issue-1996-06-25•Federal Register proposed rules — 1996-06-25
Federal Register proposed rules — 1996-06-25
issue-1996-06-25Federal Register proposed rules — 1996-06-25Proposed 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. 96-16296 Implementation of the Local Competition Provisions of 1996 Telecommunications Act
[Federal Register Volume 61, Number 123 (Tuesday, June 25, 1996)]
[Proposed Rules]
[Pages 32766-32767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16296]
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FEDERAL COMMUNICATIONS COMMISSION
47 CFR Chapter I
[DA 96-1007]
Implementation of the Local Competition Provisions of 1996
Telecommunications Act
AGENCY: Federal Communications Commission.
ACTION: Proposed rule; establishing comment date.
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SUMMARY: This document establishes an additional Comment opportunity in
CC Docket 96-98 [61 FR 18311, April 25, 1996] in order to allow parties
to that proceeding to comment on a staff-prepared working copy of an
industry demand and supply simulation model. The model, using publicly-
available, industry-wide information, allows users to simulate the
relative impact of particular changes in the industry.
DATES: Comments are due on or before July 1, 1996. (No reply comments
allowed).
ADDRESSES: Federal Communications Commission, 1919 M Street, N.W.,
20554.
FOR FURTHER INFORMATION CONTACT: Jim Lande at (202) 418-0498 or Doron
Fertig at (202) 418-1869.
SUPPLEMENTARY INFORMATION:
Supplemental Comment Period Designated for Local Competition
Proceeding, CC Docket 96-98
[DA 96-1007; IAD 96-175]
Released June 20, 1996.
1. On June 17, 1996, the FCC's Industry Analysis Division, Common
Carrier Bureau, and the Competition Division, Office of General
Counsel, released a staff model of the telecommunications industry
which allows model users to calculate a variety of outputs from nearly
200 specifications (News Release, ``FCC Staff Releases Working Copy of
an Industry Demand & Supply Simulation Model,'' released June 17,
1996.) The model allows the user to specify growth rates, pricing
trends, demand elasticities and cost relationships to simulate effects
in traditional industry segments. The
[[Page 32767]]
model, using publicly-available, industry-wide information, allows the
user to simulate the relative impact of particular changes in the
industry.
2. A copy of the model has been placed in the public file in CC
Docket No. 96-98, Implementation of the Local Competition Provisions in
the Telecommunications Act of 1996. Parties who wish to use the model,
create variations of the model, or file models of their own, in that
proceeding are requested to file Comments no later than Monday, July 1,
1996. There will be no Reply Comment filing opportunity. Commenters
should file an original and four copies with the Office of the
Secretary, two copies with Ms. Wanda Harris, Room 518, Competitive
Pricing Division, Common Carrier Bureau, one copy with the Chief,
Industry Analysis Division, Common Carrier Bureau, and one copy with
the Chief, Competition Division, Office of the General Counsel.
Comments are limited to fifty (50) pages, inclusive of attachments.
3. Copies of the model may be purchased by calling International
Transcription Services, Inc. (ITS) at (202) 857-3800. The model also
can be downloaded from the Common Carrier Bureau's home page on the
World Wide Web. The home page can be accessed directly (http://
www.fcc.gov/ccb.html) or through a direct link from the main FCC home
page (http://www.fcc.gov). The model also can be downloaded from the
FCC-State Link computer bulletin board at (202) 418-0241 [BBS file
name: MODELV30.ZIP].
4. For further information about the model, contact Jim Lande at
(202) 418-0498 (e-mail: [email protected]) or Doron Fertig at (202) 418-
1869 (e-mail: [email protected]).
Federal Communications Commission
William F. Caton,
Acting Secretary.
[FR Doc. 96-16296 Filed 6-24-96; 8:45 am]
BILLING CODE 6712-01-M
Complete official Federal Register PDF
FR Doc. 96-16078 Limited Access Management of Federal Fisheries In and Off of Alaska; Quota Shares and Individual Fishing Quota on Smaller Vessels
[Federal Register Volume 61, Number 123 (Tuesday, June 25, 1996)]
[Proposed Rules]
[Pages 32767-32769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16078]
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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 676
[Docket No. 960612171-6171-01; I.D. 060496A]
RIN 0648-AI57
Limited Access Management of Federal Fisheries In and Off of
Alaska; Quota Shares and Individual Fishing Quota on Smaller Vessels
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Proposed rule; request for comments.
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SUMMARY: NMFS issues a proposed rule to implement Amendment 42 to the
Fishery Management Plan (FMP) for the Bering Sea/Aleutian Islands
Groundfish, Amendment 42 to the FMP for the Gulf of Alaska Groundfish
Fishery, and a regulatory amendment to the Individual Fishing Quota
(IFQ) Program for fixed gear Pacific halibut and sablefish fisheries in
and off of Alaska. The proposed rule would allow quota shares (QS) and
IFQ assigned to vessels in larger size categories to be used on smaller
vessels. The North Pacific Fishery Management Council (Council)
recommended this action to increase the flexibility of QS use and
transfer while maintaining the management goals of the IFQ Program and
to provide small boat fishermen with more opportunities to improve the
profitability of their operations.
DATES: Comments on the proposed rule and supporting documents must be
received by August 5, 1996.
ADDRESSES: Send comments to Ronald J. Berg, Chief, Fisheries Management
Division, Attn: Lori Gravel, Alaska Region, National Marine Fisheries
Service, P.O. Box 21668, Juneau, AK 99802.
Copies of the proposed Amendments, and the Environmental
Assessment/Regulatory Impact Review/Initial Regulatory Flexibility
Analysis (EA/RIR/IRFA) for this action may be obtained from the North
Pacific Fishery Management Council, Suite 306, 605 West 4th Avenue,
Anchorage, AK 99501-2252.
FOR FURTHER INFORMATION CONTACT: James Hale, 907-586-7228.
SUPPLEMENTARY INFORMATION:
Background
The Bering Sea and Aleutian Islands (BSAI) and Gulf of Alaska (GOA)
groundfish FMPs and their implementing regulations govern the sablefish
fisheries in Federal waters off Alaska. The FMPs were prepared by the
Council under the authority of the Magnuson Fishery Conservation and
Management Act (Magnuson Act). The Northern Pacific Halibut Act of 1982
(Halibut Act) authorizes the Council to develop and NMFS to implement
regulations to allocate halibut fishing privileges among U.S.
fishermen.
Under these authorities, the Council developed the IFQ Program, a
limited access system to manage the fixed gear Pacific halibut and
sablefish fisheries. NMFS approved the IFQ Program in November 1993,
and fully implemented it beginning in March 1995. The Magnuson Act and
the Halibut Act authorize amendments to the IFQ Program as necessary to
conserve and manage these fisheries. The proposed amendments to the
FMPs and the IFQ Program would increase flexibility of QS use--a change
that is analyzed along with the status quo alternative in the draft EA/
RIR/IRFA prepared by the Council in February 1996.
Increased Flexibility of QS Use
The IFQ Program assigns QS to vessel categories specified by length
overall (LOA) and authorization to process IFQ species (freezer
vessels) or not (catcher vessels): Category A--freezer vessels of any
length; Category B--catcher vessels greater than 60 ft (18.3 m) LOA;
Category C--for sablefish, catcher vessels less than or equal to 60 ft
(18.3 m) LOA, and for halibut, catcher vessels less than or equal to 60
ft (18.3 m) but greater than 35 ft (10.7 m) LOA; or Category D--for
halibut, catcher vessels less than or equal to 35 ft (10.7 m) LOA.
Current regulations at Sec. 676.22(a) require that IFQ be fished only
on vessels in the category to which the pertinent QS have been
assigned. An exception to this rule allows category B, C, or D IFQ to
be fished on a category A freezer vessel provided its LOA is consistent
with the vessel category of the IFQ being fished and it neither
processes any species of fish nor fishes category A IFQ concurrently
with the use of category B, C, or D IFQ (Sec. 676.22(i)(3)). NMFS has
published a proposed rule that would amend the regulations to allow IFQ
fishermen to process groundfish on board their vessels under certain
circumstances (61 FR 14547, April 2, 1996).
The Council prohibited QS transfer across vessel categories to
preserve the
[[Page 32768]]
social and cultural character of the small boat fisheries prior to
limited access. Public discussions leading up to IFQ Program
implementation elicited substantial concern that harvesting privileges
might ultimately transfer to owners of large vessels and disenfranchise
owners of small vessels. The Council responded to these concerns in
part by establishing vessel categories and prohibiting transfer and use
of QS and IFQ across those categories. Thus, these transfer
restrictions were intended to prevent consolidation of harvesting
privileges among owners of large vessels.
Concern over the potential for excessive consolidation also led to
the Modified Block Program implemented under Amendments 31 and 35 to
the BSAI and GOA FMPs respectively and IFQ Program amendments published
at 60 FR 51135 (October 7, 1994). The Modified Block Program requires
an initial allocation of QS that represents less than 20,000 lb (9.1
mt) of IFQ in the year prior to the implementation year (1994) to be
issued as an indivisible block that can be transferred in its entirety
only.
During the first year of fishing under the IFQ Program in 1995, IFQ
fishermen and their representatives reported to the Council that the
prohibition against using or transferring QS across vessel categories
limited their ability to improve the profitability of their operations.
Many fishermen reported that they had received QS that represented far
fewer pounds than their recent catch history prior to the IFQ program.
Small boat fishermen reported the scarcity of medium- and large-size QS
blocks (5,000 lb (2.3 mt)) available to smaller vessels and
requested that the Council enable them to purchase shares from QS
holders in larger vessel size categories. Also, category B vessel
operators reported difficulties in using or marketing small category B
blocks and requested the opportunity either to downsize operations or
to sell smaller QS blocks to owners of smaller vessels.
This action would address the above concerns by allowing QS
initially assigned to a larger vessel category to be used on smaller
vessels, while continuing to prohibit the upgrading of QS or IFQ to
larger vessel categories. Under the proposed amendments, QS would
continue to be assigned to vessel categories by existing criteria at
Sec. 676.20(c)(1)-(9) and would retain original vessel category
assignments in perpetuity. However, the proposed amendments would allow
halibut and sablefish QS and IFQ assigned to vessel category B to be
used on vessels of any size; halibut QS assigned to vessel category C
likewise could be used on vessels of categories C and D. The proposed
amendments would continue to prohibit the use of QS and IFQ on larger
vessel categories than originally assigned.
In taking final action on this proposal, the Council elected to
diminish the effect the proposed amendment would have in IFQ regulatory
areas 2C for halibut and east of 140 deg. W. long. for sablefish. In
these regulatory areas the proportion of QS assigned to vessel category
B is significantly smaller than the amount assigned to other vessel
categories. Excessive consolidation of QS among smaller vessels in this
region of the GOA would reduce the larger vessel fleet and thus also
have an undesirable impact on the fisheries' socio-economic character.
This action proposes that QS assigned to vessel category B in IFQ
regulatory areas 2C for halibut and east of 140 deg. W. long. for
sablefish be prohibited from use on vessels less than or equal to 60 ft
(18.3 m) LOA except in QS blocks equivalent to less than 5,000 lb (2.3
mt) based on the 1996 Total Allowable Catch (TAC).
For example, an individual who holds two blocks of QS assigned to
vessel category B in regulatory area 2C (for halibut) or east of
140 deg. W. long. (for sablefish)--one block equivalent to 13,000 lb
(5.9 mt) and the other equivalent to 3000 lb (1.4 mt) (according to the
1996 TAC)--would be able to transfer the smaller QS block or use its
resulting IFQ on catcher vessels of any size, since the block is
equivalent to less than 5,000 lb (2.3 mt). The larger QS block, which
would result in IFQ of more than 5,000 lb (2.3 mt), would still be
prohibited from use on any vessel other than one in vessel category B.
Unblocked QS of any amount assigned to vessel category B in areas 2C
and east of 140 deg. W. long. would continue to be restricted to
transfer or use on vessels in category B only.
This action would provide owners of small boats with opportunities
to acquire QS initially assigned to larger vessel categories and would
make smaller category B blocks more marketable. The Council's intent to
prevent excessive consolidation of QS among owners of larger vessels
would be maintained, while providing greater economic potential for
owners/operators of smaller boats in the IFQ fisheries. Conversely, the
additional provision to lessen the effect of the proposed action in
regulatory areas 2C for halibut and east of 140 deg. W. long. for
sablefish would prevent excessive consolidation among owners of smaller
boats in areas where category B QS are relatively few.
Classification
Section 304(a)(1)(D) of the Magnuson Act requires NMFS to publish
regulations proposed by a Council within 15 days of receipt of the FMP
amendments and regulations. At this time, NMFS has not determined that
the FMP amendments these regulations would implement are consistent
with the national standards, other provisions of the Magnuson Act, and
other applicable laws. NMFS, in making final determinations about the
FMP amendments and in issuing final rules under both the Magnuson and
Halibut Acts, will take into account the data, views, and comments
received during the comment period.
The Council prepared an initial regulatory flexibility analysis as
part of the regulatory impact review, which describes the impact this
proposed rule would have on small entities, if adopted. The amendments
could have a significant positive impact on small vessel owners. They
open new opportunities for owners of smaller vessels to improve the
profitability of their operations by increasing the quota share
holdings available for trade by 309 percent and the IFQ pounds
available for trade by 2,547 percent. A copy of the analysis is
available from the Council (see ADDRESSES).
This proposed rule has been determined to be not significant for
purposes of E.O. 12866.
List of Subjects in 50 CFR Part 676
Alaska, Fisheries, Reporting and recordkeeping requirements.
Dated: June 19, 1996.
Gary Matlock,
Program Management Officer, National Marine Fisheries Service.
For the reasons set forth in the preamble, 50 CFR part 676 is
proposed to be amended as follows:
PART 676--LIMITED ACCESS MANAGEMENT OF FEDERAL FISHERIES IN AND OFF
OF ALASKA
1. The authority citation for 50 CFR part 676 continues to read as
follows:
Authority: 16 U.S.C. 773 et seq. and 1801 et seq.
2. In Sec. 676.20, paragraph (a)(2) is revised to read as follows:
Sec. 676.20 Individual allocations.
* * * * *
(a) * * *
(2) Vessel categories. QS and IFQ assigned to vessel categories
include:
(i) Category A--QS and IFQ, which authorizes an IFQ cardholder to
harvest and process IFQ species on a freezer vessel of any length;
[[Page 32769]]
(ii) Category B--QS and IFQ, which authorizes and IFQ cardholder to
harvest IFQ species on a catcher vessel of any length;
(iii) Category C--QS and IFQ, which authorizes an IFQ cardholder to
harvest IFQ species on a catcher vessel less than or equal to 60 ft
(18.3 m) in length overall; and
(iv) Category D--QS and IFQ, which authorizes an IFQ cardholder to
harvest IFQ halibut on a catcher vessel less than or equal to 35 ft
(10.7 m) in length overall.
* * * * *
3. In Sec. 676.22, paragraph (a) is revised to read as follows:
Sec. 676.22 Limitations on use of QS and IFQ
(a) The IFQ specified for one IFQ regulatory area must not be used
in a different IFQ regulatory area. Except as provided in paragraph
(i)(3) of this section or in Sec. 676.21(h)(1), the IFQ assigned to one
vessel category as provided in Sec. 676.20(a) must not be used to
harvest IFQ species on a vessel of a different vessel category.
Notwithstanding Sec. 676.20(a)(2)(ii), IFQ assigned to vessel category
B must not be used on any vessel less than or equal to 60 ft (18.3 m)
in length overall to harvest IFQ halibut in IFQ regulatory area 2C or
IFQ sablefish in the IFQ regulatory area east of 140 deg. W. long.
unless such IFQ derives from blocked QS units that result in IFQ of
less than 5,000 lb (2.3 mt), based on the 1996 TAC for fixed gear
specified for the IFQ halibut fishery and the IFQ sablefish fishery in
each of these two regulatory areas.
* * * * *
[FR Doc. 96-16078 Filed 6-20-96; 9:26 am]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-16009 National Volatile Organic Compounds Emission Standards for Architectural Coatings
[Federal Register Volume 61, Number 123 (Tuesday, June 25, 1996)]
[Proposed Rules]
[Pages 32729-32746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16009]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 59
[AD-FRL-5526-3]
National Volatile Organic Compounds Emission Standards for
Architectural Coatings
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule and notice of public hearing.
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SUMMARY: The proposed standards would reduce emissions of volatile
organic compounds (VOC) from architectural coatings. The proposed
standards implement Section 183(e) of the Clean Air Act (CAA), as
amended in 1990, which requires the Administrator to control VOC
emissions from certain categories of consumer and commercial products.
Exposure to ozone is associated with a wide variety of human health
effects, agricultural crop loss, and damage to forests and ecosystems.
As required by Section 183(e), the Administrator conducted a study to
determine the potential of VOC emissions from consumer and commercial
products to contribute to ozone levels that violate the National
Ambient Air Quality Standards (NAAQS) for ozone and established a list
of product categories to be regulated. Based on the criteria described
in the study and accompanying report, the EPA determined that VOC
emissions from architectural coatings should be reduced. Therefore, the
EPA is proposing standards to reduce ozone-causing VOC emissions from
these coatings. The proposed standards would reduce annual emissions of
VOC by 106,000 tons representing a 20 percent reduction from 1990
levels.
The proposed rule is centered around requiring VOC content levels
for 55 individual architectural coating categories. When promulgated
these requirements on manufacturers and importers of architectural
coatings are anticipated to take effect on April 1, 1997. This
rulemaking is on an expedited schedule, with a relatively short public
comment period.
Following proposal of this rule, the EPA plans to participate in a
joint study with the architectural coatings industry. This study will
focus on the feasibility of adopting more stringent VOC requirements in
the future.
DATES: Comments. Comments pertaining to the proposed rule must be
received on or before August 30, 1996.
Public Hearing. A public hearing will be held, if requested, to
provide interested persons an opportunity for oral presentation of
data, views, or arguments concerning the proposed standards for
architectural coatings. If anyone contacts the EPA requesting to speak
at a public hearing concerning this proposed rule by July 18, 1996, a
public hearing will be held on July 30, 1996, beginning at 10:00 a.m.
Persons interested in attending the hearing should notify Ms. Kim Teal,
(919) 541-5580 by July 18, 1996, to verify that a hearing will occur
and for notification of the location of the hearing. The record for the
public hearing will remain open for 30 days after completion of the
hearing to provide an opportunity for the submission of rebuttal and
supplementary information.
Persons wishing to present oral testimony concerning this proposed
rule must contact Ms. Kim Teal at the EPA by July 18, 1996. Ms. Teal
may be contacted at the following address: Coatings and Consumer
Products Group (MD-13), U.S. Environmental Protection Agency, Research
Triangle Park, North Carolina 27711, telephone number (919) 541-5580,
FAX number (919) 541-5689.
ADDRESSES: Comments. Comments should be submitted (in duplicate) to:
Air and Radiation Docket and Information Center (6102), Attention:
Docket No. A-92-18, U.S. Environmental Protection Agency, 401 M Street
SW, Washington, DC 20460. Comments and data may also be submitted
electronically by sending electronic mail (e-mail) to: a-and-r-
[email protected]. Electronic comments must be submitted as an
ASCII file avoiding the use of special characters and any form of
encryption. Comments and data will also be accepted on disks in
WordPerfect in 5.1 file format or ASCII file format. All comments and
data in electronic form must be identified by the docket number A-92-
18. No Confidential Business
[[Page 32730]]
Information (CBI) should be submitted through e-mail. Electronic
comments on this proposed rule may be filed online at many Federal
Depository Libraries.
Docket. The proposed regulatory text and other materials related to
this rulemaking, excepting any information claimed as CBI, are
available for review in a public record. This record has been
established for this rulemaking under docket number A-92-18. The
docket, including paper versions of electronic comments, is available
for inspection from 8:00a.m. to 5:30p.m. Monday-Friday, excluding legal
holidays. The docket is located at the EPA's Air and Radiation Docket
and Information Center, Room M1500, 1st Floor, 401 M St. S.W.,
Washington, D.C. 20460, telephone (202) 260-7548, FAX (202) 260-4400. A
reasonable fee may be charged for copying.
Background Information Document. The background information
document (BID) and other documents supporting the proposed standards
may be obtained from the docket or from the U.S. EPA Library (MD-35),
Research Triangle Park, North Carolina 27711, telephone number (919)
541-2777. Please refer to ``Architectural Coatings--Background for
Proposed Standards,'' EPA-453/R-95-009a.
FOR FURTHER INFORMATION CONTACT: For information concerning the
proposed standards, contact Ms. Ellen Ducey at (919) 541-5408, Coatings
and Consumer Products Group, Emission Standards Division (MD-13), U.S.
Environmental Protection Agency, Research Triangle Park, North Carolina
27711.
SUPPLEMENTARY INFORMATION:
Regulated entities
Entities potentially regulated by this action are those who have
the potential to supply products which emit VOC and are listed in
Sec. 183(e) of the CAA in the following regulated categories and
entities:
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Category Examples of regulated entities
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Manufacturer........................ Source that produces, packages, or
repackages architectural coatings
for sale or distribution in the
U.S.
Importers........................... Source that brings architectural
coatings from a location outside
the U.S. into the U.S. for sale
or distribution within the U.S.
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This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that the EPA is now
aware could potentially be regulated by this action. Other types of
entities not listed in the table could also be regulated. To determine
whether your facility is regulated by this action, you should carefully
examine the applicability criteria in Sec. 59.400 of the rule. If you
have questions regarding the applicability of this action to a
particular entity, consult the person listed in the preceding
FOR FURTHER INFORMATION CONTACT section of this preamble.
The regulatory text of the proposed rule is not included in this
Federal Register notice, but is available in Docket No. A-92-18 (see
ADDRESSES for information about the docket). The proposed regulatory
language is also available on one of the EPA's Technology Transfer
Network (TTN) electronic bulletin boards.
The TTN provides information and technology exchange in various
areas of air pollution control. The TTN contains 18 electronic bulletin
boards, and the following five items can be obtained through the Clean
Air Act Amendments bulletin board in the section called Recently Signed
Rules:
(1) ``FACT SHEET: Proposed Air Regulations for Architectural
Coatings (1995).''
(2) Federal Register notice for this preamble: ``National Volatile
Organic Compound Emission Standards for Architectural Coatings'' (this
document).
(3) Regulatory text for the proposed rule.
(4) ``Architectural Coatings--Background for Proposed Standards,''
(EPA-453/R-95-009a).
(5) Information Collection Request document for the proposed
standards: ``Reporting and Recordkeeping Requirements for National VOC
Emission Standards for Architectural Coatings,'' November 29, 1995.
The TTN is accessible 24 hours per day, 7 days per week except
Monday morning from 8:00 a.m. to 12:00 p.m. when the system is down for
maintenance and back up. The service is free, except for the cost of a
phone call. Dial (919) 541-5742 for up to a 14,400 bits per second
(bps) modem. If more information on the TTN is needed, call the help
desk at (919) 541-5384.
The information presented in this preamble is organized as follows:
I. Background
A. Clean Air Act Requirements
B. Regulatory Background
C. Supporting Documentation for the Proposed Standards
II. Summary of Proposed Standards
A. Applicability of the Standards
B. Regulated Entities
C. VOC Levels
D. Compliance Requirements
E. Labeling Requirements
F. Recordkeeping
G. Reporting
H. Test Methods
I. Variance
III. Summary of Impacts
A. Environmental Impacts
B. Energy Impacts
C. Cost and Economic Impacts
D. Cost-Effectiveness
IV. Rulemaking Decision Process
A. Legislative Authority
B. Regulatory Negotiation Procedure
V. Rationale
A. Applicability
B. Regulated Entities
C. Selection of Best Available Controls (BAC)
D. Exceedance Fee Approach
E. Low Volume Categories/Exemption
F. Special Provisions
G. Labeling and Public Information Requirements
H. Selection of the Recordkeeping and Reporting Requirements
I. Test Methods
J. Alternative Regulatory Approaches
K. Solicitation of Comments
VI. Future Phase Under Consideration
VII. Administrative Requirements
A. Public Hearing
B. Executive Order 12866
C. Paperwork Reduction Act
D. Regulatory Flexibility Act
E. Unfunded Mandates
F. Enhancing the Intergovernmental Partnership under Executive
Order 12875.
I. Background
A. Clean Air Act Requirements
Exposure to ground-level ozone is associated with a wide variety of
human health effects, agricultural crop loss, and damage to forests and
ecosystems. The most thoroughly studied health effects of exposure to
ozone at elevated levels during periods of moderate to strenuous
exercise are the impairment of normal functioning of the lungs,
symptomatic effects, and reduction in the ability to engage in
activities that require various levels of physical exertion. Typical
symptoms associated with acute (one to three hour) exposure to ozone at
levels of 0.12 parts per million (ppm) or higher under heavy exercise
or 0.16 ppm or higher under moderate exercise include cough, chest
pain, nausea, shortness of breath, and throat irritation.
Ground-level ozone, which is a major component of ``smog,'' is
formed in the atmosphere by reactions of VOC and oxides of nitrogen
(NOX) in the presence of sunlight. In order to reduce ground-level
ozone concentrations, emissions of VOC and NOX must be reduced.
Section 183(e) of the CAA addresses VOC emissions from the use of
consumer and commercial products. It requires the EPA to study VOC
[[Page 32731]]
emissions from the use of consumer and commercial products, to report
to Congress the results of the study, and to list for regulation
products accounting for at least 80 percent of VOC emissions resulting
from the use of such products in ozone nonattainment areas.
Accordingly, in the March 23, 1995 Federal Register (60 FR 15264), the
EPA announced the availability of the ``Consumer and Commercial
Products Report to Congress'' (EPA-453/R-94-066-A), and published the
consumer and commercial products list and schedule for regulation.
Architectural coatings are in the first group of products to be
regulated by March 1997. This listing and prioritization are not final
Agency actions, and the EPA requests comment on the placement of
architectural coatings on the list and the priority assigned to these
coatings.
B. Regulatory Background
Architectural coatings are included under the definition of
consumer and commercial products because the definition under Section
183(e) of the CAA specifically includes paints, coatings, and solvents.
Section 183(e) of the CAA requires that the first group of consumer and
commercial products (i.e., those with highest priority for regulation)
be regulated within two years after publication of the regulatory
schedule. As mentioned previously, architectural coatings are in the
first group of consumer and commercial products to be regulated and,
therefore, must be regulated by March 1997.
Because preliminary information indicated that the architectural
coatings category is a sizable contributor to ozone levels in
nonattainment areas, it seemed probable that this category would be a
high priority for regulation. In 1992, the EPA initiated a regulatory
negotiation to address architectural coatings (see section IV.B for a
discussion of the negotiation). Throughout this process, the EPA
maintained that if the final results of the study of consumer and
commercial products varied from preliminary estimates, the EPA's
decision to include architectural coatings in the first group of
categories to be regulated could change. The study indicated that the
VOC emissions from consumer and commercial products represent
approximately 28 percent of all manmade VOC emissions. The
architectural coatings category is one of the largest consumer and
commercial product categories, accounting for about nine percent of the
emissions of VOC from all consumer and commercial products. Based on
evaluation of criteria developed under Section 183(e) of the CAA,
architectural coatings were placed in the first group of products to be
regulated. The criteria that contribute to the prioritization of
architectural coatings in the first group of consumer and commercial
products to be regulated include the availability of alternatives, the
cost-effectiveness of controls, and the quantity of VOC emissions in
ozone nonattainment areas. Further details about the criteria used to
prioritize consumer and commercial product categories for regulation
are available in the report to Congress.
Architectural coating regulations are already in place in a number
of States, and many other States are in the process of developing
regulations. For the companies that market architectural coatings in
different States, trying to fulfill the differing requirements of State
rules has created administrative, technical, and marketing problems. A
Federal rule is expected to provide some degree of consistency,
predictability, and administrative ease for the industry. In addition,
State representatives have recommended that the EPA develop and
implement Federal control measures. This is because a national rule
helps reduce compliance problems associated with noncompliant coatings
being transported into nonattainment areas from neighboring areas and
neighboring States. Also, a national rule will enable States to obtain
needed emission reductions from this sector in the near term, without
having to expend their limited resources to develop similar rules in
each State.
C. Supporting Documentation for the Proposed Standards
The architectural coating BID (EPA 453/R-95-009a) contains some
supporting documentation for this proposal. It contains a product
category description, an industry profile, a discussion of control
measures, and a description of the expected emission reductions. Other
supporting information for this proposed regulation includes existing
State regulations, regulatory negotiation presentation material,
meeting summaries, survey data, technical memoranda including the
economic impact analysis, and the report to Congress on consumer and
commercial products. This information is contained in the docket and is
available to the public as described above.
II. Summary of Proposed Standards
The proposed standards are summarized below. The rationale for the
regulatory decisions made in developing these standards is provided in
section V.
A. Applicability of the Standards
The provisions of the proposed rule apply to all architectural
coatings that are manufactured or imported for sale or distribution in
the United States on or after April 1, 1997. An architectural coating
is defined in the proposed rule as ``a coating recommended for field
application to stationary structures and their appurtenances, to
portable buildings, to pavements, or to curbs.''
Category definitions in the proposed rule, such as ``exterior
flats'' or ``industrial maintenance coatings,'' are a subset of
architectural coatings. A coating must first meet the general
definition of an architectural coating to be subject to the provisions
of the proposed rule.
The proposed standards do not apply to the following architectural
coatings:
(1) Coatings manufactured exclusively for sale outside the United
States;
(2) Coatings manufactured or imported prior to April 1, 1997;
(3) Coatings supplied in nonrefillable aerosol containers;
(4) Coatings that are collected and redistributed at community-
based paint exchanges; and
(5) Coatings sold in containers with capacities of 1 liter or less.
B. Regulated Entities
Regulated entities in this proposal are limited to architectural
coating manufacturers and importers as defined below.
Architectural coating importer (or importer) means a company,
group, or individual that brings architectural coatings from a location
outside the United States into the United States for sale or
distribution within the United States.
Architectural coating manufacturer (or manufacturer) means a
company, group, or individual that produces, packages, or repackages
architectural coatings for sale or distribution in the United States. A
company, group, or individual that repackages architectural coatings as
part of a community-based paint exchange and does not produce, package,
or repackage any other architectural coatings for sale or distribution
in the United States is excluded from this definition.
C. VOC Levels
The proposed rule is centered around VOC content levels for 55
individual architectural coating categories. Manufacturers and
importers must limit the VOC content of subject coatings to the VOC
levels in Table 1, which are effective April 1, 1997 and thereafter.
As shown in Table 1, the categories of low solids stains and low
solids wood
[[Page 32732]]
preservatives have different units for the VOC content level. The VOC
content for these categories is expressed in grams of VOC per liter of
coating thinned to the manufacturer's maximum recommendation, including
water and exempt compounds. This is because, unlike conventional
coatings, which achieve a film-build, these stains and wood
preservatives are not applied to achieve a certain thickness of solid
film, but rather to affect penetration of the stain or wood
preservative. For these low solids coatings, the assumption that
coverage of the coating is dependent on the volume of solids in the
coating is not valid. The volume of the coating (which must include at
least 50 percent water in the volatile fraction) determines coverage.
For this reason, the VOC content level is determined ``including water
and exempt compounds.''
A coating is subject to the VOC content level for the category in
Table 1 that describes the coating's recommended use, appearance
characteristics, and/or resin type. If a coating meets the definition
of an architectural coating and is subject to the proposed rule, it
must be identified by the manufacturer or importer to be defined under
at least one of the categories listed in Table 1. If a coating does not
meet any of the other category definitions besides ``flat'' or
``nonflat,'' it would be categorized in either the flat or nonflat
category depending on its gloss level. These default categories
generally require lower VOC content levels than other categories in
Table 1. If a coating is marketed in more than one of the listed
coating categories, compliance is required with the lowest applicable
VOC content level except for the following:
(1) High temperature coatings that may also be suitable for use as
metallic pigmented coatings are subject only to the VOC level for high
temperature coatings;
(2) Lacquer sanding sealers that may also be suitable for use as
sanding sealers in conjunction with clear lacquer topcoats are subject
only to the VOC level for lacquer sanding sealers;
(3) Metallic pigmented coatings that may also be suitable for use
as roof coatings, industrial maintenance coatings, or primers are
subject only to the VOC level for metallic pigmented coatings;
(4) Shellacs that may be marketed as primers, sealers, or
undercoaters are subject only to the VOC level for shellacs;
(5) Fire-retardant/resistive coatings that may be suitable for use
as any other architectural coatings are subject only to the VOC level
for fire-retardant/resistive coatings;
(6) Pretreatment wash primers that may be suitable for use as
primers are subject only to the VOC level for pretreatment wash
primers; and
(7) Industrial maintenance coatings that may also be primers are
subject only to the VOC level for industrial maintenance coatings.
These exceptions were developed to clarify the applicable VOC level
in situations where inherent overlap exists between category
definitions, and the least stringent VOC level is meant to apply.
Manufacturers or importers of ``recycled'' architectural coatings
collect, reprocess, and market coatings that contain a percentage of
post-consumer coating product. Such use is environmentally beneficial
because it reduces the magnitude of waste from architectural coatings.
Manufacturers and importers of recycled coatings are given the option
of calculating an ``adjusted VOC content.'' The ``adjusted VOC
content'' provides some credit for the amount of post-consumer material
contained in the coating. The EPA is providing this credit to encourage
recycling of unused paint. The ``adjusted VOC content'' is determined
by multiplying the percentage of post-consumer content of the coating
by the VOC content of the recycled coating, which can then be
subtracted from the VOC content of the recycled coating. An explicit
equation for the calculation is in the proposed rule.
D. Compliance Requirements
1. Compliance Dates
The compliance date for all manufacturers and importers is April 1,
1997. In draft versions of the proposed rule, the compliance date for
small manufacturers and small importers was January 1, 1998. Small
manufacturers and small importers were defined as manufacturers and
importers with annual gross revenues in 1995 of less than $10 million,
and total gross revenues in 1995 from sales of all products of less
than $50 million. This extra compliance time has been eliminated from
the proposed rule due to the inclusion of less stringent VOC levels for
some of the largest categories of architectural coatings, and the
inclusion of a variance provision described in sections II.I and V.F.
These provisions are expected to provide sufficient compliance
flexibility needed by small manufacturers. However, the EPA requests
comment on whether the final rule should include the small manufacturer
compliance extension. If such a provision were included, the VOC
reduction achieved by the proposed rule in 1997 would be reduced from
20 percent to approximately 15 percent. The EPA also requests comment
on the adequacy of the compliance lead time for all affected sources.
Comments supporting extra compliance time for all manufacturers and
other affected sources should include supporting data providing
economic and/or technological justification.
2. Compliance Methods
Compliance with the VOC content levels in the proposed rule is to
be determined on a coating-by-coating basis. To determine compliance
with the VOC levels in Table 1, manufacturers or importers would first
be required to determine the coating category, the applicable VOC
level, and the VOC content for each coating product manufactured or
imported. An initial report is required for all manufacturers and
importers subject to the rule. Other labeling, recordkeeping, and
reporting requirements are summarized in sections II.E, II.F, and II.G,
respectively. Test methods to be used to determine VOC content of the
coatings are described in section II.H.
E. Labeling Requirements
With the exception of low solids stains and low solids wood
preservatives, containers of all subject coatings must bear labels or
lids that include the following information:
(1) The date of manufacture or a code indicating the date of
manufacture;
(2) The maximum VOC content of the coating in the container,
displayed in units of grams of VOC per liter of coating thinned to the
manufacturer's maximum recommendation, excluding the volume of any
water, exempt compounds, or colorant added to tint bases; and
(3) A statement of the manufacturer's recommendation regarding
thinning with organic solvents. Containers of low solids stains and low
solids wood preservatives must bear labels or lids that include the
following information:
(1) The date of manufacture or a code indicating the date of
manufacture;
(2) The maximum VOC content of the coating in the container,
displayed in units of grams of VOC per liter of coating thinned to the
manufacturer's maximum recommendation, including the volume of any
water and exempt compounds; and
(3) A statement of the manufacturer's recommendation regarding
thinning with organic solvents.
[[Page 32733]]
Containers of industrial maintenance coatings, in addition to the
labeling requirements for all subject coatings, must include on the
container label or lid the phrase ``NOT INTENDED FOR RESIDENTIAL USE.''
Containers of recycled architectural coatings, in addition to the
labeling requirements for all subject coatings, must include on the
label or lid a statement of the percentage, by volume, of post-consumer
coating content. This prerequisite must be met to be able to determine
compliance using an ``adjusted VOC content.''
The EPA considered requiring the following statement on every label
or lid of architectural coatings: ``This architectural coating contains
volatile organic compounds that will be emitted to the ambient air
during use and, under certain environmental conditions, these compounds
may contribute to the formation of ground-level ozone, an air pollutant
and major component of urban smog.'' As an alternative to this
requirement, the EPA is considering undertaking an educational effort
directed at informing the public about the role of VOC emissions from
architectural coatings in the formation of ground-level ozone. The EPA
requests comment on whether an outreach effort would be as effective an
approach as an educational statement on each container of architectural
coating.
The EPA is aware that many architectural coating labels currently
display information on the amount of coverage that the coating is
expected to provide. The EPA is considering requiring this information
to be displayed on the labels or lids of all architectural coating
containers. Both coating coverage and VOC content information are
necessary to allow a consumer to estimate and compare the expected
resulting VOC emissions from application of different coatings to
complete a particular job. This information on coating coverage would
allow consumers to make an informed choice between coatings. The EPA
requests comment on the feasibility of requiring coverage information
to be displayed on the label or lid of all architectural coating
containers subject to this rule.
F. Recordkeeping
Except for recycled coatings, there are no proposed recordkeeping
requirements. For recycled coatings, manufacturers and importers must
keep the following records for three years:
(1) The minimum percentage of post-consumer coating content for
each recycled coating product;
(2) Calculation of an adjusted VOC content that accounts for the
post-consumer coating content credit;
(3) The volume of coating received for recycling;
(4) The volume of coating received that was unusable;
(5) The volume of virgin materials; and
(6) The volume of the final recycled coating manufactured.
G. Reporting
Manufacturers and importers of coatings subject to the proposed
standard must file an initial report. The initial report must be
submitted by April 1, 1997 or within 180 days after becoming subject to
the requirements of the proposed standard, whichever is later. The
initial report must include the following information:
(1) Name and mailing address of the manufacturer or importer; and
(2) A list of categories from Table 1 in which coatings are
manufactured or imported.
For recycled coatings, manufacturers and importers must submit an
annual report by February 1 of the calendar year following the year in
which the coatings are introduced into commerce that includes the
following:
(1) The volume of coating received for recycling;
(2) The volume received that was unusable;
(3) The volume of virgin material used;
(4) The volume of the final recycled product; and
(5) The minimum post-consumer content of the coating.
Reporting requirements for the variance application are discussed
in II.I.
In cases where a code is used to indicate the date of manufacture,
all manufacturers and importers of architectural coatings must file an
explanation of each date code displayed on coating containers by April
1, 1997. Explanations of new codes must be filed within 30 days after
their first use.
H. Test Methods
For purposes of determining compliance with this rule, the VOC
content of each coating product manufactured or imported must be
determined using the EPA's Reference Method 24, ``Determination of
Volatile Matter Content, Water Content, Density, Volume Solids, and
Weight Solids of Surface Coatings,'' found in 40 CFR part 60, appendix
A. Analysis of waterborne coating VOC content determined by Reference
Method 24 must be adjusted as described in section 4.4 of Method 24.
Manufacturers and importers may use alternate methods for
determining coating VOC content if it can be demonstrated to the
Administrator's satisfaction that the method provides results
equivalent to or more accurate than those obtained using Reference
Method 24.
I. Variance
The proposed rule also allows manufacturers and importers of
architectural coatings to submit a written application to the
Administrator requesting a variance if, for reasons beyond their
reasonable control, they cannot comply with the requirements of the
proposed rule. The application must include the following information:
(1) The specific grounds for which the variance is sought;
(2) The proposed date(s) by which compliance with the provisions of
the rule will be achieved; and
(3) A compliance report reasonably detailing the method(s) by which
compliance will be achieved.
