issue-1996-07-03•Federal Register proposed rules — 1996-07-03
Federal Register proposed rules — 1996-07-03
issue-1996-07-03Federal Register proposed rules — 1996-07-03Proposed Regulation
Published Federal Register documents, not public-inspection drafts. The GPO XML/text rendition is a research aid; the linked complete official PDF retains the printed layout and all graphics. Graphics are retained in that PDF and are not independently reproduced in this text rendition. Publication does not establish that every provision remains legally in force.
FR Doc. 96-17041 Establishment of Class E Airspace; Miller, SD
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Pages 34769-34770]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17041]
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DEPARTMENT OF TRANSPORTATION
14 CFR Part 71
[Airspace Docket No. 96-AGL-11]
Establishment of Class E Airspace; Miller, SD
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This notice proposes to establish Class E airspace at Miller
Municipal Airport, Miller, SD, to accommodate a Nondirectional Radio
Beacon (NDB) to serve Runway 15. Controlled airspace extending upward
from 700 to 1200 feet above ground level (AGL) is needed to contain
aircraft executing the approach. The intended effect of this proposal
is to provide segregation of aircraft using instrument approach
procedures in instrument conditions from other aircraft operating in
visual weather conditions.
DATES: Comments must be received on or before August 5, 1996.
ADDRESSES: Send comments on the proposal in triplicate to: Federal
Aviation Administration, Office of the Assistant Chief Counsel, AGL-7,
Rules Docket No. 96-AGL-11, 2300 East Devon Avenue, Des Plaines,
Illinois 60018.
The official docket may be examined in the Office of the Assistant
Chief Counsel, Federal Aviation Administration, 2300 East Devon Avenue,
Des Plaines, Illinois. An informal docket may also be examined during
normal business hours at the Air Traffic Division, Operations Branch,
Federal Aviation Administration, 2300 East Devon Avenue, Des Plaines,
Illinois.
FOR FURTHER INFORMATION CONTACT: John A. Clayborn, Air Traffic
Division, Operations Branch, AGL-530, Federal Aviation Administration,
2300 East Devon Avenue, Des Plaines, Illinois 60018, telephone (847)
294-7568.
SUPPLEMENTARY INFORMATION:
Comments Invited
Interested parties are invited to participate in this proposed
rulemaking by submitting such written data, views, or arguments as they
may desire. Comments that provide the factual basis supporting the
views and suggestions presented are particularly helpful in developing
reasoned regulatory decisions on the proposal. Comments are
specifically invited on the overall regulatory, aeronautical, economic,
environmental, and energy-related aspects of the proposal.
Communications should identify the airspace docket number and be
submitted in triplicate to the address listed above. Commenters wishing
the FAA to acknowledge receipt of their comments on this notice must
submit with those comments a self-addressed, stamped postcard on which
the following statement is made: ``Comments to Airspace Docket No. 96-
AGL-11.'' The postcard will be date/time stamped and returned to the
commenter. All communications received on or before the specified
closing date for comments will be considered before taking action on
the proposed rule. The proposal contained in this notice may be changed
in light of comments received. All comments submitted will be available
for examination in the Rules Docket, FAA, Great Lakes Region, Office of
the Assistant Chief Counsel, 2300 East Devon Avenue, Des Plaines,
Illinois, both before and after the closing date for comments. A report
summarizing each substantive public contact with FAA personnel
concerned with this rulemaking will be filed in the docket.
Availability of NPRM's
Any person may obtain a copy of the Notice of Proposed Rulemaking
(NPRM) by submitting a request to the Federal Aviation Administration,
Office of Public Affairs, Attention: Public Inquiry Center, APA-230,
800 Independence Avenue, S.W., Washington, DC 20591, or by calling
(202) 267-3484. Communications must identify the notice number of this
NPRM. Persons interested in being placed on a mailing list for future
NPRM's should also request a copy of Advisory Circular No. 11-2A, which
describes the application procedure.
The Proposal
The FAA is considering an amendment to part 71 of the Federal
Aviation Regulations (14 CFR part 71) to establish Class E airspace at
Miller Municipal Airport, Miller, SD to accommodate a Nondirectional
Radio Beacon to serve Runway 15. Controlled airspace extending upward
from 700 to 1200 feet AGL is needed to contain aircraft executing the
approach. The intended affect of this action is to provide segregation
of aircraft using instrument approach procedures in instrument
conditions from other
[[Page 34770]]
aircraft operating in visual weather conditions. The area would be
depicted on appropriate aeronautical charts thereby enabling pilots to
circumnavigate the area or otherwise comply with IFR procedures. Class
E airspace designations for airspace areas extending upward from 700
feet or more above the surface of the earth are published in paragraph
6005 of FAA Order 7400.9C dated August 17, 1995, and effective
September 16, 1995, which is incorporated by reference in 14 CFR 71.1.
The Class E airspace designation listed in this document would be
published subsequently in the Order.
The FAA has determined that this proposed regulation only involves
an established body of technical regulations for which frequent and
routine amendments are necessary to keep them operationally current.
Therefore this, proposed regulation--(1) Is not a ``significant
regulatory action'' under Executive Order 12866; (2) is not a
``significant rule'' under DOT Regulatory Policies and Procedures (44
FR 11034; February 26, 1979); and (3) does not warrant preparation of a
Regulatory Evaluation as the anticipated impact is so minimal. Since
this is a routine matter that will only affect air traffic procedures
and air navigation, it is certified that this proposed rule will not
have a significant economic impact on a substantial number of small
entities under the criteria of the Regulatory Flexibility Act.
List of Subjects in 14 CFR Part 71
Airspace, Incorporation by reference, Navigation (air).
The Proposed Amendment
Accordingly, pursuant to the authority delegated to me, the Federal
Aviation Administration proposes to amend part 71 of the Federal
Aviation Regulations (14 CFR part 71) as follows:
PART 71--[AMENDED]
1. The authority citation for part 71 continues to read as follows:
Authority: 49 U.S.C. 106(g), 40103, 40113, 40120; E.O. 10854, 24
FR 9565, 3 CFR, 1959-1963 Comp., p. 389; 14 CFR 11.69.
Sec. 71.1 [Amended]
2. The incorporation by reference in 14 CFR 71.1 of the Federal
Aviation Administration Order 7400.9C, Airspace Designations and
Reporting Points, dated August 17, 1995, and effective September 16,
1995, is amended as follows:
Paragraph 6005 The Class E airspace areas extending upward from
700 feet or more above the surface of the earth.
* * * * *
AGL SD E5 Miller, SD [New]
Miller Municipal Airport, SD
(Lat. 44 deg.31'31''N, long. 98 deg.57'29'')
That airspace extending upward from 700 feet above the surface
within a 6.6-mile radius of the Miller Municipal Airport and that
airspace extending upward from 1,200 feet above the surface bounded
on the west and northwest by V-263, on the south by V-120, and on
the east by V-15 excluding the Aberdeen, SD; the Pierre, SD; the
Mitchell, SD; and the Huron, SD, 1,200 foot Class E airspace areas
and all federal airways.
* * * * *
Issued in Des Plaines, Illinois on June 17, 1996.
Maureen Woods,
Manager, Air Traffic Division.
[FR Doc. 96-17041 Filed 7-2-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-17034 Revision of Hydraulic Systems Airworthiness Standards To Harmonize With European Airworthiness Standards for Transport Category Airplanes
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Pages 35056-35061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17034]
[[Page 35055]]
_______________________________________________________________________
Part VII
Department of Transportation
_______________________________________________________________________
Federal Aviation Administration
_______________________________________________________________________
14 CFR Part 25
Revision of Hydraulic Systems Airworthiness Standards To Harmonize With
European Airworthiness Standards for Transportation Category Airplanes,
and Proposed Advisory Circular for Hydraulic System Certification Tests
and Analysis; Proposed Rule and Notice
Federal Register / Vol. 61, No. 129 / Wednesday, July 3, 1996 /
Proposed Rules
[[Page 35056]]
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 25
[Docket No. 28617; Notice 96-6]
RIN 2120-AF79
Revision of Hydraulic Systems Airworthiness Standards To
Harmonize With European Airworthiness Standards for Transport Category
Airplanes
AGENCY: Federal Aviation Administration (FAA), DOT.
ACTION: Notice of proposed rulemaking.
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SUMMARY: This document proposes to amend the airworthiness standards
for transport category airplanes to harmonize hydraulic systems design
and test requirements with standards proposed for the European Joint
Aviation Requirements (JAR). These proposals were developed in
cooperation with the Joint Aviation Authorities (JAA) of Europe and the
U.S. and European aviation industry through the Aviation Rulemaking
Advisory Committee (ARAC). These changes are intended to benefit the
public interest by standardizing certain requirements, concepts, and
procedures contained in the airworthiness standards without reducing,
but potentially enhancing, the current level of safety.
DATES: Comments must be received on or before October 1, 1996.
ADDRESSES: Comments on this notice may be mailed in triplicate to:
Federal Aviation Administration, Office of the Chief Counsel,
Attention: Rules Docket (AGC-200), Docket No. 28617, 800 Independence
Avenue SW., Washington, DC 20591; or delivered in triplicate to: Room
915G, 800 Independence Avenue SW., Washington, DC 20591.
Comments delivered must be marked Docket No. 28617. Comments may
also be sent electronically to the following internet address:
[email protected]. Comments may be examined in Room 915G
weekdays, except Federal holidays, between 8:30 a.m. and 5:00 p.m. In
addition, the FAA is in maintaining an information docket of comments
in the Transport Airplane Directorate (ANM-100), Federal Aviation
Administration, Northwest Mountain Region, 1601 Lind Avenue SW.,
Renton, WA 98055-4056. Comments in the information docket may be
examined weekdays, except Federal holidays, between 7:30 a.m. and 4:00
p.m.
FOR FURTHER INFORMATION CONTACT:
Mahinder K. Wahi, Flight Test and Systems Branch, ANM-111, Transport
Airplane Directorate, Aircraft Certification Service, FAA, 1601 Lind
Avenue SW., Renton, WA 98055-4056; telephone (206) 227-2142; facsimile
(206) 227-1320.
SUPPLEMENTARY INFORMATION:
Comment Invited
Interested persons are invited to participate in this proposed
rulemaking by submitting such written data, views, or arguments as they
may desire. Comments relating to any environmental, energy, or economic
impact that might result from adopting the proposals contained in this
notice are invited. Substantive comments should be accompanied by cost
estimates. Commenters should identify the regulatory docket or notice
number and submit comments in triplicate to the Rules Docket address
above. All comments received on or before the closing date for comments
will be considered by the Administrator before taking action on this
proposed rulemaking. The proposals contained in this notice may be
changed in light of comments received. All comments received will be
available in the Rules Docket, both before and after the comment period
closing date, for examination by interested persons. A report
summarizing each substantive public contact with FAA personnel
concerning this rulemaking will be filed in the docket. Persons wishing
the FAA to acknowledge receipt of their comments must submit with those
comments a self-addressed, stamped postcard on which is stated:
``Comments to Docket No. 28617.'' The postcard will be date stamped and
returned to the commenter.
Availability of the NPRM
An electronic copy of this document may be downloaded using a modem
and suitable communications software from the FAA regulations section
of the Fedworld electronic bulletin board service (telephone: 703-321-
3339), the Federal Register's electronic bulletin board service
(telephone 202-512-1661), or the FAA's Aviation Rulemaking Advisory
Committee Bulletin Board service (telephone: 202-267-5948).
Internet users may reach the FAA's web page at http://www.faa.gov
or the Federal Register's web page at http://www.access.gpo/su-docs for
access to recently published rulemaking documents.
Any person may obtain a copy of this notice of submitting a request
to the Federal Aviation Administration (FAA), Office of Rulemaking,
ARM-1, 800 Independence Avenue, S.W., Washington, D.C. 20591 or by
calling (202) 267-9680. Communications must identify the notice number
or docket number of this notice.
Persons interested in being placed on a mailing list for future
rulemaking documents should also request a copy of Advisory Circular
No. 11-2A, Notice of Proposed Rulemaking Distribution System, which
describes the application procedure.
Background
The airworthiness standards for transport category airplanes are
contained in 14 CFR part 25. Manufacturers of transport category
airplanes must show that each airplane they produce of a different type
design complies with the relevant standards of part 25. These standards
apply to airplanes manufactured within the U.S. for use by U.S.
registered operators and to airplanes manufactured in other countries
and imported under a bilateral airworthiness agreement.
In Europe, the Joint Aviation Requirements (JAR) were developed by
the Joint Aviation Authorities (JAA) to provide a common set of
airworthiness standards for use within the European aviation community.
The airworthiness standards for European type certification of
transport category airplanes, JAR-25, are based on part 25 of Title 14.
Airplanes certificated to the JAR-25 standards, including airplanes
manufactured in the U.S. for export to Europe, receive type
certificates that are accepted by the aircraft certification
authorities of 23 European countries.
Although part 25 and JAR-25 are very similar, they are not
identical. Differences between the FAR and the JAR can result in
substantial additional costs when airplanes are type certificated to
both standards. These additional costs, however, frequently do not
bring about an increase in safety. For example, part 25 and JAR-25 may
use different means to accomplish the same safety intent. In this case,
the manufacturer is usually burdened with meeting both requirements,
although the level of safety is not increased correspondingly.
Recognizing that a common set of standards would not only economically
benefit the aviation industry, but would also maintain the necessary
high level of safety, the FAA and JAA consider harmonization to be a
high priority.
In 1988, the FAA, in cooperation with the JAA and other
organizations representing the American and European aerospace
industries, began a
[[Page 35057]]
process to harmonize the airworthiness requirements of the United
States and the airworthiness requirements of Europe, especially in the
areas of Flight Test and Structures.
In 1992, the FAA harmonization effort was undertaken by the ARAC. A
working group of industry and government hydraulic systems specialists
of Europe and the United States was chartered by notice in the Federal
Register (57 FR 58843, December 12, 1992). The working group was tasked
to develop a draft notice of proposed rulemaking (NPRM) and any
collateral documents, such as advisory circulars, concerning new or
revised requirements for hydraulic systems, and the associated test
conditions for hydraulic systems, installed in transport category
airplanes (Sec. 25.1435). The JAA is to develop a similar proposal to
amend JAR-25, as necessary, to achieve harmonization.
The rulemaking proposal contained in this notice is based on a
recommendation developed by the Hydraulic Systems Harmonization Working
Group, and was presented to the FAA by the ARAC as a recommendation.
The Aviation Rulemaking Advisory Committee
The ARAC was formally established by the FAA on January 22, 1991
(56 FR 2190) to provide advice and recommendations concerning the full
range of the FAA's safety-related rulemaking activity. This advice was
sought to develop better rules in less overall time using fewer FAA
resources than are currently needed. The committee provides the
opportunity for the FAA to obtain firsthand information and insight
from interested parties regarding proposed new rules or revisions of
existing rules.
There are 64 member organizations on the committee, representing a
wide range of interests within the aviation community. Meetings of the
committee are open to the public, except as authorized by section 10(d)
of the Federal Advisory Committee Act.
The ARAC establishes working groups to develop proposals to
recommend to the FAA for resolving specific issues. Tasks assigned to
working groups are published in the Federal Register. Although working
group meetings are not generally open to the public, all interested
parties are invited to participate as working group members. Working
groups report directly to the ARAC, and the ARAC must accept a working
group proposal before that proposal can be presented to the FAA as an
advisory committee recommendation.
The activities of the ARAC will not, however, circumvent the public
rulemaking procedures. After an ARAC recommendation is received and
found acceptable by the FAA, the agency proceeds with the normal public
rulemaking procedures. Any ARAC participation in a rulemaking package
will be fully disclosed in the public docket.
Discussion of the Proposals
The FAA proposes to amend Sec. 25.1435 to harmonize this section
with JAR-25. The JAA intend to publish a Notice of Proposed Amendment
(NPA), also developed by the Hydraulic Systems Harmonization Working
Group, to revise JAR-25 as necessary to ensure harmonization in those
areas for which the proposed amendments differ from the current JAR-25,
Change 14. When it is published, the NPA will be placed in the docket
for this rulemaking.
Generally, the FAA proposes to: (1) Add appropriate existing-JAR
requirements to achieve harmonization; (2) Move some of the existing
regulatory text to an advisory circular; (3) Consolidate and/or
separate requirement subparagraphs for clarity; and (4) Revise airplane
static proof pressure test requirements to require a complete
functional (dynamic) airplane test at a lower pressure. A new proposed
Advisory Circular (AC) 25.1435-1 has been developed by the ARAC to
ensure consistent application of these proposed revised standards.
Public comments concerning the AC 25.1435-1 are invited by separate
notice published elsewhere in this issue of the Federal Register. The
JAA intend to publish an Advisory Material Joint (AMJ), also developed
by the Harmonization Working Group, to accompany their NPA. The
proposed AC and the proposed AMJ contain harmonized advisory
information. The following is a discussion of the specific proposals
prescribed in this NPRM.
Proposal 1. The FAA proposes to replace current Sec. 25.1435(a)(1)
to add the existing requirements of JAR 25.1435(a)(10) and associated
Appendix K requirements regarding design load factors for proof and
ultimate pressure conditions for elements of the hydraulic system (see
proposal 2 below regarding current Sec. 25.1435(a)(1)). The proof and
ultimate pressure conditions would be defined as the design operating
pressure times the factors of safety. This would be done to address
unusually high pressures which may be seen in service, material defects
and differences, manufacturing/construction tolerances and the
consequences of failures (e.g. pressure vessel failure). The proposed
load factors, ranging between 1.5 and 4.0, relate to the design
operating pressure (DOP) and would apply to tubes, fittings, pressure
vessels containing gas at high pressure (e.g., accumulators) and at low
pressure (e.g. hydraulic reservoirs), hoses, and all other elements.
By adopting these JAR minimum factors of safety standards which
currently are not specifically stated in the FAR, the FAA intends to
maintain an existing level of safety because normal U.S. Industry
practices meet or exceed these standards.
DOP is the normal maximum steady pressure. Excluded are reasonable
tolerances and transient pressure effects such as may arise from
acceptable pump ripple or reaction to system functioning or flow
demands that may affect fatigue. In localized areas of systems and
system elements the DOP may be different from the DOP for the system as
a whole due to the range or normally anticipated airplane operational,
dynamic and environmental conditions. Such differences would be
required to be taken into account. The term ``design operating
pressure'' would be discussed in AC 25.1435-1.
Proposal 2. The FAA proposes to redesignate the current
Sec. 25.1435(a)(1) as Sec. 25.1435(a)(2), delete the word ``loads''
from ``pressure loads'' (``loads'' is redundant) and edit some text to
avoid repetition. The term ``limit structural load'', and a recommended
minimum time to hold pressure would be discussed in AC 25.1435-1.
Proposal 3. The FAA proposes to redesignate the current
Sec. 25.1435(a)(2) as a new Sec. 25.1435(a)(3), delete the word
``loads'' from ``pressure loads'' (``loads'' is redundant) and edit
some text to avoid repetition. The term ``ultimate structural load''
and a minimum time to hold pressure would be discussed in AC 25.1435-1.
Proposal 4. The FAA proposes to add a new Sec. 25.1435(a)(4) that
would contain the current requirements of Sec. 25.1435(b)(2)(i) and
(b)(2)(ii) regarding induced loads, pressure transients, and fatigue as
well as the current JAR 25.1435(a)(11) requirements regarding fatigue
design considerations accounting for fluctuating or repeated external
or internal loads and pressure transients. These loads could be
structurally or environmentally induced. By delineating these
requirements, the FAA intends to ensure that each element is designed
to provide fatigue resistance capability consistent with anticipated
element usage, thus maintaining the current
[[Page 35058]]
level of safety. The terms ``fatigue'', and ``externally induced
loads'' would be discussed in AC 25.1435-1.
Proposal 5. The FAA proposes to add a new Sec. 25.1435(a)(5) that
would contain the current requirements of Sec. 25.1435(b)(2)(i) through
(b)(2)(v), except those addressed under proposal 4 above, as well as
parts of the current JAR 25.1435 (a)(5) and (a)(6) requirements
addressing excessive vibration, abrasion, corrosion, mechanical damage,
and the ability to withstand inertia loads. These requirements would be
consolidated and simplified by stating that each element must be
designed to perform as intended under all environmental conditions for
which the airplane is certificated. An acceptable means of compliance
would be included in AC 25.1435-1.
Proposal 6. The FAA proposes to add a modified version of the
existing JAR 25.1435(a)(2) as Sec. 25.1435(a)(1), requiring means to
indicate appropriate system parameters at a flight crewmember station
if (1) the system performs a function necessary for continued safe
flight and landing, or (2) in the event of hydraulic system
malfunction, corrective action by the crew is required to ensure
continued safe flight and landing. The existing JAR 25.1435(a)(2)
requires fluid quantity and pressure indication under specified
circumstances; prior to Amendment 25-72, Sec. 25.2435 contained an
identical requirement. It was considered at the time that this
requirement is covered by Sec. 25.1309(c), which requires that warning
information must be provided to alert the crew to unsafe system
operating conditions, and to enable them to take appropriate corrective
action, and the Sec. 25.1435 requirement was therefore deleted. It is,
however, now recognized that there is value in defining indication
requirements for hydraulic systems and implications of their loss. The
existing level of safety would not be impacted since the FAA is
proposing the adopt an existing industry practice. The term
``appropriate system parameters'' would be discussed in AC 25.1435-1.
(Note: see proposal 12 below with respect to status of current
Sec. 25.1435(b)(1) requirements).
Proposal 7. The FAA proposes to replace the current
Sec. 25.1435(b)(2) by adding a modified version of the current JAR
25.1435 (a)(4) and (a)(7) to require that each system have means to
ensure that system pressures remain within the design capabilities of
each element. Prior to Amendment 25-72, Sec. 25.1435 contained a
requirement that was identical to the current JAR requirement, but it
was characterized as both containing arbitrary pressure transient
limits and unnecessary because the intent is covered under
Sec. 25.1309. The requirement was therefore deleted from Sec. 25.1435.
The proposed version deletes the arbitrary limits but would require
that the intent be specifically addressed by Sec. 25.1435(b)(2) to
ensure consideration of the pressure and volume related transients that
are unique to the hydraulic systems. There would be no impact on level
of safety since an existing industry practice is being adopted. An
acceptable means of compliance with Sec. 25.1435(b)(2) would be
included in AC 25.1435-1.
Proposal 8. The FAA proposes to add a new Sec. 25.1435(b)(3) which
would contain a modified version of the existing JAR 25.1435(a)(5)
requirements regarding the means to minimize harmful or hazardous
concentrations of the hydraulic fluid or vapors, if liberated in any
form, into the crew and passenger compartments during flight. Prior to
Amendment 25-72, Sec. 25.1435 contained an identical requirement. It
was considered at the time that Sec. 25.831(b) covers this requirement
under a general statement that the ventilation air must be free of
hazardous or harmful gases or vapors. However, Sec. 25.831(b) specifies
allowable limits for carbon monoxide and carbon dioxide, but no other
products. It could be construed that those two gases are the only
hazardous products. Section 25.1435 would therefore be revised to state
the specific requirement with respect to the hydraulic fluid or vapors.
