeeping and other Compliance Requirements
The Commission has developed FCC Form 159 and FCC Form 159C for
submission with regulatory fee payments. Also, the Commission has
adopted implementation rules governing the payment of regulatory
fees. See 47 CFR Sec. 1.1151 et seq.
Federal Rules that Overlap, Duplicate or Conflict with Proposed Rule
None.
Description, Potential Impact, and Number of Small Entities Involved
The proposed amendment of the Schedule of Regulatory Fees will
affect permittees, licensees and other regulatees in the cable,
common carrier, mass media, private radio and international
services. After evaluating the comments in this proceeding, the
Commission will further examine the impact of any fee revisions or
additions or rule changes on small entities and set forth our
findings in the Final Regulatory Flexibility Analysis.
Any Significant Alternatives Minimizing the Impact on Small Entities
Consistent With the Stated Objectives
The Notice solicits comments on alternative methods of assessing
the regulatory fees necessary to recover the $116,400,000 in costs
that Congress has required us to recover through regulatory fees in
FY 1996.
Appendix B--Sources of Payment Unit Estimates for FY 1996
In order to calculate individual service fees for FY 1996, we
adjusted FY 1995 payment units for each service to more accurately
reflect expected FY 1996 payment liabilities. We obtained our
updated estimates through a variety of means. For example, we used
Commission licensee data bases, actual prior year payment records
and industry and trade association projections when available. We
tried to obtain verification for these estimates from multiple
sources and, in all cases, we compared FY 1996 estimates with actual
FY 1995 payment units to ensure that our revised estimates were
reasonable. Where it made sense, we adjusted and/or rounded our
final estimates to take into consideration the fact that certain
variables that impact on the number of payment units yet cannot be
estimated exactly. These include an unknown number of waivers and/or
exemptions that may occur in FY 1996 and the fact that, in many
services, the number of actual licensees or station operators
fluctuates from time to time due to economic, technical or other
reasons. Therefore, when we note, for example, that our estimated FY
1996 payment units are based on FY 1995 actual payment units, it
does not necessarily mean that our FY 1996 projection is exactly the
same number as FY 1995. It means that we have either rounded the FY
1995 number or adjusted it slightly to account for these variables.
------------------------------------------------------------------------
Fee catgory Sources of payment unit estimates
------------------------------------------------------------------------
Land Mobile (All), Microwave, Based on Wireless Telecommunications
IVDS, Marine (Ship & Coast), Bureau (WTB) projections of new
Aviation (Aircraft & applications and renewals taking into
Ground), GMRS, Amateur consideration existing Commission
Vanity Call Signs, Domestic licensee data bases. Aviation (Aircraft)
Public Fixed. and Marine (Ship) estimates have been
adjusted to take into consideration
proposals to license portions of these
services on a voluntary basis.
CMRS Mobile Services (incl. Based on actual FY 1995 payment units
Cellular/Public Mobile Radio adjusted to take into consideration
Services and Two Way Paging industry estimates of growth between FY
Services). 1995 and FY 1996 and Wireless
Telecommunications Bureau projections of
new applications and average number of
mobile units associated with each
application.
CMRS One Way Paging Services. Based on industry estimates of the number
of pager units in operation.
AM/FM Radio Stations......... Based on actual FY 1995 payment units.
UHF/VHF Television Stations.. Based on actual FY 1995 payment units.
AM/FM/TV Construction Permits Based on actual FY 1995 payment units.
[[Page 16440]]
LPTV, Translators and Based on actual FY 1995 payment units.
Boosters.
Auxiliaries.................. Based on actual FY 1995 payment units.
MDS/MMDS..................... Based on actual FY 1995 payment units.
Cable Antenna Relay System Based on actual FY 1995 payment units.
(CARS).
Cable Television System Based on Cable Services Bureau and
Subscribers. industry estimates of subscribership.
IXCs/LECs, CAPs, Other Based on actual FY 1995 interstate
Service Providers. revenues associated with contributions
to the Telecommunications Relay System
(TRS) Fund adjusted to take into
consideration FY 1996 revenue growth in
this industry as estimated by the Common
Carrier Bureau.
Earth Stations............... Based on actual FY 1995 payment units.
Space Stations & LEOs........ Based on International Bureau licensee
data bases.
International Bearer Circuits Based on actual FY 1995 payment units.
International HF Broadcast Based on actual FY 1995 payment units.
Stations, International
Public Fixed Radio Service.
------------------------------------------------------------------------
BILLING CODE 6712-01-P
[[Page 16441]]
[GRAPHIC] [TIFF OMITTED] TP15AP96.011
BILLING CODE 6712-01-C
[[Page 16442]]
Appendix D--FY 1996 Schedule of Regulatory Fees
------------------------------------------------------------------------
Annual
Fee category regulatory fee
------------------------------------------------------------------------
Land Mobile (per license) (220-222 Mhz, above 470 Mhz,
Base Station and SMRS) (47 CFR Part 90)................ 6
Microwave (per license) (47 CFR Part 101)............... 6
Interactive Video Data Service (per license) (47 CFR
Part 95)............................................... 6
Marine (Ship) (per station) (47 CFR Part 80)............ 3
Marine (Coast) (per license) (47 CFR Part 80)........... 3
General Mobile Radio Service (per license) (47 CFR Part
95).................................................... 3
Land Mobile (per license) (all stations not covered
above)................................................. 3
Aviation (Aircraft) (per station) (47 CFR Part 87)...... 3
Aviation (Ground) (per license) (47 CFR Part 87)........ 3
Amateur Vanity Call Signs (per call sign) (47 CFR Part
97).................................................... 3
CMRS Mobile Services (per unit) (47 CFR Parts 20, 22, 80
and 90)................................................ .15
CMRS One-Way Paging (per unit) (47 CFR Parts 20, 22 and
90).................................................... .02
Domestic Public Fixed Radio (per call sign) (47 CFR Part
21).................................................... 140
AM Radio (47 CFR Part 73):
Class A............................................. 1,125
Class B............................................. 630
Class C............................................. 255
Class D............................................. 315
Construction Permits................................ 125
FM Radio (47 CFR Part 73):
Classes C, C1, C2, B................................ 1,125
Classes A, B1, C3................................... 755
Construction Permits................................ 625
TV (47 CFR Part 73) VHF Commercial:
Markets 1-10........................................ 22,700
Markets 11-25....................................... 20,175
Markets 26-50....................................... 15,125
Markets 51-100...................................... 10,100
Remaining Markets................................... 6,300
Construction Permits................................ 5,025
TV (47 CFR Part 73) UHF Commercial:
Markets 1-10........................................ 18,150
Markets 11-25....................................... 16,150
Markets 26-50....................................... 12,100
Markets 51-100...................................... 8,075
Remaining Markets................................... 5,025
Construction Permits................................ 4,025
Satellite Television Stations (All Markets)............. 625
Construction Permits--Satellite Television Stations..... 230
Low Power TV, TV/FM Translators & Boosters (47 CFR Part
74).................................................... 170
Broadcast Auxiliary (47 CFR Part 74).................... 30
Multipoint Distribution Service (per call sign) (47 CFR
Part 21)............................................... 140
Cable Antenna Relay Service (47 CFR Part 78)............ 295
Cable Television Systems (per subscriber) (47 CFR Part
76).................................................... .50
Interstate Telephone Service Providers (per revenue
dollar)................................................ .00089
Earth Stations (47 CFR Part 25)......................... 335
Space Stations (per operational station in
geosynchronous orbit) (47 CFR Part 25) also includes
Direct Broadcast Satellite Service (per operational
station) (47 CFR Part 100)............................. 63,500
Low Earth Orbit Satellite (per operational system) (47
CFR Part 25)........................................... 87,725
INMARSAT/INTELSAT Signatory (per signatory)............. 217,575
International Circuits (per active 64KB circuit)........ 4
International Public Fixed (per call sign) (47 CFR Part
23).................................................... 200
International (HF) Broadcast (47 CFR Part 73)........... 255
------------------------------------------------------------------------
Appendix E--Comparison Between FY 1995 and FY 1996 Regulatory Fees
------------------------------------------------------------------------
Proposed
Annual annual
Fee category regulatory regulatory fee
fee FY 1995 FY 1996
------------------------------------------------------------------------
Land Mobile (per license) (220-222 Mhz,
above 470 Mhz, Base Station and SMRS) (47
CFR Part 90)............................. 6 6
Microwave (per license) (47 CFR Part 101). 6 6
Interactive Video Data Service (per
license) (47 CFR Part 95)................ 6 6
Marine (Ship) (per station) (47 CFR Part
80)...................................... 3 3
Marine (Coast) (per license) (47 CFR Part
80)...................................... 3 3
General Mobile Radio Service (per license)
(47 CFR Part 95)......................... 3 3
Land Mobile (per license) (all stations
not covered above)....................... 3 3
Aviation (Aircraft) (per station) (47 CFR
Part 87)................................. 3 3
Aviation (Ground) (per license) (47 CFR
Part 87)................................. 3 3
Amateur Vanity Call Signs (per call sign)
(47 CFR Part 97)......................... 3 3
[[Page 16443]]
CMRS Mobile Services (per unit) (47 CFR
Parts 20, 22, 80 and 90)................. .15 .15
CMRS One-Way Paging (per unit) (47 CFR
Parts 20, 22, and 90).................... .02 .02
Domestic Public Fixed Radio (per call
sign) (47 CFR Part 21)................... 140 140
AM Radio (47 CFR Part 73):
Class A............................... 1,120 1,125
Class B............................... 620 630
Class C............................... 250 255
Class D............................... 310 315
Construction Permits.................. 125 125
FM Radio (47 CFR Part 73):
Classes C, C1, C2, B.................. 1,120 1,125
Classes A, B1, C3..................... 745 755
Construction Permits.................. 620 625
TV (47 CFR Part 73) VHF Commercial:
Markets 1-10.......................... 22,420 22,700
Markets 11-25......................... 19,925 20,175
Markets 26-50......................... 14,950 15,125
Markets 51-100........................ 9,975 10,100
Remaining Markets..................... 6,225 6,300
Construction Permits.................. 4,975 5,025
TV (47 CFR Part 73) UHF Commercial:
Markets 1-10.......................... 17,925 18,150
Markets 11-25......................... 15,950 16,150
Markets 26-50......................... 11,950 12,100
Markets 51-100........................ 7,975 8,075
Remaining Markets..................... 4,975 5,025
Construction Permits.................. 3,975 4,025
Satellite Television Stations (All
Markets)................................. 620 625
Construction Permits--Satellite Television
Stations................................. 225 230
Low Power TV, TV/FM Translators & Boosters
(47 CFR Part 74)......................... 170 170
Broadcast Auxiliary (47 CFR Part 74)...... 30 30
Multipoint Distribution Service (per call
sign) (47 CFR Part 21)................... 140 140
Cable Antenna Relay Service (47 CFR Part
78)...................................... 290 295
Cable Television Systems (per subscriber)
(47 CFR Part 76)......................... .49 .50
Interstate Telephone Service Providers
(per revenue dollar)..................... .00088 .00089
Earth Stations (47 CFR Part 25)........... 330 335
Space Stations (per operational station in
geosynchronous orbit) (47 CFR Part 25)... 75,000 63,500
Also includes Direct Broadcast Satellite
Service (per operational station) (47 CFR
Part 100)................................ n/a 63,500
Earth Orbit Satellite (per operational
system) (47 CFR Part 25)................. n/a 87,725
INMARSAT/INTELSAT Signatory (per
signatory)............................... n/a 217,575
International Circuits (per active 64KB
circuit)................................. 4 4
International Public Fixed (per call sign)
(47 CFR Part 23)......................... 200 200
International (HF) Broadcast (47 CFR Part
73)...................................... 250 255
------------------------------------------------------------------------
Appendix F--FY 1996 Guidelines for Regulatory Fee Categories
1. The guidelines below provide an explanation of regulatory fee
categories established by the Schedule of Regulatory Fees in Section
9(g) of the Communications Act, 47 U.S.C. 159(g) as modified in the
instant Notice of Proposed Rulemaking. Where regulatory fee
categories need interpretation or clarification, we have relied on
the legislative history of Section 9, our own experience in
establishing and regulating the Schedule of Regulatory Fees for
Fiscal Years (FY) 1994 and 1995 and the services subject to the fee
schedule, and the comments of the parties in our proceeding to adopt
fees for FY 1995. The categories and amounts set out in the schedule
have been modified to reflect changes in the number of payment
units, additions and changes in the services subject to the fee
requirement and the benefits derived from the Commission's
regulatory activities, and to simplify the structure of the
schedule. The schedule may be similarly modified or adjusted in
future years to reflect changes in the Commission's budget and in
the services regulated by the Commission. See 47 U.S.C. 159(b) (2),
(3).
2. Exemptions. Most licensees and other entities regulated by
the Commission must pay regulatory fees in 1996. However,
governments and nonprofit (exempt under Section 501 of the Internal
Revenue Code) entities are exempt from paying regulatory fees and
should not submit payment, but may be asked to submit a current IRS
Determination Letter documenting its nonprofit status, a
certification of governmental authority, or certification from a
governmental entity attesting to its exempt status. The governmental
exemption applies even where the government-owned or community-owned
facility is in direct competition with commercial stations. Other
specific exemptions are discussed below in association with a
particular service category or group.
1. Private Wireless Radio Services
3. Two levels of statutory fees were established for the Private
Wireless Radio Services--exclusive use services and shared use
services. Thus, licensees who generally receive a higher quality
communication channel due to exclusive or lightly shared frequency
assignments, will pay a higher fee than those who share marginal
quality assignments. This dichotomy is consistent with the directive
of section 9 that the regulatory fees reflect the benefits provided
to the licensees. See 47 U.S.C. 159(b)(1)(A). In addition, because
of the generally small amount of the fees assessed against Private
Wireless Radio Service licensees, applicants for new licenses and
reinstatements and for renewal of existing licenses are required to
pay a regulatory fee covering the entire license term, with only a
percentage of all licensees paying a regulatory fee in any one year.
Applications for modification or assignment of existing
authorizations do not require the payment of regulatory fees. The
[[Page 16444]]
expiration date of those authorizations will reflect only the
unexpired term of the underlying license rather than a new license
term.
a. Exclusive Use Services
4. Land Mobile Services: Regulatees in this category include
those authorized under Part 90 of the Commission's Rules to provide
limited access Wireless Radio service that allows high quality voice
or digital communications between vehicles or to fixed stations to
further the business activities of the licensee. These services,
using the 220-222 MHz band and frequencies at 470 MHz and above, may
be offered on a private carrier basis in the Specialized Mobile
Radio Services (SMRS).1
---------------------------------------------------------------------------
\1\ This category only applies to licensees of shared-use
private 220-222 MHz and 470 MHz and above in the Specialized Mobile
Radio (SMR) service who have elected not to change to the Commercial
Mobile Radio Service (CMRS). Those who have elected to change to the
CMRS are referred to paragraph 14 of this Appendix.
---------------------------------------------------------------------------
For FY 1996, Land Mobile licensees will pay a $6 annual
regulatory fee per license, payable for an entire five or ten year
license term at the time of application for a new, renewal or
reinstatement license.2 The total regulatory fee due is either
$30 for a license with a five year term or $60 for a license with a
10 year term.
---------------------------------------------------------------------------
\2\ Although this fee category includes licenses with ten year
terms, the estimated volume of ten year l
FR Doc. 96-9192 Assessment and Collection of Regulatory Fees For Fiscal Year 1996
icense applications in FY
1996 is less than one tenth of one percent and, therefore, is
statistically insignificant.
---------------------------------------------------------------------------
5. Microwave Services: These services include private microwave
systems and private carrier systems authorized under Part 101 of the
Commission's Rules to provide telecommunications services between
fixed points on a high quality channel of communications. Microwave
systems are often used to relay data and to control railroad,
pipeline and utility equipment. For FY 1996, Microwave licensees
will pay a $6 annual regulatory fee per license, payable for an
entire ten year license term at the time of application for a new,
renewal or reinstatement license. The total regulatory fee due is
$60 for the ten year license term.
6. Interactive Video Data Service (IVDS): The IVDS is a two-way
point-to-multi-point radio service allocated high quality channels
of communications and authorized under Part 95 of the Commission's
Rules. The IVDS provides information, products and services, and
also the capability to obtain responses from subscribers in a
specific service area. The IVDS is offered on a private carrier
basis. For FY 1996, IVDS licensees will pay a $6 annual regulatory
fee per license, payable for an entire five year license term at the
time of application for a new, renewal, or reinstatement license.
The total regulatory fee due is $30 for the five year term of the
license.
b. Shared Use Services
7. Marine (Ship) Service: This service is a shipboard radio
service authorized under Part 80 of the Commission's Rules to
provide telecommunications between watercraft or between watercraft
and shore-based stations. Radio installations are required by
domestic and international law for large passenger or cargo vessels.
Radio equipment may be voluntarily installed on smaller vessels,
such as recreational boats. The recently enacted Telecommunications
Act of 1996 gave the Commission the authority to license certain
ship stations by rule rather than by individual license. Private
boat operators sailing entirely within domestic U.S. waters and who
are not otherwise required by treaty or agreement to carry a radio,
may no longer be required to hold a marine license if the Commission
enacts rules to that effect, and they will not be required to pay a
regulatory fee. For FY 1996, parties required to be licensed and
those choosing to be licensed for Marine (Ship) Stations will pay a
$3 annual regulatory fee per station, payable for an entire ten year
license term at the time of application for a new, renewal or
reinstatement license. The total regulatory fee due is $30 for the
ten year license term.
8. Marine (Coast) Service: This service includes land-based
stations in the maritime services, authorized under Part 80 of the
Commission's Rules, to provide communications services to ships and
other watercraft in coastal and inland waterways. For FY 1996,
licensees of Marine (Coast) Stations will pay a $3 annual regulatory
fee per call sign, payable for the entire five year license term at
the time of application for a new, renewal or reinstatement license.
The total regulatory fee due is $15 per call sign for the five year
license term.
9. Private Land Mobile (Other) Services: These services include
Land Mobile Radio Services operating under Parts 90 and 95 of the
Commission's Rules. Services in this category provide one or two way
communications between vehicles, persons or to fixed stations on a
shared basis and include radiolocation services, industrial radio
services and land transportation radio services. For FY 1996,
licensees of services in this category will pay a $3 annual
regulatory fee per call sign, payable for an entire five year
license term at the time of application for a new, renewal or
reinstatement license. The total regulatory fee due is $15 for the
five year license term.