Upon receipt of the variance application, the Administrator will
hold a public hearing to determine whether, under what conditions, and
to what extent, a variance from the requirements of the proposed rule
is necessary and will be permitted.
The Administrator may grant a variance if the following criteria
are met:
(1) By complying with the proposed rule, the applicant would bear
unreasonable economic hardship;
(2) The public benefit of avoiding hardship to the applicant
outweighs the public interest in any increased emissions or air
contaminants that would result from issuing the variance; and
(3) The proposed compliance schedule can be reasonably implemented,
and compliance will be achieved as expeditiously as possible.
The approved variance order will designate a final compliance date
and a condition that specifies increments of progress necessary to
assure timely compliance. A variance shall end immediately upon the
failure (of the party to whom the variance was granted) to comply with
any term or condition of the variance.
III. Summary of Impacts
A. Environmental Impacts
This section contains a discussion of the incremental increase or
decrease in air pollution, water pollution, and solid waste generation
that would result from implementing the proposed standards.
[[Page 32734]]
1. Air Pollution Impacts
The proposed standards would reduce annual nationwide emissions of
VOC from the use of architectural coatings by an estimated 96,000
megagrams (Mg) (106,000 tons) beginning in 1997. These reductions are
compared to the 1990 baseline emission estimate of 480,000 Mg (530,000
tons) and represent emissions that would occur in the absence of the
proposed standards.
Because the VOC emissions from architectural coatings include a
large class of compounds that are expected to be associated with a wide
spectrum of health effects, reductions in VOC from architectural
coatings would result in a decrease in the associated health effects.
Because many regulated VOC species are also hazardous air
pollutants (HAP), the proposed standards are expected to reduce some
HAP emissions from the use of architectural coatings. An increase in
the use of HAP in product formulation is not expected to occur as a
result of the proposed standards. Data on speciated VOC content from
the VOC Emissions Inventory Survey show no pattern of higher HAP
concentrations in lower VOC formulations.
2. Water and Solid Waste
The major compliance method for this rule will be the use of
compliant coatings. No adverse solid waste impacts are anticipated from
compliance with this rule. It is not expected that the disposal of
coatings as solid waste will increase as a result of this rule. In
fact, because the compliant (higher solids) coatings are more
concentrated, fewer containers will require disposal when the same
volume of solids is applied.
Some provisions in this proposed rule have the potential to reduce
the amount of coating discarded as solid waste. Recycling of coatings
may be encouraged through two provisions. The rule includes a provision
that allows an ``adjusted VOC content'' to be calculated for recycled
coatings for compliance purposes. This adjustment essentially allows a
higher VOC content standard for coatings that contain post-consumer
coating. The rule also exempts any coatings distributed through
community-based paint exchanges.
In cases where conversion from solventborne to waterborne coatings
is the method used to achieve compliance, an increase in wastewater
discharge may occur if waste waterborne coatings are discharged to
publicly owned treatment works.
B. Energy Impacts
No adverse energy impacts are anticipated from compliance with this
rule. No add-on controls are required.
C. Cost and Economic Impacts
By establishing a set of product-specific levels for VOC content,
the proposed regulations have cost implications for manufacturers and
consumers of the affected products. In 1997, manufacturers of
architectural coatings that do not meet the VOC levels in Table 1 will
be required to reformulate products or remove products from the market
(or participate in an alternative compliance mechanism such as an
exceedance fee). It is presumed that manufacturers will choose the
option that is most advantageous to them, but each option imposes
costs, some of which will be passed on to other members of society
(consumers) in the form of higher prices and some of which will be
borne directly by the manufacturers.
The cost for reformulating noncompliant products depends on the
level of effort required to develop a new product (e.g., research and
development and market testing expenditures) and how these expenditures
are incurred over time. Data on level of effort were provided to the
regulatory negotiation committee (see section IV.B for discussion of
the negotiation) for prototype reformulations, from which an annualized
cost estimate of approximately $17,772 (in 1991 dollars) per
reformulation was computed. This cost is assumed to be independent of
the annual sales volume of the product. Other costs and cost savings
associated with reformulation are likely, but could not be quantified.
Unquantified costs include material cost changes and changes in
disposal costs.
An economic impact analysis of the proposed regulatory requirements
was performed. Potential cost, price, and output effects for the
architectural coatings industry were examined for the proposed table of
VOC levels. The economic analysis also evaluated the option of
utilizing an exceedance fee, which is an alternative compliance
mechanism that is discussed in detail in section V.D. However, the
analysis did not consider the impact of any variances or low volume
exemptions that may be granted to reduce impacts.
The cost analyses performed were based on data from the 1990 VOC
Emissions Inventory Survey. These survey data represented approximately
75 percent of the total volume of architectural coating products
produced in 1990. For the products in the survey population, the
estimated average annualized cost, if all products exceeding the VOC
levels were reformulated to meet the standard, is $260 per ton of VOC
emissions reduction (in 1991 dollars). This value is extrapolated to
the national population for the cost and economic analysis.
With exceedance fees as an option, it was estimated that
manufacturers would choose to pay fees for approximately 12 percent of
products instead of incurring reformulating costs or exiting the market
in 1997. These products only account for about 2 percent of industry
output, so the foregone emissions reduction by allowing the fee is less
than 0.8 percent (2,308 tons) of estimated baseline emissions. However,
the fee reduces national reformulation costs by roughly 50 percent.
Thus, it is anticipated that the exceedance fee provision could allow
significant cost savings while sacrificing little in the way of
emissions reduction.
The estimated market effects from the proposed standards are
relatively slight. In 1997, approximately one million liters of
architectural coating products, accounting for less than one-tenth of
one percent of industry product volume, are projected to withdraw from
the market. Price effects in each market ranged from no effect to an
increase of less than two cents per liter, which is still less than a
one percent increase of the baseline price. Average price and quantity
effects across all market segments were each less than one-tenth of one
percent of baseline values.
Although relatively little product volume is projected to be
withdrawn or subject to an exceedance fee, the remaining volume is
subject to reformulation and bears the associated cost. The estimated
cost to society of the regulation is approximately $25.0 million per
year (evaluated in 1991 dollars, excluding reporting and recordkeeping
costs, and costs to the EPA). These cost estimates amount to roughly
0.4 percent of baseline revenues for the industry. With the exceedance
fee alternative compliance mechanism, the estimated annual cost
decreases to $13 million, which equates to a savings of $12 million.
Resource constraints preclude an evaluation of foreign trade
impacts. However, according to a 1992 study by SRI International,
importers accounted for less than one percent of total coating sales
volume in 1990. Due to importers' small market presence and the lack of
detailed product data on imported coatings, importers have not been
included in the cost and economic impacts analysis. However, all of the
[[Page 32735]]
flexible compliance options that are available for manufacturers are
also available for importers. The EPA solicits comment on the potential
cost and economic impacts of this rule on importers.
As discussed earlier in this section, the estimated national cost
for the regulation is based on information developed by industry
representatives during the regulatory negotiation. The assumption in
estimating these costs was that coating technologies would need to be
researched and developed in the laboratories of resin manufacturers/
suppliers and paint manufacturers in order to meet VOC requirements.
Although the proposal is significantly less stringent than the
potential requirements discussed during negotiations (which would have
been implemented in three phases), the EPA has relied on these same
reformulation cost estimates for calculating the national cost of the
proposed rule. Given that the rule has similar VOC content requirements
to State rules which have been enforced since 1990, the EPA believes
the reformulation estimates used may be overstated. Since the proposed
rule is implementing available resin technologies, the cost to comply
for those manufacturers needing to reformulate their higher VOC
coatings is expected to be partially reduced through the assistance of
resin manufacturers/suppliers. Upon request, most resin suppliers are
willing to share information and sample low VOC coating formulations
with interested paint manufacturers, both large and small. In addition,
another limitation in the cost data is that no distinction for
reformulation cost is made between categories (i.e., the reformulation
cost in one category is the same as the reformulation cost in any other
category), or in relation to the required VOC content reduction (i.e.,
it does not distinguish between coatings at different VOC levels above
the limit). The EPA requests comment and technical information on
previous (since 1990) or potential reformulation costs. Commenters on
this topic should provide detailed information specific to a given
category and VOC content level change (e.g., total number of
noncompliant products within each category, VOC content and sales
information for each noncompliant product, the applicable category, and
the estimated cost of reformulation). The EPA also requests historic
information about product reformulations and reformulation costs in
response to State and local architectural coating regulation. In
addition, information is requested on any changes in variable (e.g.,
raw material) costs or disposal costs associated with manufacturing
coatings to meet the proposed VOC levels.
D. Cost-Effectiveness
The EPA often compares the relative cost of different measures for
controlling a pollutant by calculating the ``cost-effectiveness'' of
the measures. Using the EPA's traditional calculation methodology, the
cost-effectiveness of a regulation that applies nationwide is based on
a comparison of national costs and nationwide emission reductions. This
comparison is expressed as the cost per Mg (or ton) of emissions
reduced. Using social cost and emission reduction figures presented
earlier in this section of the preamble, the nationwide cost-
effectiveness of the proposed regulation is $260 per Mg ($237 per ton).
Alternative ways to calculate a measure of the ``cost-
effectiveness'' of the regulation have been suggested by others. One
alternative would be to calculate cost-effectiveness on the basis of
the nationwide cost of the regulation ($25 million for the proposed
regulation) and the VOC reduction achieved in ozone nonattainment
areas. The stated rationale for this approach is that cost-
effectiveness measures should be designed in a way that best represents
the objective of the regulatory action. In this case, for example, a
major objective, though not the only objective, of these regulations is
the control of ozone formation in nonattainment areas. By establishing
nationwide standards, the cost of achieving emission reductions in
ozone nonattainment areas during the ozone seasons requires nationwide
expenditures during all seasons of the year, including expenditures
year-round in areas currently in attainment with the current standard.
These nationwide emission reductions--including emission reductions
outside of nonattainment areas and out of the ozone season--may or may
not contribute to efforts to limit ozone in nonattainment areas,
depending on whether they participate in ozone transport from one area
to another.
The proposed standard will achieve 42,341 Mg of VOC emission
reductions in ozone nonattainment areas. Thus, the cost-effectiveness
of the rule in limiting VOC emissions in nonattainment areas would be
$590/Mg ($538/ton). It has been suggested that cost-effectiveness could
also be calculated considering the seasonality of ozone formation, and
the EPA requests comment on this approach.
While such an approach offers a measure of the cost of emission
reductions in nonattainment areas, the EPA sees significant drawbacks
to this approach. First, cost-effectiveness figures would no longer
provide a consistent basis for comparison of the relative cost of
different control measures or regulations considered at different
points in time. Because the number and location of nonattainment areas
changes frequently, the initial calculation of the cost-effectiveness
of a rule would depend upon when it was issued. The EPA believes it is
important that cost-effectiveness be calculated in a consistent manner
that allows for valid comparisons. Also, introducing new methodology
would tend to make new control measures appear superficially to be less
cost-effective than measures utilized in the past, simply because of a
change in well-established terminology.
Second, this alternative approach attributes all costs of the rule
to emission reductions achieved in nonattainment areas and no cost to
emission reductions achieved in attainment areas. By not including
emission reductions in attainment areas, the methodology assumes that
emission reductions in areas which attain the NAAQS for ozone have no
value. In fact, attainment areas often contribute to pollution problems
in nonattainment areas through the transport of emissions downwind.
Also, emission reductions in attainment areas help to maintain clean
air as the economy grows and new pollution sources come into existence.
Furthermore, measures to reduce emissions of VOC often reduce emissions
of toxic air pollutants.
Another alternative that has been suggested would be to calculate
not only the emission reductions but also the cost if the requirements
applied only in ozone nonattainment areas, perhaps through issuance of
control techniques guidelines (CTG). A request for comment and further
information on the use of a CTG is discussed in section V(J)(2) of this
notice.
The EPA requests comments on the traditional and alternative
methods discussed above to characterize the cost-effectiveness of this
regulation.
IV. Rulemaking Decision Process
A. Legislative Authority
Section 183(e) of the CAA gives the EPA the authority to establish
national standards to reduce VOC emissions from architectural coatings.
According to the CAA, regulations developed under this section shall
require best available controls (BAC). Best available
[[Page 32736]]
controls are defined in Section 183(e)(1)(A) as follows:
The term ``best available controls'' means the degree of
emissions reduction that the Administrator determines, on the basis
of technological and economic feasibility, health, environmental,
and energy impacts, is achievable through the application of the
most effective equipment, measures, processes, methods, systems, or
techniques, including chemical reformulation, product or feedstock
substitution, repackaging, and directions for use, consumption,
storage, or disposal.
Section V.C describes the EPA's determination of BAC for the proposed
regulation.
B. Regulatory Negotiation Procedure
1. Overview of the Regulatory Negotiation Process
The regulatory negotiation process is an alternative to the
traditional approach to rulemaking. Negotiations are conducted through
an advisory committee (hereafter ``the committee'') that consists of
representatives of the interests significantly affected by the outcome
of the regulation (e.g., industry, States, environmental groups, and
consumers). In this process, the EPA works closely with the members of
the committee to develop the regulation.
The goal of the committee is to attempt to reach consensus on
language or issues that can be used as the basis of a proposed rule. If
the committee fails to reach consensus, the EPA proceeds with its own
regulatory development approach.
2. History of the Architectural Coatings Regulatory Negotiations
The EPA recognizes that there are many issues and challenges in
developing, proposing, and promulgating a rule for this source
category. In early 1992, the EPA held three meetings with
representatives of the industry (including small and large
manufacturers), trade associations, resin suppliers, States, and
environmental groups to discuss the potential scope of the regulation
and issues, share information, determine data collection needs, and
assess whether a regulatory negotiation would be appropriate for this
industry.
On July 16, 1992, the EPA solicited comments on its intent to form
an advisory committee under the authority of provisions of the Federal
Advisory Committee Act (FACA), 5 U.S.C. app. II 9(c), and the
Negotiated Rulemaking Act (NRA), 5 U.S.C. Sections 581-590, to
negotiate a proposed regulation for architectural coatings, referred to
in the notice as AIM (architectural and industrial maintenance)
coatings. The EPA held a meeting in July 1992 to discuss the
feasibility of conducting regulatory negotiations to develop a
regulation for architectural coatings. Based on the interest of the
potentially affected parties and the EPA, the EPA decided to proceed
with the regulatory negotiation process. After publishing a notice of
establishment of the regulatory negotiation committee in the Federal
Register on October 2, 1992 (57 FR 45597), the first official
regulatory negotiation meeting was held in October 1992 (57 FR 45597).
The members of the regulatory negotiation committee represented the
affected industries, consumers, Federal agencies, State and local air
pollution control agencies, environmental groups, and labor
organizations. Regulatory negotiation meetings were held from October
1992 to February 1994. During the negotiation process, it became
evident that certain groups of committee members shared similar views
and interests. These groups were called ``caucuses.''
During the negotiations, most of the caucuses submitted proposed
regulations for review by the rest of the committee. Based on elements
from the caucus proposals and discussions, a number of ``frameworks''
for a potential regulation were prepared by the EPA and the facilitator
during the more than two years of negotiation. Despite these efforts,
the committee could not reach consensus on a regulatory framework.
Therefore, on September 23, 1994, the negotiations facilitator notified
each of the committee members that the regulatory negotiations were
concluded without consensus. Following this decision, the EPA continued
development of the rule. The EPA used the information obtained in the
negotiations to develop the proposed rule. The proposed rule
development was, therefore, assisted in part through the regulatory
negotiation. Specifically, information on the volume, VOC content, and
HAP content of coatings produced in 1990 was collected in the VOC
Emissions Inventory Survey conducted by industry. Categories and
definitions for architectural coatings were presented and discussed
both in caucus meetings and meetings of the entire committee.
V. Rationale
The following sections explain the rationale for selecting the
proposed standards.
A. Applicability
These proposed standards apply to all architectural coatings that
are manufactured or imported for sale or distribution in the United
States on or after April 1, 1997. Architectural coatings were
determined to be a significant source of VOC emissions in nonattainment
areas and were designated for regulation under the authority of Section
183(e) of the CAA.
In general, architectural coatings protect the substrates to which
they are applied from corrosion, abrasion, decay, ultraviolet light
damage, or the penetration of water. These coatings are recommended for
field application to stationary structures and their interior or
exterior appurtenances, portable buildings, pavement, and curbs. The
definition in the proposed regulation includes the term ``field
application'' and specifies ``stationary structures'' in order to
distinguish architectural coatings from those coatings applied at a
coating or recoating facility or other shop or maintenance facility.
Some architectural coatings have specialized functions. Concrete
form release compounds and concrete curing compounds are examples of
architectural coatings that are used during construction, rather than
being used for protecting or enhancing the finished structure. Fire-
retardant/resistive coatings and traffic marking coatings have
important public safety functions. Coatings may also increase the
aesthetic value of a structure by changing the color or texture of its
surface. Application of architectural coatings also decreases
maintenance costs associated with stationary structure replacement or
repair. Input received during negotiations from committee members was
used to take these economic, protective, safety, and aesthetic benefits
of architectural coatings into consideration in the development of
these proposed standards.
The proposed standards do not apply to some types of coatings.
There are exemptions for exported coatings, coatings manufactured or
imported prior to April 1, 1997, coatings that are sold in
nonrefillable aerosol containers, coatings that are collected and
redistributed at community-based paint exchanges, and coatings that are
sold in containers with a volume of one liter or less.
The purpose of Section 183(e) of the CAA is to control VOC
emissions that contribute to ozone nonattainment in the United States.
Because exported coatings do not contribute to VOC emissions in the
United States, and because the EPA has no legal or factual basis to
impose VOC control measures outside the United States, coatings
manufactured for the explicit purpose of export and which are in fact
exported
[[Page 32737]]
are exempt from the requirements of the proposed rule. Coatings
manufactured and imported prior to April 1, 1997 are exempted because
the compliance date for the proposed rule is April 1, 1997. An
exemption for coatings sold in nonrefillable aerosol containers is
included in the proposed rule because the EPA is addressing these
coatings separately under Section 183(e) authority. The reason is
because aerosol paint is considered a specialty paint product and
typically involves a specialized division within a paint company. In
addition, it is a complex category due to the many subcategories of
aerosol paint, and the range of options to reformulate include the
potential to change propellant formulations.
Community-based paint exchanges are programs in which the general
public may drop off and pick up post-consumer architectural coatings
(leftover paint), typically free of charge, and thereby reduce
household hazardous waste. The exchanges occur between users and not
manufacturers. Even though these coatings may be repackaged and the
proposed regulatory definition of ``manufacturer'' includes
repackagers, repackaging that occurs at community-based paint exchanges
is specifically excluded from the definition. These programs are
consistent with the EPA's pollution prevention policies and are
generally considered effective in minimizing waste. Because the EPA
wants to encourage this form of recycling, the EPA has excluded paints
exchanged in these programs from the proposed rule.
An exemption for products sold in containers with capacities of one
liter or less is included in the proposed rule as means for
manufacturers and importers to keep selected products on the market.
Similar exemptions are included in State regulations. Due to the
increased cost of packaging products in smaller size containers, and
the increased bulk of multiple containers, the EPA would not expect a
marked increase in the number of products sold in small volume
containers as a result of the exemption. No reporting or recordkeeping
would be required for this provision.
B. Regulated Entities
In contrast to traditionally regulated stationary sources that emit
VOC at a specific fixed location (e.g., a manufacturing plant), VOC
from architectural coatings are emitted wherever the products are used.
For this reason, regulating at the manufacturer and importer level is
the most efficient and least burdensome method of regulating the VOC
content of coatings, and would ultimately impact the VOC content of
architectural coatings at the distributor and end user level.
Regulated entities are defined under Section 183(e) to include
processors, wholesale distributors, and those entities that supply
manufacturers, processors, wholesale distributors, and importers.
However, regulated entities in this proposal are limited to
architectural coating manufacturers and importers.
The EPA is also considering including ``processors'' as a regulated
entity. Processors would be defined to include individuals who add
organic thinner to the coating in a commercial setting at the point of
application. Commercial settings would include industrial applications
of architectural coatings. This would allow the regulation to prohibit
an applicator from using organic solvents to thin a coating beyond the
manufacturer's recommendation. This is a concern because if an
applicator exceeds the maximum recommended thinning, expected VOC
reductions may not be achieved. The EPA requests comments on this
approach.
C. Selection of Best Available Controls (BAC)
The primary factors considered in determining BAC were
technological and economic feasibility, and environmental impacts.
Other factors, such as non-air-environmental impacts (solid waste and
water) and energy impacts, are expected to be minimal and therefore do
not vary significantly among various VOC control levels. Health impacts
are expected to parallel environmental impacts in terms of directional
benefit (i.e., as the environment improves, health improves).
The process of determining BAC for architectural coatings presented
a new challenge for the EPA. In the past, control levels for VOC
emissions from coatings were often established based on the ability to
use add-on controls. For architectural coatings, the method for
achieving VOC reduction is through reformulation, which is a pollution
prevention technique. Reformulation could involve minor adjustments in
coating formulation or larger adjustments involving a change in resin
technology.
The EPA considered many factors in evaluating economic and
technological feasibility of VOC levels (i.e., degree of
reformulation). These include State and local VOC requirements, VOC
content and sales information, technical information, performance
considerations, cost considerations, market impacts, and stakeholder
positions.
The discussion in section V.C.1 focuses on the general process used
to determine categories and VOC levels that constitute BAC. The
discussion in V.C.2 describes the selection of BAC. The determination
of what constitutes BAC by April 1, 1997 involved consideration of what
is economically and technologically feasible in light of the lead time
available for compliance.
1. Process for Selection of BAC
The process of determining BAC began with the collection of
information from existing State and local architectural coating
requirements. The EPA focused generally on existing categories and
associated VOC limits in State architectural coating rules to determine
what categories and VOC levels might constitute the degree of emissions
reduction that represents BAC. Since California has been regulating
architectural coatings for almost two decades and generally has the
most stringent VOC limits in the country, some California air quality
management district regulations were gathered and the record underlying
these regulations was analyzed. The EPA recognizes that what is
achievable now in California cannot necessarily be used to extrapolate
what is achievable nationwide in 1997. Adequate consideration must be
given to lead time, and any other factors that may influence the
ability to apply requirements nationwide (e.g., climate
considerations).
After analyzing existing standards, the EPA reviewed the data from
the Emissions Inventory Survey that was developed during the regulatory
negotiation process. The regulatory negotiation committee developed the
survey that was administered through an industry trade association.
This survey accounted for roughly 75 percent of the volume of
architectural coatings sold in 1990. The survey data included
information on the volume and VOC content of coatings. Manufacturers
were surveyed primarily using a system of coating categories that form
the basis for existing rules in several California districts. The
survey data were used to identify the minimum VOC contents needed for
certain applications and/or resin types as well as to determine the
feasibility of establishing lower VOC levels for various categories
based on the distribution of coating sales with respect to different
VOC content levels.
The EPA also relied on technical input and information received
during the regulatory negotiation process to
[[Page 32738]]
determine BAC. The EPA considered information that was submitted to the
docket by coating manufacturers and other members of the general public
during the course of the regulatory negotiations, and definitions for
categories found in other EPA regulations. The expertise of the EPA's
engineering staff also was used to develop the appropriate definitions
that would minimize overlap and specify characteristics so that
manufacturers and enforcement personnel can identify the applicable
category for each coating on the market.
The Emissions Inventory Survey did not provide data to answer the
question as to whether coatings at a given VOC level can meet all the
performance needs within a particular category. Ideally, coating
performance data in addition to VOC content and sales data would have
been gathered to better aid this type of determination. Collection of
performance data, however, is complicated due to the subjective nature
of performance requirements. ``Acceptable'' performance is difficult to
evaluate. In evaluating potential emissions of VOC into the
environment, acceptable performance means durable coatings with
qualities acceptable to the consumer that would maximize the interval
between required repaintings. These acceptable qualities can vary
significantly depending on the consumer and the coating category. For
example, durability might be of limited value in evaluating house paint
since a house paint may be painted over due to extraneous factors such
as resale of the house or redecorating long before the coating begins
to fail. For coatings used in an industrial setting, such as high
temperature and industrial maintenance coatings, repainting is more
dependent on durability considerations. A variety of performance levels
within most coating categories presently exist in the marketplace and
will continue to exist after regulation.
Because there is no consensus within the architectural coating
industry on standards by which to evaluate acceptable coating
performance, it was not obvious what performance data could be gathered
to permit comparison. The EPA relied to some extent on input from the
negotiation committee to determine the BAC VOC level within each
coating category that would allow customer performance needs to be met.
Beyond that, the EPA also relied on the survey results as support for
its conclusions about the achievability of various VOC levels in light
of performance needs. Although the EPA recognizes that the authority
under Section 183(e) does not limit BAC determination to coatings
available in the marketplace today, availability and the fact that
customers are purchasing coatings at a particular VOC content level to
meet their performance needs were significant factors in the EPA's BAC
determination process.
While low VOC coatings are available today which meet the proposed
coating VOC limits, there continues to be debate over the performance
characteristics and perceived limitations of low VOC architectural
coatings. This issue was raised by some industry representatives during
development of the proposed rule. Specifically, it has been argued that
low VOC content levels may be counterproductive if the use of coatings
with reduced VOC results in more coating applied, more thinners needed,
and more frequent recoating, and consequently, more emissions. This
argument has been made broadly, without detail as to the VOC content
levels to which it pertains or the categories involved. The EPA is
aware of numerous examples of low VOC systems which perform better than
the traditional higher VOC systems and which result in less emissions.
The EPA requests documentation, test results, or factual evidence which
either supports or refutes claims about performance changes in coatings
with VOC contents that comply with the proposed standards.
In addition, the EPA relied on the background and expertise present
within the Agency to make decisions regarding category selection and
corresponding VOC content levels. The EPA has developed VOC standards
and guidance documents for different sectors of the paint industry
since 1977. The EPA has expertise in analysis of control techniques for
coatings and in developing test methods for coatings, including the
test method used to determine the VOC content of coatings (Method 24).
The BAC selection process involved both selection of categories and
determination of VOC content levels. These components are linked in a
determination of what degree of emissions reduction represents BAC.
Decisions to subdivide a given category into more specific
subcategories can be a direct consequence of the VOC content levels
under consideration. For example, the industrial maintenance coating
category is fairly broad and encompasses many industrial coating
applications. As the technological and economic feasibility of lower
VOC content levels are considered for the industrial maintenance
category, coatings within a particular application may not be able to
meet the VOC level under consideration. Rather than establish the VOC
level high enough to allow this particular application, the category
can be subdivided to create another category that would then allow the
achievable VOC content for industrial maintenance to be lower. For
example, the ``high temperature coating'' category was created to allow
a more stringent VOC level for the broader category of ``industrial
maintenance coatings,'' which otherwise would have included high
temperature coatings. Rather than raise the VOC content level for all
the industrial maintenance coatings to ensure that high temperature
coatings could achieve this level, the EPA created a separate, less
stringent VOC level for high temperature coatings while maintaining the
more stringent level achievable for other types of industrial
maintenance coatings. Thus, it is possible to achieve lower VOC levels
and greater emission reductions while still meeting the performance
needs of some coating categories by further subdividing particular
categories. Stains and wood preservatives have both been subdivided
into clear and semitransparent, and opaque coatings. This subdivision
of categories helps preserve markets while still achieving emission
reductions.
During development of the proposed rule, some industry
representatives provided requests for particular categories to be
created and given a higher VOC level than the VOC level for the more
general category in which it would otherwise be grouped. Categories for
which adequate justification was presented appear in the proposed rule.
However, in cases where significant overlap between the requested
category and other existing categories was apparent and the overlap
could be expected to undermine the degree of emission reductions
achieved, the category was not included in the proposal. The categories
and definitions in the proposed rule are roughly consistent with the
categories and definitions presented during negotiations.
For the BAC determination, the EPA generally focused on the coating
categories that contribute the largest amount of VOC to the
environment.
2. Determination of BAC
A primary consideration affecting the selection of VOC content
levels that EPA believes represent BAC was the need expressed by many
industry and regulatory stakeholder representatives to proceed with
development of these standards as quickly and expeditiously
[[Page 32739]]
as possible. State and local agencies and representatives of industry
who market products in different States have expressed concern about
the lack of Federal VOC standards for architectural coatings. For this
reason, the EPA has focused on establishing VOC levels that would take
effect in 1997. An expedited rulemaking process for this proposed rule
is necessary to fulfill the expectations and reliance of the States and
to give coating manufacturers timely notice of requirements. Therefore,
EPA based the BAC determination on VOC content levels that could be
achieved in a short time frame (by April 1, 1997). As discussed in
section II.D.1 of this preamble, EPA requests comment on the adequacy
of this compliance lead time.
The EPA attempted to gather specific information with which to
determine the technological and economic feasibility of different VOC
limits that would take effect in 1997. The following paragraphs discuss
this information and how EPA used it to determine BAC.
Fourteen categories which appear in the proposed rule and which are
found in existing State standards were included in a list of categories
developed during the regulatory negotiation referred to as ``low
volume.'' These are anti-graffiti coatings, bituminous coatings and
mastics, bond breakers, concrete curing compounds, fire-retardant/
resistive coatings (clear/pigmented), form release compounds, graphic
arts coatings (sign paints), high temperature coatings, magnesite
cement coatings, mastic texture coatings, multi-color coatings, pre-
treatment wash primers, sanding sealers, and swimming pool coatings.
The VOC content levels in Table 1 for these categories are in the upper
range of the VOC content limits found in existing State rules. The
industry argued that these coatings represent unique compositions and
specialized uses, and the imposition of lower VOC levels on these
categories would probably result in an adverse economic impact on the
manufacturers and may even have a disproportionate effect on small
manufacturers. Because these coatings are used in relatively low
volumes and in a limited range of circumstances, the EPA has determined
that it should set VOC levels for these coatings based on the
justification presented by the industry and that additional effort to
collect more data is not warranted in the development of this proposal.
After proposal, the EPA plans to reevaluate the feasibility of more
stringent VOC levels for these categories as part of the joint study
with industry that is described in section VI.
In addition to the 14 ``low volume'' categories discussed, the VOC
Emissions Inventory Survey contains 12 categories that represent about
75 percent of the VOC emissions (industrial maintenance, interior
nonflat, exterior nonflat, clear and semitransparent stains, clear
waterproofing sealers and treatments, interior flat, roof coatings,
primers and undercoaters, traffic markings, exterior flat, varnishes,
and lacquers). For these 26 categories and an additional 15 categories
contained in the survey, sales and VOC content data indicate that
coatings are available that can achieve the VOC content levels listed
in Table 1. The fact that the survey reveals that coatings are
available that meet today's proposed standard is one factor that
supports the conclusion that these coatings are economically and
technologically feasible.
During regulatory negotiation discussions of potential VOC content
limits, 17 additional specialty coating categories were added to the
list of categories under consideration. These categories were generally
offered as a result of discussion of specific VOC content levels for
more general and broad categories such as industrial maintenance
coatings. These specialty coating categories did not appear in any
existing State architectural coating regulation and, excepting high
performance architectural coatings, were not categories for which data
were collected in the VOC Emissions Inventory Survey. These 17
categories include alkali-resistant primers, antenna coatings,
antifouling coatings, chalkboard resurfacers, concrete protective
coatings, extreme high durability coatings, floor coatings, flow
co
FR Doc. 96-16009 National Volatile Organic Compounds Emission Standards for Architectural Coatings
atings, heat reactive coatings, high performance architectural
coatings, impacted immersion coatings, lacquer stains, nonferrous
ornamental metal lacquers and surface protectants, nuclear coatings,
repair and maintenance thermoplastic coatings, rust preventative
coatings, and thermoplastic rubber coatings and mastics.
Fourteen of these 17 additional specialty coating categories appear
in today's proposal because discussion during negotiations and/or
petitions from individual companies provided support for inclusion of
these categories and an associated VOC content level separate from the
broader category and level to which they otherwise would have been
assigned. No data were available to the EPA to conclude that lower VOC
content levels for these categories would represent BAC.
Three of these 14 categories which appear in the rule, antenna
coatings, antifouling coatings, and nuclear coatings, were assigned VOC
content levels consistent with those found in the EPA's National
Emission Standards for Hazardous Air Pollutants for Shipbuilding and
Ship Repair (59 FR 62681). These VOC levels were based primarily on
information contained in the EPA's Alternative Control Techniques (ACT)
Document: ``Surface Coating Operations at Shipbuilding and Ship Repair
Facilities,'' EPA-453/R-94-032.
Two of the three specialty categories that do not appear in the
proposed rule are alkali-resistant primers and lacquer stains. Although
the EPA considered inclusion of alkali-resistant primers based on
requests from some manufacturers, it was excluded for two reasons.
Significant overlap between alkali-resistant primers and the more
general primer category is apparent, and comments were received about
the ability of latex coatings (lower VOC coatings) to perform the
function of alkali-resistant primers. For lacquer stains, although
arguments were presented about the need for the category, the overlap
between lacquer stains and the more general stain categories would
allow the higher VOC lacquer stain for uses in which lower VOC stains
would be acceptable substitutes. In order to attain the degree of
emission reductions achievable, these categories are excluded in the
proposed rule. The coatings that would have been classified into these
categories would be subject to the VOC level of the more general
category of either primers or stains, as applicable.
The third coating category that was surveyed in the VOC Emissions
Inventory Survey, but does not appear in the proposed rule, is ``high
performance architectural (HPA) coatings.'' Several industry proposals
presented to the regulatory negotiation committee contained a
definition and VOC standard for HPA coatings with subcategories for
concrete protective coatings, floor coatings, and rust preventative
coatings. However, the information available to the EPA does not
support a need for a broad HPA category. Rather than including a
separate, broad category of HPA coatings, the proposal contains
separate definitions and VOC levels for concrete protective, floor, and
rust preventative coatings. These subcategories were specifically
identified during negotiations, and arguments were presented for VOC
levels and definitions. These categories have specific performance
requirements such
[[Page 32740]]
as prevention of water and chloride ion intrusion (concrete protective
coatings), abrasion resistance (floor coatings), and prevention of the
corrosion of metals (rust preventative coatings).
In April 1995, architectural coating industry representatives
submitted recommended VOC content limits for BAC to the EPA. These
industry representatives reported that these limits were developed
based on extensive negotiations within the industry to determine what
is economically and technologically feasible. Today's proposed VOC
requirements are consistent with those in the proposal submitted by
these industry representatives.
The EPA requests comment and any supporting data on the
appropriateness of inclusion or exclusion of the 17 additional
specialty categories and the VOC content levels assigned to all of the
categories included in the proposed rule. For comments supporting
exclusion of a category, the supporting argument should include data to
show why the category under consideration could be expected to meet
(consistent with performance needs) the VOC levels applicable to the
more general category to which it would revert back in the absence of
the specific category. For comments supporting inclusion of a category,
the request should be accompanied by a detailed explanation of the need
for the category, and data on why lower VOC coatings would not be
acceptable substitutes.
In addition, the EPA requests information on any coating category
where recent progress in low VOC resin systems has resulted in new low
VOC coatings being introduced into the market since 1990. The EPA
requests comments on the ability of coatings with VOC content levels
lower than those in Table 1 to meet the performance needs within the
category.
D. Exceedance Fee Approach
An exceedance fee economic incentive approach is being considered
for inclusion in the architectural coating rule. Under this approach,
manufacturers and importers would have the option of paying a fee,
based on the amount that VOC content levels are exceeded, instead of
achieving the VOC content levels listed in Table 1.
The fee would be calculated at an initial rate of $0.0028 per gram
($2,500 per ton) of VOC in excess of the applicable VOC level,
multiplied by the volume of coating produced. For example, if a coating
is 50 grams of VOC per liter over the applicable VOC standard, the fee
rate would be approximately 14 cents per liter ($.0028 per gram
multiplied by 50 grams per liter). The fee rate is in the upper end of
the range of the incremental VOC reduction cost imposed by VOC
regulations for other source categories. The EPA believes this rate is
appropriate because the exceedance fee rate is intended to provide
compliance flexibility, but also be high enough to encourage
reformulation to meet the applicable VOC level. This rate would be
adjusted for inflation periodically.
For all but two categories, the volume of coating produced is
determined excluding the volume of any water, exempt compounds, or
colorant added to tint bases to be consistent with the units of the VOC
content level. For the two ``low solids'' categories (low solids stains
and low solids wood preservatives), the volume is determined
``including water and exempt compounds'' to be consistent with the
units of the VOC content level for these coatings. The exceedance fee
would be paid quarterly to the Administrator and would be due no later
than two months after the end of the quarter in which the coating is
manufactured or imported.
The fee option could be expected to provide transition time for
those manufacturers that desire additional time to obtain lower VOC
technologies. It could also provide a less costly compliance approach
for manufacturers selling very low volume products.
Under the exceedance fee approach, manufacturers and importers
would be required to keep records and submit reports detailing the
following information for all coatings for which fees are paid: VOC
content, excess VOC content above the standard, volume of product
manufactured or imported, product quarterly fee, and the total
quarterly fee for all products.
Section 183(e) specifies that fees collected must be deposited in a
special fund. Specifically, under Section 183(e)(5) of the CAA, funds
collected pursuant to the regulation of consumer and commercial
products:
* * * shall be deposited in a special fund in the United States
Treasury for licensing and other services, which thereafter shall be
available until expended, subject to annual appropriation Acts,
solely to carry out the activities of the Administrator for which
such fees, charges or collections are established and made.
The Congress, through the annual appropriations process, will
determine whether and how to spend any fee revenues collected. The
Administrator, however, may make recommendations to Congress concerning
use of any funds collected. Therefore, the EPA today seeks comment on
how the revenues should be spent should the proposed exceedance fee
option be promulgated as part of the final rule. The EPA believes that
it may be possible to construe the statutory language on potential uses
of the money either broadly, to authorize spending for a wide variety
of activities related to reducing ozone, or more narrowly. In
particular, the EPA requests comment on whether these revenues should
be used for:
(1) Grants or awards to promote the development of lower VOC
architectural coating technologies by private firms, or by other
governmental or nongovernmental entities;
(2) Purchase by the government of VOC emission reduction credits
from private firms or emission credit brokers;
(3) State and EPA administrative and enforcement costs in carrying
out architectural coating rules, or other rules to reduce VOC emissions
from consumer and commercial products; or
(4) Other possible uses.
In addition to comments on the use of exceedance fees, the EPA
seeks comment on the exceedance fee rate, and recordkeeping and
reporting associated with this option.
E. Low Volume Categories/Exemption
The EPA recognizes that there may be some low volume, specialty
niche products for which it may not be cost effective for either the
manufacturer or resin supplier to develop a lower VOC formulation. The
Agency addressed this concern during the regulatory negotiation by
developing many new specialty categories and definitions which have
been subsequently included in the proposed rule. To evaluate what
further steps may still be needed to accommodate niche coatings within
the proposed rule, the EPA requests detailed information on the
following: (1) Identification of any specialty coatings which do not
comply with Table 1. (specify coating category from Table 1 in which
the product would be classified) and that cannot be cost-effectively
reformulated, (2) the sales volume and VOC content of each identified
product, (3) detailed cost estimate for reformulation (e.g., man-years,
and product testing expected to be involved) and (4) whether a lower
VOC alternative product currently exists in the market which can
adequately substitute for the identified specialty product.
EPA will consider developing additional categories for newly
identified niche markets in the final rule. In addition, based on
reformulation cost, sales volume, and VOC emissions information
gathered in
[[Page 32741]]
response to the above request on low volume products, the EPA will
evaluate the option of a categorical exemption for any new or existing
low volume specialty categories. Alternatively, although no coating
manufacturers have requested that EPA consider a low volume exemption,
the EPA will consider establishing a low volume cut-off, under which a
coating may be exempt from regulation. These approaches would allow
these low volume, specialized products to remain on the market. Under
the low volume exemption concept, any manufacturer or importer may
request an exemption from the VOC levels in Table 1 for specialized
coating products that are manufactured or imported in quantities less
than a specified number of gallons per year. This exemption would
require an annual report, recordkeeping, and labeling.