The JAR requirement currently states, in relevant part, that
``there must be a means to prevent harmful or hazardous concentration
of fluid. * * *'' In recognition of the fact that absolute prevention
of such concentrations is not an achievable objective, the FAA proposes
that the hydraulic system must have ``means to minimize the release of
harmful or hazardous concentrations * * *'' To show compliance with
this requirement, an applicant would have to show, both that the
likelihood of releases has been minimized, and that, if there is such a
release, the concentrations from the release would also be minimized.
The level of safety would remain unaffected because it's an existing
industry practice to address this issue. An acceptable means of
compliance with Sec. 25.1435(b)(3) and a discussion of the terms
``harmful'' and ``hazardous'' would be included in AC 25.1435-1.
Proposal 9. The FAA proposes to redesignate the existing
Sec. 25.1435(c) as Sec. 25.1435(b)(4); this is identical to the
existing JAR 25.1435(c) requirements regarding use of flammable
hydraulic fluid and fire protection. A discussion of the term
``flammable hydraulic fluid'' would be included in AC 25.1435-1.
Proposal 10. The FAA proposes to add a new Sec. 25.1435(b)(5),
containing the current JAR 25.1435(d) requirements that the airplane
manufacturer must specify the approved hydraulic fluid(s) suitable to
be used in the system(s) and ensure that the system(s) meet the
applicable placarding requirements of the current Sec. 25.1541.
Although it is a standard U.S. industry practice to identify the
compatible hydraulic fluid on each component's name plate, the practice
may not be universal. In order to minimize the potential use of
incompatible fluids, seals, etc. in any system, it is necessary to
include this requirement. A discussion of mixability of hydraulic
fluids would be included in AC 25.1435-1.
Proposal 11. Current Sec. 25.1435(b)(2) requirements for hydraulic
system compliance by test and analysis would be separated into
Secs. 25.1435 (c), (c)(1) and (c)(2); the list of environmental factors
[current Sec. 25.1435 (b)(2)(ii) through (b)(2)(v)] would be moved to
AC 25.1435-1; and, text in the aforementioned sections would be
clarified. In addition, analysis would be permitted in place of or to
supplement testing, where shown to be reliable and appropriate. A
discussion on endurance and fatigue testing, and simulated failures
would be included in AC 25.1435-1.
Proposal 12. Current Sec. 25.1435(b)(1) requirements for static
testing of a complete hydraulic system to 1.5 times the design
operating pressure (without deformation of any part of the system that
would prevent performance of intended function) would be replaced with
a new Sec. 25.1435(c)(3) requirement that ``the complete hydraulic
system must be functionally tested on the airplane over the range of
motion of all associated user systems.'' Also, the section would
require that ``the test must be conducted at the system relief pressure
or 1.25 times the DOP if a system pressure relief device is not part of
the system design.'' This proposal reflected the recently granted
petition for exemption to the Boeing Company, Regulatory Docket No.
27384. The petition, any comments received, and a copy of the final
disposition are filed in the assigned regulatory docket and are
available for examination in the Rules Docket (AGC 200), room 915G, FAA
Headquarters Building (FOB 10A), 800 Independence Avenue SW.,
Washington, DC 20591; telephone (202) 267-3132. A discussion on relief
[[Page 35059]]
pressure settings and an acceptable means of compliance with
Sec. 25.1435(c)(3) would be included in AC 25.1435-1.
The FAA considers that the proposed functional (i.e., dynamic) test
more closely approximates actual operating conditions than the existing
static test. This is because for the static test, several parts of the
system and associated relief valves (including return lines) may need
to be disabled to allow system pressurization at 1.5 times the design
operating pressure because the relief valves are designed to open at a
pressure lower than 1.5 times the design operating pressure. Although
the proposed test pressure would be lower than 1.5 times the design
operating pressure, all elements would still be required to be able to
withstand at least 1.5 times the design operating pressure per current
Sec. 25.1435(a)(2) (proposed Sec. 25.1435(a)(3)), at least retaining
and potentially enhancing the current level of safety by identification
of additional dynamic interference problems.
Regulatory Evaluation Summary
Regulatory Evaluation, Regulatory Flexibility Determination, and Trade
Impact Assessment
Changes to federal regulations must undergo several economic
analyses. First, Executive Order 12866 directs Federal agencies to
promulgate new regulations or modify existing regulations only if the
potential benefits to society outweigh the potential costs. Second, the
Regulatory Flexibility Act of 1980 requires agencies to analyze the
economic impact of regulatory changes on small entities. Finally, the
Office of Management and Budget directs agencies to assess the effect
of regulatory changes on international trade. In conducting these
assessments, the FAA has determined that this proposed rule: (1) Would
generate benefits exceeding its costs and is not ``significant'' as
defined in Executive Order 12866; (2) Is not ``significant'' as defined
in DOT's Policies and Procedures; (3) would not have a significant
impact on a substantial number of small entities; and (4) would lessen
restraints on international trade. These analyses, available in the
docket, are summarized below.
Although several revisions would be made to Sec. 25.1435, only
three of them would impose additional costs (see below--proposals 1, 4,
and 12, with the latter having potential cost savings for some
manufacturers). Most of the changes codify current industry practice or
conform Sec. 25.1435 to corresponding sections of the JAR. Adoption of
the proposed changes would increase harmonization and commonality
between American and European airworthiness standards. Harmonization
would eliminate unnecessary duplication of airworthiness requirements,
thus reducing manufacturers' certification costs. One manufacturer of
part 25 large airplanes estimated such cost-savings could range between
$60,000 and 600,000 per type certification (pertaining to hydraulic
systems only); a manufacturer of part 25 small airplanes estimated such
savings at $30,000 to $90,000 per type certification; Potential safety
benefits resulting from specification of minimum accepted standards
would supplement these cost-savings.
Proposal 1. These changes codify existing industry standards. As
such, they would not result in additional costs for most manufacturers,
However, one manufacturer of small transport category airplanes
estimated increased testing costs of approximately $25,000 per type
certification Codification of the proposed standards would ensure that
current safety levels are retained.
Proposals 2, 3, and 9. There would be no additional costs
associated with these minor changes.
Proposal 4. Although some of the changes described are new
requirements in the FAR, most American manufacturers of large transport
category airplanes are already in compliance with the similar current
European standards, which had to be met in order to market airplanes in
JAA member countries. The modified testing and analysis regime is
already in place. Initial first-time costs have already been incurred;
such costs have diminished in recent certifications. Consequently,
actual incremental costs would be negligible. One manufacturer,
however, indicated that additional testing and analysis costs, ranging
between $100,000 and $200,000 per type certification, would be incurred
for the first one or two type certifications. Learning curve
efficiencies would likely reduce these costs thereafter. Manufacturers
of small transport category airplanes, on the other hand, expect no or
negligible additional costs attributable to the new fatigue-related
proposals. Codification of the proposed standards would ensure that
minimum acceptable fatigue requirements are specified with potential
for safety enhancement.
Proposals 5, 6, 7, 8, and 10. These changes codify existing
industry standards and would not result in additional certification/
production costs. Codification of the proposed standards would ensure
that current safety levels are retained.
Proposal 11. There would be no additional costs associated with
these revisions. The use of analysis in lieu of or supplemental to
testing may reduce certification costs in some cases.
Proposal 12. Most manufacturers of part 25 airplanes would not
experience additional costs associated with dynamic testing of
hydraulic systems. In fact, testing time and associated costs could be
reduced to some small extent since, unlike static testing, the proposed
dynamic testing would not entail disabling any system(s) or otherwise
reconfiguring the airplane. One manufacturer of part 25 large airplanes
estimated potential savings between $100,000 and $200,000 per type
certification in this regard (another estimated such savings at only
$25,000). However, a manufacturer of part 25 small transport category
airplanes estimates $25,000 in additional testing, analysis, and report
preparation costs per type certification attributable to this proposal.
The proposed requirements would at least retain, and potentially
enhance, the current level of safety by identification of additional
dynamic interference problems.
Summary of Costs and Benefits
Manufacturers of part 25 small airplanes could experience
additional costs totalling approximately $50,000 per type certification
resulting from proposals 1 (design load factors) and 12 (dynamic
testing). The estimated $30,000-$90,000 harmonization cost savings,
coupled with potential safety benefits from proposals 4 and 12, would
exceed these costs.
For manufacturers of part 25 large airplanes, the cost differential
could range from a $25,000-$200,000 reduction (resulting from proposal
12) to a $100,000-$200,000 increase (resulting from proposal 4). The
proposal 12 cost savings coupled with the estimated $60,000-$600,000
harmonization cost savings would exceed the additional costs of
proposal 4; potential safety benefits from proposals 4 and 12 would
supplement the cost-savings.
The FAA finds the proposed rule, therefore, to be cost-beneficial
for both part 25 small and large transport manufacturers.
Regulatory Flexibility Determination
The Regulatory Flexibility Act of 1980 (RFA) was enacted by
Congress to ensure that small entities are not unnecessarily or
disproportionately burdened by government regulations. The RFA requires
a Regulatory
[[Page 35060]]
Flexibility Analysis if a rule would have a significant economic
impact, either detrimental or beneficial, on a substantial number of
small entities. FAA Order 2100.14A, Regulatory Flexibility Criteria and
Guidance, prescribes standards for complying with RFA review
requirements in FAA rulemaking actions. The order defines ``small
entities'' in terms of size thresholds, ``significant economic impact''
in terms of annualized cost threshold, and ``substantial number'' as a
number which is not less than eleven and which is more than one-third
of the small entities subject to the proposed or final rule.
The proposed rule would affect manufacturers of transport category
airplanes produced under future new airplane type certifications. For
manufacturers, Order 2100.14A specifies a size threshold for
classification as a small entity as 75 or fewer employees. Since no
transport category airplane manufacturer has 75 or fewer employees, the
proposed rule would not have a significant economic impact on a
substantial number of small manufacturers.
International Trade Impact Assessment
The proposed rule would not constitute a barrier to international
trade, including the export of American airplanes to foreign countries,
and the import of foreign airplanes into the United States. Instead,
the proposed changes to the FAR would harmonize with corresponding
existing or proposed standards in the JAR, thereby lessening restraints
on trade.
Federalism Implications
The amended regulations proposed in this rulemaking would not have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government. Therefore,
in accordance with Executive Order 12612, it is determined that this
proposal would not have sufficient federalism implications to warrant
preparing a Federalism Assessment.
International Compatibility
In keeping with U.S. obligations under the Convention on
International Civil Aviation, it is FAA policy to comply with
International Civil Aviation Organization (ICAO) standards and
recommended practices to the maximum extent practicable. The FAA has
determined that this rule does not conflict with any international
agreement of the United States.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1980 (Pub. L. 96-
511), there are no requirements for information collection associated
with this proposed rule.
Conclusion
Because the proposed changes to standardize specific hydraulic
systems test requirements of part 25 are not expected to result in
substantial economic cost, the FAA has determined that this proposed
regulation would not be significant under Executive Order 12866.
Because this is an issue which has not prompted a great deal of public
concern, the FAA has determined that this action is not significant
under DOT Regulatory Policies and Procedures (44 FR 11034, February 25,
1979). In addition since there are no small entities affected by this
proposed rulemaking, the FAA certifies, under the criteria of the
Regulatory Flexibility Act, that this rule, if adopted, will not have a
significant economic impact, positive or negative, on a substantial
number of small entities. An initial regulatory evaluation of the
proposal, including a Regulatory Flexibility Determination and Trade
Impact Analysis, has been placed in the docket. A copy may be obtained
by contacting the person identified under for further information
contact.
List of Subjects in 14 CFR Part 25
Aircraft, Aviation safety, Reporting and recordkeeping
requirements.
The Proposed Amendments
Accordingly, the Federal Aviation Administration proposes to amend
14 CFR part 25 as follows:
PART 25--AIRWORTHINESS STANDARDS--TRANSPORT CATEGORY AIRPLANES
1. The authority citation for part 25 continues to read as follows:
Authority: 49 U.S.C. 106(g), 40113, 44701, 44702, 44704.
2. Section 25.1435 is revised to read as follows:
Sec. 25.1435 Hydraulic systems.
(a) Element design. Each element of the hydraulic system must be
designed to:
(1) Withstand the proof pressure without leakage or permanent
deformation that prevents it from performing its intended function, and
the ultimate pressure without rupture. The proof and ultimate pressures
are defined in terms of the design operating pressure (DOP) as follows:
------------------------------------------------------------------------
Proof Ultimate
Element (xDOP) (xDOP)
------------------------------------------------------------------------
1. Tubes & fittings................................. 1.5 3.0
2. Pressure vessels containing gas:
High pressure (e.g., accumulators)................ 3.0 4.0
Low pressure (e.g., reservoirs)................... 1.5 3.0
3. Hoses............................................ 2.0 4.0
4. All other elements............................... 1.5 2.0
------------------------------------------------------------------------
(2) Withstand, without deformation that would prevent it from
performing its intended function, the design operating pressure in
combination with limit structural loads that may be imposed;
(3) Withstand, without rupture, the design operating pressure
multiplied by a factor of 1.5 in combination with ultimate structural
load that can reasonably occur simultaneously;
(4) Withstand the fatigue effects of all cyclic pressures,
including transients, and associated externally induced loads, taking
into account the consequences of element failure; and
(5) Perform as intended under all environmental conditions for
which the airplane is certificated.
(b) System design. Each hydraulic system must:
(1) Have means located at a flightcrew station to indicate
appropriate system parameters.
(i) It performs a function necessary for continued safe flight and
landing; or
(ii) In the event of hydraulic system malfunction, corrective
action by the crew to ensure continued safe flight and landing is
necessary;
(2) Have means to ensure that system pressures, including transient
pressures and pressures from fluid volumetric changes in elements that
are likely to remain closed long enough for such changes to occur, are
within the design capabilities of each element, such that they meet the
requirements defined in Sec. 25.1435(a)(1) through (a)(5);
(3) Have means to minimize the release of harmful of hazardous
concentrations of hydraulic fluid or vapors into the crew and passenger
compartments during flight;
(4) Meet the applicable requirements of Secs. 25.863, 25.1183,
25.1185, and 25.1189 if a flammable hydraulic fluid is used; and
(5) Be designed to use any suitable hydraulic fluid specified by
the airplane manufacturer, which must be identified by appropriate
markings as required by Sec. 25.1541.
(c) Tests. To demonstrate compliance with Sec. 25.1435 and support
compliance with Sec. 25.1309, tests must be conducted on the hydraulic
system(s), and/or
[[Page 35061]]
subsystem(s) and elements, except that analysis may be used in place of
or to supplement testing, where the analysis is shown to be reliable
and appropriate. All internal and external influences must be taken
into account to an extent necessary to evaluate their effects, and to
assure reliable system and element functioning and integration. Failure
or unacceptable deficiency of an element or system must be corrected
and be sufficiently retested, where necessary.
(1) The system(s), subsystem(s), or element(s) must be subjected to
performance, fatigue, and endurance tests representative of airplane
ground flight operations.
(2) The complete system must be tested to determine proper
functional performance and relation to the other systems, including
simulation of relevant failure conditions, and to support or validate
element design.
(3) The complete hydraulic system(s) must be functionally tested on
the airplane in normal operation over the range of motion of all
associated user systems. The test must be conducted at the system
relief pressure 1.25 times the DOP if a system pressure relief device
is not part of the system design. Clearances between hydraulic system
elements and other systems or structural elements must remain adequate
and there must be no detrimental effects.
Issued in Washington, DC, on June 26, 1996.
Ava L. Robinson,
Acting Director, Aircraft Certification Service.
[FR Doc. 96-17034 Filed 7-2-96; 8:45 am]
BILLING CODE 4910-13-M
Complete official Federal Register PDF
FR Doc. 96-17027 Use of Alternative Analytical Test Methods in the Reformulated Gasoline Program
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Pages 34775-34778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17027]
=======================================================================
-----------------------------------------------------------------------
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 80
[FRL-5531-1]
Use of Alternative Analytical Test Methods in the Reformulated
Gasoline Program
AGENCY: Environmental Protection Agency.
ACTION: Proposed rule.
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[[Page 34776]]
SUMMARY: This proposal would amend the deadline for the use of certain
alternative analytical test methods in the reformulated gasoline (RFG)
program. Currently, the deadline for the use of these alternative test
methods expires on January 1, 1997. This proposed amendment would
extend the deadline for the use of alternative test methods in the
reformulated gasoline program to September 1, 1998.
EPA is considering expanding the ability of industry to use various
alternative analytical test methods. Extension of this deadline will
allow refiners and others to continue using the currently approved
alternative analytical test methods pending a final decision by EPA on
additional alternatives. This proposed extension would result in
greater flexibility for the regulated industry and reduce costs to all
interested parties.
The RFG program reduces motor vehicle emissions of volatile organic
compounds (VOC), oxides of nitrogen (NOx) and certain toxic pollutants.
This proposed change in the deadline for the use of certain alternative
test methods under Sec. 80.46 preserves the status quo of the RFG
program and will have no change in the emission benefits that result
from the RFG program.
DATES: Comments on this proposed rule must be received by August 2,
1996.
ADDRESSES: Written comments on this proposed action should be addressed
to Public Docket No. A-96-29, Waterside Mall (Room M-1500),
Environmental Protection Agency, Air Docket Section, 401 M Street,
S.W., Washington, D.C. 20460. Materials relevant to this rulemaking
have been placed in Docket A-96-29. Documents may be inspected between
the hours of 8:00 a.m. to 5:30 p.m., Monday through Friday. A
reasonable fee may be charged for copying docket material.
FOR FURTHER INFORMATION CONTACT: Joseph R. Sopata, Chemist, U.S.
Environmental Protection Agency, Office of Air and Radiation, (202)
233-9034.
SUPPLEMENTARY INFORMATION:
Regulated Entities. Entities potentially regulated by this action
are those that use analytical test methods to comply with the
Reformulated Gasoline Program. Regulated categories and entities
include:
------------------------------------------------------------------------
Examples of regulated
Category entities
------------------------------------------------------------------------
Industry.................................. Oil refiners, gasoline
importers, oxygenate
blenders, analytical
testing laboratories.
------------------------------------------------------------------------
This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that EPA is now aware
that could potentially be regulated by this action. Other types of
entities not listed in this table could also be regulated. To determine
whether your business is regulated by this action, you should carefully
examine the applicability criteria in Sec. 80 of title 40 of the Code
of Federal Regulations. If you have any questions regarding the
applicability of this action to a particular entity, consult the person
listed in the preceding FOR FURTHER INFORMATION CONTACT section.
I. Introduction
A. RFG Standards
Section 211(k) of the Clean Air Act (the Act) requires that EPA
establish standards for RFG to be used in specified ozone nonattainment
areas (covered areas), as well as standards for non-reformulated, or
conventional, gasoline used in the rest of the country, beginning in
January, 1995. The Act requires that RFG reduce VOC and toxics
emissions from motor vehicles, not increase NOx emissions, and meet
certain content standards for oxygen, benzene and heavy metals. EPA
promulgated the final RFG regulations on December 15, 1993.1 See
40 CFR part 80, subpart D.
---------------------------------------------------------------------------
\1\ 59 FR 7812, February 16, 1994.
---------------------------------------------------------------------------
B. Test Methods Utilized at Sec. 80.46
Refiners, importers and oxygenate blenders are required, among
other things, to test RFG for various gasoline parameters or qualities,
such as sulfur levels, aromatics, benzene, and so on. During the
federal RFG rulemaking, and in response to comments by the regulated
industry, EPA concluded that it would be appropriate to temporarily
allow the use of alternative analytical test methods for measuring the
parameters of aromatics and oxygenates. See 40 CFR 80.46. EPA adopted
this provision because the designated analytical test methods for each
of these parameters were costly and relatively new, leaving the
industry little time to fully implement the designated analytical test
methods. EPA therefore provided flexibility to the regulated industry
by allowing the use of alternative analytical test methods for the two
above mentioned parameters until January 1, 1997. After that date, use
of the designated analytical test methods was required. Table 1 lists
the designated analytical test method for each parameter measured under
the RFG program.
Table 1.--Designated Analytical Test Method Under the RFG Program
------------------------------------------------------------------------
RFG gasoline parameter Designated analytical test method
------------------------------------------------------------------------
Sulfur............................ ASTM D-2622-92, entitled ``Standard
Test Method for Sulfur in Petroleum
Products by X-Ray Spectrometry''.
Olefins........................... ASTM D-1319-93, entitled ``Standard
Test Method for Hydrocarbon Types
in Liquid Petroleum Products by
Fluorescent Indicator Absorption''.
Reid Vapor Pressure............... Method 3, as described in 40 CFR
part 80, appendix E.
Distillation...................... ASTM D-86-90, entitled ``Standard
Test Method for Distillation of
Petroleum Products''. \1\
Benzene........................... ASTM D-3606-92, entitled ``Standard
Test Method for Determination of
Benzene and Toluene in Finished
Motor and Aviation Gasoline by Gas
Chromatography''.\2\
Aromatics......................... Gas Chromatography as described in
40 CFR part 80.46(f).\3\
Oxygen and Oxygenate content Gas Chromatography as described in
analysis. 40 CFR part 80.46(g).\4\
------------------------------------------------------------------------
\1\ Except that the figures for repeatability and reproducibility given
in degrees Fahrenheit in Table 9 in the ASTM method are incorrect, and
shall not be used.
\2\ Except that Instrument parameters must be adjusted to ensure
complete resolution of the benzene, ethanol and methanol peaks because
ethanol and methanol may cause interference with ASTM standard method
D-3606-92 when present.
[[Page 34777]]
\3\ Prior to January 1, 1997, any refiner or importer may determine
aromatics content using ASTM standard test method D-1319-93 entitled
``Standard Test Method for Hydrocarbon Types in Liquid Petroleum
Products by Fluorescent Indicator Absorption'' for the purpose of
meeting any testing requirement involving aromatics content. Note: The
January 1, 1997 deadline is the subject of today's notice.
\4\ Prior to January 1, 1997, and when oxygenates present are limited to
MTBE, ETBE, TAME, DIPE, tertiary-amyl alcohol, and C1 and C4 alcohols,
any refiner, importer, or oxygenate blender may determine oxygen and
oxygenated content using ASTM standard method D-4815-93, entitled
``Standard Test Method for Determination of MTBE, ETBE, TAME, DIPE,
tertiary-Amyl Alcohol and C1 and C4 Alcohols in Gasoline by Gas
Chromatography. Note: The January 1, 1997 deadline is the subject of
today's notice.
C. NPRA, API and Mobil Request To Extend the Deadline for the Use of
Alternative Analytical Test Methods at Sec. 80.46 Beyond January 1,
1997
Mobil Oil Corporation, the American Petroleum Institute (API) and
the National Petroleum Refiners Association (NPRA) have requested that
EPA extend the deadline for the use of alternative analytical test
methods for the measurement of aromatics and oxygenates as specified in
Sec. 80.46. Currently, the ability to use alternative analytical test
methods under Sec. 80.46 expires on January 1, 1997. In a September 25,
1995 letter to EPA, API and NPRA jointly urged extension of the
deadline for the use of alternative analytical test methods at
Sec. 80.46 beyond January 1, 1997. They argued an extension would allow
industry to avoid the burden of ordering costly equipment that would be
more difficult to operate and maintain, in order to comply with the
designated analytical test method. They also contended that the
designated analytical test method will not necessarily improve test
results.