10. Aviation (Aircraft) Service: These services include stations
authorized to provide communications between aircraft and from
aircraft to ground stations and includes frequencies used to
communicate with air traffic control facilities pursuant to Part 87
of the Commission's Rules. The recently enacted Telecommunications
Act of 1996 gave the Commission the authority to license certain
aircraft radio stations by rule rather than by individual license.
Private aircraft operators flying entirely within domestic U.S.
airspace and who are not otherwise required by treaty or agreement
to carry a radio, may no longer be required to hold an aircraft
license if the Commission enacts rules to that effect, and they will
not be required to pay a regulatory fee. For FY 1996, parties
required to be licensed and those choosing to be licensed for
Aviation (Aircraft) Stations will pay a $3 annual regulatory fee per
station, payable for the entire ten year license term at the time of
application for a new, renewal or reinstatement license. The total
regulatory fee due is $30 per station for the ten year license term.
11. Aviation (Ground) Service: This service includes stations
authorized to provide ground-based communications to aircraft for
weather or landing information, or for logistical support pursuant
to Part 87 of the Commission's Rules. Certain ground-based stations
which only serve itinerant traffic; i.e., possess no actual units on
which to assess a fee, are exempt from payment of regulatory fees.
For FY 1996, licensees of Aviation (Ground) Stations will pay a $3
annual regulatory fee per license, payable for the entire five year
license term at the time of application for a new, renewal or
reinstatement license. The total regulatory fee is $15 per call sign
for the five year license term.
12. General Mobile Radio Service (GMRS): These services include
Land Mobile Radio licensees providing personal and limited business
communications between vehicles or to fixed stations for short-
range, two-way communications pursuant to Part 95 of the
Commission's Rules. For FY 1996, GMRS licensees will pay a $3 annual
regulatory fee per license, payable for an entire five year license
term at the time of application for a new, renewal or reinstatement
license. The total regulatory fee due is $15 per license for the
five year license term.
c. Amateur Radio Vanity Call Signs
13. Amateur Vanity Call Signs: This fee covers voluntary
requests for specific call signs in the Amateur Radio Service
authorized under part 97 of the Commission's Rules. For FY 1996,
applicants for Amateur Vanity Call-Signs will pay a $3 annual
regulatory fee per call sign, payable for an entire ten year license
term at the time of application for a vanity call sign. The total
regulatory fee due would be $30 per license for the ten year license
term.3
---------------------------------------------------------------------------
\3\ Section 9(h) exempts ``amateur radio operator licenses under
Part 97 of the Commission's rules (47 CFR Part 97)'' from the
requirement. However, Section 9(g)'s fee schedule explicitly
includes ``Amateur vanity call signs'' as a category subject to the
payment of a regulatory fee.
---------------------------------------------------------------------------
d. Commercial Wireless Radio Services
14. Commercial Mobile Radio Services (CMRS) Mobile Services: The
Commercial Mobile Radio Service (CMRS) is a new ``umbrella''
descriptive term attributed to various existing services authorized
to provide interconnected mobile radio services for profit to the
public, or to such classes of eligible users as to be effectively
available to a substantial portion of the public. CMRS Mobile
Services include certain licensees which formerly were licensed as
part of the Private Radio Services (e.g., Specialized Mobile Radio
Services) and others formerly licensed as part of the Common Carrier
Radio Services (e.g., Public Mobile Services and Cellular Radio
Service). While specific rules pertaining to each covered service
remain in separate Parts 22, 80 and 90; general rules for CMRS are
contained in Part 20. We have replaced the Public Mobile/Cellular
Radio regulatory fee category with a CMRS Mobile Services category
for regulatory fee collection purposes. CMRS Mobile Services will
[[Page 16445]]
include: qualifying Business Radio Services, 220-222 MHz Land Mobile
Systems, Specialized Mobile Radio Services (Part 90); 4 Public
Coast Stations (Part 80); Public Mobile Radio, Cellular, 800MHz Air-
Ground Radiotelephone, and Offshore Radio Services (Part 22). Each
licensee in this group will pay an annual regulatory fee for each
mobile or cellular unit (mobile or cellular call sign or telephone
number), including two-way paging units, assigned to its customers,
including resellers of its services. For FY 1996, the regulatory fee
is $.15 per unit.
---------------------------------------------------------------------------
\4\ This category does not include licensees of private shared-
use 220 MHz and 470 MHz and above in the Specialized Mobile Radio
(SMR) service who have elected to remain non-commercial. Those who
have elected not to change to the Commercial Mobile Radio Service
(CMRS) are referred to paragraph 4 of this Appendix.
---------------------------------------------------------------------------
15. Personal Communications Service (PCS): For FY 1996, the
Personal Communications Service (PCS) covered by Part 24 of the
rules is exempt from payment of regulatory fees.
16. Commercial Mobile Radio Services (CMRS) One-Way Paging
Services: The Commercial Mobile Radio Service (CMRS) is a new
``umbrella'' descriptive term attributed to various existing
services authorized to provide interconnected mobile radio services
for profit to the public, or to such classes of eligible users as to
be effectively available to a substantial portion of the public.
CMRS One-Way Paging Services include certain licensees which
formerly were licensed as part of the Private Radio Services (e.g.,
Private Paging) and others formerly licensed as part of the Common
Carrier Radio Services (e.g., Public Mobile One-Way Paging). While
specific rules pertaining to each covered service remain in separate
Parts 22 and 90; general rules for CMRS are contained in Part 20. We
have replaced the Public Mobile One-Way Paging regulatory fee
category with a CMRS One-Way Paging Services category for regulatory
fee collection purposes. Each licensee in the Public Mobile One-Way
Paging Services will pay an annual regulatory fee for each paging
unit, assigned to its customers, including resellers of its
services. For FY 1996, the regulatory fee is $.02 per unit.
2. Mass Media Services
17. The regulatory fees for the Mass Media fee category apply to
broadcast licensees and permittees. Noncommercial Educational
Broadcasters are exempt from regulatory fees.
a. Commercial AM and FM Radio
18. These categories include licensed Commercial AM (Classes A,
B, C, and D) and FM (Classes A, B, B1, C, C1, C2, and C3) Radio
Stations operating under Part 73 of the Commission's Rules.5
The regulatory fees for AM and FM Stations for FY 1996 are as
follows:
---------------------------------------------------------------------------
\5\ The Commission acknowledges that certain stations operating
in Puerto Rico and Guam have been assigned a higher level station
class than would be expected if the station were located on the
mainland. Although this results in a higher regulatory fee, we
believe that the increased interference protection associated with
the higher station class is necessary and justifies the fee.
AM Radio:
Class A..................................................... $1,125
Class B..................................................... 630
Class C..................................................... 255
Class D..................................................... 315
FM Radio:
Classes C, C1, C2, B........................................ 1,125
Classes A, B1, C3........................................... 755
b. Construction Permits--Commercial AM Radio
19. This category includes holders of permits to construct new
Commercial AM Stations. For FY 1996, permittees will pay a fee of
$125 for each permit held. Upon issuance of an operating license,
this fee would no longer be applicable and licensees would be
required to pay the applicable fee for the designated class of the
station.
c. Construction Permits--Commercial FM Radio
20. This category includes holders of permits to construct new
Commercial FM Stations. For FY 1996, permittees will pay a fee of
$625 for each permit held. Upon issuance of an operating license,
this fee would no longer be applicable. Instead, licensees would pay
a regulatory fee based upon the designated class of the station.
d. Commercial Television Stations
21. This category includes licensed Commercial VHF and UHF
Television Stations covered under Part 73 of the Commission's Rules,
except commonly owned Television Satellite Stations, addressed
separately below. Markets are Nielsen Designated Market Areas (DMA)
as listed in the Television & Cable Factbook, Stations Volume No.
63, 1995 Edition, Warren Publishing, Inc. The fees for each category
of station are as follows:
VHF Markets 1-10--$22,700
VHF Markets 11-25--$20,175
VHF Markets 26-50--$15,125
VHF Markets 51-100--$10,100
VHF Remaining Markets--$6,300
UHF Markets 1-10--$18,150
UHF Markets 11-25--$16,150
UHF Markets 26-50--$12,100
UHF Markets 51-100--$8,075
UHF Remaining Markets--$5,025
e. Commercial Television Satellite Stations
22. Commonly owned Television Satellite Stations in any market
(authorized pursuant to Note 5 of Section 73.3555 of the
Commission's Rules) that retransmit programming of the primary
station are assessed a fee of $625 annually. Only those stations
designated as Television Satellite Stations in the 1995 Edition of
the Television and Cable Factbook are eligible to submit the fee
applicable to Television Satellite Stations. All other television
licensees are subject to the regulatory fee payment required for
their class of station and market.
f. Construction Permits--Commercial VHF Television Stations
23. This category includes holders of permits to construct new
Commercial VHF Television Stations. For FY 1996, VHF permittees will
pay an annual regulatory fee of $5,025. Upon issuance of an
operating license, this fee would no longer be applicable. Instead,
licensees would pay a fee based upon the designated market of the
station.
g. Construction permits--Commercial UHF Television Stations
24. This category includes holders of permits to construct new
UHF Television Stations. For FY 1996, UHF Television permittees will
pay an annual regulatory fee of $4,025. Upon issuance of an
operating license, this fee would no longer be applicable. Instead,
licensees would pay a fee based upon the designated market of the
station.
h. Construction Permits--Satellite Television Stations
25. The fee for UHF and VHF Television Satellite Station
construction permits for FY 1996 is $230. An individual regulatory
fee payment is to be made for each Television Satellite Station
construction permit held.
i. Low Power Television, FM Translator and Booster Stations, TV
Translator and Booster Stations
26. This category includes Low Power UHF/VHF Television stations
operating under Part 74 of the Commission's Rules with a transmitter
power output limited to 0.01 kw for a UHF facility and, generally, 1
kw for a VHF facility. Low Power Television (LPTV) stations may
retransmit the programs and signals of a TV Broadcast Station,
originate programming, and/or operate as a subscription service.
This category also includes translators and boosters operating under
Part 74 which rebroadcast the signals of full service stations on a
frequency different from the parent station (translators) or on the
same frequency (boosters). The stations in this category are
secondary to full service stations in terms of frequency priority.
We have also received requests for waivers of the regulatory fees
from operators of community based Translators. These Translators are
generally not affiliated with commercial broadcasters, they are
nonprofit, nonprofitable, or only marginally profitable, serve small
rural communities, and are supported financially by the residents of
the communities served. We are aware of the difficulties these
Translators have in paying even minimal regulatory fees, and we have
addressed those concerns in the ruling on reconsideration of the FY
1994 Order. Community based Translators are exempt from regulatory
fees. For FY 1996, licensees in this category will pay a regulatory
fee of $170 for each license held.
j. Broadcast Auxiliary Stations
27. This category includes licensees of remote pickup stations,
Aural Broadcast Auxiliary Stations, Television Broadcast Auxiliary
Stations, and Low Power Auxiliary Stations, authorized under Part 74
of the Commission's Rules. Auxiliary Stations are generally
associated with a particular television or radio broadcast station
or cable television system. For FY 1996, licensees of Commercial
Auxiliary Stations will pay a $30 annual regulatory fee on a per
call sign basis.
[[Page 16446]]
k. Multipoint Distribution Service
28. This category covers Multipoint Distribution Service (MDS),
and Multichannel Multipoint Distribution Service (MMDS), authorized
under Part 21 of the Commission's Rules to use microwave frequencies
for video and data distribution within the United States. For FY
1996, MDS and MMDS stations will pay an annual regulatory fee of
$140 per call sign.
3. Cable Services
a. Cable Television Systems
29. This category includes operators of Cable Television
Systems, providing or distributing programming or other services to
subscribers under Part 76 of the Commission's Rules. For FY 1996
Cable Systems will pay a regulatory fee of $.50 per
subscriber.6 Payments for Cable Systems are to be made on a per
subscriber by community unit basis as of December 31, 1995, as
reported on each Cable Systems's 1995 Annual Report of Cable Systems
(FCC Form 325). Cable Systems should determine their subscriber
numbers by calculating the number of single family dwellings, the
number of individual households in multiple dwelling units, e.g.,
apartments, condominiums, mobile home parks, etc., paying at the
basic subscriber rate, the number of bulk rate customers and the
number of courtesy or fee customers. In order to determine the
number of bulk rate subscribers, a system should divide its bulk
rate charge by the annual subscription rate for individual
households. See FY 1994 Order, Appendix B at para. 31.
---------------------------------------------------------------------------
\6\ Cable systems are to pay their regulatory fees on a per
subscriber basis rather than per 1,000 subscribers as set forth in
the statutory fee schedule. See FY 1994 Order at para. 100.
---------------------------------------------------------------------------
b. Cable Antenna Relay Service
30. This category includes Cable Antenna Relay Service (CARS)
stations used to transmit television and related audio signals,
signals of AM and FM Broadcast Stations and cablecasting from the
point of reception to a terminal point from where the signals are
distributed to the public by a Cable Television System. For FY 1996,
licensees will pay an annual regulatory fee of $295 per CARS
license.
4. Common Carrier Services
a. Fixed Radio Services
31. Domestic Public Fixed Radio Service: This category includes
licensees in the Point-to-Point Microwave Radio Service, Local
Television Transmission Radio Service, Digital Electronic Message
Service, authorized under Part 21 of the Commission's Rules to use
microwave frequencies for video and data distribution within the
United States. For FY 1996, Domestic Public Fixed Radio Service
licensees pay a $140 annual regulatory fee per call sign.
b. Interstate Telephone Service Providers
32. This category includes Inter-Exchange Carriers (IXCs), Local
Exchange Carriers (LECs), Competitive Access Providers (CAPs),
domestic and international carriers that provide operator services,
Wide Area Telephone Service (WATS), 800, 900, telex, telegraph,
video, other switched, interstate access, special access, and
alternative access services either by using their own facilities or
by reselling facilities and services of other carriers or telephone
carrier holding companies, and companies other than traditional
local telephone companies that provide interstate access services to
long distance carriers and other customers. This category also
includes pre-paid calling card providers. These common carriers,
including resellers, must submit fee payments based upon their
proportionate share of gross interstate revenues using the
methodology that we have adopted for calculating contributions to
the TRS fund. See Telecommunications Relay Services, 8 FCC Rcd 5300
(1993), 58 FR 39671 (July 26, 1993). In order to avoid imposing any
double payment burden on resellers, we will permit carriers to
subtract from their gross interstate revenues, as reported to NECA
in connection with their TRS contribution, any payments made to
underlying common carriers for telecommunications facilities and
services, including payments for interstate access service, that are
sold in the form of interstate service. For this purpose, resold
telecommunications facilities and services are only intended to
include payments that correspond to revenues that will be included
by another carrier reporting interstate revenue. For FY 1996,
carriers should multiply their adjusted gross revenue figure (gross
revenue reduced by the total amount of their payments to underlying
common carriers for telecommunications facilities or services) by
the factor 0.00089 to determine the appropriate fee for this
category of service. You may want to use the following worksheet to
determine your fee payment:
------------------------------------------------------------------------
Total Interstate
------------------------------------------------------------------------
(1) Revenue reported in TRS Fund worksheets
(2) Less: Access charges paid
(3) Less: Other telecommunications facilities and
services taken for resale
(4) Adjusted revenues (1) minus (2) minus (3)
(5) Fee factor..................................... ....... 0.00089
(6) Fee due (4) times (5)
------------------------------------------------------------------------
5. International Services
a. Earth Stations
33. Very Small Aperture Terminal (VSAT) Earth Stations,
equivalent C-Band Earth Stations and antennas, and earth station
systems comprised of very small aperture terminals operate in the 12
and 14 GHz bands and provide a variety of communications services to
other stations in the network. VSAT systems consist of a network of
technically-identical small Fixed-Satellite Earth Stations which
often include a larger hub station. VSAT Earth Stations and C-Band
Equivalent Earth Stations are authorized pursuant to Part 25 of the
Commission's Rules. Mobile Satellite Earth Stations, operating
pursuant to Part 25 of the Commission's Rules under blanket licenses
for mobile antennas (transceivers), are smaller than one meter and
provide voice or data communications, including position location
information for mobile platforms such as cars, buses or
trucks.7 Fixed-Satellite Transmit/Receive and Transmit Only
Earth Station antennas, authorized or registered under Part 25 of
the Commission's Rules, are operated by private and public carriers
to provide telephone, television, data, and other forms of
communications. Included in this category are telemetry, tracking,
and control (TT&C) earth stations and earth station uplinks. For FY
1996, licensees of VSATs, Mobile Satellite Earth Stations, and
Fixed-Satellite Transmit/Receive and Transmit Only Earth Stations
will pay a fee of $335 per authorization or registration as well as
a separate fee of $335 for each associated Hub Station.
---------------------------------------------------------------------------
\7\ Mobile earth stations are vehicle-based units capable of
operation while the vehicle is in motion. In contrast, transportable
units are moved to a fixed location and operate in a stationary
(fixed) mode. Both are assessed the same regulatory fee for FY 1996.
---------------------------------------------------------------------------
34. Receive only earth stations. For FY 1996, there is no
regulatory fee for receive-only earth stations.
b. Space Stations (Geosynchronous)
35. Geosynchronous Space Stations are domestic and international
satellites positioned in orbit to remain approximately fixed
relative to the earth. Most are authorized under Part 25 of the
Commission's Rules to provide communications between satellites and
earth stations on a common carrier and/or private carrier basis. In
addition, this category includes Direct Broadcast Satellite (DBS)
Service which includes space stations authorized under Part 100 of
the Commission's rules to transmit or re-transmit signals for direct
reception by the general public encompassing both individual and
community reception. For FY 1996, entities authorized to operate
geosynchronous space stations (including DBS satellites) will be
assessed an annual regulatory fee of $63,500 per operational station
in orbit. Payment is required for any geosynchronous satellite that
has been launched and tested and is authorized to provide service.
c. Low Earth Orbit Satellites (LEOs)
36. Low Earth Orbit Satellite Systems are space stations that
orbit the earth in non-geosynchronous orbit. They are authorized
under Part 25 of the Commission's rules to provide communications
between satellites and earth stations on a common carrier and/or
private carrier basis. For FY 1996, entities authorized to operate
Low Earth Orbit Satellite Systems will be assessed an annual
regulatory fee of $87,725 per operational system in orbit. Payment
is required for any LEO System that has one or more operational
satellites.
