issue-1996-01-02•Federal Register proposed rules — 1996-01-02
Federal Register proposed rules — 1996-01-02
issue-1996-01-02Federal Register proposed rules — 1996-01-02Proposed Regulation
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FR Doc. 95-31574 Proposed Tart Cherry Marketing Agreement and Order; Reopening of Comment Period To File Written Exceptions to the Proposed Marketing Agreement and Order for Tart Cherries Grown in the States of Michigan, New York, Pennsylvania, Oregon, Utah, Washington and Wisconsin
[Federal Register Volume 61, Number 1 (Tuesday, January 2, 1996)]
[Proposed Rules]
[Page 21]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31574]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 61, No. 1 / Tuesday, January 2, 1996 /
Proposed Rules
[[Page 21]]
DEPARTMENT OF AGRICULTURE
Agricultural Marketing Service
7 CFR Part 930
[Docket No. AO-370-A5; FV93-930-1]
Proposed Tart Cherry Marketing Agreement and Order; Reopening of
Comment Period To File Written Exceptions to the Proposed Marketing
Agreement and Order for Tart Cherries Grown in the States of Michigan,
New York, Pennsylvania, Oregon, Utah, Washington and Wisconsin
AGENCY: Agricultural Marketing Service, USDA.
ACTION: Reopening of the comment period to file written exceptions to
the proposed marketing agreement and order.
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SUMMARY: Notice is hereby given that the time period for filing written
exceptions to the proposed marketing agreement and order for tart
cherries grown in the States of Michigan, New York, Pennsylvania,
Oregon, Utah, Washington and Wisconsin is reopened until January 16,
1996.
DATES: Comments must be received by January 16, 1996.
ADDRESSES: Interested persons are invited to submit written comments in
triplicate to the Hearing Clerk, U.S. Department of Agriculture, room
1079-S, Washington, DC, 20050-9200. All written comments will be
available for public inspection at the Office of the Hearing Clerk
during regular business hours.
FOR FURTHER INFORMATION CONTACT: (1) R. Charles Martin or Kenneth G.
Johnson, Marketing Order Administration Branch, Fruit and Vegetable
Division, room 2523-S, AMS, USDA, P.O. Box 96456, Washington, DC 20090-
6456; telephone number (202) 720-5053.
(2) Robert Curry, Northwest Marketing Field Office, Marketing Order
Administration Branch, Fruit and Vegetable Division, AMS, USDA, 1220
S.W. Third Avenue, room 369, Portland, Oregon, 97204; telephone: (503)
326-2725.
SUPPLEMENTARY INFORMATION: Prior documents in this proceeding: Notice
of Hearing issued on November 23, 1993, and published in the November
30, 1993, issue of the Federal Register (58 FR 63108); Notice of
Additional Hearings on the Proposed Agreement and Order issued on
December 20, 1993, and published in the December 23, 1993, issue of the
Federal Register (58 FR 68065); and an Amendment to the Notice of
Hearing issued on January 25, 1994, and published in the Federal
Register (59 FR 4259) on January 31, 1994. The Notice Reopening the
Hearing was issued on December 5, 1994, and published in the Federal
Register on December 8, 1994 (59 FR 63273). The Recommended Decision
and Opportunity To File Written Exceptions to the proposed marketing
agreement and order was issued on November 20, 1995, and published in
the November 29, 1995, Federal Register (60 FR 61292).
The proposed marketing agreement and order are based on the record
of a public hearing held December 15-17, 1993, in Grand Rapids,
Michigan; January 10-11, 1994, in Rochester, New York; January 13,
1994, in Provo, Utah; February 15-17, 1994, in Portland, Oregon;
January 9-10, 1995, in Grand Rapids, Michigan; and, January 12-13,
1995, in Portland, Oregon. These multiple hearing sessions were held to
receive evidence on marketing order proposals from growers, handlers,
processors and other interested parties located throughout the proposed
production area.
The Recommended Decision was issued pursuant to the provisions of
the Agricultural Marketing Agreement Act of 1937, as amended [7 U.S.C.
601-674], hereinafter referred to as the Act, and the applicable rules
of practice and procedure governing the formulation of marketing
agreements and marketing orders [7 CFR part 900]. The deadline for
filing written exceptions with the Hearing Clerk on the Recommended
Decision was December 29, 1995.
The U.S. Department of Agriculture (USDA) has received three
requests from interested parties to provide more time for interested
persons to analyze the Recommended Decision and prepare and file with
the Hearing Clerk their written comments. These requesters cite severe
weather (that led to extended electrical power outages) in their
respective growing areas, the holiday season and the voluminous hearing
record as the reasons for requesting a 30-day extension for filing
written comments to January 31, 1996.
Reopening the period in which written comments may be filed will
provide interested persons more time to review the Recommended Decision
and submit written comments thereto. Extending the comment period by 18
days to January 16, 1996, would provide additional time for commenters,
to fairly address their concerns. A delay of 18 days should not
substantially add to the time required to complete this proceeding.
Accordingly, the period in which to file written comments is reopened
until January 16, 1996. This notice is issued pursuant to the Act and
the applicable rules of practice governing the formulation of marketing
agreements and marketing orders (7 CFR part 900).
Authority: 7 U.S.C. 601-674.
Dated: December 27, 1995.
Kenneth C. Clayton,
Acting Administrator, Agricultural Marketing Service.
[FR Doc. 95-31574 Filed 12-27-95; 3:36 pm]
BILLING CODE 3410-02-P
Complete official Federal Register PDF
FR Doc. 95-31546 Meeting Regarding Onsite Fitness-for-Duty Testing
[Federal Register Volume 61, Number 1 (Tuesday, January 2, 1996)]
[Proposed Rules]
[Pages 27-28]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31546]
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NUCLEAR REGULATORY COMMISSION
10 CFR Part 26
Meeting Regarding Onsite Fitness-for-Duty Testing
AGENCY: Nuclear Regulatory Commission.
ACTION: Notice of Open Meeting.
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SUMMARY: The Nuclear Regulatory Commission (NRC) will conduct an open
meeting to discuss regulatory options under the provisions of 10 CFR
Part 26 for performing onsite screening tests by the Washington Public
Power Supply System (WPPS) of urine specimens collected by the
Utilities Service Alliance (USA) members. The WPPS requested the
meeting to discuss its proposed approach to conduct initial screening
tests of urine specimens sent to them by USA members to determine which
specimens are negtive and need no further testing at an HHS-certified
laboratory. A summary of the meeting will be prepared and will be
available upon request.
DATES: The meeting will be held at 9:30 a.m. on January 11, 1996.
ADDRESSES: The meeting will be in Room 1-F5 at NRC Headquarters, One
White Flint North, 11555 Rockville Pike, Rockville, Maryland.
Dated at Rockville, Maryland this 26th day of December 1995.
[[Page 28]]
For the Nuclear Regulatory Commission.
Robert J. Dube,
Deputy Chief, Safeguards Branch, Division of Reactor Program
Management, Office of Nuclear Reactor Regulation.
[FR Doc. 95-31546 Filed 12-29-95; 8:45 am]
BILLING CODE 7590-01-P
Complete official Federal Register PDF
FR Doc. 95-31543 St. Marys Falls Canal and Locks, Michigan; Use, Administration, and Navigation
[Federal Register Volume 61, Number 1 (Tuesday, January 2, 1996)]
[Proposed Rules]
[Pages 33-35]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31543]
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DEPARTMENT OF DEFENSE
Department of the Army
33 CFR Part 207
St. Marys Falls Canal and Locks, Michigan; Use, Administration,
and Navigation
AGENCY: Corps of Engineers, Department of the Army, DOD.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Corps of Engineers proposes to amend the regulations which
establish the operating schedule for Soo Locks at the St. Marys Falls
Canal, Sault Ste. Marie, Michigan, to change the annual opening date
from April 1 to March 25. The locks will not open earlier than March
25, except in case of emergency and are subject to closure at any time
in a national emergency involving a vessel disaster or other
extraordinary circumstances as currently provided in 33 CFR 207.440(u).
DATES: Written comments should be received February 1, 1996.
ADDRESSES: Submit written comments, in duplicate, to: Mr. William
Willis, Acting Chief, Construction-Operations Division, Detroit
District, U.S. Army Corps of Engineers, P.O. Box 1027, Detroit,
Michigan 48231-1027, Phone: (313) 226-6794, or deliver them to Mr.
Willis at the Detroit District office at 477 Michigan Avenue, Detroit,
Michigan, between the hours of 7:30 a.m. and 4:00 p.m. Monday through
Friday. Comments received and other materials relevant to this proposed
rulemaking can be inspected at Mr. Willis' office during the same
hours. An appointment may be required for inspection, so please call
ahead to confirm availability and to avoid any conflicts with
inspections by other interested persons. A reasonable fee may be
charged for copying services.
FOR FURTHER INFORMATION CONTACT:
Mr. Michael Kidby at Corps of Engineers Headquarters in Washington,
D.C., by telephone at (202) 761-8835.
SUPPLEMENTARY INFORMATION:
Legal Authority
The legal authority for the regulation governing the use,
administration, and navigation of the St. Marys Falls Canal and Locks
is Section 4 of the River and Harbor Act of August 18, 1894 (28 Stat.
362), as amended, which is codified at 33 U.S.C. Section 1. This
statute requires the Secretary of the Army to ``prescribe such
regulations for the use, administration, and navigation of the
navigable waters of the United States'' as the Secretary determines may
be required by public necessity.
Background
The regulation governing the operation of the St. Marys Falls Canal
and Locks, in 33 CFR 207.440, was adopted on November 27, 1945 (10 FR
14451), and has been the subject of nine amendments. The legislation
allows the period of operation to be adjusted to meet the reasonable
demands of commerce. The provision setting out the current opening date
for the locks was adopted on October 30, 1956 (21 FR 8285). It
establishes an opening date of April 1, subject to annual modification
by the Division Engineer if the public interest would be best served by
the modification or in the event of emergency.
The opening date of the Soo Locks has been modified on a number of
occasions and the length of the operating season has been the subject
of a number of
[[Page 34]]
studies. Between 1970 and 1979, as authorized by the River and Harbor
Act of 1970, the locks at Sault St. Marie have remained open for as
long as the entire year in a demonstration program on the
practicability of winter navigation in the Great Lakes. Since the 1979
navigation season, the Soo Locks have opened on the following dates:
March 25, 1980; March 23, 1981; April 1, 1982; March 29, 1983; March
26, 1984; April 1, 1985; April 1, 1986; March 22, 1987; March 22, 1988;
March 15, 1989; March 21, 1990; March 21, 1991; March 22, 1992; March
21, 1993; March 25, 1994; and March 25, 1995. During periods of
navigation in ice, numerous environmental studies have indicated no
significant adverse environmental effects.
In 1977, a Final Environmental Impact Statement (FEIS) titled,
``Operation, Maintenance, and Minor Improvements to the Federal
Facilities at Sault Ste. Marie, Michigan'' was prepared. Subsequent to
this, a Detroit District staff report and supplemental environmental
impact statement (Supplement I, EIS) completed in 1979 recommended
operation of the locks each year to January 8 1 week.
Based on extensive environmental studies, a second supplemental EIS
(Supplement II), dated September 1989, was completed by the Detroit
District, concluding that no significant adverse environmental effects
would result form annual operation of the locks as late as January 31
2 weeks, and recommending that the closing date for the
locks be extended to January 31 2 weeks. A Notice of
Proposed Rulemaking to change the closing date to January 15 was
published on April 3, 1991 (56 FR 13604) and subsequently became
effective March 24, 1992.
The proposal contained in this notice will establish a fixed
opening date of March 25 for the Soo Locks. This fixed opening date, in
conjunction with the January 15 closing date, will allow nearly 10
months access to and from Lake Superior so that industry may have an
adequate basis for planning and management of their resources.
History of the Present Amendment
In March 1990, the Detroit District Engineer sent a letter to
interested governmental, environmental, and business interests,
proposing a comprehensive annual operating plan for the locks. It
proposed a fixed closing date of January 15 and fixed opening date no
earlier than March 15. Because the environmental studies of the
supplemental EIS's in 1979 and 1989 focused specifically on the closing
date, further environmental studies focusing on the effects of opening
dates between March 15 and April 1 would be conducted in order to
establish an opening date that would address the needs of both commerce
and the environment.
In 1991 and 1992, another series of environmental studies
concerning lock opening were completed. Employing these studies as well
as the environmental data from the prior studies which examined
possible impacts for Supplements I and II, potential impacts of
commercial navigation before April 1 were assessed. The resulting
February 1993 Draft EIS (DEIS) identified no significant impacts for
opening the locks as early as March 15. Rather, the study found that
even significant vessel traffic, with ice cover, would result in only
insignificant adverse environmental effects. Given the favorable
economic benefits, as set forth in the DEIS, a March 21 opening date
was suggested in the DEIS. However, to alleviate Michigan Department of
Natural Resources (MDNR) concerns raised in response to this document,
the U.S. Coast Guard, the U.S. Fish and Wildlife Service, the MDNR, and
the Detroit District signed a Memorandum of Agreement (MOA) in August
of 1993 recommending a fixed lock opening date of March 25. In this
MOA, the Federal and state agencies agreed to perform joint monitoring
studies of the aquatic ecosystem and biota. This recommendation and MOA
were included in the FEIS and distributed for public review.
Proposed Amendments to the Regulation
Based on consideration of the responses to the March 1990 letter,
comments received on the Draft FEIS, further review of the pertinent
background information in light of those responses, and the rationale
set forth in the September 26, 1994 Record of Decision, the Corps of
Engineers has determined that the overall public interest would be best
served by implementing the March 25 fixed opening alternative. As was
concluded by the District and Division Engineers, the recommended
operation of the locks is engineeringly feasible and the overall
adverse environmental effect of the March 25 opening date would not be
significant. From an economic perspective, the establishment of a fixed
opening date will create an atmosphere of stability and certainty
within Great Lakes shipping interests and industries can plan and
conduct their operations, and is economically justifiable.
At present, the regulation provides that at least one lock will be
placed in operation on April 1 and additional locks will be opened as
vessel traffic increases. As a result of the regulation proposed in
this notice, the April 1 opening date under the current regulations
will be modified from April 1 to March 25.
The Corps of Engineers proposes that the present authority of the
Division Engineer to modify opening and closing dates in emergency
conditions be retained. By their very nature, emergencies cannot be
exhaustively defined. The example given in the current regulation is
disaster to a vessel. Under the fixed closing date proposal, this type
of emergency would remain a basis for modifying the operating dates of
the locks. Similarly, national defense emergencies, extraordinary
environmental circumstances, or extraordinary national or regional
economic circumstances could also invoke the exercise of the Division
Engineer's authority. As noted above, these examples are not intended
to be exhaustive or exclusive.
Classification
1. The undersigned has reviewed this action and hereby certifies
that it is not subject to the requirements of the Regulatory
Flexibility Act, 5 U.S.C. 601-612, since it will not exert a
significant economic impact on a substantial number of small businesses
or other entities.
2. The Department of the Army has determined that this regulation
will not affect the use or value of private property and, therefore,
does not require a Takings Assessment under Executive Order 12630.
3. This proposed rule has been determined not to be a major rule
under Executive Order 12866. A Regulatory Impact Analysis (RIA)
Statement will not be prepared since the proposed changes will not
result in significant adverse economic effects identified in the
Executive Order as grounds for a finding of major action.
Environmental Documentation
This action was the subject of a FEIS, February 1994, which
concluded that there would not be significant adverse environmental
effects due to commencing the opening season of the locks on 21 March--
earlier than the date now proposed. The FEIS is available for review
upon request from the individual listed under ADDRESSES.
List of Subjects in 33 CFR Part 207
Navigation (Water), Water Transportation, Vessels.
For the reasons set out in the preamble, Title 33, Chapter II of
the
[[Page 35]]
Code of Federal Regulations is proposed to be amended as follows.
PART 207--[AMENDED]
1. The authority citation for part 207 continues to read as
follows:
Authority: 40 Stat. 266; (33 U.S.C. 1).
2. Section 207.440 is amended by revising paragraph (u) as follows:
Sec. 207.440 St. Marys Falls Canal and Locks, Michigan; use,
administration and navigation.
* * * * *
(u) The locks will be opened and closed to navigation each year as
provided in paragraphs (u) (1) and (2) of this section except as may be
authorized by the Division Engineer. Consideration will be given to
change in these dates in an emergency involving disaster to a vessel or
other extraordinary circumstances.
(1) Opening date. At least one lock will be placed in operation for
the passage of vessels on March 25. Thereafter, additional locks will
be placed in operation as traffic density demands.
(2) Closing date. The locks will be maintained in operation only
for the passage of down bound vessels departing from a Lake Superior
port before midnight (2400 hours) of January 14, and of upbound vessels
passing Detour before midnight (2400 hours) of January 15. Vessel
owners are requested to report in advance to the Engineer in charge at
Sault Ste. Marie, the name of vessel and time of departure from a Lake
Superior port on January 14 before midnight, and of vessels passing
Detour on January 15 before midnight, which may necessitate the
continued operation of a lock to permit passage of vessel.