EPA intends to undertake a rulemaking to consider establishing a
performance based analytical test method approach for the measurement
of the reformulated gasoline (RFG) parameters at Sec. 80.46. Under this
approach, quality assurance specifications would be developed under
which the performance of alternate analytical test methods would be
deemed acceptable for compliance. The Agency envisions that this
approach would provide additional flexibility to the regulated industry
in their choice of analytical test methods to be utilized for
compliance under the RFG and conventional gasoline programs for
analytical test methods that differ from the designated analytical test
method. EPA expects to finalize action on such a rulemaking by
September 1, 1998.
In the meantime, EPA today is proposing to extend the deadline for
the use of the alternative analytical test procedures for aromatics and
oxygenates under Sec. 80.46(f)(3) and Sec. 80.46(g)(9) until September
1, 1998. The Agency believes that it would be more appropriate to allow
parties to continue using these alternative analytical test methods
until a final decision is made on the performance based analytical test
method approach in order that parties may make long-term purchase
decisions based on all the testing options that could be available at
the conclusion of this rulemaking.
II. Environmental Impact
The RFG program, as required by the Act, obtains emission
reductions for VOC, NOX and toxic emissions from motor vehicles.
This proposed change in the deadline for the use of certain alternative
test methods under Sec. 80.46 preserves the status quo of the RFG
program and will result in no change in the emission benefits of the
RFG program.
III. Economic Impact
The Regulatory Flexibility Act, 5 U.S.C. 601-612, requires that
Federal Agencies examine the impacts of their regulations on small
entities. The act requires an Agency to prepare a regulatory
flexibility analysis in conjunction with notice and comment rulemaking,
unless the Agency head certifies that the rule will not have a
significant impact on a substantial number of small entities. 5 U.S.C.
605(b). This proposed rule provides for flexibility in allowing the
regulated industry to use certain alternative analytical test methods
at Sec. 80.46 for eighteen additional months. This proposed rule is not
expected to result in any additional compliance cost to regulated
parties and may be expected to reduce compliance cost for regulated
parties because it continues to provide a choice for the procurement of
test methods for aromatics and oxygenates under the RFG program. This
analysis applies to regulated parties that are small entities, as well
as other regulated parties. Based on this, the Administrator certifies
that this proposed rule will not have a significant impact on a
substantial number of small entities.
IV. Executive Order 12866
Under Executive Order 12866,\2\ the Agency must determine whether a
regulation is ``significant'' and therefore subject to OMB review and
the requirements of the Executive Order. The Order defines
``significant regulatory action'' as one that is likely to result in a
rule that may:
---------------------------------------------------------------------------
\2\ 58 FR 51735, October 4, 1993.
---------------------------------------------------------------------------
(1) Have an annual effect on the economy of $100 million or more,
or adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local or tribal governments of communities;
(2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof, or
(4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
this Executive Order.\3\
---------------------------------------------------------------------------
\3\ Id. at section 3(f)(1)-(4).
---------------------------------------------------------------------------
It has been determined that this proposed rule is not a
``significant regulatory action'' under the terms of Executive Order
12866 and is therefore not subject to OMB review.
V. Unfunded Mandates
Under Section 202 of the Unfunded Mandates Reform Act of 1995
(``UMRA''), P.L. 104-4, EPA must prepare a budgetary impact statement
to accompany any general notice of proposed rulemaking or final rule
that includes a Federal mandate which may result in estimated costs to
State, local, or tribal governments in the aggregate, or to the private
sector, of $100 million or more. Under Section 205, for any rule
subject to Section 202 EPA generally must select the least costly, most
cost-effective, or least burdensome alternative that achieves the
objectives of the rule and is consistent with statutory requirements.
Under Section 203, before establishing any regulatory requirements that
may significantly or uniquely affect small governments, EPA must take
steps to inform and advise small governments of the requirements and
enable them to provide input.
EPA has determined that this proposed rule does not include a
federal mandate as defined in UMRA. This proposed rule does not include
a Federal mandate that may result in estimated annual costs to State,
local or tribal governments in the aggregate, or to the private sector,
of $100 million or more, and it does not establish regulatory
requirements that may
[[Page 34778]]
significantly or uniquely affect small governments.
List of Subjects in 40 CFR Part 80
Environmental protection, Air pollution control, Gasoline,
Reformulated gasoline, Conventional gasoline, Motor vehicle pollution.
Dated: June 26, 1996.
Carol M. Browner,
Administrator.
For the reasons set forth in the preamble, 40 CFR part 80 of the
Code of Federal Regulations is proposed to be amended as follows:
1. The authority citation for part 80 continues to read as follows:
Authority: Sections 114, 211, and 301(a) of the Clean Air Act as
amended (42 U.S.C. 7414, 7545, and 7601(a)).
Section 80.46 is amended by revising the paragraphs under
(f)(F)(3)(i) and (g)(G)(9)(i) to read as follows:
Sec. 80.46 Measurement of reformulated gasoline fuel parameters.
* * * * *
(f) * * *
(3) Alternative Test Method. (i) Prior to September 1, 1998, any
refiner or importer may determine aromatics content using ASTM standard
method D-1319-93, entitled ``Standard Test Method for Hydrocarbon Types
in Liquid Petroleum Products by Fluorescent Indicator Adsorption.'' For
purposes of meeting any testing requirement involving aromatic content,
provided that
* * * * *
(g) * * *
(9)(i) Prior to September 1, 1998, and when the oxygenates present
are limited to MTBE, ETBE, TAME, DIPE, tertiary-amyl alcohol, and C1 to
C4 alcohols, any refiner, importer, or oxygenate blender may determine
oxygen and oxygenate content using ASTM standard method D-4815-93,
entitled ``Standard Test Method for Determination of MTBE, ETBE, TAME,
DIPE, tertiary-Amyl Alcohol and C1 to C4 Alcohols in Gasoline by Gas
Chromatography,'' for purposes of meeting any testing requirement;
provided that
* * * * *
[FR Doc. 96-17027 Filed 7-2-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-17002 Tank Vessel and Facility Response Plans, and Response Equipment for Hazardous Substances
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Page 34775]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17002]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Coast Guard
33 CFR Parts 154 and 155
[CGD 94-032 and 94-048]
RIN 2115-AE87 and 2115-AE88
Tank Vessel and Facility Response Plans, and Response Equipment
for Hazardous Substances
AGENCY: Coast Guard, DOT.
ACTION: Notice of public hearings.
-----------------------------------------------------------------------
SUMMARY: The Coast Guard is holding two public meetings on its proposed
regulations under the Oil Pollution Act of 1990 (OPA 90) relating to
the preparation of hazardous substance response plans to minimize the
impact of a discharge or release of hazardous substances into the
navigable waters of the United States. There is substantial public
interest in the rulemaking. The Coast Guard is conducting the public
meetings to receive view on what should be regulated and what
appropriate regulations should be.
DATES: The meetings will be held on July 30, 1996, and August 5, 1996.
The meetings will begin at 9:00 a.m. Comments must be received on or
before September 3, 1996.
ADDRESSES: The July 30, 1996, meeting will be held in room 6200,
Department of Transportation, Nassif Building, 400 Seventh Street SW.,
Washington, DC 20590. The August 5, 1996, meeting will be held in the
lecture hall of the Center for Advanced Space Studies, 3600 Bay Area
Boulevard, Clear Lake, TX 77058. Written comments may be mailed to the
Executive Secretary, Marine Safety Council (G-LRA/3406) (CGD 94-032 and
94-048), U.S. Coast Guard Headquarters, 2100 Second Street SW.,
Washington, DC 20593-0001 or may be delivered to room 3406 at the above
address between 8 a.m. and 3 p.m., Monday through Friday, except
Federal holidays. The telephone number if (202) 267-1477
The Executive Secretary maintains the public docket for this
rulemaking. Comments will become part of this docket and will be
available for inspection or copying at room 3406, U.S. Coast Guard
Headquarters.
FOR FURTHER INFORMATION CONTACT: LT Cliff Thomas, Project Manager,
Office of Standards Evaluation and Development, at (202) 267-1099. This
number is equipped to record messages on a 24-hour basis. Copies of the
advanced notice of proposed rulemaking (ANPRM) may be obtained by
submitting a request by facsimile at (202) 267-4547.
Supplementary Information:
Background Information
Response Plans for Hazardous Substances
The advanced noticed of proposed rulemaking (ANPRM) (61 FR 20084),
published on May 3, 1996, solicited comments on 96 questions to assist
in the development of a notice of proposed rulemaking for vessels and a
notice of proposed rulemaking for marine transportation-related
facilities (MTR).
Section 311(j)(5) of the Federal Water Pollution Control Act
(FWPCA) [33 U.S.C. 1321(j)(5)], as amended by section 4202(a) of OPA
90, requires owners and operators of tank vessels, offshore facilities,
and onshore facilities that could reasonably be expected to cause harm
to the environment to prepare and submit plans for responding, to the
maximum extent practicable, to a worst case discharge, or a substantial
threat of such a discharge, of oil or hazardous substance. Section
4202(b)(4) of OPA 90 establishes an implementation schedule for these
requirements with regard to oil. However, section 4202(b)(4) did not
establish a compliance date requiring response plans for hazardous
substances.
The Coast Guard issued two separate final rules: one requiring
response plans for tank vessels carrying oil in bulk and another
requiring response plans for marine transportation-related facilities
(MTR) that handle, store, or transport oil in bulk. These final rules
define many concepts such as ``marine transportation-related
facility,'' ``maximum extent practicable,'' and ``worst case
discharge.'' The rules also provide a specific format for these
response plans; however, they allow for deviations from this format as
long as the required information is included and there is a cross
reference sheet identifying its location. The Coast Guard is
considering using these concepts or modifying them as necessary in the
regulations for response plans for hazardous substances.
Public Meeting
The Coast Guard will hold two public meetings, the first on July
30, 1996, and the second on August 5, 1996. The public is invited to
comment on the issues discussed in the 96 questions listed in the
ANPRM. The general areas in which the Coast Guard seeks public comment
are response plan contents and format, carriage of response equipment,
training requirements, and economic impacts.
Attendance is open to the public. Persons who are hearing impaired
may request sign translation by contacting the person under FOR FURTHER
INFORMATION CONTACT at least one week before the meeting. With advance
notice, and as time permits, members of the public may make oral
presentations during the meeting. Persons wishing to make oral
presentations should notify the person listed above under FOR FURTHER
INFORMATION CONTACT no later than the day before the meeting. Written
material may be submitted prior to, during, or after the meeting.
Persons unable to attend the public meetings are encouraged to submit
written comments as outlined in the ANPRM prior to September 3, 1996.
Dated: June 27, 1996.
Joseph J. Angelo,
Director, of Standards, Marine Safety and Environmental Protection.
[FR Doc. 96-17002 Filed 7-2-96; 8:45 am]
BILLING CODE 4910-14-M
Complete official Federal Register PDF
FR Doc. 96-17000 Fee Increase for Inspection Services
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Pages 34747-34749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-17000]
-----------------------------------------------------------------------
DEPARTMENT OF AGRICULTURE
Food Safety and Inspection Service
9 CFR Part 391
[Docket No. 96-013P]
Fee Increase for Inspection Services
AGENCY: Food Safety and Inspection Service, USDA.
[[Page 34748]]
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Food Safety and Inspection Service (FSIS) is proposing to
increase the fees FSIS charges meat and poultry establishments,
importers, and exporters for providing voluntary inspection,
identification, and certification services and overtime and holiday
services. These fee increases are based upon the Agency's analysis of
projected costs for fiscal year 1996, which identifies increased costs
resulting from the January 1996 FSIS national and locality pay raise
average of 2.4 percent for Federal employees and increased health
insurance costs.
FSIS also is proposing to reduce the fees charged for providing
laboratory services to meat and poultry establishments. The Agency's
analysis of projected costs for fiscal year 1996 identified decreased
costs resulting from the use of automated equipment for testing
laboratory samples and for other inspection related services not
covered under the base time, overtime, and holiday costs.
DATES: Comments must be received on or before: August 2, 1996.
ADDRESSES: Submit an original and two copies of written comments
concerning this proposed rule to: FSIS Docket Clerk, Docket #96-013P,
Room 4352, South Agriculture Building, Food Safety and Inspection
Service, U.S. Department of Agriculture, Washington, DC 20250-3700.
Persons preferring to present oral comments should contact William L.
West at (202) 720-3367. FSIS's cost analysis and comments will be
available for public inspection in the FSIS Docket Room from 8:30 a.m.
to 1 p.m. and from 2 p.m. to 4:30 p.m., Monday through Friday.
FOR FURTHER INFORMATION CONTACT: Mr. William L. West, Director, Budget
and Finance Division, Administrative Management, Food Safety and
Inspection Service, U.S. Department of Agriculture, Washington, DC
20250-3700, (202) 720-3367.
SUPPLEMENTARY INFORMATION:
Background
The Federal Meat Inspection Act (FMIA) and the Poultry Products
Inspection Act (PPIA) provide for mandatory inspection by Federal
inspectors of meat and poultry slaughtered and/or processed at official
establishments. Such inspection is required to ensure the safety,
wholesomeness, and proper labeling of meat and poultry products. The
costs of mandatory inspection (excluding such services performed on
holidays or on an overtime basis) are borne by FSIS.
In addition to mandatory inspection, FSIS provides a range of
voluntary inspection services. Under the Agricultural Marketing Act of
1946, as amended (7 U.S.C. 1621 et seq.), FSIS provides these services
to assist in the orderly marketing of various animal products and
byproducts not subject to the FMIA or the PPIA. The costs of voluntary
inspection are totally recoverable by the Federal Government.
Each year, FSIS reviews the fees it charges meat and poultry
establishments, importers, and exporters for providing voluntary
inspection, identification, and certification services, as well as
overtime and holiday services, and performs a cost analysis to
determine whether such fees are adequate to recover the costs FSIS
incurs in providing the services. In its analysis of projected costs
for fiscal year 1996, FSIS has identified increases in the costs of
providing voluntary inspection, identification, and certification
services, as well as overtime and holiday services. These increases are
attributable to the average FSIS national and locality pay raise of 2.4
percent for Federal employees effective January 1996 and increased
health insurance costs.
Accordingly, FSIS is proposing to amend Sec. 391.2 to increase the
base time rate for providing voluntary inspection, identification, and
certification services from $31.92 per hour, per program employee, to
$32.88 per hour, per program employee. FSIS is proposing to amend
Sec. 391.3 to increase the rate for providing overtime and holiday
services from $32.96 per hour, per program employee, to $33.76 per
hour, per program employee.
In its analysis of projected costs for fiscal year 1996, FSIS also
has identified a decrease in the cost of providing laboratory services
to meat and poultry establishments resulting from the use of automated
equipment for testing laboratory samples and for other inspection
services not covered under the base time, overtime, and holiday costs,
such as travel expenses. Therefore, FSIS proposes to amend Sec. 391.4
of the regulations to reduce the fee charged for providing laboratory
services from $52.92 per hour, per program employee, to $48.56 per
hour, per program employee.
Executive Order 12866 and Regulatory Flexibility Act
This proposed rule has been determined to be significant and was
reviewed by the Office of Management and Budget (OMB) under Executive
Order 12866. The proposed fee increases for voluntary inspection,
identification, and certification services, overtime, and holiday
inspection services primarily reflect the 1996 increase in salaries of
Federal employees allocated by Congress under the Federal Employees Pay
Comparability Act of 1990. The proposed fee decrease for laboratory
services reflects the use of automated equipment for testing laboratory
samples and other inspection related services not covered under the
base time, overtime, and holiday costs such as travel expenses.
The Administrator, Food Safety and Inspection Service, has
determined that this action will not have a significant economic impact
on a substantial number of small entities as defined by the Regulatory
Flexibility Act (5 U.S.C. 601). The fee increases provided for in this
document will reflect a minimal increase in the costs currently borne
by those entities which elect to utilize certain inspection services
and a decrease in program support costs.
Executive Order 12778
This proposed rule has been reviewed under Executive Order 12778,
Civil Justice Reform. States and local jurisdictions are preempted by
the FMIA and the PPIA from proposing any regulations or policies which
conflict with its provisions or which would otherwise impede its full
implementation. This proposed rule is not intended to have retroactive
effect. There are no applicable administrative procedures that must be
exhausted prior to any judicial challenge to the provisions of this
proposed rule. However, the administrative procedures are set forth in
7 CFR part 1.
List of Subjects in 9 CFR Part 391
Fees and charges, Meat inspection, Poultry products inspection.
For the reasons set out in the preamble, 9 CFR part 391 is proposed
to be amended as set forth below.
PART 391--FEES AND CHARGES FOR INSPECTION SERVICES
1. The authority citation for part 391 is revised to read as
follows:
Authority: 7 U.S.C. 138f; 7 U.S.C. 394, 1622, and 1624; 21
U.S.C. 451 et seq. 21 U.S.C. 601-695; 7 CFR 2.18 and 2.53.
2. Sections 391.2, 391.3, and 391.4 would be revised to read as
follows:
Sec. 391.2 Base time rate.
The base time rate for inspection services provided pursuant to
Secs. 350.7, 351.8, 351.9, 352.5, 354.101, 355.12, and 362.5 shall be
$32.88 per hour, per program employee.
[[Page 34749]]
Sec. 391.3 Overtime and holiday rate.
The overtime and holiday rate for inspection services provided
pursuant to Secs. 307.5, 350.7, 351.8, 351.9, 352.5, 354.101, 355.12,
362.5, and 381.38 shall be $33.76 per hour, per program employee.
Sec. 391.4 Laboratory services rate.
The rate for laboratory services provided pursuant to Secs. 350.7,
351.9, 352.5, 354.101, 355.12, and 362.5 shall be $48.56 per hour, per
program employee.
Done at Washington, DC, on June 27, 1996.
Michael R. Taylor,
Administrator, Food Safety and Inspection Service.
[FR Doc. 96-17000 Filed 7-2-96; 8:45 am]
BILLING CODE 3410-DM-P
Complete official Federal Register PDF
FR Doc. 96-16997 Horse Protection; Public Meetings
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Page 34747]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16997]
========================================================================
Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
========================================================================
Federal Register / Vol. 61, No. 129 / Wednesday, July 3, 1996 /
Proposed Rules
[[Page 34747]]
DEPARTMENT OF AGRICULTURE
Animal and Plant Health Inspection Service
9 CFR Part 11
[Docket No. 96-037-1]
Horse Protection; Public Meetings
AGENCY: Animal and Plant Health Inspection Service, USDA.
ACTION: Notice of public meetings.
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SUMMARY: We are advising the public that the Animal and Plant Health
Inspection Service (APHIS) is hosting a series of public meetings to
discuss proposed enforcement changes to the current Horse Protection
Act. These proposals have been developed and are outlined in the APHIS
``Strategic Plan'' for Horse Protection. The development of the
strategic plan is in line with our commitment to ensure appropriate
care for horses regulated under the Horse Protection Act. We are
reviewing the current regulations and standards promulgated under the
Horse Protection Act, and are seeking recommendations and opinions from
affected industries and other concerned members of the public to
determine which revisions are necessary and appropriate in order to
further reduce the incidence of soring and improve enforcement.
DATES: The first meeting will be held in Murfreesboro, TN, on July 26,
1996. The second meeting will be held in St. Louis, MO, on August 2,
1996. The third meeting will be held in Sacramento, CA, on August 16,
1996. Each meeting will be held from 7:30 a.m. until 6 p.m.
ADDRESSES: The public meetings will be held at the following locations:
1. Murfreesboro, TN: Middle Tennessee State University, Loop Drive,
James Union Building, Tennessee Room, Murfreesboro, TN, (615) 898-2797.
If traveling from Nashville, take I-24 to exit 78, then head east on
Highway 96 (Old Fort Parkway) to Memorial Boulevard (Highway 231). Turn
right on Clark Boulevard, then left onto Greenland Drive. Park in the
Greenland Drive parking lot and take the shuttle bus to the James Union
Building.
2. St. Louis, MO: The Adams Mark Hotel, Fourth and Chestnut, St. Louis,
MO, (314) 241-7400. If traveling from Lambert International Airport,
take I-70 east to the Gateway Arch exit. The Adams Mark Hotel is
located at the corner of Fourth and Chestnut.
3. Sacramento, CA: Red Lion Hotel, Red Lion Ballroom, Sierra and
Cascade Sections, 2001 Point West Way, Sacramento, CA, (916) 929-8855.
The Red Lion Hotel is at the corner of Point West Way and Arden Way.
FOR FURTHER INFORMATION CONTACT: Dr. John V. Zisk, Director, Horse
Protection, Animal Care Staff, REAC, APHIS, USDA, 4700 River Road Unit
84, Riverdale, MD 20737-1234, (301) 734-7833. Copies of the ``Strategic
Plan'' are available through this office.
SUPPLEMENTARY INFORMATION: The practice known as ``soring'' is the
causing of suffering in show horses to affect their performance in the
show ring. Under the Horse Protection Act (HPA) (11 U.S.C. et seq.),
the Animal and Plant Health Inspection Service (APHIS) is responsible
for eliminating the practice of soring, by prohibiting the showing or
selling of sored horses.
APHIS believes the regulations and standards established in
accordance with the HPA may need to be updated, and APHIS officials
have proposed program changes through a ``Strategic Plan.'' In this
plan, we have reviewed which areas of enforcement may require a change
in regulations and standards based on our experience and knowledge of
the program. In developing these proposed changes and conducting this
review, APHIS is seeking recommendations and opinions regarding the
following: The enforcement of the HPA by USDA-certified horse industry
organizations; the certification status of horse industry
organizations; uniform systems of rules, regulations, and penalties;
training and research. As a forum for such recommendations and
opinions, APHIS will hold three meetings to gather input from the
public, including equine protection organizations and members of
affected industries, such as the walking horse industry and related
equine organizations. The meetings will include four workshops
facilitated by trained APHIS facilitators, as follows:
(1) Self-regulatory enforcement of the HPA by USDA-certified horse
industry organizations;
(2) USDA certifications of horse industry organizations;
(3) Uniform rules, regulations, and penalty systems; and
(4) Training and research under the HPA.
In these workshops, group participation will be used to develop
recommendations within specific topic areas. After the workshops have
concluded, each workshop group will report its recommendations to the
entire meeting.
APHIS will consider the recommendations received in developing any
revisions to the current HPA regulations and standards. The Agency will
initiate rulemaking for any changes deemed appropriate.
Each of the workshops will be conducted twice at each meeting, once
in the morning and once in the afternoon. Participants who intend to
attend a full 1-day meeting are asked to register for only one workshop
for the morning and a different workshop for the afternoon. Attendance
may be limited for some workshops because of space availability.
Registration will be held the day of each meeting between 7:30 a.m.
and 8:30 a.m. at the entrance of the general assembly meeting rooms.
The general sessions will begin at 8:30 a.m. Any person who is unable
to attend the meetings, but who wishes to comment on any of the topics
covered by the four workshops, may send written comments to the person
listed under FOR FURTHER INFORMATION CONTACT.