[[Page 16447]]
d. Signatories
37. A Signatory to INMARSAT is an Administration or government,
or the telecommunications entity designated as sole operating entity
by an Administration or government, which participates in the
International Mobile Satellite Organization (INMARSAT) in order to
develop and operate a global maritime satellite telecommunication
system which serves maritime commercial and safety needs of the
United States and foreign countries. A Signatory to INTELSAT is an
Administration or government, or the telecommunications entity
designated as sole operating entity by an Administration or
government, which participates in the International
Telecommunications Satellite Organization (INTELSAT) in order to
develop, construct, operate and maintain the space segment of the
global commercial telecommunications satellite system established
under the Interim Agreement and Special Agreement signed by
Governments on August 20, 1964. For FY 1996, Signatories to INMARSAT
and INTELSAT will be assessed an annual regulatory fee of $217,575
in order to recover the cost of the Commission's regulatory
activities associated with such entities.
e. International Bearer Circuits
38. Regulatory fees for International Bearer Circuits are to be
paid by the facilities-based common carrier activating the circuit
in any transmission facility for the provision of service to an end
user or resale carrier. Payment of the fee for bearer circuits by
private submarine cable operators is required for circuits sold on
an indefeasible right of use (IRU) basis or leased to any customer
other than an international common carrier authorized by the
Commission to provide U.S. international common carrier services.
Compare FY 1994 Order at 5367. The fee is based upon active 64 Kbps
circuits, or equivalent circuits. Under this formulation, 64 Kbps
circuits or their equivalent will be assessed a fee. Equivalent
circuits include the 64 Kbps circuit equivalent of larger bit stream
circuits. For example, the 64 Kbps circuit equivalent of a 2.048
Mbps circuit is 30 64 Kbps circuits. Analog circuits such as 3 and 4
KHz circuits used for international service are also included as 64
Kbps circuits. However, circuits derived from 64 Kbps circuits by
the use of digital circuit multiplication systems are not equivalent
64 Kbps circuits. Such circuits are not subject to fees. Only the 64
Kbps circuit from which they have been derived will be subject to
payment of a fee. For FY 1996, the regulatory fee is $4.00 for each
active 64 Kbps circuit or equivalent. For analog television channels
we will assess fees as follows:
------------------------------------------------------------------------
No. of
equivalent
Analog Television Channel Size in MHz 64 Kbps
Circuits
------------------------------------------------------------------------
36.......................................................... 630
24.......................................................... 288
18.......................................................... 240
------------------------------------------------------------------------
f. International Public Fixed
39. This fee category includes common carriers authorized under
Part 23 of the Commission's Rules to provide radio communications
between the United States and a foreign point via microwave or HF
troposcatter systems, other than satellites and satellite earth
stations, but not including service between the United States and
Mexico and the United States and Canada using frequencies above 72
MHz. For FY 1996, International Public Fixed Radio Service licensees
will pay a $200 annual regulatory fee per call sign.
g. International (HF) Broadcast
40. This category covers International Broadcast Stations
licensed under Part 73 of the Commission's Rules to operate on
frequencies in the 5,950 khz to 26,100 Khz range to provide service
to the general public in foreign countries. For FY 1996,
International HF Broadcast Stations will pay an annual regulatory
fee of $255 per station license.
[FR Doc. 96-9192 Filed 4-12-96; 8:45 am]
BILLING CODE 6712-01-P
Complete official Federal Register PDF
FR Doc. 96-9177 Approval of Colorado's Petition to Relax the Federal Gasoline Reid Vapor Pressure Volatility Standard for 1996 and 1997
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16423-16424]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9177]
=======================================================================
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80
[FRL-5457-6]
Approval of Colorado's Petition to Relax the Federal Gasoline
Reid Vapor Pressure Volatility Standard for 1996 and 1997
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Environmental Protection Agency (``EPA'' or the
``Agency'') is proposing a limited approval of the State of Colorado's
petition to relax the Reid Vapor Pressure (RVP) standard that applies
to gasoline introduced into commerce in the Denver-Boulder ozone
nonattainment area from June 1 to September 15. It is proposed that the
standard be relaxed from 7.8 pounds per square inches (psi) to 9.0 psi
for the years 1996 and 1997. Pursuant to the Clean Air Act Amendments
of 1990, Federal RVP standards were promulgated by EPA on June 11, 1990
and revised on December 12, 1991. Colorado's petition is based on
evidence that the Denver-Boulder area does not need the 7.8 psi
standard to maintain ozone attainment in the near term and that the 7.8
psi standard would impose significant costs on industry and
[[Page 16424]]
consumers. Colorado's petition requests a continuation of previous
relaxations of the RVP standard. EPA has approved relaxations in the
Denver-Boulder area for the past four years, from 1992 through 1995.
DATES: Comments on this proposed rule must be received in writing by
May 15, 1996.
ADDRESSES: Materials relevant to this rulemaking have been placed in
Docket A-96-10 by EPA. The docket is located at the Docket Office of
the U.S. Environmental Protection Agency, 401 M Street, SW.,
Washington, DC 20460, Room M-1500 in Waterside Mall and may be
inspected from 8:30am to 5:30 pm, Monday through Friday. A reasonable
fee may be charged for copying docket material.
Comments should be submitted (in duplicate if possible) to the Air
Docket Section at the above address. A copy should also be sent to the
EPA contact person listed below at the following address: U.S.
Environmental Protection Agency, Office of Air and Radiation, 401 M
Street, SW. (6406-J), Washington, DC 20460.
FOR FURTHER INFORMATION CONTACT: Marilyn Winstead McCall of the Fuels
and Energy Division at 202-233-9029 at the above address.
SUPPLEMENTARY INFORMATION: For more detailed information on this
proposal, please see EPA's Direct Final Rulemaking published in the
Final Rules section of this Federal Register which approves for a
limited time period Colorado's petition to relax the Reid Vapor
Pressure standard in the Denver-Boulder area from 7.8 psi to 9.0 psi
for the summer ozone season beginning June 1, 1996. The Agency views
this as a noncontroversial action due to the limited scope of this
proposed rulemaking, Colorado's continued attainment of the ozone
standard and for the reasons discussed in the direct final rulemaking
published in today's Federal Register. If no adverse comments are
received in response to this proposed rule, no further action is
contemplated in relation to this rule. If EPA receives adverse
comments, the direct final rule will be withdrawn and all public
comments received will be addressed in a subsequent rule. The EPA will
not institute a second comment period on this document. Any parties
interested in commenting on this action should do so at this time.
Authority: 42 U.S.C. 7545 and 7601(a).
Dated: April 4, 1996.
Carol M. Browner,
Administrator.
[FR Doc. 96-9177 Filed 4-12-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-9155 Loan Policies and Operations; Definitions; Loan Underwriting
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16403-16412]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9155]
========================================================================
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.
========================================================================
Federal Register / Vol. 61, No. 73 / Monday, April 15, 1996 /
Proposed Rules
[[Page 16403]]
FARM CREDIT ADMINISTRATION
12 CFR Parts 614 and 619
RIN 3052-AB64
Loan Policies and Operations; Definitions; Loan Underwriting
AGENCY: Farm Credit Administration.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Farm Credit Administration (FCA), by the Farm Credit
Administration Board (Board), proposes amendments to the regulations
relating to loan underwriting in response to comments received from the
Board's initiative to reduce regulatory burden, streamline the
regulations, and set clear minimum regulatory standards where
practicable. The proposed regulations would require each institution to
adopt loan underwriting policies and standards, eliminate unnecessary
regulations, and make other changes to the regulations governing
prudent credit administration, the lending authority of production
credit associations, and collateral evaluations.
DATES: Comments should be received on or before May 15, 1996.
ADDRESSES: Comments may be mailed or delivered to Patricia W. DiMuzio,
Associate Director, Regulation Development, Office of Examination, Farm
Credit Administration, McLean, Virginia 22102-5090. Copies of all
communications received will be available for review by interested
parties in the Office of Examination, Farm Credit Administration.
FOR FURTHER INFORMATION CONTACT:
John J. Hays, Policy Analyst, Regulation Development, Office of
Examination, (703) 883-4498, TDD (703) 883-4444;
or
Joy E. Strickland, Senior Attorney, Regulatory Enforcement Division,
Office of General Counsel, (703) 883-4020, TDD (703) 883-4444.
SUPPLEMENTARY INFORMATION: On June 10, 1993, the FCA Board approved a
notice seeking public comment on the appropriateness of requirements
that the FCA regulations impose on the Farm Credit System (System or
FCS). See 58 FR 34003 (June 23, 1993). The FCA has addressed many of
those comments in previous rulemakings. Of the comments received in
response to the notice, 24 were related to loan underwriting and the
independent credit judgment rule for loan sale and purchase
transactions through agents. This rulemaking addresses those issues. In
addition to responding to the regulatory burden comments, the FCA is
also proposing other amendments to refocus regulatory requirements for
loan underwriting, make the regulations more understandable and useful
to the reader, set minimum regulatory standards, and make conforming
amendments.
In response to regulatory burden comments and in an attempt to
achieve consistency throughout the regulations in subparts C through E
of part 614, the FCA is proposing a substantial revision to the
structure and content of the regulations. In addition, some areas that
were addressed in loan underwriting are more properly the focus of
subpart A, Lending Authorities, and the FCA is proposing relocating
those items from subpart E to subpart A. The explanation of proposed
amendments to subpart A is contained in the discussion of the proposed
amendments to subpart E, Loan Terms and Conditions. Accordingly, the
following discussion begins with subparts C and D.
In order to provide readers with a guideline for the changes
proposed, the following is a list of changes for the proposed revisions
in parts 614 and 619:
Subpart A--Lending Authorities
Secs. 614.4000 through 614.4050--Revised.
Subpart C--Bank/Association Lending Relationship
Secs. 614.4100, 614.4110, and 614.4130--No changes proposed.
Sec. 614.4120--Revised.
Secs. 614.4135 through 614.4145--Deleted.
Subpart D--General Loan Policies for Banks and Associations
Sec. 614.4150--Revised.
Sec. 614.4160--Deleted.
Sec. 614.4165--Revised.
Subpart E--Loan Terms and Conditions
Sec. 614.4200--Revised.
Secs. 614.4210 through 614.4230--Deleted.
Sec. 614.4231--Revised.
Secs. 614.4232 and 614.4233--No changes proposed.
Subpart F--Collateral Evaluation Requirements
Secs. 614.4245 and 614.4250--Revised. No other amendments proposed.
Subpart H--Loan Purchases and Sales
Sec. 614.4325--Revised. No other amendments proposed.
Subpart J--Lending Limits
Secs. 614.4355 and 614.4358--Revised. No other amendments proposed.
Subpart Q--Banks for Cooperatives Financing International Trade
Sec. 614.4810--Revised. No other amendments proposed.
Part 619--Definitions
Secs. 619.9165 and 619.9290--Removed. No other amendments proposed.
I. Subparts C and D--Bank/Association Lending Relationship and General
Loan Policies for Banks and Associations
In response to the request for comments on regulatory burden, one
association commented that most Farm Credit Banks (FCBs) have changed
their relationship with associations from a supervisory to a wholesale
lending relationship. The association stated that the FCA examiners
encourage direct lender associations to adopt their own policies and
procedures. FCA regulations, however, continue to contemplate a
supervisory role for FCBs over association lending operations as if all
banks retained direct (retail) lending authorities without recognizing
the role of many banks as wholesale or discount lenders to Farm Credit
associations. The association stated that operational policies for
direct lenders should be developed by the associations rather than the
banks, but noted that this practice is inconsistent with existing
regulations and that clarifying language from the FCA would be helpful.
The criticized regulations, Secs. 614.4135, 614.4140, and 614.4145,
were promulgated in 1972 to implement the Farm Credit Act of 1971.
These regulations, addressing credit supervision, have not been amended
since their adoption. At that time, the banks in the Farm Credit System
[[Page 16404]]
performed many supervisory functions over associations, including
conducting credit reviews. The FCA's primary focus at the time was to
regulate the banks' own operations, including their supervision of
associations and did not emphasize the agency's present practice of
exercising its regulatory and enforcement authorities directly over
associations.
Since 1972, the importance of direct lender associations in the
Farm Credit System has increased substantially. As a result, many banks
are becoming wholesale lenders rather than direct lenders. Statutory
changes since 1972 in FCA's structure and authorities and in the
relationship of associations with their funding banks result in a
greater need for accountability of direct lender associations. The FCA
believes that autonomy in association operations promotes
accountability in many areas including prudent lending operations.
Therefore, the FCA proposes to delete existing Secs. 614.4135,
614.4140, and 614.4145 and clarify the role of Farm Credit Banks (and
Agricultural Credit Banks) in supervision of association's credit
operations. However, the FCA does not intend to minimize the importance
of general bank oversight of association credit activities that may
have a material impact on the bank and on the association's ability to
perform on its direct loan(s) from the bank. These issues, however, can
be appropriately addressed in the agreements governing the lending
relationship between a bank and an association.
The FCA believes that each direct lender, through its board of
directors, should adopt and follow its own policies and procedures for
operations. The FCA agrees with the commenter that duplication and
possibly conflict may result when an association is required by
regulation to abide by district policies and at the same time is
encouraged to develop its own local policies and procedures.
In order to emphasize that the responsibility for developing
prudent loan policies and underwriting standards rests with each
institution, the FCA proposes to delete certain existing regulations.
For example, Sec. 614.4150 currently defines ``sound loan.'' Rather
than define ``sound loan'' by regulation, the FCA proposes to require
each institution to adopt loan underwriting policies and standards that
contain measurable criteria appropriate for the type of loan and the
institution's risk-bearing capacity, which criteria can be used to
determine whether the applicant's operational, financial, and
management resources are sufficient to ensure repayment of the debt
from cashflow, taking into account the borrower's other debt
obligations.
Existing Sec. 614.4160 requires that each bank adopt policies to
ensure that lending practices result in sound loans and specifies five
credit factors that must be analyzed and documented in evaluating the
creditworthiness of each loan applicant. The five credit factors
listed, however, need not be given the same weight in every transaction
and may be only a portion of the variables that should be considered in
some transactions. The FCA believes that each institution should have
the responsibility and the flexibility to adapt its loan underwriting
program to its particular circumstances without regulatory mandates for
the basic and well understood principles of prudent lending. Therefore,
existing Sec. 614.4160 would be deleted under the proposed regulations,
and the mandate for an appropriate analysis of creditworthiness would
be included in proposed Sec. 614.4150(g) governing loan underwriting
standards.
To implement the requirement that each institution must develop its
own policies, the FCA proposes a new regulation that addresses credit
supervision by each institution's board of directors and the
establishment of loan policies and underwriting standards by each
direct lending institution. In instances where direct lending authority
has not been transferred to the Federal land bank associations (FLBAs),
FCBs must still develop lending policies and standards that all FLBAs
within their respective districts must follow in making credit
decisions for the bank. Additionally, in certain circumstances where
loss exposure accrues to individual FLBAs through loss sharing
agreements with the FCB, loan policies and standards may be needed by
FLBAs to augment and supplement those established by their supervisory
banks.
The proposed rule, Sec. 614.4150, addresses the responsibility of
each institution's board of directors to adopt policies to guide
lending. Under these policies, each direct lending institution would be
required to adopt written standards for lending and issue written
policies, operating procedures, and control mechanisms that reflect
those standards for guidance in the extension and administration of
sound credit. These requirements parallel the current requirements in
existing Sec. 614.4145, which address each bank's responsibilities to
supervise credit operations in its district. This regulation would
clearly establish that each direct lending institution's board of
directors is not only accountable for providing policy direction for
credit operations, but also is responsible for more specific guidance
in the extension and administration of sound credit.
The FCA proposes to leave the prescription of specific credit
policies and underwriting standards to each direct lender institution's
board rather than to prescribe them by regulation. However, the
proposed regulation would require certain minimum standards that must
be addressed in the institution's policies. Proposed Sec. 614.4150
would require that the institution's policies and procedures address
minimum standards for credit information and verification, credit
analysis, loan disbursement and servicing, collateral requirements,
loan approval delegations and requirements for board reporting, loan
pricing requirements, prudent loan underwriting standards, loan terms
and conditions that are appropriate for a loan's purpose, and other
areas necessary for the professional conduct of a lending organization.
Under the proposed rule, the FCA would evaluate the adequacy of
each institution's policies to ensure that its board is providing
sufficient direction, guidance, and internal controls for the
institution's credit operations. The procedures implementing these
policies should be in sufficient detail to properly manage and control
risk in the institution's portfolio consistent with the institution's
risk-bearing capacity. Each lending program should be guided by
policies and underwriting standards that address the specific types of
risks associated with the types of loans within an institution's
overall lending program. The FCA believes that institutions should have
the flexibility to develop different lending programs for the types of
customers within their chartered territory. The FCA's primary concern
is whether or not the programs are conducted in a safe and sound manner
in compliance with the statute and the regulations.
The FCA is aware that some System institutions are making increased
use of credit scoring techniques in the evaluation of certain types of
loans. Credit scoring and other techniques used in minimum information
programs, when fully understood and well managed by an institution and
its board of directors, can be a valuable tool in making credit
decisions. These proposed regulatory changes will allow System
institutions the flexibility to use credit scoring and enhance minimum
information programs in credit delivery decisions.
[[Page 16405]]
Proposed Sec. 614.4150(g) would require each direct lending
institution to develop written, measurable loan underwriting standards
to be used to determine whether the applicant has the operational,
financial, and management resources necessary to ensure repayment of
the debt from cashflow, taking into consideration all other
obligations. Such standards would be required to be applied to each
loan transaction as appropriate, taking into consideration the amount
of the loan, the loan's purpose, the nature and type of credit risk and
enterprise being financed. The measurements should be quantitative to
the extent feasible (as for financial information), but may be
qualitative for factors that do not lend themselves to quantification,
but are considered important to the credit decision. Such standards and
their application would be required to be related to the institution's
risk-bearing ability and to take into account future credit risk
uncertainties. Under proposed Sec. 614.4150(g), each institution would
be required to embody the concepts underlying existing Secs. 614.4150
and 614.4160 in a comprehensive, written loan policy. In addition, the
proposed regulations would require that for any loans made that do not
meet the loan underwriting standards, the written credit analysis must
document the compensating factors or extenuating circumstances that
demonstrate repayment capacity. The FCA recognizes that even among
acceptable credits the level of perceived risk will vary. Accordingly,
a well capitalized institution with strong capital and sound earnings
potential will be better positioned to extend credit to a borrower who
appears to have the capacity to repay but nonetheless presents a higher
risk. A weaker institution will need to establish higher standards
until it improves its risk-bearing capacity.