* * * * *
Dated: December 21, 1995.
John H. Zirschky,
Acting Assistant Secretary of the Army (Civil Works).
[FR Doc. 95-31543 Filed 12-29-95; 8:45 am]
BILLING CODE 3710-92-M
Complete official Federal Register PDF
FR Doc. 95-31498 Telephone Regulations and Inmate Financial Responsibility
[Federal Register Volume 61, Number 1 (Tuesday, January 2, 1996)]
[Proposed Rules]
[Pages 92-93]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31498]
Federal Register / Vol. 61, No. 1 / Tuesday, January 2, 1996 /
Proposed Rules
[[Page 92]]
DEPARTMENT OF JUSTICE
Bureau of Prisons
28 CFR Parts 540 and 545
[BOP-1050-P]
RIN 1120-AA49
Telephone Regulations and Inmate Financial Responsibility
AGENCY: Bureau of Prisons, Justice.
ACTION: Proposed Rule.
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SUMMARY: In this document, the Bureau of Prisons (Bureau) is proposing
to limit telephone privileges to 60 minutes of debit calls per month
for inmates who refuse to participate in the inmate financial
responsibility program (IFRP). Additionally, the Bureau proposes to
impose a $25 per month spending limitation upon the commissary
purchases of IFRP refusees, excluding the purchase of stamps and
telephone credits. These actions are made pursuant to the terms of a
settlement approved by the District Court in a nation-wide federal
prisoner class action, Washington v. Reno, Nos. 93-217, 93-290 (E.D.
KY), and are intended to continue encouraging inmates to participate in
the IFRP.
DATES: Comments are due on March 4, 1996.
ADDRESSES: Office of General Counsel, Bureau of Prisons, HOLC Room 754,
320 First Street, NW., Washington, DC 20534.
FOR FURTHER INFORMATION CONTACT: Roy Nanovic, Office of General
Counsel, Bureau of Prisons, telephone (202) 514-6655.
SUPPLEMENTARY INFORMATION: The Bureau of Prisons (Bureau) is proposing
to amend its rules on telephone regulations (28 CFR part 540, subpart
I) and on the inmate financial responsibility program (IFRP) (28 CFR
part 545, subpart B) which were published in the Federal Register on
April 4, 1994 (59 FR 15812).
In the April 4, 1994, revision of its rules on telephone
regulations and on the IFRP, the Bureau delayed the effective date for
provisions in Secs. 540.105(c) and 545.11(d)(10) which imposed
limitations on the telephone privileges of inmates refusing to
participate in the IFRP. These provisions were to become effective
January 3, 1995. Due to ongoing litigation in Washington v. Reno, the
effective date for these provisions was further delayed until January
4, 1996. See 60 FR 240. In accordance with the court-approved
settlement in Washington v. Reno, Nos. 93-217, 93-290 (E.D. KY), the
Bureau has withdrawn those provisions in a document published elsewhere
in today's Federal Register.
Also in accordance with provisions of the settlement in Washington
v. Reno, this proposed rule specifies providing only debit telephone
calling privileges for inmates who refuse to participate in the IFRP
and to limit such debit calling privileges to 60 minutes of debit calls
per month. This proposed limitation will not take effect until
installation of the new nation-wide telephone system, per terms of the
settlement in Washington v. Reno.
Local institution guidelines continue to govern the duration of
each individual call. As with all inmate telephone privileges, the
Warden retains the discretion to further limit the debit calling
privileges of inmates who refuse to participate in the IFRP to ensure
the security or good order, including discipline of the institution or
to protect the public, 28 CFR Sec. 540.100. Telephone privileges of
inmates who refuse to participate in the IFRP may also be further
limited as a disciplinary sanction, 28 CFR part 541.
Additionally, the Bureau is proposing to amend the provision in 28
CFR 545.11(d) which relates to the monthly commissary spending
limitation imposed upon inmates who refuse to participate in the IFRP.
Specifically, under 28 CFR 545.11(d)(6), IFRP refusees currently are
not permitted to purchase any items in excess of the monthly spending
limitation for all inmates, including special purchase items like
sports equipment, hobby crafts, etc. The Bureau proposes to revise this
provision to impose upon IFRP refusees a more stringent monthly
spending limitation than that imposed upon all inmates. Pursuant to the
terms of the settlement in Washington v. Reno, the proposed rule
specifies that the monthly spending limitation upon IFRP refusees shall
be at least $25 per month and excludes purchases of stamps and
telephone credits.
Interested persons may participate in this rulemaking by submitting
data, views, or arguments in writing to the Bureau of Prisons, 320
First Street, NW., HOLC Room 754, Washington, DC 20534. Comments
received during the comment period will be considered before final
action is taken. All comments received remain on file for public
inspection at the above address.
The Bureau of Prisons has determined that this rule is not a
significant regulatory action for the purpose of E.O. 12866, and
accordingly this rule has not been reviewed by the Office of Management
and Budget pursuant to E.O. 12866. After review of the law and
regulations, the Director, Bureau of Prisons has certified that this
rule, for the purpose of the Regulatory Flexibility Act (Pub. L. 96-
354), does not have a significant impact on a substantial number of
small entities.
List of Subjects in 28 CFR Part 540 and 545
Prisoners.
Kathleen M. Hawk,
Director, Bureau of Prisons.
Accordingly, pursuant to the rulemaking authority vested in the
Attorney General in 5 U.S.C. 552(a) and delegated to the Director,
Bureau of Prisons in 28 CFR 0.96(p), parts 540 and 545 in subchapter C
of 28 CFR, chapter V are proposed to be amended as set forth below.
SUBCHAPTER C--INSTITUTIONAL MANAGEMENT
PART 540--CONTACT WITH PERSONS IN THE COMMUNITY
1. The authority citation for 28 CFR part 540 continues to read as
follows:
Authority: 5 U.S.C. 301, 551, 552a; 18 U.S.C. 1791, 3013, 3571,
3572, 3621, 3622, 3624, 3663, 4001, 4042, 4081, 4082 (Repealed in
part as to offenses committed on or after November 1, 1987), 5006-
5024 (Repealed October 12, 1984 as to offenses committed after that
date), 5039; 28 U.S.C. 509, 510; 28 CFR 0.95-0.99.
2. In Sec. 540.105, paragraph (c) is added to read as follows:
Sec. 540.105 Expenses of inmate telephone use.
* * * * *
(c) The Warden shall limit the telephone privileges (collect and
debit calls) of an inmate who has refused to participate in the Inmate
Financial Responsibility Program (IFRP) as specified in 28 CFR part
545.
* * * * *
PART 545--WORK AND COMPENSATION
1. The authority citation for 28 CFR part 545 continues to read as
follows:
Authority: 5 U.S.C. 301; 18 U.S.C. 3013, 3571, 3572, 3621, 3622,
3624, 3663, 4001, 4042, 4081, 4082 (Repealed in part as to offenses
committed on or after November 1, 1987), 4126, 5006-5024 (Repealed
October 12, 1984 as to offenses committed after that date), 5039; 28
U.S.C. 509, 510; 28 CFR 0.95-0.99.
2. In Sec. 545.11, paragraph (d)(6) is revised, and paragraph
(d)(10) is added, to read as follows:
Sec. 545.11 Procedures.
* * * * *
[[Page 93]]
(d) * * *
(6) The inmate shall be subject to a monthly commissary spending
limitation more stringent than the monthly commissary spending
limitation set for all inmates. This more stringent commissary spending
limitation for IFRP refusees shall be at least $25 per month, excluding
purchases of stamps and telephone credits.
* * * * *
(10) The inmate is restricted to the use of debit telephone calls
and will be allowed to make 60 minutes of debit telephone calls per
month, unless the Warden further limits the inmate's telephone
privileges to ensure the security or good order, including discipline
of the institution, or to protect the public, pursuant to 28 CFR
Sec. 540.100, or the inmate's telephone privileges are restricted as a
disciplinary sanction under 28 CFR, part 541. Any exception to this
provision requires approval of the Warden and is to be based on
compelling circumstances.
* * * * *
[FR Doc. 95-31498 Filed 12-29-95; 8:45 am]
BILLING CODE 4410-05-P
Complete official Federal Register PDF
FR Doc. 95-31457 Distribution of Marketable Securities by a Partnership
[Federal Register Volume 61, Number 1 (Tuesday, January 2, 1996)]
[Proposed Rules]
[Pages 28-33]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31457]
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DEPARTMENT OF THE TREASURY
Internal Revenue Service
26 CFR Part 1
[PS-2-95]
RIN 1545-AT19
Distribution of Marketable Securities by a Partnership
AGENCY: Internal Revenue Service (IRS), Treasury.
ACTION: Notice of proposed rulemaking and notice of public hearing.
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SUMMARY: This document contains proposed regulations relating to the
treatment of a distribution of marketable securities by a partnership
under section 731(c) of the Internal Revenue Code of 1986, as amended
(Code). These proposed regulations provide taxpayers with guidance
needed to comply with certain changes made by the Uruguay Round
Agreements Act of 1994 (Pub. L. No. 103-465). This document also
provides notice of a public hearing on these proposed regulations.
DATES: Written comments and requests to speak (with outlines of oral
comments) at a public hearing scheduled for 10 a.m. on Wednesday, April
3, 1996 must be received by Wednesday, March 13, 1996.
ADDRESSES: Send submissions to: CC:DOM:CORP:R (PS-2-95), 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 (PS-2-95), Courier's
Desk, Internal Revenue Service, 1111 Constitution Avenue NW.,
Washington, DC. The public hearing will be held in the IRS Auditorium.
FOR FURTHER INFORMATION CONTACT: Concerning the regulations, Terri A.
Belanger or William M. Kostak, (202) 622-3080; concerning submissions
and the hearing, Christina Vasquez, (202) 622-7190 (not toll-free
numbers).
SUPPLEMENTARY INFORMATION:
Introduction
This document proposes to add Sec. 1.731-2 to the Income Tax
Regulations (26 CFR part 1) under section 731(c) of the Code. Section
731(c) was amended by section 741(a) of the Uruguay Round Agreements
Act of 1994 (Public Law 103-465).
Background
Section 731(a)(1) of the Code provides that a partner must
recognize gain on a distribution from a partnership to the extent that
any money distributed exceeds the adjusted basis of the partner's
interest in the partnership immediately before the distribution.
Section 737 provides that a partner must recognize gain on a
distribution of property other than money in an amount equal to the
lesser of (i) the partner's net precontribution gain or (ii) the excess
of the fair market value of the distributed property over the partner's
basis in the partnership interest.
Section 731(c) provides that the term money includes marketable
securities for purposes of section 731(a)(1) and section 737. As
discussed in the legislative history accompanying section 731(c),
treating marketable securities as money for this purpose is appropriate
because marketable securities are economically equivalent to money.
Section 731(c) affects only the tax consequences to the distributee
partner; section 731(c) does not require the partnership or any partner
other than the distributee partner to recognize gain on a distribution
of marketable securities.
Explanation of Provisions
Marketable Securities Treated as Money
Distributions of marketable securities are treated as distributions
of money under section 731(c) only for purposes of sections 731(a)(1)
and 737. For example, a distribution of marketable securities is not
treated as a distribution of money to the extent it is subject to
section 707 or section 751(b) because the distribution is not subject
to section 731(a)(1) or section 737. In addition, marketable securities
are not treated as money for purposes of section 731(a)(2), so that a
partner does not recognize a loss on a distribution of marketable
securities. Finally, marketable securities contributed by a partner are
treated as property other than money for purposes of determining the
partner's net precontribution gain under section 737(b).
Reduction of Amount Treated as Money
Under section 731(c)(3)(B), the amount of marketable securities
that is treated as money is reduced by the excess of (i) the partner's
share of the net gain of the partnership's securities of the same class
and issuer as the distributed securities immediately before the
distribution over (ii) the partner's share of such net gain immediately
after the distribution. This provision allows a partner to withdraw the
partner's share of appreciation in the partnership's marketable
securities without recognizing gain on the distribution. As a result,
section 731(c) generally applies only when a partner receives a
distribution of marketable securities in exchange for the partner's
share of appreciated assets other than marketable securities.
Under the authority of section 731(c)(3)(B), the proposed
regulations provide that all marketable securities held by a
partnership are treated as marketable securities of the same class and
issuer as the distributed securities. Treating all marketable
securities as a single asset for this purpose is consistent with the
basic rationale of section 731(c) that marketable securities are the
economic equivalent of money. As a result, the amount of the
distribution that is not treated as money will depend on the partner's
share of the net appreciation in all partnership securities, not on the
partner's share of the appreciation in the type of securities
distributed.
Definition of Marketable Securities
In general, the term marketable securities includes any financial
instruments--such as stocks, options, and derivatives--that are
actively traded within the meaning of section 1092(d)(1). In addition,
section 731(c)(2)(B)(v) provides that an interest in an entity is a
marketable security if substantially all of the assets of the entity
consist of marketable securities or money. The proposed regulations
provide that substantially all of the assets of an entity consist of
marketable securities or money only if 90 percent or more of the assets
of the entity at the time of the distribution consist of such assets.
Section 731(c)(2)(B)(vi) provides that, to the extent provided in
regulations, an interest in an entity not described in section
731(c)(2)(B)(v) is a marketable security to the extent that the value
of such interest is attributable to marketable securities or money. The
proposed regulations provide that an interest in an entity is a
marketable security to the extent that the value of the interest is
attributable to marketable securities or money that constitute less
than 90 percent but 20 percent or more of the assets of the entity. The
20 percent threshold means that an interest in an entity holding only a
small
[[Page 29]]
amount of marketable securities will not be treated as a marketable
security.
The proposed regulations also provide that a marketable security
will continue to be treated as a marketable security, even if the
partnership or its partners are restricted by agreement or otherwise
from selling or exchanging the security. This provision is intended to
prevent a partnership from avoiding section 731(c) by temporarily
restricting the transferability of the distributed security.
Exceptions
Consistent with the provisions of section 731(c)(3)(A), the
proposed regulations provide three exceptions to section 731(c). First,
the proposed regulations provide that if the marketable security was
contributed to the partnership by the distributee partner, section
731(c) does not apply to the distribution of that security.
Second, the proposed regulations provide that section 731(c) does
not apply to the distribution of a marketable security to the extent
that the security was acquired by the partnership in a nonrecognition
transaction in exchange for property other than marketable securities
or cash and (i) the security is actively traded as of the date of
distribution and (ii) the security is distributed by the partnership
within five years of either the date the security was acquired by the
partnership or, if later, the date the security became actively traded.
For example, if a partnership contributed substantially all of its
assets to a corporation in a transaction described in section 351 and
the stock of the corporation became marketable, the distribution of the
stock by the partnership within five years would not be subject to
section 731(c). This exception recognizes that the marketable security
in these situations is simply a substitute for the underlying assets
exchanged in the nonrecognition transaction.
The proposed regulations also provide that section 731(c) does not
apply to the distribution of a marketable security if (i) the security
was not actively traded on the date acquired by the partnership and the
entity to which the security relates had no outstanding actively traded
securities at the time the security was acquired by the partnership;
(ii) the security is actively traded as of the date of distribution;
and (iii) the security was held by the partnership for at least six
months before it became actively traded and the security was
distributed by the partnership within five years of the date on which
the security became actively traded.
In addition, the proposed regulations provide a successor security
rule that applies to these exceptions. This rule provides that the
exceptions continue to apply to a security acquired in a nonrecognition
transaction in exchange for a security that was already subject to an
exception.
Investment Partnerships
Section 731(c) does not apply to the distribution of marketable
securities by an investment partnership to an eligible partner. An
investment partnership is defined as a partnership that has never been
engaged in a trade or business and substantially all of the assets of
which consist of the investment assets described in section
731(c)(3)(C)(i). The proposed regulations provide that a partner can
qualify as an eligible partner even if the partner contributed services
to the partnership. In addition, the proposed regulations provide that
a partnership will not be treated as engaged in a trade or business if
the partnership provides reasonable and customary management services
to a lower-tier investment partnership. This exception allows an upper-
tier investment partnership to manage the investments and other
activities of a lower-tier investment partnership without disqualifying
the upper-tier partnership as an investment partnership. The exception
does not extend to management services provided to lower-tier
partnerships other than investment partnerships because, as discussed
below, the tiering rules of section 731(c)(3)(C)(iv) treat the upper-
tier management partnership as engaged in the trade or business of the
lower-tier partnership, thereby preventing the upper-tier partnership
from qualifying as an investment partnership.
The proposed regulations also provide that a partnership will not
be treated as engaged in a trade or business if the partnership
provides reasonable and customary services in assisting the formation,
capitalization, expansion, or offering of interests in an entity in
which the partnership holds a significant equity interest, provided
that the anticipated receipt of compensation for the services does not
represent a significant purpose for the partnership's investment in the
entity and is incidental to the investment in the entity.
Section 731(c)(3)(C)(iv) provides that, except as otherwise
provided in regulations, a partnership is treated as engaged in any
trade or business engaged in by (and as holding the assets of) any
partnership in which the partnership holds an interest. The proposed
regulations provide that this look-through rule does not apply if the
upper-tier partnership does not participate in the management of the
lower-tier partnership and the interest held by the upper-tier
partnership is less than 10 percent of the total profits and capital
interests in the lower-tier partnership.