A major issue with this type of an exemption is where to set the
cut-off. The EPA would design any low volume exemption to avoid
significant loss in emission reductions. The EPA has limited data with
which to evaluate an appropriate cut-off level. The EPA requests
comment on a cut-off in the range between 1,000 and 5,000 gallons per
year.
A manufacturer or importer applying for this type of exemption
would need to submit an annual report. This report would contain a
written request for the exemption, a list of the coating products for
which the exemption is being requested, a statement signed by a
responsible official that the sales of each product for which the
exemption is being requested will not exceed the cut-off established,
and documentation and a statement signed by a responsible official that
each product serves a specialized use which cannot be cost-effectively
replaced with another, lower VOC product. In addition, the report would
contain the following information for each product for which the
exemption is being requested: the name of the product, the specialized
use, the sales of the product in the previous year, and the VOC content
of the product. The EPA can waive this reporting requirement on a case-
by-case basis if the information from each year is essentially the
same. Whether or not reporting is waived, the company would be required
to keep records for a three year period sufficient to demonstrate upon
request that the product qualified for the exemption. A company that
sold more than the cut-off amount of a product for which the exemption
was claimed would be in violation of the rule and subject to the same
penalties as any company producing coatings in violation of the VOC
content limits.
In addition, the following statement would need to be placed on the
label or lid of each container of coating for which the exemption is
being applied: ``This is a specialized architectural coating produced
in volumes less than X gallons per year.'' The labeling requirement
would serve to identify these coatings to enforcement personnel.
The EPA's goal would be to set the volume cut-off for this
exemption low enough such that it would not significantly impact the
VOC emission reductions achieved by the rule, yet high enough such
that, if needed, it could be expected to be used by a number of smaller
manufacturers and importers for their low volume products.
The EPA requests comment on whether a low volume exemption would
have any disadvantages. Such an exemption might create an incentive for
some companies to circumvent the rule by taking a higher volume product
and marketing (with or without any variations in formulation) as
several separate products, each meeting the sales volume cut-off. Also,
some may perceive that a low volume exemption would give competitive
advantage to higher polluting, low volume products.
The EPA requests comments on whether this exemption should be
included in the final rule and on the following specific aspects of
this exemption: (1) What would be an appropriate cut-off level? (2) To
what degree would a low volume exemption aid small manufacturers and
importers in complying with the rule? (3) To what extent would the
exemption be used if included in the regulation? (4) Would such an
exemption be equitable? (5) Would such an exemption create incentives
for circumvention of the rule?
F. Special Provisions
This section contains a description of the rationale for the
recycled coating and variance provisions that are included in the
proposed standard.
1. Recycled Coatings
The proposed regulation allows manufacturers and importers VOC
credit for recycling post-consumer coatings. Post-consumer coating is
unused coating that has been previously purchased by a consumer, and is
subsequently combined with virgin materials and offered for sale as a
recycled coating. The proposed credit for recycled coating content is
demonstrated in the following example: If a coating has a VOC content
(calculated as prescribed in Sec. 59.404 of the regulation) of 400
grams per liter of coating and contains 10 percent recycled coating,
then 10 percent of the calculated VOC content (40 grams per liter) is
subtracted or credited to give an adjusted VOC content of 360 grams per
liter. Compliance is determined based on the adjusted VOC content.
The calculation of an adjusted VOC content is included in the
proposed regulation to encourage recycling by providing flexibility to
manufacturers of recycled coatings. Recycling these coatings eliminates
the need for their disposal (some unused coatings may be considered
hazardous waste) and reduces the amount of new coating that must be
manufactured.
The EPA recognizes the inherent difficulties associated with
enforcing the credit associated with the recycled coating provision. It
is not normally possible to determine the fraction of post-consumer
content by analytical means. Therefore, enforcement would be through an
evaluation of reports submitted by manufacturers or importers of
recycled coatings (see section II.G) and a comparison of these reports
to claims of recycled content on the labels of coatings. The EPA
requests comment on this VOC credit for recycled coatings and the
enforcement of such a provision.
2. Compliance Variance.
The proposed rule includes a variance provision whereby
manufacturers and importers of subject architectural coatings may apply
to the Administrator for a temporary variance from compliance with the
standards. A variance will be granted if the applicant demonstrates
that compliance would result in economic hardship, and that granting
the variance would better serve the public interest than would
requiring continuous compliance under the conditions of economic
hardship. The EPA intends for this provision to allow manufacturers and
importers some flexibility in responding to unforeseen circumstances
that may cause additional, unanticipated compliance burden. The EPA
recognizes that certain interruptions in the availability of raw
materials and or manufacturing processes may affect the manufacturer's
or importer's ability to continuously comply with the standards. In
particular, the EPA anticipates that this variance provision will help
to mitigate impacts to small manufacturers. Within the architectural
coatings industry, small manufacturers are likely to have fewer
research and development
[[Page 32742]]
resources, and therefore, will benefit from the allowed variance.
G. Labeling and Public Information Requirements
1. Containers of All Subject Coatings
The proposed regulation requires that containers for all subject
coatings display on the label or lid the date of manufacture (or a code
indicating the date) and the maximum VOC content in the coating. The
date of manufacture on the label or lid allows enforcement personnel to
determine whether the coating was manufactured prior to April 1, 1997.
Section 183(e) of the CAA specifically authorizes the EPA to
require certain labeling and informing of the public as mechanisms for
control of VOC emissions from consumer and commercial products. The
proposed standards include labeling requirements that not only allow
the EPA to verify compliance with the VOC content levels but also to
inform consumers about VOC content. Such labeling, with appropriate
consumer education, might provide an incentive to consumers to purchase
coatings that will emit less VOC, and to manufacturers and importers to
manufacture or import lower VOC content coatings.
As described in section II.E, the EPA is considering two other
labeling requirements. The EPA is considering a requirement to include
on the label of each coating an educational statement about VOC
emissions, and their potential contribution to ground-level ozone. The
EPA requests comment on whether an outreach effort would be as
effective an approach as an educational statement. Also, the EPA is
considering a requirement to include coating coverage information on
all architectural coating labels. Comment is requested on the
feasibility of this requirement.
2. Containers of Industrial Maintenance Coatings
In addition to the general labeling requirements for all
architectural coatings, containers of industrial maintenance coatings
(as defined in Sec. 59.401 of the proposed regulation) must also
include on the label or lid the phrase ``NOT INTENDED FOR RESIDENTIAL
USE.'' Section 183(e) of the CAA provides authority to include in the
regulation directions for use of the product. The proposed VOC levels
for industrial maintenance coatings were set based on more rigorous
performance specifications than those needed for residential
applications. While this labeling requirement is intended to discourage
consumers from applying industrial maintenance coatings in a
residential setting where a lower VOC coating with less rigorous
performance specifications may be adequate, it does not prohibit the
use of industrial maintenance coatings in a residential setting where
extreme environmental conditions are present and for which an
industrial maintenance coating would provide the most viable protection
from these conditions.
3. Containers of Recycled Architectural Coatings
Containers of recycled architectural coatings, in addition to the
requirements listed previously for all subject coatings, must also
display a label that includes the statement ``CONTAINS NOT LESS THAN X
PERCENT, BY VOLUME, POST-CONSUMER COATING,'' where X is replaced by the
percentage, by volume, of post-consumer coating. Inclusion of the
recycled coating content is necessary for compliance purposes to
identify coatings for which an adjusted VOC content has been
calculated.
H. Selection of Recordkeeping and Reporting Requirements
The EPA evaluated what recorded and reported information would be
sufficient to ensure compliance with the VOC levels. The recordkeeping
and reporting requirements proposed are necessary to allow
determination of compliance, and the EPA believes they do not represent
an undue burden on manufacturers or importers of architectural
coatings. For all but the initial report, recordkeeping and reporting
are only required for manufacturers and importers who choose to take
advantage of optional provisions, including the calculation of an
adjusted VOC content (based on post-consumer coating content), the
variance provision, or the exceedance fee approach that is under
consideration.
For coatings for which the manufacturer or importer chooses to
demonstrate compliance by meeting the VOC content levels in the
proposed table (Table 1), enforcement personnel can compare the VOC
content of the product to the VOC content statement on the label to
establish compliance or noncompliance. Therefore, there are no
reporting or recordkeeping provisions for the manufacturers and
importers of these coatings beyond initial notification. The initial
report serves to notify the EPA of the identity of the universe of all
manufacturers and importers subject to the standards.
The proposed rule includes reporting and recordkeeping requirements
for coatings that contain post-consumer coating and for which an
adjusted VOC content is reported for compliance purposes. Manufacturers
and importers must maintain the required records for these coatings for
a period of three years. The required recordkeeping and initial reports
are essential for the EPA to determine whether coatings are in
compliance.
Manufacturers or importers that choose to apply for a variance are
required to submit a variance application to the Administrator. The
purpose of this application is for the applicant to provide the
Administrator with sufficient information on which the decision to
grant, or not to grant, the variance can be made.
The reporting and recordkeeping requirements for the exceedance fee
approach and low volume exemption that is under consideration for
inclusion in the final rule is discussed in section V.D., and V.E.
respectively
I. Test Methods
Under the proposed provisions, compliance with the VOC content
levels is based on the EPA's Reference Method 24. This is the EPA's
standard test method for determining the VOC content of coatings.
A provision allowing use of alternative methods of determining VOC
content subject to the Administrator's approval is also included in the
proposed rule.
J. Alternative Regulatory Approaches
1. Other Systems of Regulation.
Section 183(e)(4) allows the EPA to consider ``any system or
systems of regulation as the Administrator may deem appropriate,
including requirements for registration and labeling, self-monitoring
and reporting, prohibitions, limitations, or economic incentives
(including marketable permits and auctions of emission rights)
concerning the manufacture, processing, distribution, use, consumption,
or disposal of the product.'' Accordingly, the EPA requests comment on
any alternative to the proposed system of regulation.
2. Regulation with the Use of CTG
Section 183(e)(3)(C) gives the EPA the flexibility to ``issue
control techniques guidelines under this Act in lieu of regulations
required under subparagraph (A) if the Administrator determines that
such guidance will be substantially as effective as regulations in
reducing emissions of volatile organic
[[Page 32743]]
compounds which contribute to ozone levels in areas which violate the
national ambient air quality standard for ozone.''
In many cases, a CTG can be an effective approach to reduce
emissions of VOC in nonattainment areas without imposing control costs
on attainment areas. For example, a CTG may effectively reduce VOC
emissions from commercial products used in industrial settings where
the targeted emissions occur at a point of end use which is readily
identifiable, and at a fixed location. However, a CTG may not be as
effective as a regulation to reduce emissions in nonattainment areas
for architectural products because these products are easily
transportable and widely distributed. This is because an architectural
coating CTG would prohibit the sale of noncompliant architectural
coatings in nonattainment areas. A CTG would have the potential
compliance problems associated with noncompliant products being
transported into nonattainment areas from neighboring areas and
neighboring states. In contrast, a regulation could require
modification of the product itself. Since all products would be subject
to the same requirements, this would help ensure effective enforcement
and implementation in all areas.
It is expected that an architectural coating national rule would
reduce costs of compliance for companies serving national or large
regional markets by promoting consistency in VOC requirements across
the country. In addition, a national rule would help reduce
recordkeeping and reporting for those manufacturers who sell products
in both attainment and nonattainment areas. To evaluate the benefits
(i.e., reduction in cost) to manufacturers from the consistency aspect
of a national rule, the EPA requests detailed information from
manufacturers on the cost to comply with a variety of State standards.
In particular, the EPA requests comment on the administrative cost
burden (inventory tracking, distribution, labeling, and tracking of
State architectural coating regulation development) expected to result
from use of a CTG. In addition, to evaluate the population and product
mix of manufacturers who may be excluded from regulation under a CTG
approach, the EPA requests comment on the number and identity of
manufacturers who sell products solely in attainment areas. To evaluate
differences in the reformulation cost associated with a CTG versus a
national rule, the EPA requests comment on the proportion of products
which would be reformulated if, in general, only nonattainment areas
were regulated. For example, EPA requests information on whether
manufacturers would tend to produce one product for attainment areas
and one for nonattainment areas, only sell products in attainment
areas, or reformulate all products to be compliant with applicable
nonattainment area requirements.
The EPA requests comment on whether and how a CTG approach (by
itself, or in combination with any other regulatory alternatives) would
be as effective as a national rule in reducing VOC emissions in ozone
nonattainment areas. If warranted by comments, a quantitative analysis
of costs and emission reductions expected from a CTG will be completed.
K. Solicitation of Comments
The EPA invites comments concerning the proposed standards,
particularly as noted in the preceding sections concerning: the
inclusion of specialty product categories; the technological and
economic feasibility of VOC levels listed in Table 1; the ability of
coatings with VOC content levels lower than the proposed levels to meet
performance needs; the inclusion of processors in the applicability of
the rule; economic and other impacts on importers; the feasibility of
requiring coverage information to be displayed on coating labels or
lids; the effectiveness of a public outreach program versus statements
on the container label to educate users about the environmental impacts
of VOC in coatings; and the placement of architectural coatings on the
consumer products priority list. The EPA also requests information on
coating categories where recent progress in low VOC resin systems has
resulted in new low VOC coatings that have been introduced since 1990.
The EPA requests comment on the inclusion of an exceedance fee
option for use as a compliance alternative to meeting the VOC levels in
Table 1. Specifically, the EPA requests comments on the following: the
appropriate use for revenues generated from the fee; the
appropriateness of the exceedance fee rate; and the appropriateness of
the recordkeeping and reporting requirements associated with the fee.
The EPA requests detailed information on any specialty coatings
which do not comply with proposed standards, and cannot be cost-
effectively reformulated. The EPA also requests comment on the
inclusion of a low volume exemption for specialty, niche products.
Specifically, the EPA requests comment on the following: (1) What would
be an appropriate cut-off level? (2) To what degree would a low volume
exemption aid small manufacturers and importers in complying with the
rule? (3) To what extent would the exemption be used if included in the
regulation? (4) Would such an exemption be equitable? (5) Would such an
exemption create incentives for circumvention of the rule?
In addition, the EPA requests comment on the inclusion of the
special provision for VOC credit for recycled coatings, the variance
provision, and the small container exemption. For all of these
provisions, the EPA requests comment on the expected extent of their
use by small manufacturers and small importers.
Comments submitted to the Administrator should contain specific
proposals and supporting data to allow the EPA to fully evaluate the
comments. Recommended changes to any of the VOC content levels
presented in this proposal should include sufficient information for
the EPA to evaluate the technological and economic feasibility
associated with such changes. Applicable dates and addresses for the
submission of comments are included at the beginning of this preamble.
VI. Future Phase Under Consideration
The EPA believes further VOC reductions beyond those in Table 1 may
be technologically and economically feasible. A great deal of
controversy surrounds the proposal of more stringent VOC levels in a
future phase of regulation. To address the controversy, the EPA will
participate in a joint study with industry representatives to
investigate the cost and performance characteristics of coatings with
VOC contents lower than the proposed levels in Table 1. The
environmental and economic impacts of requiring lower VOC contents will
also be assessed. In addition, the EPA will continue to meet with other
stakeholders regarding the potential for a future phase for the
architectural coatings rule. After analyzing comments received
regarding this proposal and following completion of the joint EPA/
industry study, the EPA will evaluate whether further reductions beyond
the 1997 requirements are technologically and economically feasible.
The result of this evaluation could be proposal of more stringent VOC
levels, the proposal of economic incentive approaches, some combination
of VOC levels and economic incentive approaches, or no further action
beyond the 1997 requirements.
The EPA is using this proposal as an opportunity to solicit input
for use in
[[Page 32744]]
the joint EPA/industry study. The EPA expects to focus effort in the
study on evaluation of issues which will include the following: the
cost and economic impact of requiring lower VOC contents than those in
Table 1, identification of any performance issues associated with lower
VOC content coatings, and investigation of reactivity considerations
involved in reformulating architectural coatings. The EPA invites
comments concerning the planned EPA/industry study, and any input on
performance, cost or reactivity considerations which should be included
in the study.
Because the EPA's data consists of the Emissions Inventory Survey
of coatings sold in 1990 and on limits in California coatings
regulations that have been in effect since the late 1980's, the EPA is
requesting information on coating categories where recent progress in
low VOC resin systems has resulted in new low VOC coatings being
introduced into the market since 1990. The EPA requests comments on the
ability of coatings with VOC content levels lower than those in Table 1
to meet the performance needs within the category. Cost information on
these coatings is also requested.
VII. Administrative Requirements
A. Public Hearing
A public hearing will be held, if requested, to provide opportunity
for interested persons to make oral presentations regarding the
requirements in the proposed regulation in accordance with Section
307(d)(5) of the CAA. Persons wishing to make oral presentation on the
proposed regulation for architectural coatings should contact the EPA
at the address given in the ADDRESSES section of this preamble. Oral
presentations will be limited to 15 minutes each. Any member of the
public may file a written statement before, during, or within 30 days
after the hearing. Written statements should be addressed to the Air
and Radiation Docket and Information Center at the address given in the
ADDRESSES section of this preamble and should refer to Docket No. A-92-
18.
A verbatim transcript of the hearing and written statements will be
available for inspection and copying during normal business hours at
the EPA's Air and Radiation Docket and Information Center in
Washington, DC (see ADDRESSES section of the preamble).
B. Executive Order 12866
Under Executive Order 12866, the Agency must determine whether the
regulatory action is ``significant'' and therefore subject to Office of
Management Budget (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, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of 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.
Pursuant to the terms of the Executive Order, the EPA has
determined that this rule is a ``significant regulatory action'' under
criterion (4) above, based on both the long regulatory negotiation
process that preceded this proposal and the novel use of economic
incentives (potential exceedance fees) for this industry. Therefore,
the proposed regulation presented in this notice was submitted to the
OMB for review as required. Any written comments from the OMB to the
EPA and any written EPA response to those comments will be included in
Docket No. A-92-18, listed at the beginning of this notice under the
ADDRESSES section of this preamble.
C. Paperwork Reduction Act
The information collection requirements in this proposed rule have
been submitted for approval to the OMB under the Paperwork Reduction
Act, 44 U.S.C. 3501 et seq. An Information Collection Request (ICR)
document has been prepared by the EPA (ICR No. 1750.01) and a copy may
be obtained from Sandy Farmer, Office of Policy Planning and Evaluation
(OPPE) Regulatory Information Division; U.S. Environmental Protection
Agency (2136); 401 M Street., SW, Washington, DC 20460 or by calling
(202) 260-2740. This ICR document is also available on the EPA's OAQPS
TTN bulletin board under the Clean Air Act Amendments menu. See the
SUPPLEMENTARY INFORMATION section of this preamble for information on
accessing the EPA's TTN electronic bulletin board.
The information required to be collected by this proposed rule is
necessary to identify the regulated entities who are subject to the
rule and to ensure their compliance with the rule. The recordkeeping
and reporting requirements are mandatory and are being established
under authority of Section 114 of the CAA. All information submitted as
part of a report to the Agency for which a claim of confidentiality is
made will be safeguarded according to the Agency policies set forth in
title 40, Chapter 1, part 2, subpart B, ``Confidentiality of Business
Information'' (see 40 CFR 2; 41 FR 36902, September 1, 1976, amended by
43 FR 39999, September 28, 1978; 43 FR 42251, September 28, 1978; 44 FR
17674, March 23, 1979).
The total annual reporting and recordkeeping burden for this
information collection averaged over the first three years is estimated
to be 37,447 hours and $1,279,469. This is the estimated burden for 500
respondents (i.e., architectural coating manufacturers).
The average burden, per respondent, is 75 hours per year. The total
reporting, recordkeeping, and labeling burden for an individual
respondent will vary depending on the compliance option chosen.
Respondents choosing to meet the VOC levels will have the lowest
reporting, recordkeeping, and labeling burden, whereas, manufacturers
and importers that use the option of calculating an ``adjusted VOC
content'' (for recycled coatings) will have the highest reporting,
recordkeeping, and labeling burden. The proposed rule requires an
initial one-time notification from each respondent. Respondents whose
coatings products have a VOC content that is less than or equal to the
VOC content levels have no periodic reporting requirements. Respondents
choosing the recycled coatings provision must submit annual reports.
Respondents choosing the variance provision must submit a one-time
report requesting the variance.
Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This estimate includes
the time needed to: (1) Review instructions; (2) develop, acquire,
install, and utilize technology and systems for the purposes of
collecting, validating, and verifying information; processing and
maintaining information; and disclosing and providing information; (3)
adjust the existing ways to comply with any previously applicable
instructions and requirements; (4) train personnel to be able to
respond to a collection of information; (5) search data sources; (6)
complete and review the collection of
[[Page 32745]]
information; and (7) transmit or otherwise disclose the information.
The exceedance fee alternative compliance mechanism being
considered for inclusion in the final rule would require quarterly
reports of fees by the manufacturers choosing this option. In addition,
these manufacturers would keep records for each coating product on
which fees are paid. The average annual burden increase for each
manufacturer choosing this option is 194 hours.
Comments are requested on the Agency's need for this information,
the accuracy of the provided burden estimates, and any suggested
methods for minimizing respondent burden, including through the use of
automated collection techniques. Send comments on the ICR to the
Director, OPPE Regulatory Information Division; U.S. Environmental
Protection Agency (2136); 401 M Street SW; Washington, DC 20460; and to
the Office of Information and Regulatory Affairs, Office of Management
and Budget, 725 17th Street NW; Washington, DC 20503; marked
``Attention: Desk Officer for the EPA.'' Include the ICR number in any
correspondence. Since OMB is required to make a decision concerning the
ICR between 30 and 60 days after June 25, 1996, a comment to OMB is
best assured of having its full effect if OMB receives it by July 25,
1996. The final rule will respond to any OMB or public comments on the
information collection requirements contained in this proposal.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires the
EPA to consider potential adverse impacts of proposed regulations on
small entities and to consider regulatory options that might mitigate
any such impacts. It is currently the EPA's policy to perform a
regulatory flexibility analysis of the potential impacts of proposed
regulations on small entities whenever it is anticipated that any small
entities may be adversely impacted. Because it is anticipated that some
small architectural coating manufacturers could be adversely impacted
from implementation of the proposed standards, a regulatory flexibility
analysis was performed.
The analysis of small entity impacts focused on the potential
impacts on small manufacturers producing architectural coatings. For
the purpose of this analysis, small manufacturers were considered to be
firms with less than $10 million of total gross annual revenues from
the sale of architectural coatings and less than $50 million in total
gross annual revenues from all products. Using this definition,
potentially 85 percent of architectural coating manufacturers are
considered small manufacturers. A copy of the technical memorandum
titled ``Economic Impact and Regulatory Flexibility Analysis of the
Proposed Architectural Coatings Rule'' is included in the public
docket.
Reducing VOC content generally requires a fixed investment for
reformulation of each product to its respective regulatory level.
Because, on average, coatings sold by small manufacturers are sold in
smaller quantities than the industry average (an estimated 67,000
liters per product versus 377,000 liters per product), the cost of
reformulation per unit sold may in some cases be significantly higher
for small manufacturers. To meet the limitations in Table 1, the
estimated ratio of annualized reformulation cost to revenues for small
manufacturers equals approximately 3.5 percent as opposed to a ratio of
only about 0.4 percent for the entire industry. Thus, it may be
difficult for small coating manufacturers to pass control costs to
consumers in product markets where competition with larger
manufacturers is significant. This impact will be reduced to the extent
that small manufacturers are provided reformulation technologies from
larger resin suppliers. Still, the EPA has recognized a need to include
special compliance provisions in the rule to avoid adverse economic
impacts upon small manufacturers.
The economic impacts on small manufacturers were taken into
consideration in establishing both the categories and VOC levels.
Special effort was made to consider the economic feasibility of VOC
levels for product categories in which small manufacturers have a
disproportionate presence. The small container exemption, compliance
variance, and consideration of an exceedance fee option and low volume
exemption are also included in the proposed rule primarily to reduce
small business impacts.
Because the per-unit costs of the economic incentive options are
constant with respect to volume sold, and because the per-unit
reformulation cost is higher for small-volume products than large-
volume products, an economic incentive option, such as a fee, if
included, is more likely to be beneficial to and adopted by small
manufacturers than by large manufacturers. The results of the economic
analysis suggests that the fee option is likely to provide a cost-
saving alternative to reformulation for relatively low-volume products
with VOC content fairly close to the regulatory VOC levels. Estimated
annual reformulation cost savings minus fee payments associated with
the fee option equals approximately $5.0 million. In addition, the fee
option reduces foregone profits by roughly 0.3 million for products
which otherwise would have been removed from the market. It is
anticipated that most of these savings would accrue to small
manufacturers.
E. Unfunded Mandates
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under Section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. Before promulgating an EPA rule for which a written statement
is needed, Section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective or least burdensome alternative
that achieves the objectives of the rule. The provisions of Section 205
do not apply when they are inconsistent with applicable law. Moreover,
Section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it must have developed under
Section 203 of the UMRA a small government agency plan. The plan must
provide for notifying potentially affected small governments, enabling
officials of affected small governments to have meaningful and timely
input in the development of EPA regulatory proposals with significant
Federal intergovernmental mandates, and informing, educating, and
advising small governments on compliance with the regulatory
requirements.
Today's rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, or tribal
governments or the private sector. The rule imposes no enforceable
duties on any of these governmental entities. In any event, EPA has
determined that this rule does not contain a Federal mandate that may
[[Page 32746]]
result in expenditures of $100 million or more for State, local, and
tribal governments, in the aggregate, or the private sector in any one
year. Thus, today's rule is not subject to the requirements of Sections
202 and 205 of the UMRA.
F. Enhancing the Intergovernmental Partnership under Executive Order
12875
In compliance with Executive Order 12875, the EPA has involved
State and local governments in the development of this rule. State and
local air pollution control associations participated in the regulatory
negotiation and have also provided regulatory review. State and local
air pollution control representatives participated in the regulatory
negotiation and have also provided input into subsequent regulatory
development.
List of Subjects in 40 CFR Part 59
Environmental protection, Air pollution control, Architectural
coatings, Consumer and commercial products, Incorporation by Reference,
Ozone, Regulatory negotiation, Volatile organic compound.
Table 1.--Architectural Coating Volatile Organic Compound Content Levels
[Unless otherwise specified, units are in grams of VOC per liter of
coating thinned to the manufacturer's maximum recommendation excluding
the volume of any water, exempt compounds, or colorant added to tint
bases.]
------------------------------------------------------------------------
Effective
Coating category Apr. 1,
1997
------------------------------------------------------------------------
Antenna coatings............................................. 530
Antifouling coatings......................................... 400
Anti-graffiti coatings....................................... 600
Bituminous coatings and mastics.............................. 500
Bond breakers................................................ 600
Chalkboard resurfacers....................................... 450
Concrete curing compounds.................................... 350
Concrete protective coatings................................. 400
Dry fog coatings............................................. 400
Extreme high durability coatings............................. 800
Fire-retardant/resistive coatings:
Clear.................................................... 850
Opaque................................................... 450
Flat coatings:
Exterior................................................. 250
Interior................................................. 250
Floor coatings............................................... 400
Flow coatings................................................ 650
Form release compounds....................................... 450
Graphic arts coatings (sign paints).......................... 500
Heat reactive coatings....................................... 420
High temperature coatings.................................... 650
Impacted immersion coatings.................................. 780
Industrial maintenance coatings.............................. 450
Lacquers (including lacquer sanding sealers)................. 680
Magnesite cement coatings.................................... 600
Mastic texture coatings...................................... 300
Metallic pigmented coatings.................................. 500
Multi-colored coatings....................................... 580
Nonferrous ornamental metal lacquers and surface protectants. 870
Nonflat coatings:
Exterior................................................. 380
Interior................................................. 380
Nuclear coatings............................................. 420
Pretreatment wash primers.................................... 780
Primers and undercoaters..................................... 350
Quick-dry coatings:
Enamels.................................................. 450
Primers, sealers, and undercoaters....................... 450
Repair and maintenance thermoplastic coatings................ 650
Roof coatings................................................ 250
Rust preventative coatings................................... 400
Sanding sealers (other than lacquer sanding sealers)......... 550
Sealers (including interior clear wood sealers).............. 400
Shellacs:
Clear.................................................... 650
Opaque................................................... 550
Stains:
Clear and semitransparent................................ 550
Opaque................................................... 350
Low solids............................................... \1\ 120
Swimming pool coatings....................................... 600
Thermoplastic rubber coatings and mastics.................... 550
Traffic marking coatings..................................... 150
Varnishes.................................................... 450
Waterproofing sealers and treatments:
Clear.................................................... 600
Opaque................................................... 400
Wood preservatives:
Below ground wood preservatives.......................... 550
Clear and semitransparent................................ 550
Opaque................................................... 350
Low solids............................................... \1\ 120
------------------------------------------------------------------------
\1\ Units are grams of VOC per liter of coating, including water and
exempt compounds, thinned to the maximum thinning recommended by the
manufacturer.
Dated: June 18, 1996.
Carol M. Browner,
Administrator.
[FR Doc. 96-16009 Filed 6-24-96; 8:45am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-15884 Hazardous Waste Management System; Identification and Listing of Hazardous Waste; Proposed Exclusion
[Federal Register Volume 61, Number 123 (Tuesday, June 25, 1996)]
[Proposed Rules]
[Pages 32746-32753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15884]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 261
[SW-FRL-5525-3]
Hazardous Waste Management System; Identification and Listing of
Hazardous Waste; Proposed Exclusion
AGENCY: Environmental Protection Agency.
ACTION: Proposed rule and request for comment.
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SUMMARY: The Environmental Protection Agency (EPA) is proposing to
grant a petition to Bekaert Steel Corporation (Bekaert) of Rogers,
Arkansas to exclude (or ``delist''), certain solid wastes generated at
its facility from the lists of hazardous wastes contained in 40 CFR
261.31 and 261.32 (hereinafter all sectional references are to 40 CFR
unless otherwise indicated). This action responds to a delisting
petition submitted under 40 CFR 260.20, which allows any person to
petition the Administrator to modify or revoke any provision of 40 CFR
Parts 260 through 266, 268 and 273, and under 40 CFR 260.22, which
specifically provides generators the opportunity to petition the
Administrator to exclude a waste on a ``generator specific'' basis from
the hazardous waste lists. This proposed decision is based on an
evaluation of waste-specific information provided by the petitioner. If
this proposed decision is finalized, the petitioned waste will be
conditionally excluded from the requirements of hazardous waste
regulations under the Resource Conservation and Recovery Act (RCRA).
DATES: The EPA is requesting public comments on this proposed decision.
Comments will be accepted until August 9, 1996. Comments postmarked
after the close of the comment period will be stamped ``late.''
Any person may request a hearing on this proposed decision by
filing a request with Jane N. Saginaw, Regional Administrator, whose
address appears below, by July 10, 1996. The request must contain the
information prescribed in 40 CFR 260.20(d).
ADDRESSES: Send three copies of your comments. Two copies should be
sent to William Gallagher, Delisting Program, Multimedia Planning and
Permitting Division (6PD-O), Environmental Protection Agency, Region 6,
1445 Ross Avenue, Dallas, Texas 75202. A third copy should be sent to
the Arkansas Department of Pollution Control and Ecology, P.O. Box
8913, 8001 National Drive, Little Rock, Arkansas 72219-8913. Identify
your comments at the top with this regulatory docket number: ``F-96-
ARDEL-BEKAERT.''
[[Page 32747]]
Requests for a hearing should be addressed to the Regional
Administrator, Region 6, Environmental Protection Agency, 1445 Ross
Avenue, Dallas, Texas 75202.
The RCRA regulatory docket for this proposed rule is located at the
Region 6, Environmental Protection Agency, 1445 Ross Avenue, Dallas,
Texas 75202 and is available for viewing in the EPA library on the 12th
floor from 8:30 a.m. to 4:00 p.m., Monday through Friday, excluding
Federal holidays. Call (214) 665-6444 for appointments. The docket may
also be viewed at the Arkansas Department of Pollution Control and
Ecology, 8001 National Drive, Little Rock, Arkansas 72219-8913. The
public may copy material from any regulatory docket at no cost for the
first 100 pages, and at $0.15 per page for additional copies.
FOR FURTHER INFORMATION, CONTACT: For technical information concerning
this notice, contact David Vogler, Delisting Program (6PD-O), Region 6,
Environmental Protection Agency, 1445 Ross Avenue, Dallas, Texas 75202,
(214) 665-7428.
SUPPLEMENTARY INFORMATION:
I. Background
A. Authority
On January 16, 1981, as part of its final and interim final
regulations implementing Section 3001 of RCRA, the EPA published an
amended list of hazardous wastes from non-specific and specific
sources. This list has been amended several times, and is published in
Sec. 261.31 and Sec. 261.32. These wastes are listed as hazardous
because they typically and frequently exhibit one or more of the
characteristics of hazardous wastes identified in Subpart C of Part 261
(i.e., ignitability, corrosivity, reactivity, and toxicity) or meet the
criteria for listing contained in Sec. 261.11 (a)(2) or (a)(3).
Individual waste streams may vary, however, depending on raw
materials, industrial processes, and other factors. Thus, while a waste
that is described in these regulations generally is hazardous, a
specific waste from an individual facility meeting the listing
description may not be hazardous. For this reason, Sec. 260.20 and
Sec. 260.22 provide an exclusion procedure, allowing persons to
demonstrate that a specific waste from a particular generating facility
should not be regulated as a hazardous waste.
To have their wastes excluded, petitioners must show that wastes
generated at their facilities do not meet any of the criteria for which
the wastes were listed. See Sec. 260.22(a) and the background documents
for the listed wastes. In addition, the Hazardous and Solid Waste
Amendments (HSWA) of 1984 require the Agency to consider any factors
(including additional constituents) other than those for which the
waste was listed, if there is a reasonable basis to believe that such
additional factors could cause the waste to be hazardous. Accordingly,
a petitioner also must demonstrate that the waste does not exhibit any
of the hazardous waste characteristics (i.e., ignitability, reactivity,
corrosivity, and toxicity), and must present sufficient information for
the Agency to determine whether the waste contains any of the other
identified constituents at hazardous levels. See Sec. 260.22(a), 42
U.S.C. Sec. 6921(f), and the background documents for the listed
wastes. Although wastes which are ``delisted'' (i.e., excluded) have
been evaluated to determine whether or not they exhibit any of the
characteristics of hazardous waste, generators remain obligated under
RCRA to determine whether or not their waste remains non-hazardous
based on the hazardous waste characteristics.
In addition, residues from the treatment, storage, or disposal of
listed hazardous wastes and mixtures containing listed hazardous wastes
are also considered hazardous wastes. See Secs. 261.3 (a)(2)(iv) and
(c)(2)(i), referred to as the ``mixture'' and ``derived-from'' rules,
respectively. Such wastes are also eligible for exclusion and remain
hazardous wastes until excluded. On December 6, 1991, the U.S. Court of
Appeals for the District of Columbia vacated the ``mixture/derived
from'' rules and remanded them to the Agency on procedural grounds. See
Shell Oil Co. v. EPA, 950 F.2d 741 (D.C. Cir. 1991). On March 3, 1992,
EPA reinstated the mixture and derived-from rules, and solicited
comments on other ways to regulate waste mixtures and residues (57 FR
7628). On December 21, 1995, the EPA proposed rules related to waste
mixtures and residues at 60 FR 66344 and invited public comment. These
references should be consulted for more information regarding mixtures
and residues.
B. Approach Used To Evaluate This Petition
Bekaert's petition requests a delisting for a listed hazardous
waste. In making the initial delisting determination, the EPA evaluated
the petitioned waste against the listing criteria and factors cited in
Sec. 261.11 (a)(2) and (a)(3). Based on this review, the EPA agreed
with the petitioner that the waste is non-hazardous with respect to the
original listing criteria. (If the EPA had found, based on this review,
that the waste remained hazardous based on the factors for which the
waste was originally listed, the EPA would have proposed to deny the
petition.) The EPA then evaluated the waste with respect to other
factors or criteria to assess whether there is a reasonable basis to
believe that such additional factors could cause the waste to be
hazardous. The EPA considered whether the waste is acutely toxic, and
considered the toxicity of the constituents, the concentration of the
constituents in the waste, their tendency to migrate and to
bioaccumulate, their persistence in the environment once released from
the waste, plausible and specific types of management of the petitioned
waste, the quantities of waste generated, and waste variability.
For this delisting determination, the EPA used such information to
identify plausible exposure routes (i.e., ground water, surface water,
air) for hazardous constituents present in the petitioned waste. The
EPA determined that disposal in a Subtitle D landfill is the most
reasonable, worst-case disposal scenario for Bekaert's petitioned
waste, and that the major exposure route of concern would be ingestion
of contaminated ground water. Therefore, the EPA used a particular fate
and transport model to predict the maximum allowable concentrations of
hazardous constituents that may be released from the petitioned waste
after disposal and to determine the potential impact of the disposal of
Bekaert's petitioned waste on human health and the environment.
Specifically, the EPA used the maximum estimated waste volume and the
maximum reported extract concentrations as inputs to estimate the
constituent concentrations in the ground water at a hypothetical
receptor well downgradient from the disposal site. The calculated
receptor well concentrations (referred to as compliance-point
concentrations) were then compared directly to the current Maximum
Contaminant Levels (MCLs) promulgated under the Safe Drinking Water Act
(SWDA) or health-based levels derived from Verified Reference Doses
(RfDs). The value used for copper is an action level for treatment of a
water supply in lieu of a MCL (40 CFR Sec. 141.80).
The EPA believes that this fate and transport model represents a
reasonable worst-case scenario for disposal of the petitioned waste in
a landfill, and that a reasonable worst-case scenario is appropriate
when evaluating whether a waste should be relieved of the protective
management constraints of
[[Page 32748]]
RCRA Subtitle C. The use of a reasonable worst-case scenario results in
conservative values for the compliance-point concentrations and ensures
that the waste, once removed from hazardous waste regulation, will not
pose a threat to human health or the environment. Because a delisted
waste is no longer subject to hazardous waste control, the EPA is
generally unable to predict and does not presently control how a waste
will be managed after delisting. Therefore, the EPA does not currently
consider extensive site-specific factors when applying the fate and
transport model.
The EPA also considers the applicability of groundwater monitoring
data during the evaluation of delisting petitions. The EPA normally
requests groundwater monitoring data for wastes currently managed or
have ever been managed in a land based management unit. Groundwater
monitoring data provides significant additional information important
to fully characterize the potential impact (if any) of the disposal of
a petitioned waste on human health and the environment. In this case,
the EPA determined that the groundwater monitoring data was not
applicable to the evaluation of the petitioned waste. Specifically,
Bekaert currently disposes of the petitioned waste generated from its
filter press which is part of their wastewater treatment facility in an
off-site RCRA hazardous waste landfill (which is not owned/operated by
Bekaert). This landfill did not begin accepting the petitioned waste
generated by the filter press until September 1991. In other words, the
petitioned waste comprises a small fraction of the total waste managed
in the off-site units. The Agency, therefore, believes that any ground-
water monitoring data from the landfill would not be meaningful for an
evaluation of the specific effect of the petitioned waste on ground
water. However, the potential impact of these wastes on ground water is
predicted through the application of a fate and transport model.
Finally, the Hazardous and Solid Waste Amendments of 1984
specifically require the EPA to provide notice and an opportunity for
comment before granting or denying a final exclusion. Thus, a final
decision will not be made until all timely public comments (including
those at public hearings, if any) on today's proposal are addressed.