Proposed Sec. 614.4150(h) would require that loan terms and
conditions are appropriate for the purpose of a loan. In this regard,
assets with a useful life of 5 to 10 years would not be financed with a
loan that has a 30-year repayment obligation. This provision is added
in order to retain the existing regulatory requirement in
Sec. 614.4160(e) that the institution has to consider the
constructiveness and practicality of the loan amount, purpose, and
terms and conditions.
Existing Sec. 614.4165 requires that bank lending policies give
special consideration to the credit needs of young, beginning, or small
farmers, ranchers, and producers or harvesters of aquatic products. The
regulation also defines terms and requires associations to make annual
reports to the banks regarding the operations and achievements in these
lending programs. The banks, in turn, are required to make annual
reports to the FCA. Although two institutions commented that the FCA
should eliminate the reporting requirements in Sec. 614.4165, these
requirements are statutory and cannot be eliminated. Section 4.19 of
the Act obligates each institution to take the needs of young,
beginning, and small farmers and ranchers into consideration and report
annually on its progress. However, the reporting instructions can be
eliminated as a regulatory requirement and be implemented instead
through the Agency's call report instructions. The FCA proposes to
retain the regulatory requirement to have a lending program for this
segment of the market, as required by section 4.19 of the Act, but to
transfer the instructions for reporting to the call report. The call
report instructions will provide specific direction and timing for
consistent reporting from System institutions to the FCA. The FCA will
continue to report to the Congress as the Act requires.
II. Subpart E--Loan Terms and Conditions
Existing Sec. 614.4200 requires institutions to set forth the terms
and conditions of each loan in a written loan agreement between the
borrower and the lender. Seven institutions commented that the FCA
should eliminate the requirement that loan terms and conditions be set
forth in a written loan agreement. Some of the commenters suggested
that the reference to a loan agreement should be changed to reference a
written instrument, thus permitting institutions to document loans in
the most appropriate fashion. Other commenters requested that the FCA
eliminate the loan agreement requirement for loans below a de minimus
level, such as $250,000. Finally, one commenter noted that the
requirement that loan terms and conditions be adequately disclosed to
the borrower prior to closing is unclear and troublesome and should be
deleted.
The FCA originally adopted the requirement for a loan agreement
between the lender and borrower in order to ensure that borrowers have
the requisite information in order to meet all loan conditions and to
provide institutions with a means of imposing a legal obligation on
borrowers to provide certified financial statements. See 55 FR 24861
(June 19, 1990). Because the FCA is proposing amendments to its
financial statement collection requirements and wishes to provide
institutions with more flexibility, the FCA is proposing to delete the
requirement that there be a loan agreement for each loan. Instead,
proposed Sec. 614.4200(a)(1) would require institutions to set forth
the terms and conditions of each loan in a written instrument. Such
written instrument could be a loan agreement, promissory note, or other
instrument appropriate to the type and amount of the credit extended.
The FCA notes that continued use of loan agreements is a prudent
practice for complex loans, loans of above average risk, and loans with
conditions that are not standard or that contain elements that the
borrower must fulfill prior to loan closing or during the term of the
loan. The FCA also notes that when periodic financial statements are
required, the written instrument used to convey terms and conditions or
the promissory note should create a legal obligation on the part of the
borrower to provide the statements.
Proposed Sec. 614.4200(a)(2) also would replace the current rules
with a simple requirement that the borrower be given notice of the
terms and conditions of the loan prior to loan closing. Existing
Sec. 614.4200 requires that if the loan closing will occur more than 15
days after notification of the approval is provided to the borrower,
the notice of approval must set forth the terms and conditions on which
credit will be extended. One institution commented that the regulator
should not prescribe the contents of the notice of approval. The FCA
does not wish to dictate to institutions what may be contained in its
notice of approval to borrowers. However, the FCA continues to believe
that it is important that borrowers receive prompt written notice of
all terms and conditions on which credit will be extended. It is
especially important that the borrower receive prompt written notice in
situations where the borrower must take certain actions prior to loan
closing. Therefore, the proposed regulations would require institutions
to provide prompt written notice of approval of the loan and ensure
that loan terms and conditions are properly and promptly disclosed to
the borrower not later than loan closing. In addition, copies of all
documents executed by a borrower in connection with the closing of a
loan under titles I or II of the Act must be provided to the borrower
at the time of execution and any time thereafter that the borrower
requests copies. This is a requirement of section 4.13A of the Act for
each
[[Page 16406]]
qualified lender and is restated in the regulation as a matter of
convenience.
The FCA also notes that System institutions are subject to the
requirements of the Federal Equal Credit Opportunity Act (ECOA), 15
U.S.C. 1691 et seq., with respect to the timing and content of
notification of action taken on credit applications. The ECOA generally
requires creditors to provide applicants with notice that their credit
request has been approved or denied within 30 days after receiving a
completed application and entitles rejected applicants to learn the
principal, specific reasons for the adverse decision. Proposed new
Sec. 614.4200(a)(3) incorporates by reference the requirements
contained in the ECOA's implementing Regulation B, 12 CFR 202.9.
The FCA received comments from nine institutions regarding the
requirements in existing Sec. 614.4200 and the former requirement in
section 1.10(a)(5) of the Act regarding obtaining financial statements
from borrowers. Section 1.10(a)(5) of the Act, which required financial
statements for long-term real estate loans at least every 3 years or
sooner as determined by the FCA through regulation, was removed from
the statute by the Farm Credit System Reform Act of 1996 (1996
Amendments)(Pub. L. 104-105, Feb. 10, 1996).
Several institutions commented that the requirement for obtaining
annual financial statements from borrowers was excessive. One
institution stated that institutions should obtain financial statements
from borrowers based upon an institution's assessment of risk with
respect to categories of loans. Another stated that the need for
periodic financial information should be determined according to loan
size, complexity, and performance history as well as the institution's
risk-bearing ability. One commenter stated that the requirement to
obtain periodic financial statements should be changed from obtaining
statements annually to obtaining them every 3 years as required in the
Act. Finally, one institution stated that there should be an annual
requirement only for loans in excess of one million dollars.
The FCA agrees that as long as institutions have in place
sufficient loan underwriting standards that include requirements for
obtaining necessary financial information, annual submission of a
verifiable balance sheet and an income statement is not needed for many
loans. As a result, the FCA is proposing significant amendments to the
existing financial information requirements in Sec. 614.4200, including
a proposed separation of the provisions requiring that financial
statements be obtained when making or renewing a loan from the
requirement for requiring periodic financial statements during the term
of a loan. The FCA believes it is essential, for safety and soundness
reasons, that appropriate financial information be required when making
every loan, and that certain loans, i.e. those with larger balances and
those not classified acceptable, should be supported with more detailed
financial information, which is provided by a balance sheet and income
statement.
The FCA proposes to retain the general requirement that when
making, renewing, or taking a material servicing action, such as a
release of a significant portion of the collateral, institutions obtain
a verifiable balance sheet and income statement, certified true and
correct by the borrower, for certain categories of loans made under
title I or II of the Act. However, rural home loans and loans of
$500,000 or less that are amortized monthly would be exempt from this
regulatory requirement, and institutions would be given the flexibility
to address this need through their own credit standards and lending
policies. A borrower's monthly payment record on such a loan provides
an ongoing indication to a lender of the borrower's financial condition
and repayment capacity. The FCA is also proposing that all other loans
and commitments with an aggregate outstanding balance of $100,000 or
less per borrower be exempt from the requirement to obtain financial
statements when making and servicing such loans. Under each exemption,
however, institutions would be required to have adequate procedures and
controls in place to obtain and verify sufficient financial information
to establish repayment capacity and assess the risk in the loan.
The requirement for obtaining periodic financial statements is also
modified in the proposed regulations. The regulation would require
annual financial statements for all loans, except: (1) Rural home
loans; (2) loans (other than rural home loans) amortized monthly of
$500,000 or less; (3) loans classified acceptable that have an
aggregate outstanding balance and commitment per borrower of $200,000
or less; and (4) loans that have an aggregate outstanding balance and
commitment per borrower of $100,000 or less, regardless of credit
classification.
The FCA believes that obtaining verifiable balance sheets and
income statements is a necessary tool for managing adversely classified
credit. As the credit risk in a particular loan increases, identified
through its assigned credit classification, it is imperative that the
lender have complete and accurate borrower financial information to
appropriately monitor and service the account. For loans classified
acceptable under $200,000, the FCA believes that institutions should
have the flexibility to forego reviews of annual financial statements,
but encourages institutions to require financial statements for loans
under this threshold in which the risk level warrants closer
monitoring. Such financial information would permit lenders to learn of
any potential changes in the borrower's repayment capacity. The FCA
acknowledges that there are no industrywide standards for the size or
complexity of loans warranting current and complete financial
information. However, prudent credit practices dictate that risk be
assessed in each loan. The FCA believes that the best method for
assessing risk in certain loans is through an analysis of a balance
sheet and income statement and incorporates such practices in its
proposed amendments to Sec. 614.4200. The FCA proposes $200,000 as an
appropriate threshold to require balance sheets and income statements,
even for acceptable loans.
The FCA received four comments regarding the security requirements
for long-term real estate loans. Existing Sec. 614.4210(a) requires
that long-term real estate mortgage loans must be secured by a first
lien on an interest in real estate comprising agricultural property, an
eligible farm-related business, an eligible rural residence, or real
estate used as an integral part of an eligible aquatic operation.
Additional security may be taken for long-term real estate loans, but
it may not be included in meeting the requirement in Sec. 614.4210(b)
that funds only be advanced if the outstanding loan balance after the
advance would not exceed 85 percent of the appraised value of the real
estate taken as primary security.
One commenter requested that the FCA remove the requirement that
the primary security for a loan be agricultural land and suggested that
the requirement creates an eligibility test for both the borrower and
the collateral. Another commenter suggested that any additional
security taken should be considered toward meeting the loan-to-value
limitation in Sec. 614.4210(b). Two commenters suggested that the FCA
eliminate the existing requirement to report regularly to the
institution's board any advance of funds by an
[[Page 16407]]
institution to protect the institution's collateral position.
In response to the commenters and in order to achieve the goal of
adequately collateralized loans and safe and sound lending activities
with a minimum of regulatory burden, the FCA is proposing to delete
existing Sec. 614.4210. Requirements relating to security for long-term
loans would be placed in revised Sec. 614.4200, General requirements.
Under the proposal, Sec. 614.4200(c)(1) would continue to require long-
term real estate mortgage loans to be secured by a first lien on real
estate. The proposed regulation would also maintain the existing
requirement regarding the agricultural nature of the real estate
security and continue to permit other real estate to be taken as
additional security. The proposal would, however, delete the
requirement in existing Sec. 614.4210(b) that only the value of the
agricultural property be considered for the purpose of meeting the
loan-to-value ratio. When both agricultural and nonagricultural
property is taken as security, the total value of the real estate may
be considered, provided that the security is primarily agricultural, in
that the value of the agricultural property is greater than the other
real estate security.
The FCA believes that this modification preserves the rural focus
of long-term mortgage lenders contemplated by section 1.7 of the Act
and also implements the safety and soundness concern reflected in the
loan-to-value requirements of section 1.10. At the same time, the
proposal would offer institutions greater flexibility to take the type
of real estate collateral that best secures each loan. If the proposed
regulations are adopted, the FCA will require institutions to include
standards for real estate collateral that ensure safe and sound lending
practices in their loan policies and underwriting standards, pursuant
to proposed Sec. 614.4150 and subpart F of part 614.
The FCA is also proposing to delete the requirement to report
periodically to the institution's board of directors in situations in
which the institution has advanced funds in order to protect its
collateral position. Instead, the FCA expects the board of directors of
each institution to direct management to establish appropriate
procedures and reporting requirements for monitoring and controlling
the advance of funds to protect collateral. Institutions should
document that the advance is in the institution's best interest despite
the fact that the real estate may not fully secure the advance.
The FCA is proposing another modification to implement a provision
of the 1996 Amendments regarding the loan security requirements.
Existing Sec. 614.4210(b) requires that no funds can be advanced if the
outstanding loan balance after the advance exceeds 85 percent (or 97
percent if guaranteed by a Government agency) of the appraised value of
the real estate taken as primary security. Section 202 of the 1996
Amendments provides that a loan on which private mortgage insurance
(PMI) is obtained may exceed 85 percent of the appraised value of the
real estate security to the extent that the loan amount in excess of 85
percent is covered by PMI. The proposed regulations would incorporate
this change in revised Sec. 614.4200(c)(1).
The FCA also received a comment relating to the requirements for
intermediate-term loans in existing Sec. 614.4220. The commenter stated
that the FCA should eliminate the requirement that intermediate-term
loans be specifically identified and have a regular level amortization
schedule (i.e., no graduated schedules, balloons, or bullet
maturities). The institution asserts that good credit sense should
dictate loan terms, rather than limiting them through regulation.
In response, the FCA notes that loans that currently must be
amortized and specifically identified are loans that are made for major
capital items, such as new equipment and new or remodeled buildings and
facilities. Existing Sec. 614.4220(b)(2) requires that the maturity of
such loans must be shorter than the useful life of the item, and the
amount outstanding must at all times be less than the value of the item
after normal depreciation.
The FCA believes that existing Sec. 614.4220(b)(2) contains an
important credit philosophy that should be maintained by Farm Credit
lenders. However, the FCA believes that matters such as loan
amortization and maturity for short-term loans are more appropriately
addressed in each lender's loan underwriting policies and standards and
that prudent underwriting standards would reflect such a philosophy.
Therefore, the FCA proposes to delete the requirements in
Sec. 614.4220(b)(2). The items in Sec. 614.4220 that address loan terms
would be relocated to Sec. 614.4040 in subpart A, and the items
addressing loan underwriting standards and loan security requirements
are contained in the proposed amendments to Sec. 614.4200. As a result
of incorporating the provisions relating to short- and intermediate-
term loans in Secs. 614.4040 and 614.4200, existing Sec. 614.4220 is
proposed to be deleted. In addition, the proposed regulations would
codify guidance that the FCA has provided to institutions regarding
loans made by production credit associations (PCAs) that have
amortization schedules longer than 7 years.
Proposed Sec. 614.4200(c)(3) would continue the provision in
existing Sec. 614.4220(b)(1) that short- and intermediate-term loans
may be secured or unsecured as the documented creditworthiness of the
borrower warrants. Institutions would be expected to include collateral
standards for short-and intermediate-term loans in the loan
underwriting standards adopted pursuant to proposed Sec. 614.4150.
Existing Sec. 614.4040 would be amended to specify the terms for which
PCAs can make loans. Authority would continue for PCAs to make loans
with maturities of up to 7 years and make loans with maturities in
excess of 7, but not more than 10 years, if authorized in policies
adopted by the funding bank. The FCA is proposing to add flexibility
for PCAs to make loans with maturities of 10 years or less having
amortization schedules of up to 15 years when such loans are authorized
in policies approved by the funding bank.
The FCA notes that neither the Act nor FCA regulations prohibit
PCAs from offering borrowers a loan amortization period greater than
the term of the loan with a balloon payment at maturity. Nor are PCAs
precluded from refinancing such loans when safety and soundness
conditions are met and the circumstances warrant such action.
Therefore, the FCA is clarifying in the proposed regulations that PCAs
may make loans with maturities of 10 years or less that are amortized
over a period of up to 15 years, the longest period that Congress has
considered appropriate for production lenders. This authority is
subject to the following restrictions:
(1) The loan may be refinanced only if the lender determines at
maturity that the loan meets its current loan policy and loan
underwriting criteria;
(2) Any refinancing of the loan may not extend beyond 15 years from
the date of the original loan; and
(3) The loan must be for refinancing or acquisition of a capital
asset or other permissible purpose and may not be made solely to
finance the acquisition of real estate.
The FCA notes that in making loans with an amortization in excess
of 10 years, institutions cannot include an explicit or implicit
guarantee or promise of refinancing. However, prudent lending criteria
dictate that PCAs should determine whether a borrower's circumstances
are likely to warrant refinancing of the balloon payment at
[[Page 16408]]
the maturity date. Also, the FCA clarifies that although loans cannot
be made solely for the purpose of acquiring real estate, loans may be
made for facility expansions that include the purchase of real estate
on which to build the facilities. Finally, the FCA reiterates that any
loans made by PCAs with an amortization in excess of 7 years must be
authorized in policies adopted by the funding bank. In adopting such
policies, the FCA expects the bank boards to consider the competitive
impact on other chartered System institutions operating in the district
territory and minimize any disruptive impact of new lending programs to
the extent possible, consistent with the authority to make loans with
an amortization of up to 15 years.
The PCAs will continue to have the authority to make loans with
terms of up to 15 years to producers and harvesters of aquatic products
for major capital expenditures. Such loans are not subject to the
restrictions delineated above.
The FCA also proposes to continue the requirement that all short-
and intermediate-term loans be made with maturities that are
appropriate for the purpose of the loan and comply with the
institution's loan underwriting standards. This requirement would be
moved to Sec. 614.4040.
III. Other Proposed Amendments
The FCA is proposing a clarifying amendment to Sec. 614.4050 that
would recognize the authority of agricultural credit associations
(ACAs) to make long-term real estate mortgage loans of not less than 5
nor more than 40 years, rather than not less than 10 nor more than 40
years as stated in the existing regulation. The current provision was
adopted in order to recognize that ACAs have the option to make loans
under their short- and intermediate-term lending authority without
requiring a first lien on real estate if the term is 10 years or less.
The proposed amendment would clarify that an ACA has the option of
making loans with maturities between 5 and 10 years under either its
long-term or its short- and intermediate-term lending authority as
appropriate.
The FCA received a comment relating to regulatory burden that
pertains to the independent credit judgment requirements of
Sec. 614.4325(e). The commenter states that this regulation eliminates
the ability of FCS institutions to fully utilize an agent in the
administration of loan participations. The regulation requires that
independent credit judgment be applied by an employee of the purchasing
participant, and does not allow the authority to be delegated to an
agent who is not an employee.