Coordination With Other Sections
The proposed regulations provide rules for coordinating section
731(c) with section 704(c)(1)(B) and section 737. This coordination is
necessary because a distribution of marketable securities could occur
as part of a larger distribution in which property contributed by the
distributee partner is distributed to another partner (section
704(c)(1)(B)) or the distributee partner receives property in addition
to marketable securities (section 737).
Under the proposed regulations, the basis increase in the partner's
interest in the partnership as a result of any gain recognized by the
partner under section 704(c)(1)(B) is taken into account in determining
the distributee partner's gain under section 731(c) and the partner's
basis in the distributed securities. Taking the stepped-up basis into
account for purposes of section 731 reflects the fact that the general
effect of section 704(c)(1)(B) is to treat the contributing partner as
having contributed property with a full fair market value basis at the
time of contribution. The proposed regulations, however, provide that
the basis increase in the partner's interest as a result of any gain
recognized by the partner under section 737 is not taken into account
for these purposes. The proposed regulations are consistent with
section 737, which generally treats a distribution of money as
occurring before, and independent of, a distribution of other property.
Anti-Abuse Rule
The proposed regulations provide that the provisions of section
731(c) and this section must be applied in a manner that is consistent
with the purpose of section 731(c) and the substance of the
transaction.
Proposed Effective Date
This section is proposed to apply to distributions of marketable
securities by a partnership to a partner on or after December 29, 1995.
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
[[Page 30]]
assessment is not required. It also has 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 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 timely submitted to the IRS. All
comments will be available for public inspection and copying.
A public hearing has been scheduled for Wednesday, April 3, 1996 at
10:00 a.m. in the Auditorium of the Internal Revenue Building, 1111
Constitution Avenue NW., Washington, DC. Because of access
restrictions, visitors will not be admitted beyond the Internal Revenue
Building lobby more than 15 minutes before the hearing starts.
The rules of 26 CFR 601.601(a)(3) apply to the hearing.
Persons that wish to present oral comments at the hearing must
submit written comments by Wednesday, March 13, 1996 and submit an
outline of the topics to be discussed and the time to be devoted to
each topic (signed original and eight (8) copies) by Wednesday, March
13, 1996.
A period of 10 minutes will be allotted to each person for making
comments.
An agenda showing the scheduling of the speakers will be prepared
after the deadline for receiving outlines has passed. Copies of the
agenda will be available free of charge at the hearing.
Drafting Information
The principal authors of these regulations are Terri A. Belanger
and William M. Kostak, Office of Assistant Chief Counsel (Passthroughs
and Special Industries), 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 is amended by adding
an entry in numerical order to read as follows:
Authority: 26 U.S.C. 7805.* * *
Section 1.731-2 also issued under 26 U.S.C. 731(c).* * *
Par. 2. Section 1.731-2 is added to read as follows:
Sec. 1.731-2 Partnership distributions of marketable securities.
(a) Marketable securities treated as money. Except as otherwise
provided in section 731(c) and this section, for purposes of section
731(a)(1) and 737, the term money includes marketable securities and
such securities are taken into account at their fair market value as of
the date of the distribution.
(b) Reduction of amount treated as money--(1) Aggregation of
securities. For purposes of section 731(c)(3)(B) and this paragraph
(b), all marketable securities held by a partnership are treated as
marketable securities of the same class and issuer as the distributed
security.
(2) Amount of reduction. The amount of the distribution of
marketable securities that is treated as a distribution of money under
section 731(c) and paragraph (a) of this section is reduced (but not
below zero) by the excess, if any, of--
(i) The distributee partner's distributive share of the net gain,
if any, which would be recognized if all the marketable securities held
by the partnership were sold (immediately before the transaction to
which the distribution relates) by the partnership for fair market
value; over
(ii) The distributee partner's distributive share of the net gain,
if any, which is attributable to the marketable securities held by the
partnership immediately after the transaction, determined by using the
same fair market value as used under paragraph (b)(2)(i) of this
section.
(3) Distributee partner's share of net gain. For purposes of
section 731(c)(3)(B) and paragraph (b)(2) of this section, a partner's
distributive share of net gain is determined--
(i) By taking into account any basis adjustments under section
743(b) with respect to that partner; and
(ii) Without taking into account any special allocations adopted
with a principal purpose of avoiding the effect of section 731(c) and
this section.
(c) Marketable securities--(1) Actively traded. For purposes of
section 731(c) and this section, a financial instrument is actively
traded (and thus is a marketable security) if it is of a type that is,
as of the date of distribution, actively traded within the meaning of
section 1092(d)(1). Thus, for example, if XYZ common stock is listed on
a national securities exchange, particular shares of XYZ common stock
that are distributed by a partnership are marketable securities even if
those particular shares cannot be resold by the distributee partner for
a designated period of time.
(2) Interests in an entity--(i) Substantially all. For purposes of
section 731(c)(2)(B)(v) and this section, substantially all of the
assets of an entity consist (directly or indirectly) of marketable
securities, money, or both only if 90 percent or more of the assets of
the entity (by value) at the time of the distribution of an interest in
the entity consist (directly or indirectly) of marketable securities,
money, or both.
(ii) Less than substantially all. For purposes of section
731(c)(2)(B)(vi) and this section, an interest in an entity is a
marketable security to the extent that the value of the interest is
attributable (directly or indirectly) to marketable securities, money,
or both, if less than 90 percent but 20 percent or more of the assets
of the entity (by value) at the time of the distribution of an interest
in the entity consist (directly or indirectly) of marketable
securities, money, or both.
(d) Exceptions--(1) Previously contributed property. Section 731(c)
and this section do not apply to the distribution of a marketable
security if the security was contributed to the partnership by the
distributee partner, except to the extent that the value of the
distributed security is attributable to marketable securities or money
contributed (directly or indirectly) by the partnership to the entity
to which the distributed security relates.
(2) Security acquired in nonrecognition transaction. Section 731(c)
and this section do not apply to the distribution of a marketable
security to the extent that--
(i) The security was acquired by the partnership in a
nonrecognition transaction in exchange for any property except money or
marketable securities (including a security that would have been
treated as a marketable security under paragraph (c)(2) of this section
if distributed at the time of the exchange);
(ii) The distributed security is actively traded as of the date of
distribution; and
(iii) The security is distributed within five years of either the
date on which the security was acquired by the partnership or, if
later, the date on
[[Page 31]]
which the security became actively traded.
(3) Security not marketable when acquired. Section 731(c) and this
section do not apply to the distribution of a marketable security if--
(i) The security was not actively traded as of the date acquired by
the partnership and the entity to which the security relates had no
outstanding actively traded securities on that date;
(ii) The security is actively traded as of the date of
distribution; and
(iii) The security was held by the partnership for at least six
months before the date the security became actively traded and the
security was distributed within five years of the date on which the
security became actively traded.
(4) Successor security. Section 731(c) and this section do not
apply to the distribution of a marketable security to the extent that
the security was acquired by the partnership in a nonrecognition
transaction in exchange for a security the distribution of which
immediately prior to the exchange would have been excepted under this
paragraph (d).
(e) Investment partnerships--(1) In general. Section 731(c) and
this section do not apply to the distribution of marketable securities
by an investment partnership (as defined in section 731(c)(3)(C)(i)) to
an eligible partner (as defined in section 731(c)(3)(C)(iii)).
(2) Eligible partner. For purposes of section 731(c)(3)(C)(iii) and
this section, a partner is not treated as a partner other than an
eligible partner solely because the partner contributed services to the
partnership.
(3) Trade or business activities. For purposes of section
731(c)(3)(C) and this section, a partnership is not treated as engaged
in a trade or business by reason of--
(i) Any activity undertaken as an investor, trader, or dealer in
any asset described in section 731(c)(3)(C)(i), including the receipt
of commitment fees, break-up fees, guarantee fees, director's fees, or
similar fees that are customary in and incidental to any activities of
the partnership as an investor, trader, or dealer in such assets;
(ii) Reasonable and customary management services (including the
receipt of reasonable and customary fees in exchange for such
management services) provided to an investment partnership (within the
meaning of section 731(c)(3)(C)(i)) in which the partnership holds a
partnership interest; or
(iii) Reasonable and customary services provided by the partnership
in assisting the formation, capitalization, expansion, or offering of
interests in a corporation (or other entity) in which the partnership
holds or acquires a significant equity interest (including the
provision of advice or consulting services, bridge loans, guarantees of
obligations, or service on a company's board of directors), provided
that the anticipated receipt of compensation for the services, if any,
does not represent a significant purpose for the partnership's
investment in the entity and is incidental to the investment in the
entity.
(4) Partnership tiers. For purposes of section 731(c)(3)(C)(iv) and
this section, a partnership (upper-tier partnership) is not treated as
engaged in a trade or business engaged in by, or as holding (instead of
a partnership interest) a proportionate share of the assets of, a
partnership (lower-tier partnership) in which the partnership holds a
partnership interest if--
(i) The upper-tier partnership does not participate in the
management of the lower-tier partnership; and
(ii) The interest held by the upper-tier partnership is less than
10 percent of the total profits and capital interests in the lower-tier
partnership.
(f) Basis rules--(1) Partner's basis--(i) Partner's basis in
distributed securities. The distributee partner's basis in distributed
marketable securities with respect to which gain is recognized by
reason of section 731(c) and this section is the basis of the security
determined under section 732, increased by the amount of such gain. Any
increase in the basis of the marketable securities attributable to gain
recognized by reason of section 731(c) and this section is allocated to
marketable securities in proportion to their respective amounts of
unrealized appreciation in the hands of the partner before such
increase.
(ii) Partner's basis in partnership interest. The basis of the
distributee partner's interest in the partnership is determined under
section 733 as if no gain were recognized by the partner on the
distribution by reason of section 731(c) and this section.
(2) Basis of partnership property. No adjustment is made to the
basis of partnership property under section 734 as a result of any gain
recognized by a partner, or any step-up in the basis in the distributed
marketable securities in the hands of the distributee partner, by
reason of section 731(c) and this section.
(g) Coordination with other sections--(1) Section 704(c)(1)(B). The
basis of the distributee partner's interest in the partnership for
purposes of determining the amount of gain, if any, recognized by
reason of section 731(c) (and for determining the basis of the
marketable securities in the hands of the distributee partner) includes
the increase, if any, in the partner's basis that occurs under section
704(c)(1)(B)(iii) as a result of a distribution to another partner of
property contributed by the distributee partner in a distribution that
is part of the same distribution as the marketable securities.
(2) Section 737--(i) Marketable securities as other property. A
distribution of marketable securities is treated as a distribution of
property other than money for purposes of section 737 to the extent
that the marketable securities are not treated as money under section
731(c). In addition, marketable securities contributed to the
partnership are treated as property other than money in determining the
contributing partner's net precontribution gain under section 737(b).
(ii) Basis increase under section 737. The basis of the distributee
partner's interest in the partnership for purposes of determining the
amount of gain, if any, recognized by reason of section 731(c) (and for
determining the basis of the marketable securities in the hands of the
distributee partner) does not include the increase, if any, in the
partner's basis that occurs under section 737(c)(1) as a result of a
distribution of property to the distributee partner in a distribution
that is part of the same distribution as the marketable securities.
(h) Anti-abuse rule. The provisions of section 731(c) and this
section must be applied in a manner consistent with the purpose of
section 731(c) and the substance of the transaction. Accordingly, if a
principal purpose of a transaction is to achieve a tax result that is
inconsistent with the purpose of section 731(c) and this section, the
Commissioner can recast the transaction for federal tax purposes as
appropriate to achieve tax results that are consistent with the purpose
of section 731(c) and this section. Whether a tax result is
inconsistent with the purpose of section 731(c) and this section must
be determined based on all the facts and circumstances. For example,
under the provisions of this paragraph (h)--
(1) A change in partnership allocations or distribution rights with
respect to marketable securities may be treated as a distribution of
the marketable securities subject to section 731(c) if the change in
allocations or distribution rights is, in substance, a distribution of
the securities;
(2) A distribution of substantially all of the assets of the
partnership other than marketable securities and money to some partners
may also be treated as a distribution of marketable securities to the
remaining partners if the
[[Page 32]]
distribution of the other property and the withdrawal of the other
partners is, in substance, equivalent to a distribution of the
securities to the remaining partners; and
(3) The distribution of multiple properties to one or more partners
at different times may also be treated as part of a single distribution
if the distributions are part of a single plan of distribution.
(i) [Reserved]
(j) Examples. The following examples illustrate the rules of this
section. Unless otherwise specified, all securities held by a
partnership are marketable securities within the meaning of section
731(c); the partnership holds no marketable securities other than the
securities described in the example; all distributions by the
partnership are subject to section 731(a) and are not subject to
sections 704(c)(1)(B), 751(b), or 737; and no securities are eligible
for an exception to section 731(c).
Example 1. Recognition of gain. (i) A and B form partnership AB
as equal partners. A contributes property with a fair market value
of $1,000 and an adjusted tax basis of $250. B contributes $1,000
cash. AB subsequently purchases Security X for $500 and immediately
distributes the security to A in a current distribution. The basis
in A's interest in the partnership at the time of distribution is
$250.
(ii) The distribution of Security X is treated as a distribution
of money in an amount equal to the fair market value of Security X
on the date of distribution ($500). (The amount of the distribution
that is treated as money is not reduced under section 731(c)(3)(B)
and paragraph (b) of this section because, if Security X had been
sold immediately before the distribution, there would have been no
gain recognized by AB and A's distributive share of the gain would
therefore have been zero.) As a result, A recognizes $250 of gain
under section 731(a)(1) on the distribution ($500 distribution of
money less $250 adjusted tax basis in A's partnership interest).
Example 2. Reduction in amount treated as money--in general. (i)
A and B form partnership AB as equal partners. AB subsequently
distributes Security X to A in a current distribution. Immediately
before the distribution, AB held securities with the following fair
market values, adjusted tax bases, and unrecognized gain or loss:
------------------------------------------------------------------------
Gain
Value Basis (loss)
------------------------------------------------------------------------
Security X.................................. 100 70 30
Security Y.................................. 100 80 20
Security Z.................................. 100 110 (10)
------------------------------------------------------------------------
(ii) If AB had sold the securities for fair market value
immediately before the distribution to A, the partnership would have
recognized $40 of net gain ($30 gain on Security X plus $20 gain on
Security Y minus $10 loss on Security Z). A's distributive share of
this gain would have been $20 (one-half of $40 net gain). If AB had
sold the remaining securities immediately after the distribution of
Security X to A, the partnership would have $10 of net gain ($20 of
gain on Security Y minus $10 loss on Security Z). A's distributive
share of this gain would have been $5 (one-half of $10 net gain). As
a result, the distribution resulted in a decrease of $15 in A's
distributive share of the net gain in AB's securities ($20 net gain
before distribution minus $5 net gain after distribution).
(iii) Under paragraph (b) of this section, the amount of the
distribution of Security X that is treated as a distribution of
money is reduced by $15. The distribution of Security X is therefore
treated as a distribution of $85 of money to A ($100 fair market
value of Security X minus $15 reduction).
Example 3. Reduction in amount treated as money--carried
interest. (i) A and B form partnership AB. A contributes $1,000 and
provides substantial services to the partnership in exchange for a
60 percent interest in partnership profits. B contributes $1,000 in
exchange for a 40 percent interest in partnership profits. AB
subsequently distributes Security X to A in a current distribution.
Immediately before the distribution, AB held securities with the
following fair market values, adjusted tax bases, and unrecognized
gain:
------------------------------------------------------------------------
Value Basis Gain
------------------------------------------------------------------------
Security X................................... 100 80 20
Security Y................................... 100 90 10
------------------------------------------------------------------------
(ii) If AB had sold the securities for fair market value
immediately before the distribution to A, the partnership would have
recognized $30 of net gain ($20 gain on Security X plus $10 gain on
Security Y). A's distributive share of this gain would have been $18
(60 percent of $30 net gain). If AB had sold the remaining
securities immediately after the distribution of Security X to A,
the partnership would have $10 of net gain ($10 gain on Security Y).
A's distributive share of this gain would have been $6 (60 percent
of $10 net gain). As a result, the distribution resulted in a
decrease of $12 in A's distributive share of the net gain in AB's
securities ($18 net gain before distribution minus $6 net gain after
distribution).
(iii) Under paragraph (b) of this section, the amount of the
distribution of Security X that is treated as a distribution of
money is reduced by $12. The distribution of Security X is therefore
treated as a distribution of $88 of money to A ($100 fair market
value of Security X minus $12 reduction).
Example 4. Reduction in amount treated as money--change in
partnership allocations. (i) A is admitted to partnership ABC as a
partner with a 1 percent interest in partnership profits. At the
time of A's admission, ABC held no securities. ABC subsequently
acquires Security X. A's interest in partnership profits is
subsequently increased to 2 percent for securities acquired after
the increase. A retains a 1 percent interest in all securities
acquired before the increase. ABC then acquires Securities Y and Z
and later distributes Security X to A in a current distribution.