II. Disposition of Delisting Petition
Bekaert Steel Corporation, One Bekaert Drive, Rogers, Arkansas,
72757
A. Petition for Exclusion
Bekaert, located in Rogers, Arkansas, manufactures steel cord by
reducing the diameter of steel rods followed by electroplating and
further reduction. Bekaert petitioned the Agency to exclude its
wastewater treatment filter cake presently listed as EPA Hazardous
Waste No. F006--``Wastewater treatment sludges from electroplating
operations except from the following processes: (1) Sulfuric acid
anodizing of aluminum; (2) tin plating on carbon steel; (3) zinc
plating (segregated basis) on carbon steel; (5) cleaning/stripping
associated with tin, zinc, and aluminum plating on carbon steel; and
(6) chemical etching and milling of aluminum''. The listed constituents
of concern for EPA Hazardous Waste No. F006 are: cadmium, hexavalent
chromium, nickel and cyanide (complexed) (see 40 CFR part 261, Appendix
VII).
Bekaert petitioned the EPA to exclude its waste filter cake because
it does not believe that the waste meets the criteria for which it was
listed. Bekaert also believes that the waste does not contain any other
constituents that would render it hazardous. Review of this petition
included consideration of the original listing criteria, as well as the
additional factors required by the Hazardous and Solid Waste Amendments
(HSWA) of 1984. See Section 222 of HSWA, 42 U.S.C. Sec. 6921(f), and 40
CFR Sec. 260.22(d) (2)-(4). Today's proposal to grant this petition for
delisting is the result of the EPA's evaluation of Bekaert's petition.
B. Background
On September 11, 1995, Bekaert petitioned the EPA to exclude, from
the lists of hazardous wastes contained in 40 CFR Sec. 261.31 and
Sec. 261.32, its wastewater filter cake generated from its wastewater
treatment system. Bekaert subsequently provided additional information
to complete its petition.
In support of its petition, Bekaert submitted: (1) Descriptions of
its manufacturing and wastewater treatment processes, including
schematic diagrams; (2) a list of all raw materials and Material Safety
Data Sheets (MSDSs) for all trade name products used in the
manufacturing and waste treatment processes; (3) results from total
constituent analyses for fourteen metals including the eight Toxicity
Characteristic (TC) metals listed in Sec. 261.24 (i.e., the TC metals)
and antimony, beryllium, copper, nickel, thallium, and zinc from
representative samples of the petitioned waste; (4) results from the
Toxicity Characteristic Leaching Procedure (TCLP, SW-846 Method 1311)
for fourteen metals which include the eight TC metals, and antimony,
beryllium, copper, nickel, thallium, and zinc from representative
samples of the petitioned waste; (5) results from total constituent
analysis for total and reactive sulfide and cyanide for representative
samples of the petitioned waste; (6) results from total oil and grease
analyses from representative samples of the petitioned waste; (7) test
results and information regarding the hazardous characteristics of
ignitability, corrosivity, and reactivity; and (8) results from total
constituent analyses for certain volatile and semi-volatile organic
compounds from representative samples of the petitioned waste.
Bekaert manufactures steel cord which is sold to the tire
manufacturing industry for use in reinforcing tires. The steel cord is
produced from steel rod which has been reduced in size and
electroplated with a copper and zinc alloy.
The manufacturing processes contribute to the petitioned waste from
the following sources: water from the caustic scrubbers, water from the
hydrochloric acid scrubbers, water from the rinse used to remove soap
from wire, water from the cooling water bath following fluidized bed
heater, waste acid from the hydrochloric acid pickling, water from the
rinse following the zinc plating bath, water from the cooling bath
following induction heating, phosphoric acid from the phosphoric acid
bath, water from the phosphoric acid rinse bath and the spent oil/water
mixture (non-petroleum) used as a lubricant in the process.
Wastewaters from the manufacturing process are collected and stored
in four central tanks prior to discharge to the wastewater treatment
plant. The petitioned waste is generated from the wastewater treatment
plant and not directly from the manufacturing process. Wastewaters are
transferred from the holding tanks to a treatment tank where it is
neutralized with sodium hydroxide. After neutralization, one of several
methods are employed to remove solids: (1) A polymer is added to
promote flocculation. This wastewater is then sent to a sludge
thickening tank from which the sludge is sent to the filter press; (2)
the wastewater is routed to an ultrafiltration unit to remove solids
which are routed to the filter press; or (3) the wastewater is routed
to a clarifier where a polymer is added to aid in solids precipitation.
The solids are routed to the sludge thickening tank and then to the
filter press.
[[Page 32749]]
The petitioned waste is dropped from the filter press at the end of
the wastewater treatment process into a 18 x 8 x 5 foot hopper. The
F006 filter press cake is currently sent to a permitted hazardous waste
facility for disposal.
To collect representative samples, petitioners are normally
requested to divide the unit into four quadrants (not exceeding 10,000
square feet per quadrant) and randomly collect five full-depth core
samples from each quadrant. The five full-depth core samples are then
composited (mixed) by quadrant to produce a total of four composite
samples. See Test Methods for Evaluating Solid Wastes: Physical/
Chemical Methods, U.S. EPA, Office of Solid Waste and Emergency
Response, Publication SW-846 (third edition), November 1986, and
Petitions to Delist Hazardous Wastes--A Guidance Manual, (second
edition), U.S. EPA, Office of Solid Waste, (EPA/530-R-93-007), March
1993.
Bekaert submitted analytical results from five composite filter
cake samples collected from the hoppers at five different days taken at
intervals during a period between May 25, 1995, and July 10, 1995. This
was done to demonstrate that the waste composition did not vary with
time. In order account for spatial variability, grab samples were
collected from four randomly selected sample locations based on a grid
pattern that divided each hopper into ten grids. The entire depth
(approximately five feet) of each hopper was sampled. A composite of
the four grab samples was obtained to represent that day's sample.
Bekaert developed a list of constituents of concern from comparing
a list of all raw materials used in the plant that could potentially
appear in the petitioned waste with those found in 40 CFR Sec. 261,
Appendix VIII, as well as the following six constituents not found in
Appendix VIII: acetone, ethylbenzene, isophorone, 4-methyl-2-pentanone,
styrene, and total xylenes. Based on this review, it was not
anticipated that any of the Appendix VIII organic compounds or any of
the six additional organic compounds would be present in the petitioned
waste.
Using the list of constituents of concern, Bekaert analyzed the
five composite samples for the total concentrations (i.e., mass of a
particular constituent per mass of waste) of the eight TCLP metals,
antimony, beryllium, copper, nickel, thallium, zinc, selected volatile
and semi-volatile organic constituents, and oil and grease content.
These five samples were also analyzed to determine whether the waste
exhibited ignitable, corrosive, or reactive properties as defined,
respectively, under Sec. 261.21, Sec. 261.22, and Sec. 261.23,
including analysis for total constituent concentrations of cyanide,
sulfide, reactive cyanide, and reactive sulfide. These five samples
were also analyzed for TCLP concentrations (i.e., mass of a particular
constituent per unit volume of extract) of the eight TC metals, and
antimony, beryllium, copper, nickel, thallium, and zinc.
C. Agency Analysis
Bekaert used SW-846 Methods 7041, 7091, 7191, and 7196A, in
respective order, to quantify the total constituent concentrations and
leachable (TCLP) concentrations of antimony, beryllium, chromium, and
hexavalent chromium; and SW-846 Method 6010A was used to quantify total
constituent concentrations and leachable (TCLP) concentrations of
arsenic, barium, cadmium, copper, lead, nickel, selenium, silver,
thallium, and zinc in samples. SW-846 methods 7471 and 7470 were used
to determine total and leachable (in respective order) constituent
concentrations for mercury.
Using SW 846 Method 9070, Bekaert determined that the petitioned
waste had a maximum oil and grease content of 5700 mg/kg.
Characteristic testing was conducted on the samples of the
petitioned waste, including analysis for reactive cyanide and reactive
sulfide (SW-846 Methods 7.3.3.2 and 7.3.4.1, respectively),
ignitability (ASTM D-4982B), and corrosivity (SW-846 Method 9045).
Bekaert used SW-846 Methods 9012 and 4500 to quantify concentrations of
the total and complexed cyanide, respectively, in the samples. Bekaert
used Method 9030A to quantify the total constituent concentrations of
sulfide in the samples.
Table 1 presents the maximum total constituent and leachate
concentrations for the eight TC metals, antimony, beryllium, copper,
nickel, thallium, and zinc for the composite samples of the petitioned
waste. Table 1 also presents maximum reactive cyanide and reactive
sulfide concentrations.
The detection limits presented in Table 1 represent the lowest
concentrations quantifiable by Bekaert when using the appropriate SW-
846 or Agency-approved analytical methods to analyze its waste.
(Detection limits may vary according to the waste and waste matrix
being analyzed, i.e., the ``cleanliness'' waste matrices varies and
``dirty'' waste matrices may cause interferences, thus raising the
detection limits).
Bekaert used SW-846 Methods 8240 and 8270 to quantify the total
constituent concentrations of 30 volatile and 71 semi-volatile organic
compounds, respectively, in the waste samples. This suite of
constituents included all of the organic constituents listed in
Sec. 261.24 as well as other organic compounds commonly analyzed for in
hazardous waste samples. Bekaert used SW-846 Methods 8240, 8270, 8150A,
3510A, and 8080 to quantify the leachable concentrations of 11
volatile, 13 semi-volatile, 2 chlorinated herbicides, and 7 pesticides
(all organic compounds), respectively, in the waste samples, following
extraction by SW-846 Method 1311 (TCLP). This suite of constituents
included all of the organic constituents listed in Sec. 261.24. Table 2
presents the maximum total and leachate concentrations of all detected
organic constituents in Bekaert's waste and waste extract samples.
Lastly, on the basis of explanations and analytical data provided by
Bekaert, none of the analyzed samples exhibited the characteristics of
ignitability, corrosivity, or reactivity. See Sec. 261.21, Sec. 261.22
and Sec. 261.23.
Table 1.--Maximum Total Constituent and Leachate Concentrations (ppm)
\1\ Filter Press Waste
------------------------------------------------------------------------
Total TCLP
constituent leachate
Inorganic constituents analyses analyses
(mg/kg) (mg/l)
------------------------------------------------------------------------
Antimony........................................ < 0.50 0.34
Arsenic......................................... < 5.00 < 0.05
Barium.......................................... 2.5 1.3
Beryllium....................................... < 0.10 < 0.05
Cadmium......................................... 3.1 < 0.05
Chromium........................................ 68 < 0.05
Chromium (hexavalent)........................... < 5.0 < 0.05
Copper.......................................... 580 12
Lead............................................ < 5.0 < 0.10
Mercury......................................... < 0.125 < 0.005
Nickel.......................................... 43 1.1
Selenium........................................ 6.4 0.091
Silver.......................................... 1.2 0.2
Thallium........................................ < 10 < 0.10
Zinc............................................ 16000 470
Cyanide (complexed) (total)..................... 0.31 0.030
Cyanide (soluble)............................... < 0.13 NA
Cyanide (reactive).............................. < 0.050 NA
Sulfide (reactive).............................. <10 NA
------------------------------------------------------------------------
< Denotes that the constituent was not detected at the detection limit
specified in the table.
\1\ These levels represent the highest concentration of each constituent
found in any one sample. These levels do not represent the specific
levels found in one sample.
NA Denotes that the constituent was not analyzed.
[[Page 32750]]
Table 2.--Maximum Total Constituent and Leachate Concentrations (ppm)
\1\ Filter Press Sludge
------------------------------------------------------------------------
Total TCLP
constituent leachate
Organic constituents analyses analyses
(mg/kg) (mg/l)
------------------------------------------------------------------------
Methyl Ethyl Ketone............................. 0.120 < 0.100
Dichloromethane................................. 0.008 NA
4-Methylphenol.................................. <1.0 0.067
------------------------------------------------------------------------
< Denotes that the constituent was not detected at the detection limit
specified in the table.
\1\ These levels represent the highest concentration of each constituent
found in any one sample. These levels do not represent the specific
levels found in one sample.
NA Denotes that the constituent was not analyzed.
Bekaert submitted a signed certification stating that the maximum
volume of filter cake generated on an annual basis is 1,022 cubic yards
of waste. The EPA reviews a petitioner's estimates and, on occasion,
has requested a petitioner to re-evaluate estimated waste volume. The
EPA accepted Bekaert's certified estimate of 1,022 cubic yards of
annual generated waste. The petition was evaluated at a waste volume of
1,250 cubic yards of annual generated which is a more conservative
approach and also allows for future fluctuations in waste output.
The EPA does not generally verify submitted test data before
proposing delisting decisions. The sworn affidavit submitted with this
petition binds the petitioner to present truthful and accurate results.
The EPA, however, has maintained a spot-check sampling and analysis
program to verify the representative nature of the data for some
percentage of the submitted petitions. A spot-check visit to a selected
facility may be initiated before finalizing a delisting petition or
after granting a final exclusion.
D. Agency Evaluation
The EPA considered the appropriateness of alternative waste
management scenarios for Bekaert's petitioned waste and decided, based
on the information provided in the petition, that disposal in a
municipal solid waste landfill is the most reasonable, worst-case
scenario for this waste. Under a landfill disposal scenario, the major
exposure route of concern for any hazardous constituents would be
ingestion of contaminated ground water. The EPA, therefore, evaluated
Bekaert's petitioned waste using the modified EPACML which predicts the
potential for groundwater contamination from wastes that are
landfilled. See 56 FR 32993 (July 18, 1991), 56 FR 67197 (December 30,
1991), and the RCRA public docket for these notices for a detailed
description of the EPACML model, the disposal assumptions, and the
modifications made for delisting. This model, which includes both
unsaturated and saturated zone transport modules, was used to predict
reasonable worst-case contaminant levels in groundwater at a compliance
point (i.e., a receptor well serving as a drinking water supply).
Specifically, the model estimated the dilution/attenuation factor (DAF)
resulting from subsurface processes such as three-dimensional
dispersion and dilution from groundwater recharge for a specific volume
of waste. The EPA requests comments on the use of the EPACML as applied
to the evaluation of Bekaert's petitioned waste.
For the evaluation of Bekaert's petitioned waste, the EPA used the
EPACML to evaluate the mobility of the hazardous inorganic constituents
detected in the extract of samples of Bekaert's petitioned waste. The
EPA intends to evaluate petitions for generated wastes on a case-by-
case basis. The DAFs are currently calculated assuming an ongoing
process generates wastes for 20 years. EPA's evaluation, using a DAF of
96, maximum annual waste volume estimate of 1,250 cubic yards and the
maximum reported TCLP leachate concentrations (see Table 1), yielded
compliance-point concentrations (see Table 3) that are below the
current health-based levels used in delisting decision-making.
The maximum reported or calculated leachate concentrations of
antimony, barium, copper, nickel, selenium, silver, and zinc in the
petitioned waste yielded compliance point concentrations below the
health-based levels used in delisting decision-making. The EPA did not
evaluate the mobility of the remaining inorganic constituents (i.e.,
arsenic, beryllium, cadmium, chromium, lead, mercury, and thallium) in
Bekaert's waste because they were not detected in the leachate using
the appropriate analytical test methods (see Table 1). The EPA believes
that it is inappropriate to evaluate nondetectable concentrations of a
constituent of concern in its modeling efforts if the nondetectable
value was obtained using the appropriate analytical method. If a
constituent cannot be detected (when using the appropriate analytical
method with an adequate detection limit), the EPA assumes that the
constituent is not present and therefore does not present a threat to
human health or the environment.
Table 3.--EPACML: Calculated Compliance-Point Concentrations (ppm)
Petitioned Waste
------------------------------------------------------------------------
Compliance Levels of
point regulatory
Inorganic constituents concentrations concern 2
1 (mg/l) (mg/l)
------------------------------------------------------------------------
Antimony................................. 0.0036 0.006
Barium................................... 0.014 2.0
Copper................................... 0.13 1.3
Nickel................................... 0.012 0.1
Selenium................................. 0.00096 0.05
Silver................................... 0.002 0.2
Zinc..................................... 4.90 10.
------------------------------------------------------------------------
\1\ Using the maximum TCLP leachate level and based on a DAF of 96
calculated using the EPACML for an annual volume of 1,250 cubic yards.
\2\ See Docket Report on Health-Based Levels and Solubilities Used in
the Evaluation of Delisting Petitions, December 1994 located in the
RCRA public docket for today's notice.
The EPA also evaluated the potential hazard of methyl ethyl ketone,
4-methylphenol (p-cresol), and dichloromethane, the only organic
constituents detected in the total concentrations or TCLP extract of
samples of Bekaert's petitioned waste. Process information submitted by
Bekaert demonstrates that organic constituents are unlikely to be
present in the waste. Furthermore, the organic analysis submitted
indicated only trace levels of these three constituents. In any case,
the Agency notes that if the total levels (0.120, < 1.00, 0.008 mg/kg,
in respective order) of these trace constituents were evaluated using
the EPACML (conservatively assuming the total concentration of the
constituents would leach), the compliance levels (.00125, < 0.0104,
0.0000842 mg/l) at the theoretical compliance point would still be well
below health-based levels (20, 2, 0.005 mg/l, in respective order).
As reported in Table 1, reactive cyanide and reactive sulfide were
not detected in Bekaert's petitioned waste. The detection limits are
less than 0.050 mg/kg and less than 10 mg/kg, respectively. These
detection limit concentrations are below the EPA's interim standards of
250 and 500 ppm, respectively. See Interim Agency Thresholds for Toxic
Gas Generation, July 12, 1985, internal Agency Memorandum in the RCRA
public docket. Therefore, reactive cyanide and reactive sulfide levels
are not of concern.
Complexed cyanide was identified in one of the five samples
analyzed at a total concentration of 0.31 mg/kg and at a leachable
(TCLP extract) concentration of 0.030 mg/1. The leachable amount found
in the one sample of waste is below the appropriate health-base
[[Page 32751]]
number of 0.2 mg/1 (see docket) even without considering the dilution
effects of the fate and transport of the constituent. Therefore, since
Bekaert does not use cyanide in any of their processes and the
complexed cyanide was identified in only one sample at concentrations
below the health-based concentration, complexed cyanide is not
considered of concern.
The EPA concluded, after reviewing Bekaert's processes, that no
other hazardous constituents of concern, other than those tested for,
are likely to be present or formed as reaction products or by-products
in Bekaert's waste proposed for exclusion. In addition, on the basis of
explanations and analytical data provided by Bekaert, pursuant to
Sec. 260.22, the EPA concludes that the waste does not exhibit any of
the characteristics of ignitability, corrosivity, or reactivity. See
Sec. 261.21, Sec. 261.22, and Sec. 261.23, respectively.
During the evaluation of Bekaert's petition, the EPA also
considered the potential impact of the petitioned waste via non-ground
water routes (i.e., air emission and surface runoff). With regard to
airborne dispersion in particular, the EPA believes that exposure to
airborne contaminants from Bekaert's petitioned waste is unlikely. The
EPA evaluated the potential hazards resulting from the unlikely
scenario of airborne exposure to hazardous constituents released from
Bekaert's waste in an open landfill. The results of this worst-case
analysis indicated that there is no substantial present or potential
hazard to human health from airborne exposure to constituents from
Bekaert's petitioned waste. A description of the EPA's assessment of
the potential impact of Bekaert's waste, with regard to airborne
dispersion of waste contaminants, is presented in the RCRA public
docket for today's proposed rule.
The EPA also considered the potential impact of the petitioned
waste via a surface water route. The EPA believes that containment
structures at municipal solid waste landfills can effectively control
surface water run-off. Subtitle D regulations (see 56 FR 50978, October
9, 1991) prohibit pollutant discharges into surface waters.
Furthermore, the concentrations of any hazardous constituents dissolved
in the runoff will tend to be lower than the levels in the TCLP
leachate analyses reported in today's notice, due to the aggressive
acid medium used for extraction in the TCLP test. The EPA believes
that, in general, leachate derived from the waste is unlikely to enter
a surface water body directly without first travelling through the
saturated subsurface zone where further dilution and attenuation of
hazardous constituents will also occur. Leachable concentrations
provide a direct measure of the solubility of a toxic constituent in
water, and are indicative of the fraction of the constituent that may
be mobilized in surface water, as well as ground water. The reported
TCLP extraction data shows that the metals that might be released from
Bekaert's waste to surface water would be likely to remain undissolved
or leach in concentrations that would be below health-based levels of
concern. Finally, any transported constituents would be further diluted
in the receiving surface water body.
Based on the reasons discussed above, the EPA believes that
contamination of surface water through run-off from the waste disposal
area is very unlikely. Nevertheless, the EPA evaluated potential
impacts on surface water if Bekaert's waste were released from a
municipal solid waste landfill through run-off and erosion. See, the
RCRA public docket for today's proposed rule. The estimated levels of
the hazardous constituents of concern in surface water would be well
below health-based levels for human health, as well as below the EPA
Chronic Water Quality Criteria for aquatic organisms (USEPA, OWRS,
1987). The EPA, therefore, concluded that Bekaert's petitioned waste is
not a substantial present or potential hazard to human health and the
environment via the surface water exposure pathway.
E. Conclusion
The EPA has reviewed the sampling procedures used by Bekaert and
has determined that they satisfy the EPA criteria for collecting
representative samples. The data submitted in support of the petition
demonstrates, after careful evaluation, that constituents in Bekaert's
waste are present at the compliance point below the health-based levels
used in the delisting decision-making. The EPA believes that Bekaert
has successfully demonstrated that the petitioned waste is non-
hazardous.
The EPA, therefore, proposes to grant an exclusion to Bekaert Steel
Corporation, located in Rogers, Arkansas, for the petitioned waste
described in its petition as EPA Hazardous Waste No. F006. The EPA's
decision to exclude this waste is based on descriptions of the process
from which the petitioned waste is derived, descriptions of Bekaert's
wastewater treatment process, and characterization of the petitioned
waste. If the proposed rule is finalized, the petitioned waste will no
longer be subject to regulation under Parts 262 through 268 and the
permitting standards of Part 270.
If made final, the proposed exclusion will apply only to 1,250
cubic yards of petitioned waste generated annually, on a calendar year
basis, through operation of Bekaert's wastewater treatment filter
press. The facility would be required to obtain a new exclusion if
either its manufacturing or treatment processes are significantly
altered such that an adverse change in waste composition (for example,
significantly higher levels of hazardous constituents) or increase in
volume occur. Accordingly, the facility would be required to file a new
petition for the altered waste. Additionally, the facility must treat
waste generated either in excess of 1,250 cubic yards per year or
generated from changed processes as hazardous until a new exclusion is
granted.
Although management of the waste covered by this petition would be
removed from Subtitle C jurisdiction upon final promulgation of an
exclusion, the generator of a delisted waste must either treat, store,
or dispose of the waste in an on-site facility, or ensure that the
waste is delivered to an off-site storage, treatment, or disposal
facility, either of which is permitted, licensed, or registered by a
State to manage municipal or industrial solid waste. Alternatively, the
delisted waste may be delivered to a facility that beneficially uses or
reuses, or legitimately recycles or reclaims the waste, or treats the
waste prior to such beneficial use, reuse, recycling, or reclamation.
F. Annual Testing
If a final exclusion is granted, the petitioner will be required to
demonstrate, on an annual basis, that the characteristics of the
petitioned waste remain as originally described. In order to confirm
that the characteristics of the waste do not change significantly, the
facility must, on an annual basis, analyze a representative composite
sample for the constituents listed in Sec. 261.24 as well as antimony,
copper, nickel and zinc using the method specified therein. Sampling
and analysis must be completed by July 1 of each year. Each year's
analytical results (including quality control information) must be
compiled, certified according to 260.22(i)(12), maintained on-site for
a minimum of five years, and made available for inspection upon request
by any employee or representative of EPA or the State of Arkansas.
Failure to maintain the required records on site will be considered by
EPA, at its discretion, sufficient basis to revoke the exclusion to the
extent directed by EPA.
[[Page 32752]]
The purpose of this testing requirement is to ensure that the
quality of the petitioned waste remains as originally described by the
petitioner. The Agency believes that the data obtained will assist EPA
or the State in determining whether the petitioner's manufacturing
processes have been significantly altered, or if the waste is more
variable than originally described by the petitioner. The Agency also
believes that the annual retesting of the petitioned waste is not
overly burdensome to the facility and notes that these data will assist
the facility in complying with Sec. 262.11(c) which requires generators
to determine whether their wastes are hazardous, as defined by the
Toxicity Characteristic (see 40 CFR 261.24).
III. Limited Effect of Federal Exclusion
This proposed exclusion, if promulgated, would be issued under the
Federal (RCRA) delisting program. States, however, are allowed to
impose their own, non-RCRA regulatory requirements that are more
stringent than EPA's, pursuant to section 3009 of RCRA. These more
stringent requirements may include a provision which prohibits a
Federally-issued exclusion from taking effect in the State. Since a
petitioner's waste may be regulated under a dual system (both Federal
(RCRA) and State (non-RCRA) programs), petitioners are urged to contact
their State regulatory authorities to determine the current status of
their wastes under State law.
Furthermore, some States are authorized to administer a delisting
program in lieu of the Federal program, i.e., to make their own
delisting decisions. Therefore, this proposed exclusion, if
promulgated, would not apply in those authorized States. If the
petitioned waste will be transported to any State with delisting
authorization, Bekaert must obtain delisting authorization from that
State before the waste may be managed as nonhazardous in that State.
IV. Effective Date
This rule, if made final, will become effective immediately upon
final publication. The Hazardous and Solid Waste Amendments of 1984
amended Section 3010 of RCRA to allow rules to become effective in less
than six-months when the regulated community does not need the six-
month period to come into compliance. That is the case here, because
this rule, if finalized, would reduce the existing requirements for
persons generating hazardous wastes. In light of the unnecessary
hardship and expense that would be imposed on this petitioner by an
effective date six months after publication and the fact that a six-
month deadline is not necessary to achieve the purpose of Section 3010,
the EPA believes that this exclusion should be effective immediately
upon final publication. These reasons also provide a basis for making
this rule effective immediately, upon final publication, under the
Administrative Procedure Act, pursuant to 5 U.S.C.Sec. 553(d).
V. Regulatory Impact
Under Executive Order 12866, the EPA must conduct an ``assessment
of the potential costs and benefits'' for all ``significant''
regulatory actions. This proposal to grant an exclusion is not
significant, since its effect, if promulgated, would be to reduce the
overall costs and economic impact of the EPA's hazardous waste
management regulations. This reduction would be achieved by excluding
waste generated at a specific facility from the EPA's lists of
hazardous wastes, thereby enabling this facility to treat its waste as
non-hazardous. There is no additional impact due to today's rule.
Therefore, this proposal would not be a significant regulation, and no
cost/benefit assessment is required. The Office of Management and
Budget (OMB) has also exempted this rule from the requirement for OMB
review under Section (6) of Executive Order 12866.
VI. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act, 5 U.S.C. Secs. 601-612,
whenever an agency is required to publish a general notice of
rulemaking for any proposed or final rule, it must prepare and make
available for public comment a regulatory flexibility analysis that
describes the impact of the rule on small entities (i.e., small
businesses, small organizations, and small governmental jurisdictions).
No regulatory flexibility analysis is required, however, if the
Administrator or delegated representative certifies that the rule will
not have any impact on any small entities.
This rule, if promulgated, will not have any adverse economic
impact on any small entities since its effect would be to reduce the
overall costs of the EPA's hazardous waste regulations and would be
limited to one facility. Accordingly, I hereby certify that this
proposed regulation, if promulgated, will not have a significant
economic impact on a substantial number of small entities. This
regulation, therefore, does not require a regulatory flexibility
analysis.
VII. Paperwork Reduction Act
Information collection and recordkeeping requirements associated
with this proposed rule have been approved by the Office of Management
and Budget (OMB) under the provisions of the Paperwork Reduction Act of
1980 (Pub. L. 96-511, 44 U.S.C. Sec. 3501 et seq.) and have been
assigned OMB Control Number 2050-0053.
VIII. Unfunded Mandates Reform Act
Under section 202 of the Unfunded Mandates Reform Act of 1995
(UMRA), Public Law 104-4, which was signed into law on March 22, 1995,
the EPA generally must prepare a written statement for rules with
Federal mandates that may result in estimated costs to State, local,
and tribal governments in the aggregate, or to the private sector, of
$100 million or more in any one year. When such a statement is required
for EPA rules, under section 205 of the UMRA, the EPA must identify and
consider alternatives, including the least costly, most cost-effective
or least burdensome alternative that achieves the objectives of the
rule. The EPA must select that alternative, unless the Administrator
explains in the final rule why it was not selected or it is
inconsistent with law. Before the EPA establishes regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it must develop under
section 203 of the UMRA a small government agency plan. The plan must
provide for notifying potentially affected small governments, giving
them meaningful and timely input in the development of the EPA
regulatory proposals with significant Federal intergovernmental
mandates, and informing, educating, and advising them on compliance
with the regulatory requirements. The UMRA generally defines a Federal
mandate for regulatory purposes as one that imposes an enforceable duty
upon state, local or tribal governments or the private sector. The EPA
finds that today's proposed delisting decision is deregulatory in
nature and does not impose any enforceable duty upon state, local or
tribal governments or the private sector. In addition, the proposed
delisting does not establish any regulatory requirements for small
governments and so does not require a small government agency plan
under UMRA section 203.
List of Subjects in 40 CFR Part 261
Environmental protection, Hazardous waste, Recycling, Reporting and
recordkeeping requirements.
[[Page 32753]]
Authority: Sec. 3001(f) RCRA, 42 U.S.C. 6921(f).
Dated: June 11, 1996.
Jane N. Saginaw,
Regional Administrator.
For the reasons set out in the preamble, 40 CFR Part 261 is
proposed to be amended as follows:
PART 261--IDENTIFICATION AND LISTING OF HAZARDOUS WASTE
1. The authority citation for Part 261 continues to read as
follows:
Authority: 42 U.S.C. 6905, 6912(a), 6921, 6922, and 6938.
2. In Table 2 of Appendix IX of Part 261 it is proposed to add the
following waste stream in alphabetical order by facility to read as
follows:
Appendix IX to Part 261--Wastes Excluded Under Sec. 260.20 and
Sec. 260.22
Table 2.--Wastes Excluded From Specific Sources
----------------------------------------------------------------------------------------------------------------
Facility Address Waste description
----------------------------------------------------------------------------------------------------------------
* * * * * *
*
Bekaert Steel Corporation....... Rogers, Arkansas................ Wastewater treatment sludge (EPA Hazardous
Waste No. F006) generated from
electroplating operations (at a maximum
annual rate of 1,250 cubic yards to be
measured on a calendar year basis) after
[insert publication date of the final
rule]. In order to confirm that the
characteristics of the waste do not change
significantly, the facility must, on an
annual basis, before July 1 of each year,
analyze a representative composite sample
for the constituents listed in 261.24 as
well as antimony, copper, nickel, and zinc
using the method specified therein. The
annual analytical results, including
quality control information, must be
compiled, certified according to Sec.
260.22(i)(12) of this chapter, maintained
on site for a minimum of five years, and
made available for inspection upon request
of any employee or representative of EPA or
the State of Arkansas. Failure to maintain
the required documents on site will be
considered by EPA, at its discretion,
sufficient basis to revoke the exclusion to
the extent directed by EPA.
Notification Requirements:
Bekaert Steel Corporation must provide a one-
time written notification to any State
Regulatory Agency to which or through which
the delisted waste described above will be
transported for disposal at least 60 days
prior to the commencement of such
activities. Failure to provide such a
notification will result in a violation of
the delisting petition and a possible
revocation of the decision.
* * * * * *
*
----------------------------------------------------------------------------------------------------------------
[FR Doc. 96-15884 Filed 6-24-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-15883 Hazardous Waste Management System; Identification and Listing of Hazardous Waste; Proposed Exclusion
[Federal Register Volume 61, Number 123 (Tuesday, June 25, 1996)]
[Proposed Rules]
[Pages 32753-32765]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15883]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 261
[SW-FRL-5525-2]
Hazardous Waste Management System; Identification and Listing of
Hazardous Waste; Proposed Exclusion
AGENCY: Environmental Protection Agency.
ACTION: Proposed rule and request for comment.
-----------------------------------------------------------------------
SUMMARY: The Environmental Protection Agency (EPA) is proposing to
grant a petition to the Texas Eastman Division of Eastman Chemical
Company (Texas Eastman) to exclude (or ``delist''), certain solid
wastes generated at its facility from the lists of hazardous wastes
contained in 40 CFR 261.24, 261.31, 261.32 and 261.33 (hereinafter all
sectional references are to 40 CFR unless otherwise indicated). This
petition was submitted under 40 CFR 260.20, which allows any person to
petition the Administrator to modify or revoke any provision of 40 CFR
Parts 260 through 266, 268 and 273, and under 40 CFR 260.22, which
specifically provides generators the opportunity to petition the
Administrator to exclude a waste on a ``generator specific'' basis from
the hazardous waste lists. This proposed decision is based on an
evaluation of waste-specific information provided by the petitioner. If
this proposed decision is finalized, the petitioned waste will be
conditionally excluded from the requirements of hazardous waste
regulations under the Resource Conservation and Recovery Act (RCRA).
DATES: The EPA is requesting public comments on this proposed decision.
Comments will be accepted until August 9, 1996. Comments postmarked
after the close of the comment period will be stamped ``late.''
Any person may request a hearing on this proposed decision by
filing a request with Jane N. Saginaw, Regional Administrator, whose
address appears below, by July 10, 1996. The request must contain the
information prescribed in 40 CFR 260.20(d).
ADDRESSES: Send three copies of your comments. Two copies should be
sent to William Gallagher, Delisting Program, Multimedia Planning and
Permitting Division (6PD-O), U.S. Environmental Protection Agency,
Region 6, 1445 Ross Avenue, Dallas, Texas 75202. A third copy should be
sent to the Texas Natural Resource Conservation Commission, 12100 Park
35 Circle, Austin, Texas 78753. Identify your comments at the top with
this regulatory docket number: ``F-96-TXDEL-TXEASTMAN.''
Requests for a hearing should be addressed to the Regional
Administrator, Region 6, Environmental Protection Agency, 1445 Ross
Avenue, Dallas, Texas 75202.
The RCRA regulatory docket for this proposed rule is located at the
Region 6, Environmental Protection Agency, 1445 Ross Avenue, Dallas,
Texas 75202 and is available for viewing in the EPA library on the 12th
floor from 8:30 a.m. to 4:00 p.m., Monday through Friday, excluding
Federal holidays. Call (214) 665-6444 for appointments. The docket may
also be viewed at the Texas Natural Resource Conservation Commission,
12100 Park 35 Circle, Austin, Texas 78753. The public may copy material
from any regulatory docket at no cost for the first 100 pages, and at
$0.15 per page for additional copies.
FOR FURTHER INFORMATION, CONTACT: For technical information concerning
this notice, contact Michelle Peace, Delisting Program (6PD-O), Region
6, Environmental Protection Agency, 1445 Ross Avenue, Dallas, Texas
75202, (214) 665-7430.
[[Page 32754]]
SUPPLEMENTARY INFORMATION:
I. Background
A. Authority
On January 16, 1981, as part of its final and interim final
regulations implementing Section 3001 of RCRA, the EPA published an
amended list of hazardous wastes from non-specific and specific
sources. This list has been amended several times, and is published in
Sec. 261.24, Sec. 261.31, Sec. 261.32 and Sec. 261.33. These wastes are
listed as hazardous because they typically and frequently exhibit one
or more of the characteristics of hazardous wastes identified in
Subpart C of Part 261 (i.e., ignitability, corrosivity, reactivity, and
toxicity) or meet the criteria for listing contained in
Sec. 261.11(a)(2) or (a)(3).
Individual waste streams may vary, however, depending on raw
materials, industrial processes, and other factors. Thus, while a waste
described in these regulations generally is hazardous, a specific waste
from an individual facility meeting the listing description may not be
hazardous. Therefore, Sec. 260.20 and Sec. 260.22 provide an exclusion
procedure, allowing persons to demonstrate that a specific waste from a
particular generating facility should not be regulated as a hazardous
waste.
To have their wastes excluded, petitioners must show that wastes
generated at their facilities do not meet any of the criteria for which
the wastes were listed. See, Sec. 260.22(a) and the background
documents for the listed wastes. In addition, the Hazardous and Solid
Waste Amendments (HSWA) of 1984 require the EPA to consider any factors
(including additional constituents) other than those for which the
waste was listed, if there is a reasonable basis to believe that such
additional factors could cause the waste to be hazardous. Accordingly,
a petitioner also must demonstrate that the waste does not exhibit any
of the hazardous waste characteristics (i.e., ignitability, reactivity,
corrosivity, and toxicity), and must present sufficient information for
the EPA to determine whether the waste contains any of the other
identified constituents at hazardous levels. See, Sec. 260.22(a), 42
U.S.C. 6921(f), and the background documents for the listed wastes.
Although wastes that are ``delisted'' have been evaluated to decide
whether they exhibit any of the characteristics of hazardous waste,
generators remain obligated under RCRA to determine whether their waste
remains non-hazardous based on the hazardous waste characteristics.
In addition, residues from the treatment, storage, or disposal of
listed hazardous wastes and mixtures containing listed hazardous wastes
are also considered hazardous wastes. See, Secs. 261.3(a)(2)(iv) and
(c)(2)(I), referred to as the ``mixture'' and ``derived-from'' rules,
respectively. Such wastes are also eligible for exclusion and remain
hazardous wastes until excluded. On December 6, 1991, the U.S. Court of
Appeals for the District of Columbia vacated the ``mixture/derived
from'' rules and remanded them to the EPA on procedural grounds. See,
Shell Oil Co. v. EPA, 950 F.2d 741 (D.C. Cir. 1991). On March 3, 1992,
EPA reinstated the mixture and derived-from rules, and solicited
comments on other ways to regulate waste mixtures and residues (57 FR
7628). On December 21, 1995, the EPA proposed rules related to waste
mixtures and residues at 60 FR 66344 and invited public comment. These
references should be consulted for more information regarding mixtures
and residues.
B. Approach Used to Evaluate This Petition
Texas Eastman's petition requests a delisting for a listed
hazardous waste. In making the initial delisting determination, the EPA
evaluated the petitioned waste against the listing criteria and factors
cited in Sec. 261.11(a)(2) and (a)(3). Based on this review, the EPA
agreed with the petitioner that the waste is non-hazardous with respect
to the original listing criteria. (If the EPA had found, based on this
review, that the waste remained hazardous based on the factors for
which the waste was originally listed, the EPA would have proposed to
deny the petition.) The EPA then evaluated the waste with respect to
other factors or criteria to assess whether there is a reasonable basis
to believe that such additional factors could cause the waste to be
hazardous. The EPA considered whether the waste is acutely toxic, and
considered the toxicity of the constituents, the concentration of the
constituents in the waste, their tendency to migrate and to
bioaccumulate, their persistence in the environment once released from
the waste, plausible and specific types of management of the petitioned
waste, the quantities of waste generated, and waste variability.
For this delisting determination, the EPA used such information to
identify plausible exposure routes (i.e., ground water, surface water,
air) for hazardous constituents present in the petitioned waste. The
EPA determined that disposal in a Subtitle D landfill is the most
reasonable, worst-case disposal scenario for Texas Eastman's petitioned
waste, and that the major exposure route of concern would be ingestion
of contaminated ground water. Therefore, the EPA is proposing to use a
particular fate and transport model, the EPA Composite Model for
Landfills (EPACML), to predict the maximum allowable concentrations of
hazardous constituents that may be released from the petitioned waste
after disposal and to determine the potential impact of the disposal of
Texas Eastman's petitioned waste on human health and the environment.
Specifically, the EPA used the maximum estimated waste volume and the
maximum reported extract concentrations as inputs to estimate the
constituent concentrations in the ground water at a hypothetical
receptor well downgradient from the disposal site. The calculated
receptor well concentrations (referred to as compliance-point
concentrations) were then compared directly to the current health-based
levels used in delisting decision-making for the hazardous constituents
of concern.