Done in Washington, DC, this 27th day of June 1996.
Terry L. Medley,
Acting Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 96-16997 Filed 7-2-96; 8:45 am]
BILLING CODE 3410-34-P
Complete official Federal Register PDF
FR Doc. 96-16958 Radio Broadcasting Services; Hemphill, TX
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Page 34785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16958]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 96-140, RM-8824]
Radio Broadcasting Services; Hemphill, TX
AGENCY: Federal Communications Commission.
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: The Commission requests comments on a petition filed by
Phillip Burr proposing the allotment of Channel 280A at Hemphill,
Texas, as the community first local FM service. Channel 280A can be
allotted to Hemphill in compliance with the Commission's minimum
distance separation requirements with a site restriction of 2.2
kilometers (1.4 miles) north in order to avoid a short-spacing conflict
with the licensed site of Station KBIU(FM), Channel 279C1, Lake
Charles, Louisiana. The coordinates for Channel 280A at Hemphill are
31-21-30 and 93-51-24.
DATES: Comments must be filed on or before August 19, 1996, and reply
comments on or before September 3, 1996.
ADDRESSES: Federal Communications Commission, Washington, DC 20554. In
addition to filing comments with the FCC, interested parties should
serve the petitioner, or its counsel or consultant, as follows: Cary S.
Tepper, Booth, Freret & Imlay, P.C., 1233 20th Street, NW., Suite 204,
Washington, DC 20554 (Counsel for petitioner).
FOR FURTHER INFORMATION CONTACT: Pam Blumenthal, Mass Media Bureau,
(202) 418-2180.
SUPPLEMENTARY INFORMATION: This is a synopsis of the Commission's
Notice of Proposed Rule Making, MM Docket No. 96-140, adopted June 21,
1996, and released June 28, 1996. The full text of this Commission
decision is available for inspection and copying during normal business
hours in the FCC's Reference Center (Room 239), 1919 M Street, NW.,
Washington, DC. The complete text of this decision may also be
purchased from the Commission's copy contractor, ITS, Inc., (202) 857-
3800, 2100 M Street, NW., Suite 140, Washington, DC 20037.
Provisions of the Regulatory Flexibility Act of 1980 do not apply
to this proceeding.
Members of the public should note that from the time a Notice of
Proposed Rule Making is issued until the matter is no longer subject to
Commission consideration or court review, all ex parte contacts are
prohibited in Commission proceedings, such as this one, which involve
channel allotments. See 47 CFR 1.1204(b) for rules governing
permissible ex parte contacts.
For information regarding proper filing procedures for comments,
see 47 CFR 1.415 and 1.420.
List of Subjects in 47 CFR Part 73
Radio broadcasting.
Federal Communications Commission.
John A. Karousos,
Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 96-16958 Filed 7-2-96; 8:45 am]
BILLING CODE 6712-01-F
Complete official Federal Register PDF
FR Doc. 96-16952 Airworthiness Directives; De Havilland Model DHC-8-100 Series Airplanes
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Pages 34767-34769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16952]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. 95-NM-266-AD]
RIN 2120-AA64
Airworthiness Directives; De Havilland Model DHC-8-100 Series
Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Notice of proposed rulemaking (NPRM).
-----------------------------------------------------------------------
SUMMARY: This document proposes to revise an existing airworthiness
directive (AD), applicable to certain de Havilland Model DHC-8 series
airplanes, that currently requires clearly marking the location and
means of entering the lavatory. That AD was prompted by reports of
passengers mistaking the airstair door operating handle for the means
of gaining access to the lavatory. The actions specified by that AD are
intended to prevent inadvertent opening of the airstair door and
consequent depressurization of the airplane. This action would limit
the applicability of the rule to fewer airplanes.
DATES: Comments must be received by July 29, 1996.
ADDRESSES: Submit comments in triplicate to the Federal Aviation
Administration (FAA), Transport Airplane Directorate, ANM-103,
Attention: Rules Docket No. 95-NM-266-AD, 1601 Lind Avenue, SW.,
Renton, Washington 98055-4056. Comments may be inspected at this
location between 9:00 a.m. and 3:00 p.m., Monday through Friday, except
Federal holidays.
The service information referenced in the proposed rule may be
obtained from Bombardier, Inc., Bombardier Regional Aircraft Division,
Garratt Boulevard, Downsview, Ontario, Canada M3K 1Y5. This information
may be examined at the FAA, Transport Airplane Directorate, 1601 Lind
Avenue, SW., Renton, Washington.
FOR FURTHER INFORMATION CONTACT: Marc Goldstein, Aerospace Engineer,
Systems and Equipment Branch, ANE-172, FAA, New York Aircraft
Certification Office, Engine and
[[Page 34768]]
Propeller Directorate, 10 Fifth Street, Third Floor, Valley Stream, New
York 11581; telephone (516) 256-7513; fax (516) 568-2716.
SUPPLEMENTARY INFORMATION:
Comments Invited
Interested persons are invited to participate in the making of the
proposed rule by submitting such written data, views, or arguments as
they may desire. Communications shall identify the Rules Docket number
and be submitted in triplicate to the address specified above. All
communications received on or before the closing date for comments,
specified above, will be considered before taking action on the
proposed rule. The proposals contained in this notice may be changed in
light of the comments received.
Comments are specifically invited on the overall regulatory,
economic, environmental, and energy aspects of the proposed rule. All
comments submitted will be available, both before and after the closing
date for comments, in the Rules Docket for examination by interested
persons. A report summarizing each FAA-public contact concerned with
the substance of this proposal will be filed in the Rules Docket.
Commenters wishing the FAA to acknowledge receipt of their comments
submitted in response to this notice must submit a self-addressed,
stamped postcard on which the following statement is made: ``Comments
to Docket Number 95-NM-266-AD.'' The postcard will be date stamped and
returned to the commenter.
Availability of NPRMs
Any person may obtain a copy of this NPRM by submitting a request
to the FAA, Transport Airplane Directorate, ANM-103, Attention: Rules
Docket No. 95-NM-266-AD, 1601 Lind Avenue, SW., Renton, Washington
98055-4056.
Discussion
On April 22, 1988, the FAA issued AD 88-09-05, amendment 39-5908
(53 FR 15363, April 29, 1988), applicable to certain de Havilland Model
DHC-8-100 series airplanes, to require clearly marking the location and
means of entering the lavatory. That action was prompted by reports of
passengers mistaking the airstair door operating handle for the means
of gaining access to the lavatory. The requirements of that AD are
intended to prevent inadvertent opening of the airstair door and
consequent depressurization of the airplane.
Explanation of Relevant Service Information
Since the issuance of that AD, de Havilland has issued Revision
`B', dated July 1, 1988, and Revision `C', dated September 29, 1995, of
Service Bulletin S.B. 8-11-14. The modification procedures
(Modification 8/0757) specified in these revisions are essentially
identical to Revision `A' of the service bulletin, which was referenced
in AD 88-09-05 as the appropriate source of service information.
However, the effectivity listing in Revisions `B' and `C' has been
revised to eliminate certain airplanes on which Modification 8/0757 was
installed during production; therefore, these airplanes are not
affected by the addressed unsafe condition. The modification clearly
marks the location and means of entering the lavatory.
Transport Canada Aviation, which is the airworthiness authority for
Canada, classified these service bulletins as mandatory and issued
Canadian airworthiness directive CF-87-07R1, dated June 30, 1995, in
order to assure the continued airworthiness of these airplanes in
Canada.
FAA's Conclusions
This airplane model is manufactured in Canada and is type
certificated for operation in the United States under the provisions of
section 21.29 of the Federal Aviation Regulations (14 CFR 21.29) and
the applicable bilateral airworthiness agreement. Pursuant to this
bilateral airworthiness agreement, the Transport Canada Aviation has
kept the FAA informed of the situation described above. The FAA has
examined the findings of the Transport Canada Aviation, reviewed all
available information, and determined that AD action is necessary for
products of this type design that are certificated for operation in the
United States.
Explanation of Requirements of Proposed Rule
Since an unsafe condition has been identified that is likely to
exist or develop on other airplanes of the same type design registered
in the United States, the proposed AD would revise AD 88-09-05 to
continue to require clearly marking the location and means of entering
the lavatory. This action would limit the applicability of the existing
AD to fewer airplanes.
Cost Impact
There are approximately 30 de Havilland Model DHC-8-100 series
airplanes of U.S. registry that would be affected by this proposed AD.
Since this proposed AD merely deletes airplanes from the
applicability of the rule, it would add no additional costs, and would
require no additional work to be performed by affected operators. The
current costs associated with this proposed rule are reiterated below
for the convenience of affected operators:
The actions that are currently required by AD 88-09-05, and
retained in this proposal, take approximately 1 work hour per airplane
to accomplish, at an average labor rate of $60 per work hour. Required
parts are supplied by the manufacturer at no cost to the operators.
Based on these figures, the cost impact on U.S. operators of the
actions currently required is estimated to be $1,800, or $60 per
airplane.
Regulatory Impact
The regulations proposed herein would not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this
proposal would not have sufficient federalism implications to warrant
the preparation of a Federalism Assessment.
For the reasons discussed above, I certify that this proposed
regulation (1) is not a ``significant regulatory action'' under
Executive Order 12866; (2) is not a ``significant rule'' under the DOT
Regulatory Policies and Procedures (44 FR 11034, February 26, 1979);
and (3) if promulgated, will not have a significant economic impact,
positive or negative, on a substantial number of small entities under
the criteria of the Regulatory Flexibility Act. A copy of the draft
regulatory evaluation prepared for this action is contained in the
Rules Docket. A copy of it may be obtained by contacting the Rules
Docket at the location provided under the caption ADDRESSES.
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Safety.
The Proposed Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration proposes to amend
part 39 of the Federal Aviation Regulations (14 CFR part 39) as
follows:
PART 39--AIRWORTHINESS DIRECTIVES
1. The authority citation for part 39 continues to read as follows:
[[Page 34769]]
Authority: 49 U.S.C. 106(g), 40113, 44701.
Sec. 39.13 [Amended]
2. Section 39.13 is amended by removing amendment 39-5908 (53 FR
15363, April 29, 1988), and by adding a new airworthiness directive
(AD), to read as follows:
De Havilland, Inc.: Docket 95-NM-266-AD. Revises AD 88-09-05,
Amendment 39-5908.
Applicability: Model DHC-8 series airplanes, serial numbers 3
through 79, inclusive; on which Modification 8/0757 has not been
installed; certificated in any category.
Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must request approval for an
alternative method of compliance in accordance with paragraph (b) of
this AD. The request should include an assessment of the effect of
the modification, alteration, or repair on the unsafe condition
addressed by this AD; and, if the unsafe condition has not been
eliminated, the request should include specific proposed actions to
address it.
Compliance: Required as indicated, unless accomplished
previously.
To prevent inadvertent opening of the airstair door and
consequent depressurization of the airplane, accomplish the
following:
(a) Within 60 days after June 10, 1988 (the effective date of AD
88-09-05, amendment 39-5908), replace the labels marking the
location and means of opening the lavatory, in accordance with the
Accomplishment Instructions of de Havilland Service Bulletin 8-11-
14, Revision `A', dated July 31, 1987.
Note 2: Replacement accomplished in accordance with de Havilland
Service Bulletin 8-11-14, Revision `B', dated July 1, 1988, or
Revision `C', dated September 29, 1995, is considered acceptable for
compliance with this paragraph.
(b) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, New York Aircraft Certification
Office (ACO), FAA, Engine and Propeller Directorate. Operators shall
submit their requests through an appropriate FAA Principal
Maintenance Inspector, who may add comments and then send it to the
Manager, New York ACO.
Note 3: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the New York ACO.
(c) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to a location where
the requirements of this AD can be accomplished.
Issued in Renton, Washington, on June 27, 1996.
S. R. Miller,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-16952 Filed 7-2-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-16880 Coastal Migratory Pelagic Resources of the Gulf of Mexico and South Atlantic; Changes in Catch Limits
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Pages 34785-34788]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16880]
=======================================================================
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DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric Administration
50 CFR Part 642
[Docket No. 950725189-6182-03; I.D. 060696A]
RIN 0648-AI92
Coastal Migratory Pelagic Resources of the Gulf of Mexico and
South Atlantic; Changes in Catch Limits
AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA), Commerce.
ACTION: Proposed rule; request for comments.
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SUMMARY: In accordance with the framework procedure for adjusting
management measures of the Fishery Management Plan for the Coastal
Migratory Pelagic Resources of the Gulf of Mexico and South Atlantic
(FMP), NMFS proposes commercial vessel trip limits for the Atlantic
migratory group of king mackerel. The intended effects of this rule are
to preclude an early closure of the commercial fishery, protect king
mackerel from overfishing, and maintain healthy stocks while still
allowing catches by important commercial fisheries.
DATES: Written comments must be received on or before July 18, 1996.
ADDRESSES: Comments must be mailed to Mark F. Godcharles, Southeast
Region, National Marine Fisheries Service, 9721 Executive Center Drive
N., St. Petersburg, FL 33702.
Send requests for copies of the regulatory amendment document
(dated June 1995) and its supplement (dated February 1996), which
include the environmental assessment and regulatory impact review for
this action, to the South Atlantic Fishery Management Council,
Southpark Building, One Southpark Circle, Suite 306, Charleston, SC
29407-4699.
FOR FURTHER INFORMATION CONTACT: Mark F. Godcharles, 813-570-5305.
SUPPLEMENTARY INFORMATION: The fisheries for coastal migratory pelagic
resources are regulated under the FMP. The FMP was prepared jointly by
the Gulf of Mexico and South Atlantic Fishery Management Councils and
is implemented by regulations at 50 CFR part 642.
In accordance with the framework procedures of the FMP, the South
Atlantic Council (Council) recommended to the Director, Southeast
Region, NMFS (Regional Director), a regulatory amendment, which, among
other changes, included establishment of commercial vessel trip limits
for the Atlantic migratory group of king mackerel. These vessel trip
limits were included in a proposed rule published on August 3, 1995 (60
FR 39698). A final decision by NMFS on whether the trip limits were
consistent with the National Standards of the Magnuson Fishery
Conservation and Management Act (Magnuson Act) was deferred, and the
reasons for the deferral were published in the final rule implementing
the approved measures of the regulatory amendment (60 FR 5768, November
17, 1995). The Council revised the proposed trip limits to address
cited deficiencies, took additional public comment, and resubmitted a
supplemented regulatory amendment for NMFS' review and approval.
The Council proposes daily trip limits for vessels harvesting under
the commercial allocation for Atlantic group king mackerel. This
segment of the fishery has not been subject to trip limits. As revised,
the daily possession/landing limit for a vessel using non-prohibited
gear and having a Federal commercial mackerel permit would be 3,500 lb
(1,588 kg) of king mackerel in or from the exclusive economic zone
(EEZ) year-round in the northern area (i.e., between the New York/
Connecticut and Flagler/Volusia County, FL boundaries). Off Volusia
County, FL, the daily trip limit would be 3,500 lb (1,588 kg) of king
mackerel in or from the EEZ from April 1 through October 31. South of
there, between the Volusia/Brevard and Dade/Monroe County boundaries,
the daily trip limit would be 500 lb (227
[[Page 34786]]
kg) of king mackerel in or from the EEZ from April 1 through October
31. In the southernmost area, off Monroe County (Florida Keys), the
daily trip limit would be 1250 lb (567 kg) of king mackerel in or from
the EEZ from April 1 through October 31. All trip limits proposed for
the Atlantic group king mackerel are daily landing/possession limits
that would be reduced to zero for that group when the annual commercial
allocation is reached.
The Council desires implementation as soon as possible in the
fishing year that began April 1, 1996, to preclude excessive early
season harvest of king mackerel, early closure, disproportionate
harvest of the allocation by regional fisheries, subsequent negative
socioeconomic impacts, recruitment overfishing, and waste.
In its resubmitted proposal, the Council revised the original trip
limit proposals by converting limits on the number of fish that may be
possessed or landed to equivalent pounds of fish. The Council
determined that this change was necessary to prevent waste caused by
high-grading (i.e., the act of discarding smaller fish and replacing
them with larger ones to maximize aggregate poundage landed while
complying with the daily trip limit on the number of fish landed). Such
waste causes estimates of release and fishing mortality to be lower
than the actual mortality and results in an inaccurate evaluation of
the status of the stocks and of the fishery impacts on the resource.
Trip limits were first proposed in conjunction with a proposed
decrease in total allowable catch (TAC) from 10.0 million lb (4,536
metric tons (mt)) to 7.3 million lb (3,311 mt) for the Atlantic group
king mackerel for the 1995/96 fishing year (August 3, 1995, 60 FR
39698). The reduced TAC was approved by NMFS and implemented through a
final rule (November 17, 1995, 60 FR 57686). Further decreases were
expected for the 1996/97 fishing year . The 7.3-million lb TAC
decreased the commercial allocation for the 1995-96 fishing year from
the previous level of 3.71 million lb (1,683 mt) to 2.70 million lb
(1,225 mt). The Council reduced TAC to the lower range of the
acceptable biological catch (ABC) in anticipation of a lower ABC for
the 1996/97 fishing year, and expressed concerns about the status of
both the Atlantic and Gulf groups of king mackerel and recent low
catches.
As the Council expected and the 1995 Mackerel Stock Assessment
Panel Report projected, the 1996 Report of the Mackerel Stock
Assessment Panel presented lower estimates of the spawning potential
ratio (SPR) and the ABC for Atlantic group king mackerel. Although some
of the decreases in these parameters may be attributed to new
analytical methods, most are attributable to the inclusion of more
accurate estimates for the mortality of juvenile and subadult mackerels
taken as incidental bycatch in the Atlantic shrimp trawl fishery off
southeastern states. The 1996 modal SPR estimate of 32 percent is down
by about 36 percent from the approximate 50 percent level estimated for
previous years, and the 1996 ABC is about half of 1995 estimates. The
1996 ABC range estimate is 4.1 - 6.8 million lb (mode: 5.5 million lb)
(1,860 - 3,084 mt, mode: 2,495 mt) compared to the 1995 estimate of 7.3
- 15.5 million lb (mode: 10.9 million lb) (3,311 - 7,031 mt, mode:
4,944 mt). The Council sets TAC within the ABC range usually at or
below the modal value suggesting that the 1996/97 TAC will be even
lower than last year's 7.3 million lb (3,311 mt) that yielded
commercial and recreational allocations of 2.70 (1.225 mt) and 4.60 M
(2.087 mt), respectively.
Although the 1996 estimate of SPR indicates that the Atlantic group
king mackerel is not overfished, the lower SPR value suggests, as the
Council previously suspected, that stock size may not be as large as
previous estimates indicated. The modal 1996 SPR estimate is reduced to
32 percent, well below the 1995 estimate of 55 percent and just above
the 30 percent overfished level currently defined in the FMP. Even
though the estimated 32 percent SPR level is well above the overfishing
level of 20 percent SPR proposed in FMP Amendment 8, it is below the
Council's proposed target SPR of 40 percent for achieving maximum
sustainable yield or long-term optimum yield (OY). Moreover, the actual
total catch (commercial and recreational combined) may have reached its
lowest level (5.92 million lb; 2,685 mt) in 15 years during the 1994/95
season; preliminary estimates indicate that the 1995/96 catch will
remain at this same low level. In the past nine years, total catch has
exceeded 7.30 million lb (3,311 mt) four times.
The Council also proposed the trip limits, in anticipation of
increased effort in the fishery, to prevent excessive harvest of pre-
spawning and spawning fish and recruitment overfishing. The Council is
concerned that a number of new entrants may join the fishery as a
result of the recent prohibition on gillnet use in Florida waters (July
1, 1995) and New England fishery closures.
The Council recommended the trip limits not only to provide
increased protection for Atlantic group king mackerel but also for the
Gulf group. The trip limits would prevent the detrimental effects of
excessive catches of the Atlantic group throughout the spring/summer
spawning season and of the Gulf group during April. King mackerel
harvest in April, unrestricted by daily vessel trip limits, could
result in the unintentional taking of large quantities of Gulf group
king mackerel when such fish are still located within the boundaries of
the Atlantic group. Tag and recapture information indicate that king
mackerel off south Florida from late fall through early spring,
particularly off the Florida Keys, mostly belong to the Gulf migratory
group.
The fishing season for Atlantic group king mackerel fishery opens
annually on April 1, and vessels targeting fish with hook-and-line,
run-around gillnet, and purse seine gear are not restricted by trip
limits. Consequently, excessive capture of Gulf group king mackerel
could occur off south Florida in April if conditions delay emigration
to spring/summer spawning grounds.
The Council considers such catches ``double-dipping'' (i.e.,
overrunning of quotas that have already been harvested). In the past
two years, hook-and-line and run-around gillnet quotas for Gulf group
king mackerel were reached or exceeded, and respective fisheries were
closed, after large February catches off the Florida Keys. The Gulf
group king mackerel stock is still considered overfished; preliminary
calculations for the 1996/97 fishing year suggest that this group would
remain in the overfished status even under the less restrictive
overfished/overfishing definitions proposed in Amendment 8.
Excessive capture of king mackerel, unrestrained by trip limits and
under a reduced commercial allocation, could result in a
disproportionately large harvest off south Florida and an early closure
of the commercial fishery for the Atlantic group. Fishery participants
in the northern area might then lose the opportunity to harvest their
traditional and equitable share of the allocation. Atlantic group king
mackerel support an important fall fishery off North Carolina. An early
fishery closure would adversely affect these traditional fisheries and
could lead to severe socioeconomic impacts and subsequent requests for
relief through emergency action.
To keep the recreational catch within the reduced allocation of 4.6
million lb (2,087 mt), the recreational bag limit for the EEZ from New
York through Georgia was reduced on January 1, 1996, from
[[Page 34787]]
five to three fish per person. The Council determined that this
reduction would be sufficient to maintain catch within the decreased
allocation without changing the two-fish bag limit off Florida.
Recreational catch estimates indicated that the bag limit reduction in
the northern area (Georgia through New York) would provide about a 10
percent reduction in catch. In addition, 1995 catch estimates for the
1988/89 through 1990/91 fishing years, when the bag limit was three
fish in the northern area and two fish off Florida, were below 4.6
million lb (2,087 mt).
Although a recreational bag limit reduction was approved to reduce
catch in alignment with the decreased 1995/96 recreational allocation,
NMFS deferred the decision to approve or disapprove the collateral
commercial vessel trip limits until certain analytical and procedural
deficiencies were corrected. The Council has addressed the deficiencies
and revised and resubmitted the trip limit proposals. In conjunction
with the public review of Amendment 8 to the FMP, additional public
hearings were conducted to review the proposed trip limits. Thereafter,
the Council revised its proposal to convert the units for the trip
limits from numbers of fish to pounds of fish to reduce waste from the
practice of high-grading and to allow vessels operating in the
commercial fishery off Monroe County (Florida Keys) from April 1 though
October 31 to possess or land up to 1250-lb (567-kg) per trip, thus
reducing socioeconomic impacts on that sector. Preliminary review of
the revised supporting documents indicates that the Council has
addressed the deficiencies previously noted in the initial analyses. As
discussed below, NMFS' preliminary review of the Council's re-
submission did not reveal any inconsistencies with the national
standards.