Immediately before the distribution, the securities held by ABC had
the following fair market values, adjusted tax bases, and
unrecognized gain or loss:
------------------------------------------------------------------------
Value Basis Gain (loss)
------------------------------------------------------------------------
Security X.................................. 1,000 500 500
Security Y.................................. 1,000 800 200
Security Z.................................. 1,000 1,100 (100)
------------------------------------------------------------------------
(ii) If ABC had sold the securities for fair market value
immediately before the distribution to A, the partnership would have
recognized $600 of net gain ($500 gain on Security X plus $200 gain
on Security Y minus $100 loss on Security Z). A's distributive share
of this gain would have been $7 (1 percent of $500 gain on Security
X plus 2 percent of $200 gain on Security Y minus 2 percent of $100
loss on Security Z).
(iii) If ABC had sold the remaining securities immediately after
the distribution of Security X to A, the partnership would have $100
of net gain ($200 gain on Security Y minus $100 loss on Security Z).
A's distributive share of this gain would have been $2 (2 percent of
$200 gain on Security Y minus 2 percent of $100 loss on Security Z).
As a result, the distribution resulted in a decrease of $5 in A's
distributive share of the net gain in ABC's securities ($7 net gain
before distribution minus $2 net gain after distribution).
(iv) Under paragraph (b) of this section, the amount of the
distribution of Security X that is treated as a distribution of
money is reduced by $5. The distribution of Security X is therefore
treated as a distribution of $95 of money to A ($100 fair market
value of Security X minus $5 reduction).
Example 5. Basis consequences--distribution of marketable
security. (i) A and B form partnership AB as equal partners. A
contributes nondepreciable real property with a fair market value
and adjusted tax basis of $100.
(ii) AB subsequently distributes Security X with a fair market
value of $120 and an adjusted tax basis of $90 to A in a current
distribution. At the time of distribution, the basis in A's interest
in the partnership is $100. The amount of the distribution that is
treated as money is reduced under section 731(c)(3)(B) and paragraph
(b)(2) of this section by $15 (one- half of $30 net gain in Security
X). As a result, A recognizes $5 of gain under section 731(a) on the
distribution (excess of $105 distribution of money over $100
adjusted tax basis in A's partnership interest).
(iii) A's adjusted tax basis in Security X is $95 ($90 adjusted
basis of Security X determined under section 732(a)(1) plus $5 of
gain recognized by A by reason of section 731(c)). The basis in A's
interest in the partnership is $10 as determined under section 733
($100 pre-distribution basis minus $90 basis allocated to Security X
under section 732).
Example 6. Basis consequences--distribution of marketable
security and other property. (i) A and B form partnership AB as
equal partners. A contributes nondepreciable
[[Page 33]]
real property, with a fair market value of $100 and an adjusted tax
basis of $10.
(ii) AB subsequently distributes Security X with a fair market
value and adjusted tax basis of $40 to A in a current distribution
and, as part of the same distribution, AB distributes Property Z to
A with an adjusted tax basis and fair market value of $40. At the
time of distribution, the basis in A's interest in the partnership
is $10. A recognizes $30 of gain under section 731(a) on the
distribution (excess of $40 distribution of money over $10 adjusted
tax basis in A's partnership interest).
(iii) A's adjusted tax basis in Security X is $35 ($5 adjusted
basis determined under section 732(a)(2) plus $30 of gain recognized
by A by reason of section 731(c)). A's basis in Property Z is $5, as
determined under section 732(a)(2). The basis in A's interest in the
partnership is $0 as determined under section 733 ($10 pre-
distribution basis minus $10 basis allocated between Security X and
Property Z under section 732).
(iv) AB's adjusted tax basis in the remaining partnership assets
is unchanged unless the partnership has a section 754 election in
effect. If AB made such an election, the aggregate basis of AB's
assets would be increased by $70 (the difference between the $80
combined basis of Security X and Property Z in the hands of the
partnership before the distribution and the $10 combined basis of
the distributed property in the hands of A under section 732 after
the distribution). Under section 731(c)(5), no adjustment is made to
partnership property under section 734 as a result of any gain
recognized by A by reason of section 731(c) or as a result of any
step-up in basis in the distributed marketable securities in the
hands of A by reason of section 731(c).
Example 7. Coordination with section 737. (i) A and B form
partnership AB. A contributes Property A, nondepreciable real
property with a fair market value of $200 and an adjusted basis of
$100 in exchange for a 25 percent interest in partnership capital
and profits. AB owns marketable Security X.
(ii) Within five years of the contribution of Property A, AB
subsequently distributes Security X, with a fair market value of
$120 and an adjusted tax basis of $100, to A in a current
distribution that is subject to section 737. As part of the same
distribution, AB distributes Property Y to A with a fair market
value of $20 and an adjusted tax basis of $0. At the time of
distribution, there has been no change in the fair market value of
Property A or the adjusted tax basis in A's interest in the
partnership.
(iii) If AB had sold Security X for fair market value
immediately before the distribution to A, the partnership would have
recognized $20 of gain. A's distributive share of this gain would
have been $5 (25 percent of $20 gain). Because AB has no other
marketable securities, A's distributive share of gain in partnership
securities after the distribution would have been $0. As a result,
the distribution resulted in a decrease of $5 in A's share of the
net gain in AB's securities ($5 net gain before distribution minus
$0 net gain after distribution). Under paragraph (b)(2) of this
section, the amount of the distribution of Security X that is
treated as a distribution of money is reduced by $5. The
distribution of Security X is therefore treated as a distribution of
$115 of money to A ($120 fair market value of Security X minus $5
reduction). The portion of the distribution of the marketable
security that is not treated as a distribution of money ($5) is
treated as other property for purposes of section 737.
(iv) A recognizes total gain of $40 on the distribution. A
recognizes $15 of gain under section 731(a)(1) on the distribution
of the portion of Security X treated as money ($115 distribution of
money less $100 adjusted tax basis in A's partnership interest). A
recognizes $25 of gain under section 737 on the distribution of
Property Y and the portion of Security X that is not treated as
money. A's section 737 gain is equal to the lesser of (i) A's
precontribution gain ($100) or (ii) the excess of the fair market
value of property received ($20 fair market value of Property Y plus
$5 portion of Security X not treated as money) over the adjusted
basis in A's interest in the partnership immediately before the
distribution ($100) reduced (but not below zero) by the amount of
money received in the distribution ($115).
(v) A's adjusted tax basis in Security X is $115 ($100 basis of
Security X determined under section 732(a) plus $15 of gain
recognized by reason of section 731(c)). A's adjusted tax basis in
Property Y is $0 under section 732(a). The basis in A's interest in
the partnership is $25 ($100 basis before distribution minus $100
basis allocated to Security X under section 732(a) plus $25 gain
recognized under section 737).
(k) Effective date. This section applies to distributions of
marketable securities made on or after December 29, 1995.
Margaret Milner Richardson,
Commissioner of Internal Revenue.
[FR Doc. 95-31457 Filed 12-29-95; 8:45 am]
BILLING CODE 4830-01-U
Complete official Federal Register PDF
FR Doc. 95-31452 Use of Consultants Funded by Borrowers
[Federal Register Volume 61, Number 1 (Tuesday, January 2, 1996)]
[Proposed Rules]
[Pages 21-27]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31452]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR 1789
RIN 0572-AB17
Use of Consultants Funded by Borrowers
AGENCY: Rural Utilities Service, USDA.
ACTION: Proposed rule.
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SUMMARY: The Rural Utilities Service (RUS) hereby proposes to implement
recent amendments to the Rural Electrification Act of 1936, as amended,
(RE Act) (7 U.S.C. 918(c)) and to amend 7 CFR chapter XVII by adding a
new Part 1789, Use of Consultants Funded by Borrowers. This part would
set forth procedures and policies pursuant to which a borrower under
the RE Act may fund consultants used by the Administrator for
financial, legal, engineering, environmental and other technical advice
and services. The use of the consultants will assist RUS in the
[[Page 22]]
expeditious review of applications for financial assistance or other
approvals sought by borrowers.
DATES: Written comments concerning the proposed rule and/or its
information collection requirements must be received by RUS or carry a
postmark or equivalent by March 4, 1996.
ADDRESSES: Written comments should be addressed to F. Lamont Heppe,
Jr., Deputy Director, Program Support Staff, U.S. Department of
Agriculture, Rural Utilities Service, AG Box 1522, Washington, DC
20250-1522. RUS requires a signed original and 3 copies of all comments
(7 CFR 1700.30(e)). Comments will be available for public inspection
during regular business hours (7 CFR 1.27(b)).
FOR FURTHER INFORMATION CONTACT: F. Lamont Heppe, Jr., Deputy Director,
Program Support Staff, (address as above). Telephone: (202) 720-0736.
Facsimile: (202) 720-4120.
SUPPLEMENTARY INFORMATION: This proposed rule has been determined to be
not significant for purposes of Executive Order 12866, Regulatory
Planning and Review, and therefore has not been reviewed by the Office
of Management and Budget (OMB). The Administrator of RUS has determined
that the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) does not
apply to this rule. The Administrator of RUS has determined that this
rule will not significantly affect the quality of the human environment
as defined by the National Environmental Policy Act of 1969 (42 U.S.C.
4321 et seq.). Therefore this action does not require an environmental
impact statement or assessment. This rule is excluded from the scope of
Executive Order 12372, Intergovernmental Consultation, which may
require consultation with State and local officials. A Notice of Final
Rule title Department Programs and Activities Excluded from Executive
Order 12372 (50 FR 47034) exempts RUS electric loans and loan
guarantees from coverage under this Order. This rule has been reviewed
under Executive Order 12778, Civil Justice Reform. This proposed rule:
(1) Will not preempt any State or local laws, regulations, or policies,
unless they present an irreconcilable conflict with this rule; (2) will
not have any retroactive effect; and (3) will not require
administrative proceedings before any parties may file suit challenging
the provisions of this rule in accordance with existing law.
The programs covered by this rule are listed in the Catalog of
Federal Domestic Assistance Programs under numbers 10.850, Rural
Electrification Loans and Loan Guarantees, 10.851, Rural Telephone
Loans and Loan Guarantees, and 10.852, Rural Telephone Bank Loans. This
catalog is available on a subscription basis from the Superintendent of
Documents, the United States Government Printing Office, Washington, DC
20402-9325.
Information Collection and Recordkeeping Requirements
Summary: In accordance with the Paperwork Reduction Act of 1995 (44
U.S.C. Chapter 35, as amended) RUS is requesting comments on the
information collection incorporated in this proposed rule.
Dates: Comment on this information collection must be received by
March 4, 1996.
Comments are invited on: (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (b) the accuracy of the agency's estimate of the burden of the
proposed collection of information; (c) ways to enhance the quality,
utility and clarity of the information to be collected; and (d) ways to
minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques or other
forms of information technology.
For Further Information Contact: Sue Arnold, Financial Analyst,
Program Support Staff, Rural Utilities Service, U.S. Department of
Agriculture, 14th & Independence Avenue, SW., AG Box 1522, Washington,
DC 20250. Telephone: (202) 690-1078. FAX: (202) 720-4120.
Supplementary Information:
Title: Title 7 Part 1789, Use of Consultants Funded by Borrowers.
Type of Request: New information collection.
Abstract: On November 1, 1993, Public Law 103-129 amended section
18 of the RE Act to provide a mechanism for expediting RUS reviews. As
amended, section 18(c) authorized RUS to use consultants voluntarily
funded by borrowers for financial, legal, engineering, and other
technical services. The consultant may to be used to facilitate timely
action on applications by borrowers for financial assistance and for
approvals required by RUS, pursuant to the terms of outstanding loans,
or otherwise. RUS may not require borrowers to fund consultants. The
provisions of section 18(c) may be utilized only at the borrower's
request.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 2 hours per response.
Respondents: Business or other for-profit, small businesses or
organizations.
Estimated Number of Respondents: 6.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 12.
Copies of this information collection can be obtained from Dawn
Wolfgang, Program Support Staff, at (202) 720-0812.
Comments: Send comments regarding this information collection
requirement to the Office of Information and Regulatory Affairs, OMB,
ATTN: Desk Officer, USDA, Room 10102, New Executive Office Building,
Washington, DC 20503, and F. Lamont Heppe, Jr., Deputy Director,
Program Support Staff, Rural Utilities Service, AG Box 1522,
Washington, DC 20250-1522.
Comments to OMB are best assured of having full effect if OMB
receives them within 30 days of publication in the Federal Register.
All responses to this information collection requirement will be
summarized and included in the final rule. All comments will become a
matter of public record.
Background
Section 18 of the RE Act was amended effective November 1, 1993,
pursuant to Public Law 103-129, 2(c)(4), 107 Stat. 1364. As amended,
subsection (c) of section 18 authorizes the RUS to use consultants
funded by borrowers for financial, legal, engineering, and other
technical advice and services. The consultants are to be used to
facilitate timely action on applications by borrowers for financial
assistance and for approvals required by RUS pursuant to the terms of
outstanding loan or security instruments or otherwise.
Subsection (c) expressly requires that RUS establish procedures for
the use of consultants to ensure that the consultants have no financial
or other conflicts of interest in the outcome of the application.
Subsection (c) further provides that funding of consultants is strictly
voluntary with the borrowers, that RUS may not require borrowers to
agree to fund consultants. This proposed rule sets forth procedures and
policies implementing the authority under subsection (c).
Policy
RUS believes that both RUS and its borrowers will be well served by
the prudent use of this authority. It will assist RUS in the processing
of certain complex transactions that have placed a
[[Page 23]]
burden on its staff and resources. For example, financial and legal
consultants may assist in the review of certain transactions involving
complicated financing arrangements between borrowers and third parties
that potentially impact on the feasibility of and security for
outstanding government loans. Such transactions may require the review
and analysis of voluminous documents and the development of an
extensive administrative record. The transactions may involve complex
technical issues regarding which RUS has limited expertise thus slowing
the review process. Such transactions may be very time sensitive; any
delays may jeopardize the transaction or reduce the benefits of the
transaction to the borrower. In some cases, the transactions are very
important to the borrower but cannot be given corresponding priority by
the RUS as it dedicates its resources to matters that have program wide
significance. It is in the interests of both RUS and the borrower to
expedite review of such transactions with borrower funded consultants.
Examples of how RUS might use borrower funded consultants include,
but are not limited to, the use of an engineering firm to review
proposed generation projects for technical or financial feasibility,
e.g., wind or hydroelectric projects utilizing relatively new
technology. RUS could use consultants to make periodic visits to major
construction projects and report to RUS on the status of construction
and whether or not the project is on budget. Financial advisory
consultants may be used to evaluate new financial products which are
the basis for requests to modify the RUS mortgage. Legal support
services will enhance RUS' ability to review and process merger,
consolidation and holding company applications from both telephone and
electric borrowers. RUS would also consider using environmental
consultants to prepare environmental assessments and environmental
impact studies under RUS' direction and supervision.
RUS does not, however, believe that use of subsection (c) authority
is authorized or appropriate for all transactions requiring RUS review.
The authority will not be used unless it is reasonably expected to
facilitate timely action on an application by RUS. Even then, it may
not always be in RUS' interest to rely on consultants. For example,
transactions that involve matters that RUS is particularly qualified to
address or which have program wide implications may not be well suited
for expedited processing facilitated with borrower funded consultants.
Thus, RUS will weigh its use of the authority under subsection (c) on a
case by case basis.
Procedure
Under the proposed rule RUS may enter into contracts on the basis
of case by case procurements or on a retainer basis with a series of
consultants having different areas of expertise, i.e. financial, legal,
engineering, or environmental. In order to assure that sufficient
consultant resources are available and to allow for competition in
terms of both quality and cost, RUS may contract with several different
consultants in a given area of expertise.
RUS will solicit bids for the services of financial, legal,
engineering, and environmental consultants in accordance with the
provisions of the Federal Acquisition Regulations (FAR), 48 CFR Chapter
1. Notwithstanding the use of borrowers' funds, it has been determined
that such funding must be treated as appropriated funds and the
contracts are subject to the provisions of FAR.
The proposed rule provides that RUS will decide when timely
consideration of an application or approval would best be facilitated
by the use of borrower funded consultants. When the RUS has made such a
determination, and the borrower in question is willing to fund
consulting services, the borrower must provide to RUS an appropriate
notice of proposal to fund consulting services. RUS will consider the
borrower's proposal, whether it is consistent with this regulation and
otherwise in the interests of the government. If RUS chooses to proceed
with the borrower's proposal, RUS will require the borrower and the
consultant selected by RUS to execute a funding agreement which
complies with the regulation. The funding agreement will provide for
the borrower to establish and fund an escrow account with a third-party
commercial institution prior to the commencement of work by the
consultant.
The use of a third-party commercial institution will allow for the
escrow account to be interest-bearing and greatly ease the
administrative burden of arranging for any excess funds to be remitted
to the borrower upon the closing out of a task order. With the
exception of an annual retainer fee, if applicable, the consultants
shall not be entitled to any payments from RUS. Rather, all payment
obligations for work performed must be satisfied by amounts available
in the escrow account and RUS shall have sole discretion in directing
that payments be made from the escrow account.