The FCA agrees that an institution may sometimes find it
advantageous to use an agent in connection with its loan purchase
authorities. The FCA observes, however, that the institution's board
remains fully accountable for transactions through agents and fully
responsible for the sound administration of all loans, whether made
directly by the institution or purchased through the institution's
participation authority. Therefore, the FCA proposes, by adding a new
Sec. 614.4325(h), to allow transactions through agents as long as the
institution remains accountable for all the agent's actions by ensuring
that the agent complies with the institution's specific underwriting
and other criteria for the purchase of loans. The FCA proposes that
these types of transactions are permissible, only if: (1) The
institution's board establishes the necessary criteria in a written
agency agreement that outlines the scope of the agent relationship and
obligates the agent to follow the institution's loan underwriting
standards; and (2) the agent relationship is reviewed periodically by
the institution's board to determine if the agent's actions are in the
best interest of the institution. In order to maintain the independent
judgment of the institution, the proposed regulation also requires that
the agent must be independent of the seller or any intermediate broker
in the transaction.
The FCA Board believes that these actions represent the minimum
practices that will not only outline the authority of the agent, but
also establish how the institution will hold the agent accountable for
compliance with the institution's loan policies and underwriting
standards. The FCA Board expects an agent agreement to outline the type
of business that is acceptable to the board and specific authorities
with respect to approval levels, reporting requirements, and other
performance elements that the board of directors could utilize to
ensure that the agent relationship is in the institution's best
interest. Given the supervisory role of a bank and its control over the
association's funding, the FCA believes it would not be practical for
an association to attempt to hold its funding bank accountable.
Therefore, under proposed Sec. 614.4325(h)(3), a funding bank will be
specifically prohibited from being an agent for an association it
funds.
The FCA Board is also proposing amendments that are not a result of
the regulatory burden comments, but are nonetheless consistent with
FCA's initiatives to reduce burden and clarify existing regulations
where necessary.
The FCA proposes to delete Sec. 614.4222, non-farm rural home
loans, and relocate the provisions to Sec. 614.4200(c)(4) that pertain
to general security requirements for such rural home loans. This action
is proposed to achieve more consistent and concise regulations. The FCA
notes that there is an outstanding proposed amendment to Sec. 614.4222,
and this proposal will be in addition to the amendment proposed at 60
FR 47121 (September 11, 1995).
The FCA proposes to delete Sec. 614.4230 and include the provisions
on security for title III loans in a new Sec. 614.4200(c)(5), in the
same manner as is proposed for Sec. 614.4222. The provisions in
Sec. 614.4230(a) pertain to loan underwriting and must be considered by
the institution pursuant to proposed Sec. 614.4150.
The FCA proposes to significantly revise Sec. 614.4231, which
contains the specific requirements outlined for different commodity
programs, and instead require that loans on commodities covered by
government programs comply with the criteria established for those
programs. This revision is proposed because of the changing nature of
the government programs for the listed commodities.
Since their publication in 1995, the FCA has received several
requests to review certain provisions of the collateral regulations
contained in this subpart. Specifically, Farm Credit institutions and
examiners have pointed out two potentially burdensome areas: (1) The
applicability of the collateral evaluation requirements in
Sec. 614.4250 within an institution's small loan program; and (2) the
income capitalization approach to valuing collateral and related
provisions of Sec. 614.4265.
Comments received suggest the amount of documentation specifically
required by Sec. 614.4250 (a)(4), (a)(5), and (a)(6) is burdensome and
yields little extra risk protection for loans that qualify under an
institution's small loan program. In addition to comments received from
System institutions, FCA examiners have observed some instances in
which these particular collateral evaluation requirements may be
impeding prudent underwriting of certain loans in some institutions.
Some lending officials have made unsecured loans in the institution's
small loan program rather than taking available collateral to avoid the
documentation burden of Sec. 614.4250. The FCA now recognizes that
certain elements of
[[Page 16409]]
collateral evaluations required in the existing regulation may not be
conducive to the effective and efficient delivery of credit demanded by
the current market place for certain small, low risk loans. The FCA
believes such programs can be structured to ensure prudent lending
practices are imposed and remain in place while alleviating the burden
of the existing regulations.
The FCA proposes to amend Secs. 614.4245 and 614.4250 by making
parts of Sec. 614.4250 requirements inapplicable to an institution's
small loan program. However, each System institution must establish
appropriate procedures for the valuation of collateral taken to secure
loans under any small loan program. At a minimum, these procedures
should require documentation and certification of the value of the
collateral taken for small loans by an individual sufficiently skilled
to assign values to the collateral taken. The FCA believes certain
minimum requirements for collateral evaluations will sufficiently
document valuations for loans qualifying under an institution's small
loan program and meet the central, but not all, requirements of the
Uniform Standards of Professional Appraisal Practice (USPAP)
guidelines. The FCA, through this proposal, seeks to ensure that the
most essential requirements of Sec. 614.4250 for small loan programs,
namely paragraphs (a)(1), (a)(2), (a)(3), and (a)(7), are retained. To
accomplish this change, a new paragraph Sec. 614.4245(d) is proposed to
permit an institution to adopt policies and standards for a small loan
program that exclude documentation requirements presently existing in
Sec. 614.4250 (a)(4) through (a)(6). A corresponding modification is
proposed for Sec. 614.4250. This proposal would allow greater
flexibility to institutions and require that policies and standards be
adopted that address small loan program collateral criteria.
Requirements contained in (a)(1), (a)(2), (a)(3), and (a)(7) of
Sec. 614.4250 would continue to apply to an institution's small loan
program. These provisions require all collateral evaluations to be
based on the property's market value, be in a written format, consider
the property's use or intended use, and contain a certification by a
competent appraiser/evaluator. The FCA further observes that the use of
a limited or restricted appraisal, completed in accordance with USPAP
Standard 2.2, is a valid statement of value under the revisions to this
section. While the FCA is proposing to exempt certain requirements
contained in Sec. 614.4250(a), institutions are reminded that if real
estate is taken as collateral and State-sanctioned (certified or
licensed) appraisers are used for the valuation process, the proposed
exclusion of the provisions contained in Sec. 614.4250 (a)(4) through
(a)(6) may cause the resulting evaluations not to comply with USPAP and
State certification or licensing standards in certain instances. In
such cases, appraisers/evaluators may not meet terms and conditions
under which those States have certified or licensed them. This,
however, is considered a professional issue and institutions may
include the provisions of Sec. 614.4250(a)(4) through (a)(6) as they
deem appropriate.
The second area concerning the Agency's collateral regulations
centers on the clarification of requirements of the departure
provisions and income capitalization approach to valuing collateral
found in Sec. 614.4265. The FCA has received several comments and
suggestions to reconsider the appropriate use of, or exclusion of, one
or more of the three recognized approaches to valuation of real estate.
Most comments focused on Sec. 614.4265(b) and the intent and purpose of
the requirements of Sec. 614.4265 (d) and (e). Upon review and
consideration of comments received and the changes proposed herein, the
FCA concludes that no revisions to the existing requirements of
Sec. 614.4265 should be made. However, the FCA believes it is necessary
to clarify the purposes of, and alternatives provided by, Sec. 614.4265
(d) and (e), and the FCA intends to make this clarification through its
bookletter process.
Finally, the FCA proposes to clarify that Sec. 614.4325, purchase
and sale of interests in loans, also applies to transactions involving
pools of loans in the same manner as they apply to transactions
pertaining to individual loans. The FCA proposes an expanded definition
of the term ``interests in loans'' in Sec. 614.4325(a)(1) to include
transactions involving a pool of loans. The FCA is proposing this
amendment to relieve any potential regulatory burden and clarify how
pool transactions are to be handled.
The FCA proposes many conforming amendments within subparts A, C,
H, J, and Q of part 614, and in part 619 so that affected regulations
are consistent with the substantive changes proposed. Certain
conforming amendments in subpart A are in regulation sections that are
proposed to be revised as conforming amendments in the proposed rule
addressing eligibility and scope of financing. See 60 FR 47103
(September 11, 1995). The conforming amendments in this rulemaking are
in addition to those proposed on September 11, 1995, and include
Secs. 614.4000, 614.4010, 614.4020, 614.4030, 614.4040, 614.4050,
614.4222, and 614.4810.
List of Subjects
12 CFR Part 614
Agriculture, Banks, banking, Flood insurance, Foreign trade,
Reporting and recordkeeping requirements, Rural areas.
12 CFR Part 619
Agriculture, Banks, Banking, Rural areas.
For the reasons stated in the preamble, parts 614 and 619 of
chapter VI, title 12 of the Code of Federal Regulations are proposed to
be amended to read as follows:
PART 614--LOAN POLICIES AND OPERATIONS
1. The authority citation for part 614 continues to read as
follows:
Authority: 42 U.S.C. 4012a, 4104a, 4101b, 4106, and 4128; Secs.
1.3, 1.5, 1.6, 1.7, 1.9, 1.10, 2.0, 2.2, 2.3, 2.4, 2.10, 2.12, 2.13,
2.15, 3.0, 3.1, 3.3, 3.7, 3.8, 3.10, 3.20, 3.28, 4.12, 4.12A, 4.13,
4.13B, 4.14, 4.14A, 4.14C, 4.14D, 4.14E. 4.18, 4.18A, 4.19, 4.36,
4.37, 5.9, 5.10, 5.17, 7.0, 7.2, 7.6, 7.7, 7.8, 7.12, 7.13, 8.0, 8.5
of the Farm Credit Act (12 U.S.C. 2011, 2013, 2014, 2015, 2017,
2018, 2019, 2071, 2073, 2074, 2075, 2091, 2093, 2094, 2096, 2121,
2122, 2124, 2128, 2129, 2131, 2141, 2149, 2183, 2184, 2199, 2201,
2202, 2202a, 2202c, 2202d, 2202e, 2206, 2206a, 2207, 2219a, 2219b,
2243, 2244, 2252, 2279a, 2279a-2, 2279b, 2279b-1, 2279b-2, 2279f,
2279f-1, 2279aa, 2279aa-5); sec. 413 of Pub. L. 100-233, 101 Stat.
1568, 1639.
Subpart A--Lending Authorities
2. Section 614.4000 is amended by removing the words ``agricultural
credit association of a Federal land credit association'' and adding in
its place, the words ``agricultural credit association or a Federal
land credit association'' in the introductory text of paragraph (f),
and revising paragraph (a) to read as follows:
Sec. 614.4000 Farm Credit Banks.
(a) Long-term real estate lending. Except to the extent such
authorities are transferred pursuant to section 7.6 of the Act, Farm
Credit Banks are authorized to make, subject to the requirements in
Sec. 614.4200 of this part, real estate mortgage loans with maturities
of not less than 5 years nor more than 40 years and continuing
commitments to make such loans.
* * * * *
3. Section 614.4010 is amended by removing the reference
``Sec. 614.4230''
[[Page 16410]]
and adding in its place, the reference ``Sec. 614.4200'' in paragraphs
(d)(1) and (d)(2); and revising paragraph (a) to read as follows:
Sec. 614.4010 Agricultural credit banks.
(a) Long-term real estate lending. Except to the extent such
authorities are transferred pursuant to section 7.6 of the Act,
agricultural credit banks are authorized to make, subject to the
requirements of Sec. 614.4200, real estate mortgage loans with
maturities of not less than 5 years nor more than 40 years and
continuing commitments to make such loans.
* * * * *
Sec. 614.4020 [Amended]
4. Section 614.4020 is amended by removing the reference
``614.4230'' and adding in its place, the reference ``614.4200'' in
paragraphs (a)(1) and (a)(2).
5. Section 614.4030 is amended by revising paragraph (a) to read as
follows:
Sec. 614.4030 Federal land credit associations.
(a) Long-term real estate lending. Federal land credit associations
are authorized to make, subject to the requirements of Sec. 614.4200,
real estate mortgage loans with maturities of not less than 5 years nor
more than 40 years and continuing commitments to make such loans.
* * * * *
6. Section 614.4040 is amended by removing paragraph (b);
redesignating paragraphs (c) and (d) as new paragraphs (b) and (c),
respectively; removing the reference ``paragraph (c)(2)'' and adding in
its place, the reference ``paragraph (b)(2)'' in newly designated
paragraph (b)(1) introductory text; and by revising paragraph (a) to
read as follows:
Sec. 614.4040 Production credit associations.
(a) Loan terms.
(1) Production credit associations are authorized to make or
guarantee loans and other similar financial assistance for the
following terms:
(i) Repayable in not more than 7 years;
(ii) Repayable in more than 7 years, but not more than 10 years,
subject to authorization in policies approved by the funding bank;
(iii) Repayable in not more than 15 years to producers or
harvesters of aquatic products for major capital expenditures,
including but not limited to the purchase of vessels, construction or
purchase of shore facilities, and similar purposes directly related to
the producing or harvesting operation; 'and
(2) Subject to policies approved by the funding bank, production
credit associations may make loans authorized under paragraph (a)(1) of
this section that are amortized over a period not to exceed 15 years,
provided that:
(i) The loan may be refinanced only if the lender determines, at
the time of maturity, that the loan meets its loan policy and
underwriting criteria;
(ii) Any refinancing may not extend repayment beyond 15 years from
the date of the original loan; and
(iii) The loan is not being made solely for the purpose of
acquiring real estate;
(3) Short- and intermediate-term loans shall be made with
maturities that are appropriate for the purpose of the loan and that
comply with the institution's loan underwriting standards adopted
pursuant to Sec. 614.4150 and the general requirements of Sec. 614.4200
of this part.
* * * * *
7. Section 614.4050 is amended by adding introductory text and by
revising paragraphs (a) and (b) to read as follows:
Sec. 614.4050 Agricultural credit associations.
Agricultural credit associations are authorized to make, subject to
the requirements of Sec. 614.4200 of this part:
(a) Long-term real estate mortgage loans with maturities of not
less than 5 nor more than 40 years, and continuing commitments to make
such loans; and
(b) Short- and intermediate-term loans and provide other similar
financial assistance for a term not more than 10 years (15 years for
aquatic producers and harvesters).
* * * * *
Subpart C--Bank/Association Lending Relationship
Sec. 614.4120 [Amended]
8. Section 614.4120 is amended by removing the words ``the factors
set forth in Secs. 614.4150 and 614.4160'' and adding in their place,
the words ``the loan underwriting policies and standards adopted
pursuant to Sec. 614.4150'' in the last sentance of paragraph (a).
Secs. 614.4135, 614.4140, and 614.4145 [Removed]
9. Sections 614.4135, 614.4140, and 614.4145 are removed.
Subpart D--General Loan Policies for Banks and Associations
Secs. 614.4150, 614.4160 [Removed]
10. Sections 614.4150 and 614.4160 are removed.
11. New section 614.4150 is added to read as follows:
Sec. 614.4150 Lending policies and loan underwriting standards.
Under the policies of its board, each institution shall adopt
written standards for prudent lending and shall issue written policies,
operating procedures, and control mechanisms that reflect prudent
credit practices and comply with all applicable laws and regulations.
Written policies and procedures shall, at a minimum, prescribe:
(a) The minimum supporting credit information, frequency for
submission of information, and verification of information required in
relation to loan size, complexity and risk exposure;
(b) The procedures to be followed in credit analysis;
(c) The minimum standards for loan disbursement, servicing and
collections;
(d) Requirements for collateral and methods for its administration;
(e) Loan approval delegations and requirements for reporting to the
board;
(f) Loan pricing practices;
(g) Loan underwriting standards that include measurable standards
for determining that an applicant has the operational, financial, and
management resources necessary to repay the debt from cashflow, are
appropriate for each loan program and the institution's risk-bearing
ability, and consider the nature and type of credit risk, amount of the
loan, and enterprise being financed;
(h) Requirements that loan terms and conditions are appropriate for
loan purposes; and
(i) Such other requirements as are necessary for the professional
conduct of a lending organization, including documentation for each
loan transaction of compliance with the loan underwriting standards or
the compensating factors or extenuating circumstances that establish
repayment capacity notwithstanding the failure to meet any single loan
underwriting standard.
12. Section 614.4165 is amended by removing paragraphs (b) and (c);
redesignating paragraphs (d) and (e) as new paragraphs (b) and (c); and
revising paragraph (a) to read as follows:
Sec. 614.4165 Special credit needs.
(a) The board of each direct lender institution shall adopt
policies to establish programs to provide credit and related services
to young, beginning, and small farmers, ranchers, and producers or
harvesters of aquatic products.
* * * * *
Subpart E--Loan Terms and Conditions
13. Section 614.4200 is revised to read as follows:
[[Page 16411]]
Sec. 614.4200 General requirements.
(a) Terms and conditions. (1) The terms and conditions of each loan
made by a Farm Credit bank or association shall be set forth in a
written document, such as a loan agreement, promissory note, or other
instrument appropriate to the type and amount of the credit extension,
in order to establish loan conditions and performance requirements and,
where appropriate, to obligate the borrower to provide financial
statements, certified true and correct by the borrower, as required or
requested during the term of the loan. Copies of all documents executed
by the borrower in connection with the closing of a loan made under
titles I or II of the Act shall be provided to the borrower at the time
of execution and at any time thereafter that the borrower requests
additional copies.
(2) The terms and conditions of all loans shall be adequately
disclosed in writing to the borrower not later than loan closing. For
loans made under titles I and II of the Act, the institution shall
provide prompt written notice of the approval of the loan.
(3) Applicants shall be provided notification of the action taken
on each credit application in compliance with the requirements of 12
CFR 202.9.
(b) Obtaining borrower financial statements. As part of the loan
underwriting policies adopted pursuant to Sec. 614.4150, each direct
lender institution must adopt policies and procedures for obtaining
sufficient financial information from all borrowers in order to
establish repayment capacity and assess the risk inherent in each loan.
In addition, for loans, except rural home loans, made under titles I or
II of the Act:
(1) Farm Credit banks and associations shall require from each
borrower a verifiable balance sheet and income statement that has been
certified true and correct as a condition precedent to making, renewing
or extending the terms of a loan or taking any material servicing
action for the following loans:
(i) Monthly payment loans with an aggregate outstanding balance of
loans and commitments per borrower greater than $500,000; and
(ii) Loans, except monthly payment loans, with an aggregate
outstanding balance of loans and commitments per borrower greater than
$100,000.
(2) Farm Credit banks and associations shall require annually from
each borrower a verifiable balance sheet and income statement that has
been certified true and correct for the following loans:
(i) Monthly payment loans with an aggregate outstanding balance of
loans and commitments per borrower greater than $500,000;
(ii) Loans, except monthly payment loans, with an aggregate
outstanding balance of loans and commitments per borrower greater than
$200,000; and
(iii) Loans, except monthly payment loans, that are classified as
less than acceptable and that have an aggregate outstanding balance of
loans and commitments per borrower greater than $100,000.