The EPA believes that this fate and transport model represents a
reasonable worst-case scenario for disposal of the petitioned waste in
a landfill, and that a reasonable worst-case scenario is appropriate
when evaluating whether a waste should be relieved of the protective
management constraints of RCRA Subtitle C. The use of a reasonable
worst-case scenario results in conservative values for the compliance-
point concentrations and ensures that the waste, once removed from
hazardous waste regulation, will not pose a threat to human health or
the environment. Because a delisted waste is no longer subject to
hazardous waste control, the EPA is generally unable to predict and
does not presently control how a waste will be managed after delisting.
Therefore, the EPA does not currently consider extensive site-specific
factors when applying the fate and transport model. The EPA also
considers the applicability of groundwater monitoring data during the
evaluation of delisting petitions. The EPA normally requests
groundwater monitoring data for wastes managed on-site to determine
whether hazardous constituents have migrated to the underlying
groundwater. Groundwater monitoring data provides significant
additional information important to fully characterize the potential
impact (if any) of the disposal of a petitioned waste on human health
and the environment. In this case, the EPA determined that the
groundwater
[[Page 32755]]
monitoring data was applicable to the evaluation of the petitioned
waste. Texas Eastman's petitioned waste is transported to an on-site
hazardous waste landfill that has been designed to meet the RCRA
minimum technology requirements and has groundwater monitoring wells to
monitor the landfill. The EPA believes that data collected from Texas
Eastman's groundwater monitoring system provides a clear measure of
whether the landfill has adversely impacted groundwater quality at the
Texas Eastman site. The data provided from the groundwater monitoring
system and the landfill leachate seem to indicate that no adverse
impact on the groundwater has occurred and that the leachate collected
from the system is currently below health based limits. The potential
impact of these wastes on the groundwater will also be predicted
through the application of the EPACML, fate and transport model.
Finally, the Hazardous and Solid Waste Amendments of 1984 specifically
require the EPA to provide notice and an opportunity for comment before
granting or denying a final exclusion. Thus, a final decision will not
be made until all timely public comments (including those at public
hearings, if any) on today's proposal are addressed.
II. Disposition of Delisting Petition
Eastman Chemical Company--Texas Eastman Division, Longview, Texas,
75607.
A. Petition for Exclusion
Eastman Chemical Company --Texas Eastman Division (Texas Eastman),
located in Longview, Texas is involved in the manufacturing of organic
chemicals and plastics. Texas Eastman petitioned the EPA for a
conditional exclusion of approximately 7,000 cubic yards of Fluidized
Bed Incinerator (FBI) ash generated per calendar year. The FBI ash,
presently disposed of in an on-site hazardous waste landfill, is
generated from the incineration of sludges from its wastewater
treatment plant. The FBI ash is listed for 56 EPA Hazardous Waste
Numbers due to the ``derived-from'' and mixture rules. The waste is
listed as D001, D003, D018, D019, D021, D022, D027, D028, D029, D030,
D032, D033, D034, D035, D036, D038, D039, D040, F001, F003, F005, K009,
K010, U001, U002, U003, U019, U028, U031, U037, U044, U056, U069, U070,
U107, U108, U112, U113, U115, U117, U122, U140, U147, U151, U154, U159,
U161, U169, U190, U196, U211, U213, U226, U239, and U359. The listed
constituents of concern for these EPA Hazardous Waste Numbers are shown
in Table 1 (See, Part 261, Appendix VII).
Table 1.--Hazardous Waste Codes Associated With Wastewater Streams
------------------------------------------------------------------------
Waste code Basis for characteristic/listing
------------------------------------------------------------------------
D001......................... Ignitability.
D003......................... Reactivity.
D018......................... Benzene.
D019......................... Carbon Tetrachloride.
D021......................... Chlorobenzene.
D022......................... Chloroform.
D027......................... 1,4-Dichlorobenzene.
D028......................... 1,2-Dichloroethane.
D029......................... 1,1-Dichloroethylene.
D030......................... 2,4-Dinitrotoluene.
D032......................... Hexachlorobenzene.
D033......................... Hexachlorobutadiene.
D034......................... Hexachloroethane.
D035......................... Methyl ethyl ketone.
D036......................... Nitrobenzene.
D038......................... Pyridine.
D039......................... Tetrachloroethylene.
D040......................... Trichloroethylene
F001......................... Tetrachloroethylene, methylene chloride,
Trichloroethylene, 1,1,1-
trichloroethane, carbon tetrachloride,
chlorinated fluorocarbons.
F002......................... Tetrachloroethylene, methylene chloride,
Trichloroethylene, 1,1,1-
trichloroethane, 1,1,2-trichloroethane,
chlorobenzene, 1,1,2-trichloro-1,2,2
trichlorofluoroethane, ortho-
dichlorobenzene, trichlorofluoromethane.
F005......................... Toluene, methyl ethyl ketone, carbon
disulfide, isobutanol, pyridine, 2-
ethoxyethanol, benzene, 2-nitropropane.
K009......................... Chloroform, formaldehyde, methylene
chloride, methyl chloride, paraldehyde,
formic acid.
K010......................... Chloroform, formaldehyde, methylene
chloride, methyl chloride, paraldehyde,
formic acid, chloroacetaldehyde.
U001......................... Acetaldehyde.
U002......................... Acetone.
U003......................... Acetonitrile.
U019......................... Benzene.
U028......................... Benzenetrichloride.
U031......................... n-Butyl alcohol.
U037......................... Chlorobenzene.
U044......................... Chloroform.
U056......................... Cyclohexane.
U069......................... Dibutyl phthlate.
U070......................... o-Dichlorobenzene.
U107......................... Di-n-octyl-phthlate.
U108......................... 1,4-Diethyleneoxide.
U112......................... Ethyl acetate.
U113......................... Ethyl acrylate.
U115......................... Ethylene oxide.
U117......................... Ethyl ether.
[[Page 32756]]
U122......................... Formaldehyde.
U140......................... Isobutyl alcohol.
U147......................... Maleic anhydride.
U151......................... Mercury.
U154......................... Methanol.
U159......................... Methyl ethyl ketone.
U161......................... Methyl isobutyl ketone.
U169......................... Nitrobenzene.
U190......................... Phthalic anhydride.
U196......................... Pyridine.
U211......................... Carbon Tetrachloride.
U213......................... Tetrahydrofuran
U226......................... 1,1,1-Trichloroethane (methyl
chloroform).
U239......................... Xylene.
U359......................... Ethylene glycol monoethyl ether.
------------------------------------------------------------------------
Texas Eastman petitioned the EPA to exclude this annual volume of
FBI ash because it does not believe that the waste meets the criteria
for which it was listed. Texas Eastman also believes that the waste
does not contain any other constituents that would render it hazardous.
Review of this petition included consideration of the original listing
criteria, as well as the additional factors required by the HSWA of
1984. See, Section 222 of HSWA, 42 U.S.C. Sec. 6921(f), and 40 CFR
Sec. 260.22(d)(2)-(4). Today's proposal to grant this petition for
delisting is the result of the EPA's evaluation of Texas Eastman's
petition.
B. Background
On December 29, 1994, Texas Eastman petitioned the EPA to exclude,
from the lists of hazardous wastes contained in 40 CFR Sec. 261.31 and
Sec. 261.32, an annual volume of incinerator ash generated from
incineration of sludge from its wastewater treatment plant.
Specifically, in its petition, Texas Eastman requested that the EPA
grant a standard exclusion for 7,000 cubic yards of incinerator ash
generated per calendar year.
In support of its petition, Texas Eastman submitted: (1)
descriptions of its wastewater treatment processes and the incineration
activities associated with the petitioned waste; (2) results from total
constituent analyses for the Toxicity Characteristic (TC) metals listed
in Sec. 261.24 (i.e., the TC metals) antimony, arsenic, barium,
beryllium, cadmium, chromium, cobalt, copper, lead, mercury, nickel,
selenium, silver, thallium, tin, vanadium, and zinc from representative
samples of the waste; (3) results from the Toxicity Characteristic
Leaching Procedure (TCLP), (SW-846 Method 1311) for the TC metals
antimony, arsenic, barium, beryllium, cadmium, chromium, cobalt,
copper, lead, mercury, nickel, selenium, silver, thallium, tin,
vanadium, and zinc from representative samples of the waste; (4)
results from the Multiple Extraction Procedure (MEP), (SW-846 Method
1330) for antimony, arsenic, barium, beryllium, cadmium, chromium,
cobalt, copper, lead, mercury, nickel, selenium, silver, thallium, tin,
vanadium, and zinc from representative samples of the waste; (5) test
results from the total constituent analyses for dioxins/furans from
representative samples of the waste; (6) results from total oil and
grease analyses from representative samples of the waste; (7) test
results and information regarding the hazardous characteristics of
ignitability, corrosivity, and reactivity; (8) results from total
constituent and TCLP analyses for 40 CFR Part 264 Appendix IX volatile
and semi-volatile organic compounds from representative samples of the
waste; and (9) results from the Land Disposal Restriction Analysis
performed on the untreated ash. Texas Eastman also provided total
constituent analyses and for the biological treatment sludge, scrubber
water blowdown, influent waste water and waste liquid fuel associated
with the generation of the FBI ash. To meet the Land Disposal
Restriction's interim treatment standard for nickel, Texas Eastman had
to stabilize the nickel in the FBI ash by adding a polymer. Since the
universal treatment standards were finalized in 1995, and designated
the TCLP treatment standard for nickel as 5.0 mg/l, Texas Eastman no
longer has to add the polymer to the ash.
Texas Eastman is an active organic chemical and plastics
manufacturing plant. Current facility operations, including wastewater
treatment, are not significantly different from the operations
occurring at this facility for the last 10 years. There are two major
raw materials (propane and ethane) used at the Texas Eastman facility.
Most of the products from this facility are in similar product
groupings, therefore the wastewater resulting from the manufacturing of
these products is fairly well defined. Texas Eastman believes that
several factors dampen the spatial and temporal variability that may
occur in the wastewater: (1) the majority of wastewater volume
generated at the Texas Eastman facility is from low strength sources
and the high strength sources generated are from a few low volume
sources; (2) the daily volume of wastewater flow is such that very
large mass loading is necessary to influence the concentrations of a
constituent reaching the wastewater treatment plant (WWTP); (3) the
hydraulic retention time of 17 days within the WWTP is very high as
well as the corresponding sludge age which minimizes the chance of a
shock load influencing the resulting feed to the incinerator; (4) the
collection system for the WWTP is equipped with ``shock'' load sensors
and a monitoring system which prevent large mass loadings from being
introduced into the WWTP; (5) the WWTP is equipped with emergency
storage tanks capable of holding approximately 20 hours of influent;
and (6) the liquid fuels used as supplemental fuels in the incinerator
are relatively uniform in characteristics and constituents.
During the various production processes, wastewaters are generated
and flow into a centralized collection system. All wastewaters are
routed to the wastewater treatment plant for treatment, via biological
degradation, and subsequent discharge into receiving waters. To
facilitate growth of new microorganisms, a portion of the biological
mass (i.e., sludge) is removed from the wastewater treatment system.
The biological sludge is routed to a storage tank and then to the FBI
for thermal treatment. The FBI is a
[[Page 32757]]
permitted incinerator operated at a temperature of 1550 deg.F. The
total heat content of all feeds introduced into the FBI, including the
waste feeds and auxiliary fuels are not permitted to exceed 42 million
BTU/hr. After incineration, the flue gases are routed through a heat
exchanger and a venturi scrubber. A mixture of ash solids and scrubber
water is sent to the ash thickener. This mixture is dewatered by
passing it through a rotary vacuum filter. After being scraped from the
filter, the ash drops into a dumpster where it is stored prior to
disposal. The resulting FBI ash generated annually is the subject of
Texas Eastman's delisting petition.
Texas Eastman developed a list of constituents of concern from
comparing a list of the wastes generated at the plant with the list of
constituents that appear in 40 CFR Sec. 261, Appendix VIII, as well as
the following six constituents not found in Appendix VIII: acetone,
ethylbenzene, isophorone, 4-methyl-2-pentanone, styrene, and total
xylenes. It was decided due to the availability of test methods and
process knowledge, that Texas Eastman would analyze its waste for those
constituents found in 40 CFR Sec. 264, Appendix IX, except for
pesticides, herbicides, and polychlorinated biphenyls (PCBs).
The sampling and analysis of the FBI ash took place in April and
May 1994. The sampling program consisted of two individual test runs
which together spanned 42 days. During the two test runs, two extreme
FBI operating conditions (high sludge and high liquids) were
represented in addition to normal operations. During one worst case
test condition, biological treatment sludge was fed to the FBI at
approximately 12,000 pounds per hour (lbs/hr), and waste liquid fuels
were fed to the FBI at approximately 540 lbs/hr. During the other worst
case test condition, waste liquid fuels were fed to the FBI at
approximately the maximum feed rate of 684 lbs/hr and biological
treatment sludge was fed at approximately 8,000 lbs/hr. Each test
condition consisted of one run. The tests for extreme conditions (high
sludge or high liquids) lasted two days due to the limited availability
to produce sufficient sludge volume for a longer duration test. The
tests for normal operations lasted five days. The FBI was operated
continuously at the designated test condition throughout the test
period. This allowed for the collection of samples of FBI ash during
each test, yielding a total of 10 sets of FBI ash data from the eight
tests: 8 from the individual test conditions, 1 duplicate, and 1 from
the untreated ash. Samples of four streams (the treated and untreated
FBI ash, biological treatment sludge, and waste liquid fuels) were
collected at 6-hour intervals during each of the eight tests. With the
exception of VOA vials collected for volatiles analysis, the 6-hour
interval samples of each stream collected during each run were
composited at the Texas Eastman facility and shipped to the analytical
laboratories. The composite samples were analyzed for the total
concentrations (i.e., mass of a particular constituent per mass of
waste) of the eight TCLP metals, antimony, beryllium, cobalt, copper,
nickel, thallium, tin, vanadium, and zinc, selected volatile and semi-
volatile organic constituents, dioxins/furans, and oil and grease
content. The samples were also analyzed to determine whether the waste
exhibited the reactive properties, including analysis for total
constituent concentrations of cyanide, sulfide, reactive cyanide, and
reactive sulfide. These samples were also analyzed for TCLP
concentrations (i.e., mass of a particular constituent per unit volume
of extract) of the eight TC metals, antimony, beryllium, cobalt,
copper, nickel, thallium, tin, vanadium, zinc, and selected volatile
and semi-volatile organic constituents.
Texas Eastman has also collected samples of the treated and
untreated ash to maintain compliance with the Land Disposal
Restrictions. For compliance with LDR, the untreated ash is analyzed
for total constituents concentrations of a select group of volatile and
semivolatile organics expected to be present in the ash and the eight
TCLP metals, nickel and vanadium. LDR leachate results for the treated
ash were provided in the 1994 petition. Since, treatment of the ash is
no longer necessary, results from four samples of the untreated ash
have been provided to support this petition. The four samples were
collected for four consecutive months from December 1995-March 1996.
C. Agency Analysis
Texas Eastman used SW-846 Methods 7041, 7060, 7421, 7471, 7740, and
7841 to quantify the total constituent concentrations of antimony,
arsenic, lead, mercury, selenium, and thallium; and SW-846 Method 6010
to quantify total constituent concentrations of barium, beryllium,
cadmium, chromium, nickel, silver, vanadium, and zinc in the samples of
FBI ash (treated and untreated), sludge,and liquid fuels. Texas Eastman
used SW-846 Methods 9010 to quantify the total constituent
concentrations of cyanide for these samples. Texas Eastman used 9030 to
quantify the total constituent concentrations of sulfide.
Using method M-413.2 from the ``Methods for Chemical Analysis of
Water and Wastes'', EPA-600/4-79-020, March 1983, Texas Eastman
determined that oil and grease content was not detected in the
untreated ash.
Texas Eastman used SW-846 Method 1311 (TCLP)/Method 6010 to
quantify the leachable concentrations of the eight TC metals, antimony,
beryllium, copper, cobalt, nickel, vanadium, and zinc in the ash
samples. SW-846 Method 7471 was used for mercury analyses of the
extracts from the samples. Texas Eastman used SW-846 Method 1311 /
Method 9010 to quantify leachable cyanide concentrations in the
samples. The samples taken for the LDR program used SW-846 Method 1311
(TCLP)/ Method 6010 to quantify the TC metals present in the untreated
ash. Method 8290 was used to quantify the total concentrations of
dioxin and furans.
The analyses for reactive cyanide and reactive sulfide (SW-846
Methods 7.3.3.2 and 7.3.4.2, respectively) were provided to verify that
the untreated ash was not characteristic. The ash does not meet the
definitions of ignitability and corrosivity provided in 40 CFR
Sec. 261.21 (a)(2) and Sec. 261.22.
Table 1 presents the maximum total constituent and leachate
concentrations for the eight TC metals, antimony, beryllium, cyanide,
nickel, vanadium, and zinc for the composite samples of the petitioned
waste. Table 1 also presents the maximum reactive cyanide and reactive
sulfide concentrations.
The detection limits presented in Table 1 represent the lowest
concentrations quantifiable by Texas Eastman when using the appropriate
SW-846 or Agency-approved analytical methods to analyze the untreated
ash. (Detection limits may vary according to the waste and waste matrix
being analyzed, i.e., the ``cleanliness waste matrices varies and
``dirty'' waste matrices may cause interferences, thus raising the
detection limits).
[[Page 32758]]
Table 1.--Maximum Total Constituent and Leachate Concentrations (ppm)
\1\ Untreated FBI Ash
------------------------------------------------------------------------
Total Leachate analyses
Inorganic constituents constituent ---------------------------
analyses TCLP MEP
------------------------------------------------------------------------
Antimony...................... 12.5 0.0217 0.0092
Arsenic....................... 1.49 <0.000647 0.0138
Barium........................ 302 0.346 0.025
Beryllium..................... 0.4203 <0.00051 <0.00051
Cadmium....................... 1.23 <0.00386 0.0140
Chromium (total).............. 45.4 <0.00524 0.0171
Cobalt........................ 46.7 0.0350 0.0141
Copper........................ 198 0.0783 0.00989
Lead.......................... 41.3 <0.0022 <0.0022
Mercury....................... < 0.0125 0.0002 <0.00003
Nickel........................ 837 0.411 0.176
Selenium...................... 1.30 <0.00708 0.00399
Silver........................ 10.4 0.00601 <0.00519
Thallium...................... < 0.273 <0.00173 <0.00185
Tin........................... 4.16 <0.0145 0.0161
Vanadium...................... 63.1 0.0397 0.0687
Zinc.......................... 1930 0.568 0.345
Hydrogen Cyanide.............. < 0.25
Hydrogen Sulfide.............. < 24.8
Oil and Grease................ <126
------------------------------------------------------------------------
< Denotes that the constituent was not detected at the detection limit
specified in the table.
\1\ These levels represent the highest concentration of each constituent
found in any one sample. These levels do not necessarily represent the
specific levels found in one sample.
Texas Eastman used SW-846 Methods 8240 and 8270 to quantify the
total constituent concentrations of 50 volatile and 115 semivolatile
organic compounds, respectively, in the ash. This suite of constituents
included all of the nonpesticide organic constituents listed in
Sec. 261.24. Also, Texas Eastman used SW-846 Methods 8240 and 8270 to
quantify the leachable concentrations of 50 volatile and 115 semi-
volatile organic compounds, respectively, in the untreated ash samples,
following extraction by SW-846 Method 1311 (TCLP). This suite of
constituents included all of the organic constituents listed in
Sec. 261.24.
In addition to analyzing the FBI ash for TC metals, samples of the
ash were analyzed for metals using the modified multiple extraction
procedure (MEP) (SW-846, Method 1330). The MEP simulates the long-term
effects of leaching in a landfill and is used to determine the overall
effectiveness of a stabilization process. During the sampling program,
a sample of untreated ash was analyzed using the MEP test to determine
the long-term leachability of metals. Table 2 presents the maximum
total and leachate concentrations of all detected organic constituents
in Texas Eastman's waste and waste extract samples. Lastly, on the
basis of explanations and analytical data provided by Texas Eastman,
none of the analyzed samples exhibited the characteristics of
ignitability, corrosivity, or reactivity. See, Sec. 261.21, Sec. 261.22
and Sec. 261.23.
Table 2.--Maximum Total Constituent and Leachate Concentrations (ppm)
\1\ Untreated FBI Ash
------------------------------------------------------------------------
Total TCLP
Organic constituents constituent leachate
analyses analyses
------------------------------------------------------------------------
Acetone..................................... 0.021 0.059
Benzo(a)pyrene.............................. 0.0217 < 0.00441
Carbon Disulfide............................ 0.0526 0.0151
Benzo(g,h,i) perylene....................... 0.0444 < 0.00626
Indeno (1,2,3-cd) pyrene.................... 0.0188 < 0.0049
Methylene Chloride.......................... 0.077 < 0.0185
------------------------------------------------------------------------
< Denotes that the constituent was not detected at the detection limit
specified in the table.
\1\These levels represent the highest concentration of each constituent
found in any one sample. These levels do not necessarily represent the
specific levels found in one sample.
Texas Eastman submitted a signed certification stating that the
maximum annual generation rate of the FBI ash will be 7,000 cubic yards
of waste. The EPA reviews a petitioner's estimates and, on occasion,
has requested a petitioner to reevaluate estimated waste volume. The
EPA accepted Texas Eastman's certified estimate of 7,000 cubic yards of
FBI ash.
The EPA does not generally verify submitted test data before
proposing delisting decisions. The sworn affidavit submitted with this
petition binds the petitioner to present truthful and accurate results.
The EPA, however, has maintained a spot-check sampling and analysis
program to verify the representative nature of the data for some
percentage of the submitted petitions. A spot-check visit to a selected
facility may be initiated before finalizing a delisting petition or
after granting a final exclusion.
[[Page 32759]]
D. Agency Evaluation
The EPA considered the appropriateness of alternative waste
management scenarios for Texas Eastman's FBI ash and decided, based on
the information provided in the petition, that disposal in a municipal
solid waste landfill is the most reasonable, worst-case scenario for
this waste. Under a landfill disposal scenario, the major exposure
route of concern for any hazardous constituents would be ingestion of
contaminated ground water. The EPA, therefore, evaluated Texas
Eastman's petitioned waste using the modified EPA Composite Model for
Landfills (EPACML) which predicts the potential for groundwater
contamination from wastes that are landfilled. See, 56 FR 32993 (July
18, 1991), 56 FR 67197 (December 30, 1991), and the RCRA public docket
for these notices for a detailed description of the EPACML model, the
disposal assumptions, and the modifications made for delisting. This
model, which includes both unsaturated and saturated zone transport
modules, was used to predict reasonable worst-case contaminant levels
in groundwater at a compliance point (i.e., a receptor well serving as
a drinking water supply). Specifically, the model estimated the
dilution/attenuation factor (DAF) resulting from subsurface processes
such as three-dimensional dispersion and dilution from groundwater
recharge for a specific volume of waste. The EPA requests comments on
the use of the EPACML as applied to the evaluation of Texas Eastman's
petitioned waste (FBI untreated ash).
For the evaluation of Texas Eastman's petitioned waste, the EPA
used the EPACML to evaluate the mobility of the hazardous inorganic
constituents detected in the extract of samples of Texas Eastman's FBI
untreated ash. DAFs are currently calculated assuming an ongoing
process generates wastes for 20 years. The DAF for the waste volume of
7,000 cubic yards/year assuming 20 years of generation is 45. The EPA's
evaluation, using a DAF of 45, maximum waste volume estimate of 7,000
cubic yards and the maximum reported TCLP or MEP leachate
concentrations (See, Table 1), yielded compliance-point concentrations
(See, Table 3) that are below the current health-based levels used in
delisting decision-making.
Table 3.--EPACML: Calculated Compliance-Point Concentrations (ppm)
Untreated FBI Ash
------------------------------------------------------------------------
Levels of
Compliance point regulatory
Inorganic constituents concentrations concern \2\
\1\ (mg/l) (mg/l)
------------------------------------------------------------------------
Antimony............................... 0.00048 0.006
Arsenic................................ 0.00031 0.05
Barium................................. 0.00769 2.0
Cadmium................................ 0.00031 0.005
Chromium............................... 0.00038 0.1
Cobalt................................. 0.00078 2.1
Copper................................. 0.00174 1.3
Mercury................................ 0.0002 0.001
Nickel................................. 0.00913 0.1
Selenium............................... 0.00009 0.20
Silver................................. 0.00013 0.2
Tin.................................... 0.00036 21.0
Vanadium............................... 0.00153 0.3
Zinc................................... 0.01262 10.0
------------------------------------------------------------------------
\1\ Using the maximum TCLP leachate level and based on a DAF of 45
calculated using the EPACML for a maximum volume generated annually of
7,000 cubic yards.
\2\ See, ``Docket Report on Health-Based Levels and Solubilities Used in
the Evaluation of Delisting Petitions,'' May 1996 located in the RCRA
public docket for today's notice.
The maximum reported or calculated leachate concentrations of
arsenic, antimony, barium, cadmium, chromium, copper, nickel, mercury,
selenium, silver, vanadium, and zinc in the FBI ash yielded compliance
point concentrations well below the health-based levels used in
delisting decision-making. The EPA did not evaluate the mobility of the
remaining inorganic constituents (i.e., beryllium, lead, and thallium)
from Texas Eastman's waste because they were not detected in the
leachate using the appropriate analytical test methods (See, Table 1).
The EPA believes that it is inappropriate to evaluate non-detectable
concentrations of a constituent of concern in its modeling efforts if
the non-detectable value was obtained using the appropriate analytical
method. If a constituent cannot be detected (when using the appropriate
analytical method with an adequate detection limit), the EPA assumes
that the constituent is not present and therefore does not present a
threat to human health or the environment.
The EPA also evaluated the potential hazards of acetone and carbon
disulfide, the organic constituents detected in the TCLP extract of
samples of Texas Eastman's FBI ash. In particular, were these leachate
concentrations evaluated using the EPACML, the calculated compliance-
point concentration would be 0.00131 ppm and 0.00034 ppm respectively;
these values are significantly below the respective health based values
of 4.
As reported in Table 1, the concentrations of reactive cyanide and
sulfide were not detected in Texas Eastman's untreated FBI ash. These
concentrations are below the EPA's interim standards of 250 and 500
ppm, respectively. See, ``Interim Agency Thresholds for Toxic Gas
Generation,'' July 12, 1985, internal Agency Memorandum in the RCRA
public docket. Therefore, reactive cyanide and sulfide levels are not
of concern.
The EPA concluded, after reviewing Texas Eastman's processes, that
no other hazardous constituents of concern, other than those tested
for, are likely to be present or formed as reaction products or by-
products in Texas Eastman's waste. In addition, on the basis of
explanations and analytical data provided by Texas Eastman, pursuant to
Sec. 260.22, the EPA concludes that the waste does not exhibit any of
the
[[Page 32760]]
characteristics of ignitability, corrosivity, or reactivity. See,
Sec. 261.21, Sec. 261.22, and Sec. 261.23, respectively.
During the evaluation of Texas Eastman's petition, the EPA also
considered the potential impact of the petitioned waste via non-ground
water routes (i.e., air emission and surface runoff). With regard to
airborne dispersion in particular, the EPA believes that exposure to
airborne contaminants from Texas Eastman's petitioned waste is
unlikely. The EPA evaluated the potential hazards resulting from the
unlikely scenario of airborne exposure to hazardous constituents
released from Texas Eastman's waste in an open landfill. The results of
this worst-case analysis indicated that there is no substantial present
or potential hazard to human health from airborne exposure to
constituents from Texas Eastman's FBI ash. A description of the EPA's
assessment of the potential impact of Texas Eastman's waste, with
regard to airborne dispersion of waste contaminants, is presented in
the RCRA public docket for today's proposed rule.
The EPA also considered the potential impact of the petitioned
waste via a surface water route. The EPA believes that containment
structures at municipal solid waste landfills can effectively control
surface water run-off, as the Subtitle D regulations (See, 56 FR 50978,
October 9, 1991) prohibit pollutant discharges into surface waters.
Furthermore, the concentrations of any hazardous constituents dissolved
in the runoff will tend to be lower than the levels in the TCLP or MEP
leachate analyses reported in today's notice, due to the aggressive
acid medium used for extraction in the TCLP and MEP tests. The EPA
believes that, in general, leachate derived from the waste is unlikely
to enter a surface water body directly without first traveling through
the saturated subsurface zone where further dilution and attenuation of
hazardous constituents will also occur. Leachable concentrations
provide a direct measure of the solubility of a toxic constituent in
water, and are indicative of the fraction of the constituent that may
be mobilized in surface water, as well as ground water. The reported
TCLP and MEP extraction data show that the metals in Texas Eastman's
FBI ash that might be released from Texas Eastman's waste to surface
water would be likely to remain undissolved or leach in concentrations
that would be below the health-based levels of concern. Finally, any
transported constituents would be further diluted in the receiving
surface water body.
Based on the reasons discussed above, EPA believes that
contamination of surface water through run-off from the waste disposal
area is very unlikely. Nevertheless, the EPA evaluated potential
impacts on surface water if Texas Eastman's waste were released from a
municipal solid waste landfill through run-off and erosion. See, the
RCRA public docket for today's proposed rule. The estimated levels of
the hazardous constituents of concern in surface water would be well
below health-based levels for human health, as well as below the EPA
Chronic Water Quality Criteria for aquatic organisms (USEPA, OWRS,
1987). The EPA, therefore, concluded that Texas Eastman's untreated FBI
ash is not a substantial present or potential hazard to human health
and the environment via the surface water exposure pathway.
E. Conclusion
The EPA believes that the descriptions of the Texas Eastman
incineration process and analytical characterizations, in conjunction
with the proposed verification testing requirements (as discussed later
in this notice), provide a reasonable basis to grant Texas Eastman's
petition for a conditional exclusion of the untreated FBI ash. The EPA
believes that the lack of variability between the treated and untreated
ash samples collected from the characterization of the ash in 1994 and
the LDR data for the untreated ash adequately represent the variations
in the raw materials and processing. The EPA believes that the data
submitted in support of the petition show that Texas Eastman's
incineration process can render the sludge from the waste water
treatment system non-hazardous. The EPA has reviewed the sampling
procedures used by Texas Eastman and has determined that they satisfy
EPA criteria for collecting representative samples of the variations in
constituent concentrations of the FBI ash. The data submitted in
support of the petition show that constituents in Texas Eastman's waste
are presently below the health-based levels used in the delisting
decision-making. The EPA believes that Texas Eastman has successfully
demonstrated that the untreated FBI ash is non-hazardous.
The EPA, therefore, proposes to grant a conditional exclusion to
Texas Eastman, located in Longview, Texas, for the untreated FBI ash
described in its petition. The EPA's decision to exclude this waste is
based on descriptions of the incineration activities associated with
the petitioned waste and characterization of the FBI ash. If the
proposed rule is finalized, the petitioned waste will no longer be
subject to regulation under Parts 262 through 268 and the permitting
standards of Part 270.
F. Verification Testing Conditions
1. Delisting Levels: All leachable concentrations for those metals
must not exceed the following levels (ppm). Metal concentrations must
be measured in the waste leachate by the method specified in 40 CFR
Part 261.24.
(A) Inorganic Constituents
Antimony--0.27; Arsenic--2.25; Barium--90.0; Beryllium--0.0009;
Cadmium--0.225; Chromium--4.5; Cobalt--94.5; Copper--58.5; Lead--0.675;
Mercury--0.045; Nickel--4.5; Selenium--1.0; Silver--5.0; Thallium--
0.135; Tin--945.0; Vanadium--13.5; Zinc--450.0
(B) Organic Constituents
Acenaphthene--90.0
Acetone--180.0
Benzene--0.135
Benzo(a)anthracene--0.00347
Benzo(a)pyrene--0.00045
Benzo(b) fluoranthene--0.00320
Bis(2 ethylhexyl) phthalate--0.27
Butylbenzyl phthalate--315.0
Chloroform--0.45
Chlorobenzene--31.5
Carbon Disulfide--180.0
Chrysene--0.1215
1,2-Dichlorobenzene--135.0
1,4-Dichlorobenzene--0.18
Di-n-butyl phthalate--180.0
Di-n-octyl phthalate--35.0
1,4 Dioxane--0.36
Ethyl Acetate--1350.0
Ethyl Ether--315.0
Ethylbenzene--180.0
Flouranthene--45.0
Fluorene--45.0
1-Butanol--180.0
Methyl Ethyl Ketone--200.0
Methylene Chloride--0.45
Methyl Isobutyl Ketone--90.0
Naphthalene--45.0
Pyrene--45.0
Toluene--315.0
Xylenes--3150.0
This paragraph provides the levels of constituents for which Texas
Eastman must test the leachate from the FBI ash, below which the ash
would be considered non-hazardous. The EPA selected the set of
inorganic constituents specified after reviewing information about the
composition of the waste, descriptions of Texas Eastman's treatment
process, previous test data provided for the untreated ash and the
health-based levels used in delisting decision-making.
The EPA established the proposed delisting levels for this
paragraph by
[[Page 32761]]
back-calculating the maximum allowable leachate concentrations (MALs)
from the health-based levels (HBLs) for the constituents of concern
using the EPACML chemical-specific DAFs of 45 (See, previous
discussions in Section D--Agency Evaluation), i.e., MAL = HBL x DAF.
These delisting levels correspond to the allowable levels measured in
the TCLP extract of the waste.
2. Waste Holding and Handling: Texas Eastman must store in
accordance with its RCRA permit, or continue to dispose of as
hazardous all FBI ash generated until the Initial and Subsequent
Verification Testing described in Paragraph 4 and 5 below is
completed and valid analyses demonstrate that all Verification
Testing Conditions are satisfied. After completion of Initial and
Subsequent Verification Testing, if the levels of constituents
measured in the samples of the FBI ash do not exceed the levels set
forth in Paragraph 1 above, and written notification is given by
EPA, then the waste is non-hazardous and may be managed and disposed
of in accordance with all applicable solid waste regulations.
The purpose of this paragraph is to ensure that ash which contains
hazardous levels of inorganic and organic constituents are managed and
disposed of in accordance with Subtitle C of RCRA. Holding the waste
until characterization is complete will protect against improper
handling of hazardous material. If the EPA determines that the data
collected under this condition do not support the data provided for the
petition, the exclusion will not cover the generated incinerator ash.
3. Verification Testing Requirements: Sample collection and
analyses, including quality control procedures, must be performed
according to SW-846 methodologies. If EPA judges the incineration
process to be effective under the operating conditions used during
the initial verification testing described in Paragraph 4 below,
Texas Eastman may replace the testing required in Paragraph 4 with
the testing required in Paragraph 5 below. Texas Eastman must,
however, continue to test as specified in Paragraph 4 until notified
by EPA in writing that testing in Paragraph 4 may be replaced by the
testing described in Paragraph 5.
4. Initial Verification Testing: During the first 40 operating
days of the FBI incinerator after the final exclusion is granted,
Texas Eastman must collect and analyze daily composites of the FBI
ash. Daily composites must be composed of representative grab
samples collected every 6 hours during each 24-hour FBI operating
cycle. The FBI ash must be analyzed, prior to disposal of the ash,
for all constituents listed in Paragraph 1. Texas Eastman must
report the operational and analytical test data, including quality
control information, obtained during this initial period no later
than 90 days after the incineration of the wastewater treatment
sludge.
The EPA believes that an initial period of 40 days is sufficient
for a facility to collect sufficient data to verify that the data
provided for the untreated ash in the 1994 petition and LDR information
is representative of the ash to be delisted.
5. Subsequent Verification Testing: Following the completion of
the Initial Verification Testing, Texas Eastman may request to
monitor operating conditions and analyze samples representative of
each quarter of operation during the first year of ash generation.
The samples must represent the untreated ash generated over one
quarter. Following written notification from EPA, Texas Eastman may
begin the quarterly testing described in this Paragraph.
The EPA believes that the concentrations of the constituents of
concerns in the FBI ash may vary somewhat over time. As a result, in
order to ensure that Texas Eastman's treatment process can effectively
handle any variation in constituent concentrations in the incinerator
ash, the EPA is proposing a subsequent verification testing condition.
The proposed subsequent testing would verify that the FBI is operated
in a manner similar to its operation during the initial verification
testing and that the untreated incinerator ash does not exhibit
unacceptable levels of toxic constituents. Therefore, the EPA is
proposing to require Texas Eastman to analyze representative samples of
the incinerator ash on an quarterly basis during the first year of
waste generation. If the EPA determines that the data from the initial
verification period demonstrates that the incineration process is
effective, Texas Eastman may request that EPA allow it to perform
verification testing on a quarterly basis. If approved in writing by
EPA, then Texas Eastman may begin verification testing quarterly.
6. Termination of Organic Testing: Texas Eastman must continue
testing as required under Paragraph 5 for organic constituents
specified in Paragraph 1 until the analyses submitted under
Paragraph 5 show a minimum of two consecutive quarterly samples
below the delisting levels in Paragraph 1. Texas Eastman may then
request that quarterly organic testing be terminated. After EPA
notifies Texas Eastman in writing it may terminate quarterly organic
testing.
7. Annual Testing: Following termination of quarterly testing
under either Paragraphs 5 or 6, Texas Eastman must continue to test
a representative composite sample for all constituents listed in
Paragraph 1 (including organics) on an annual basis (no later than
twelve months after the date that the final exclusion is effective).
The EPA is proposing to terminate the subsequent testing conditions
for organics as allowed in Paragraph 6 after Texas Eastman has
demonstrated the delisting levels for the untreated ash are
consistently met. In order to confirm that the characteristics of the
waste do not change significantly over time, Texas Eastman must
continue to analyze a representative sample of the untreated FBI ash
for organic constituents on an annual basis (no later than twelve
months after the date that the final exclusion is effective). The
Fluidized Bed Incinerator as described in the petition has demonstrated
its effectiveness in removing organic constituents from solid matrices,
but not inorganic constituents. Therefore, Paragraph 1 (A), which
requires Texas Eastman to test for the specified inorganic constituents
of concern that may not be treated by this process, is not subject to
the termination provision in Paragraph 6.
8. Changes in Operating Conditions: If Texas Eastman
significantly changes the incineration process described in its
petition or implements any new manufacturing or production
process(es) which generate(s) the ash and which may or could affect
the composition or type of waste generated established under
Paragraph 3 (by illustration {but not limitation}, use of
stabilization reagents or operating conditions of the fluidized bed
incinerator), Texas Eastman must notify the EPA in writing and may
no longer handle the wastes generated from the new process as non-
hazardous until the wastes meet the delisting levels set in
Paragraph 1 and it has received written approval to do so from EPA.
Paragraph 8 would allow Texas Eastman the flexibility of modifying
its processes (e.g., use of new treatment reagents or change in
operating conditions) to improve its treatment process. However, Texas
Eastman must demonstrate the effectiveness of the modified process and
request approval from the EPA. Wastes generated during the new process
demonstration must be managed as a hazardous waste until written
approval has been obtained and Paragraph 1 is satisfied. If Texas
Eastman changes operating conditions as described in Paragraph 8, then
Texas Eastman must reinstate all testing in Paragraph 3, pending a new
demonstration under this condition for termination.
9. Data Submittals: The data obtained through Paragraph 3 must
be submitted to Mr. William Gallagher, Chief, Region 6 Delisting
Program, U.S. EPA, 1445 Ross Avenue, Dallas, Texas 75202-2733, Mail
Code, (6PD-O) within the time period specified. Records of operating
conditions and analytical data from Paragraph 3 must be compiled,
summarized, and maintained on site for a minimum of five years.
These records and data must be furnished upon request by EPA, or the
State of Texas, and
[[Page 32762]]
made available for inspection. Failure to submit the required data
within the specified time period or maintain the required records on
site for the specified time will be considered by EPA, at its
discretion, sufficient basis to revoke the exclusion to the extent
directed by EPA. All data must be accompanied by a signed copy of
the following certification statement to attest to the truth and
accuracy of the data submitted:
Under civil and criminal penalty of law for the making or
submission of false or fraudulent statements or representations
(pursuant to the applicable provisions of the Federal Code, which
include, but may not be limited to, 18 USC Sec. 1001 and 42 USC
Sec. 6928), I certify that the information contained in or
accompanying this document is true, accurate and complete.