Once the escrow account is funded, RUS will then issue a task order
to the consultant under the applicable contract and the consultant will
commence work for RUS. Periodically, the consultant will submit
invoices to RUS. Upon due authorization by RUS, the escrow agent will
make payments to the consultant. The escrow account will be closed and
any remaining funds remitted to the borrower upon direction from RUS.
The procedure outlined above generally applies to financial, legal,
engineering and environmental consultant services. The proposed rule
reserves the discretion, however, for RUS to contract for any type of
consultant services on a case by case basis after receipt of an
appropriate notice of proposal to fund from the borrower.
Legal and Selected Other Consultants
The procedures and policies applicable to the use of legal
consultants pursuant to subsection 18(c) differs from the use of other
consultants in several key respects. First, pursuant to 7 CFR part
2.47(a)(1), the Administrator may utilize consultants and attorneys for
the provision of legal services with the concurrence of the General
Counsel. The Secretary by regulation (7 CFR 2.31) has designated the
General Counsel as the chief law officer of the Department and legal
advisor to the Secretary with the responsibility for providing legal
services for all activities of the Department; accordingly, any
proposal by RUS to use outside legal counsel will require the approval
of the General Counsel. The approval will include a review of the
nature of the transaction and the scope of legal services to be
provided. Moreover, any contracts for legal consultants will provide
that an attorney from OGC will serve as a technical representative and
adviser to the contracting officer. The technical representative will
be responsible for, among other matters, evaluating the adequacy of
performance.
The conflict of interest provisions in the proposed rule are
different from the FAR in certain respects, particularly in the case of
legal and financial consultants. For all consultants, however, it is
important to protect against the possibility, or the appearance, that
those consultants providing services to RUS might handle particular
assignments in such a way as to encourage their own future employment
with RUS program beneficiaries after fulfilling their government
contract requirements. The electric and telephone borrowers are
[[Page 24]]
particularly closely tied to RUS since RUS is responsible for a
significant percentage of their annual capital requirements. Because of
the unique position of RUS vis a vis its borrowers, it is in the
government's interest that prospective legal counsel, financial
consultants and other consultants be reasonably indifferent to the
subsequent marketing implications of having RUS as a client.
Additionally, because of the special nature of the attorney/client
relationship, there is a need to provide for maximum discretion on the
part of the RUS Administrator in the determination of conflict criteria
for legal consultants. Accordingly, proposed conflict provisions
specific to borrower funded RUS consultants are as follows:
(1) Disclosure requirements incorporated in procurements under the
proposed rule shall provide that consultants disclose all business
relationships with current or former RUS borrowers at the time
proposals to offer consulting services are made to RUS and in the event
additional business relationships are entered into subsequent to the
original disclosure.
(2) Certification requirements incorporated in procurements under
the proposed rule shall provide that consultants certify, at the time a
proposal is made to provide consulting services to RUS, to the best of
their knowledge and belief, that no Organizational Conflict of Interest
exists and there are no relevant facts or circumstances which could
give rise to an Organizational Conflict of Interest, or the consultant
has disclosed all such relevant information. The representations in the
certificate shall be deemed reaffirmed upon the execution of the
Consultant Contract and upon the undertaking of each Task Order by the
contractor.
(3) The determination of whether or not an Organizational Conflict
of Interest exists shall rest with the Administrator in his sole
discretion; RUS shall not award a contract or Task Order, as the case
by be, to a consultant if an Organizational Conflict of Interest
exists.
(4) Authority to waive an Organizational Conflict of Interest vests
with the RUS Administrator; such waivers must be in writing to be
effective.
(5) Consultant contracts with all legal consultants, all financial
consultants and such other consultants as the RUS may determine on a
case by case basis (selected other consultants) shall provide that such
consultants agree not to undertake during the term of the applicable
contract, inclusive of option or renewal periods, to represent any RUS
borrower on the same or other matters without the express written
consent of RUS.
(6) Consultant contracts with all legal consultants, all financial
consultants and selected other consultants shall provide that such
consultants agree not to undertake, for a period of not less than four
years from the contract expiration date, to represent any RUS borrower
or generation and transmission (G&T) affiliate thereof, including a
borrower which may prepay outstanding RUS indebtedness subsequent to
the consultant undertaking to represent RUS, on any matter in which RUS
has a significant interest in the outcome, where such borrower(s) were
the subject of consulting services rendered by that consultant during
the tenure of the applicable contract, without the express written
consent of RUS. G&T affiliate in this context shall refer to all
members of the applicable generation and transmission cooperative and
the cooperative(s) in which the borrower was itself a member.
Representation includes any retainer or advisory contract and is not
limited to representation relating to negotiations with or applications
before RUS.
(7) RUS may waive any of the foregoing requirements or procedures
by determining that its application in a particular situation would not
be in the government's interest.
Key Personnel
Legal service contracts are distinguished from other consulting
services funded by borrowers pursuant to Section 18 of the RE Act with
respect to provisions relating to key personnel. Factors such as trust,
judgment, negotiating style and presence and other intangibles affect
the quality and effectiveness of representation and client
satisfaction. Borrower funded legal service contracts will provide that
no substitution of key personnel may occur without prior approval of
the contracting officer, who may confer with the legal and RUS
technical representatives for the applicable contract.
List of Subjects in 7 CFR Part 1789
Administrative practice and procedure, legal services, Electric
power, Electric utilities, Loan programs--energy, Loan programs--
telecommunications, escrow fund, consulting contracts.
For the reasons stated, RUS proposes to add a new part 1789 to
chapter XVII of title 7 of the Code of Federal Regulations as follows:
PART 1789--USE OF CONSULTANTS FUNDED BY BORROWERS
Subpart A--Policy and Procedures With Respect to Consultant Services
Funded by Borrowers--General
Sec.
1789.150 Purpose.
1789.151 Definitions.
1789.152 Policy.
1789.153 Borrower funding.
1789.154 Eligible borrowers.
1789.155 Approval criteria.
1789.156 Proposal procedure.
1789.157 Consultant contract.
1789.158 Implementation.
1789.159 Contract administration.
1789.160 Access to information.
1789.161 Conflicts of interest.
1789.162 Indemnification agreement.
1789.163 Waiver.
1789.164-1789.165 [Reserved]
Subpart B--Escrow Account Funding and Payments
Sec.
1789.166 Terms and conditions of funding agreement.
1789.167 Terms and conditions of escrow agreement.
1789.168-1789.175 [Reserved]
Authority: 7 U.S.C. 901 et seq.; Pub. L. 103-354, 108 Stat. 3178
(7 U.S.C. 6941 et seq.); [Title I, Subtitle D, Pub. L. 100-203, 101
Stat. 1330].
Subpart A--Policy and Procedures With Respect to Consultant
Services Funded by Borrowers--General
Sec. 1789.150 Purpose.
This part sets forth policies and the procedures for implementing
subsection (c) of section 18 of the Rural Electrification Act of 1936,
as amended (7 U.S.C. 901 et seq.) (RE Act) which authorizes the Rural
Utilities Service (RUS) to use the services of Consultants funded by
the Borrowers to facilitate timely action on Applications by Borrowers
for financial assistance and other approvals.
Sec. 1789.151 Definitions.
As used in this part:
Administrator means the Administrator of the Rural Utilities
Service (RUS).
Application means a request for financial assistance under the RE
Act or such other approvals as may be required of the RUS pursuant to
the terms of outstanding loan or security instruments or otherwise.
Borrower means any organization which has an outstanding loan(s)
made or guaranteed by RUS or its predecessor agency, the Rural
Electrification Administration (REA) under the RE Act or any
organization which has an Application before RUS.
Consultant means a person or firm which has been retained by RUS
under
[[Page 25]]
a contract to provide financial, legal, engineering, environmental, or
other technical advice and services.
Consultant Contract means a contract for the performance of
consulting services for RUS, to be paid using funds provided by a
Borrower, which may be in the form of a Retainer Contract, purchase
order, or such other form as RUS may choose.
Escrow Account means an account established pursuant to
Sec. 1789.158 herein.
Escrow Agreement means an agreement, between a Borrower, a
Consultant and a Third-party Commercial Institution, meeting the
requirements of Sec. 1789.167.
Final Invoice means the closing Invoice prepared for a given Task
Order.
Financial Consultant means a Consultant retained pursuant to this
part to provide financial advisory services.
Funding Agreement means an agreement, between a Borrower and a
Consultant providing for the Borrower to fund the costs of a Task Order
and otherwise meeting the requirements of Sec. 1789.166.
Indemnification Agreement means an agreement by a Borrower meeting
the requirements of Sec. 1789.162.
Invoice means an invoice, satisfactory to RUS, prepared by a
Consultant pursuant to the terms of a Consultant Contract.
Legal Consultant means any Consultant retained pursuant to this
part to provide legal services to RUS.
Notice of Proposal to Fund means a notice meeting the requirements
of Sec. 1789.156 provided to RUS by the Borrower.
Organizational Conflict of Interest means that because of other
activities or relationships with other persons, a person is unable or
potentially unable to render impartial assistance or advice to the
Government, or the person's objectivity in performing the contract work
is or might be otherwise impaired, or a person has an unfair
competitive advantage. Organizational conflicts of interest shall
include, but not be limited to, a financial interest in the project
which is the subject of the Application; and providing advice and
services concurrently to RUS and to the Borrower which submitted the
relevant Application, on the same or different matters. Organizational
conflicts of interest may also include activities or relationships
determined by the Administrator pursuant to Sec. 1789.161 to constitute
an organizational conflict of interest.
Retainer Contract means a Consultant Contract providing for a
minimum required payment to a Consultant irrespective of whether
services are utilized by RUS thereunder.
Task Order means a written request for consultant services made by
RUS pursuant to the terms of a Consultant Contract.
Third-party Commercial Institution means a commercial financial
institution mutually acceptable to the Borrower and the Consultant.
Sec. 1789.152 Policy.
(a) As provided in this subpart, RUS may, at its discretion, use
the services of Consultants funded by a Borrower where such services
will facilitate timely action on an Application by such Borrower for
financial assistance or other approvals. Such Consultants may provide
financial, legal, engineering, environmental or other technical advice
and services in connection with the review of an Application.
(b) With the approval of RUS, a Borrower may fund the cost of
consulting services in connection with the review by RUS of an
Application by such Borrower. Such funding shall be provided pursuant
to the terms of a Funding Agreement between the Borrower and the
Consultant designated by RUS.
(c) RUS may not, without the consent of the Borrower, require, as a
condition of processing any Application for approval, that the Borrower
agree to pay the costs of a Consultant hired to provide services to
RUS.
(d) RUS shall retain sole discretion in the selection of
Consultants to provide services to RUS. RUS may use the services of one
or more Consultants retained under Retainer Contracts to provide
services for projects to be identified by RUS. Alternatively, RUS may
elect to retain a Consultant in connection with a specific project. RUS
shall have sole discretion to prescribe terms and conditions of
Consultant Contracts. The Borrower shall be advised of the Consultant
selected only after committing to fund consultant services.
Sec. 1789.153 Borrower funding.
Borrowers shall use their general funds for the purposes of funding
consultant services hereunder. Borrowers may not use the proceeds of
loans made or guaranteed under the RE Act for costs incurred by
Borrowers pursuant to the funding of consultant services for RUS.
Sec. 1789.154 Eligible borrowers.
All Borrowers are eligible to fund consultant services under this
part.
Sec. 1789.155 Approval criteria.
RUS will consider approving the use of consultant services funded
by a Borrower on a case by case basis taking into account, among other
matters, the following:
(a) Whether such services are required to facilitate timely action
on a Borrower's Application. RUS shall determine what represents timely
action with respect to each Application considering, among other
matters, the review period normally required for such projects by RUS
and other lenders and the consequences to the Borrower of adjusting the
review period.
(b) The availability of staff resources, the priorities of other
projects then before RUS, and the efficiencies to be realized from the
use of consultant services.
(c) Whether it is in the best interest of RUS to use Borrower-
funded Consultants. Certain types of projects, such as those involving
issues of program-wide significance, may not be well suited for the use
of Borrower funded Consultants.
Sec. 1789.156 Proposal procedure.
(a) In the event RUS determines that consideration should be given
to the use of a Borrower-funded consultant in connection with the
review of an Application, the RUS Regional Director or the Director of
the Power Supply Division, as appropriate, will discuss with the
Borrower the nature of the Application and the projected review period
required of RUS. If RUS concludes that the projected review period will
not result in timely action on the Application, and after being so
notified in writing by RUS the Borrower wishes to fund consultant
services to facilitate RUS review, the Borrower shall submit to the
same Director a funding proposal. The proposal shall set forth the
following:
(1) Identification in the heading or caption as a Notice of
Proposal to Fund Consulting Services;
(2) Borrower's REA/RUS designation;
(3) Borrower's legal name and address;
(4) A description of the Application, critical issues and concerns
relating to the Application, time deadlines, and the consequences of
any delays in RUS review;
(5) A description of the consulting service(s) that would
facilitate timely RUS review of the Application; and
(6) Such additional documents and information as RUS may request.
(b) RUS will review the Notice of Proposal to Fund and any
additional information RUS deems relevant in determining whether to
proceed with
[[Page 26]]
procuring Borrower funded Consultants. If RUS proposes to utilize Legal
Consultants, RUS must obtain the concurrence of the Office of General
Counsel (OGC) of the Department of Agriculture. RUS will notify the
Borrower in writing of its determination.
Sec. 1789.157 Consultant contract.
(a) The Federal Acquisition Regulation (FAR), 48 CFR Ch. 1 and Ch.
4 of the Agriculture Acquisition Regulation (AGAR) shall apply to all
Consultant Contracts entered into pursuant to this part except as
herein provided. Where there is a conflict between FAR and AGAR and the
provisions of this part, the provision of this part shall apply.
Exceptions to FAR and/or AGAR shall be incorporated in Consultant
Contracts under this part as follows:
(1) Contracts for Legal Consultants shall provide for a technical
representative from OGC and that no substitution of key personnel may
occur without the prior approval of the applicable contracting officer.
(2) All Consultant Contracts shall provide for an escrow account
funding mechanism pursuant to this part and for RUS sole discretion in
determining whether payments are to be made from the Escrow Account to
the Consultant.
(3) All Consultant Contracts shall provide that payment of all
obligations for work performed thereunder must be satisfied by amounts
available in the Escrow Account; with the exception of the annual
retainer fee, if any, Consultants shall not be entitled to any payments
from RUS.
(4) Consultant Contracts, as applicable, shall incorporate the
applicable conflict of interest provisions set forth in Sec. 1789.161.
(b) Notice of the provisions herein shall be given by RUS at such
time as requests for proposals are issued under this part.
Sec. 1789.158 Implementation.
(a) Upon making a determination to go forward with Borrower funding
for consulting services, RUS shall select a Consultant to provide the
services. RUS may either contract with a Consultant on a case by case
basis or elect to use a Consultant pursuant to an outstanding Retainer
Contract. The Borrower will not be informed of the Consultant selected
by RUS until such time as RUS provides the information set forth in
subparagraph (c)(3) of this section.
(b) If RUS determines to contract with a Consultant on a case by
case basis, RUS shall notify the Borrower of the applicable procedures.
(c) If RUS determines to contract with a Consultant under an
outstanding Retainer Contract, the following procedures will normally
apply:
(1) Pursuant to the terms of the contract, RUS will prepare a draft
Task Order requesting consultant services in connection with the review
of the Borrower's Application. The draft Task Order shall set forth for
the Consultant's review and acceptance a description of the services to
be provided and applicable time frames for the provision of such
services.
(2) RUS will request that the Consultant:
(i) notify RUS as to the acceptability of the form and substance of
the draft Task Order;
(ii) notify RUS as to its ability to provide RUS with a
satisfactory conflict of interest certification consistent with the
requirements of Sec. 1789.161; and
(iii) provide a cost estimate for the draft Task Order.
(3) When RUS is satisfied with the response(s) received pursuant to
paragraph (c)(2) of this section, RUS shall promptly provide to the
Borrower:
(i) a copy of the draft Task Order identifying the Consultant;
(ii) the Consultant's cost estimate for the draft Task Order; and
(iii) contract information required to enable the Borrower to
develop a Funding Agreement, an Escrow Agreement and an Indemnification
Agreement (the ``agreements'').
(4) The Borrower shall develop and submit to RUS for approval
executed originals of:
(i) the agreements; and
(ii) a certified copy of a resolution of the board of directors
authorizing the Borrower to enter into the agreements and to take such
other action as is necessary to effect the purposes of the agreements.
(5) Upon receiving written RUS approval of the agreements and the
form and substance of the board resolution, the Borrower shall:
(i) establish and fund the Escrow Account; and
(ii) provide written notice to RUS of the Escrow Account number,
the funding thereof, and such other information as required pursuant to
the agreements.
(6) After the Borrower has funded the Escrow Account, RUS shall
issue Task Order(s) for consultant services in accordance with the
terms and conditions of the applicable Retainer Contract.
Sec. 1789.159 Contract administration.
RUS shall be solely responsible for the administration of a
Consulting Contract and shall have complete control over the scope,
content, timeliness, and quality of the Consultant's work and the
approval of payment Invoices.