(c) Security. (1) Long-term real estate mortgage loans must be
secured by a first lien interest in real estate. No funds shall be
advanced, under a legally binding commitment or otherwise, if the
outstanding loan balance after the advance would exceed 85 percent (or
97 percent as provided in section 1.10(a) of the Act) of the appraised
value of the real estate, except that a loan on which private mortgage
insurance is obtained may exceed 85 percent of the appraised value of
the real estate to the extent that the loan amount in excess of 85
percent is covered by such insurance. Real estate securing long-term
mortgage loans must be comprised primarily of agricultural or rural
property, including agricultural land, a farm-related business, a
marketing or processing operation, a rural residence, or real estate
used as an integral part of an aquatic operation.
(2) Notwithstanding the requirements of paragraph (c)(1) of this
section, the lending institution may advance funds for the payment of
taxes or insurance premiums with respect to the real estate, reschedule
loan payments, grant partial releases of security interests in the real
estate, and take other actions necessary to protect the lender's
collateral position. Any action taken that results in exceeding the
loan-to-value limitation shall be in accordance with a policy of the
institution's board of directors and adequately documented in the loan
file.
(3) Short- and intermediate-term loans may be secured or unsecured
as the documented creditworthiness of the borrower warrants.
(4) In addition to the requirements in paragraph (c)(1) of this
section, a long-term, non-farm rural home loan, including a revolving
line of credit, shall be secured by a first lien on the property,
except that it may be secured by a second lien if the institution also
holds the first lien on the property. A short- or intermediate-term
loan on a rural home, including a revolving line of credit, must be
secured by a lien on the property unless the financing is provided
exclusively for repairs, remodeling, or other improvements to the rural
home, in which case the credit may be secured by other property or
unsecured if warranted by the documented creditworthiness of the
borrower.
(5) Except as provided in Sec. 614.4231, loans made under title III
of the Act may be secured or unsecured, as appropriate for the purpose
of the loan and the documented creditworthiness of the borrower.
Secs. 614.4210, 614.4220, 614.4222, 614.4230 [Removed]
14. Sections 614.4210, 614.4220, 614.4222, and 614.4230 are
removed.
15. Section 614.4231 is revised to read as follows:
Sec. 614.4231 Certain seasonal commodity loans to cooperatives.
Loans on certain commodities that are part of government programs
shall comply with the criteria established for those programs. Security
taken on program commodities shall be consistent with prudent lending
practices and ensure compliance with the government program. The bank
shall provide for periodic review by bank officials of any custodial
activities and shall provide notice to the custodians that their
activities are subject to review and examination by the Farm Credit
Administration.
Subpart F--Collateral Evaluation Requirements
16. Section 614.4245 is amended by adding a new paragraph (d) to
read as follows:
Sec. 614.4245 Collateral evaluation policies.
* * * * *
(d) An institution's board of directors may adopt modified
collateral evaluation requirements, consistent with Sec. 614.4250(b),
for loans designated as part of a small loan program, which shall be
limited to loans to borrowers with aggregate outstanding balances to
the institution of $100,000 or less.
* * * * *
17. Section 614.4250 is amended by removing the words
``Specifically, all collateral evaluations must:'' and adding in their
place, the words ``Except for security taken on loans that are
designated as part of an institution's small loan program, all
collateral evaluations must:'' in paragraph (a) introductory text;
redesignating paragraph (b) as new paragraph (c) and adding new
paragraph (b) to read as follows:
Sec. 614.4250 Collateral evaluation standards.
* * * * *
[[Page 16412]]
(b) Collateral evaluations of property that secures a loan
designated as part of an institution's small loan program must comply
only with the requirements of paragraphs (a)(1), (a)(2), (a)(3), and
(a)(7) of this section.
* * * * *
Subpart H--Loan Purchases and Sales
18. Section 614.4325 is amended by removing the reference
``Sec. 614.4160'' and adding in its place, the words ``the loan
underwriting standards adopted pursuant to Sec. 614.4150'' in the
fourth sentence of paragraph (e); revising paragraph (a)(1); and adding
new paragraph (h) to read as follows:
Sec. 614.4325 Purchase and sale of interests in loans.
(a) * * *
(1) Interests in loans means ownership interests in the principal
amount, interest payments, or any aspect of a loan transaction and
transactions involving a pool of loans, including servicing rights.
* * * * *
(h) Transactions through agents. Transactions pertaining to
purchases of loans, including the judgment on creditworthiness, may be
performed through an agent, provided that:
(1) The institution establishes the necessary criteria in a written
agency agreement that outlines, at a minimum, the scope of the agency
relationship and obligates the agent to comply with the institution's
underwriting standards;
(2) The institution periodically reviews the agency relationship to
determine if the agent's actions are in the best interest of the
institution;
(3) Restrictions.
(i) An association's funding bank cannot act as its agent; and
(ii) The agent must be independent of the seller or intermediate
broker in the transaction.
Subpart J--Lending Limits
Sec. 614.4355 [Amended]
19. Section 614.4355 is amended by removing the word ``seasonal''
and adding in its place, the word ``commodity'' the second place it
appears in paragraphs (a)(6) and (b)(1) respectively, and in paragraph
(a)(8).
Sec. 614.4358 [Amended]
20. Section 614.4358 is amended by removing the words ``on the
credit factors set forth in Sec. 614.4160'' and adding in their place,
the words ``under the loan underwriting standards adopted pursuant to
Sec. 614.4150'' in paragraph (a)(1)(ii).
Subpart Q--Banks for Cooperatives Financing International Trade
Sec. 614.4810 [Amended]
21. Section 614.4810 is amended by removing the words ``credit
factors listed in Sec. 614.4160'' and adding in their place, the words
``the loan underwriting standards adopted pursuant to Sec. 614.4150''
in paragraph (b).
PART 619--DEFINITIONS
21. The authority citation for part 619 continues to read as
follows:
Authority: Secs. 1.7, 2.4, 4.9, 5.9, 5.12, 5.17, 5.18, 7.0, 7.6,
7.7, 7.8 of the Farm Credit Act (12 U.S.C. 2015, 2075, 2160, 2243,
2246, 2252, 2253, 2279a, 2279b, 2279b-1, 2279b-2).
Secs. 619.9165 and 619.9290 [Removed]
22. Sections 619.9165 an 619.9290 are removed.
* * * * *
Dated: April 9, 1996.
Floyd Fithian,
Secretary, Farm Credit Administration Board.
[FR Doc. 96-9155 Filed 4-12-96; 8:45 am]
BILLING CODE 6705-01-P
Complete official Federal Register PDF
FR Doc. 96-9096 List of Regulated Substances and Thresholds for Accidental Release Prevention; Proposed Stay of Effectiveness
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16606-16608]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9096]
[[Page 16605]]
_______________________________________________________________________
Part V
Environmental Protection Agency
_______________________________________________________________________
40 CFR Part 68
List of Regulated Substances and Thresholds for Accidental Release
Prevention; Proposed Stay of Effectiveness; Proposed Rule
Federal Register / Vol. 61, No. 73 / Monday, April 15, 1996 /
Proposed Rules
[[Page 16606]]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 68
[FRL-5657-8]
List of Regulated Substances and Thresholds for Accidental
Release Prevention; Proposed Stay of Effectiveness
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule; proposed stay of effectiveness.
-----------------------------------------------------------------------
SUMMARY: In Part IV of today's Federal Register, the Environmental
Protection Agency (EPA) is proposing several modifications to
provisions of the rule listing regulated substances and establishing
threshold quantities under section 112(r) of the Clean Air Act as
amended (List Rule Amendments). The proposed List Rule Amendments, if
promulgated in a final rule, would clarify or establish that part 68
does not apply to several types of processes and sources.
This action proposes, pursuant to Clean Air Act section 301(a)(1),
42 U.S.C. 7601(a)(1), to stay the effectiveness of provisions that are
affected by the proposed List Rule Amendments in Part IV of today's
Federal Register, for so long as necessary to take final action on the
proposed List Rule Amendments. Pursuant to the rulemaking provisions of
Clean Air Act section 307(d), 42 U.S.C. 7607(d), EPA hereby requests
public comment on this proposed short-term stay of provisions affected
by the proposed List Rule Amendments. Under the proposed stay, owners
and operators of processes and sources that EPA has proposed not be
subject to part 68 would not become subject to part 68 until EPA has
determined whether to proceed with the List Rule Amendments proposed in
today's Federal Register.
DATES: Comments. Comments must be submitted on or before May 15, 1996
unless a hearing is requested by April 25, 1996. If a hearing is
requested, written comments must be received by May 30, 1996.
Public Hearing. Anyone requesting a public hearing must contact EPA
no later than April 25, 1996. If a hearing is held, it will take place
on April 30, 1996 at 9:30 a.m.
ADDRESSES: Comments. Comments should be submitted to: U.S.
Environmental Protection Agency, Air Docket (6102), Attn: Docket A-96-
08: IV-I (Proposed Stay of Effectiveness), Waterside Mall, 401 M St.
SW., Washington, DC 20460. Comments must be submitted in duplicate. If
a public hearing is held, written testimony must be submitted in
duplicate at the time of the hearing.
Public Hearing. If a public hearing is held, it will be held at
Waterside Mall, 401 M St. SW., Washington DC, in the EPA Conference
Center. Persons interested in attending the hearing or wishing to
present oral testimony should notify by telephone Vanessa Rodriguez
(see For Further Information Contact).
Docket. All information used in the development of this proposal is
contained in the preamble below. However, Docket A-91-74, containing
background information for the original List Rule, and Docket A-96-08,
containing background information on the proposed List Rule amendments,
are available for public inspection between 8:00 a.m. and 5:30 p.m.,
Monday through Friday at EPA's Air Docket, Room 1500, 401 M St. SW.,
Washington, DC 20460; telephone (202) 260-7548. A reasonable fee may be
charged for copying.
FOR FURTHER INFORMATION CONTACT: Vanessa Rodriguez, Chemical Engineer,
Chemical Emergency Preparedness and Prevention Office, Environmental
Protection Agency (5101), 401 M St. SW., Washington, DC 20460, (202)
260-7913.
SUPPLEMENTARY INFORMATION:
I. Background and Discussion
Elsewhere in the proposed rule section of today's Federal Register,
EPA is proposing amendments to regulations in 40 CFR part 68 that,
inter alia, list regulated substances and establish threshold
quantities for the accident prevention provisions under Clean Air Act
section 112(r). Readers should refer to that document for a complete
discussion of the background of the rule affected. The amendments
proposed in that document (``List Rule Amendments'') would, if
promulgated, delete explosives from the list of regulated substances,
modify threshold provisions to exclude flammable substances in gasoline
and in naturally occurring hydrocarbon mixtures prior to entry into
processing unit or plant, modify the threshold provisions for other
flammable mixtures, and clarify the definition of stationary source
with respect to transportation, storage incident to transportation, and
naturally occurring hydrocarbon reservoirs.
It is unlikely that EPA will be able to take final action on some
or all of the proposed List Rule Amendments prior to May 24, 1996, the
date on which EPA anticipates it will take final action on additional
``Risk Management Program'' regulations under Clean Air Act section
112(r). This action proposes to stay provisions of part 68 that are
affected by the proposed List Rule Amendments until such time as EPA
takes final action on the proposed List Rule Amendments. If, following
consideration of public comment, EPA takes final action to stay the
effectiveness of these provisions, these provisions will be stayed
until after EPA takes final action on the proposed List Rule
Amendments.
EPA is proposing this stay because, at this time, EPA is seeking
comment on whether the various processes and sources affected by the
proposed List Rule Amendments should be subject to part 68. EPA will
need to evaluate comments on the proposed List Rule Amendments before
taking final action on that proposal. During the period prior to final
action on the List Rule Amendments proposal, owners and operators of
sources affected by the proposed List Rule Amendments would not know if
they ultimately will be subject to part 68. Such owners and operators
should have the same certainty about whether they are subject to part
68 as other owners and operators have when they begin their regulatory
compliance planning. The effect of the proposed stay would be to allow
owners and operators of processes and sources affected by the proposed
List Rule Amendments three years to come into compliance with the Risk
Management Program rule in the event EPA fails to adopt the proposed
List Rule Amendments. That is, if EPA does not promulgate a provision
of the proposed List Rule Amendments, either by taking negative final
action or by allowing the stay to expire without final action, owners
and operators of processes and sources affected by that provision would
need to achieve compliance with the Risk Management Program rule within
three years from the date of the negative final action or the
expiration of the stay.
II. Required Analyses
A. E.O. 12866
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency must judge whether the regulatory action is ``significant,'' and
therefore subject to OMB review and the requirements of the Executive
Order. The Order defines ``significant regulatory action'' 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,
[[Page 16607]]
productivity, jobs, the environment, public health or safety, or state,
local, or tribal government 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 entitlements, 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.
It has been determined this proposed rule is not a ``significant
regulatory action'' under the terms of Executive Order 12866 and
therefore is not subject to OMB review.
B. Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act of 1980, Federal
agencies must evaluate the effects of the rule on small entities and
examine alternatives that may reduce these effects.
EPA has examined the proposed rule's potential effects on small
entities as required by the Regulatory Flexibility Act. It has
determined that this rule will have no adverse effect on small entities
because it defers the need for stationary sources to comply with
current rule provisions that EPA has proposed to amend; the amendments,
if adopted, likely would reduce the number of stationary sources
subject to the accidental release prevention requirements. Therefore, I
certify that today's proposed rule will not have a significant economic
effect on a substantial number of small entities.
C. Paperwork Reduction Act
This proposed rule does not include any information collection
requirements for OMB to review under the provisions of the Paperwork
Reduction Act of 1980, 44 U.S.C. 3501 et seq.
D. Unfunded Mandates
Under section 202 of the Unfunded Mandates Reform Act of 1995,
signed into law on March 22, 1995, EPA must prepare a statement to
accompany any rule where the estimated costs to State, local, or tribal
governments in the aggregate, or to the private sector, will be $100
million or more in any one year. Under section 205, EPA must select the
most cost-effective and least burdensome alternative that achieves the
objective 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 impacted by the rule.
EPA has estimated that this rule 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.
List of Subjects in 40 CFR Part 68
Environmental protection, Chemicals, Chemical accident prevention,
Clean Air Act, Extremely hazardous substances, Intergovernmental
relations, Hazardous substances, Reporting and recordkeeping
requirements.
Dated: April 5, 1996.
Carol M. Browner,
Administrator.
For the reasons set out in the preamble, Title 40, Chapter I,
Subchapter C, Part 68 of the Code of Federal Regulations is proposed to
be amended to read as follows:
PART 68--CHEMICAL ACCIDENT PREVENTION PROVISIONS
1. The authority citation for Part 68 continues to read as follows:
Authority: 42 U.S.C. 7412(r), 7601.
2. In Subpart A, Sec. 68.2 is proposed to be added to read as
follows:
Sec. 68.2 Stayed Provisions.
(a) Notwithstanding any other provision of this part, the
effectiveness of the following provisions is stayed from March 2, 1994
to (insert date 18 months after publication of final rule in the
Federal Register):
(1) In Sec. 68.3, definition of ``stationary source,'' to the
extent that such definition includes naturally occurring hydrocarbon
reservoirs or transportation subject to oversight or regulation under a
state natural gas or hazardous liquid program for which the state has
in effect a certification to DOT under 49 U.S.C. 60105;
(2) Section 68.115(b)(2) of this part, to the extent that such
provision requires an owner or operator to treat as a regulated
flammable substance:
(i) Gasoline, when in distribution or related storage for use as
fuel for internal combustion engines.
(ii) Naturally occurring hydrocarbon mixtures prior to entry into a
petroleum refining process unit or a natural gas processing plant.
Naturally occurring hydrocarbon mixtures include any of the following:
condensate, crude oil, field gas, and produced water, each as defined
in paragraph (b) of this section.
(iii) Other mixtures containing a regulated flammable substance
that does not have a National Fire Protection Association flammability
hazard rating of 4, the definition of which is in the NFPA 704,
Standard System for the Identification of the Fire Hazards of
Materials, National Fire Protection Association, Quincy, MA, 1990.
Available from the National Fire Protection Association, 1 Batterymarch
Park, Quincy, MA 02269-9101. This incorporation by reference was
approved by the Director of the Federal Register in accordance with 5
U.S.C. 552(a) and 1 CFR part 51. Copies may be inspected at the
Environmental Protection Agency Air Docket (6102), Attn: Docket No. A-
96-08, Waterside Mall, 401 M. St. SW., Washington D.C.; or at the
Office of Federal Register at 800 North Capitol St., NW, Suite 700,
Washington, D.C. (Note: this document will only be available for
inspection at the Federal Register after this action becomes a final
rule); and
(3) Section 68.130(a).
(b) From March 2, 1994 to (insert date 18 months after publication
of final rule in the Federal Register) the following definitions shall
apply to the stayed provisions described in paragraph (a) of this
section.
Condensate means hydrocarbon liquid separated from natural gas that
condenses because of changes in temperature, pressure, or both, and
remains liquid at standard conditions.
Crude oil means any naturally occurring, unrefined petroleum
liquid.
Field gas means gas extracted from a production well before the gas
enters a natural gas processing plant.
Natural gas processing plant means any processing site engaged in
the extraction of natural gas liquids from field gas, fractionation of
natural gas liquids to natural gas products, or both. A separator,
dehydration unit, heater treater, sweetening unit, compressor, or
similar equipment shall not be considered a ``processing site'' unless
such equipment is physically located within a natural gas processing
plant (gas plant) site.
Petroleum refining process unit means a process unit used in an
establishment primarily engaged in petroleum refining as defined in the
Standard Industrial Classification code for petroleum refining (2911)
and used for the following: (1) Producing transportation fuels (such as
gasoline, diesel fuels, and jet fuels), heating fuels (such as
kerosene, fuel gas distillate, and fuel oils), or lubricants; (2)
Separating petroleum; or (3) Separating, cracking, reacting, or
reforming intermediate petroleum streams.
Examples of such units include, but are not limited to, petroleum
based solvent units, alkylation units, catalytic hydrotreating,
catalytic hydrorefining, catalytic hydrocracking, catalytic
[[Page 16608]]
reforming, catalytic cracking, crude distillation, lube oil processing,
hydrogen production, isomerization, polymerization, thermal processes,
and blending, sweetening, and treating processes. Petroleum refining
process units include sulfur plants.