As to the (those) identified section(s) of this document for
which I cannot personally verify its (their) truth and accuracy, I
certify as the company official having supervisory responsibility
for the persons who, acting under my direct instructions, made the
verification that this information is true, accurate and complete.
In the event that any of this information is determined by EPA
in its sole discretion to be false, inaccurate or incomplete, and
upon conveyance of this fact to the company, I recognize and agree
that this exclusion of waste will be void as if it never had effect
or to the extent directed by EPA and that the company will be liable
for any actions taken in contravention of the company's RCRA and
CERCLA obligations premised upon the company's reliance on the void
exclusion.
To provide appropriate documentation that Texas Eastman's facility
is properly treating the waste, all analytical data obtained through
Paragraph 3, including quality control information, must be compiled,
summarized, and maintained on site for a minimum of five years.
Paragraph 9 requires that these data be furnished upon request and made
available for inspection by any employee or representative of EPA or
the State where the treatment facility is located.
If made final, the proposed exclusion will apply only to the 7,000
cubic yards generated annually of FBI ash generated during the
treatment of its wastewater sludge in the Texas Eastman fluidized bed
incinerator after successful verification testing. Except as described
in Paragraph 8, the facility would be required to submit a new
exclusion if the treatment process specified for the FBI incinerator or
the WWTP is significantly altered. Texas Eastman would be required to
file a new petition for any new manufacturing or production
process(es), or significant changes from the current process(es)
described in its petition which generates the ash or which may or could
affect the composition or type of waste generated. The facility must
treat any FBI ash in excess of the original 7,000 cubic yards as
hazardous unless a new exclusion is granted.
Although management of the waste covered by this petition would be
removed from Subtitle C jurisdiction upon final promulgation of an
exclusion, the generator of a delisted waste must either treat, store,
or dispose of the waste in an on-site facility, or ensure that the
waste is delivered to an off-site storage, treatment, or disposal
facility, either of which is permitted, licensed, or registered by a
State to manage municipal or industrial solid waste. Alternatively, the
delisted waste may be delivered to a facility that beneficially uses or
reuses, or legitimately recycles or reclaims the waste, or treats the
waste prior to such beneficial use, reuse, recycling, or reclamation.
III. Effective Date
This rule, if made final, will become effective immediately upon
final publication. The Hazardous and Solid Waste Amendments of 1984
amended Section 3010 of RCRA to allow rules to become effective in less
than six months when the regulated community does not need the six-
month period to come into compliance. That is the case here, because
this rule, if finalized, would reduce the existing requirements for
persons generating hazardous wastes. In light of the unnecessary
hardship and expense that would be imposed on this petitioner by an
effective date six months after publication and the fact that a six-
month deadline is not necessary to achieve the purpose of Section 3010,
EPA believes that this exclusion should be effective immediately upon
final publication. These reasons also provide a basis for making this
rule effective immediately, upon final publication, under the
Administrative Procedure Act, pursuant to 5 U.S.C. Sec. 553(d).
IV. Regulatory Impact
Under Executive Order 12866, EPA must conduct an ``assessment of
the potential costs and benefits'' for all ``significant'' regulatory
actions. This proposal to grant an exclusion is not significant, since
its effect, if promulgated, would be to reduce the overall costs and
economic impact of EPA's hazardous waste management regulations. This
reduction would be achieved by excluding waste generated at a specific
facility from EPA's lists of hazardous wastes, thereby enabling this
facility to treat its waste as non-hazardous. There is no additional
impact due to today's rule. Therefore, this proposal would not be a
significant regulation, and no cost/benefit assessment is required. The
Office of Management and Budget (OMB) has also exempted this rule from
the requirement for OMB review under Section (6) of Executive Order
12866.
V. Regulatory Flexibility Act
Pursuant to the Regulatory Flexibility Act, 5 U.S.C. Secs. 601-612,
whenever an agency is required to publish a general notice of
rulemaking for any proposed or final rule, it must prepare and make
available for public comment a regulatory flexibility analysis that
describes the impact of the rule on small entities (i.e., small
businesses, small organizations, and small governmental jurisdictions).
No regulatory flexibility analysis is required, however, if the
Administrator or delegated representative certifies that the rule will
not have any impact on any small entities.
This rule, if promulgated, will not have any adverse economic
impact on any small entities since its effect would be to reduce the
overall costs of EPA's hazardous waste regulations and would be limited
to one facility. Accordingly, I hereby certify that this proposed
regulation, if promulgated, will not have a significant economic impact
on a substantial number of small entities. This regulation, therefore,
does not require a regulatory flexibility analysis.
VI. Paperwork Reduction Act
Information collection and recordkeeping requirements associated
with this proposed rule have been approved by the Office of Management
and Budget (OMB) under the provisions of the Paperwork Reduction Act of
1980 (Pub. L. 96-511, 44 U.S.C. Sec. 3501 et seq.) and have been
assigned OMB Control Number 2050-0053.
VII. Unfunded Mandates Reform Act
Under section 202 of the Unfunded Mandates Reform Act of 1995
(``UMRA''), Public Law 104-4, which was signed into law on March 22,
1995, EPA generally must prepare a written statement for rules with
Federal mandates that may result in estimated costs to State, local,
and tribal governments in the aggregate, or to the private sector, of
$100 million or more in any one year. When such a statement is required
for EPA rules, under section 205 of the UMRA, EPA must identify and
consider alternatives, including the least costly, most cost-effective
or least burdensome alternative that achieves the objectives of the
rule. EPA must select that alternative, unless the Administrator
explains in the final rule why it was not selected or it is
inconsistent with law. Before EPA
[[Page 32763]]
establishes regulatory requirements that may significantly or uniquely
affect small governments, including tribal governments, it must develop
under section 203 of the UMRA a small government agency plan. The plan
must provide for notifying potentially affected small governments,
giving them meaningful and timely input in the development of EPA
regulatory proposals with significant Federal intergovernmental
mandates, and informing, educating, and advising them on compliance
with the regulatory requirements. The UMRA generally defines a Federal
mandate for regulatory purposes as one that imposes an enforceable duty
upon state, local or tribal governments or the private sector. EPA
finds that today's proposed delisting decision is deregulatory in
nature and does not impose any enforceable duty upon state, local or
tribal governments or the private sector. In addition, the proposed
delisting does not establish any regulatory requirements for small
governments and so does not require a small government agency plan
under UMRA section 203.
List of Subjects in 40 CFR Part 261
Environmental protection, Hazardous waste, Recycling, Reporting and
recordkeeping requirements.
Authority: Sec. 3001(f) RCRA, 42 U.S.C. 6921(f).
Dated: June 11, 1996.
Jane N. Saginaw,
Regional Administrator.
For the reasons set out in the preamble, 40 CFR Part 261 is
proposed to be amended as follows:
PART 261--IDENTIFICATION AND LISTING OF HAZARDOUS WASTE
1. The authority citation for Part 261 continues to read as
follows:
Authority: 42 U.S.C. 6905, 6912(a), 6921, 6922, and 6938.
2. In Tables 1, 2, and 3 of Appendix IX of Part 261 it is proposed
to add the following waste stream in alphabetical order by facility to
read as follows:
Appendix IX to Part 261--Wastes Excluded Under Sec. 260.20 and
260.22.
Table 1.--Wastes Excluded From Non-Specific Sources
----------------------------------------------------------------------------------------------------------------
Facility Address Waste description
----------------------------------------------------------------------------------------------------------------
* * * * * *
*
Texas Eastman.................. Longview, Texas................ Incinerator ash (at a maximum generation of
7,000 cubic yards per calendar year)
generated from the incineration of sludge
from the wastewater treatment plant (EPA
Hazardous Waste No.D001, D003, D018, D019,
D021, D022, D027, D028, D029, D030, D032,
D033, D034, D035, D036, D038, D039, D040,
F001, F002, F003, F005, after [insert
publication date of the final rule]. Texas
Eastman must implement a testing program that
meets the following conditions for the
petition to be valid:
1. Delisting Levels: All leachable
concentrations for those metals must not
exceed the following levels (ppm). Metal
concentrations must be measured in the waste
leachate by the method specified in 40 CFR
Part 261.24.
(A) Inorganic Constituents
Antimony--0.27; Arsenic--2.25; Barium--90.0;
Beryllium--0.0009; Cadmium--0.225; Chromium--
4.5; Cobalt--94.5; Copper--58.5; Lead--0.675;
Mercury--0.045; Nickel--4.5; Selenium--1.0;
Silver--5.0; Thallium--0.135; Tin--945.0;
Vanadium--13.5; Zinc--450.0.
(B) Organic Constituents
Acenaphthene--90.0; Acetone--180.0; Benzene--
0.135; Benzo(a)anthracene--0.00347;
Benzo(a)pyrene--0.00045; Benzo(b)
fluoranthene--0.00320; Bis(2 ethylhexyl)
phthalate--0.27; Butylbenzyl phthalate--
315.0; Chloroform--0.45; Chlorobenzene--31.5;
Carbon Disulfide--180.0; Chrysene--0.1215;
1,2-Dichlorobenzene--135.0; 1,4-
Dichlorobenzene--0.18; Di-n-butyl phthalate--
FR Doc. 96-15883 Hazardous Waste Management System; Identification and Listing of Hazardous Waste; Proposed Exclusion
180.0; Di-n-octyl phthalate--35.0; 1,4
Dioxane--0.36; Ethyl Acetate--1350.0; Ethyl
Ether--315.0; Ethylbenzene--180.0;
Flouranthene--45.0; Fluorene--45.0; 1-
Butanol--180.0; Methyl Ethyl Ketone--200.0;
Methylene Chloride--0.45; Methyl Isobutyl
Ketone--90.0; Naphthalene--45.0; Pyrene--
45.0; Toluene--315.0; Xylenes--3150.0.
2. Waste Holding and Handling: Texas Eastman
must store in accordance with its RCRA
permit, or continue to dispose of as
hazardous all FBI ash generated until the
Initial and Subsequent Verification Testing
described in Paragraph 4 and 5 below is
completed and valid analyses demonstrate that
all Verification Testing Conditions are
satisfied. After completion of Initial and
Subsequent Verification Testing, if the
levels of constituents measured in the
samples of the FBI ash do not exceed the
levels set forth in Paragraph 1 above, and
written notification is given by EPA, then
the waste is non-hazardous and may be managed
and disposed of in accordance with all
applicable solid waste regulations.
3. Verification Testing Requirements: Sample
collection and analyses, including quality
control procedures, must be performed
according to SW-846 methodologies. If EPA
judges the incineration process to be
effective under the operating conditions used
during the initial verification testing
described in Paragraph 4 below, Texas Eastman
may replace the testing required in Paragraph
4 with the testing required in Paragraph 5
below. Texas Eastman must, however, continue
to test as specified in Paragraph 4 until
notified by EPA in writing that testing in
Paragraph 4 may be replaced by the testing
described in Paragraph 5.
4. Initial Verification Testing: During the
first 40 operating days of the FBI
incinerator after the final exclusion is
granted, Texas Eastman must collect and
analyze daily composites of the FBI ash.
Daily composites must be composed of
representative grab samples collected every 6
hours during each 24-hour FBI operating
cycle. The FBI ash must be analyzed, prior to
disposal of the ash, for all constituents
listed in Paragraph 1. Texas Eastman must
report the operational and analytical test
data, including quality control information,
obtained during this initial period no later
than 90 days after the incineration of the
wastewater treatment sludge.
[[Page 32764]]
5. Subsequent Verification Testing: Following
the completion of the Initial Verification
Testing, Texas Eastman may request to monitor
operating conditions and analyze samples
representative of each quarter of operation
during the first year of ash generation. The
samples must represent the untreated ash
generated over one quarter. Following written
notification from EPA, Texas Eastman may
begin the quarterly testing described in this
Paragraph.
6. Termination of Organic Testing: Texas
Eastman must continue testing as required
under Paragraph 5 for organic constituents
specified in Paragraph 1 until the analyses
submitted under Paragraph 5 show a minimum of
two consecutive quarterly samples below the
delisting levels in Paragraph 1. Texas
Eastman may then request that quarterly
organic testing be terminated. After EPA
notifies Texas Eastman in writing it may
terminate quarterly organic testing.
7. Annual Testing: Following termination of
quarterly testing under either Paragraphs 5
or 6, Texas Eastman must continue to test a
representative composite sample for all
constituents listed in Paragraph 1 (including
organics) on an annual basis (no later than
twelve months after the date that the final
exclusion is effective).
8. Changes in Operating Conditions: If Texas
Eastman significantly changes the
incineration process described in its
petition or implements any new manufacturing
or production process(es) which generate(s)
the ash and which may or could affect the
composition or type of waste generated
established under Paragraph 3 (by
illustration {but not limitation}, use of
stabilization reagents or operating
conditions of the fluidized bed incinerator),
Texas Eastman must notify the EPA in writing
and may no longer handle the wastes generated
from the new process as non-hazardous until
the wastes meet the delisting levels set in
Paragraph 1 and it has received written
approval to do so from EPA.
9. Data Submittals: The data obtained through
Paragraph 3 must be submitted to Mr. William
Gallagher, Chief, Region 6 Delisting Program,
U.S. EPA, 1445 Ross Avenue, Dallas, Texas
75202-2733, Mail Code, (6PD-O) within the
time period specified. Records of operating
conditions and analytical data from Paragraph
3 must be compiled, summarized, and
maintained on site for a minimum of five
years. These records and data must be
furnished upon request by EPA, or the State
of Texas, and made available for inspection.
Failure to submit the required data within
the specified time period or maintain the
required records on site for the specified
time will be considered by EPA, at its
discretion, sufficient basis to revoke the
exclusion to the extent directed by EPA. All
data must be accompanied by a signed copy of
the following certification statement to
attest to the truth and accuracy of the data
submitted:
Under civil and criminal penalty of law for
the making or submission of false or
fraudulent statements or representations
(pursuant to the applicable provisions of the
Federal Code, which include, but may not be
limited to, 18 USC Sec. 1001 and 42 USC Sec.
6928), I certify that the information
contained in or accompanying this document is
true, accurate and complete.
As to the (those) identified section(s) of
this document for which I cannot personally
verify its (their) truth and accuracy, I
certify as the company official having
supervisory responsibility for the persons
who, acting under my direct instructions,
made the verification that this information
is true, accurate and complete.
In the event that any of this information is
determined by EPA in its sole discretion to
be false, inaccurate or incomplete, and upon
conveyance of this fact to the company, I
recognize and agree that this exclusion of
waste will be void as if it never had effect
or to the extent directed by EPA and that the
company will be liable for any actions taken
in contravention of the company's RCRA and
CERCLA obligations premised upon the
company's reliance on the void exclusion.
10. Notification Requirements: Texas Eastman
must provide a one-time written notification
to any State Regulatory Agency to which or
through which the delisted waste described
above will be transported for disposal at
least 60 days prior to the commencement of
such activities. Failure to provide such a
notification will result in a violation of
the delisting petition and a possible
revocation of the decision.
----------------------------------------------------------------------------------------------------------------
Table 2.--Wastes Excluded From Specific Sources
----------------------------------------------------------------------------------------------------------------
Facility Address Waste description
----------------------------------------------------------------------------------------------------------------
* * * * * *
*
Texas Eastman.................. Longview, Texas................ Incinerator ash (at a maximum generation of
7,000 cubic yards per calendar year)
generated from the incineration of sludge
from the wastewater treatment plant (EPA
Hazardous Waste No. K009 and K010, after
[insert publication date of the final rule].
Texas Eastman must implement a testing
program that meets conditions found in Table
1. Wastes Excluded From Non-Specific Sources
for the petition to be valid.
----------------------------------------------------------------------------------------------------------------
[[Page 32765]]
Table 3.--Wastes Excluded From Commercial Chemical Products, Off-Specification Species, Container Residues, and
Soil Residues Thereof
----------------------------------------------------------------------------------------------------------------
Facility Address Waste description
----------------------------------------------------------------------------------------------------------------
* * * * * *
*
Texas Eastman.................. Longview, Texas................ Incinerator ash (at a maximum generation of
7,000 cubic yards per calendar year)
generated from the incineration of sludge
from the wastewater treatment plant (EPA
Hazardous Waste No. U001, U002, U003, U019,
U028, U031, U037, U044, U056, U069, U070,
U107, U108, U112, U113, U115, U117, U122,
U140, U147, U151, U154, U159, U161, U169,
U190, U196, U211, U213, U226, U239, and U359,
after [insert publication date of the final
rule]. Texas Eastman must implement the
testing program described in Table 1. Wastes
Excluded From Non-Specific Sources for the
petition to be valid.
* * * * * *
*
----------------------------------------------------------------------------------------------------------------
[FR Doc. 96-15883 Filed 6-24-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-15882 National Oil and Hazardous Substances Pollution Contingency Plan; National Priorities List
[Federal Register Volume 61, Number 123 (Tuesday, June 25, 1996)]
[Proposed Rules]
[Pages 32765-32766]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15882]
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 300
[FRL-5525-3]
National Oil and Hazardous Substances Pollution Contingency Plan;
National Priorities List
AGENCY: Environmental Protection Agency.
ACTION: Notice of Intent to Delete the Omega Hills North Landfill
Superfund Site from the National Priorities List; Request for Comments.
-----------------------------------------------------------------------
SUMMARY: The United States Environmental Protection Agency (U.S. EPA)
Region V announces its intent to delete the Omega Hills Landfill Site
from the National Priorities List (NPL) and requests public comment on
this action. The NPL constitutes Appendix B to the National Oil and
Hazardous Substances Pollution Contingency Plan (NCP), which U.S. EPA
promulgated pursuant to Section 105 of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 (CERCLA) as amended.
This action is being taken by U.S. EPA, because it has been determined
that all Fund-financed responses under CERCLA have been implemented and
U.S. EPA, in consultation with the State of Wisconsin, has determined
that no further response is appropriate. Moreover, U.S. EPA and the
State have determined that remedial activities conducted at the Site to
date have been protective of public health, welfare, and the
environment.
DATE: Comments concerning the proposed deletion of the Site from the
NPL may be submitted on or before July 25, 1996.
ADDRESSES: Comments may be mailed to Gladys Beard, Associate Remedial
Project Manager, Superfund Division, U.S. EPA, Region V, 77 W. Jackson
Blvd. (SR-6J), Chicago, IL 60604. Comprehensive information on the site
is available at U.S. EPA's Region V office and at the local information
repository located at: Wisconsin Department of Natural Resources, 101
S. Webster, Madison, WI 53707. Requests for comprehensive copies of
documents should be directed formally to the Region V Docket Office.
The address and phone number for the Regional Docket Officer is Jan
Pfundheller (H-7J), U.S. EPA, Region V, 77 W. Jackson Blvd., Chicago,
IL 60604, (312) 353-5821.
FOR FURTHER INFORMATION CONTACT: Gladys Beard (SR-6J), Associate
Remedial Project Manager, Superfund Division, U.S. EPA, Region V, 77 W.
Jackson Blvd., Chicago, IL 60604, (312) 886-7253 or Susan Pastor (P-
19J), Office of Public Affairs, U.S. EPA, Region V, 77 W. Jackson
Blvd., Chicago, IL 60604, (312) 353-1325.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Introduction
II. NPL Deletion Criteria
III. Deletion Procedures
IV. Basis for Intended Site Deletion
I. Introduction
The U.S. Environmental Protection Agency (EPA) Region V announces
its intent to delete the Omega Hills North Landfill Site from the
National Priorities List (NPL), which constitutes Appendix B of the
National Oil and Hazardous Substances Pollution Contingency Plan (NCP),
and requests comments on the proposed deletion. The EPA identifies
sites that appear to present a significant risk to public health,
welfare or the environment, and maintains the NPL as the list of those
sites. Sites on the NPL may be the subject of remedial actions financed
by the Hazardous Substance Superfund Response Trust Fund (Fund).
Pursuant to Section 300.425(e)(3) of the NCP, any site deleted from the
NPL remains eligible for Fund-financed remedial actions if the
conditions at the site warrant such action.
The U.S. EPA will accept comments on this proposal for thirty (30)
days after publication of this notice in the Federal Register.
Section II of this notice explains the criteria for deleting sites
from the NPL. Section III discusses procedures that EPA is using for
this action. Section IV discusses the history of this site and explains
how the site meets the deletion criteria.
Deletion of sites from the NPL does not itself create, alter, or
revoke any individual's rights or obligations. Furthermore, deletion
from the NPL does not in any way alter U.S. EPA's right to take
enforcement actions, as appropriate. The NPL is designed primarily for
informational purposes and to assist in Agency management.
II. NPL Deletion Criteria
The NCP establishes the criteria the Agency uses to delete sites
from the NPL. In accordance with 40 CFR 300.425(e), sites may be
deleted from the NPL where no further response is appropriate. In
making this determination, U.S. EPA will consider, in consultation with
the State, whether any of the following criteria have been met:
(i) Responsible parties or other persons have implemented all
appropriate response actions required; or
(ii) All appropriate Fund-financed responses under CERCLA have been
implemented, and no further response action by responsible parties is
appropriate; or
(iii) The Remedial Investigation has shown that the release poses
no significant threat to public health or the environment and,
therefore, remedial measures are not appropriate.
III. Deletion Procedures
Upon determination that at least one of the criteria described in
300.425(e) has been met, U.S. EPA may formally begin deletion
procedures once the State has concurred. This Federal Register
[[Page 32766]]
notice, and a concurrent notice in the local newspaper in the vicinity
of the site, announce the initiation of a 30-day comment period. The
public is asked to comment on U.S. EPA's intention to delete the Site
from the NPL. All critical documents needed to evaluate U.S. EPA's
decision are included in the information repository and the deletion
docket.
Upon completion of the public comment period, if necessary, the
U.S. EPA Regional Office will prepare a Responsiveness Summary to
evaluate and address comments that were received. The public is welcome
to contact the U.S. EPA Region V Office to obtain a copy of this
responsiveness summary, if one is prepared. If U.S. EPA then determines
the deletion from the NPL is appropriate, final notice of deletion will
be published in the Federal Register.
IV. Basis for Intended Site Deletion
The Omega Hills North Landfill is located in the Village of
Germantown in Washington County, Wisconsin. The Omega Hills North
Landfill is a former hazardous and solid waste disposal site. The
landfill is closed. A clay cover was completed October 1, 1989.
Contaminants at the site include benzene, vinyl chloride,
trichloroethylene, and cis 1,-dichloroethylene. Contamination from the
site extends to bedrock and sand seams located beneath the site to an
approximate depth of 95 feet. Groundwater contamination (chiefly
trichloroethylene) has been detected in private wells near the site.
Residents in the area now use municipal water. The site has undergone
remediation in the form of installing treatment systems that address
groundwater, leachate, gas and surface water runoff contamination. The
potential for continuing migration of contaminants due to groundwater
movement is a public health concern and is addressed with regular
monitoring of wells in the area of the site.
The Omega Hills North Landfill is an 83-acre site that is part of a
two-site complex. The Omega Hills North Landfill, which is now closed,
operated as a municipal and industrial waste disposal site that was
licensed to accept hazardous waste from 1977 to 1982. One of the
largest landfills in the state, the Omega Hills complex is located in
the extreme southeastern corner of Washington County near metropolitan
Milwaukee. The site was proposed for the NPL in September 1983. The
listing was finalized in September 21, 1984, Federal Register number
49, volume number 185 and page number 37070-37090.
Soils at the site are generally fine grained, but there are major
sand layers that extend vertically to the bedrock and serve as recharge
zones. An ineffective leachate collection system and large amounts of
liquid waste allowed very high leachate head levels to develop. Wells
in the area draw from the underlying Niagara dolomite.
The sand and underlying dolomite serve as conduits for contaminant
migration. Hydrogeologic investigations conducted during 1981 through
1983 detected a groundwater divide that exists within the bedrock
aquifer along the northwest side of the landfill. A stream to the west
of the site also inhibits groundwater flow to the west.
After becoming saturated, layers of sand that intersect the bottom
and sides of the landfill serve as conduits for transmitting liquid
wastes and leachate to surrounding groundwater. Data from monitoring
wells around the landfill indicates that groundwater is contaminated.
Some nearby wells rely on the same aquifer for water.
A medical waste incinerator and a methane gas power plant are
located on the site.
Remediation activities began at this site in the early 1980's and a
significant portion of the environmental cleanup has been completed.
All of this work has been implemented under state solid hazardous waste
authority and it is EPA's intent to continue using existing state
environmental regulations to require the on-going long-term care
activities such as environmental monitoring, leachate extraction and
treatment, routine maintenance, as well as additional remediation work
as necessary.
The majority of the cleanup has been completed. Federal CERCLA
authorities have not been used to compel any cleanup actions at this
site. Instead, cleanup activities at the site were initiated using the
State's authority under RCRA. The State will also require long-term
operation and maintenance of the site using these RCRA authorities. Any
future cleanup activities will be addressed using State RCRA
authorities. As a result, the site should be removed from the NPL.
EPA, with concurrence from the State of Wisconsin, has determined
that all appropriate Fund-financed responses under CERCLA at the Omega
Hills North Landfill Superfund Site have been completed, and no further
CERCLA response is appropriate in order to provide protection of human
health and the environment. Therefore, EPA proposes to delete the site
from the NPL.
Dated: June 11, 1996.
Valdas V. Adamkus,
Regional Administrator, U.S. EPA, Region V.
[FR Doc. 96-15882 Filed 6-24-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-15831 Modifications of Bad Debts and Dealer Assignments of Notional Principal Contracts
[Federal Register Volume 61, Number 123 (Tuesday, June 25, 1996)]
[Proposed Rules]
[Pages 32728-32729]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-15831]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[FI-59-94]
RIN 1545-AT08
Modifications of Bad Debts and Dealer Assignments of Notional
Principal Contracts
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking by cross-reference to temporary
regulations.
-----------------------------------------------------------------------
SUMMARY: In the Rules and Regulations section of this issue of the
Federal Register, the IRS is issuing temporary regulations relating to
the allowance of a deduction for a partially worthless debt when the
terms of a debt instrument have been modified. The temporary
regulations provide relief to certain taxpayers that are required to
recognize gain as the result of modifying a debt instrument, when a
portion of the gain is in part caused by a reduction of the debt's
basis attributable to a bad debt deduction claimed in a prior taxable
year. The temporary regulations provide guidance to taxpayers that
modify the terms of a debt instrument after deducting an amount for
partial worthlessness.
In the Rules and Regulations section of this issue of the Federal
Register, the IRS is also issuing temporary regulations relating to
certain assignments of notional principal contracts by dealers in those
contracts. The temporary regulations provide guidance to taxpayers
relating to consequences of these assignments.
The text of those temporary regulations also serves as the text of
these proposed regulations.
DATES: Written comments and requests for a public hearing must be
received by September 23, 1996.
ADDRESSES: Send submissions to: CC:DOM:CORP:R (FI-59-94), room 5228,
Internal Revenue Service, POB 7604, Ben Franklin Station, Washington,
DC 20044. In the alternative, submissions may be hand delivered between
the hours of 8 a.m. and 5 p.m. to: CC:DOM:CORP:R (FI-59-94), Courier's
Desk, Internal Revenue Service, 1111 Constitution Avenue NW.,
Washington, D.C.
FOR FURTHER INFORMATION CONTACT: Craig R. Wojay, Office of Assistant
Chief Counsel, Financial Institutions and Products, (202) 622-3920 (not
a toll-free number) concerning the modifications of bad debts, and
Thomas J. Kelly, Office of Assistant Chief Counsel, Financial
Institutions and Products, (202) 622-3940 (not a toll-free number)
concerning dealer assignments of notional principal contracts.
SUPPLEMENTARY INFORMATION:
Background
Temporary regulations in the Rules and Regulations section of this
issue of the Federal Register amend the Income Tax Regulations (26 CFR
part 1) relating to section 166. The temporary regulations contain
rules relating to the requirement that a debt be charged off before a
deduction on account of partial worthlessness is allowed. The rules
apply to certain taxpayers who are required to recognize gain as the
result of a significant modification of a debt instrument.
Temporary regulations in the Rules and Regulations section of this
issue of the Federal Register amend the Income Tax Regulations (26 CFR
part 1) relating to section 1001. The temporary regulations contain
rules relating to certain assignments of notional principal contracts
by dealers in those contracts.
The text of those temporary regulations also serves as the text of
these proposed regulations. The preamble to the temporary regulations
explains the temporary regulations.
Special Analyses
It has been determined that this notice of proposed rulemaking is
not a significant regulatory action as defined in EO 12866. Therefore,
a regulatory assessment is not required. It also has
[[Page 32729]]
been determined that section 553(b) of the Administrative Procedure Act
(5 U.S.C. chapter 5) and the Regulatory Flexibility Act (5 U.S.C.
chapter 6) do not apply to these regulations, and, therefore, a
Regulatory Flexibility Analysis is not required. Pursuant to section
7805(f) of the Internal Revenue Code, this notice of proposed
rulemaking will be submitted to the Chief Counsel for Advocacy of the
Small Business Administration for comment on its impact on small
business.
Comments and Requests for a Public Hearing
Before these proposed regulations are adopted as final regulations,
consideration will be given to any written comments (a signed original
and eight (8) copies) that are submitted timely to the IRS. All
comments will be available for public inspection and copying. A public
hearing may be scheduled if requested in writing by any person that
timely submits written comments. If a public hearing is scheduled,
notice of the date, time, and place for the hearing will be published
in the Federal Register.
Drafting Information
The principal author of the regulations concerning the
modifications of bad debts is Craig R. Wojay, Office of Assistant Chief
Counsel (Financial Institutions and Products), IRS. The principal
author of the regulations concerning dealer assignments of notional
principal contracts is Thomas J. Kelly, Office of Assistant Chief
Counsel (Financial Institutions and Products), IRS. However, other
personnel from the IRS and Treasury Department participated in their
development.
List of Subjects in 26 CFR Part 1
Income taxes, Reporting and recordkeeping requirements.
Proposed Amendments to the Regulations
Accordingly, 26 CFR part 1 is proposed to be amended as follows:
PART 1--INCOME TAXES
Paragraph 1. The authority citation for part 1 continues to read in
part as follows:
Authority: 26 U.S.C. 7805 * * *
Par. 2. Section 1.166-3 is amended by adding paragraph (a)(3) to
read as follows:
Sec. 1.166-3 Partial or total worthlessness.
(The text of proposed paragraph (a)(3) is the same as the text of
Sec. 1.166-3T(a)(3) published elsewhere in this issue of the Federal
Register).
Par. 3. Section 1.1001-4 is added to read as follows:
Sec. 1.1001-4 Modifications of notional principal contracts.
(The text of proposed section 1.1001-4 is the same as the text of
Sec. 1.1001-4T published elsewhere in this issue of the Federal
Register).
Margaret Milner Richardson,
Commissioner of Internal Revenue,
[FR Doc. 96-15831 Filed 6-24-96; 8:45 am]
BILLING CODE 4830-01-P
Complete official Federal Register PDF
FR Doc. 96-14441 Corporate Governance
[Federal Register Volume 61, Number 123 (Tuesday, June 25, 1996)]
[Proposed Rules]
[Pages 32713-32728]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-14441]
========================================================================
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. 123 / Tuesday, June 25, 1996 /
Proposed Rules
[[Page 32713]]
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
12 CFR Parts 543, 544, 545, 552, 556, 563, and 575
[No. 96-49]
RIN 1550-AA87
Corporate Governance
AGENCY: Office of Thrift Supervision, Treasury.
ACTION: Notice of proposed rulemaking; request for comment.
-----------------------------------------------------------------------
SUMMARY: The Office of Thrift Supervision (OTS or Office) today is
proposing amendments to its corporate governance regulations and policy
statements to update, reorganize and substantially streamline them.
This proposal follows a detailed review of each pertinent regulation
and policy statement in the Code of Federal Regulations (CFR) to
determine whether it is necessary, imposes the least possible burden
consistent with safety and soundness and is written in a clear and
straightforward manner. Today's proposal is being made pursuant to the
Regulatory Reinvention Initiative of the Vice President's National
Performance Review and section 303 of the Riegle Community Development
and Regulatory Improvement Act of 1994.
DATES: Comments must be received on or before August 26, 1996.
ADDRESSES: Send comments to Manager, Dissemination Branch, Records
Management and Information Policy, Office of Thrift Supervision, 1700 G
Street, NW., Washington, D.C. 20552, Attention Docket No. 96-49. These
submissions may be hand-delivered to 1700 G Street, NW., from 9:00 A.M.
to 5:00 P.M. on business days; they may be sent by facsimile
transmission to FAX Number (202) 906-7755. Comments will be available
for inspection at 1700 G Street, NW., from 9:00 P.M. until 4:00 P.M. on
business days.
FOR FURTHER INFORMATION CONTACT: David Permut, Counsel (Banking and
Finance), Business Transactions Division, (202) 906-7505; or Mary Jo
Johnson, Project Manager, Supervision Policy (202) 906-5739; or Valerie
J. Lithotomos, Counsel (Banking and Finance), Regulations and
Legislation Division, (202) 906-6439, Chief Counsel's Office, 1700 G
Street NW., Washington, D.C. 20552.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background of the Proposal
II. Objectives
A. Reduce Compliance Costs by Removing Unnecessary Regulations
B. Provide Maximum Corporate Governance Flexibility for Savings
Associations
C. Provide Clear Regulatory Guidance for Frequently Recurring
Questions
D. Move the Charter and Model Bylaws Into Application Processing
Regulatory Handbook
III. Historical Overview of Current Corporate Governance Regulations
IV. Section-by-Section Analysis of the Proposal
V. Proposed Disposition of Corporate Governance Regulations
VI. Request for Comment
VII. Executive Order 12866
VIII. Regulatory Flexibility Act Analysis
IX. Unfunded Mandates Act of 1995
X. Paperwork Reduction Act
I. Background of the Proposal
In a comprehensive review of the agency's regulations in the spring
of 1995, OTS identified numerous obsolete or redundant regulations that
could quickly be repealed. On December 27, 1995, OTS published a final
rule in the Federal Register repealing eight percent of its
regulations.1 As part of its review, OTS also identified several
key areas in its regulations for a more intensive, systematic
regulatory burden review. Certain areas--lending and investment
authority, corporate governance, subsidiaries and equity investments,
and conflicts of interest, corporate opportunity and hazard insurance--
were chosen for intensive review because they are vital to the thrift
industry, had not been developed on an interagency basis,2 and had
not been substantially reviewed or amended in recent years.
---------------------------------------------------------------------------
\1\ 60 FR 66866 (December 27, 1995).
\2\ Interagency regulations are being reviewed through the
Federal Financial Institutions Examination Counsel.
---------------------------------------------------------------------------
Earlier this year, OTS proposed a comprehensive streamlining of its
lending and investment regulations.3 Proposals regarding
subsidiaries and equity investments and conflicts of interest,
corporate opportunity and hazard insurance will be issued in the near
future.
---------------------------------------------------------------------------
\3\ 61 FR 1162 (January 17, 1996).
---------------------------------------------------------------------------
Today's proposal presents the results of the review of the charter
and bylaw regulations (corporate governance). If adopted in final form,
today's proposal will reduce the number of charter and bylaw
regulations and policy statements from 33 to 24, a reduction of 27
percent. In addition, deletion of the charter and model bylaws from the
CFR will remove 13.5 pages of CFR text. This information will be moved
to the Application Processing Regulatory Handbook (Handbook).
This proposal was developed in consultation with those who use the
regulations on a daily basis: OTS regional staff and representatives of
the thrift industry. OTS sought specific comments from the thrift
industry through a focus group composed of representatives of seven
savings associations and an industry trade association.
II. Objectives
The overarching goal of OTS' reinvention initiative is to reduce
regulatory burden on savings associations to the greatest extent
possible consistent with statutory requirements and safety and
soundness. In the context of corporate governance, we believe maximum
burden reduction can be achieved by pursuing four specific objectives.
A. Reduce Compliance Costs by Removing Unnecessary Regulations
The first objective of the OTS proposal is to remove unnecessary,
duplicative or outdated regulations affecting the corporate governance
of Federal thrift institutions. As described in more detail in the
Background section below, the corporate governance regulations have not
been thoroughly updated for many years. By eliminating unnecessary
regulations, OTS hopes to reduce regulatory compliance costs.
Examples of regulations, or subsections thereof, proposed to be
removed are Sec. 544.2(b)(4) (Mutual capital certificates), Sec. 544.3
(Adoption of
[[Page 32714]]
a new Federal charter by a Federal savings association),
Sec. 544.5(b)(17) (Emergency preparedness), Sec. 544.8 (Old and new
charters), Sec. 544.9 (Charter B associations), Sec. 552.1
(Definitions), Sec. 552.2 (Corporate titles), Sec. 552.2-5 (Conversion
from Federal mutual to Federal stock), Sec. 552.4(b)(3) (Charter
amendments), Sec. 552.6-2(a) (Requirement that the President shall be a
director and CEO), and Sec. 552.8 (Savings deposits). All of the above
regulations, or portions thereof, are being removed because they are
redundant, outdated or unnecessary.
Several other sections will have changes made to certain sentences
or phrases within the section, such as the removal of the need for
preliminary OTS approval of proposed charter amendments in Secs. 544.1,
Section 9; 552.3, Section 8; and 575.9, Section 8; and elimination of
the need for certification by management of the legality of proposed
charter and bylaw amendments in Secs. 544.2(a)(2)(i), 544.5(c),
552.4(a)(2)(i), and 552.5(b)(1).
B. Provide Maximum Corporate Governance Flexibility for Savings
Associations
OTS is committed to ensuring that Federal savings associations
operate under state-of-the-art corporate governance procedures.
Wherever possible, consistent with safety and soundness and fairness to
shareholders and members, we are seeking to move toward greater
flexibility. Specific amendments proposed to provide greater
flexibility include:
Amending Secs. 544.5(b)(1) and 552.6(a) to provide more
flexibility for the site of shareholder meetings.
Modifying Secs. 544.5(b)(5) and 552.6(f)(1) to allow
proxies to be gathered telephonically or electronically.
Expanding the list of preapproved charter amendments in
Secs. 544.2 and 552.4 to enable institutions to adopt supermajority
voting provisions, to eliminate cumulative voting, and, for mutuals to
increase the maximum permissible number of votes per member to up to
1000.
Replacing the current requirement in Secs. 544.2,
544.5(c)(2), 552.4 and 552.5(b) that institutions give OTS advance
notice of their intent to adopt preapproved charter and bylaws
amendments with an after-the-fact notice.
Authorize associations to hold their annual shareholders
meeting 150 days after the close of their fiscal year, instead of the
current 120 days (Secs. 544.5(b)(1) and 552.6(a)).
Revising Sec. 544.5(b)(16) to recognize the ``sitting''
board of directors rather than the ``authorized'' board of directors
when determining voting requirements in certain instances.
Exempt wholly-owned stock associations from various
requirements such as staggered terms for members of their boards of
directors (Sec. 552.6-1(b)), notice of shareholder meetings
(Sec. 552.6(b)), and compilation of shareholder voting lists
(Sec. 552.6(d)).
Permit shareholder actions to be taken by unanimous
written consent in lieu of a formal shareholders meeting
(Sec. 552.6(h)).
OTS is continuing to review the laws of various states, and the
corporate governance approaches followed by the other federal agencies
that charter depository institutions, for additional innovative
corporate governance ideas. We welcome further suggestions from
commenters.
In particular, OTS requests comment on whether there are aspects of
the corporate governance structure applicable to national banks that
would be beneficial for Federal thrifts. The corporate governance
regulations applicable to Federal thrifts tend to be more detailed than
those applicable to national banks. To fill in the details, national
banks are permitted to elect to follow the corporate governance laws of
the state where the bank's home office is located, the laws of the
state where the bank's holding company is chartered, Delaware law, or
the Model Business Corporation Act. The body of law that a national
bank elects to follow applies only to the extent not inconsistent with
the corporate governance provisions of the National Bank Act and
implementing regulations.