Sec. 1789.160 Access to information.
The Borrower shall not have rights in nor right of access to the
work product of the Consultant. All analyses, studies, opinions,
memoranda, and other documents and information provided by the
Consultant pursuant to a Consulting Contract with RUS may be released
and made available to the Borrower only with the approval of RUS. This
section does not restrict release of information by RUS pursuant to the
Freedom of Information Act (5 U.S.C. 552(a)(2)) or other legal process.
Sec. 1789.161 Conflicts of interest.
(a) Disclosure requirements incorporated in procurements under this
part shall provide that Consultants disclose all business relationships
with current or former RUS Borrowers at the time proposals to offer
consulting services are made to RUS and in the event additional
business relationships are entered into subsequent to the original
disclosure.
(b) Certification requirements incorporated in procurements under
this part shall provide that Consultants certify, at the time a
proposal is made to provide consulting services to RUS, to the best of
their knowledge and belief, that no Organizational Conflict of Interest
exists and there are no relevant facts or circumstances which could
give rise to an Organizational Conflict of Interest, or the Consultant
has disclosed all such relevant information. The representations in the
certificate shall be deemed reaffirmed upon the execution of the
Consultant Contract and upon the undertaking of each Task Order by the
Contractor.
(c) The determination of whether or not an Organizational Conflict
of Interest exists shall rest with the Administrator in his sole
discretion; RUS shall not award a contract or task order, as the case
may be, to a Consultant if an Organizational Conflict of Interest
exists.
(d) The Administrator may waive an Organizational Conflict of
Interest pursuant to Sec. 1789.163 hereof; such waivers must be in
writing to be effective.
(e) Consultant Contracts with all Legal Consultants, all Financial
Consultants and such other Consultants as the RUS may determine on a
case by case basis (selected other Consultants) shall provide that such
Consultants agree not to undertake during the term of the
[[Page 27]]
applicable contract, inclusive of option or renewal periods, to
represent any RUS Borrower on the same or other matters, without the
express written consent of RUS.
(f) Consultant Contracts with all Legal Consultants, all Financial
Consultants and selected other Consultants shall provide that such
Consultants agree not to undertake, for a period of not less than four
years from the contract expiration date, to represent any RUS Borrower
or G&T affiliate thereof, including a Borrower which may prepay
outstanding RUS indebtedness subsequent to the Consultant undertaking
to represent RUS, on any matter in which RUS has a significant interest
in the outcome, where such Borrower(s) were the subject of consulting
services rendered by that Consultant during the tenure of the
applicable contract, without the express written consent of RUS. G&T
affiliate in this context shall refer to all members of the applicable
generation and transmission cooperative and the cooperative(s) in which
the Borrower was itself a member. Representation includes any retainer
or advisory contract and is not limited to representation relating to
negotiations with or Applications before RUS.
Sec. 1789.162 Indemnification agreement.
As a condition of approving Borrower funding, RUS will require the
Borrower to enter into an Indemnification Agreement, in form and
substance satisfactory to RUS, providing that the Borrower will
indemnify and hold harmless the government and any officers, agents or
employees of the government from any and all liability, including
costs, fees, and settlements arising out of, or in any way connected
with the administration and supervision of, the contract funded by the
Borrower for consultant services relating to the Borrower's
Application.
Sec. 1789.163 Waiver
RUS may waive any requirement or procedure of this subpart by
determining that its application in a particular situation would not be
in the government's interest.
Secs. 1789.164-1789.165 [Reserved]
Subpart B--Escrow Account Funding and Payments
Sec. 1789.166 Terms and conditions of funding agreement.
Funding Agreements between the Borrower and a Consultant shall be
in form and substance satisfactory to RUS and provide for, among other
matters, the following:
(a) Specific reference by number to the applicable Consulting
Contract entered into between RUS and the Consultant;
(b) Specific reference by number to the applicable Task Order
(where applicable);
(c) A brief description of the Application;
(d) A requirement that Invoices make specific reference to:
(1) The applicable contract and Task Order(s); and
(2) The Escrow Account from which payment is to be made;
(e) A requirement that the Final Invoice for a Task Order be
clearly identified as such;
(f) A description of the services to be provided by the Consultant
to RUS and the applicable time frames for the provision of such
services;
(g) Agreement that the Borrower shall pay for the Consultant
services provided to RUS under the applicable contract through an
Escrow Account established pursuant to an Escrow Agreement, the
Consultant shall not provide services to RUS under the applicable
contract unless there are sufficient funds in the Escrow Account to pay
for such services, the Consultant shall seek compensation for services
provided under the applicable contract from, and only from, funds made
available through the Escrow Account, and the Consultant must submit
all Invoices to RUS for approval.
(h) A form of Escrow Agreement satisfactory to the Borrower,
Consultant and the designated Third-party Commercial Institution;
(i) A schedule setting forth when and in what amounts the Borrower
shall fund the Escrow Account;
(j) Acknowledgment by the Consultant of the Indemnification
Agreement provided by the Borrower to the government; and
(k) The Funding Agreement shall not be effective unless and until
approved in writing by RUS.
Sec. 1789.167 Terms and conditions of escrow agreement.
Escrow Agreements between and among the Borrower, Consultant and
Third-party Commercial Institution shall be in form and substance
satisfactory to RUS and provide for, among other matters, the
following:
(a) Specific reference by number to the applicable contract for
services entered into between RUS and the Consultant;
(b) Specific reference by number to the applicable Task Order;
(c) Specific reference by number to the Escrow Account into which
funds are to be deposited;
(d) Invoices to specifically identify the applicable contract and
Task Order(s);
(e) Funds to be held in the Escrow Account by the escrow agent
until paid to the Consultant pursuant to RUS direction;
(f) The Escrow Account to be closed and all remaining funds
remitted to the Borrower after payment of the Final Invoice, or upon
notice from RUS to the escrow agent that RUS is satisfied no further
payments are required under the Funding Agreement; and
(g) RUS, the Consultant and the Borrower to have the right to be
informed, in a timely manner and in such form as they may reasonably
request, as to the status of and activity in the Escrow Account.
Secs. 1789.168-1789.175 [Reserved]
Dated: December 21, 1995.
Jill Long Thompson,
Under Secretary, Rural Economic and Community Development.
[FR Doc. 95-31452 Filed 12-29-95; 8:45 am]
BILLING CODE 3410-15-P
Complete official Federal Register PDF
FR Doc. 95-31450 Endangered and Threatened Wildlife and Plants: Proposed Establishment of a Nonessential Experimental Population of California Condors in Northern Arizona
[Federal Register Volume 61, Number 1 (Tuesday, January 2, 1996)]
[Proposed Rules]
[Pages 35-47]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31450]
=======================================================================
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DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
50 CFR Part 17
RIN 1018-AD62
Endangered and Threatened Wildlife and Plants: Proposed
Establishment of a Nonessential Experimental Population of California
Condors in Northern Arizona
AGENCY: Fish and Wildlife Service, Interior.
ACTION: Proposed rule.
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SUMMARY: The U.S. Fish and Wildlife Service, in cooperation with the
Arizona Game and Fish Department, and the U.S. Bureau of Land
Management, proposes to reintroduce California condors (Gymnogyps
californianus) into northern Arizona. This reintroduction will achieve
a primary recovery goal for this endangered species, establishment of a
second non-captive population, spatially disjunct from the non-captive
population in southern California. This population is proposed to be
designated a nonessential experimental population in accordance with
Section 10(j) of the Endangered Species Act of 1973, as amended.
Captive-reared condors will be released in early 1996 (target date) and
additional releases will occur annually thereafter until a self-
sustaining wild population is established. The reintroduction will use
tested release techniques developed in previous releases in southern
California and will be managed in accordance with the provisions of
this special rule. The potential impacts associated with this proposed
rule were assessed in an Environmental Assessment completed in November
1995. This California condor reintroduction does not conflict with
existing or anticipated Federal or State agency actions or traditional
land uses on public or private lands.
DATES: Comments from all interested parties must be received by
February 1, 1996. Public hearings will be held at Flagstaff High School
on Tuesday, January 23, 1996, from 6:00 to 8:00 pm and Kanab High
School on Thursday, January 25, 1996, from 6:00 to 8:00 pm.
ADDRESSES: Comments and materials concerning this proposal should be
sent to State Supervisor, U.S. Fish and Wildlife Service, Ecological
Services, Arizona State Office, 2321 W. Royal Palm Road, Suite 103,
Phoenix, Arizona. Comments and materials received will be available for
public inspection, by appointment, during normal business hours at the
above address. The public hearings will be held at the Main Auditorium,
Flagstaff High School, 400 West Elm Street, Flagstaff, Arizona and
Kanab High School Auditorium, 59 East Red Shadow Lane, Kanab, Utah.
FOR FURTHER INFORMATION CONTACT: Robert Mesta, U.S. Fish and Wildlife
Service, Ecological Services, Ventura Field Office, 2493 Portola Road,
Suite B, Ventura, California, 93003 (Telephone: 805/644-1766;
Facsimile: 805/644-3958).
SUPPLEMENTARY INFORMATION:
Background
1. Legislative. Section 10(j) of the Endangered Species Act of 1973
(Act) enables the U.S. Fish and Wildlife Service (Service) to designate
certain populations of federally listed species that are released into
the wild as ``experimental.'' The circumstances under which this
designation can be applied are--(1) The population is geographically
disjunct from nonexperimental populations of the same species (e.g.,
the population is reintroduced outside the species' current range but
within its historical range); and (2) the Service determines the
release will further the conservation of the species. This designation
can increase the Service's flexibility to manage a reintroduced
population, because under section 10(j) an experimental population is
treated as a threatened species regardless of its designation elsewhere
in its range and, under section 4(d) of the Act, the Service has
greater discretion in developing management programs for threatened
species than it has for endangered species.
Section 10(j) of the Act requires that when an experimental
population is designated, a determination be made by the Service
whether that population is either ``essential'' or ``nonessential'' to
the continued existence of the species, based on the best available
information. Nonessential experimental populations located outside
National Wildlife Refuge (NWR) or National Park Service (NPS) lands are
treated, for the purposes of section 7 of the Act, as if they are
proposed for listing. Thus, only two provisions of section 7 would
apply outside NWR and NPS lands--section 7(a)(1), which requires all
Federal agencies to use their authorities to conserve listed species,
and section 7(a)(4), which requires Federal agencies to informally
confer with the Service on actions that are likely to jeopardize the
continued existence of a proposed species. Section 7(a)(2) of the Act,
which requires Federal agencies to ensure that their activities are not
likely to jeopardize the continued existence of
[[Page 36]]
a listed species, would not apply except on NWR and NPS lands.
Experimental populations determined to be ``essential'' to the survival
of the species would remain subject to the consultation provisions of
section 7 of the Act. Activities undertaken on private lands are not
affected by section 7 of the Act unless the activities are authorized,
funded or carried out by a Federal agency.
Individual animals that comprise a designated experimental
population may be removed from an existing source or donor population
only after it has been determined that such a removal is not likely to
jeopardize the continued existence of the species; the removal must be
conducted under a permit issued in accordance with the requirements of
50 CFR 17.22.
2. Biological. The California Condor (Gymnogyps californianus) was
listed as endangered on March 11, 1967, (32 FR 4001) in a final rule
published by the Service. The Service designated critical habitat for
the California condor on September 24, 1976, (41 FR 41914). Long
recognized as a vanishing species (Cooper 1890, Koford 1953, Wilbur
1978), the California condor remains one of the world's rarest and most
imperiled vertebrate species.
California condors are among the largest flying birds in the world
(U. S. Fish and Wildlife Service 1995a). Adults weigh approximately 10
kilograms (kg) (22 pounds (lbs)) and have a wing span up to 2.9 meters
(m) (9 1/2 feet (ft)). Adults are black except for prominent white
underwing linings and edges of the upper secondary coverts. The head
and neck are mostly naked, and the bare skin is gray, grading into
various shades of yellow, red, and orange. Males and females cannot be
distinguished by size or plumage characteristics. The heads of
juveniles up to 3 years old are grayish-black, and their wing linings
are variously mottled or completely dark. During the third year the
head develops yellow coloration, and the wing linings become gradually
whiter (N.J. Schmitt in litt. 1995). By the time individuals are 5 or 6
years of age, they are essentially indistinguishable from adults
(Koford 1953, Wilbur 1975, Snyder et al. 1987), but full development of
the adult wing patterns may not be completed until 7 or 8 years of age
(N.J. Schmitt in litt. 1995).
The California condor is a member of the family Cathartidae or New
World vultures, a family of seven species, including the closely
related Andean condor (Vultur gryphus) and the sympatric turkey vulture
(Cathartes aura). Although the family has traditionally been placed in
the Order Falconiformes, some contemporary taxonomists believe that New
World vultures are more closely related to storks (Ligon 1967, Rea
1983, Sibley and Ahlquist 1990).
The fossil record of the genus Gymnogyps dates back about 100,000
years to the Middle Pleistocene Epoch (Brodkorb 1964). Fossil records
also reveal that the species once ranged over much of the southern
United States, south to Nuevo Leon, Mexico and east to Florida
(Brodkorb 1964), and two well preserved fossil bones were reported from
a site in upstate New York (Steadman and Miller 1987). There is
evidence indicating that California condors nested in west Texas,
Arizona, and New Mexico during the late Pleistocene. The disappearance
of the California condor from much of this range occurred about 10,000-
11,000 years ago, coinciding with the late Pleistocene extinction of
the North American megafauna (Emslie 1987).
By the time European man arrived in western North America,
California condors occurred only in a narrow Pacific coastal strip from
British Columbia, Canada, to Baja California Norte, Mexico (Koford
1953, Wilbur 1978). California condors were observed until the mid-
1800s in the northern portion of the Pacific Coast region (Columbia
River Gorge) and until the early 1930s in the southern extreme,
northern Baja California (Koford 1953, Wilbur 1973, Wilbur and Kiff
1980). Prior to 1987, California condors used a wishbone-shaped area
encompassing six counties--Los Angeles, Ventura, Santa Barbara, San
Luis Obispo, Monterey, and Kern, just north of Los Angeles, California
(U.S. Fish and Wildlife Service 1995a).
Courtship and nest site selection occurs from December through the
spring. Breeding California condors normally lay a single egg between
late January and early April. The egg is incubated by both parents and
hatches after approximately 56 days. Both parents share
responsibilities for feeding the nestling. Feeding usually occurs daily
for the first two months, then gradually diminishes in frequency. At
two to three months of age, condor chicks leave the nest cavity but
remain in the vicinity of the nest where they are fed by their parents.
The chick takes its first flight at about six to seven months of age,
but may not become fully independent of its parents until the following
year. Parent birds occasionally continue to feed a fledgling even after
it has begun to make longer flights to foraging grounds (U.S. Fish and
Wildlife Service 1995a).
Because of the long period of parental care, it was formerly
assumed that successful California condor pairs normally nested
successfully every other year (Koford 1953). However, this pattern
seems to vary, possibly depending mostly on the time of year that the
nestling fledges. If a nestling fledges relatively early (in late
summer or early fall), its parents may nest again in the following
year, but late fledging probably inhibits nesting in the following year
(Snyder and Snyder 1989).
The only wild California condor (a male) of known age bred
successfully in the wild in 1986 at the age of six years. Recent data
collected from captive birds, however, demonstrates that reproduction
may occur, or at least be attempted, at earlier ages. A four-year old
male was the youngest condor observed in courtship display, and the
same bird subsequently bred successfully at the age of five years (M.
Wallace, Los Angeles Zoo, in litt. 1993).
California condors nest in various types of rock formations
including crevices, overhung ledges, potholes, and more rarely, in
cavities of giant sequoia trees (Sequoia giganteus) (Snyder et al.
1986).
California condors are opportunistic scavengers, feeding only on
carcasses. Typical foraging behavior includes long-distance
reconnaissance flights, lengthy circling flights over a carcass, and
hours of waiting at a roost or on the ground near a carcass (U.S. Fish
and Wildlife Service 1995a). Condors may feed immediately, or wait
passively as other California condors or golden eagles (Aquila
chrysaetos) feed on the carcass (Wilbur 1978). Most California condor
foraging occurs in open terrain. This ensures easy take-off and
approach and makes food finding easier. Carcasses under brush are hard
to see, and California condors apparently do not locate food by
olfactory cues (Stager 1964). Condors maintain wide-ranging foraging
patterns throughout the year, an important adaptation for a species
that may be subjected to unpredictable food supplies (Meretsky and
Snyder 1992).
Prior to the arrival of European man, California condor food items
within interior California probably included mule deer (Odocoileus
hemionus), tule elk (Cervus nannodes), pronghorn (Antilocapra
americana), and smaller mammals. Along the Pacific shore the diet may
have included whales, sea lions, and other marine species (Emslie 1987,
U.S. Fish and Wildlife Service 1984). Koford (1953) listed observations
of California condors feeding on 24 different mammalian species within
the
[[Page 37]]
last two centuries. He estimated that 95 percent of the diet consisted
of the carcasses of cattle, domestic sheep, ground squirrels
(Spermophilus beechyi), mule deer, and horses. Although cattle may be
the most available food within the range of the condor, deer appear to
be preferred (Koford 1953, Wilbur 1972, Meretsky and Snyder 1992).