Consistency with the National Standards
In regard to the original trip limit proposals, as discussed in the
preamble to the final rule implementing the approved measures of the
Council's regulatory amendment (60 FR 57686; November 17, 1995),
inaccuracies and inconsistencies in the analyses of impacts and
inadequate opportunity for public comment prevented NMFS from
determining if the proposals were consistent with the National
Standards (N.S.). Some letters received during the comment period,
which was announced in the proposed rule (60 FR 39698; August 3, 1995),
contended that the trip limit proposals would preclude achievement of
OY (N.S. 1), were not based on the best available information (N.S. 2),
would be unfair and inequitable to fishery participants throughout the
management area (N.S. 4), would unnecessarily promote harvest
inefficiency (N.S. 5), and would constitute unjustifiable
administrative costs and burdens (N.S. 7).
After reviewing the revised impact analyses, findings of the 1996
mackerel stock assessment concerning the status of the Atlantic group
king mackerel, and results from additional public hearings, NMFS has
made a preliminary determination that the proposed commercial vessel
trip limits are consistent with the N.S. as discussed below. Previous
problems related to the Council's analyses of the potential impacts of
the 50-fish trip limit on the Florida Keys fishery and not providing
sufficient notice to impacted fishermen appear to have been corrected.
Impact analyses were revised and the Council held additional public
hearings. In response to the comments received at those hearings, the
Council increased the proposed trip limit for the Florida Keys area
from 500 to 1250 pounds (initially proposed as 50 to 125 fish) per
vessel per day.
National Standard 1
Newly available information contained in the 1996 Report of the
Mackerel Stock Assessment Panel probably will compel the Council to
recommend further reductions in TAC for Atlantic group king mackerel.
The forthcoming TAC recommendation for the 1996/97 fishing year
probably would reduce both commercial and recreational allocations to
levels that have been harvested during the past two years.
Consequently, NMFS expects that TAC will be taken and OY achieved for
the 1996/97 fishing year even with the imposition of trip limits. To
provide the socioeconomic benefits that the Council intends while
preventing overfishing, the proposed trip limits appear necessary.
National Standard 2
Recent review of the proposed trip limits and supporting documents,
increased effort and king mackerel landings off southwest Florida this
April (1996), and findings of the 1996 stock assessment indicate that
the proposed trip limits are based on the best available scientific
information. In a recent review, NMFS Southeast Fisheries Science
Center (Center) advised that the revised proposed trip limits appear to
be based on the best available scientific information. Further, the
Center advised that the proposals clearly are risk averse in that they
would maintain stock levels that would not be at risk of recruitment
overfishing.
Although the 1996 SPR estimate indicates that the Atlantic group
king mackerel is not overfished, the lower estimated value suggests, as
the Council previously suspected, that stock size may not be as large
as previous estimates indicated. The 1996 SPR estimate is reduced to 32
percent, near the 30 percent SPR overfished level currently defined in
the FMP and above the 20 percent level in proposed Amendment 8.
Nevertheless, the current 32 percent SPR estimate is below the proposed
SPR target of 40 percent for achieving maximum sustainable yield (MSY)
or long-term OY. Therefore, the best available scientific information
is not inconsistent with the Council's recommendations for more
conservative management measures that reduce fishing mortality and,
thus, prevent early closure and quota overruns, and decrease the risk
of recruitment overfishing.
National Standard 4
NMFS believes the revised proposed trip limits have the potential
to maintain traditional harvest and quota distribution among user
groups. Initially, the proposed trip limit for the Florida Keys fishery
was 50 fish throughout the Florida east and southwest coast areas. The
50-fish limit was requested and was strongly supported by many
southeast Florida king mackerel fishermen.
In response to comments received at public hearings, the Council
increased the proposed trip limit for the Florida Keys to 1250-lb (567-
kg) to provide sufficient revenue to operate in the April fishery near
the Dry Tortugas. This proposal is equivalent to the 125-fish trip
limit for the Gulf group king mackerel hook-and-line fishery that
begins in that area on November 1. Consequently, the proposed 1250-lb
(567 kg) trip limit would appear to provide fair access while
preventing excessive catches, early closures, and quota overruns, and
thus satisfies the requirements of N.S. 4 regarding fairness and equity
to all fishery participants throughout the management area.
For the fishery from northeast Florida through New York, the
Council proposed the 3500-lb (1588-kg) trip limit. Available landings
information reviewed by the Council indicates that proposal would have
essentially no effect on harvest. Moreover, the Council does not expect
the proposed increased trip limit for this area to alter the status quo
or provide increased harvesting advantage. If inordinate large northern
[[Page 34788]]
landings do occur in the future, the Council will reconsider and revise
the 3500-lb (1588-kg) trip limit to prevent inequitable quota
distribution and recruitment overfishing.
National Standard 5
The Council's impact analyses indicate that the proposed trip
limits would have restricted less than 6 percent of the trips in any
given area. However, the 500-lb (227-kg) and 1250-lb (567-kg) trip
limits proposed for south Florida would have substantially reduced some
individual vessel landings and total catch for those areas for some
years. Data examined by the Council indicated that the 3500-lb (1,588
kg) trip limit would have impacted no trips off Volusia County
(Florida) and would have only minimally impacted trips between the
Volusia/Flagler County (Florida) and New York/Connecticut boundaries.
Such impacted trips landed at North Carolina ports would have exceeded
that state's landing limit (i.e., 3500 lb). The Council's analyses were
based on landings estimates for Florida (1991/92 through 1994/95
seasons) and North Carolina.
National Standard 7
The revised proposed trip limits appear consistent with a
management strategy to balance costs and benefits; the Council's impact
analyses indicate that the trip limits will not inordinately affect
costs or place an undue economic and regulatory burden on fishermen or
fisheries.
The Regional Director initially concurs that the Council's
recommendations are necessary to protect king mackerel stocks and
prevent overfishing and that they are consistent with the objectives of
the FMP, the N.S., and other applicable law. Accordingly, the Council's
proposed revised trip limits are published for comment.
Classification
This proposed rule has been determined to be not significant for
purposes of E.O. 12866.
The Assistant General Counsel for Legislation and Regulation of the
Department of Commerce certified to the Chief Counsel of the Small
Business Administration that this proposed rule, if adopted, would not
have a significant economic impact on a substantial number of small
entities. Historical landings data for the last four fishing seasons
indicate that the percentage of fishing trips that would have been
affected by the proposed trip limits ranged from 0 to 5.4 percent.
Although it is not possible to directly translate number of fishing
trips into number of fishing firms impacted, it appears that less than
20 percent of the small business entities involved in harvest of
Atlantic king mackerel would be affected. The proposed trip limits are
estimated to reduce the harvest of Atlantic king mackerel and the
associated net revenue by about five percent. Compliance costs will not
be affected by this action. There are no differential small and large
business impacts because all affected entities are small entities. No
capital costs of compliance are expected, and there is no information
indicating that two or more percent of the existing harvesting firms
will cease business operations as a result of this rule. The proposed
trip limits are designed, in part, to moderate the rate of harvest,
thereby minimizing the probability of early closures and the associated
adverse socioeconomic impacts. Therefore, the trip limits are expected
to provide small increases in long-term benefits to the industry. For
these reasons, a regulatory flexibility analysis was not prepared.
List of Subjects in 50 CFR Part 642
Fisheries, Fishing, Reporting and recordkeeping requirements.
Dated: June 27, 1996.
Gary Matlock,
Program Management Officer, National Marine Fisheries Service.
For the reasons set out in the preamble, 50 CFR part 642 is
proposed to be amended as follows:
PART 642--COASTAL MIGRATORY PELAGIC RESOURCES OF THE GULF OF MEXICO
AND SOUTH ATLANTIC
1. The authority citation for part 642 continues to read as
follows:
Authority: 16 U.S.C. 1801 et seq.
2. In Sec. 642.7, paragraphs (q) and (r) are revised to read as
follows:
Sec. 642.7 Prohibitions.
* * * * *
(q) Exceed a commercial trip limit for Atlantic group king or
Spanish mackerel, as specified in Sec. 642.27(a) or (b).
(r) Transfer at sea from one vessel to another an Atlantic group
king or Spanish mackerel subject to a commercial trip limit, as
specified in Sec. 642.27(f).
* * * * *
3. In Sec. 642.27, paragraphs (a) through (e) are redesignated as
paragraphs (b) through (f), respectively; in newly redesignated
paragraph (b), the introductory text is removed; in newly redesignated
paragraphs (c) and (d), the references to ``paragraph (a)(2) of this
section'' are removed and ``paragraph (b)(2) of this section'' is added
in their places; in newly redesignated paragraph (f) introductory text
and in newly redesignated paragraph (f)(2) the term ``Spanish
mackerel'' is removed and ``king or Spanish mackerel'' is added in its
place; the section heading is revised; and paragraph (a) and newly
redesignated paragraph (b) heading are added to read as follows:
Sec. 642.27 Commercial trip limits for Atlantic group king and Spanish
mackerel.
(a) Atlantic group king mackerel. (1) North of a line extending
directly east from the Volusia/Flagler County, Florida boundary
(29 deg.25' N. lat.) to the outer limit of the EEZ, king mackerel in or
from the EEZ may not be possessed on board or landed from a vessel in a
day in amounts exceeding 3,500 lb (1,588 kg).
(2) In the area between lines extending directly east from the
northern and southern boundaries of Volusia County, Florida (29 deg.25'
N. lat. and 28 deg.47.8' N. lat., respectively) to the outer limit of
the EEZ, king mackerel in or from the EEZ may not be possessed on board
or landed from a vessel in a day in amounts exceeding 3,500 lb (1,588
kg) from April 1 through October 31.
(3) In the area between lines extending directly east from the
Volusia/Brevard County, Florida boundary (28 deg.47.8' N. lat.) to the
outer limit of the EEZ and directly east from the Dade/Monroe County,
Florida boundary (25 deg.20.4' N. lat.) to the outer boundary of the
EEZ, king mackerel in or from the EEZ may not be possessed on board or
landed from a vessel in a day in amounts exceeding 500 lb (227 kg) from
April 1 through October 31.
(4) In the area between lines extending directly east from the
Dade/Monroe County, Florida boundary (25 deg.20.4' N. lat.) to the
outer boundary of the EEZ and directly west from the Monroe/Collier
County, Florida boundary (28 deg.48' N. lat.) to the outer boundary of
the EEZ, king mackerel in or from the EEZ may not be possessed on board
or landed from a vessel in a day in amounts exceeding 1250 lb (567 kg)
from April 1 through October 31.
(b) Atlantic group Spanish mackerel.
* * * * *
[FR Doc. 96-16880 Filed 6-28-96; 9:44 am]
BILLING CODE 3510-22-F
Complete official Federal Register PDF
FR Doc. 96-16856 Revised Carbon Monoxide (CO) Standard for Class I and II Nonhandheld New Nonroad Phase 1 Small Spark-Ignition Engines
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Pages 34778-34784]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16856]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 90
[FRL-5530-8]
Revised Carbon Monoxide (CO) Standard for Class I and II
Nonhandheld New Nonroad Phase 1 Small Spark-Ignition Engines
AGENCY: Environmental Protection Agency (EPA).
ACTION: Notice of proposed rulemaking.
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SUMMARY: Today EPA is proposing a revision of the Phase 1 carbon
monoxide (CO) emission standard for Class I and II new nonroad spark-
ignition (SI) engines at or below 19 kilowatts. Today's action would
increase the standard from 469 grams per kilowatt-hour (g/kW-hr) to 519
g/kW-hr. This proposed action is necessary to address the CO emission
difference between oxygenated and nonoxygenated fuels that was not
reflected when the Agency previously set the CO standard for these
nonhandheld engines in a final rule published July 3, 1995. This
correction of the nonhandheld engine CO standard would ensure that the
CO standard for manufacturers of Class I and II small SI engines used
to power equipment such as lawnmowers is achievable and otherwise
appropriate under the Clean Air Act and that it is technically feasible
for manufacturers to certify their engine models to the Phase 1
emission standards and make them commercially available for the 1997
model year.
In addition, today's action proposes to give the Administrator the
option to permit the use of open crankcases in engines used exclusively
to power snowthrowers. This proposed change will give EPA the
flexibility to allow certain engine manufacturers to certify engines to
be used in snowthrowers without making technological changes that would
severely impair the ability of the engine to function or that would be
economically prohibitive.
DATES: Written comments on this NPRM must be submitted by August 2,
1996. EPA will hold a public hearing on this NPRM sometime between
[Insert date 15 days from date of publication] and August 2, 1996. If
one is requested by July 15, 1996.
ADDRESSES: Written comments should be submitted (in duplicate, if
possible) to: EPA Air and Radiation Docket, Attention Docket No. A-96-
02, room M-1500 (mail code 6102), 401 M St., SW, Washington, D.C.
20460. Materials relevant to this rulemaking are contained in docket
no. A-93-25 and docket no. A-96-02, and may be viewed from 8:00 a.m.
until 5:30 p.m. weekdays. The docket may also be reached by telephone
at (202) 260-7548. As provided in 40 CFR part 2, a reasonable fee may
be charged by EPA for photocopying. Members of the public may call the
contact person indicated below to find out whether a hearing will be
held and if so, the exact location. Requests for a public hearing
should be directed to the person indicated below. The hearing, if
requested, will be held in Michigan.
FOR FURTHER INFORMATION CONTACT: Laurel Horne, U.S. Environmental
Protection Agency, 2565 Plymouth Road, Ann Arbor, MI 48105. Telephone:
(313) 741-7803. FAX: (313) 741-7816. Electronic mail:
[email protected]
SUPPLEMENTARY INFORMATION:
Regulated Entities
Entities potentially regulated by this action are those which
manufacture engines used in nonhandheld applications, such as
lawnmowers, and those which manufacture engines used exclusively to
power snowthrowers. Regulated categories and entities include:
------------------------------------------------------------------------
Category Examples of regulated entities
------------------------------------------------------------------------
Industry........................... Manufacturers of small (at or below
19 kW) nonroad engines used in
nonhandheld applications such as
lawnmowers.
Do............................. Manufacturers of small nonroad
engines used exclusively to power
snowthrowers.
------------------------------------------------------------------------
This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that EPA is now aware
could potentially be regulated by this action. Other types of entities
not listed in the table could also be regulated. To determine whether
your company is regulated by this action, you should carefully examine
the applicability criteria in section 90.1 of title 40 of the Code of
Federal Regulations. If you have questions regarding the applicability
of this action to a particular entity, consult the person listed in the
preceding ``FOR FURTHER INFORMATION CONTACT'' section.
II. Obtaining Electronic Copies of Documents
Electronic copies of the preamble and the regulatory text of this
notice of proposed rulemaking are available electronically from the EPA
Internet site and via dial-up modem on the Technology Transfer Network
(TTN), which is an electronic bulletin board system (BBS) operated by
EPA's Office
[[Page 34779]]
of Air Quality Planning and Standards. Both services are free of
charge, except for your existing cost of Internet connectivity or the
cost of the phone call to TTN. Users are able to access and download
files on their first call using a personal computer and modem per the
following information.
Internet:
World Wide Web:
http://www.epa.gov/OMSWWW
Gopher:
gopher://gopher.epa.gov/ Follow menus for: Offices/Air/OMS
FTP:
ftp://ftp.epa.gov/ Change Directory to pub/gopher/OMS TTN BBS: 919-
541-5742
(1200-14400 bps, no parity, 8 data bits, 1 stop bit) Voice Help
line: 919-541-5384.
Off-line: Mondays from 8:00 AM to 12:00 noon EST.
A user who has not called TTN previously first will be required to
answer some basic informational questions for registration purposes.
After completing the registration process, proceed through the
following menu choices from the Top Menu to access information on this
rulemaking.
GATEWAY TO TTN TECHNICAL AREAS (Bulletin Boards)
OMS--Mobile Sources Information
Rulemaking and Reporting
<6> Non-Road
<2> Non-road Engines
At this point, the system will list all available files in the
chosen category in reverse chronological order with brief descriptions.
To download a file, select a transfer protocol that is supported by the
terminal software on your own computer, then set your own software to
receive the file using that same protocol.
If unfamiliar with handling compressed (i.e. ZIP'ed) files, go to
the TTN top menu, System Utilities (Command: 1) for information and the
necessary program to download in order to unZIP the files of interest
after downloading to your computer. After getting the files you want
onto your computer, you can quit the TTN BBS with the oodbye
command.
Please note that due to differences between the software used to
develop the document and the software into which the document may be
downloaded, changes in format, page length, etc. may occur.
III. Legal Authority
Authority for the actions set forth in this rule is granted to EPA
by sections 213 and 301(a) of the Clean Air Act as amended (42 U.S.C.
7547 and 7601(a)).
IV. The Carbon Monoxide Standard and Fuel Specification Issue
On March 4, 1996, Briggs and Stratton Corporation submitted to EPA
a petition requesting reconsideration and revision of the certification
fuel requirements and carbon monoxide (CO) emission standard for
nonhandheld engines. The petition asks the Agency to amend its July 3,
1995 final rule, Emission Standards for New Nonroad Spark-ignition (SI)
Engines At or Below 19 Kilowatts, hereafter referred to as the Phase 1
small SI engine regulations.1 Specifically, the petition requests
that the Agency amend the Phase 1 small SI engine rule to either: (1)
permit the use of appropriate oxygenated gasolines for emissions
certification testing as a direct alternative to Indolene 2 under
the current CO standard, or (2) revise the CO standard for nonhandheld
small engines from 469 grams per kilowatt-hour (g/kW-hr) to 536 g/kW-
hr, in order to reflect the emission characteristics of these engines
when tested on nonoxygenated gasolines. Nonhandheld engines are
intended for use in nonhandheld applications and fall under one of two
classes based on engine displacement.3 Class I engines are less
than 225 cubic centimeters (cc) displacement, and Class II engines are
greater than or equal to 225 cc displacement.4 In response to the
Briggs and Stratton petition, EPA is revising the Phase 1 small SI
engine regulation by increasing the CO standard for Class I and II
nonhandheld small SI engines from 469 g/kW-hr to 519 g/kW-hr.
---------------------------------------------------------------------------
\1\ 60 FR 34582, July 3, 1995, codified at 40 C.F.R. part 90.
The docket for the Phase 1 small SI engine rulemaking, EPA Air
Docket #A-93-25, is incorporated by reference.
\2\ See section 90.308(b) and page 34589 of the preamble for the
certification fuel specification for the Phase 1 small SI engine
rulemaking. Indolene is one possible federal certification fuel.
Indolene is not the only eligible fuel, but it is within the
eligible range specified in part 86 (section 86.1313-94(a)) to which
the Phase 1 small SI engine rule refers. The Phase 1 small SI engine
rulemaking provides for a range and based on experience with the on-
highway program, EPA expects that engine manufacturers will use
Indolene. California Phase II Reformulated Gasoline and other
oxygenated fuels are not within the range specified in the Phase 1
small SI engine rule.
\3\ For additional discussion of engine classes and handheld
engine qualifications, see 60 FR 34585, July 3, 1995.
\4\ Class I engines are predominantly found in lawnmowers. Class
II engines primarily include engines used in generator sets, garden
tractors, and commercial lawn and garden equipment.
---------------------------------------------------------------------------
To help the reader understand EPA's response to the petitioner's
request, the following text provides background on prior actions taken
by the State of California's Air Resources Board (CARB), EPA, and
industry relating to the fuel requirements and the CO standard for
nonhandheld small SI engines.
Both EPA and CARB have regulations that pertain to nonhandheld
small SI engines. Nonhandheld small SI engines manufactured for sale in
the United States must meet EPA emission regulations starting with the
1997 model year. Engines produced for sale in California must also meet
regulatory requirements specified by CARB. The small engine industry
and other stakeholders have been actively involved in the development
of EPA and CARB nonroad engine regulations.
CARB's CO Standard and Fuel Specifications
CARB began the process of developing emission regulations for small
nonroad engines under the authority of the California Clean Air Act of
1988. In December 1990, the California Regulations for 1995 and Later
Utility and Lawn and Garden Equipment Engines (hereafter referred to as
the utility engine regulations) were initially approved. Among other
requirements, CARB's Tier 1 utility engine regulations, as formally
adopted in March 1992, specified that Class I and Class II engines
produced from January 1, 1995, through December 31, 1998, must certify
to a 300 gram per brake horsepower-hour (g/bhp-hr)carbon monoxide
exhaust emission standard.5
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\5\ Throughout its utility engine regulations, CARB uses
horsepower (hp) measurements, while in its small SI engine
regulations, EPA refers to kilowatts (kW). To convert kilowatts to
horsepower multiply kW by 1.34 and round to the same number of
significant digits. In this case, 300 g/bhp-hr = 402 g/kW-hr.
---------------------------------------------------------------------------
In regard to certification fuel specifications, CARB's utility
engine regulations referenced CARB on-road vehicle certification fuel
specifications, which were adopted in 1987 and amended in July 1991.
Consequently, engine manufacturers could select to certify their
engines using either Indolene Clear or California Phase 1 Reformulated
Gasoline. A later amendment to the utility engine regulations revised
the certification fuel specifications to incorporate the most recent
on-road motor vehicle fuel specification, California Phase II
Reformulated gasoline. In a related mail-out, CARB stated that it had
intended for engine test fuel specifications to be consistent with the
on-road motor vehicle fuel specifications 6; in the future,
approved amendments to the CARB on-road vehicle fuel specifications
will be immediately
[[Page 34780]]
applicable to engine certification test fuels.
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\6\ See CARB Mail-out #94-20, May 4, 1994, Utility and Lawn and
Garden Equipment Engine Test Fuel Specifications.
---------------------------------------------------------------------------
In July, 1995, Briggs and Stratton Corporation petitioned CARB to
amend its 300 g/bhp-hr CO standard for Class I and II engines to 350 g/
bhp-hr. The company argued that it was not technically feasible to meet
the 300 g/bhp-hr CO standard. After consideration of Briggs and
Stratton's petition, CARB prepared a notice of public hearing and an
accompanying staff report.7 While expressing several concerns
about the petition in the staff report, CARB staff recommended that the
Board approve Briggs and Stratton's request. At a public hearing on
January 25, 1996, the Board granted Briggs and Stratton's request, and
adopted the recommended amendment to raise the Class I and II CO
exhaust emission standard to 350 g/bhp-hr (equivalent to 469 g/kw-
hr).8
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\7\ See CARB Mail-out #95-43, Notice of January 25, 1996 Public
Hearing.
\8\ CARB Resolution 96-1, January 25, 1996.
---------------------------------------------------------------------------
EPA's CO Standard and Fuel Specifications
Not long after CARB began developing its utility engine
regulations, EPA decided to adopt a phased approach for regulating
emissions from small SI engines under the authority of section 213(a)
of the Clean Air Act. For the first phase, EPA determined that the
regulations would be similar to the CARB's Regulation for 1995 and
Later Utility and Lawn and Garden Equipment Engines. EPA published its
proposed rules on May 16, 1994. One provision of the proposal was that
nonhandheld engines would be required to certify to a CO standard set
at 402 g/kW-hr--equivalent to CARB's original CO standard of 300 g/bhp-
hr. However, the certification test fuel specified in the Phase 1
proposal was different from CARB's. In its notice of proposed
rulemaking (NPRM), EPA specified a fuel referred to as Clean Air Act
Baseline (CAAB).9 EPA noted in its preamble that although
oxygenated and reformulated gasoline fuel was available in different
areas around the United States, the availability varied widely.10
Reformulated or oxygenated gasoline was therefore not specified as a
certification test fuel for the Phase 1 NPRM.