Federal savings associations may benefit from the detail provided
in OTS's corporate governance regulations. Absence of detail in the
area of corporate governance can lead to confusion, delay, and
potential shareholder litigation. Accordingly, OTS's objective has been
to provide savings associations with a comprehensive set of clear,
modern, and flexible corporate governance rules. Institutions may apply
on a case-by-case basis for permission to adopt non-standard charter
and bylaw provisions.
Nevertheless, savings associations may benefit from the additional
option of following state law in lieu of OTS corporate governance
regulations--except for those regulations that OTS designated as vital
to safety and soundness or other fundamental policy objectives. OTS
requests comment on whether this type of state law election would offer
benefits to savings associations and, if so, a description of those
benefits.
C. Provide Clear Regulatory Guidance for Frequently Recurring Questions
A third objective is to clarify certain issues that frequently
arise regarding the corporate governance regulations. This will reduce
the number of instances when institutions incur delay or expense
seeking clarification of ambiguous or incomplete regulatory language.
Accordingly, OTS proposes to amend:
Section 544.5(b)(3) and (4) to indicate what rules govern
adjourned shareholder meetings;
Sections 544.5(b)(10) and 552.6-1(f) to add a cross
reference to a definition indicating what constitutes ``cause'' for
removal of a director;
Section 544.5(b)(6) to extend privacy rights for
confidential portions of an institution's books and records, now
provided for Federal stock institutions at Sec. 552.11(d), to Federal
mutual associations;
Section 544.5(b)(13) to give guidance on the procedures
governing when an institution substitutes a new director nominee for a
nominee that dies or becomes incapacitated; and
Section 552.6(d) to give guidance on how stock held in the
name of fiduciaries should be reflected on voting lists.
D. Move the Charters and Model Bylaws Into Application Processing
Regulation Handbook
OTS is proposing to move the charters for Federal stock and mutual
savings associations, found at Secs. 544.1, 552.3 and 575.9, to the
Handbook. We are also proposing to move the model bylaws, found in
appendices to Parts 544 and 552, to the Handbook. The Office of the
Comptroller of the Currency (OCC) and the National Credit Union
Administration (NCUA) follow a similar practice.
Placing the savings association charters and bylaws in the Handbook
may offer two advantages. First, by eliminating nonessential items from
the regulations, the regulations may become easier to use. Second, OTS
would have more flexibility to update and modernize the charters and
bylaws from time to time, because notice and comment rulemaking would
not be required to effect changes. We recognize, however, that making
changes without notice and comment rulemaking could also be viewed as a
disadvantage. Moreover, placing the charters and bylaws in the Handbook
may make them less accessible.
[[Page 32715]]
Accordingly, we request specific comment on this proposed change.
III. Historical Overview of Current Corporate Governance
Regulations
Before 1982, the corporate governance of Federal savings
associations was primarily concerned with Federal mutual savings and
loan associations, the only type of corporate charter available from
the chartering authority, the Federal Home Loan Bank Board (FHLBB),
predecessor to OTS. The Home Owners' Loan Act (HOLA) 4 only
permitted the chartering of Federal mutual savings and loan
associations.5
---------------------------------------------------------------------------
\4\ 12 U.S.C. 1461-1470.
\5\ Section 5(a) of the HOLA, 12 U.S.C. 1464(a), contains the
statutory authority for the OTS to issue charters for Federal thrift
institutions.
---------------------------------------------------------------------------
In 1982, Congress enacted the Garn-St Germain Depository
Institutions Act (DIA),6 which broadened the types of charters and
organizational options available to Federal savings associations. The
DIA authorized the creation of new Federally chartered stock
institutions, either as Federal savings banks or Federal savings and
loan associations, and permitted state-chartered savings banks to
convert to a Federal charter without requiring them to surrender their
FDIC insurance in favor of FSLIC insurance of accounts.
---------------------------------------------------------------------------
\6\ Pub. L. 97-320, 96 Stat. 1469, October 15, 1982.
---------------------------------------------------------------------------
In response to the DIA, the FHLBB amended its corporate governance
regulations (1983 Rulemaking) 7 to create a single Federal mutual
charter and a single Federal stock charter. The same basic charter was
available both to savings banks and to savings and loan associations,
with minor differences. Before the 1983 Rulemaking, Federally-chartered
thrifts had operated under a plethora of charters, including Charter S,
Charter T, Charter B, Charter B (Revised), Charter N, Charter N
(Revised), Charter L and Charter K (Revised). Some Federal associations
continue to operate under those charters. It is important to note that
today's proposed rulemaking does not require any institution to change
its current charter. After adoption of a final regulation, institutions
may retain their existing charters or amend their charters to conform
to the new provisions.
---------------------------------------------------------------------------
\7\ 48 FR 44174 (September 28, 1983).
---------------------------------------------------------------------------
In 1985, the FHLBB concluded that with the new structural options
available to Federal savings associations, a number of important
matters regarding the corporate governance of those associations were
either not adequately addressed, not covered in codified form or were
distributed in a piecemeal fashion throughout the regulations. The
FHLBB conducted an extensive review of the Model Business Corporation
Act, the corporate codes of Delaware, California, New York and Florida,
then presented a proposal for updating the corporate governance
regulations. Because the proposal was extensive, it was broken into
four parts,8 published over a two year period, with comments
sought on all sections before a final regulation was to be promulgated.
Only one section, however, the proposal on revisions to Receiverships
and Conservatorships, was enacted in final form before the priorities
of the FHLBB and external circumstances changed. The savings and loan
crisis had begun and the extensive revisions to corporate governance
were set aside for future consideration.
---------------------------------------------------------------------------
\8\ Part I-50 FR 38832 (September 13, 1985); Part II-50 FR 52482
(December 24, 1985); and Part III and IV-52 FR 25870 (July 9, 1987).
---------------------------------------------------------------------------
In 1989, the FHLBB's regulatory and chartering authority was
assumed by the newly established OTS. A number of the corporate
governance issues were ultimately addressed in the form of legal
opinions or approved amendments to charters and bylaws. These changes,
however, were confined to considerably more narrow subject areas than
the FHLBB proposal envisioned.
Thus, today's proposal, if adopted in final form, will be the first
major update of the corporate governance regulations in over a decade.
IV. Section-by-Section Analysis of the Proposal
A. Part 544--Charter and Bylaws
Section 544.1 Federal Mutual Charter
This section contains the required charter for Federal mutual
associations. As indicated above, OTS proposes to move this charter (as
well as the charter for stock associations and the model bylaws for
both) from the regulations to the Handbook. Thus, OTS proposes to amend
Sec. 544.1 to reference the Handbook. OTS also proposes to update the
charter.
So that the reader can understand what is being proposed, we have
set forth the changes proposed for the charter in the regulatory text,
and discuss them below.9
---------------------------------------------------------------------------
\9\ For drafting purposes, the changes to the charter have been
designated as Alternative Two in the regulatory text.
---------------------------------------------------------------------------
Section 1. Corporate Title. Section 1 establishes the corporate
title of the Federal association. The words ``hereby chartered'' will
be removed as unnecessary verbiage.
Section 6. Members. This section identifies the association's
members and describes their rights. OTS proposes to streamline this
section by moving the third and fourth sentences to introductory
instructions in the Handbook or, if the charter is retained in
Sec. 544.1, to the introductory paragraph of the regulation. These two
sentences instruct institutions that wish to adopt the charter, but are
currently operating under old charters conferring membership rights on
borrowers, to grandfather the membership rights of their existing
borrowers.
The sixth sentence of section 6, dealing with proxies, will be
removed because it already appears in the bylaws. The seventh and
eighth sentences, dealing with quorums, will be moved to the bylaws
because matters regarding member meetings are more fully addressed
there.
Section 7. Directors. This section provides that a Federal mutual
association may have from 5 to 15 directors. To further streamline the
charter, bracketed references to ``trustees'' will be removed, and a
single sentence will be added to the introductory instructions
indicating that institutions may substitute the term ``trustee'' for
the term ``director'' where appropriate. Similar changes will be made
throughout the charter and the model bylaws for mutual associations.
The third and fifth sentences (providing that directors shall be
members of the association and requiring staggered terms for directors)
will be moved to the bylaw section dealing with directors. The fourth
sentence (regarding vacancies on the board) will be moved to the bylaw
section on resignations, removals and (newly added) vacancies. The last
sentence, in brackets, will also be moved to the bylaw section on
directors. This sentence authorizes state savings banks that convert to
Federal mutual associations to grandfather their existing provisions
for electing directors for a limited period of time. OTS believes each
of these matters is more appropriately addressed in the bylaws, where
related issues are already addressed. Presenting related requirements
in a single place should make the charter and bylaws more user
friendly.
Section 9. Amendment of charter. Section 9 describes the procedures
for amending the association's charter. References to Secs. 544.2 or
544.3 will be removed as unnecessary verbiage. Section 9 will also be
revised to reflect the fact that ``preapproved'' charter amendments
(Sec. 544.2) will now be truly preapproved. Institutions will no longer
be required to submit these amendments to OTS for ``preliminary''
approval. (See discussion of Sec. 544.2 below.)
[[Page 32716]]
Finally, the signature blocks of the charter will be modified to
include a date to clarify when a charter is effective.
Section 544.2 Charter Amendments
Paragraphs (a) and (b) describe the filing requirements for
amending Federal mutual charters. OTS is proposing to remove, from
paragraphs (a)(2)(i) and (ii), the requirement that institutions
certify that amendments they propose are permissible under all
applicable laws. This certification is unnecessary because the legality
of a proposed amendment is reviewed by OTS staff as part of the
application process and its deletion will also reduce regulatory
burden. In addition, paragraph (b) will be revised to indicate that
preapproved charter amendments will no longer require advance
submissions to OTS. Instead, preapproved amendments will be deemed
approved when adopted by the institution and must simply be filed with
OTS within 30 days after adoption.
A new preapproved charter amendment will be added to Sec. 544.2
that authorizes Federal mutual associations to amend their charters to
raise the cap on the maximum number of votes any member can cast up to
1,000. Mutual charters generally authorize depositors to cast one vote
for every $100 of deposits, subject to a cap that has historically
tracked the limit on deposit insurance. Thus, 1,000 votes is the
standard cap under the current mutual charter (Sec. 544.1). However,
many institutions operate under charters adopted before the cap was
raised to 1,000. Making the 1,000 cap a preapproved amendment will
enable institutions to update their cap without filing an application
and paying an application fee. This is the most frequently requested
amendment for Federal mutual associations.
OTS also proposes to remove from Sec. 544.2 an obsolete preapproved
amendment authorizing institutions to issue Mutual Capital Certificates
(MCCs). Institutions generally no longer issue MCCs.10 Elimination
of outdated matter such as this should make the regulations less
confusing and easier to use.
---------------------------------------------------------------------------
\10\ An institution could still choose to issue MCCs after
Sec. 544.2 is modified, provided the institution makes any necessary
amendments to its charter and bylaws (which would no longer be
preapproved) and follows the procedures specified at 12 CFR 563.74.
Paragraph (d) of Sec. 563.74 will be amended to reflect removal of
the preapproved amendment for MCCs.
---------------------------------------------------------------------------
Paragraph 544.2(c) details the procedures an institution must
follow when it wants OTS to reissue its charter to reflect amendments
to the charter. The wording of this section will be conformed to the
wording of the corresponding stock charter section at Sec. 552.4(d). No
substantive change will result. Paragraph (c) is also being amended to
remove the delegation of authority to the Chief Counsel to execute
reissued charters. This change is being proposed as part of a
continuing effort to remove delegations from the regulations. Delegated
authority to execute reissued charters will be preserved via an
internal OTS document.
Section 544.3 Adoption of a New Federal Charter by a Federal Savings
Association
This section details the procedures that a Federal mutual savings
and loan association would use to amend its charter to read in the form
of a Federal mutual savings bank, or vice versa. This section has
become obsolete. Today, the charters for both types of institution are
identical, except for a possible difference in corporate title. A
simple corporate title change can be used to redesignate an institution
as a ``savings bank'' or ``savings and loan association.'' Thus,
Sec. 544.3 is being repealed. Corresponding changes will be made to
Secs. 543.1(b) and 543.14.
Section 544.5 Federal Mutual Savings Association Bylaws
This section describes the requirements for the bylaws of a Federal
mutual association. A nonsubstantive change will be made to paragraph
(a) to conform its language regarding procedures for bylaw amendments
to similar language that appears later in Sec. 544.5(b)(16).
Paragraph (b)(1) contains the annual meeting requirements for
Federal mutual associations. This paragraph will be amended to allow
meetings not only at the main office, but also at any other convenient
place the board of directors may designate, and to permit the
association to hold its annual meeting within 150 days of the end of
the association's fiscal year. The current requirement is 120 days.
Both changes will provide additional flexibility for Federal mutual
associations.
Paragraph (b)(2) addresses special meetings of members. It
provides, inter alia, that the holders of ten percent or more of a
mutual association's voting capital may call a special meeting.
Institutions frequently ask for clarification of the meaning of
``voting capital,'' since the term is no longer defined by the HOLA.
OTS proposes to clarify that voting capital means all FDIC-insured
deposits held by a savings association.
Paragraphs (b) (3) and (4), which discuss notice requirements for
meetings of members and the fixing of the record date for determining
what members are entitled to vote, respectively, will be amended to
indicate the circumstances under which adjournment of a meeting of
members will require the issuance of new notices and the fixing of a
new record date. These are also frequently asked questions.
OTS is also proposing a new paragraph (b)(5), to be titled ``Member
Quorum.'' 11 This paragraph will contain certain quorum provisions
currently found in the charter (as discussed above), as well as
clarification of what items of business may be considered at a meeting
held after adjournment. The agency believes that quorum issues are more
appropriately addressed in the bylaws, where other rules governing
member meetings already appear.
---------------------------------------------------------------------------
\11\ All subsequent paragraphs will be renumbered accordingly.
However, only those paragraphs being substantively changed are
discussed below.
---------------------------------------------------------------------------
Current paragraph (b)(5), on voting by proxy, will become (b)(6)
and will be amended to permit proxies to be given telephonically or
electronically as long as the holder uses a procedure for verifying the
identity of the member.12 Telephonic and electronic proxies enable
institutions to gather proxies and conduct corporate business more
rapidly and have become an accepted part of corporate democracy. In
addition, in response to frequent questions, OTS proposes to describe
voting procedures applicable to joint accounts and accounts held by
fiduciaries on behalf of others.
---------------------------------------------------------------------------
\12\ One example of a verification procedure is for the
institution receiving the proxy by facsimile to compare the
signature on the proxy to a signature that the institution has on
file.
---------------------------------------------------------------------------
Current paragraph (b)(6), which references Sec. 545.131 regarding
communication with other members, will become (b)(7). In addition, the
paragraph will be amended to reflect the relocation of Sec. 545.131 to
Part 544, and will extend the privacy rights now guaranteed to
depositors of Federal stock institutions (Sec. 552.11(d)) to the
depositors of Federal mutual institutions. The privacy rights of the
members of mutual institutions will not prevent the internal use of
member information by those institutions.
Current paragraph (b)(7), regarding the number of directors, will
become (b)(8). In addition, the paragraph will be amended to clarify
that the bylaws must specify the precise number of directors (rather
than a range). This number is
[[Page 32717]]
chosen by the institution within the range specified in the charter and
may be changed by the institution from time to time by amending its
bylaws. Paragraph (b)(8) will also contain three provisions being moved
from section seven of the charter. One provision requires that
directors be members of their association; a second provision requires
that directors serve staggered terms; and a third provision permits
state savings banks that convert to Federal mutual associations to
grandfather their method of electing directors for a limited time.
Current paragraph (b)(9), which addresses the duties of officers,
employees and agents and their indemnification, will become (b)(10). In
addition, a sentence on the removal of officers will be added to answer
a frequently asked question. The sentence will state: ``Any officer may
be removed by the board of directors with or without cause, but such
removal, other than for cause, shall be without prejudice to the
contractual rights, if any, of the person so removed.''
Current paragraph (b)(10), on the resignation or removal of
directors, will become (b)(11). A cross reference to the definition of
``cause,'' which appears elsewhere in the regulations, will be added in
response to a frequently asked question concerning the circumstances
under which shareholders can remove directors for ``cause''. Paragraph
(b)(11) will also be expanded to authorize boards of directors to fill
vacancies under the current flexible rules that now apply to stock
associations.
Current paragraph (b)(13), discussing procedures for nominating
directors, will become (b)(14) and will be expanded to clarify the
requirement that the names of nominees be posted at least 15 days
before an election, under certain circumstances. New language will
confirm that this requirement does not apply to a nominee substituted
as a result of death or other incapacity of another nominee. From time
to time, institutions have sought clarification on this issue.
Current paragraph (b)(16), which sets forth procedures for amending
the bylaws, will become (b)(17) and will be amended to make it easier
for a board that fails to meet its quorum requirement solely due to
vacancies on the board to amend its bylaws. The new language will
specify that, in the absence of a quorum due solely to vacancies, the
affirmative vote of a majority of the sitting board may amend the
bylaws.
Current paragraph (b)(17), on miscellaneous topics, will become
(b)(18) and will be amended to remove the reference to provisions
regarding ``emergency preparedness.'' Emergency preparedness provisions
are no longer part of the model bylaws.
Paragraphs (c)(1) and (c)(2) discuss the filing procedures for
bylaw amendments. OTS proposes to remove the requirement that
applications for bylaw amendments contain certifications that the
proposed amendments comport with all laws. As noted above when
discussing charter amendments, the certification requirement is
unnecessary because the legality of proposed amendments are reviewed by
OTS staff as part of the application process and its deletion will also
reduce regulatory burden. In addition, consistent with the proposal to
move the model bylaws out of the regulations, paragraph (c)(1) will be
revised to indicate that the model bylaws can be found in the Handbook
available from OTS. The current appendix to part 544, which contains
the model bylaws, will be removed.
Paragraph (c)(2) will also be revised to indicate that the model
bylaws, if adopted verbatim, are approved when adopted and must simply
be filed with OTS within 30 days after adoption. This change is
proposed because OTS has determined that over 90 percent of the bylaws
applications filed in recent years are for standard provisions that do
not require agency review.
Paragraph (d), which addresses the effective date of all other
bylaw amendments, will be amended to comport with a similar provision
for Federal stock associations. The provision is intended to clarify
the circumstances under which an amendment may be rejected by OTS, by
cross referencing the current standards which appear in paragraph
(c)(1).
Section 544.8 References to Old and New Charters; Rules Applicable to
Trustees of Federal Mutual Savings Banks
OTS proposes to remove this section, which indicates that trustees
will be treated as if they are directors for purposes of the
regulations. The same point will be made in the introductory
instructions to the charter and model bylaws. It does not need to be
repeated here.
Section 544.9 Obsolete Charter Provision for Charter B Associations.
This section provides that institutions that still operate under
the old Charter B are not bound by section 10 of that charter. Section
10 of Charter B purports to limit the authority of an institution to
invest in consumer loans and corporate debt securities. OTS proposes to
move Sec. 544.9, which affects very few institutions, from the
regulations into Handbook guidance.
Section 544.8 Communication Between Members of a Federal Mutual
Savings Association (Proposed)
OTS proposes to move the rules governing communications between
members of Federal mutual associations, which now appear in
Sec. 545.131, to part 544. This is where users of the regulations would
most likely look for guidance on such matters. Accordingly, current
Sec. 545.131 will become new Sec. 544.8.
Appendix to Part 544
As indicated above, OTS proposes to eliminate the appendix to part
544, which contains the model bylaws. Instead, these bylaws will be
moved to the Handbook, with changes being made to conform the model
bylaws to the amendments to the bylaws regulations described above.
B. Part 552--Incorporation, Organization, and Conversion of Federal
Stock Associations
Section 552.2 Corporate Title
OTS proposes to remove this section, which merely reminds
institutions that Sec. 543.1 regarding corporate titles for Federal
associations applies to Federal stock associations. There is no need
for this provision. Current Sec. 543.1, as currently written, clearly
governs corporate titles for all Federal associations.
Section 552.2-5 Conversion From Federal Mutual to Federal Stock
Charter
This section authorizes Federal mutual associations to convert to
Federal stock associations and provides for issuance of a stock charter
upon completion of the conversion. These matters are also covered, in
greater detail, by OTS conversion regulations. OTS, therefore, proposes
to remove this section.
Section 552.3 Charters for Federal Stock Associations
This section contains the required charter for Federal stock
associations. For the reasons indicated above in the discussion of
Sec. 544.1, OTS proposes to move the stock charter out of the
regulations and into the Handbook. Section 552.3 will thus be revised
to reference the charter as it appears in the Handbook. OTS proposes to
update the Federal stock charter with the following changes:
Section 2. Office. This section describes the location of the home
office of the Federal stock association. The
[[Page 32718]]
word ``in'' will be deleted and replaced by the word ``at.'' This is a
purely technical amendment.
Section 5. Capital stock. Section 5 describes the rules governing
the capital stock of a Federal stock association, including the types
of stock it may issue, the consideration to be paid, and voting rights.
Several changes are proposed. First, the charter will be amended to
permit the issuance of ``no par'' stock. The decision whether stock
should have a stated par value is a matter of internal corporate
governance that raises no supervisory or safety and soundness issues.
Second, the final sentence of the first paragraph will be revised
to reflect more current accounting terminology. The term ``retained
earnings'' will be substituted for ``surplus,'' and the phrase ``common
stock or paid-in capital accounts'' will be substituted for ``stated
capital.''
Third, the second paragraph will be revised to clarify that Federal
stock associations may issue stock to officers, directors, and
controlling persons in connection with its initial organization,
without a shareholder vote.
Fourth, the second sentence of the third paragraph will be revised
to clarify that a Federal stock charter may be amended to eliminate
cumulative voting.
Section 7. Directors. This section specifies that the number of
directors of a stock association shall be fixed in the bylaws and shall
not be fewer than five nor more than fifteen. However, provision is
made for the Director of OTS to approve a larger or smaller board of
directors. OTS proposes a technical amendment to this section that will
specify that approval of a larger or smaller board can be given either
by the Director ``or his or her delegate.''
Section 8. Amendment of charter. Section 8 describes the procedure
for amending an association's charter. This section is being revised to
indicate that preapproved charter amendments will be effective once
they have been approved by the association's board of directors and
shareholders, without any need for ``preliminary approval'' or any
other form of approval from OTS. (See discussion below of Sec. 552.4.)
In addition, OTS proposes to elaborate on the general rule that charter
amendments require approval by only a majority of the votes eligible to
be cast at a shareholders' meeting. Clarifying language will be added
indicating that this general rule does not apply in those instances
where an association's charter specifies that a supermajority vote is
required. (See discussion of Sec. 552.4 below.)
Finally, the signature blocks of the charter will be modified to
include a date to clarify when a charter is effective.
Section 552.4 Charter Amendments
Paragraphs (a) and (b) set forth the filing requirements for
amendments to Federal stock charters. In paragraph (a), OTS is
proposing to make the same changes regarding certification requirements
as discussed above in connection with the corresponding provisions for
mutual associations (Sec. 544.2(a)). Thus, stock associations will no
longer be required to certify that proposed amendments comport with all
applicable laws.
Paragraph (b) sets forth a list of preapproved charter amendments.
OTS proposes to add descriptive titles to each of the preapproved
amendments. The titles will correspond to the titles to similar
preapproved charter provisions for Federal mutual associations.
Paragraph (b) will also be revised to indicate that preapproved charter
amendments are approved when adopted and must simply be filed with OTS
within 30 days after adoption.
Paragraph (b)(3), which contains a preapproved amendment for
institutions that wish to change from a Federal stock savings and loan
association charter to a Federal stock savings bank charter, will be
removed for the same reasons described above with regard to
Sec. 544.3.13
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\13\ Subsequent paragraphs will be renumbered accordingly.
However, only those paragraphs being substantively changed are
discussed below.
---------------------------------------------------------------------------
Current paragraph (b)(4), which permits changes to the authorized
number of shares and the par or stated value of such shares, will
become (b)(3). Additional nonsubstantive changes will be made to
clarify the language of this provision.
Current paragraph (b)(5), which permits institutions to modify
section 5 of the charter so as to authorize the issuance of preferred
stock, will become (b)(4) and will include the same changes to section
5 of the charter as were discussed above. In addition, the reference to
the Resolution Trust Corporation will be deleted, because that agency
no longer exists.
A new preapproved charter amendment will be added, as new paragraph
(b)(6), to authorize institutions to prohibit cumulative voting for
directors. The standard charter for Federal stock associations provides
for cumulative voting for directors. Federal associations frequently
apply to amend their charters to prohibit cumulative voting, and OTS
routinely approves these applications. Adding this provision to the
list of preapproved amendments will save associations that wish to make
this change the time and expense of an application.
Paragraph (c) states OTS policy on antitakeover provisions in
charter amendments. OTS proposes to expand this provision to state the
two basic standards OTS uses when reviewing proposed antitakeover
amendments. First, the proposed amendment must be consistent with
applicable statutes, regulations and OTS policies. Second, such
amendments must be adopted by a percentage of the shareholder vote at
least equal to the highest percentage that would be required to take
any action under the antitakeover provision. These are not new
standards; OTS already employs them when reviewing antitakeover
amendments. Stating these standards in the regulations will enable
institutions to present applications that conform to OTS requirements,
thereby saving them time and expense.
Section 552.5 Bylaws
This section presents the requirements for the bylaws of a Federal
stock association. A technical amendment will be made to paragraph (a)
to confirm that shareholder votes to approve bylaw amendments must
occur ``at a legal meeting'' of shareholders.
Paragraph (b) discusses the application and notice procedures
applicable to bylaw amendments. This paragraph will be amended to
remove the requirement that associations certify that bylaw amendments
comport with applicable law. Revisions will also be made to indicate
that the model bylaws, if adopted verbatim, are approved when adopted
and must simply be filed with OTS within 30 days after adoption.
Paragraph (b) will also indicate that the model bylaws are in the
Handbook and are available from any Regional Office.
OTS proposes to add a new paragraph (d) confirming that the
authority of a Federal stock association to engage in any transaction
is determined by the association's charter and bylaws in effect at the
time of the transaction. Subsequent amendments do not retroactively
affect this determination. A similar regulatory provision is already in
effect for Federal mutual associations (Sec. 544.6).
Section 552.6 Shareholders
This section contains certain corporate governance requirements
regarding shareholder meetings. Paragraph (a), which contains rules
regarding the time and place of shareholder meetings, will be amended
in two respects. First, the requirement
[[Page 32719]]
that shareholders meetings be held in the state of an association's
principal place of business is being removed. Instead, associations
will be able to hold shareholder meetings at any convenient place the
board of directors designates. Second, the time frame within which an
association must hold its annual shareholders meeting will be extended
from 120 to 150 days of the end of the association's fiscal year. These
are the same changes being proposed for Federal mutual associations
(Sec. 544.5(b)(1)).
Paragraph (b) states the notice requirements for shareholder
meetings. This paragraph will be amended to waive the shareholder
notice requirements for wholly-owned institutions.
Paragraph (d)(1), which addresses access to shareholder lists, will
be revised to clarify that shareholder lists are available only to
shareholders ``of record'' and their agents, and that the lists must
contain the names of beneficial owners that are furnished to the
association under the rules of the Securities and Exchange Commission.
In addition, the paragraph will be amended to waive its application to
wholly-owned institutions.
Paragraph (e), regarding shareholder quorum requirements, will be
amended to confirm that, whenever a quorum is present, the affirmative
vote of the majority of shares entitled to vote at a shareholders
meeting shall constitute an act of the shareholders, absent a
supermajority voting requirement.
Paragraph (f), which addresses proxies, will be amended in the same
manner as the Federal mutual bylaws at Sec. 544.5(b)(6) to allow
proxies to be gathered electronically or telephonically. In addition,
in response to frequent questions, paragraph (f) will be expanded to
describe voting procedures applicable to stock held by fiduciaries on
behalf of others and stock held jointly.
A new paragraph (h) will also be added confirming that, if an
association's bylaws so provide, shareholder action may be taken by
unanimous written consent in lieu of a shareholder meeting. At times,
this may allow associations to obtain shareholder approval more rapidly
and with less expense.
Section 552.6-1 Board of Directors
This section addresses corporate governance matters involving
directors. Paragraph (a) will be amended to provide that Directors need
not be stockholders unless the bylaws so require.
Paragraph (b) sets forth the number and term of directors. This
paragraph will be amended to clarify that the bylaws of a Federal stock
association must specify an exact number of positions on an
association's board of directors, not simply a range. The number is
selected by the institution within a range prescribed in the charter.
OTS also proposes to amend paragraph (b) to exempt wholly-owned stock
associations from the requirement that their directors be elected to
staggered terms.
Paragraph (c), regarding regular meetings of the board, will be
expanded to confirm that the board of directors has authority to
determine the place, frequency, time, and notice procedures for its
meetings. These matters need not be specified in the bylaws.
Paragraph (e), which covers director vacancies, will be amended to
clarify that a director appointed to fill a vacancy may serve ``only''
until the next election of directors. This is not a substantive change.
The word ``only'' is being added for emphasis and clarity.
Paragraph (f), concerning removal of directors, will be retitled
``Resignation or removal of directors'' to conform to the title for the
same provision for Federal mutual associations. In addition, the
paragraph will be amended to confirm, as is already the case, that
shareholders may remove a director in the midst of his or her term
``only'' for cause. A cross reference to the existing regulatory
definition of ``cause'' will also be added to answer a frequently asked
question.
Paragraph (k), on age limitations for directors, will be revised to
indicate that any age limitation provision must conform to applicable
Federal law, rules, or regulations, such as the Age Discrimination in
Employment Act.
Section 552.6-2 Officers
This section addresses corporate governance matters involving
officers. Paragraph (a) will be amended to remove the requirement that
the president always be a director and that either the president or the
chair of the board of directors always be the chief executive officer.
In paragraph (b), which addresses removal of officers, the cross
reference to OTS employment contract regulation will be updated.
Paragraph (c), on age limitations for officers, will be revised to
indicate that any age limitation on service by officers must conform to
applicable Federal law, rules, or regulations, such as the Age
Discrimination in Employment Act.
Section 552.8 Savings Deposits
This section contains instructions to Federal stock associations
regarding the types of savings deposits they may accept, preservation
of those accounts when a former mutual association adopts a stock
charter, rights of account holders in the event of liquidation, and
forms of certificates to use for accounts. OTS proposes to remove this
section from the regulations. The provisions of this section are either
self evident or covered by other statutes and regulations and general
contract law. Under the conversion regulations, all converting mutual
institutions are required to notify their accountholders that all the
rights they enjoyed as accountholders, except voting and ownership of
the institution, carry over to the converting association.
Section 552.11 Books and Records
This section describes a Federal stock association's obligations
with respect to books and records. Paragraph (b) will be amended to
make clear that shareholders' inspection rights extend only to
nonconfidential portions of an institution's books and records.
Appendix to Part 552
As indicated above, OTS proposes to move the model bylaws for
Federal stock associations, which currently appear in the appendix to
Part 552, into the Handbook. Changes will be made to conform the model
bylaws to the amendments to the bylaws regulations described above. In
addition, OTS proposes to modify the model bylaws to indicate that
procedures other than Robert's Rules of Order may be used for
shareholder meetings, as long as the board of directors adopts
alternative written procedures.
C. Part 575--Mutual Savings and Loan Holding Companies
Section 575.9 Charters and Bylaws for Mutual Holding Companies and
Their Savings Association Subsidiaries
This section describes the required charter and bylaws for Federal
mutual holding companies. Paragraph (a)(1) contains the prescribed
charter. This paragraph will be amended to indicate that the charter
will appear in the Handbook and will be available from any Regional
Office. In addition, the following changes will be made to the charter:
Section 1. Corporate Title. Section 1 contains the corporate title
of the Federal mutual holding company. The words ``hereby chartered''
will be deleted as unnecessary verbiage.
[[Page 32720]]
Section 5. Members. This section identifies the mutual holding
company's members and defines their rights. The sixth, seventh, and
eighth sentences of this section, addressing proxies and quorums, will
be removed because these matters either are covered or will be covered
(once today's amendments are made) by the bylaw requirements applicable
to mutual holding companies. As a result of this change, proxy and
quorum issues will be addressed in a single place in the corporate
documents of mutual holding companies.
Section 6. Directors. This section provides that a Federal mutual
holding company may have from 5 to 15 directors. In addition to
technical changes made to conform the wording of this section to the
corresponding section of the charter for Federal mutual associations,
OTS also proposes to remove the requirement that directors be members
of the association and the requirement that the terms of directors be
staggered.
Section 8. Amendment of charter. Section 8 describes the procedures
for amending the mutual holding company's charter. These procedures
will be streamlined to indicate that preapproved charter amendments are
effective once approved by members of the mutual holding company. Other
amendments will continue to require advance OTS approval.
Paragraph (a)(2) of Sec. 575.9 provides that mutual holding
companies may adopt the same preapproved charter amendments as are
specified for mutual savings associations, subject to certain specified
exclusions. Paragraph (a)(2) will be updated to conform to the changes
being proposed for the list of preapproved charter amendments for
mutual associations.
Paragraph (a)(4) specifies that Federal mutual holding companies
shall be subject to the same rules regarding bylaws as apply to Federal
mutual associations, with certain exceptions. This paragraph will be
amended to indicate that the model bylaws may be found in the Handbook,
available from OTS Regional Offices.
A technical amendment will be made to paragraph (a)(5), which
requires mutual holding companies to make their charter and bylaws
available to members. The cross reference to Sec. 545.131 will be
changed to reflect the proposed movement of this section to Part 544.
D. Miscellaneous Technical Changes
Section 543.1(b) Title Change
This section prescribes the rules for corporate titles for Federal
savings associations. This section will be amended to delete cross
references to sections being removed by this proposal.
Section 543.14 Continuity of Existence
This section, which confirms that the corporate existence of
converting associations continues, notwithstanding the conversion, will
be amended to delete a cross reference to a section being removed by
this proposal.
Section 556.1 Directors
This section, which describes OTS policy on the number of directors
necessary for a quorum and the directors' power to fill vacancies, will
be removed because both subjects are thoroughly covered by the bylaws
regulations.
Section 556.17 Effect of Loan Participation on Status of Borrowing
Members
This section provides guidance regarding various issues that arise
when determining the identity of the borrowing members of a Federal
mutual savings association. For example, this section indicates that
sale of a whole loan by a savings association to a third party
terminates the borrower's membership rights in the association. OTS
proposes to move this policy statement from the regulations into
Handbook guidance.
V. Proposed Disposition of Corporate Governance Regulations
The following chart displays the changes being proposed for OTS's
corporate governance regulations.
--------------------------------------------------------------------------------------------------------------------------------------------------------
Original provision Comment
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sec. 543.1(b)......................... Amended to delete references.
Sec. 543.14........................... Amended to delete references.
Sec. 544.1............................ Amended and moved to Handbook.
Sec. 544.1, Section 6................. Moved portion to Sec. 544.5 for clarification.
Sec. 544.1, Section 7................. Moved portion to Sec. 544.5 for clarification.
Sec. 544.1, Section 9................. Removed need for preliminary approval.
Sec. 544.2(a)(2)...................... Eliminated need for management certification.
Sec. 544.2(b)......................... Eliminated need for prior notice requirement.
Sec. 544.2(b)(4)...................... Removed existing paragraph and added new preapproved amendment.
Sec. 544.2(c)......................... Removed delegation.
Sec. 544.3............................ Removed.
Sec. 544.5(a)......................... Revised for clarification.
Sec. 544.5(b) (1) and (2)............. Amended for flexibility; changed annual meeting date.
Sec. 544.5(b) (3) and (4)............. Adjournment provisions added.
Sec. 544.5(b) (5) through (17)........ Redesignated (b) (6) to (18)
Sec. 544.5(b)(6)...................... Amended to add privacy rights.
Sec. 544.5(b)(10)..................... Amended to add guidance on vacancies.
Sec. 544.5(b)(13)..................... Amended to add guidance on nominee substitution.
Sec. 544.5(b)(16)..................... Revised for clarification.
Sec. 544.5(b)(17)..................... Removed.
Sec. 544.5(c)......................... Eliminated need for management certification.
Sec. 544.5(c)(1)...................... Eliminated need for prior notice requirement.
Sec. 544.5(d)......................... Reduced filing requirement.
Sec. 544.8............................ Removed.
Sec. 544.9............................ Removed.
Part 544 Appendix...................... Conformed to proposed changes and moved to Handbook.
Sec. 545.131.......................... Moved to Part 544.
Sec. 552.1............................ Removed.
Sec. 552.2............................ Removed.
Sec. 552.2-5.......................... Removed.
Sec. 552.3............................ Amended and moved to Handbook.
[[Page 32721]]
Sec. 552.3 Section 8.................. Removed need for preliminary approval.
Sec. 552.4(a)(2)...................... Eliminated need for management certification.
Sec. 552.4(b)......................... Eliminated need for prior notice requirement.
Sec. 552.4(b)(3)...................... Removed.
Sec. 552.4(b) (4) through (6)......... Redesignated (b) (3) to (5).
New Sec. 552.4(b)(6).................. Add new preapproved amendment.
Sec. 552.4(c)......................... Amended for clarification.
Sec. 552.5(b)......................... Eliminated need for management certification.
Sec. 552.5(b)(1)(ii).................. Eliminated need for prior notice requirement.
Sec. 552.5(c)......................... Reduced filing requirement.
Sec. 552.6(a)......................... Amended for flexibility; changed annual meeting date.
Sec. 552.6(b)......................... Amended shareholder meeting requirements.
Sec. 552.6(d)......................... Amended to add guidance on voting lists.
Sec. 552.6(e)......................... Amended to add guidance on certain voting requirements.
Sec. 552.6(f)(1)...................... Amended for flexibility.
New Sec. 552.6(f)(4).................. Added section on shares held by others.
New Sec. 552.6(h)..................... Added section on informal action.
Sec. 552.6-1(a)....................... Amended for flexibility.
Sec. 552.6-1(b)....................... Removed necessity for staggered board of directors if wholly owned. Also amended to specify number of
directors.
Sec. 552.6-1(f)....................... Amended to clarify where ``cause'' is defined.
Sec. 552.6-1(k)....................... Amended to add guidance.
Sec. 552.6-2(a)....................... Amended to remove provision requiring president to be a director.
Sec. 552.8............................ Removed.
Part 552 Appendix...................... Conformed to proposed changes and moved to Handbook.
Sec. 556.1............................ Removed.
Sec. 556.17........................... Moved to Handbook.
Sec. 563.74(d)........................ Amended to conform to earlier change.
Sec. 575.9............................ Amended and moved to Handbook.
Sec. 575.9 Section 8.................. Removed need for preliminary approval.
--------------------------------------------------------------------------------------------------------------------------------------------------------
VI. Request for Comment
OTS invites comment on all aspects of the proposal. Specific areas
that OTS requests for comments are as follows:
--Whether to move the charters and model bylaws from the regulations to
OTS's Handbook.
--Whether OTS should exempt associations that are wholly-owned from the
requirement that the board of directors be elected in staggered
elections; also whether a staggered board of directors should be
required if the association is not wholly owned.
--Whether OTS should adopt a practice similar to the OCC of permitting
institutions to elect to adopt, en bloc, the corporate governance
procedures authorized by any of the following: the laws of the state
where the main office of the bank is located, the laws of the state
where the bank's holding company, if any, is located, Delaware General
Corporation Law, or The Model Business Corporation Act. As indicated
above, any such election would likely be subject to certain exclusions,
as is the case for national banks, for Federal laws considered vital to
safety and soundness or other important policy objectives. Commenters
supporting the election option are asked to specify how the option
would benefit savings associations.
VII. Executive Order 12866
The Director of OTS has determined that this proposed rule does not
constitute a ``significant regulatory action'' for the purposes of
Executive Order 12866.