California condors appear to feed only one to three days per week, but
the frequency of adult feeding is variable and may show seasonal
differences (U.S. Fish and Wildlife Service 1995a).
Depending upon weather conditions and the hunger of the bird, a
California condor may spend most of its time perched at a roost.
California condors often use traditional roosting sites near important
foraging grounds (U.S. Fish and Wildlife Service 1984). Although
California condors usually remain at roosts until mid-morning, and
generally return in mid- to late afternoon, it is not unusual for a
bird to stay perched throughout the day. While at a roost, condors
devote considerable time to preening and other maintenance activities.
Roosts may also serve some social function, as it is common for two or
more condors to roost together and to leave a roost together (U.S. Fish
and Wildlife Service 1984). Cliffs and tall conifers, including dead
snags, are generally used as roost sites in nesting areas. Although
most roost sites are near nesting or foraging areas, scattered roost
sites are located throughout the range. There may be adaptive as well
as traditional reasons for California condors to continue to occupy a
number of widely separated roosts, such as reducing food competition
between breeding and non-breeding birds (U.S. Fish and Wildlife Service
1984).
Condor censusing efforts through the years have varied in intensity
and accuracy. This has led to conflicting estimates of historical
abundance, but all have indicated an ever-declining California condor
population. Koford (1953) estimated a population of about 60
individuals in the late 1930s through the mid-1940s, apparently based
on flock size. A field study by Eben and Ian McMillan in the early
1960s suggested a population of about 40 individuals, again based in
part on the validity of Koford's estimates of flock size (Miller et al.
1965). An annual October California condor survey was begun in 1965
(Mallette and Borneman 1966) and continued for 16 years. Its results
supported an estimate of 50 to 60 California condors in the late 1960s
(Sibley 1969, Mallette 1970). Wilbur (1980) continued the survey
efforts into the 1970s and concurred with the interpretations of the
earlier October surveys. He further estimated that by 1978 the
population had dropped to 25 to 30 individuals.
In 1981, the Service, in cooperation with California Polytechnic
State University at San Luis Obispo, began census efforts based on
individual identifications of birds through flight photography (Snyder
and Johnson 1985). Minimum summer counts from these photo-censusing
efforts showed a steady decline from an estimated minimum of 21 wild
condors in 1982, 19 individuals in 1983, 15 individuals in 1984, and 9
individuals in 1985. Although the overall condor population increased
slightly after 1982 as a result of double clutching, the wild
population continued to decline. By the end of 1986, all but two
California condors were captured for safe keeping and genetic security
(U.S. Fish and Wildlife Service 1995a).
On April 19, 1987, the last wild condor was captured and taken to
the San Diego Wild Animal Park (SDWAP). Beginning with the first
successful captive breeding of California condors in 1988, the total
population has increased annually and now stands at 103 individuals,
including 90 in the captive flock and 13 in the wild (U.S. Fish and
Wildlife Service 1995a).
Causes of the California condor population decline have probably
been numerous and variable through time (U.S. Fish and Wildlife Service
1984). However, despite decades of research, it is not known with
certainty which mortality factors have been dominant in the overall
decline of the species. Relatively few dead condors have been found,
and definitive conclusions on the causes of death were made in only a
small portion of these cases (Miller et al. 1965, Wilbur 1978, Snyder
and Snyder 1989). Poisoning, shooting, egg and specimen collecting,
collisions with man-made structures, and loss of habitat have
contributed to the decline of the species (U.S. Fish and Wildlife
Service 1984).
3. Recovery Efforts. The primary recovery objective as stated in
the California Condor Recovery Plan (Plan) (U.S. Fish and Wildlife
Service 1995a), is to reclassify the condor to threatened status. The
minimum criterion for reclassification to threatened is the maintenance
of at least two non-captive populations and one captive population.
These populations must (1) each number at least 150 individuals, (2)
each contain at least 15 breeding pairs and (3) be reproductively self-
sustaining and have a positive rate of population growth. The non-
captive populations also must (4) be spatially disjunct and non-
interacting, and (5) contain individuals descended from each of the 14
founders. When these five conditions are met, the species should be
reclassified to threatened status.
The recovery strategy to meet this goal is focused on increasing
reproduction in captivity to provide condors for release, and the
release of condors to the wild. (U.S. Fish and Wildlife Service 1995a).
a. Captive Breeding. The years 1983 and 1984 were critical in
formation of the captive California condor flock at the SDWAP and Los
Angeles Zoo (LAZ). In 1983, two chicks and four eggs were brought in
from the wild. The chicks went to the LAZ, and the eggs were hatched
successfully at the San Diego Zoo (SDZ). Three of the chicks were taken
to the SDWAP and one to the LAZ to be reared. In 1984, one chick and
eight eggs were taken from the wild. The chick went to the LAZ and six
of the eight eggs were successfully hatched at SDZ. Five of the chicks
went to the LAZ and one went to the SDWAP to be reared. In 1985, two
eggs were taken from the wild and hatched successfully, one at the SDZ
and the other at the SDWAP. Both of these chicks were taken to the LAZ
to be reared. In 1986, the last egg was brought in from the wild and
hatched at the SDWAP, where it was kept for rearing. By 1986, only one
pair of condors existed in the wild and the last free-flying condor was
captured on April 19, 1987, bringing the captive population to 27. The
first successful breeding in captivity occurred in 1988, when a chick
was produced at the SDWAP by a pair of wild-caught condors. Four more
chicks were produced in 1989. The number of chicks produced by captive
condors continues to increase annually and the captive population has
grown from the original 27 in 1987 to 90 in 1995, with 13 additional
captive-reared condors that are now in the wild. In 1993, the captive
breeding program was expanded to include a facility at The Peregrine
Funds World Center for Birds of Prey (WCBP) in Boise, Idaho (U.S. Fish
and Wildlife Service 1995a).
b. Releases. In October 1986, the California Condor Recovery Team
(Team) recommended that criteria be satisfied before a release of
captive-bred California condors could take place. These included having
three actively breeding pairs of condors, three chicks behaviorally
suitable for release, and retaining at least five offspring from each
breeding pair contributing to the release. The Team added a provision
to the third criterion to retain a minimum of seven progeny in
captivity for founders that were not reproductively
[[Page 38]]
active (U.S. Fish and Wildlife Service 1995a).
The 1991 breeding season produced two condor chicks that met the
Team's criteria for release, a male from the SDWAP and a female from
the LAZ. However, attempting to apply the Team's third criterion to the
1991 chicks also revealed that it would not be practical in the future,
because several founders had died without producing five progeny. The
Team, therefore, recommended choosing genetically appropriate chicks
for future releases based on pedigree analyses developed for genetic
management of captive populations (U.S. Fish and Wildlife Service
1995a).
Prior to capture of the last wild California condor in 1987, the
Team recognized that anticipated future releases of captive-reared
condors would pose the problem of reintroducing individuals of an
altricial bird into habitat devoid of their parents and other members
of their own species. Thus, the Team recommended initiation of an
experimental release of Andean condors. Research objectives for the
experimental release were to refine condor release and recapture
techniques; test the criteria being used to select condor release
sites; develop written protocols for releases, monitoring, and
recapture of condors; field test rearing protocols being used, or
proposed for use to produce condors suitable for release; evaluate
radiotelemetry packages; supplemental feeding strategies; train a team
of biologists for releasing condors; and identify potential problems
peculiar to the California environment. The Andean condor experiment
began in August 1988 and concluded in December 1991. During that period
three release sites where tested and a total of 13 female Andean
condors were released. Only one mortality occurred in the field when an
Andean condor collided with a power line (U.S. Fish and Wildlife
Service 1995a).
In 1991, two California condor chicks were released into Sespe
Condor Sanctuary, Los Padres National Forest, Ventura County on January
14, 1992. The male died from ingesting ethylene glycol in October of
the same year. The next release of California condors occurred on
December 1, 1992, when six more captive-produced California condors
chicks were released at the same Sespe Condor Sanctuary site.
Socialization with the remaining female from the first release
proceeded well, and the ``flock'' appeared to adjust well to the wild
conditions. However, there was continuing concern over the tendency of
the birds to frequent zones of heavy human activity. Indeed, three of
these birds eventually died from collisions with power lines between
late May and October 1993 (U.S. Fish and Wildlife Service 1995a).
Because of the tendency for the remaining condors to be attracted
to the vicinity of human activity and man-made obstacles, especially
power lines, another California condor release site was constructed in
a more remote area, Lion Canyon, in the Los Padres National Forest near
the boundary of the San Rafael Wilderness Area in Santa Barbara County.
Five hatch year condors were released at the new site on December 8,
1993. In addition, the four condors that had been residing in the Sespe
area were moved to the new site. They were re-released over a period of
several weeks in hopes that this approach would reduce the probability
that they would return to the Sespe area. Nevertheless, three of these
condors eventually moved back to the Sespe area in March 1994, where
they resumed the high risk practice of perching on power poles. Because
of general concern about the tameness of these birds and the
possibility that their undesirable behavior would be mimicked by
younger California condors, these condors were retrapped on March 29,
1994 and added to the captive breeding population. On June 24, one of
the 1993 California condors died when it collided with a power line. A
second condor that was in the company of this condor at the time of its
death, was trapped and returned to the LAZ. The three remaining wild
condors continued to frequent areas of human activity and were trapped
and returned to the zoo the same week the first 1995 release took place
(U.S. Fish and Wildlife Service 1995a).
As a result of the deaths due to collisions with power lines and
the attraction of newly released young condors to humans and their
activities, the 14 young California condors scheduled for release in
1995 were subjected to aversion training in the zoo environment. An
electrified mock power pole and natural snag perches were constructed
in a large flight pen holding the release candidates. When the young
condors landed on the electrified pole they were given a negative
experience in the form of a mild shock. When they landed on the natural
snag perches they received no shock. After only a few attempts at
landing on the electrified power pole and receiving a mild shock, they
all avoided the power pole and used the natural perches exclusively (M.
Wallace, The Los Angeles Zoo, in litt. 1995).
This group of California condors was also subjected to a series of
human aversion exercises. Aversion maneuvers were staged in which a
person would appear in view of a group of condors at a distance of
approximately 100 meters (300 yds). Once it was determined that the
condors spotted the person, they would be ambushed and captured by a
hidden group of biologists. These condors were then placed in sky
kennels, and later released after nightfall (M. Wallace, The Los
Angeles Zoo, in litt. 1995). The goals of this exercise were to
condition the condors to associate this negative experience with humans
and increase the distance in which they would flush in future
encounters with humans. Six of these young condors were released to the
wild on February 8, 1995, at the Lion Canyon release site. To date none
of these condors have attempted to land on a power pole and, although
they have roosted near campgrounds, they have not approached humans.
The one exception was a young condor of this group that was lured into
a campground by campers that placed food and water out for it. This
condor was subsequently trapped and brought into the zoo. The remaining
five continue to avoid both power poles and human activities. On August
29 the remaining eight California condors of this group were released
at the Lion Canyon Site. There are now 13 condors flying free in
southern California.
4. Proposed Reintroduction Sites. To satisfy the objectives of the
Plan, at least one subpopulation of non-captive California condors must
be established in an area disjunct from the subpopulation already being
reestablished in the recent historical range in California. Following a
widely publicized solicitation for suggestions for suitable condor
release sites outside of California, the Team recommended in December
1991 that California condor releases be conducted in northern Arizona.
Because this area once supported California condors, still provides a
high level of remoteness, ridges and cliffs for soaring, and caves for
nesting, the probability of a successful reintroduction is very good.
The Service endorsed this recommendation on April 2, 1992. In
collaboration with the Federal initiative to designate a release site
in Arizona, the Arizona Game and Fish Department began evaluating a
possible California condor reintroduction in 1989. The Arizona Game and
Fish Department determined the reestablishment as appropriate and
feasible in steps 1 and 2 of the Department's ``Procedures for
[[Page 39]]
Nongame Wildlife and Endangered Species Re-establishment Projects,'' a
12-step process specifying the protocol for a nongame reintroduction to
take place (U.S. Fish and Wildlife Service 1995b).
a. Site Selection Process. Potential release sites in northern
Arizona were evaluated through aerial reconnaissance, site visits, and
discussions with agency personnel familiar with the sites being
evaluated. This evaluation process resulted in selection of four
potential release sites. As required by the National Environmental
Policy Act of 1969 (NEPA), the Service, in cooperation with the Arizona
Game and Fish Department and the Bureau of Land Management (BLM),
produced an Environmental Assessment titled--``Release of California
Condors at the Vermilion Cliffs, 1995,'' in which the potential release
sites were thoroughly examined and objectively evaluated. The NEPA
process resulted in selection of a preferred release site at the
Vermilion Cliffs located on BLM lands (U.S. Fish and Wildlife Service
1995b).
The suitability of the Vermilion Cliffs as a California condor
release site was further evaluated using the Service's ``The Condor
Release Site Evaluation System''. This system uses 25 working criteria
divided into three priority classes--priority 1 includes features
critical to releasing and establishing condors in the wild, priority 2
includes features that are necessary but not critical, and priority 3
includes features that would add or detract from suitability but are
not critical. The working criteria are grouped into working factors
that include: site suitability, logistics, man-made threats/hazards,
and suitability of adjacent lands (for population expansion). Each
working criterion is assigned a quantitative value and weighted
according to assigned priority criteria. The sum from the three
priority classes gives the total value for a site. This rating system
verified the Vermilion Cliffs (the preferred alternative) as a suitable
release site (U.S. Fish and Wildlife Service 1995b).
b. Vermilion Cliffs Release Site. The Vermilion Cliffs
reintroduction site is on the southwestern corner of the Paria Plateau
approximately 100 meters from the edge of the Vermilion Cliffs,
Coconino County, Arizona, as shown on the following map:
BILLING CODE 4310-55-P
[[Page 40]]
[GRAPHIC][TIFF OMITTED]TP02JA96.000
BILLING CODE 4310-55-C
[[Page 41]]
The Paria Plateau is characterized by relatively flat, undulating
topography dominated by pinyon-juniper/blue grama (Pinus edulis-
Juniperus osteosperma/Bouteloua gracilis) communities and mixed shrub
communities dominated by sagebrush (Artemesia spp.) on sandy upland
soils. To the south and east of the Plateau lies the steep precipice of
the Vermilion Cliffs, rising over 1,000 feet from the floor of House
Rock Valley. Uplifting and differential erosion has created complex
geologic structures and a diverse variety of habitats in a small
geographic area. The cliffs are sharply dissected by canyons and
arroyos and the lower slopes are littered with enormous boulders.
Numerous springs emerge from the sides of the cliffs (U.S. Bureau of
Land Management and Arizona Game and Fish Department 1983).
5. Reintroduction Protocol. In general, the reintroduction protocol
will involve an annual release of captive-reared California condors
until recovery goals, as outlined in the Plan, are achieved (U.S. Fish
and Wildlife Service 1995b). These reintroduction protocols were
developed and tested in the current southern California condor release
project.
a. Condor Release. The reintroduction is designed to release a
cohort of captive-reared California condors once each year, beginning
in early 1996 (target date). Three captive breeding facilities (LAZ,
SDWAP, and WCBP), are producing condors for release to the wild. The
size of each release cohort will depend on the number of hatch-year
condors produced during the late winter to early spring of that year,
but releases will likely involve up to 10 hatch-year condors. These
condors will be hatched in captivity and raised by a condor look-alike
hand puppet, or by their parents, until they are approximately four
months of age. They will then be placed together in a single large pen
so they will form social bonds. At approximately 6 months of age they
will be moved to a large flight pen and undergo aversion training to
humans and power poles for one to two months. After the training has
been completed the young condors will be transported by helicopter to
the release site at Vermilion Cliffs (U.S. Fish and Wildlife Service
1995b).
At the release site they will be placed in a temporary release pen
and will remain there for an acclimation period, of approximately one
to two weeks. This structure will be approximately 16 ft by 8 ft and 6
ft high. Netting will cover the front of the pen, allowing the young
condors to view and become accustomed to the surrounding area. The
release pen will be pre-fabricated, delivered to the release site by
helicopter, and removed from the site after the young condors have
fledged (U.S. Fish and Wildlife Service 1995b).