---------------------------------------------------------------------------
\9\ See Table 3 in Appendix A to Subpart D of Part 90 of the
proposed Phase 1 regulations, available in EPA Air Docket #A-93-25,
item III-A-2.
\10\ 59 FR 25419, May 16, 1994.
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Following publication of the Phase 1 NPRM, Briggs and Stratton
submitted proprietary engine development data and analysis to EPA. The
company argued that the data established a need for an increase to the
nonhandheld CO standard from the proposed level of 402 g/kW-hr. The
Engine Manufacturers Association (EMA) also provided comments in
support of increasing the CO emission standard for Class I and II
nonhandheld engines from the proposed 402 g/kw-hr to 469 g/kw-hr. EMA
argued that it is not technically feasible for a significant percentage
of the market to meet the more stringent proposed standard.
On July 3, 1995, EPA published its Phase 1 small SI engine final
rulemaking.11 The final provisions for both the nonhandheld CO
emission standard and the certification fuel specifications differed
from the proposed provisions. Based on its own review and analysis of
the data submitted by Briggs and Stratton following publication of the
NPRM, EPA decided to raise the CO standard for nonhandheld engines from
the proposed level of 402 g/kw-hr to 469 g/kw-hr. The rationale for the
increase of the nonhandheld CO standard is discussed in further detail
in the final rule response to comments document.12
---------------------------------------------------------------------------
\11\ 60 FR 34584, July 3, 1995.
\12\ See Response to Comments on the NPRM, in EPA Air Docket #A-
93-25, item V-C-01.
---------------------------------------------------------------------------
In the preamble to its final Phase 1 small SI engine rule, EPA
discussed the provisions for the type of fuel to be used for
certification and confirmatory testing. In response to comments
received on the NPRM, the Agency decided to expand the range of
specifications for certification fuels such that the fuel commonly
referred to as Indolene Clear, in addition to the Clean Air Act
Baseline (CAAB) fuel that was discussed in the proposal, would be
allowed.13 Indolene is the trade name for the gasoline fuel
specified at 40 CFR 86.113 and 40 CFR 86.1313 for most on-highway
federal compliance test procedures. Since the CARB regulation allows
the use of either Indolene or Phase 2 fuel, a test performed using
Indolene could be used to satisfy both federal and CARB requirements
for small SI engines. Unknown by the Agency at the time EPA finalized
the rule, Briggs and Stratton's data supporting the increased standard
was based on testing conducted with oxygenated fuels, rather than the
federal fuel specified in the NPRM.
---------------------------------------------------------------------------
\13\ See 40 CFR 90.308(b)(1).
---------------------------------------------------------------------------
In sum, while EPA had hoped its allowance of Indolene as a test
fuel would facilitate consistency with CARB's program and allow
manufacturers to conduct a single test for both the federal and CARB
program, the Agency in fact set a standard that only engines tested on
oxygenated fuel had been demonstrated to meet. In conjunction with a
test fuel like Indolene the 469 g/kW-hr nonhandheld CO emission
standard set in the Phase 1 small SI engine regulations is more
stringent than the Agency intended because it did not take into account
the effect of the oxygenated fuel used in the test data on which EPA
based the standard.
Again, at the time EPA set the standard, the Agency did not know
Briggs and Stratton's data had been generated through testing with
oxygenated fuels. In addition, when CARB decided to relax its CO
standard to 350 g/bhp-hr (469 g/kW-hr) in January 1996, it noted that
the standard would be less stringent than federal regulations due to
CARB's allowance of oxygenated, reformulated gasoline for
certification. Although the CARB 350 g/bhp-hr CO standard and the
federal 469 g/kW-hr CO standard are numerically equivalent, the latter
does not allow for the use of oxygenated fuels such as Phase II
reformulated gasoline, and is therefore more stringent than EPA
believes is appropriate in light of the factors EPA is directed to
consider in CAA section 213(a)(3). The Agency believes it is important
to correct its nonhandheld CO emission standard to align with CARB's
new standard, and more importantly, to ensure that the federal standard
is technologically achievable and otherwise appropriate under section
213(a) by accounting for the CO emission offset between nonoxygenated
and oxygenated fuels.
Following publication of the Phase 1 small SI engine final rule,
Briggs and Stratton raised concerns in meetings with EPA that the Class
I and II 469 g/kW-hr CO emission standard was not technologically
feasible given the finalized certification fuel provisions. The Agency
indicated in a letter to the EMA on November 3, 1995, that any change
to the CO standard necessary to reflect differences in fuel effects
would require that the Agency initiate a notice and comment rulemaking
process.14 Additionally, EPA stated in correspondence on January
24, 1996, that if Briggs and Stratton submitted an adequately supported
petition to reconsider the final rule on this issue, EPA would initiate
a rulemaking to raise the Phase 1 CO standard for nonhandheld engines
by the amount of the emission offset.15 On March 4, 1996, Briggs
and Stratton formally petitioned
[[Page 34781]]
the Agency to amend the Phase 1 small SI engine regulations in one of
two ways: To permit the use of oxygenated fuels for certification while
maintaining the 469 g/kW-hr CO standard, or to raise the CO standard
for nonhandheld engines to 536 g/kW-hr.
---------------------------------------------------------------------------
\14\ Letter from Chester France, EPA to Jed Mandel, EMA,
November 3, 1995. A copy of this letter is included in the docket
for this rulemaking.
\15\ Letter from Paul Machiele, EPA to Addresses, January 24,
1996. A copy of this letter is included in the docket for this
rulemaking.
---------------------------------------------------------------------------
Basis for the Briggs and Stratton Petition
In its petition, Briggs and Stratton describes the grounds on which
it believes the Agency should grant its petition. The company argues
that the Clean Air Act requires EPA to grant the petition and that
granting the petition will further the primary purposes of the Phase 1
small SI engine regulations by enhancing the in-use control of NOX
emissions in small engine exhaust.
Briggs and Stratton states in its petition that the Agency is
compelled by statute and by its prior findings to grant the petition.
The company points out that the Clean Air Act specifies that the
emission standards must be achievable giving appropriate consideration
to the cost of applying available technology within the period of time
available to manufacturers. EPA decided in its Phase 1 small SI engine
final rule, states Briggs and Stratton, that the 469 g/kW-hr CO
standard was the most stringent achievable CO standard for Class I and
II nonhandheld engines when taking into account cost and leadtime
concerns. Briggs and Stratton additionally argues that the law requires
that the feasibility and stringency of federal emission standards
depend upon the test procedures used to measure compliance. Because the
data supplied by Briggs and Stratton and used by EPA to set the 469 g/
kW-hr CO standard for nonhandheld engines was data collected using
oxygenated fuels, while EPA's final rule does not allow for the use of
an oxygenated certification test fuel, Briggs and Stratton argues that
the rule must be revised to allow for the effect of the fuel
difference.
In general, EPA agrees with Briggs and Stratton's argument that a
change to the nonhandheld Phase 1 CO emission standard is necessary
based on the Clean Air Act's requirement that the standard reflect the
greatest degree of emission reduction achievable through the
application of technology which EPA determines will be available for
the regulated engines, giving appropriate consideration to the cost of
applying such technology and other factors.16 The Agency did
determine that the 469 g/kW-hr CO standard for nonhandheld engines was
appropriate based in part on test data supplied by Briggs and Stratton.
Prior to publication of the final rule it was never indicated to EPA
that the fuel these tests were conducted on was something other than
what EPA had proposed in its NPRM. Absent any indication to the
contrary, EPA had assumed that Briggs and Stratton had used a
nonoxygenated fuel such as Clean Air Act Baseline when conducting the
tests that generated the data the Agency used to set its nonhandheld CO
emission standard. Had EPA been made aware of the fact that Briggs and
Stratton had in fact used oxygenated fuel as the test fuel, the Agency
would have taken the difference in the effect of the fuel into account
when setting its final CO standard for nonhandheld engines. Analysis of
data recently supplied by Briggs and Stratton of comparison testing
using oxygenated and nonoxygenated fuels substantiates the company's
claim that the fuel type affects CO emissions. EPA's analysis of Briggs
and Stratton's data and of data collected in testing conducted by the
Agency after publication of the Phase 1 small SI engine final rule
indicates that nonhandheld engine CO emissions are indeed lower when
run on oxygenated fuels than they are when run on nonoxygenated fuels.
---------------------------------------------------------------------------
\16\ See 42 U.S.C. 7547(a)(3).
---------------------------------------------------------------------------
Briggs and Stratton also argues, as grounds for EPA granting its
petition, that allowing the use of oxygenated fuel would improve in-use
control of NOX in small engine exhaust. However, Briggs and
Stratton's argument is theoretical, and not supported by any data
analysis. As shown in the Regulatory Support Document (RSD) for this
rule, the Agency's analysis of the test data recently supplied by
Briggs and Stratton and of EPA's own test data indicate that the
differences of changes in NOX and HC depending on the use of
oxygenated or nonoxygenated fuels are minimal.
V. Snowthrower Open Crankcase Issue
Specific engine manufacturers and the Engine Manufacturers
Association (EMA) have raised concerns about the closed crankcase
certification requirement specified in the Phase 1 small SI engine
final rule at section 90.109. The Agency specified in its Phase 1 small
SI proposal that crankcases must be closed as a requirement of
certification in order to eliminate emissions that would otherwise
occur when a crankcase is vented to the atmosphere. It was EPA's
understanding that since most currently produced engines do have closed
crankcases, this requirement would impact relatively few manufacturers.
No comments were submitted in response to EPA's NPRM on this issue, and
EPA finalized the provision requiring closed crankcases. Subsequent to
publication of the Phase 1 small SI engine final rule, however, the
Agency has been made aware of concerns specific to manufacturers of
engines used exclusively in snowthrowers. These manufacturers have
indicated that it is necessary to maintain an open crankcase in order
to prevent the freeze up of the intake which would likely occur if a
crankcase breather hose was required. Additionally, these manufacturers
have provided evidence that the cost to close these crankcases and
prevent freeze up would be prohibitively expensive--possibly in excess
of the cost of the engine. Furthermore, they have argued that the
emissions benefit does not justify the cost. HC + NOX emissions
resulting from having the crankcase open for snowthrower equipment will
have no impact on summer ozone concentrations. Manufacturers claim that
the CO emission impact on CO nonattainment will also be minor due to
the limited numbers of these pieces of equipment and the small impact
opening the crankcase has on overall CO emissions from this small
number of engines. The Agency seeks additional and more detailed
comment on the cost and emission impacts of open crankcases on engines
used exclusively to power snowthrowers.
At this time the Agency has not received notification from any
other parties regarding similar difficulties. The Agency seeks comment
on whether there are engines used in other equipment types that face
similar difficulties in meeting the closed crankcase requirement. The
Agency requests that if such situations are identified, commenters
submit documentation regarding the technical and economic need for
utilizing an open crankcase.
The Agency is convinced by the arguments presented by the
manufacturers of engines used exclusively in snowthrowers that a change
to the closed crankcase requirement is appropriate. Therefore, EPA
proposes that the Administrator be given the flexibility to allow open
crankcases in certain circumstances for engines used exclusively in
snowthrowers. The Administrator would consider allowing open crankcases
for these engines if adequate demonstrations are made by the
manufacturers that the applicable emission standards would be met and
that the cost of abating emissions from an open crankcase would be
prohibitive. The Agency seeks comment on this proposed provision and on
what criteria the Administrator might apply in
[[Page 34782]]
determining whether costs are prohibitive.
VI. Provisions of This Rulemaking
In response to the petition submitted by Briggs and Stratton
Corporation, EPA has decided to propose revising the CO emission
standard for Class I and II nonhandheld small SI engines from 469 g/kW-
hr to 519 g/kW-hr. The underlying technical analysis and a description
of the data on which it is based is presented in the Regulatory Support
Document, a copy of which is in the public docket for this rulemaking.
Given that the Agency, had it known that Briggs and Stratton had
used an oxygenated test fuel to generate the test data which EPA used
to set the Class I and II nonhandheld standard, would have taken fuel
effects into account when determining the CO standard, the Agency
believes that it is appropriate, now knowing about the fuel
differences, to revise the Phase 1 final rule to reflect the fuel
effect on CO emissions.
Briggs and Stratton suggested two options that the Agency might
take to revise the Phase 1 rule in a way that would address the
company's concerns. The first suggested option was for the Agency to
permit the use of appropriate oxygenated gasolines for emissions
certification testing as a direct alternative to Indolene under the
current CO standard. The Agency has decided not to take this approach
for several reasons. While the Agency based its nonhandheld Class I and
II emission standards on Briggs and Stratton test data, which it now
knows was run on oxygenated fuels, the same cannot be said for the data
EPA used to set its standards for Classes III, IV, and V engines. The
Agency's greatest concern regarding the allowance of oxygenated fuels
generally is the effect on the stringency of the emission standards. If
the Agency were to allow certification testing on oxygenated fuels but
maintain its current standards, it would not be certain of the benefits
of HC and NOX emission reductions described in the final rule when
the engines are run on nonoxygenated fuels in the field. In addition,
the Agency has concerns about the nationwide availability of oxygenated
fuel. While it is required in certain nonattainment areas, those areas
of the country that are in attainment may not have reformulated or
oxygenated fuels commercially available. Correcting the CO standard is
also the simplest and least complicated solution to address the problem
presented by Briggs and Stratton's petition in a timely manner, which
is critical so that engine manufacturers will be able to certify their
model year 1997 production engines. Therefore, the Agency has decided
to address the issue of the appropriateness of the nonhandheld CO
emission standard by proposing to revise the CO standard for Class I
and II engines while retaining the specified certification test fuel.
To determine the amount by which to propose a revision to the
standard, EPA analyzed the comparative test data recently supplied by
Briggs and Stratton. When Briggs and Stratton submitted the data, the
company noted in a cover letter that the use of oxygenated fuels
reduced CO emissions by up to 47 g/kW-hr. However, Briggs and Stratton
requested in its petition that the Agency revise its CO standard upward
by 67 g/kW-hr, which would mean a new standard of 536 g/kW-hr. No
additional data was supplied to the Agency to support such an increase.
The rationale given by Briggs and Stratton for requesting an additional
20 g/kW-hr is that the test data supplied represents a limited number
of engine tests, and does not account for production variability. EPA's
response to the petitioner's argument is that the Agency took
production variability into account when setting the original 469 g/kW-
hr standard for the Phase 1 final rule. Any change to the CO emission
standard should thus be based solely on differences in fuel type.
Analysis of Briggs and Stratton data and of EPA test data indicates
that indeed there are cases where the effects of fuel differences on
the CO standard may be as much as 50 g/kW-hr. Given the limited
quantity of data, EPA considered quantifying the difference in fuel
types and the resultant change in CO emission standard by comparing the
two means from sample data using the two fuel types. As explained in
the RSD, statistical tests comparing the means of the two populations
(oxygenated fuel and nonoxygenated fuel) indicate an average difference
of 30.6 g/kW-hr for Class I engines, and 26.6 g/kW-hr for Class II
engines. However, EPA determined that it is most appropriate, and in
keeping with its approach for establishing the 469 g/kW-hr standard in
the final rule,17 to adjust the standard to take into account the
largest offsets observed in the Briggs and Stratton and EPA data, and
to ensure harmonization with CARB. The Agency thus concludes that in
order for engine manufacturers to achieve the greatest CO emission
reduction with the technology available within the given time limits of
the Phase 1 small SI engine regulation that it is appropriate to
increase the nonhandheld CO standard by 50 g/kW-hr to 519 g/kW-hr. In
reaching this conclusion, EPA has attempted to determine an appropriate
offset attributable to the effect of oxygenated fuel, while preserving
to the greatest extent possible the balance made by the final Phase 1
rule of various factors such as technical feasibility, cost, lead time,
and harmonization with CARB.
---------------------------------------------------------------------------
\17\ See the Response to Comments document in EPA Air Docket #
A-93-25.
---------------------------------------------------------------------------
This proposed action will further harmonize the Class I and II CO
standard with California's analogous standard, considering CARB's
recent action to increase its CO standard to 350 g/bhp-hr (469 g/kW-
hr). The Agency considers a nonhandheld CO emission standard of 519 g/
kW-hr with the use of a nonoxygenated fuel such as Indolene to be
roughly equivalent to CARB's Class I and II CO standard of 350 g/bhp-hr
with the use of an oxygenated fuel such as California Phase II.
As indicated in EPA's November 3, 1995, letter to EMA, the Agency
already provides a mechanism for those manufacturers who certify in
California using oxygenated fuel and wish to use those test results for
certification with EPA. Manufacturers may apply to EPA under the
alternative test procedures provision contained in the Phase 1 small SI
engine final rule (section 90.120(b)). If a manufacturer's submitted
data indicates that its test engine would comply with the applicable
federal emission standard using federal fuel, EPA would determine that
the engine family meets the requirements of Phase 1 and issue a
certificate of conformity. EPA has stated 18 that it will work
with manufacturers to assist them in making the required technical
demonstrations under the alternative certification procedures.
---------------------------------------------------------------------------
\18\ Letter from Chester France, EPA to Jed Mandel, EMA,
November 3, 1995.
---------------------------------------------------------------------------
This proposed action would also provide the Administrator with the
option of permitting open crankcases on engines used exclusively to
power snowthrowers, provided that the affected engine complies with
applicable standards and the manufacturer demonstrates that the cost of
closing the crankcase is prohibitive.
VII. Environmental Benefit Assessment
Although the change in the nonhandheld CO standard results in a
change from the 7% reduction in CO estimated in the final rule to a 2%
reduction in the CO inventory, the Agency has concluded that this rule
has no effect on the HC + NOX inventory and minimal effect on the
CO inventory in nonattainment areas. The majority of equipment powered
by the Class I and
[[Page 34783]]
II nonhandheld engines subject to this rule is used during the summer
months, when CO nonattainment is generally not a concern. Many
nonhandheld engine models are expected to have CO emission levels well
below the standard since CO levels are controlled in meeting the HC +
NOX emission standards which are not affected by this action.
The provision to provide the Administrator with the option of
permitting open crankcases in engines used exclusively to power
snowthrowers will require manufacturers seeking to demonstrate the need
for open crankcases to show compliance with applicable standards. The
Agency expects, therefore, that the proposed open crankcase option will
not affect the emission inventory or the emission reductions to be
achieved by the Phase 1 small SI engine final rule.
VIII. Economic Effects
The Agency anticipates that this rule will have minimal, if any,
affect on the costs or benefits of the Phase 1 small SI engine final
rule. Industry costs are unlikely to change because engine
manufacturers will not need to make additional modifications to meet
the relaxed CO standard. As there will be no additional cost for
industry to pass on to the consumer as a result of this rulemaking, EPA
is convinced that consumer cost impacts will remain unchanged. The
Agency therefore concludes that the economic effects of this rulemaking
are negligible.
IX. Effective Date
EPA is proposing to make these regulations effective upon signature
of the final rule because these regulations will not require any lead
time for compliance.
X. Public Participation
A. Comments and the Public Docket
The Agency welcomes comments on all aspects of this proposed
rulemaking. All comments (preferably in duplicate), with the exception
of proprietary information, should be directed to the EPA Air Docket
Section, Docket No. A-96-02 (see ADDRESSES). Commenters who wish to
submit proprietary information for consideration should clearly
separate such information from other comments by:
labeling proprietary information ``Confidential Business
Information'' and
sending proprietary information directly to the contact
person listed (see FOR FURTHER INFORMATION CONTACT) and not to the
public docket.
This will help ensure that proprietary information is not
inadvertently placed in the docket. If a commenter wants EPA to use a
submission labeled as confidential business information as part of the
basis for the final rule, then a nonconfidential version of the
document, which summarizes the key data or information, should be sent
to the docket.
Information covered by a claim of confidentiality will be disclosed
by EPA only to the extent allowed and by the procedures set forth in 40
CFR Part 2. If no claim of confidentiality accompanies the submission
when it is received by EPA, the submission may be made available to the
public without notifying the commenters.
B. Public Hearing
Anyone wishing to present testimony about this proposal at the
public hearing, should one be requested, (see DATES) should, if
possible, notify the contact person (see FOR FURTHER INFORMATION
CONTACT) at least two business days prior to the day of the hearing.
The contact person should be given an estimate of the time required for
the presentation of testimony and notification of any need for audio/
visual equipment. A sign-up sheet will be available at the registration
table the morning of the hearing for scheduling those who have not
notified the contact earlier. This testimony will be scheduled on a
first-come, first-served basis, and will follow the testimony that is
arranged in advance.
The Agency recommends that approximately 50 copies of the statement
or material to be presented be brought to the hearing for distribution
to the audience. In addition, EPA would find it helpful to receive an
advance copy of any statement or material to be presented at the
hearing at least two business days before the scheduled hearing date.
This is to give EPA staff adequate time to review such material before
the hearing. Such advance copies should be submitted to the contact
person listed.
XI. Administrative Requirements
A. Administrative Designation
Under Executive Order 12866 (58 FR 51735 (October 4, 1993)), EPA
must determine whether a regulatory action is ``significant'' and
therefore subject to OMB review and the requirements of the executive
order. The order defines ``significant regulatory action'' as one that
is likely to result in a rule that may:
(1) have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or state, local, or tribal governments or
communities;
(2) create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
(3) materially alter the budgetary impact of entitlement, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof;
(4) raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the order.
EPA has determined that this rule is not a ``significant regulatory
action'' under the terms of Executive Order 12866 and is therefore not
subject to OMB review.
B. Paperwork Reduction Act
This rule does not contain any new information requirements subject
to the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., nor does it
change the information collection requirements the Office of Management
and Budget (OMB) has previously approved. OMB has previously assigned
OMB control number 2060-0338 to the requirements associated with the
nonroad small SI engine certification information collection request
(ICR); this action does not change those requirements in any way.
C. Unfunded Mandates Reform Act
Section 202 of the Unfunded Mandates Reform Act of 1995 (signed
into law on March 22, 1995) requires that EPA prepare a budgetary
impact statement before promulgating a rule that includes a federal
mandate that may result in expenditure by state, local, and tribal
governments, in aggregate, or by the private sector, of $100 million or
more in any one year. Section 203 of the Unfunded Mandates Reform Act
requires EPA to establish a plan for obtaining input from and
informing, educating, and advising any small governments that may be
significantly or uniquely affected by the rule.
Under section 205 of the Unfunded Mandates Act, EPA must identify
and consider a reasonable number of regulatory alternatives before
promulgating a rule for which a budgetary impact statement must be
prepared. EPA must select from those alternatives the least costly,
most cost-effective, or least burdensome alternative that achieves the
objectives of the rule, unless EPA explains why this alternative is not
selected or the
[[Page 34784]]
selection of this alternative is inconsistent with law.