Produced water means water extracted from the earth from an oil or
natural gas production well, or that is separated from oil or natural
gas after extraction.
[FR Doc. 96-9096 Filed 4-12-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-9095 List of Regulated Substances and Thresholds for Accidental Release Prevention; Proposed Amendments
[Federal Register Volume 61, Number 73 (Monday, April 15, 1996)]
[Proposed Rules]
[Pages 16598-16604]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-9095]
[[Page 16597]]
_______________________________________________________________________
Part IV
Environmental Protection Agency
_______________________________________________________________________
40 CFR Part 68
List of Regulated Substances and Thresholds for Accidental Release
Prevention; Proposed Rule
Federal Register / Vol. 61, No. 73 / Monday, April 15, 1996 /
Proposed Rules
[[Page 16598]]
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 68
[FRL-5657-7]
List of Regulated Substances and Thresholds for Accidental
Release Prevention; Proposed Amendments
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Environmental Protection Agency (EPA) is proposing several
modifications to the rule listing regulated substances and threshold
quantities under section 112(r) of the Clean Air Act as amended. EPA is
proposing to delete the category of Division 1.1 explosives (as listed
by DOT) from the list of regulated substances. Regulated flammable
substances in gasoline used as fuel and in naturally occurring
hydrocarbon mixtures prior to initial processing are proposed for
exemption from threshold quantity determinations, and a clarification
of the provision for threshold determination of flammable substances in
a mixture is proposed. Modifications to the definition of stationary
source are proposed to clarify the exemption of transportation and
storage incident to transportation and to clarify that naturally
occurring hydrocarbon reservoirs are not stationary sources or parts of
stationary sources. In addition, EPA is clarifying that the Chemical
Accident Prevention Provisions do not apply to sources located on the
Outer Continental Shelf. EPA believes these proposed changes will
better focus accident prevention activities on stationary sources with
high hazard operations and reduce duplication with other similar
requirements.
DATES: Comments. Comments must be submitted on or before May 15, 1996
unless a hearing is requested by April 25, 1996. If a hearing is
requested, written comments must be received by May 30, 1996.
Public Hearing. Anyone requesting a public hearing must contact EPA
no later than April 25, 1996. If a hearing is held, it will take place
on April 30, 1996 at 9:30 a.m.
ADDRESSES: Comments. Comments should be mailed or submitted to:
Environmental Protection Agency, Air Docket (6102), Attn: Docket No. A-
96-O8, Waterside Mall, 401 M St. SW, Washington, DC 20460. Comments
must be submitted in duplicate. Comments may be submitted on disk in
WordPerfect or Word formats. If a public hearing is held, written
testimony should be submitted in duplicate at the time of the hearing.
Public Hearing. If a public hearing is held, it will be held at
Waterside Mall, 401 M St. SW, Washington, DC 20460, in the Conference
Center in a room to be designated. Persons interested in attending the
hearing or wishing to present oral testimony should notify by telephone
Vanessa Rodriguez (see For Further Information Contact).
Docket. The docket for this rulemaking is A-96-O8. This proposed
rule would amend a final rule, the docket for which is A-91-74. The
docket may be inspected between 8:00 am and 5:30 pm, Monday through
Friday at EPA's Air Docket, Room M1500, Waterside Mall, 401 M St. SW,
Washington, DC 20460; telephone (202) 260-7548. A reasonable fee may be
charged for copying.
FOR FURTHER INFORMATION CONTACT: Vanessa Rodriguez, Chemical Engineer,
Chemical Emergency Preparedness and Prevention Office, Environmental
Protection Agency, OS-120, 401 M St. SW, Washington, DC 20460, (202)
260-7913.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction and Background
A. Statutory Authority
B. Background
C. Summary of Final Rule
II. Discussion of Proposed Modifications
A. Explosives
B. Regulated Flammable Substances in Gasoline and in Naturally
Occurring Hydrocarbon Mixtures
C. Clarification of Threshold Determination for Mixtures
Containing Flammable Substances
D. Definition of Stationary Source
E. Applicability to Outer Continental Shelf
III. Discussion of the Proposed Rule
IV. Required Analyses
A. E.O. 12866
B. Regulatory Flexibility Act
C. Paperwork Reduction Act
D. Unfunded Mandates
I. Introduction and Background
A. Statutory Authority
This notice of proposed rulemaking (NPRM) is being issued under
sections 112(r) and 301 of the Clean Air Act (Act) as amended (42
U.S.C. sections 7412(r) and 7601).
B. Background
The Clean Air Act (CAA or Act), section 112(r), contains
requirements related to prevention of accidental releases. The goal of
the accidental release provisions is to prevent accidental releases and
minimize the consequences of releases by focusing on those chemicals
and operations that pose the greatest risk. The CAA requires EPA to
promulgate an initial list of at least 100 substances (``regulated
substances'') that, in the event of an accidental release, are known to
cause or may be reasonably expected to cause death, injury, or serious
adverse effects to human health and the environment. The Act identifies
16 substances to be included in the initial list. Factors required to
be considered in listing substances are the severity of acute adverse
health effects associated with accidental releases of the substance,
the likelihood of accidental releases of the substance, and the
potential magnitude of human exposure to accidental releases of the
substance. The CAA also requires EPA to establish a threshold quantity
for each chemical at the time of listing. In developing these
thresholds, factors required to be considered include toxicity,
reactivity, volatility, dispersibility, combustibility, or flammability
of the substance and the amount of the substance which is known to
cause or can be reasonably anticipated to cause death, injury, or
serious adverse effects in case of a release. Stationary sources that
have more than a threshold quantity of a regulated substance are
subject to accident prevention regulations promulgated under CAA
section 112(r)(7), including the requirement to develop risk management
plans.
EPA's final rule on the list of substances and thresholds (59 FR
4478, January 31, 1994) (the ``List Rule'') promulgated the regulated
list of substances and thresholds that identify sources subject to the
accident prevention rules. EPA subsequently sought comment on a
proposed accident prevention (``risk management program'') rule in two
notices and intends to promulgate a final rule in late Spring 1996.
(See 58 FR 54190, October 20, 1993; 60 FR 13526, March 13, 1995.) For
additional information on the requirements of section 112(r) and
related statutory provisions, see these notices.
C. Summary of the List Rule
In the List Rule, EPA promulgated a list that includes 77 acutely
toxic substances, 63 flammable gases and volatile flammable liquids,
and Division 1.1 high explosive substances as listed by the United
States Department of Transportation (DOT) in 49 CFR 172.101. The final
rule establishes threshold quantities for toxic substances ranging from
500 to 20,000 pounds. For all listed flammable substances, the
threshold quantity is 10,000 pounds,
[[Page 16599]]
while all explosive substances have a threshold quantity of 5,000
pounds. The rule sets forth the procedures for determining whether a
threshold quantity of a regulated substance is present at a stationary
source. Specific exemptions for quantities considered in the threshold
determination are also included for mixtures, articles, and certain
uses and activities. The rule also specifies the requirements for any
petitions to the Agency requesting to add substances to, or delete
substances from, the list.
The criteria EPA considered in selecting substances for listing
include severity of acute adverse health effects, likelihood of
release, and potential magnitude of human exposure. EPA was required to
set threshold quantities for each regulated substance considering its
toxicity, reactivity, volatility, dispersibility, and flammability, as
well as amounts known or anticipated to cause effects of concern.
EPA selected commercially produced acutely toxic and volatile
substances mostly from the list of extremely hazardous substances
(EHSs) under section 302 of the Emergency Planning and Community Right-
to-Know Act (EPCRA). EPA chose volatile substances because they are
more likely to become airborne and impact the public. EPA also
considered accident history associated with a substance. One substance,
oleum, was listed because it has a history of accidents that have
impacted the public. Because vapor cloud explosions and blast waves
from detonations of high explosives have caused injuries to the public
and damage to the environment, EPA also included highly flammable gases
and liquids and high explosives on the list.
The American Petroleum Institute (API), the Institute of Makers of
Explosives (IME), and one other party filed petitions for judicial
review of the List Rule (American Petroleum Institute v. EPA, No. 94-
1273 (D.C. Cir.) and consolidated cases). On March 28, 1996, EPA made
available for public comment under CAA section 113(g) proposed
settlement agreements with API and IME (61 FR 13858, March 28, 1996).
II. Discussion of Proposed Modifications
Following EPA's promulgation of regulated substances and thresholds
in the List Rule, the petitioners mentioned above and other members of
the regulated community raised a number of issues concerning the list
and thresholds. Certain provisions of the List Rule that seemed
inconsistent with EPA's intent expressed in the preamble or other
documents supporting the final rule were identified. Additional
information was also received addressing the concerns that led to the
regulation. As a result, EPA is proposing the following amendments to
the final rule: delisting explosives; exempting from threshold
determination regulated flammable substances in gasoline and in
naturally occurring hydrocarbon mixtures prior to initial processing;
clarifying the provision for threshold determination of flammable
substances in mixtures to exempt mixtures that do not have a National
Fire Protection Association (NFPA) flammability hazard rating of 4;
modifying the definition of stationary source to clarify the exemption
of transportation and storage incident to transportation and to clarify
that naturally occurring hydrocarbon reservoirs are not stationary
sources or parts of stationary sources; and clarifying that the
chemical accident prevention provisions do not apply to sources located
on the Outer Continental Shelf (``OCS sources'').
A. Explosives
In the final rule (59 FR 4478, January 31, 1994), EPA included
explosives classified by DOT as Class 1, Division 1.1, and listed as
such in 49 CFR 172.101 (the Hazardous Materials Table) as regulated
substances with a threshold quantity of 5,000 pounds. Division 1.1
explosives were listed because of their potential to readily detonate,
causing offsite impacts. While acknowledging that explosives are
regulated by a number of other agencies, EPA maintained that public
safety would be enhanced if additional information about explosives,
such as hazard assessments, were available to emergency response
agencies and local emergency planners under section 112(r). EPA's
primary concern was that there were gaps in the existing regulatory
framework in the area of communication with emergency responders and
local planners because existing regulations and programs were not
comprehensive. EPA noted that public safety would be enhanced by
additional coordination between facilities handling explosives and the
local emergency planners and responders.
Subsequent to promulgation of the List Rule, IME provided EPA with
additional information about the extent of the regulatory gaps
discussed above, including coordination with emergency responders.
After additional review of other federal, state, and local laws and
regulations for explosives, as well as industry practices for
explosives manufacturing and storage, EPA has concluded that current
regulations and current and contemplated industry practices promote
safety and accident prevention in storage, handling, transportation,
and use of explosives. As a result, these regulations and practices
adequately protect the public and the environment from the hazards of
accidents involving explosives. Explosives are regulated by the Bureau
of Alcohol, Tobacco and Firearms (BATF), the Mine Safety and Health Act
(MSHA), the Occupational Safety and Health Act (OSHA), the Department
of Defense (DoD), the Department of Transportation (DOT), and state and
local agencies. BATF's American Table of Distances (ATD) specifies
distances for explosive storage from inhabited buildings, public
highways, and passenger railways; these distances are great enough to
ensure that an accidental explosion at a site that is in compliance
with the ATD should not produce blast waves that are hazardous to
people at distances where the public could be affected (the hazard to
which the public could be exposed if a site complies with the ATD is
significantly lower than that which the Agency would be protecting
against with its listing of Division 1.1 explosives at a 5,000-pound
threshold). Most facilities that manufacture or store explosives
already are required to develop emergency response plans and to provide
local emergency responders with copies of Material Safety Data Sheets
(MSDSs) or lists of materials with MSDSs, or to advise local emergency
responders regarding the type, quantity, and location of Division 1.1
explosives on site.
EPA's review of existing regulations and current industry practices
still indicates that public safety would be enhanced if some sites
handling explosives made additional information about explosives
available to emergency responders and planners. While EPA does not
believe there are many sites that are not already coordinating with
local authorities under other regulatory and voluntary programs, public
safety would be enhanced if there were additional coordination between
the remaining facilities handling explosives and the local emergency
planners and responders. To address the gaps EPA identified, IME has
developed suggested safety practices that would be adopted in due
course if EPA provides final consent to the proposed settlement
agreement. These actions would provide additional information and
enhance the coordination between explosives facilities and the
emergency planners and responders. IME member companies would post
signs at all
[[Page 16600]]
normal access routes stating, ``Danger. Never Fight Explosive Fires.
Explosives are stored on this site,'' and providing an emergency phone
number. Whenever a new Division 1.1 commercial explosives storage or
manufacturing location is established at a temporary job site, IME
member companies would notify Local Emergency Planning Committees and
other local authorities (e.g., fire departments and law enforcement
agencies) of the type, quantity, and location of explosives on site. At
Division 1.1 commercial explosives storage or manufacturing locations
with 5,000 pounds or more of Division 1.1 explosives (not including
temporary job sites) where preparation of emergency response plans is
not already required, IME member companies would prepare emergency
response plans, notify Local Emergency Planning Committees and other
local authorities of the type, quantity, and location of explosives on
site, provide the emergency response plans to local emergency
responders, and respond to reasonable requests for information from
said authorities. IME member companies also would inform their
customers of the contents of the Settlement Agreement and the actions
to be taken. IME would respond to reasonable requests from law
enforcement agencies and emergency responders for information
concerning the safe storage, distribution, and use of explosives. IME
also would distribute a letter to other non-IME commercial explosives
manufacturers, distributors, and users informing them of the Settlement
Agreement and actions to be taken. The Agency believes these actions
effectively close the remaining gap in emergency planning and response
communications, while allowing existing laws to prevail. Therefore, EPA
is proposing to delist explosives from the list of regulated substances
under section 112(r). EPA requests comments on whether explosives
should be delisted.
B. Regulated Flammable Substances in Gasoline and in Naturally
Occurring Hydrocarbon Mixtures
In the threshold determination provisions for mixtures containing
flammable regulated substances, the List Rule provides that such
mixtures are exempt if the owner or operator can demonstrate that the
mixture does not meet boiling point or flash point criteria; otherwise,
the entire mixture is treated as a regulated substance unless another
exemption applies. The boiling point and flash point are objectively
determinable and derived from the definition of highly flammable
liquids and gases, National Fire Protection Association (NFPA)
flammability hazard rating of 4. Although EPA did not specifically
exempt gasoline and naturally occurring hydrocarbon mixtures (e.g.,
crude oil) from threshold determination, it did not intend the List
Rule to cover regulated flammable substances in mixtures that do not
meet the NFPA 4 criteria. Gasoline and crude oil are listed with NFPA
flammability ratings of 3 in Fire Hazard Properties of Flammable
Liquids, Gases, and Volatile Solids, NFPA 325M (1991 edition). EPA
noted in Proposed List of Substances and Threshold for Accidental
Release Prevention: Summary and Response to Comments (1994) that it
believed gasoline does not meet the boiling point criterion for
listing. EPA also noted that it considered unlisted hydrocarbons that
fail to meet the NFPA 4 criteria to represent a lower priority for
accident prevention.
The NFPA criteria contain both the objective elements included in
EPA's rule as well as certain judgmental criteria. NFPA 4, as defined
in the NFPA Standard System for the Identification of Fire Hazards of
Materials, NFPA 704 (1990 edition), includes the following:
``Materials that will rapidly or completely vaporize at atmospheric
pressure and normal ambient temperature, and which will burn readily.
This degree usually includes:
Flammable gases;
Flammable cryogenic materials;
Any liquid or gaseous material that is liquid while under pressure
and has a flash point below 73 deg.F (22.8 deg.C) and a boiling point
below 100 deg.F (37.8 deg.C) (i.e., Class IA flammable liquids);
Materials that ignite spontaneously in air.''
Thus, the promulgated threshold determination provision does not
exempt mixtures that meet the flash point and boiling point criteria,
but that do not rapidly or completely vaporize and, therefore, are not
true NFPA 4 mixtures based on the full definition. In particular,
certain grades of gasoline and some naturally occurring hydrocarbon
mixtures might be subject to threshold determination under the
provisions of the final rule, based on the flash point and boiling
point criteria, even though these mixtures do not meet the judgmental
criteria of NFPA 4.
To better reflect EPA's original intent to exempt non-NFPA 4
mixtures and to clarify the regulatory status of gasoline and naturally
occurring hydrocarbon mixtures (e.g., crude oil and natural gas
condensate), EPA is proposing to provide specific exemptions from
threshold determination for regulated flammable substances in gasoline
used as fuel for internal combustion engines and for regulated
substances in naturally occurring hydrocarbon mixtures prior to initial
processing in a petroleum refining process unit or a natural gas
processing plant. Naturally occurring hydrocarbon mixtures would
include any or any combination of the following: condensate, crude oil,
field gas, and produced water. EPA is proposing definitions of these
substances for inclusion in the rule and is also proposing definitions
of petroleum refining process unit and natural gas processing plant.
EPA believes the proposed definitions reflect standard, widely accepted
meanings of these terms.
EPA believes gasoline and the naturally occurring hydrocarbon
mixtures condensate and crude oil, because they contain many non-
volatile components, have low potential for vapor cloud explosions (the
basis for listing flammable substances under CAA section 112(r)), even
if, in some cases, they may meet the flash point and boiling point
criteria cited in the final rule. Produced water in naturally occurring
hydrocarbon mixtures would likely reduce the flammability and potential
for vapor cloud explosion of these mixtures. EPA believes field gas,
prior to initial processing, also has low potential for vapor cloud
explosions that might have an impact on the public. Exploration and
production facilities likely do not have many congested areas or
confined spaces; congested areas or turbulent conditions (in an
advancing flame front) generally are necessary for a vapor cloud
explosion to occur. On-site processes are relatively simple, and there
are unlikely to be many ignition sources. The American Petroleum
Institute (API) evaluated the potential consequences of releases of
naturally occurring hydrocarbon mixtures at oil and gas exploration and
production facilities, as discussed in Hazard Assessment of Exploration
and Production Facilities Potentially Subject to the Environmental
Protection Agency's Risk Management Program Regulations (January 20,
1995) (see docket), and concluded that hazard distances were generally
very short for the types of facilities evaluated. Finally, EPA believes
these explicit, specific, and clear exemptions for gasoline and
naturally occurring hydrocarbons are useful in addition to revising the
flammable mixture provision to better reflect NFPA 4, because they
simplify the task of applying the judgmental criteria of NFPA 4 for
these pervasive mixtures.