Meanwhile, biologists will remain near the release pen 24 hours a
day observing the young condor's behavior and guarding against
predators or other disturbance. After the initial adjustment period and
when all the young condors can fly, the release will take place. Any
release candidate showing signs of physical or behavioral problems will
not be released. Release is accomplished by removing the net at the
front of the pen allowing the birds to exit. The young condors will
likely remain in the immediate area of the pen for some time before
beginning exploratory forays along the cliffs. A small area of
approximately 10 acres will be temporarily closed to recreational
activity to protect the newly released condors and will remain closed
until they have dispersed from the release area (U.S. Fish and Wildlife
Service 1995b).
b. Supplemental Feeding. Condors are dependent on carrion and must
be fed until they learn to locate carcasses independently. Newly
released young condors will be dependent on carrion provided by
biologists, making it necessary to maintain a supplemental feeding
program. However, older condors (sub-adults and adults), should be
locating carcasses on their own and hopefully would not be dependent on
the supplemental feeding program for their survival. Supplemental
feeding should reduce the likelihood of deaths of young condors from
accidental poisoning insofar as it will help prevent them from feeding
on contaminated carcasses. The diet provided to the condors will
consist primarily of livestock carcasses and road killed animals. Field
biologists will deliver carcasses to the condors every four to five
days by carrying carcasses to the edge of the cliffs at night, to avoid
detection by the condors. A network of feeding stations on prominent
points with high visibility will be identified in the general area of
the release. Carcasses will be placed on the ground or, if predators
become a problem, elevated off the ground by placing them atop natural
rock outcrops less accessible to ground predators (U.S. Fish and
Wildlife Service 1995b).
c. Monitoring. All California condors released to the wild will be
equipped with two radio transmitters, one on each patagium, or one
patagial placement and one mounted on the tail. In addition, they will
wear bold colored patagial markers on each wing with code numbers to
facilitate visual identification. The movements and behavior of each
condor will be monitored for at least the first two to three years of
its life. Ground triangulation will be the primary means of radio
tracking. Aerial tracking will be used to find lost birds or when more
accurate locations are desired. Telemetry flights will be coordinated
with the appropriate land management agencies (U.S. Fish and Wildlife
Service 1995b).
Status of Reintroduced Population
In accordance with section 10(j) of the Act, California condors
reintroduced into northern Arizona are proposed to be designated as a
nonessential experimental population. The experimental designation
means the reintroduced California condors will be treated as a
threatened population instead of an endangered population. Under
section 4(d) of the Act, this designation enables the Service to
develop special regulations for management of the population that are
less restrictive than the mandatory prohibitions covering endangered
species. Therefore, the experimental designation allows the management
flexibility needed to ensure that this reintroduction is compatible
with current or planned human activities in the reintroduction area and
to permit management of the population for recovery purposes.
Experimental populations can be classified as either ``essential''
or ``nonessential''. An essential experimental population is a
population whose loss would be likely to appreciably reduce the
likelihood of the survival of the species in the wild [50 CFR 17.80
(Subpart H-Experimental Populations)]. All other experimental
populations are treated as nonessential, if they are not considered
essential to the continued existence of the species. ``Nonessential''
experimental populations are treated for purposes of section 7 of the
Act as though they were only proposed for listing (except on National
Wildlife Refuge and National Park System lands where they will be
treated as a species listed as ``threatened'' under the authority of
the Act). The proposed California condor experimental population merits
classification as nonessential because the population will not be
essential to the continued existence of the species.
Currently, the principal California condor population (90
individuals) exists in the safe environment of three captive breeding
facilities located at the SDWAP, LAZ, and WCBP. The captive
[[Page 42]]
breeding facilities are not included in exhibits and are under 24 hour
surveillance by condor keepers or video cameras. Only essential program
personnel are granted access to the captive population. The captive
population is given excellent care and to date there have been no
deaths of adults or sub-adults. In addition, the geographic separation
of the three breeding facilities protects the captive population from
the threat of extinction due to a single catastrophic event.
The reproductive rate of the captive population dramatically
exceeds the mortality rate of the wild population. All condors lost in
the reintroduction efforts can be replaced by current chick production,
while the captive population continues to increase. The extant
population will not be adversely effected by the proposed
reintroduction since it is hundreds of miles away (see below).
By mid-1987, every surviving individual of the species was held in
captivity following agreement that the decline of the wild population
to eight surviving adults had demonstrated that the wild population was
destined for extinction (Geyer et al. 1993). Genetic management, which
includes control of all matings, has preserved the genetic viability of
the extant captive population. No California condor hatched in
captivity is considered for release to the wild unless its founder line
is well-represented in the captive population. All release candidates
are genetically redundant and their loss will not jeopardize the
diversity of the existing condor gene pool.
The proposed reintroduction project will further the recovery of
the species by--establishing a second wild population, ensuring the
existence of a wild population if a catastrophic event eliminates the
southern California population, enhancing the opportunity to manage the
genetic diversity of the wild population, and avoiding the potential
risks inherent in overcrowding the captive population.
Location of Reintroduced Population
Under section 10(j)(1) of the Act, an experimental population must
be separate geographically from nonexperimental populations of the same
species. The last recorded sighting of a California condor in the area
of the proposed experimental release occurred in 1924, when Edouard
Jacot observed a condor feeding on a carcass with golden eagles near
the town of Williams, Arizona (Rea 1983). The last known free-flying
California condor was captured April 19, 1987, in southern California
and placed in the captive breeding program. To date there have been no
verified sightings of California condors in the wild and condor
researchers are confident that there are no undocumented wild condors
in the proposed release area or anywhere else in their historic range.
Since January 1992, five releases of young California condors have
taken place in Ventura and Santa Barbara counties, California.
Currently, 13 endangered California condors are located in the wild
back country of Santa Barbara County. This non-captive population is
located approximately 720 kilometers (km) (450 miles (mi)) west of the
proposed release site. The longest flight by these recently
reintroduced condors has been approximately 40 km (25 mi), with typical
daily flights from 8 km (5 mi) to 16 km (10 mi). According to Meretsky
and Snyder (1992) the foraging flights by breeding California condors
in the 1980's were from 70 km (44 mi) to 180 km (112 mi). Based on this
information, the Service does not believe there will be any
immigration/emigration between the existing non-captive and the
proposed nonessential experimental populations.
The release site for reintroducing California condors into northern
Arizona will be on the Vermilion Cliffs, in the southwestern corner of
the Paria Plateau. However, the designated nonessential experimental
population area will be significantly larger and include portions of
three states--Arizona, Nevada, and Utah. The southern boundary is
Interstate Highway 40 in Arizona from its junction with Highway 191
west across Arizona to Kingman; the western boundary starts at Kingman,
goes northwest on Highway 93 to Interstate Highway 15, continues
northeasterly on Interstate Highway 15 in Nevada, to Interstate Highway
70 in Utah; where the northern boundary starts and goes across Utah to
Highway 191; where the eastern boundary starts and goes south through
Utah until Highway 191 meets Interstate Highway 40 in Arizona (Fig. 1).
Management
The Vermilion Cliffs reintroduction project will be undertaken by
the Service and its primary cooperators the Arizona Game and Fish
Department and the BLM. Other cooperators that will provide support on
an as-needed basis include--Grand Canyon National Park, Glen Canyon
National Recreation Area, Kaibab National Forest, the Hualapai Tribe,
the Navajo Nation, LAZ, Zoological Society of San Diego (the Zoological
Society includes the SDWAP and SDZ), The Phoenix Zoo and The Peregrine
Fund. All cooperators will participate in this recovery project under
the general guidance of a Memorandum of Understanding written to
promote recovery of the California condor. Reintroduction procedures
were explained above under ``Background, 5. Reintroduction Protocols.''
The reintroduction site is surrounded by remote Federal or Indian
Reservation lands with only a few small private inholdings. The current
general management scheme for these lands will not affect the
establishment of a nonessential experimental population in this area.
Furthermore, the designation of nonessential experimental will
encourage local cooperation as a result of the management flexibility
allowed under this designation. The Service considers the nonessential
experimental population designation and associated reintroduction plan
necessary to receive cooperation of the affected landowners, agencies,
and recreational interests in the area.
A designation of nonessential experimental prohibits the
application of section 7(a)(2) of the Act except on NWR and NPS lands.
This will ensure that current land uses and activities (such as, but
not limited to, forest management, agriculture, mining, livestock
grazing, sport hunting and fishing, and non-consumptive outdoor
recreational activities) will not be restricted.
The progress of the reintroduction project will receive an informal
review on an annual basis by the primary cooperators and a formal
evaluation by all cooperators within the first five years after the
first release to evaluate the reintroduction project and determine
future management needs. Once recovery goals are met for downlisting
the species, a rule will be proposed to address the downlisting. The 5-
year evaluation will not include a reevaluation of the ``nonessential
experimental'' designation for this population. The Service does not
foresee any likely situation which would call for altering the
nonessential experimental status of this population.
Public Comments Solicited
The Service intends that any action resulting from this proposed
rulemaking to determine the northern Arizona California condor
population as a nonessential experimental population be as effective as
possible. The Service therefore solicits comments or recommendations
concerning any aspect of this proposed rule (see ADDRESSES section)
from Federal, State, public, and local government agencies, the
scientific community, industry, or any other interested party. Comments
[[Page 43]]
should be as specific as possible. Final promulgation of a rule to
implement this proposed action will take into consideration the
comments and any additional information received by the Service. Such
communications may lead to a final rule that differs from this
proposal.
Section 4(b)(5)(e) of the Act requires that a public hearing be
held, if requested, within 45 days of a proposed rule. The Service has
scheduled two public hearings on this proposal due to the anticipated
number of requests for such hearings. The first public hearing will be
held at the Main Auditorium, Flagstaff High School, 400 West Elm
Street, Flagstaff, Arizona, on Tuesday, January 23, 1996, from 6:00 to
8:00 pm and the second at the Kanab High School Auditorium, 59 East Red
Shadow Lane, Kanab, Utah, on Thursday, January 25, 1996, from 6:00 to
8:00 pm. Anyone expecting to make an oral presentation at these
hearings is encouraged to provide a written copy of their statement to
the hearing officer prior to the start of the hearing. In the event
there is a large attendance, the time allotted for oral statements may
have to be limited. Oral and written statements receive equal
consideration. There are no limits to the length of written comments
presented at these hearings or mailed to the Service.
National Environmental Policy Act
A final environmental assessment as defined under authority of the
NEPA, has been prepared and is available to the public at the Service
office identified in the ADDRESSES section. This assessment formed the
basis for the decision that the proposed California condor
reintroduction is not a major Federal action which would significantly
affect the quality of the human environment within the meaning of
section 102(2)(C) of NEPA.
Migratory Bird Treaty Act
The proposed rule will not affect protection provided to the
California condor by the Migratory Bird Treaty Act (MBTA). The take of
all migratory birds, including the California condor, is governed by
the MBTA. The MBTA regulates the taking of migratory birds for
educational, scientific, and recreational purposes.
Required Determinations
This proposed rule was subject to Office of Management and Budget
review under Executive Order 12866. The rule will not have a
significant economic effect on a substantial number of small entities
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). Also, no
direct costs, enforcement costs, information collection, or record-
keeping requirements are imposed on small entities by this action and
the rule contains no record-keeping requirements, as defined in the
Paperwork Reduction Act of 1980 (44 U.S.C. 350 et seq.). This rule does
not require a Federalism assessment under Executive Order 12612 because
it would not have any significant federalism effects as described in
the order.
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Cooper, J.G. 1890. A doomed bird. Zoe 1:248-249.
Emslie, S.D. 1987. Age and diet of fossil California condors in
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Geyer, C.J., O.A. Ryder, L.G. Chemnick, and E.A. Thompson. 1993.
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Wilbur, S.R. 1980. Estimating the size and trend of the California
condor population. 1965-1978. California Fish and Game. 66:40-48.
Wilbur, S.R., and L.F. Kiff. 1980. The California condor in Baja
California, Mexico. American Birds. 34:856-859.
Author
The Primary author of this rule is Robert Mesta, U.S. Fish and
Wildlife Service, Ecological Services, Ventura Field Office, 2493
Portola Road, Suite B, Ventura, California 93003.
List of Subjects in 50 CFR Part 17
Endangered and threatened species, Exports, Imports, Reporting and
record- keeping requirements, and Transportation.
Proposed Regulation Promulgation
Accordingly, the Service hereby proposes to amend part 17,
subchapter B of Chapter I, Title 50 of the Code of Federal Regulations
as set forth below:
PART 17--[AMENDED]
1. The authority citation for part 17 continues to read as follows:
[[Page 44]]
Authority: 16 U.S.C. 1361-1407; 16 U.S.C. 1531-1544; 16 U.S.C.
4201-4245; Pub. L. 99-625, 100 Stat. 3500, unless otherwise noted.
2. In Section 17.11(h), the table entry ``Condor, California''
under BIRDS is revised to read as follows:
Sec. 17.11 Endangered and threatened wildlife.
* * * * *
(h) * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
Species Vertebrate
-------------------------------------------------------- population where Critical Special
Historic range endangered or Status When listed habitat rules
Common name Scientific name threatened
--------------------------------------------------------------------------------------------------------------------------------------------------------
* * * * * * *
BIRDS
* * * * * * *
Condor, California........... Gymnogyps U.S.A. (AZ, CA, OR) U.S.A. only, except E 1,____ 17.95(b) NA
californianus. Mexico (Baja where listed as an
California). experimental
population below.
Do........................... do.................. do................. U.S.A. (specific XN ____ NA 17.84(j)
portions of Utah,
Nevada, and
Arizona).
* * * * * * *
--------------------------------------------------------------------------------------------------------------------------------------------------------
3. Section 17.84 is amended by adding paragraph (j) to read as
follows:
Sec. 17.84 Special rules--vertebrates.
* * * * *
(j) California condor (Gymnogyps californianus).
(1) The California condor (Gymnogyps californianus) population
identified in paragraph (j)(8) of this section is a nonessential
experimental population.
(2) No person may take this species in the wild in the experimental
population area except when such take is accidental, unavoidable, and
not the purpose of the carrying out of an otherwise lawful activity, or
as provided in paragraphs (j)(3), (4), and (9) of this section.
(3) Any person with a valid permit issued by the Service under
Sec. 17.32 may take California condors in the wild in the experimental
population area.
(4) Any employee or agent of the Service, Bureau of Land Management
or appropriate State wildlife agency, who is designated for such
purposes, when acting in the course of official duties, may take a
California condor from the wild in the experimental population area and
vicinity if such action is necessary:
(i) For scientific purposes;
(ii) To relocate California condors within the experimental
population area to improve condor survival and recovery prospects, or
to address conflicts with ongoing activities or private landowners;
(iii) To relocate California condors that have moved outside the
experimental population area, when removal is necessary to protect the
condor, or is requested by an affected landowner or land manager;
(iv) To relocate California condors from the experimental
population area into other condor reintroduction areas or captivity;
(v) To aid a sick, injured, or orphaned California condor;
(vi) To salvage a dead specimen that may be useful for scientific
study; or
(vii) To dispose of a dead specimen.
(5) Any taking pursuant to paragraphs (j)(2), (j)(4)(v),
(j)(4)(vi), and (j)(4)(vii), of this section must be reported
immediately to the State Supervisor, U.S. Fish and Wildlife Service,
Ecological Services, Arizona State Office, Phoenix, 2321 W. Royal Palm
Road, Suite 103, Arizona (telephone 602/640-2720) who will determine
the disposition of any live or dead specimens.
(6) No person shall possess, sell, deliver, carry, transport, ship,
import, or export by any means whatsoever, any California condor or
part thereof from the experimental population taken in violation of
this paragraph (j) or in violation of applicable State laws or
regulations or the Endangered Species Act.
(7) It is unlawful for any person to attempt to commit, solicit
another to commit, or cause to be committed, any offense defined in
paragraphs (j)(2) and (j)(6) of this section.
(8)(i) The designated experimental population area of the
California condor includes portions of three states--Arizona, Nevada,
and Utah. The southern boundary is Interstate Highway 40 in Arizona
from its junction with Highway 191 west across Arizona to Kingman; the
western boundary starts at Kingman, goes northwest on Highway 93 to
Interstate Highway 15, continues northeasterly on Interstate Highway 15
in Nevada, to Interstate Highway 70 in Utah; where the northern
boundary starts and goes across Utah to Highway 191; where the eastern
boundary starts and goes south through Utah until Highway 191 meets
Interstate Highway 40 in Arizona (See map at end of this paragraph
(j).). All California condors found in the wild within these boundaries
will comprise the experimental population.
(ii) All California condors released into the experimental
population area will be marked and visually identifiable. All offspring
will also be marked before fledging. Any condors found outside of the
experimental population area will be identifiable by colored and coded
patagial wing markers. In the event that a condor moves outside the
experimental population area, three options will be considered--leave
the condor undisturbed and monitor it closely, capture the condor and
return it to the reintroduction area, or place it in a captive breeding
facility. The fate of condors that move outside the experimental
population area will be decided on a case by case basis.
(9) The experimental population will be monitored continually for
the life of the reintroduction project. All California condors will be
given physical examinations before being released. If there is any
evidence that the condor is in poor health or diseased, it will not be
released to the wild. Any condor that displays signs of illness, is
injured, or otherwise needs special care may be captured by authorized
personnel of the Service, Bureau of Land Management or appropriate
State wildlife agency or their agents, and given the appropriate care.
These condors will be re-released
[[Page 45]]
into the reintroduction area as soon as possible, unless physical or
behavioral problems make it necessary to keep them in captivity for an
extended period of time, or permanently.
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[[Page 46]]
[GRAPHIC][TIFF OMITTED]TP02JA96.001
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[[Page 47]]
Dated: December 20, 1995.
George T. Frampton, Jr.,
Assistant Secretary for Fish and Wildlife and Parks.
[FR Doc. 95-31450 Filed 12-29-95; 8:45 am]
BILLING CODE 4310-55-P
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