Because the rule proposed here is expected to result in the
expenditure by state, local, and tribal governments or the private
sector of less than $100 million in any one year, EPA has not prepared
a budgetary impact statement or specifically addressed selection of the
least costly, most cost-effective or least burdensome alternative.
Because small governments will not be significantly or uniquely
affected by this rule, EPA is not required to develop a plan with
regard to small governments.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601) requires EPA to
consider potential impacts of proposed regulations on small business.
If a preliminary analysis indicates that a proposed regulation would
have a significant adverse economic impact on a substantial number of
small business entities, a regulatory flexibility analysis must be
prepared.
This rule decreases the stringency of the CO exhaust emission
standard for Class I and II nonhandheld engines, thereby potentially
creating beneficial effects on small businesses by easing one provision
required of small engine manufacturers by the Phase 1 small SI engine
regulations. As a result, EPA certifies that this rulemaking will not
have a significant adverse effect on a substantial number of small
entities. Consequently, EPA has not prepared a regulatory flexibility
analysis for this rule.
List of Subjects in 40 CFR Part 90
Environmental protection, Administrative practice and procedure,
Air pollution control, Confidential business information, Environmental
protection, Imports, Incorporation by reference, Labeling, Nonroad
source pollution, Reporting and recordkeeping requirements.
Dated: June 26, 1996.
Carol M. Browner,
Administrator.
For the reasons set out in the preamble, part 90 of title 40 of the
Code of Federal Regulations is amended as follows:
PART 90--CONTROL OF EMISSIONS FROM NONROAD SPARK-IGNITION ENGINES
1. The authority citation for part 90 continues to read as follows:
Authority: Sections 203, 204, 205, 206, 207, 208, 209, 213, 215,
216, and 301(a) of the Clean Air Act, as amended (42 U.S.C. 7522,
7523, 7524, 7525, 7541, 7542, 7543, 7547, 7549, 7550, and 7601(a)).
Subpart B--[Amended]
2. Section 90.103 is amended by revising the table in paragraph (a)
introductory text to read as follows:
Sec. 90.103 Exhaust emission standards.
(a) * * *
Exhaust Emission Standards
[Grams per kilowatt-hour]
----------------------------------------------------------------------------------------------------------------
Hydrocarbon
Engine displacement class plus oxides Hydrocarbon Carbon Oxides of
of nitrogen monoxide nitrogen
----------------------------------------------------------------------------------------------------------------
I........................................................... 16.1 ........... 519 ...........
II.......................................................... 13.4 ........... 519 ...........
III......................................................... ........... 295 805 5.36
IV.......................................................... ........... 241 805 5.36
V........................................................... ........... 161 603 5.36
----------------------------------------------------------------------------------------------------------------
* * * * *
3. Section 90.109 is amended by adding new paragraph (c) to read as
follows:
Sec. 90.109 Requirement of certification--closed crankcase.
* * * * *
(c) Notwithstanding paragraph (a) of this section, the
Administrator may exercise the option to permit open crankcases for
engines used exclusively to power snowthrowers based upon a
manufacturer's demonstration, approved in advance by the Administrator,
that all applicable emission standards will be met by the engine and
that the cost of closing the crankcase is prohibitive.
[FR Doc. 96-16856 Filed 7-02-96; 8:45 am]
BILLING CODE 6560-50-P
Complete official Federal Register PDF
FR Doc. 96-16842 OJJDP Formula Grants Regulation
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Pages 34770-34775]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16842]
=======================================================================
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DEPARTMENT OF JUSTICE
Office of Juvenile Justice and Delinquency Prevention
28 CFR Part 31
[OJP No. 1091]
RIN 1121-AA39
OJJDP Formula Grants Regulation
AGENCY: Office of Justice Programs, Office of Juvenile Justice and
Delinquency Prevention.
ACTION: Proposed rule and request for public comment.
-----------------------------------------------------------------------
SUMMARY: The Office of Juvenile Justice and Delinquency Prevention
(OJJDP) is publishing for public comment proposed amendments to its
Formula Grants Regulation, 28 CFR Part 31. The Formula Grants
Regulation implements Part B of Title II of the Juvenile Justice and
Delinquency Prevention (JJDP) Act of 1974, as amended by the Juvenile
Justice and Delinquency Prevention Amendments of 1992. The proposed
amendments to the existing Regulation provide further clarification and
guidance to States in the formulation, submission and implementation of
State Formula Grant plans and determinations of State compliance with
plan requirements. They are intended to provide additional flexibility
and greater clarity to participating States with respect to key
provisions related to the core requirements of the JJDP Act.
DATES: Interested persons are invited to submit written comments which
must be received on or before August 19, 1996.
ADDRESSES: Address all comments to Mr. Shay Bilchik, Administrator,
Office of Juvenile Justice and Delinquency Prevention, 633 Indiana
Avenue NW., Room 742, Washington, DC 20531.
FOR FURTHER INFORMATION CONTACT: Ms. Roberta Dorn, Director, State
Relations and Assistance Division, Office of Juvenile Justice and
Delinquency Prevention, 633 Indiana Avenue NW., Room 543, Washington,
DC 20531; (202) 307-5924.
SUPPLEMENTARY INFORMATION: The Office of Juvenile Justice and
Delinquency Prevention is proposing revisions to the existing
Regulation, codified at 28 CFR Part 31, and inviting public comment on
the proposed changes. The proposed changes in the regulatory text
accomplish the following:
(1) Revise Sec. 31.303(d)(1)(i) to clarify the level of contact
that is prohibited between juveniles in a secure custody status
within an institution and incarcerated adults;
(2) Revise Sec. 31.303(d)(1)(i) by providing an exception to the
core requirement of separation with respect to brief, and
inadvertent contact between juveniles in a secure custody status
within an institution and incarcerated adults in nonresidential
areas;
(3) Revise Sec. 31.303(d)(1)(v) to permit the placement of an
adjudicated delinquent in an institution with adults once the
adjudicated delinquent reaches the State's age of full criminal
responsibility, when authorized by State law;
(4) Revise Sec. 31.303(e)(2) to permit the placement of an
accused or adjudicated delinquent juvenile in an adult jail or
lockup for up to six hours immediately before or after a court
appearance for processing and transportation purposes;
(5) Revise Sec. 31.303(e)(3) by eliminating the requirement for
OJJDP concurrence in State approved collocated juvenile facilities,
the requirement that a needs-based analysis precede a jurisdiction's
request for State approval, and to permit time-phased use of
nonresidential areas of collocated facilities;
(6) Revise Sec. 31.303(f)(2) to expressly provide that accused
status offenders can be placed in a secure juvenile detention
facility for up to twenty-four hours, exclusive of weekends and
holidays, prior to an initial court appearance and up to twenty-four
hours, exclusive of weekends and holidays, following an initial
court appearance;
(7) Revise Sec. 31.303(f)(3)(vi) to eliminate the regulatory
recommendation that a multi disciplinary team may be used to satisfy
the ``public agency'' requirement, under the valid court order
exception even if some members represent court or law enforcement
agencies;
(8) Revise Sec. 31.303(f)(4)(vi) to eliminate the requirement
that States document and describe in their annual monitoring report
to OJJDP the specific circumstances surrounding each use of
distance/ground transportation and weather exceptions to the jail
and lockup removal requirement;
(9) Revise Sec. 31.303(f)(5)(i)(C) to define and clarify the
scope of the exception to the deinstitutionalization of status
offenders requirement for offenses under ``Sec. 922(x) of Title 18
or other similar State law'' (relating to possession of handguns by
juveniles);
[[Page 34771]]
(10) Revise Sec. 31.303(f)(6)(i) to eliminate portions of the
section related to funding eligibility for fiscal year 1993 and
prior years that are no longer applicable;
(11) Revise Sec. 31.303(f)(6)(ii) to permit States that do not
have a law, regulation, or court rule prohibiting the incarceration
of all juvenile offenders in circumstances that would be in
violation of the separation requirement to be eligible for a finding
of compliance if reported violations do not constitute a pattern or
practice and mechanisms are in place to prevent such violations from
recurring in the future; and
(12) Revise Sec. 31.303(j) to clarify the purpose of the
Disproportionate Minority Confinement core requirement.
Contact With Incarcerated Adults
OJJDP recognizes that there has been a lack of clarity surrounding
the issue of contact between juveniles and incarcerated adults in
secure facilities. OJJDP finds that the term ``sight and sound
contact'' needs to be clarified. In the 1992 amendments to the JJDP
Act, Congress amended the existing ``regular'' contact standard that
defined the level of permissible contact between juveniles and
incarcerated adults by deleting the word ``regular''. OJJDP interpreted
Congress' intent to be that ``haphazard and accidental contact''
between juveniles and incarcerated adults should be prohibited because
this was the level of contact permitted under the regulation
implementing the no ``regular contact'' prohibition in effect prior to
the 1992 amendments. After further review, OJJDP believes that the no
contact prohibition should be interpreted to preclude the systematic,
procedural, and condoned contact between juveniles and incarcerated
adults in secure areas of facilities. Consequently, OJJDP would not
consider brief and inadvertent or accidental contact between juveniles
and incarcerated adults in nonresidential areas of a secure facility to
be a violation of the separation requirement. Specifically, OJJDP
proposes to amend the regulation to provide that brief and inadvertent
contact between juveniles and incarcerated adults in secure
nonresidential areas of a facility such as dining, recreational,
educational, vocational, health care, sallyports and passageways
(hallways) should not be considered a violation of the JJDP Act
separation requirement. However, in any secure residential area of a
facility, any contact between juvenile offenders and adult inmates is
prohibited.
Further, the regulation would provide definitions for sight and
sound contact to assist in understanding what is permitted under
Sec. 223(a)(13). Sight contact is defined as clear visual contact
between incarcerated adults and juveniles in close proximity of each
other. For example, a detained juvenile who sees an adult inmate who is
several hundred feet away is not in close proximity to the incarcerated
adult. In this scenario, the juvenile is not exposed to any conceivable
harm as a consequence of seeing an adult inmate several hundred feet
away. A rule of reason should be exercised by jurisdictions in
assessing whether a juvenile who is exposed visually to an incarcerated
adult is in close proximity to that adult.
With respect to sound contact, the regulation would state that
``direct'' oral communication between incarcerated adults and juveniles
is prohibited. This addition is intended to alleviate concerns over
misinterpretation of this provision. The purpose of the provision is to
prevent incarcerated adults from having direct oral communication with
juveniles, thereby reducing the likelihood of intimidation and
harassment. A rule of reason should also be exercised with sound
contact. Direct oral communication such as conversations and yelling in
close proximity is clearly prohibited. However, an incarcerated adult
yelling at a juvenile who is several hundred feet away may not be
engaged in direct oral communication with the juvenile.
Placement of Juveniles in Adult Facilities
Under the current regulation, States are prohibited from
administratively reclassifying and transferring adjudicated delinquents
to adult (criminal) correctional institutions. OJJDP recognizes that
State laws are increasingly providing for the mandatory or permissible
transfer of adjudicated delinquents to adult facilities once the
delinquent has attained the age of full criminal responsibility under
State law. Consequently, OJJDP proposes to amend the regulation to
provide that it is not a violation of the separation requirement to
transfer an adjudicated delinquent to an adult correctional institution
once the adjudicated delinquent has reached the age of full criminal
responsibility established by State law. The proposed regulation would
permit the placement of an adjudicated delinquent who reaches the age
of full criminal responsibility in an adult correctional facility only
when such transfers are required or authorized by State law.
OJJDP also proposes to amend the regulation to permit the placement
of an alleged or adjudicated delinquent in an adult jail or lockup for
up to six hours immediately before or after a court appearance. Several
States have advised OJJDP that the detention of a juvenile prior to a
court appearance and the immediate transport of a juvenile after a
court appearance creates a difficulty if there is more than one
juvenile before the court on a given day or where separate facilities
are not available. The secure detention of an alleged or adjudicated
delinquent in a jail or lockup for up to six hours immediately before
or after a court appearance would be permissible when circumstances
warrant such a detention, and provided that such juveniles are
separated from adult offenders.
Collocated Facilities
OJJDP currently requires that a needs-based analysis precede a
jurisdiction's request for State approval and OJJDP's concurrence in
order for a juvenile detention facility that is collocated with an
adult jail or lockup to qualify as a separate juvenile detention
facility. OJJDP finds that this requirement is best left to the State
to determine whether a needs-based analysis should be required. In
addition, OJJDP's concurrence with a State agency's decision to approve
a collocated facility would no longer be required. The elimination of
the needs-based analysis and OJJDP's concurrence does not negate the
separation criteria set forth in Sec. 31.303(e)(3)(D). The regularly
scheduled review of State monitoring systems would insure that the
facility continues to meet the separate juvenile detention facility
criteria. Consequently, OJJDP proposes to modify Sec. 31.303(e)(3) to
reflect the elimination of the needs-based analysis and OJJDP's
concurrence.
Under the current regulation, collocated facilities are prohibited
from sharing common use nonresidential areas. Based on State and local
input, OJJDP finds that common use nonresidential areas should be
permissible in collocated facilities. This would require the
utilization of time-phasing in order to allow both juveniles and adults
access to available educational, vocational, and recreational areas of
collocated facilities. The allowance of time-phased use would apply
only to nonresidential areas in collocated facilities.
Deinstitutionalization of Status Offenders
OJJDP has found that confusion exists over the secure detention of
accused status offenders and non-offenders. For purposes of
clarification, OJJDP is adding a paragraph at the end of
Sec. 31.303(f)(2) to state clearly that it is permissible to hold an
accused status
[[Page 34772]]
offender or a nonoffender in a secure juvenile detention facility for
up to twenty-four hours, exclusive of weekends and holidays, prior to
an initial appearance and up to twenty-four hours, exclusive of
weekends and holidays, after an initial court appearance.
Valid Court Order
Under the current statute and regulation, an independent public
agency (other than a court or law enforcement agency) is required to
prepare and submit a written report to a court that is considering an
order that directs or authorizes the placement of a status offender in
a secure facility for the violation of a valid court order. A multi
disciplinary review team that operates independently of a court is
described in the regulation as one option for meeting the requirement,
even where some members of the team may be law enforcement or court
agency staff. Pretrial Service agencies are another option for
jurisdictions to consider to meet the criteria of ``other than a court
or law enforcement agency.'' These offices operate in various
jurisdictions to assess and evaluate individuals who are before the
court for a determination on pretrial release or custody. The intent of
this multi disciplinary provision was to provide States with an example
of a public agency that would meet the criteria where some members of a
team were employed by the courts and/or law enforcement. Because the
wording of this provision had led some States to the conclusion that
multi disciplinary teams are required, the provision would be deleted
from the regulation.
Removal Exception
States are required to document and describe, in their annual
monitoring report to OJJDP, the specific circumstances surrounding each
individual use of the distance/ground transportation and weather
exceptions to the jail and lockup removal requirement. OJJDP finds this
requirement to be overly burdensome on the States and therefore
proposes that it be deleted from the regulation.
Reporting Requirement
The JJDP Act provides that juveniles may be securely detained or
confined pursuant to 18 U.S.C. 922(x) or a similar State law. Section
922(x) was added to the Federal Criminal Code by the Youth Handgun
Safety Act that was passed as a part of the Violent Crime Control and
Law Enforcement Act of 1994, Pub. L. No. 103-322, 108 Stat. 1796
(1994), codified as amended at 42 U.S.C. 13701 et seq. Specifically,
Sec. 922(x) makes it a Federal delinquent offense for a juvenile to
possess a handgun. The possession of a handgun by a juvenile is,
however, a status offense in those States where possession of a handgun
by an adult is permitted. Consequently, the Youth Handgun Safety Act
specifically amended the JJDP Act to exclude from the
deinstitutionalization of status offenders requirement a juvenile who
has violated Sec. 922(x) or a similar State law. For the purpose of
clarification, where Sec. 922(x) initially appears in the regulation,
it is described as a federal law prohibiting the possession of a
handgun by a juvenile and specifically excluding such a violation, or
the violation of a similar State law, from the coverage of the
deinstitutionalization of status offenders requirement.
Compliance
OJJDP would delete the first two sentences of Sec. 31.303(f)(6)(i)
because it pertains to States substantially complying with the
deinstitutionalization of status offenders core requirement in fiscal
year 1993 and prior years. The substantial compliance criteria allowed
States to be eligible for formula grant funding during these years if
the State had achieve a seventy five percent reduction in the aggregate
number of status offenders and nonoffenders held in secure detention or
correctional facilities and had made an unequivocal commitment to
achieving full compliance. Because this standard does not apply to
fiscal years beyond 1994, OJJDP would remove it from the regulation.
However, the portion of the section that defines full compliance would
remain.
Under the current regulation, compliance with the separation
requirement is considered to be achieved when a State can demonstrate
that in the last monitoring report, covering a full 12 months of data,
no juveniles were incarcerated in circumstances in violation of the
separation requirement. Also, compliance can be achieved where a State
has a law, regulation, court rule, or other established executive or
judicial policy clearly prohibiting the incarceration of juvenile
offenders in circumstances that would be in violation of the separation
requirement, and violations reported do not constitute a pattern or
practice in the State. However, a State that has no law or policy that
mirrors the JJDP Act separation requirement could not be in compliance
if any juvenile was held in violation of the separation requirement.
OJJDP proposes to modify this policy in order not to unfairly penalize
States that have not enacted laws, rules, regulations or policies
prohibiting the incarceration of all juvenile offenders under
circumstances that would be in violation of the separation requirement.
OJJDP proposes a single standard applicable to all States regardless of
whether a law, regulation, rule or policy exists that prohibits the
detention of juveniles with incarcerated adults. Specifically,
compliance can be established under circumstances in which the
instances do not indicate a pattern or practice and mechanisms or plans
to address exist within the State to ensure that such instances are
unlikely to recur in the future.
Minority Detention and Confinement
Several States have expressed concern over the Disproportionate
Minority Confinement (Sec. 223(a)(23)) core requirement of the JJDP
Act. Specifically, this core requirement has been criticized as
requiring the establishment of numerical standards or quotas in order
for a State to achieve or maintain compliance. This is not the purpose
of the statute or its implementing regulation. In order to respond to
this concern, two sentences have been added to Sec. 31.303(j) of the
regulation to state specifically that the purpose of the statute and
regulation is to encourage States to address, programmatically, any
features of its justice system that may account for the
disproportionate detention or confinement of minority juveniles. The
section states clearly that the Disproportionate Minority Confinement
core requirement neither requires nor establishes numerical standards
or quotas in order for a State to achieve or maintain compliance.
Executive Order 12866
This proposed rule is not a ``significant regulatory action'' for
purposes of Executive Order 12866 because it does not result in: (1) An
annual effect on the economy of $100 million or more or adversely
affect in a material way the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or state, local or tribal governments or communities; (2)
create a serious inconsistency or otherwise interfere with action taken
or planned by another agency; (3) materially alter the budgetary impact
of entitlement, grants, user fees, or loan programs or the rights and
obligations of recipients thereof; and (4) does not raise novel legal
or policy issues arising out of legal mandates, the President's
priorities or the principles of Executive Order No. 12866. The Office
of Management and
[[Page 34773]]
Budget has waived its review process for this rule under Executive
Order 12866.
Regulatory Flexibility Act
This proposed rule, if promulgated, will not have a ``significant''
economic impact on a substantial number of small ``entities'' as
defined by the Regulatory Flexibility Act. This action is intended to
relieve existing requirements in the Formula Grants program and to
clarify other provisions so as to promote compliance with its
provisions by States participating in the program.
Paperwork Reduction Act
No collections of information requirements are contained in or
affected by this regulation pursuant to the Paperwork Reduction Act,
codified at 44 U.S.C. 3504(H).
Intergovernmental Review of Federal Programs
In accordance with Executive Order 12372 and the Department of
Justice's implementing regulation 28 CFR Part 30, States must submit
Formula Grant Program applications to the State ``Single Point of
Contact,'' if one exists. The State may take up to 60 days from the
application date to comment on the application.
List of Subjects in 28 CFR Part 31
Grant programs--law, Juvenile delinquency, Grant programs.
For the reasons set forth in the preamble, it is proposed to amend
the OJJDP Formula Grants Regulation, 28 CFR Part 31, as follows:
PART 31--[AMENDED]
1. The authority citation for Part 31 would continue to read as
follows:
Authority: 42 U.S.C. 5601 et seq.
2. Section 31.303 is amended by revising paragraphs (d)(1)(i) and
(v) to read as follows:
Sec. 31.303 Substantive requirements.
* * * * *
(d)(1) * * *
(i) Separation. Describe its plan and procedure, covering the
three-year planning cycle, for assuring that the requirements of this
section are met. The term ``contact'' includes any physical or
sustained sight or sound contact between juveniles in a secure custody
status and incarcerated adults, including inmate trustees. A juvenile
in a secure custody status is one who is physically detained or
confined in a locked room or other area set aside or used for the
specific purpose of securely detaining persons who are in law
enforcement custody. Secure detention or confinement may result either
from being placed in such a room or area and/or from being physically
secured to a cuffing rail or other stationary object. Sight contact is
defined as clear visual contact between incarcerated adults and
juveniles within close proximity to each other. Sound contact is
defined as direct oral communication between incarcerated adults and
juveniles. Separation must be accomplished in all secure areas of the
facility which include, but are not limited to, admissions, sleeping,
toilet and shower, and other areas, as appropriate. Brief and
inadvertent or accidental contact between juveniles in a secure custody
status and incarcerated adults, in secure nonresidential areas of a
facility such as dining, recreational, educational, vocational, health
care, sally ports or other entry areas, and passageways (hallways)
would not require a State to document or report such contact as a
violation. However, any contact in a residential area of a secure
facility between juveniles and incarcerated adults would be a
reportable violation.
* * * * *
(v) Assure that adjudicated delinquents are not reclassified
administratively and transferred to an adult (criminal) correctional
authority to avoid the intent of separating juveniles from adult
criminals in jails or correctional facilities. A State is not
prohibited from placing or transferring an alleged or adjudicated
delinquent who reaches the State's age of full criminal responsibility
to an adult facility when required or authorized by State law. However,
the administrative transfer, without statutory direction or
authorization, of a juvenile offender to an adult correctional
authority, or a transfer within a mixed juvenile and adult facility for
placement with adult criminals, either before or after a juvenile
reaches the age of full criminal responsibility, is prohibited. A State
is also precluded from transferring adult offenders to a juvenile
correctional authority for placement in a juvenile facility. This
neither prohibits nor restricts the waiver or transfer of a juvenile to
criminal court for prosecution, in accordance with State law, for a
criminal felony violation, nor the detention or confinement of a waived
or transferred criminal felony violator in an adult facility.
* * * * *
3. Section 31.303(e) is amended by revising paragraphs (e)(2),
(e)(3) introductory text and (e)(3)(i) to read as follows:
Sec. 31.303 Substantive requirements.
* * * * *
(e) * * *
(2) Describe the barriers that a State faces in removing all
juveniles from adult jails and lockups. This requirement excepts only
those alleged or adjudicated juvenile delinquents placed in a jail or a
lockup for up to six hours from the time they enter a secure custody
status or immediately before or after a court appearance, those
juveniles formally waived or transferred to criminal court and against
whom criminal felony charges have been filed, or juveniles over whom a
criminal court has original or concurrent jurisdiction and such court's
jurisdiction has been invoked through the filing of criminal felony
charges.