[[Page 16601]]
As naturally occurring hydrocarbon mixtures undergo processing in a
petroleum refining process unit or a natural gas processing plant, the
potential for a vapor cloud explosion likely increases. The processes
are more complex, there may be significant on-site congestion from
buildings and equipment, flammable substance may be stored in large
quantities, and there may be many ignition sources. The components of
crude oil and condensates may be separated based on volatility. The
more volatile mixtures (or purified substances) resulting from such
processing may meet the criteria for NFPA 4 and, therefore, would need
to be considered for threshold determination in accordance with the
provisions for threshold determination of regulated flammable
substances in mixtures, as discussed in the next section of this
preamble. Similarly, before gasoline is finally formulated into a fuel
for internal combustion engines, during processing in a refinery, it
may meet the criteria for NFPA 4 and, therefore, would need to be
considered for threshold determination in accordance with the
provisions for threshold determination of regulated flammable
substances in mixtures.
EPA requests comments on the proposed exemption from threshold
determination for gasoline used as fuel for internal combustion engines
and specifically requests comments on whether the qualifying phrase,
``used as fuel for internal combustion engines,'' is a necessary part
of the exemption. EPA also requests comments on the proposed exemption
for regulated substances in naturally occurring hydrocarbon mixtures
prior to initial processing and on the proposed definitions related to
the exemption for naturally occurring hydrocarbon mixtures.
C. Clarification of Threshold Determination of Regulated Flammable
Substances in Mixtures
In the final rule, EPA provided flash point and boiling point
criteria for determining whether a mixture containing a regulated
flammable substance is subject to threshold determination. Although
these flash point and boiling point criteria are associated with an
NFPA rating of 4, the NFPA rating was not specifically cited as a
criterion. As discussed in the preamble to the List Rule, EPA believes
that mixtures that do not have an NFPA rating of 4 should not be
subject to threshold determination. Based on comments from the
regulated community, EPA now believes the flash point and boiling point
criteria, although they are part of the criteria for the NFPA 4 rating,
are not adequate by themselves to identify mixtures with the NFPA 4
rating. As noted above, the NFPA 4 rating applies to substances that
will rapidly or completely vaporize at atmospheric pressure and normal
ambient temperature or that are readily dispersed in air, and that will
burn readily. Like gasoline and crude oil, which have NFPA 3 ratings
for flammability, other mixtures may contain low boiling flammable
components that would cause the mixture to meet the flash point and
boiling point criteria, but also contain higher boiling components that
would prevent the mixture from rapidly or completely vaporizing. To
clarify threshold determination for mixtures, EPA is proposing to
provide that, for mixtures that have one percent or greater
concentration of a regulated flammable substance, the entire weight of
the mixture shall be treated as the regulated substance unless the
owner or operator can demonstrate that the mixture does not have an
NFPA flammability hazard rating of 4, as defined in the NFPA Standard
System for the Identification of Fire Hazards of Materials, NFPA 704-
1990. EPA requests comments on this proposed clarification, which would
be in addition to the specific exemption proposed for gasoline and
naturally occurring hydrocarbons.
D. Definition of Stationary Source
The List Rule defined stationary source to exclude transportation,
including storage incident to transportation, provided such
transportation is regulated under 49 CFR parts 192, 193, or 195. In
addressing issues related to EPCRA, which also excludes transportation
in commerce for most purposes, EPA has interpreted the transportation
exclusion to exempt substances being transported in commerce or in
storage under active shipping papers and to treat as a ``stationary
item'' any storage in containers not under active shipping papers. In
the List Rule, EPA referred to DOT pipeline regulations under 49 CFR
parts 192, 193, and 195, and stated in the Preamble that pipelines,
transfer stations, and other activities already covered by DOT would be
excluded. Furthermore, EPA intended to exclude from the definition of
stationary source all transportation and storage incident to such
transportation to be consistent with EPCRA. EPA believes the List Rule
definition of stationary source clearly covers transportation
containers only when they are no longer in transportation in commerce
and clearly excludes pipelines as defined by DOT; however, based on
comments from the regulated community, EPA believes there still may be
potential for overlap and confusion regarding the jurisdiction and
regulatory responsibility of EPA and DOT for pipelines and for
transportation containers at stationary sources.
The Agency has received questions regarding the language in the
stationary source definition that refers to ``transportation containers
no longer under active shipping papers.'' Both EPA and DOT agree this
term would generally apply to containers that are not in transportation
in commerce and that are at the stationary source for purposes of
storage, loading, or unloading that is not incidental to transportation
in commerce. ``Transportation in commerce'' is defined by DOT pursuant
to Federal Hazardous Materials Transportation Law (Federal HAZMAT Law,
49 U.S.C. sections 5107-5127). As a result of continued questions
regarding the scope of Federal HAZMAT Law and the applicability of the
regulations issued thereunder, DOT is currently working to better
delineate and more clearly define the applicability of its regulations.
DOT currently contemplates clarifying its jurisdiction through the
rulemaking process. As a result, there may be a future need for EPA to
further amend the definition of stationary source to better comport
with DOT clarifications or actions. The Agency will continue to work
closely with DOT to minimize overlap and confusion with respect to
jurisdiction and items in transportation and will coordinate with DOT
to ensure that consistent interpretations about regulations coverage
are provided to the regulated community.
EPA is proposing several amendments to the definition of stationary
source to reflect more clearly EPA's intent. First, EPA is proposing to
modify the definition of stationary source to clarify that exempt
transportation shall include, but not be limited to, transportation
activities subject to regulation or oversight under 49 CFR parts 192,
193, or 195, as well as transportation subject to natural gas or
hazardous liquid programs for which a state has in effect a
certification under 49 U.S.C. section 60105. DOT established safety
standards for pipeline facilities used in the transportation of natural
gas by pipeline in 49 CFR part 192, for liquefied natural gas
facilities in 49 CFR part 193, and for pipeline facilities used in the
transportation of hazardous liquids by pipeline in 49 CFR part 195.
State programs with certifications under 49 U.S.C. section 60105 are
comparable to the DOT
[[Page 16602]]
requirements and thus ensure public safety.
In addition, EPA is proposing to modify the definition of
stationary source to clarify that naturally occurring hydrocarbon
reservoirs are not stationary sources or parts of stationary sources.
This interpretation is consistent with EPA's policy under EPCRA. API
concluded in the Hazard Assessment of Exploration and Production
Facilities Potentially Subject to the Environmental Protection Agency's
Risk Management Program Regulations (January 20, 1995) that the flow of
hydrocarbons from reservoirs would not contribute to the magnitude of a
catastrophic release scenario. This conclusion was based on consequence
analysis of a range of fire and explosion events, assuming a range of
handling conditions, types of equipment, and material compositions
typical of exploration and production facilities. Finally, EPA is
clarifying that the exemption for transportation containers in
transportation in commerce or storage incident to such transportation
is not limited to pipelines. EPA requests comments on these proposed
revisions to the stationary source definition.
E. Applicability to Outer Continental Shelf
EPA is proposing an applicability exception for sources on the
outer continental shelf (OCS sources). Such an exception is consistent
with CAA section 328, which precludes the applicability of EPA CAA
rules to such sources when such rules are not related to attaining or
maintaining ambient air quality standards or to the ``prevention of
significant deterioration'' provisions of the CAA.
III. Summary of Proposed Revisions to the Rule
EPA is proposing to amend several sections of part 68 of title 40
of the Code of Federal Regulations.
In Sec. 68.3, the definition of stationary source would be revised.
The revised definition would specifically state that naturally
occurring hydrocarbon reservoirs are not stationary sources or parts of
stationary sources. The definition would state that exempt
transportation shall include, but not be limited to, transportation
activities subject to regulation or oversight under 49 CFR parts 192,
193, or 195, as well as transportation subject to natural gas or
hazardous liquid programs for which a state has in effect a
certification under 49 U.S.C. section 60105.
Several new definitions are proposed for Sec. 68.3, for condensate,
crude oil, field gas, natural gas processing plant, petroleum refining
process unit, and produced water.
Section 68.10 is proposed to be amended to clarify that part 68
does not apply to OCS sources.
Several revisions are proposed for Sec. 68.115 on threshold
determination. Section 68.115(b)(2) is proposed to be modified to state
that the entire weight of the mixture containing a regulated flammable
substance shall be treated as the regulated substance unless the owner
or operator can demonstrate that the mixture does not have an NFPA
flammability hazard rating of 4. Another proposed modification to
Sec. 68.115(b)(2) would exempt from threshold determination regulated
flammable substances in gasoline used as fuel in internal combustion
engines. Regulated substances in naturally occurring hydrocarbon
mixtures (including condensate, crude oil, field gas, and produced
water), prior to entry into a natural gas processing plant or a
petroleum refining process unit, also are proposed to be exempt from
threshold determination. Section 68.115(b)(3), on concentrations of a
regulated explosive substance in a mixture, is proposed to be deleted,
and 68.115(b)(4), 68.115(b)(5), and 68.115(b)(6) would be redesignated
as 68.115(b)(3), 68.115(b)(4), and 68.115(b)(5).
Section 68.130 is proposed to be modified by the deletion of (a),
explosives listed by DOT as Division 1.1. Section 68.130(b) would be
redesignated as 68.130(a), and 68.130(c) would be 68.130(b).
IV. Required Analyses
A. E.O. 12866
Under Executive Order 12866 (58 FR 51735, October 4, 1993), the
Agency must judge whether the regulatory action is ``significant,'' and
therefore subject to OMB review and the requirements of the Executive
Order. The Order defines ``significant regulatory action'' 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, jobs, the environment, public health or safety,
or state, local, or tribal government 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 entitlements, 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.
It has been determined this proposed rule is not a ``significant
regulatory action'' under the terms of Executive Order 12866 and
therefore is not subject to OMB review.
B. Regulatory Flexibility Act
In accordance with the Regulatory Flexibility Act of 1980, Federal
agencies must evaluate the effects of the rule on small entities and
examine alternatives that may reduce these effects.
EPA has examined the proposed rule's potential effects on small
entities as required by the Regulatory Flexibility Act. It has
determined that this rule will have no adverse effect on small entities
because it reduces the number of substances that would be used to
identify stationary sources for regulation and provides exemptions that
will likely reduce the number of stationary sources subject to the
accidental release prevention requirements. Therefore, I certify that
today's proposed rule will not have a significant economic effect on a
substantial number of small entities.
C. Paperwork Reduction Act
This proposed rule does not include any information collection
requirements for OMB to review under the provisions of the Paperwork
Reduction Act of 1980, 44 U.S.C. 3501 et seq.
D. Unfunded Mandates
Under section 202 of the Unfunded Mandates Reform Act of 1995,
signed into law on March 22, 1995, EPA must prepare a statement to
accompany any rule where the estimated costs to State, local, or tribal
governments in the aggregate, or to the private sector, will be $100
million or more in any one year. Under section 205, EPA must select the
most cost-effective and least burdensome alternative that achieves the
objective 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 impacted by the rule.
EPA has estimated that this rule 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.
List of Subjects in 40 CFR Part 68
Environmental protection, Chemicals, Chemical accident prevention,
Clean Air Act, Extremely hazardous substances, Incorporation by
reference, Intergovernmental relations, Hazardous
[[Page 16603]]
substances, Reporting and Recordkeeping requirements.
Dated: April 5, 1996.
Carol M. Browner,
Administrator.
For the reasons set out in the preamble, Title 40, Chapter I,
Subchapter C, Part 68 of the Code of Federal Regulations is proposed to
be amended as follows:
PART 68--CHEMICAL ACCIDENT PREVENTION PROVISIONS
1. The authority citation for part 68 continues to read as follows:
Authority: 42 U.S.C. sections 7412(r), 7601.
Subpart A--General
2. Section 68.3 is proposed to be amended by adding the following
definitions in alphabetical order and revising the definition of
stationary source to read as follows:
Sec. 68.3 Definitions.
* * * * *
Condensate means hydrocarbon liquid separated from natural gas that
condenses due to changes in temperature, pressure, or both, and remains
liquid at standard conditions.
Crude oil means any naturally occurring, unrefined petroleum
liquid.
* * * * *
Field gas means gas extracted from a production well before the gas
enters a natural gas processing plant.
Natural gas processing plant (gas plant) means any processing site
engaged in the extraction of natural gas liquids from field gas,
fractionation of mixed natural gas liquids to natural gas products, or
both. A separator, dehydration unit, heater treater, sweetening unit,
compressor, or similar equipment shall not be considered a ``processing
site'' unless such equipment is physically located within a natural gas
processing plant (gas plant) site.
Petroleum refining process unit means a process unit used in an
establishment primarily engaged in petroleum refining as defined in the
Standard Industrial Classification code for petroleum refining (2911)
and used for the following: (1) Producing transportation fuels (such as
gasoline, diesel fuels, and jet fuels), heating fuels (such as
kerosene, fuel gas distillate, and fuel oils), or lubricants; (2)
Separating petroleum; or (3) Separating, cracking, reacting, or
reforming intermediate petroleum streams.
Examples of such units include, but are not limited to, petroleum-
based solvent units, alkylation units, catalytic hydrotreating,
catalytic hydrorefining, catalytic hydrocracking, catalytic reforming,
catalytic cracking, crude distillation, lube oil processing, hydrogen
production, isomerization, polymerization, thermal processes, and
blending, sweetening, and treating processes. Petroleum refining
process units include sulfur plants.
* * * * *
Produced water means water extracted from the earth from an oil or
natural gas production well, or that is separated from oil or natural
gas after extraction.
* * * * *
Stationary source means any buildings, structures, equipment,
installations, or substance emitting stationary activities which belong
to the same industrial group, which are located on one or more
contiguous properties, which are under the control of the same person
(or persons under common control), and from which an accidental release
may occur. A stationary source includes transportation containers that
are no longer under active shipping papers and transportation
containers that are connected to equipment at the stationary source for
the purposes of temporary storage, loading, or unloading. A stationary
source does not include naturally occurring hydrocarbon reservoirs. The
term stationary source does not apply to transportation, including
storage incident to transportation, of any regulated substance or any
other extremely hazardous substance under the provisions of this part.
Transportation includes, but is not limited to, transportation subject
to oversight or regulation under 49 CFR parts 192, 193, or 195, or a
state natural gas or hazardous liquid program for which the state has
in effect a certification to DOT under 49 U.S.C. section 60105.
Properties shall not be considered contiguous solely because of a
railroad or gas pipeline right-of-way.
3. Section 68.10, as proposed at 60 FR 13543, is further amended by
adding a paragraph (e) to read as follows:
Sec. 68.10 Applicability.
* * * * *
(e) The provisions of this part shall not apply to an Outer
Continental Shelf (``OCS'') source, as defined in 40 CFR 55.2.
Subpart C--Regulated Substances for Accidental Release Prevention
4. Section 68.115 is proposed to be amended by revising paragraph
(b) introductory text and paragraph (b)(2); removing paragraph (b)(3);
and by redesignating paragraphs (b)(4) as (b)(3), (b)(5) as (b)(4), and
(b)(6) as (b)(5) to read as follows:
Sec. 68.115 Threshold determination.
* * * * *
(b) For the purposes of determining whether more than a threshold
quantity of a regulated substance is present at the stationary source,
the following exemptions apply:
* * * * *
(2) Concentrations of a regulated flammable substance in a mixture.
(i) General provision. If a regulated substance is present in a
mixture and the concentration of the substance is below one percent by
weight of the mixture, the mixture need not be considered when
determining whether more than a threshold quantity of the regulated
substance is present at the stationary source. Except as provided in
paragraph (b)(2) (ii) and (iii) of this section, if the concentration
of the substance is one percent or greater by weight of the mixture,
then, for purposes of determining whether a threshold quantity is
present at the stationary source, the entire weight of the mixture
shall be treated as the regulated substance unless the owner or
operator can demonstrate that the mixture itself does not have a
National Fire Protection Association flammability hazard rating of 4.
The demonstration shall be in accordance with the definition of
flammability hazard rating 4 in the NFPA 704, Standard System for the
Identification of the Fire Hazards of Materials, National Fire
Protection Association, Quincy, MA, 1990. Available from the National
Fire Protection Association, 1 Batterymarch Park, Quincy, MA 02269-
9101. This incorporation by reference was approved by the Director of
the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part
51. Copies may be inspected at the Environmental Protection Agency Air
Docket (6102), Attn: Docket No. A-96-08, Waterside Mall, 401 M. St.
SW., Washington D.C.; or at the Office of Federal Register at 800 North
Capitol St., NW, Suite 700, Washington, D.C. (Note: this document will
only be available for inspection at the Federal Register after this
action becomes a final rule.) Boiling point and flash point shall be
defined and determined in accordance with NFPA 321, Standard on the
Basic Classification of Flammable and Combustible Liquids, National
Fire Protection Association, Quincy, MA, 1991. Available from the
National Fire Protection Association, 1 Batterymarch Park, Quincy, MA
02269-9101. This
[[Page 16604]]
incorporation by reference was approved by the Director of the Federal
Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies
may be inspected at the Environmental Protection Agency Air Docket
(6102), Attn: Docket No. A-96-08, Waterside Mall, 401 M. St. SW.,
Washington D.C.; or at the Office of Federal Register at 800 North
Capitol St., NW, Suite 700, Washington, D.C. (Note: this document will
only be available for inspection at the Federal Register after this
action becomes a final rule.) The owner or operator shall document the
National Fire Protection Association flammability hazard rating.
(ii) Gasoline. Regulated substances in gasoline, when in
distribution or related storage for use as fuel for internal combustion
engines, need not be considered when determining whether more than a
threshold quantity is present at a stationary source.
(iii) Naturally occurring hydrocarbon mixtures. Prior to entry into
a natural gas processing plant or a petroleum refining process unit,
regulated substances in naturally occurring hydrocarbon mixtures need
not be considered when determining whether more than a threshold
quantity is present at a stationary source. Naturally occurring
hydrocarbon mixtures include any combination of the following:
condensate, crude oil, field gas, and produced water, each as defined
in Sec. 68.3 of this part.
* * * * *
Sec. 68.130 [Amended]
5. Section 68.130 is proposed to be amended by removing paragraph
(a) and redesignating paragraph (b) as (a), and paragraph (c) as (b).
The tables to the section remain unchanged.
[FR Doc. 96-9095 Filed 4-12-96; 8:45 am]
BILLING CODE 6560-50-P
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