VIII. Regulatory Flexibility Act Analysis
Pursuant to section 605(b) of the Regulatory Flexibility Act, OTS
certifies that this proposal will not have a significant economic
impact on a substantial number of small entities. The proposal does not
impose any additional burdens or requirements upon small entities and
lowers several paperwork and other burdens on all savings associations.
IX. Unfunded Mandates Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995, Pub. L.
104-4 (Unfunded Mandates Act), requires that an agency prepare a
budgetary impact statement before promulgating a rule that includes a
federal mandate that may result in expenditure by state, local, and
tribal governments, in the aggregate, or by the private sector, of $100
million or more in any one year. If a budgetary impact statement is
required, Section 205 of the Unfunded Mandates Act also requires an
agency to identify and consider a reasonable number of regulatory
alternatives before promulgating a rule. As discussed in the preamble,
this proposed rule reduces regulatory burden and updates, reorganizes
and substantially streamlines corporate governance regulations and
policy statements. OTS has determined that the proposed rule will not
result in expenditures by state, local, or tribal governments or by the
private sector of $100 million or more. Accordingly, this rulemaking is
not subject to section 202 of the Unfunded Mandates Act.
OTS has determined that the requirements of this proposed rule will
not result in expenditures by State, local, and tribal governments, or
by the private sector, of more than $100 million in any one year.
Accordingly, a budgetary impact statement is not required under section
202 of the Unfunded Mandates Act of 1995.
X. Paperwork Reduction Act
This proposed regulation changes the timing of the submission of a
notice to OTS when an institution proposes to amend its charter or
bylaws with OTS preapproved amendments. Currently, this notice is
required before the institution adopts the amendment. Under the
proposal, the institution will file the notice after adopting the
preapproved amendment. The reporting burden for this notice remains
unchanged.
Comments are invited on (i) whether the existing approved
collections of
[[Page 32722]]
information (OMB Control Nos. 1550-0017 and 1550-0018) are necessary
for the proper performance of the functions of the agency, including
whether the information shall have practical utility, (ii) the accuracy
of the estimate of the burden of the collection of information, (iii)
ways to enhance the quality of the information collected, (iv) ways to
minimize the burden of the collection of information on respondents,
including the use of automated collection techniques or other forms of
information technology.
List of Subjects
12 CFR Parts 543 and 544
Reporting and recordkeeping requirements, Savings associations.
12 CFR Part 545
Accounting, Consumer protection, Credit, Electronic Funds
transfers, Investments, Manufactured homes, Mortgages, Reporting and
recordkeeping requirements, Savings associations.
12 CFR Part 552
Reporting and recordkeeping requirements, Savings associations,
Securities.
12 CFR Part 556
Savings associations.
12 CFR Part 563
Accounting, Advertising, Crime, Currency, Flood insurance,
Investments, Mortgages, Reporting and recordkeeping requirements,
Savings associations, Securities, Surety bonds.
12 CFR Part 575
Administrative practice and procedure, Capital, Holding companies,
Reporting and recordkeeping requirements, Savings associations,
Securities.
Accordingly, the Office of Thrift Supervision proposes to amend
chapter V, title 12, Code of Federal Regulations, as set forth below.
PART 543--INCORPORATION, ORGANIZATION, AND CONVERSION OF FEDERAL
MUTUAL ASSOCIATIONS
1. The authority citation for part 543 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 2901 et
seq.
Sec. 543.1 [Amended]
2. Section 543.1 is amended in paragraph (b) by removing the phrase
``, only pursuant to a charter change under Sec. 544.3 or Sec. 552.4 of
this chapter''.
Sec. 543.14 [Amended]
3. Section 543.14 is amended by removing the phrase ``or under
Sec. 544.3 of this chapter''.
PART 544--CHARTER AND BYLAWS
4. The authority citation for part 544 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 2901 et
seq.
ALTERNATIVE ONE
5. Section 544.1 is revised to read as follows:
Sec. 544.1 Federal mutual charter.
The Federal mutual charter may be found in the Application
Processing Regulatory Handbook, available from any Regional Office of
OTS. (See Sec. 516.1(b) of this chapter.) Each Federal mutual
association's charter, including any amendments thereto, constitutes
conditions imposed in writing by the agency in connection with the
granting of an application and a written agreement entered into with
the agency within the meaning of 12 U.S.C. 1818(b).
ALTERNATIVE TWO
5a. Section 544.1 is amended by:
a. Revising the introductory text preceding the Federal Mutual
Charter;
b. Removing in section 1 of the Federal Mutual Charter the phrase
``hereby chartered'';
c. Transferring the third and fourth sentences of section 6 of the
charter, appearing in brackets, to the end of the introductory text of
Sec. 544.1 and by removing the brackets;
d. Removing the last three sentences of section 6 of the charter;
e. Removing the third, fourth, and fifth sentences of the first
paragraph, and all of the second paragraph of section 7 of the charter;
f. Removing the word ``[Trustees]'' in the heading and the words
``[trustee]'' and ``[trustees]'' where they appear in the text of
section 7 of the charter; and
g. Revising section 9 of the charter.
The revisions read as follows:
Sec. 544.1 Federal mutual charter.
A Federal mutual savings association shall have a charter in the
following form, which may include any of the additional provisions set
forth in Sec. 544.2, if such provisions are specifically requested. A
charter for a Federal mutual savings bank shall substitute the term
``savings bank'' for ``association.'' The term ``trustees'' may be
substituted for the term ``directors.''
* * * * *
Section 9. Amendment of charter. Adoption of any preapproved
charter amendment shall be effective after such preapproved
amendment has been approved by the members at a legal meeting. Any
other amendment, addition, change, or repeal of this charter must be
approved by the Office prior to approval by the members at a legal
meeting. Any amendment, addition, alteration, change, or repeal so
acted upon and approved shall be effective upon filing with the
Office
FR Doc. 96-14441 Corporate Governance
in accordance with regulatory procedures.
Attest:----------------------------------------------------------------
Secretary of the Association
By:--------------------------------------------------------------------
President or Chief Executive Officer of the Association
Attest:----------------------------------------------------------------
Secretary of the Office of Thrift Supervision
By:--------------------------------------------------------------------
Director of the Office of Thrift Supervision
Effective Date:--------------------------------------------------------
6. Section 544.2 is amended by:
a. Removing in paragraphs (a)(2)(i) and (a)(2)(ii), the phrase
``along with a certification that the proposed'' and by adding in lieu
thereof the phrase, ``provided such'';
b. Removing the phrase ``filing with the OTS'' in the third
sentence of paragraph (b), and by adding in lieu thereof the phrase
``adoption, if adopted without change and filed with OTS, within 30
days after adoption'';
c. Revising paragraph (b)(4); and
d. Removing the word ``shall'' in the second sentence of paragraph
(c), and by adding in lieu thereof the phrase ``should be filed in
accordance with Sec. 516.1(c) of this chapter and'' and by removing the
last sentence of paragraph (c).
The revisions read as follows:
Sec. 544.2 Charter amendments.
* * * * *
(b) * * *
(4) Maximum number of votes. A Federal mutual savings association
may amend its charter by substituting (__________) votes per member in
section 6. [Fill in a number from 50 to 1000.]
* * * * *
Sec. 544.3 [Removed]
7. Section 544.3 is removed.
8. Section 544.5 is amended by:
a. Adding, between the words ``majority'' and ``of'' in the second
sentence of paragraph (a), the phrase ``of the votes cast by the
members at a legal meeting or a majority'', and by adding two new
sentences at the end of paragraph (a);
b. Removing the words ``[trustee]'' and ``[trustees]'' wherever
they appear in paragraph (b);
c. Revising the second sentence of paragraph (b)(1);
d. Adding a sentence at the end of paragraph (b)(2);
[[Page 32723]]
e. Adding a sentence at the end of paragraph (b)(3);
f. Adding a sentence at the end of paragraph (b)(4);
g. Redesignating paragraphs (b)(5) through (b)(17) as paragraphs
(b)(6) through (b)(18), respectively;
h. Adding a new paragraph (b)(5);
i. Adding to newly designated paragraph (b)(6), a sentence between
the first and second sentences, and three new sentences at the end;
j. Revising newly designated paragraph (b)(7);
k. Revising newly designated paragraph (b)(8);
l. Adding after the word ``treasurer'' in newly designated
paragraph (b)(10)(i), the words ``or comptroller'';
m. Adding a sentence at the end of newly designated paragraph
(b)(10)(ii);
n. Revising newly designated paragraph (b)(11);
o. Adding, between the words ``secretary'' and ``and'' in the
second sentence of newly designated paragraph (b)(14), the phrase ``,
except in the case of a nominee substituted as a result of death or
other incapacity,'';
p. Removing, in the first sentence of newly designated paragraph
(b)(17), the phrase ``pursuant to Sec. 544.5 of the Office's
regulations, as long as any such amendment'', and by adding in lieu
thereof the word ``that'', and by adding a sentence at the end of
paragraph (b)(17);
q. Removing, in newly designated paragraph (b)(18), the phrase
``emergency preparedness,'';
r. Removing in paragraph (c)(1) introductory text, the phrase
``along with a certification that the proposed'', and by adding in lieu
thereof the phrase ``, provided such'';
s. Removing, in the concluding text of paragraph (c)(1), the phrase
``shall be deemed to comply with the requirements of this section'',
and by adding in lieu thereof the phrase ``, if adopted without change,
and filed within 30 days after adoption, are effective upon adoption'';
t. Amending the heading of paragraph (c)(2) by removing the word
``Notice'', and by adding in lieu thereof the word ``Filing'', and by
removing, in paragraph (c)(2), the phrase ``together with a
certification'', and by adding in lieu thereof the word ``provided'';
and
u. Removing, in the second sentence of paragraph (d), the phrase
``raises a significant issue of law or policy'', and by adding in lieu
thereof the phrase ``requires an application to be filed pursuant to
paragraph (c)(1) of this section'',.
The additions and revisions read as follows:
Sec. 544.5 Federal mutual savings association bylaws.
(a) * * * The bylaws for a Federal mutual savings bank may
substitute the term ``savings bank'' for ``association.'' The term
``trustees'' may be substituted for the term ``directors.''
(b) * * *
(1) * * * Such meeting shall be held, as designated by its board of
directors, at a location within the state that constitutes the
principal place of business of the association, or at any other
convenient place the board of directors may designate, and at a date
and time within 150 days after the end of the association's fiscal
year. * * *
(2) * * * For purposes of this section, ``voting capital'' means
FDIC-insured deposits.
(3) * * * When any meeting is adjourned for 30 days or more, notice
of the adjournment and reconvening of the meeting shall be given as in
the case of the original meeting.
(4) * * * The same determination shall apply to any adjourned
meeting.
(5) Member quorum. Any number of members present and voting,
represented in person or by proxy, at a regular or special meeting of
the members shall constitute a quorum. A majority of all votes cast at
any meeting of the members shall determine any question. At any
adjourned meeting any business may be transacted which might have been
transacted at the meeting as originally called. Members present at a
duly constituted meeting may continue to transact business until
adjournment.
(6) * * * Proxies may be given telephonically or electronically as
long as the holder uses a procedure for verifying the identity of the
member. * * * Accounts held by an administrator, executor, guardian,
conservator or receiver may be voted in person or by proxy by such
person. Accounts held by a trustee may be voted by such trustee either
in person or by proxy, in accordance with the terms of the trust
agreement, but no trustee shall be entitled to vote accounts without a
transfer of such accounts into the trustee name. Joint accounts shall
be entitled to no more than 1,000 votes, split as the joint owners may
agree, in writing.
(7) Communications between members. Provisions relating to
communications between members shall be consistent with Sec. 544.8 of
the Office's regulations. No member, however, shall have the right to
inspect or copy any portion of any books or records of a Federal mutual
savings association containing:
(i) A list of depositors in or borrowers from such association;
(ii) Their addresses;
(iii) Individual deposit or loan balances or records; or
(iv) Any data from which such information could be reasonably
constructed.
(8) Number of directors, membership. The bylaws shall set forth a
specific number of directors, not a range. The number of directors
shall be not fewer than five nor more than fifteen, unless a higher or
lower number has been authorized by the Director of the Office or his
or her designee. Each director of the association shall be a member of
the association. Directors shall be elected for periods of three years
and until their successors are elected and qualified, but provision
shall be made for the election of approximately one-third of the board
each year. [State-chartered savings banks converting to Federal savings
banks may include alternative provisions for the election and term of
office of directors so long as such provisions are authorized by the
Office, and provide for compliance with the standard provisions of this
section no later than six years after the conversion to a Federal
savings association.]
* * * * *
(10) * * *
(ii) * * * Any officer may be removed by the board of directors
with or without cause, but such removal, other than for cause, shall be
without prejudice to the contractual rights, if any, of the person so
removed.
* * * * *
(11) Vacancies, resignation or removal of directors. Members of the
association shall elect directors by ballot: Provided, that in the
event of a vacancy on the board, the board of directors may, by their
affirmative vote, fill such vacancy, even if the remaining directors
constitute less than a quorum. A director elected to fill a vacancy
shall be elected to serve only until the next election of directors by
the members. The bylaws shall set out the procedure for the resignation
of a director, which shall be by written notice or by any other
procedure established in the bylaws. Directors may be removed only for
cause as defined in Sec. 563.39 of this chapter, by a vote of the
holders of a majority of the shares then entitled to vote at an
election of directors.
* * * * *
(17) * * * When an association fails to meet its quorum
requirement, solely due to vacancies on the board, the bylaws may be
amended by an affirmative vote of a majority of the sitting board.
* * * * *
[[Page 32724]]
Secs. 544.8 and 544.9 [Removed]
9. Sections 544.8 and 544.9 are removed.
ALTERNATIVE ONE
10. The Appendix to Part 544 is revised to read as follows:
Appendix to Part 544--Model Bylaws for Mutual Savings Associations
The Federal mutual bylaws may be found in the Application
Processing Regulatory Handbook, available from any Regional Office
of OTS (see Sec. 516.1(b) of this chapter). Each Federal mutual
association's bylaws, including any amendments thereto, constitutes
conditions imposed in writing by the agency in connection with the
granting of an application and a written agreement entered into with
the agency within the meaning of 12 U.S.C. 1818(b).
ALTERNATIVE TWO
10a. The Appendix to Part 544 is amended by:
a. Removing section 18;
b. Removing the words ``[trustee]'', ``[trustees]'', and
``[Trustees]'' wherever they appear in the appendix;
c. Adding introductory text between the heading of the appendix and
Section 1;
d. Amending the first sentence of Section 1 by removing the phrase
``at (insert date and time within 120 days'', and by adding in lieu
thereof the phrase ``or at any other convenient place the board of
directors may designate, at (insert date and time within 150 days'';
e. Amending Section 2 by adding a sentence between the second and
third sentences and by revising the last sentence;
f. Amending Section 3 by removing paragraph (b) and the paragraph
designation (a), by removing the word ``annual'' wherever it appears in
Section 3, and by adding a sentence at the end of Section 3;
g. Adding a sentence at the end of Section 4;
h. Redesignating Sections 5 through 17 as Sections 6 through 18,
respectively, and adding a new Section 5;
i. Adding to newly designated Section 6, a sentence between the
first and second sentences, and three new sentences at the end;
j. Adding new text at the end of newly designated Section 7;
k. Revising newly designated Section 8;
l. Amending newly designated Section 10 by adding the phrase ``or
comptroller'' in the first sentence of the first paragraph, between the
word ``treasurer'' and the colon and at the end of the sentence, and by
adding a sentence at the end of the first paragraph;
m. Amending newly designated Section 11 by revising the heading,
adding two sentences at the beginning of the first paragraph following
the heading, and adding the phrase ``as defined in the regulations in
Sec. 563.39 of this chapter'' after the word ``cause'' in the second
paragraph;
n. Amending newly designated Section 14 by adding the phrase ``,
except in the case of a nominee substituted as a result of death or
other incapacity'' at the end of the second and third sentences;
o. Amending newly designated Section 17 by adding a new sentence at
the end of the section; and
p. Amending newly designated Section 18 by adding one sentence of
introductory text preceding paragraph (a), and by removing the phrase
``of at least ____________________ (must be in accordance with ERISA)''
in paragraph (b).
The additions and revisions read as follows:
Appendix to Part 544--Model Bylaws for Mutual Savings Associations
The bylaws for a Federal mutual savings bank may substitute the
term ``savings bank'' for ``association.'' The term ``trustees'' may
be substituted for the term ``directors.''
* * * * *
2. * * * For purposes of this section, ``capital'' means FDIC-
insured deposits. Annual and special meetings shall be conducted in
accordance with the most current edition of Robert's Rules of Order
or any other set of procedures agreed to by the board of directors.
3. * * * When any meeting is adjourned for 30 days or more,
notice of the adjournment shall be given as in the case of the
original meeting.
4. * * * The same determination shall apply to any adjourned
meeting.
5. Member quorum. Any number of members present and voting,
represented in person or by proxy, at a regular or special meeting
of the members shall constitute a quorum. A majority of all votes
cast at any meeting of the members shall determine any question. At
any adjourned meeting any business may be transacted which might
have been transacted at the meeting as originally called. Members
present at a duly constituted meeting may continue to transact
business until adjournment.
6. * * * Proxies may be given telephonically or electronically
as long as the holder uses a procedure for verifying the identity of
the member. * * * Accounts held by an administrator, executor,
guardian, conservator or receiver may be voted in person or by proxy
by such person. Accounts held by a trustee may be voted by such
trustee either in person or by proxy, in accordance with the terms
of the trust agreement, but no trustee shall be entitled to vote
accounts without a transfer of such accounts into the trustee name.
Joint accounts shall be entitled to no more than 1,000 votes, split
as the joint owners may agree, in writing.
7. * * * No member, however, shall have the right to inspect or
copy any portion of any books or records of a Federal mutual savings
association containing:
(i) A list of depositors in or borrowers from such association;
(ii) Their addresses;
(iii) Individual deposit or loan balances or records; or
(iv) Any data from which such information could be reasonably
constructed.
8. Number of directors, membership. The number of directors
shall be ________ [not fewer than five nor more than fifteen],
except where authorized by the Director of the Office or his or her
designee. Each director of the association shall be a member of the
association. Directors shall be elected for periods of three years
and until their successors are elected and qualified, but provision
shall be made for the election of approximately one-third of the
board each year. [State-chartered savings banks converting to
Federal savings banks may include alternative provisions for the
election and term of office of directors so long as such provisions
are authorized by the Office, and provide for compliance with the
standard provisions of this section no later than six years after
the conversion to a Federal savings association.]
* * * * *
10. * * * Any officer may be removed by the board of directors
with or without cause, but such removal, other than for cause, shall
be without prejudice to the contractual rights, if any, of the
person so removed.
* * * * *
11. Vacancies, resignation, or removal of directors. Members of
the association shall elect directors by ballot: Provided, that in
the event of a vacancy on the board, the board of directors may, by
their affirmative vote, fill such vacancy, even if the remaining
directors constitute less than a quorum. A director elected to fill
a vacancy shall be elected to serve only until the next election of
directors by the members. * * *
* * * * *
17. * * * When an association fails to meet its quorum
requirement, solely due to vacancies on the board, the bylaws may be
amended by an affirmative vote of a majority of the sitting board.
18. Age limitations. [Bylaws on age limitations must comply with
all Federal laws, such as the Age Discrimination in Employment Act
and the Employee Retirement Income Security Act.] (a) * * *
* * * * *
PART 545--OPERATIONS
11. The authority citation for part 545 continues to read as
follows:
Authority: 12 U.S.C. 1462a, 1463, 1464, 1828.
Sec. 545.131 [Redesignated as Sec. 544.8]
12. Section 545.131 is redesignated as Sec. 544.8.
[[Page 32725]]
PART 552--INCORPORATION, ORGANIZATION, AND CONVERSION OF FEDERAL
STOCK ASSOCIATIONS
13. The authority citation for part 552 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.
Secs. 552.1 and 552.2 [Removed]
14. Sections 552.1 and 552.2 are removed.
Sec. 552.2-5 [Removed]
15. Section 552.2-5 is removed.
ALTERNATIVE ONE
16. Section 552.3 is revised to read as follows:
Sec. 552.3 Charters for Federal stock associations.
The Federal stock charter may be found in the Application
Processing Regulatory Handbook, available from any Regional Office of
OTS. (see Sec. 516.1(b) of this chapter.) Each Federal stock
association's charter, including any amendments thereto, constitutes
conditions imposed in writing by the agency in connection with the
granting of an application and a written agreement entered into with
the agency within the meaning of 12 U.S.C. 1818(b).
ALTERNATIVE TWO
16a. Section 552.3 is amended in the Federal Stock Charter by:
a. Removing, in Section 2, the word ``in'', and by adding in lieu
thereof the word ``at'';
b. Amending Section 5 by adding between the words ``or'' and
``stated'' appearing in brackets in the first sentence, the phrase ``if
no par is specified then shares shall have a'', by revising the last
sentence in the first paragraph;
c. Amending Section 5 by removing in the first sentence of the
second paragraph the phrases ``issuable in'' and ``common stock'', and
by adding in lieu thereof the phrases ``issued in the initial
organization of the association or'' and ``capital stock'',
respectively;
d. Amending Section 5 by adding the phrase ``, unless the charter
otherwise provides that there shall be no such cumulative voting'' at
the end of the second sentence in the third paragraph;
e. Amending Section 7 by adding the phrase ``, or his or her
delegate'' at the end of the last sentence; and
f. Revising Section 8.
The revisions read as follows:
Sec. 552.3 Charters for Federal stock associations.
* * * * *
Federal Stock Charter
* * * * *
Section 5. * * * In the case of a stock dividend, that part of
the retained earnings of the association that is transferred to
common stock or paid-in capital accounts upon the issuance of shares
as a stock dividend shall be deemed to be the consideration for
their issuance.
* * * * *
Section 8. Amendment of charter. Except as provided in Section
5, no amendment, addition, alteration, change or repeal of this
charter shall be made, unless such is first proposed by the board of
directors of the association, then approved by the Office, provided
that preapproved charter amendments shall be effective after such
preapproved amendment has been approved by the board of directors
and by the shareholders at a legal meeting. Amendments shall be
approved by the shareholders by a majority of the votes eligible to
be cast at a legal meeting, unless a higher vote is otherwise
required. Any amendment, addition, alteration, change, or repeal so
acted upon shall be effective upon filing with the Office in
accordance with regulatory procedures.
Attest:----------------------------------------------------------------
Secretary of the Association
By:--------------------------------------------------------------------
President or Chief Executive Officer of the Association
Attest:----------------------------------------------------------------
Secretary of the Office of Thrift Supervision
By:--------------------------------------------------------------------
Director of the Office of Thrift Supervision
Effective Date:--------------------------------------------------------
17. Section 552.4 is amended by:
a. Removing at the end of paragraph (a)(1) the semicolon and the
word ``and'', and by adding in lieu thereof a period;
b. Removing in paragraph (a)(2)(i) the phrase ``with a
certification that the proposed'' and in paragraph (a)(2)(ii) the
phrase ``, together with a certification that the'', and by adding in
both places the phrase ``, provided such'';
c. Removing the phrase ``filing with the OTS'' in the second
sentence of paragraph (b) introductory text, and by adding in lieu
thereof the phrase ``adoption, if adopted without change and filed with
OTS, within 30 days after adoption'';
d. Adding headings to paragraphs (b)(1) and (b)(2);
e. Removing paragraph (b)(3);
f. Redesignating paragraph (b)(4) as paragraph (b)(3) and revising
it;
g. Redesignating paragraph (b)(5) as paragraph (b)(4) and adding a
paragraph heading, and revising the introductory text;
h. Amending newly redesignated paragraph (b)(4) in Section 5 by
adding between the words ``or'' and ``stated'' appearing in brackets in
the first sentence, the phrase ``if no par value is specified the'',
and by revising the last sentence in the first paragraph;
i. Amending paragraph (b)(4) in Section 5 by removing in the first
sentence of the second paragraph the phrase ``issuable in'' and by
adding in lieu thereof the phrase ``issued in the initial organization
of the association or'';
j. Amending paragraph (b)(4) in Section 5 by adding the phrase ``,
unless the charter otherwise provides that there shall be no such
cumulative voting'' in the introductory text of the third paragraph
between the words ``directors:'' and ``Provided'';
k. Amending paragraph (b)(4) in paragraph (ii) of the third
paragraph of Section 5 by removing the phrase ``, the Federal Deposit
Insurance Corporation, or the Resolution Trust Corporation'', and by
adding in lieu thereof the phrase ``or the Federal Deposit Insurance
Corporation'';
l. Amending paragraph (b)(4) in paragraph A. of the fourth
paragraph by adding the phrase ``, unless the charter otherwise
provides that there shall be no such cumulative voting'' at the end of
the second sentence;
m. Redesignating paragraph (b)(6) as paragraph (b)(5), adding a
heading, and removing the phrase ``Amend the charter of a Federal stock
association'', and by adding in lieu thereof the phrase ``A Federal
stock association may amend its charter'';
n. Adding a new paragraph (b)(6);
o. Adding a heading to paragraph (b)(8); and
p. Amending paragraph (c) by removing the word ``preliminary''
wherever it appears, and by adding a second sentence.
The additions and revisions read as follows:
Sec. 552.4 Charter amendments.
* * * * *
(b) * * *
(1) Title change. * * *
(2) Home office. * * *
(3) Number of shares of stock and par value. A Federal stock
association may amend Section 5 of its charter to change the number of
authorized shares of stock, the number of shares within each class of
stock, and the par or stated value of such shares.
(4) Capital stock. A Federal stock association may amend its
charter by revising Section 5 to read as follows:
Section 5. * * * In the case of a stock dividend, that part of
the retained earnings of the association that is transferred to
common stock or paid-in capital accounts upon the issuance of shares
as a stock dividend shall be deemed to be the consideration for
their issuance.
* * * * *
[[Page 32726]]
(5) Limitations on subsequent issuances. * * *
(6) Cumulative voting. A Federal stock association may amend its
charter by substituting the following sentence for the second sentence
in the third paragraph of Section 5: ``Each holder of shares of common
stock shall be entitled to one vote for each share held by such holder
and there shall be no right to cumulate votes in an election of
directors.''
* * * * *
(8) Antitakeover provisions following conversion. * * *
(c) * * * Any such provision must be consistent with applicable
statutes, regulations, and OTS policies; and Provided Further, that any
such provision having the effect of rendering more difficult a change
in control of the association which requires for any corporate action
(other than the removal of directors) the affirmative vote of a larger
percentage of shareholders than is required by this part, shall not be
effective unless adopted by a percentage of shareholder vote at least
equal to the highest percentage that would be required to take any
action under such provision.
* * * * *
18. Section 552.5 is amended by:
a. Revising the second sentence of paragraph (a);
b. Removing, in paragraphs (b)(1) introductory text and (b)(2), the
phrase ``together with a certification'', and by adding in lieu thereof
the word ``provided'';
c. Removing, in the concluding text of paragraph (b)(1), the phrase
``shall be deemed to comply with the requirements of this section'',
and by adding in lieu thereof the phrase'', if adopted without change,
and filed within 30 days after adoption, are effective upon adoption'';
d. Amending the heading of paragraph (b)(2) by removing the word
``Notice'', and by adding in lieu thereof the word ``Filing''; and
e. Adding paragraph (d).
The additions and revisions read as follows:
Sec. 552.5 Bylaws.
(a) * * * Bylaws may be adopted, amended or repealed by either a
majority of the votes cast by the shareholders at a legal meeting or a
majority of the board of directors. * * *
* * * * *
(d) Effect of subsequent charter or bylaw change. Notwithstanding
any subsequent change to its charter or bylaws, the authority of a
Federal stock association to engage in any transaction shall be
determined only by the association's charter or bylaws then in effect,
unless otherwise provided by Federal law or regulation.
19. Section 552.6 is amended by:
a. Removing in paragraph (a) the number ``120'', and by adding in
lieu thereof the number ``150'', and by adding the phrase ``, or at any
other convenient place the board of directors may designate'' at the
end of the paragraph;
b. Adding a sentence at the end of paragraph (b);
c. Revising paragraph (d)(1);
d. Adding a sentence at the end of paragraph (e);
e. Adding two sentences after the first sentence in paragraph
(f)(1);
f. Adding paragraph (f)(4); and
g. Adding paragraph (h).
The additions and revisions read as follows:
Sec. 552.6 Shareholders.
* * * * *
(b) * * * Notwithstanding anything in this section, however, a
Federal stock association that is wholly owned shall not be subject to
the stockholder notice requirement.
* * * * *
(d) Voting lists. (1) At least 20 days before each meeting of the
shareholders, the officer or agent having charge of the stock transfer
books for the shares of the association shall make a complete list of
the stockholders of record entitled to vote at such meeting, or any
adjournments thereof, including the names of beneficial owners
furnished to the association pursuant to the rules of the Securities
Exchange Commission, arranged in alphabetical order, with the address
and the number of shares held by each. This list of shareholders shall
be kept on file at the home office of the association and shall be
subject to inspection by any stockholder of record or the stockholder's
agent during the entire time of the meeting. The original stock
transfer book shall constitute prima facie evidence of the shareholders
entitled to examine such list or transfer books or to vote at any
meeting of shareholders. Notwithstanding anything in this section,
however, a Federal stock association that is wholly owned shall not be
subject to the voting list requirements.
* * * * *
(e) * * * If a quorum is present, the affirmative vote of the
majority of the shares represented at the meeting and entitled to vote
on the subject matter shall be the act of the stockholders, unless the
vote of a greater number of stockholders voting together or voting by
classes is required by law or the charter.
(f) Shareholder voting (1) * * * Proxies may be given
telephonically or electronically as long as the holder uses a procedure
for verifying the identity of the stockholder. Notwithstanding part 569
of this chapter, a proxy may designate as holder a corporation,
partnership, company as defined in part 574 of this chapter, or other
person. * * *
* * * * *
(4) Shares held by others. Shares held by an administrator,
executor, guardian, conservator or receiver may be voted in person or
by proxy by such person. Stock standing in the name of a trustee may be
voted by such trustee either in person or by proxy, but only in
accordance with the terms of the trust agreement.
* * * * *
(h) Informal action by stockholders. If the bylaws of the
association so provide, any action required to be taken at a meeting of
the stockholders, or any other action that may be taken at a meeting of
the stockholders, may be taken without a meeting if consent in writing
has been given by all the stockholders entitled to vote with respect to
the subject matter.
20. Section 552.6-1 is amended by:
a. Adding a sentence at the end of paragraph (a);
b. Revising paragraph (b);
c. Adding a sentence at the end of paragraph (c);
d. Adding the word ``only'' in paragraph (e) between the words
``serve'' and ``until'' in the second sentence;
e. Revising the heading of paragraph (f), adding the word ``only''
between the words ``removed'' and ``for'' and the words ``as defined in
Sec. 563.39 of this chapter,'' after the word ``cause'' in the first
sentence of paragraph (f)(1), and adding a sentence at the end of
paragraph (f)(1); and
f. Adding a sentence at the end of paragraph (k).
The additions and revisions read as follows:
Sec. 552.6-1 Board of directors.
(a) * * * Directors need not be stockholders unless the bylaws so
require.
(b) Number and term. The bylaws shall set forth a specific number
of directors, not a range. The number of directors shall be not fewer
than five nor more than fifteen, unless a higher or lower number has
been authorized by the Director of the Office or his or her delegate.
The directors shall be divided
[[Page 32727]]
into three classes as nearly equal in number as possible. The members
of each class shall be elected for a term of three years and until
their successors are elected and qualified. One class shall be elected
by ballot annually, except in the case of a converting or newly
chartered association where all directors shall be elected at the first
election of directors for terms which shall be staggered in length from
one to three years. Notwithstanding anything in this section, however,
a Federal stock association that is wholly owned shall not be subject
to the staggered board requirement.
(c) * * * The board of directors shall determine the place,
frequency, time and procedure for notice of such meetings.
* * * * *
(f) Removal or resignation of directors. (1) * * * Associations may
provide for procedures regarding resignations in the bylaws.
* * * * *
(k) * * * [Bylaws on age limitations must comply with all Federal
laws, such as the Age Discrimination in Employment Act and the Employee
Retirement Income Security Act.]
21. Section 552.6-2 is amended by:
a. Adding in paragraph (a) the phrase ``or comptroller'' after the
word ``treasurer'' in the first and fifth sentences, and by removing
the third and fourth sentences; and
b. Adding a sentence at the end of paragraph (c).
The additions read as follows:
Sec. 552.6-2 Officers.
* * * * *
(c) * * * [Bylaws on age limitations must comply with all Federal
laws, such as the Age Discrimination in Employment Act and the Employee
Retirement Income Security Act.]
Sec. 552.8 [Removed]
22. Section 552.8 is removed.
Sec. 552.11 [Amended]
23. Section 552.11 is amended by adding the phrase
``nonconfidential portions of'' in paragraph (b) introductory text
between the words ``times,'' and ``its'' in the first sentence.
ALTERNATIVE ONE
24. The Appendix to part 552 is revised to read as follows:
Appendix to Part 552--Model Bylaws for Stock Associations
The Federal stock bylaws may be found in the Application
Processing Regulatory Handbook, available from any Regional Office
of OTS. (See Sec. 516.1(b) of this chapter.) Each Federal stock
association's bylaws, including any amendments thereto, constitutes
conditions imposed in writing by the agency in connection with the
granting of an application and a written agreement entered into with
the agency within the meaning of 12 U.S.C. 1818(b).
ALTERNATIVE TWO
24a. The Appendix to Part 552 is amended:
a. In Article II, Section 1, by removing the phrase ``place in the
State in which the principal place of business of the association is
located'', and by adding in lieu thereof the phrase ``convenient
place'';
b. In Article II, Section 2, by removing the number ``120''
wherever it appears, and by adding in lieu thereof the number ``150'';
c. In Article II, Section 4, by adding at the end of the first
sentence the phrase ``or the board of directors adopts another
procedure for the conduct of meetings'';
d. In Article II, Section 5, by removing the number ``10'' in the
first sentence, and by adding in lieu thereof the number ``20'';
e. In Article II, Section 7, by removing the word ``shareholders''
in the first sentence and adding the phrase ``stockholders of record''
in lieu thereof, adding at the end of the first sentence the phrase ``,
including the names of beneficial owners furnished pursuant to the
rules of the Securities and Exchange Commission'', removing in the
second and third sentences the words ``any shareholder'' and adding in
lieu thereof the phrase ``any stockholders of record or the
stockholder's agent'', and removing in the fourth sentence the phrase
``shareholders entitled'' and adding in lieu thereof the phrase
``stockholders of record entitled'';
f. In Article II, Section 8, by adding a sentence at the end;
g. In Article II, Section 9, by adding a sentence after the first
sentence;
h. In Article III, Section 3, by adding two sentences at the end;
i. In Article III, Section 11, by adding in the second sentence,
the word ``only'' between the words ``serve'' and ``until'';
j. In Article III, Section 14, by adding in the first sentence, the
word ``only'' between the words ``removed'' and ``for'' and the words
``as defined in the regulations in Sec. 563.39 of this chapter'' after
the word ``cause'';
k. In Article V, Section 1, by adding, in first, and fifth
sentences, the phrase ``or comptroller'' after the word ``treasurer''
each place it appears, and removing the third and fourth sentences; and
l. In Article XI, by adding a sentence at the end.
The additions read as follows:
Appendix to Part 552--Model Bylaws for Stock Associations
* * * * *
Article II--Shareholders
* * * * *
Section 8. Quorum. * * * If a quorum is present, the affirmative
vote of the majority of the shares represented at the meeting and
entitled to vote on the subject matter shall be the act of the
stockholders, unless the vote of a greater number of stockholders
voting together or voting by classes is required by law or the
charter.
Section 9. Proxies. * * * Proxies may be given telephonically or
electronically as long as the holder uses a procedure for verifying
the identity of the stockholder. * * *
* * * * *
Article III--Board of Directors
* * * * *
Section 3. Regular Meetings. * * * Directors may participate in
a meeting by means of a conference telephone or similar
communications device through which all persons participating can
hear each other at the same time. Participation by such means shall
constitute presence in person for all purposes.
* * * * *
Article XI--Amendments
* * * When an association fails to meet its quorum requirement,
solely due to vacancies on the board, then the affirmative vote of a
majority of the sitting board will be required to amend the bylaws.
PART 556--STATEMENTS OF POLICY
25. The authority citation for part 556 continues to read as
follows:
Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1464, 1701j-3; 15 U.S.C.
1693-1693r.
Secs. 556.1, 556.17 [Removed]
26. Sections 556.1 and 556.17 are removed.
PART 563--OPERATIONS
27. The authority citation for part 563 continues to read as
follows:
Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468,
1817, 1828, 3806; 42 U.S.C. 4106.
28. Section 563.74 is amended by revising paragraph (d) to read as
follows:
Sec. 563.74 Mutual capital certificates.
* * * * *
(d) Charter amendment. No application for approval of the issuance
of mutual capital certificates pursuant to this section may be filed
unless the mutual association amends its charter to authorize issuance,
or as may otherwise be required by applicable law.
* * * * *
[[Page 32728]]
PART 575--MUTUAL SAVINGS AND LOAN HOLDING COMPANIES
29. The authority citation for part 575 continues to read as
follows:
Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a, 1828, 2901.
ALTERNATIVE ONE
30. Section 575.9(a)(1) is revised to read as follows:
Sec. 575.9 Charters and bylaws for mutual holding companies and their
savings association subsidiaries.
(a) * * * (1) Charter. The Federal mutual holding company charter
may be found in the Application Processing Regulatory Handbook,
available from any Regional Office of OTS. (See Sec. 516.1(b) of this
chapter). Each Federal mutual holding company's charter, including any
amendments thereto, constitutes conditions imposed in writing by the
agency in connection with the granting of an application and a written
agreement entered into with the agency within the meaning of 12 U.S.C.
1818(b).
* * * * *
ALTERNATIVE TWO
30a. Section 575.9 is amended by:
a. Removing, in Section 1 of the Charter in paragraph (a)(1), the
phrase ``hereby chartered'';
b. Removing, in Section 5 of the Charter in paragraph (a)(1), the
sixth, seventh, and eighth sentences in the last paragraph;
c. Removing, in Section 6 of the Charter in paragraph (a)(1), the
word ``OTS'' in the second sentence, and by adding in lieu thereof the
phrase ``the Director of the Office or his or her delegate'', and by
removing the third, fourth and fifth sentences;
d. Revising Section 8 of the Charter in paragraph (a)(1);
e. Removing in paragraph (a)(2) the phrase ``references to
`association' in the text of the mutual capital certificate charter
provision in Sec. 544.2(b)(4) shall be replaced with references to the
`Mutual Company','' and
f. Removing the number ``545.131'' in paragraph (a)(5), and by
adding in lieu thereof the number ``544.8''.
The revisions read as follows:
Sec. 575.9 Charters and bylaws for mutual holding companies and their
savings association subsidiaries.
(a) Charters and bylaws for mutual holding companies--(1) Charters.
* * *
CHARTER
* * * * *
Section 8. Amendment. Adoption of any preapproved charter
amendment shall be effective after such preapproved amendment has
been approved by the members at a legal meeting. Any other
amendment, addition, change, or repeal of this charter must be
approved by the Office prior to approval by the members at a legal
meeting. Any amendment, addition, alteration, change, or repeal so
acted upon and approved shall be effective upon filing with the
Office in accordance with regulatory procedures.
Attest:----------------------------------------------------------------
Secretary of the Association
By:--------------------------------------------------------------------
President or Chief Executive Officer of the Association
Attest:----------------------------------------------------------------
Secretary of the Office of Thrift Supervision
By:--------------------------------------------------------------------
Director of the Office of Thrift Supervision
Effective Date:--------------------------------------------------------
* * * * *
Dated: May 31, 1996.
By the Office of Thrift Supervision.
Jonathan L. Fiechter,
Acting Director.
[FR Doc. 96-14441 Filed 6-24-96; 8:45 am]
BILLING CODE 6720-01-P
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