(3) Collocated facilities. (i) Determine whether or not a facility
in which juveniles are detained or confined is an adult jail or lockup.
The JJDP Act prohibits the secure custody of juveniles in adult jails
and lockups, except as otherwise provided under the Act and
implementing OJJDP regulations. Juvenile facilities collocated with
adult facilities are considered adult jails or lockups unless
paragraphs (e)(3)(i)(C)(1) through (4) criteria established in this
section are complied with.
(A) A collocated facility is a juvenile facility located in the
same building as an adult jail or lockup, or is part of a related
complex of buildings located on the same grounds as an adult jail or
lockup. A complex of buildings is considered ``related'' when it shares
physical features such as walls and fences, or services beyond
mechanical services (heating, air conditioning, water and sewer), or
the specialized services that are allowable under paragraph
(e)(3)(i)(C)(3) of this section.
(B) The State must determine whether a collocated facility
qualifies as a separate juvenile detention facility under the four
criteria set forth in paragraphs (e)(3)(i)(C)(1) through (4) of this
section for the purpose of monitoring compliance with
Sec. 223(a)(12)(A), (13) and (14) of the JJDP Act.
(C) Each of the following four criteria must be met in order to
ensure the requisite separateness of a juvenile detention facility that
is collocated with an adult jail or lockup:
(1) Separation between juveniles and adults such that there could
be no sight or sound contact between juveniles and incarcerated adults
in the facility. Separation can be achieved architecturally or through
time-phasing of common use nonresidential areas; and
[[Page 34774]]
(2) Separate juvenile and adult programs, including recreation,
education, vocation, counseling, dining, sleeping, and general living
activities. There must be an independent and comprehensive operational
plan for the juvenile detention facility which provides for a full
range of separate program services. No program activities may be shared
by juveniles and incarcerated adults. Time-phasing of common use
nonresidential areas is permissible to conduct program activities.
Equipment and other resources may be used by both populations subject
to security concerns; and
(3) Separate staff for the juvenile and adult populations,
including management, security, and direct care staff. Staff providing
specialized services (medical care, food service, laundry, maintenance
and engineering, etc.) who are not normally in contact with detainees,
or whose infrequent contacts occur under conditions of separation of
juveniles and adults, can serve both populations (subject to State
standards or licensing requirements). The day to day management,
security and direct care functions of the juvenile detention center
must be vested in a totally separate staff, dedicated solely to the
juvenile population within the collocated facilities; and
(4) In States that have established standards or licensing
requirements for juvenile detention facilities, the juvenile facility
must meet the standards (on the same basis as a free-standing juvenile
detention center) and be licensed as appropriate. If there are no State
standards or licensing requirements, OJJDP encourages States to
establish administrative requirements that authorize the State to
review the facility's physical plant, staffing patterns, and programs
in order to approve the collocated facility based on prevailing
national juvenile detention standards.
* * * * *
4. Section 31.303 is amended by revising paragraphs (f)(2),
(3)(vi), and (4)(vi) to read as follows:
Sec. 31.303 Substantive requirements.
* * * * *
(f) * * *
(2) For the purpose of monitoring for compliance with section
223(a)(12)(A) of the Act, a secure detention or correctional facility
is any secure public or private facility used for the lawful custody of
accused or adjudicated juvenile offenders or non-offenders, or used for
the lawful custody of accused or convicted adult criminal offenders.
Accused status offenders or non offenders in lawful custody can be held
in a secure juvenile detention facility for up to twenty-four hours,
exclusive of weekends and holidays, prior to an initial court
appearance and for an additional twenty-four hours, exclusive of
weekends and holidays, following a court appearance.
(3) * * *
(vi) In entering any order that directs or authorizes the placement
of a status offender in a secure facility, the judge presiding over an
initial probable cause hearing or violation hearing must determine that
all the elements of a valid court order (paragraphs (f)(3)(i), (ii) and
(iii) of this section) and the applicable due process rights (paragraph
(f)(3)(v) of this section) were afforded the juvenile and, in the case
of a violation hearing, the judge must obtain and review a written
report that: reviews the behavior of the juvenile and the circumstances
under which the juvenile was brought before the court and made subject
to such order; determines the reasons for the juvenile's behavior; and
determines whether all dispositions other than secure confinement have
been exhausted or are clearly inappropriate. This report must be
prepared and submitted by an appropriate public agency (other than a
court or law enforcement agency).
* * * * *
(4) * * *
(vi) Pursuant to section 223(a)(14) of the JJDP Act, the non-MSA
(low population density) exception to the jail and lockup removal
requirement as described in paragraphs (f)(4)(i) through (v) of this
section will remain in effect through 1997, and will allow for secure
custody beyond the twenty-four-hour period described in paragraph
(f)(4)(i) of this section when the facility is located where conditions
of distance to be traveled or the lack of highway, road, or other
ground transportation do not allow for court appearances within twenty-
four hours, so that a brief (not to exceed an additional forty-eight
hours) delay is excusable; or the facility is located where conditions
of safety exist (such as severely adverse, life-threatening weather
conditions that do not allow for reasonably safe travel), in which case
the time for an appearance may be delayed until twenty-four hours after
the time that such conditions allow for reasonably safe travel. States
may use these additional statutory allowances only where the precedent
requirements set forth in paragraphs (f)(4)(i) through (v) of this
section have been complied with. This may necessitate statutory or
judicial (court rule or opinion) relief within the State from the
twenty-four hours initial court appearance standard required by
paragraph (f)(4)(i) of this section.
* * * * *
5. Section 31.303(f)(5)(i)(C) is revised to read as follows:
Sec. 31.303 Substantive requirements.
* * * * *
(f) * * *
(5) * * *
(i) * * *
(C) The total number of accused status offenders and nonoffenders,
including out-of-State runaways and Federal wards, held in any secure
detention or correctional facility for longer than twenty-four hours
(not including weekends or holidays), excluding those held pursuant to
the valid court order provision as set forth in paragraph (f)(3) of
this section or pursuant to section 922(x) of Title 18, United States
Code (which prohibits the possession of a handgun by a juvenile), or a
similar State law. A juvenile who violates this statute, or a similar
state law, is excepted from the deinstitutionalization of status
offenders requirement;
* * * * *
6. Section 31.303 is amended by revising paragraphs (f)(6)(i) and
(ii) to read as follows:
Sec. 31.303 Substantive requirements.
* * * * *
(f) * * *
(6) * * *
(i) Full compliance with section 223(a)(12)(A) is achieved when a
State has removed 100 percent of status offenders and nonoffenders from
secure detention and correctional facilities or can demonstrate full
compliance with de minimis exceptions pursuant to the policy criteria
contained in the Federal Register of January 9, 1981 (46 FR 2566-2569).
(ii) Compliance with section 223(a)(13) has been achieved when a
State can demonstrate that:
(A) The last submitted monitoring report, covering a full 12 months
of data, demonstrates that no juveniles were incarcerated in
circumstances that were in violation of section 223(a)(13); or
(B)(1) The instances reported under paragraph (f)(6)(ii)(A) of this
section do not indicate a pattern or practice but rather constitute
isolated instances; and
(2) Existing mechanisms or plans to address these incidences are
such that they are unlikely to recur in the future.
* * * * *
7. Section 31.303 is amended by inserting the following sentences
after the 2nd sentence of paragraph (j) introductory text:
[[Page 34775]]
Sec. 31.303 Substantive requirements.
* * * * *
(j) * * * The purpose of the statute and regulation is to encourage
States to address, programmatically, any features of its justice
system, and related laws and policies, which may account for the
disproportionate detention or confinement of minority juveniles in
secure detention facilities, secure correctional facilities, jails and
lockups. The Disproportionate Minority Confinement core requirement
neither establishes nor requires numerical standards or quotas in order
for a State to achieve or maintain compliance. * * *
* * * * *
Dated: June 26, 1996.
Shay Bilchik,
Administrator, Office of Juvenile Justice and Delinquency Prevention.
[FR Doc. 96-16842 Filed 7-2-96; 8:45 am]
BILLING CODE 4410-18-P
Complete official Federal Register PDF
FR Doc. 96-16841 Relations With Dealers in Securities Under Section 32, Banking Act of 1933; Miscellaneous Interpretations
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Pages 34749-34751]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16841]
=======================================================================
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FEDERAL RESERVE SYSTEM
12 CFR Parts 218 and 250
[Regulation R; Docket No. R-0931]
Relations With Dealers in Securities Under Section 32, Banking
Act of 1933; Miscellaneous Interpretations
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Notice of proposed rulemaking.
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SUMMARY: The Board is proposing to amend its regulations to remove
Regulation R concerning relations with dealers in securities under
section 32 of the Banking Act of 1933, which the Board believes is no
longer necessary. The Board also is proposing to amend its regulations
to remove an interpretation of section 32 of the Glass-Steagall Act,
which the Board believes is no longer necessary. This interpretation
explains the position of the Board regarding the application of the
prohibitions of section 32 to bank holding companies.
DATES: Comments must be received by August 2, 1996.
ADDRESSES: Comments should refer to Docket No. R-0931 and may be mailed
to William W. Wiles, Secretary, Board of Governors of the Federal
Reserve System, Docket No. R-0931, 20th Street and Constitution Avenue,
NW., Washington, DC 20551. Comments addressed to Mr. Wiles may also be
delivered to the Board's mail room between 8:45 a.m. and 5:15 p.m., and
to the security control room outside of those hours. Both the mail room
and control room are accessible from the courtyard entrance on 20th
Street between Constitution Avenue and C Street, NW. Comments may be
inspected in room MP-500 between 9 a.m. and 5 p.m., except as provided
in Sec. 261.8 of the Board's Rules Regarding Availability of
Information, 12 CFR 261.8.
FOR FURTHER INFORMATION CONTACT: Richard M. Ashton, Associate General
Counsel (202/452-3750), or Thomas M. Corsi, Senior Attorney (202/452-
3275), Legal Division. For the hearing impaired only,
Telecommunications Device for the Deaf (TDD), Dorothea Thompson (202/
452-3544).
SUPPLEMENTARY INFORMATION:
Section 303 of the Riegle Community Development and Regulatory
Improvement Act of 1994 (CDRI Act)
Section 303(a) of the CDRI Act (12 U.S.C. 4803(a)) requires the
Board, as well as the other federal banking agencies, to review its
regulations and written policies in order to streamline and modify
these regulations and policies to improve efficiency, reduce
unnecessary costs, and eliminate unwarranted constraints on credit
availability. The Board has reviewed its interpretations of section 32
of the Glass-Steagall Act (12 U.S.C. 78) with this purpose in mind,
and, as is explained in greater detail in the text that follows,
proposes to amend these interpretations in a way designed to meet the
goals of section 303(a).
Substantive Provisions of Regulation R
The Board's Regulation R (12 CFR Part 218) implements section 32 of
the Glass-Steagall Act. Section 32 prohibits officer, director and
employee interlocks between member banks and firms ``primarily
engaged'' in underwriting and dealing in securities, and authorizes the
Board to exempt from this prohibition, under limited circumstances,
certain interlocks by regulation. Currently, Regulation R restates the
statutory language of section 32, and sets forth the only exemption
adopted by the Board since passage of the Glass-Steagall Act. The Board
also has codified in the CFR 14 interpretations of the substantive
provisions of section 32 and the regulation.1 The Board also has
issued other interpretations of section 32 that are contained in the
Federal Reserve Regulatory Service (FRRS).
---------------------------------------------------------------------------
\1\ 12 CFR 218.101-218.114.
---------------------------------------------------------------------------
The exemption in Regulation R, adopted by the Board in 1969,
permits interlocks between member banks and securities firms whose
securities underwriting and dealing activities are limited to
underwriting and dealing in only securities that a national bank would
be authorized to underwrite and deal in. The adoption of the express
exemption was apparently based on the assumption that the literal
language of the section 32 prohibition could at least arguably cover
bank-eligible securities activities.
Subsequently, in orders approving applications under the Bank
Holding Company Act (12 U.S.C. 1841 et seq.), the Board interpreted the
prohibitions of section 20 of the Glass-Steagall Act, which prohibits a
member bank from being affiliated with a firm engaged principally in
underwriting and dealing in securities, as not applying on their face
to underwriting and dealing in securities that may be underwritten and
dealt in directly by a state member bank. In these decisions, the Board
also expressed the view that section 32 similarly did not cover an
interlock between a member bank and a firm that was not engaged in
securities activities covered by section 20.2 Accordingly, in
light of the Board's more recent view of the scope of section 32, the
express exemption from the provisions of section 32 for bank-eligible
securities activities is no longer necessary.3 Moreover, the Board
has never adopted any other exemption to the interlocks provision and
historically, requests that the Board create new exemptions have been
infrequent and have been uniformly denied.4
---------------------------------------------------------------------------
\2\ This interpretation has been upheld by the courts.
Securities Industry Association v. Board of Governors of the Federal
Reserve System, 839 F.2d 47, 62 (2d Cir. 1988), cert. denied, 486
U.S. 1059 (1988).
\3\ The Board is proposing to adopt a new interpretation of
section 32 to clarify this point.
\4\ A footnote to Regulation R that dates to 1936 makes it clear
that a broker who is engaged solely in executing orders for the
purchase and sale of securities on behalf of others in the open
market is not engaged in the business referred to in section 32. The
Board has since authorized bank holding companies to engage in this
activity directly, reiterating that securities brokerage is not a
proscribed activity under either sections 32 or 20 of the Glass-
Steagall Act. BankAmerica Corporation, 69 Federal Reserve Bulletin
105 (1983). The courts upheld the Board's interpretation. Securities
Industry Assn. v. Board of Governors, 468 U.S. 207 (1984). The
removal of Regulation R does not affect this interpretation.
---------------------------------------------------------------------------
Since the exemption in Regulation R is no longer necessary, and it
is not necessary to have a substantive regulation solely to restate a
statutory provision, the Board is proposing to rescind Regulation R.
Bank Holding Company Interpretation of Section 32 of the Glass-
Steagall Act
With one exception, the 14 interpretations of section 32 now
contained in the CFR, would be retained and transferred to 12 CFR Part
250,
[[Page 34750]]
which contains miscellaneous Board interpretations.
By their terms, the prohibitions of section 32 apply only to member
banks. In 1969, the Board issued an interpretation that extended the
prohibitions of section 32 to a bank holding company where the
principal activity of the bank holding company is the ownership and
control of member banks.5 The Board is now seeking public comment
on rescinding this interpretation.
---------------------------------------------------------------------------
\5\ 12 CFR 218.114.
---------------------------------------------------------------------------
The Board based its 1969 interpretation not so much on the literal
language of section 32, but on its belief that where the ownership and
control of member banks is the principal activity of a bank holding
company, the same possibilities of abuse that section 32 was designed
to prevent would be present in the case of a director of the holding
company as in the case of the member bank.6 The Board believed
that giving cognizance to the separate corporate entities in such a
situation would partially frustrate Congressional purpose in enacting
section 32.
---------------------------------------------------------------------------
\6\ As noted in the Board's interpretation, section 32 is
directed to the probability or likelihood that a bank director
interested in the underwriting business may use his or her influence
in the bank to involve it or its customers in securities sold by his
or her underwriting house.
---------------------------------------------------------------------------
The Board now believes that it could rescind this interpretation
and give some measure of regulatory burden relief to bank holding
companies in a manner consistent with section 32, and without
frustrating the Congressional purpose underlying the section. The Board
is not barred by the literal terms of the Glass-Steagall Act from
rescinding the interpretation. As noted above, section 32 specifically
restricts only those interlocks involving member banks. While the bank
holding company structure was not in widespread use when section 32 was
adopted, Congress has amended section 32 since the section was adopted
and since bank holding companies have become commonplace, but never has
extended the prohibitions in the section to bank holding companies.
Notably, in 1987, Congress extended the prohibitions of section 32 to
cover interlocks involving nonmember banks and thrift institutions but
not interlocks involving bank holding companies.7
---------------------------------------------------------------------------
\7\ The provisions extending the prohibitions of section 32 to
nonmember banks and thrifts expired in 1988.
---------------------------------------------------------------------------
The potential that removal of the interpretation could frustrate
Congressional purpose in enacting section 32 is mitigated by the fact
that the prohibitions of section 32 would continue to apply to member
banks. Accordingly, the directors, officers and employees of these
banks, none of whom may be interlocked with a securities firm, could
serve as a check against the possibilities of abuse that section 32 is
intended to prohibit. In addition, the Board believes that by
rescinding this interpretation, it would be granting some measure of
regulatory relief to bank holding companies by giving them access to a
larger pool of persons from which to choose their officers, directors,
and employees.8
---------------------------------------------------------------------------
\8\ Should the Board determine to rescind this interpretation,
this action would not affect other Board decisions or determinations
that restrict interlocks to ensure compliance with section 20 of the
Glass-Steagall Act (12 U.S.C. 377). See, e.g., Mellon Bank
Corporation, 79 Federal Reserve Bulletin 626 (1993).
---------------------------------------------------------------------------
Other Interpretations of Section 32
The Board also seeks comment on whether any of the other
interpretations of section 32 previously adopted by the Board could be
amended.
Regulatory Flexibility Act Analysis
Pursuant to section 605(b) of the Regulatory Flexibility Act (Pub.
L. 95-354, 5 U.S.C. 601 et seq.), the Board of Governors of the Federal
Reserve System certifies that adoption of this proposed rule will not
have a significant economic impact on a substantial number of small
entities that would be subject to the regulation.
This amendment will remove a regulation and an interpretation that
the Board believes are no longer necessary. The amendment does not
impose more burdensome requirements on bank holding companies than are
currently applicable.
Paperwork Reduction Act
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3506; 5 CFR 1320 Appendix A.1), the Board reviewed the proposed rule
under the authority delegated to the Board by the Office of Management
and Budget. No collections of information pursuant to the Paperwork
Reduction Act are contained in the proposed rule.
List of Subjects
12 CFR Part 218
Antitrust, Federal Reserve System, Securities.
12 CFR Part 250
Federal Reserve System.
For the reasons set forth in the preamble and under the authority
of 12 U.S.C. 248, the Board proposes to amend Chapter II of the Code of
Federal Regulations as set forth below:
PART 218--[AMENDED]
Secs. 218.101 through 218.113 [Redesignated as Secs. 250.400 through
250.412]
1. Sections 218.101 through 218.113 are redesignated as set forth
in the following table:
------------------------------------------------------------------------
New
0ld Section section
------------------------------------------------------------------------
218.101...................................................... 250.400
218.102...................................................... 250.401
218.103...................................................... 250.402
218.104...................................................... 250.403
218.105...................................................... 250.404
218.106...................................................... 250.405
218.107...................................................... 250.406
218.108...................................................... 250.407
218.109...................................................... 250.408
218.110...................................................... 250.409
218.111...................................................... 250.410
218.112...................................................... 250.411
218.113...................................................... 250.412
------------------------------------------------------------------------
PART 218--[REMOVED]
2. Part 218 is removed.
PART 250--MISCELLANEOUS INTERPRETATIONS
1. The authority citation for part 250 is revised to read as
follows:
Authority: 12 U.S.C. 78, 248(i) and 371c(e).
2. A new center heading is added immediately preceding newly
designated Sec. 250.400 to read as follows:
Interpretations of Section 32 of the Glass-Steagall Act
3. Section 250.413 is added to read as follows:
Sec. 250.413 ``Bank-eligible'' securities activities.
Section 32 of the Glass-Steagall Act (12 U.S.C. 78) prohibits any
officer, director, or employee of any corporation or unincorporated
association, any partner or employee of any partnership, and any
individual, primarily engaged in the issue, flotation, underwriting,
public sale, or distribution, at wholesale or retail, or through
syndicate participation, of stocks, bonds, or other similar securities,
from serving at the same time as an officer, director, or employee of
any member bank of the Federal Reserve System. The Board is of the
opinion that to the extent that a company, other entity or person is
engaged in securities activities that are expressly authorized for a
state member bank under section 16 of the Glass-Steagall Act (12 U.S.C.
24(7), 335), the company, other entity or individual is not engaged in
the types of activities described in section 32. In addition, a
securities broker who is engaged solely in executing orders for the
purchase and
[[Page 34751]]
sale of securities on behalf of others in the open market is not
engaged in the business referred to in section 32.
By order of the Board of Governors of the Federal Reserve
System.
Date: June 26, 1996.
William W. Wiles,
Secretary of the Board.
[FR Doc. 96-16841 Filed 7-02-96; 8:45am]
Billing Code 6210-01-P
Complete official Federal Register PDF
FR Doc. 96-16767 Radio Broadcasting Services; Dafter, MI
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Pages 34784-34785]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16767]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 73
[MM Docket No. 95-119; RM-8667]
Radio Broadcasting Services; Dafter, MI
AGENCY: Federal Communications Commission.
ACTION: Proposed rule; dismissal.
-----------------------------------------------------------------------
SUMMARY: This document dismisses a petition filed by Dafter Community
Broadcasters proposing the allotment of Channel 293A to Dafter,
Michigan. See FR 38539, July 27, 1995. Petitioner failed to provide
sufficient information to establish community status for Dafter.
Therefore, in keeping with Commission policy to refrain from allotting
channels to communities lacking community status, we have dismissed the
petiton for Dafter. With this action, this proceeding is terminated.
FOR FURTHER INFORMATION CONTACT: Kathleen Scheuerle, Mass Media Bureau,
(202) 418-2180.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order, MM Docket No. 95-119, adopted May 8, 1996, and released June
21, 1996. The full text of this Commission decision is available for
inspection and copying during normal business hours in the Commission's
Reference Center (Room 239), 1919 M Street, NW., Washington, DC. The
complete text of this decision may also be purchased from the
Commission's copy contractors, International Transcription Services,
Inc., 2100 M Street, NW., Suite 140, Washington, DC 20037, (202) 857-
3800.
List of Subjects in 47 CFR Part 73
Radio broadcasting.
[[Page 34785]]
Federal Communications Commission.
John A. Karousos,
Chief, Allocations Branch, Policy and Rules Division, Mass Media
Bureau.
[FR Doc. 96-16767 Filed 7-2-96; 8:45 am]
BILLING CODE 6712-01-F
Complete official Federal Register PDF
FR Doc. 96-16349 Assessments
[Federal Register Volume 61, Number 129 (Wednesday, July 3, 1996)]
[Proposed Rules]
[Pages 34751-34767]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16349]
=======================================================================
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FEDERAL DEPOSIT INSURANCE CORPORATION
12 CFR Part 327
RIN 3064-AB59
Assessments
AGENCY: Federal Deposit Insurance Corporation.
ACTION: Proposed Rule.
-----------------------------------------------------------------------
SUMMARY: The Federal Deposit Insurance Corporation (FDIC) is proposing
to amend its assessment regulations by adopting interpretive rules
regarding certain provisions therein that pertain to so-called Oakar
institutions: institutions that belong to one insurance fund (primary
fund) but hold deposits that are treated as insured by the other
insurance fund (secondary fund). Recent merger transactions and branch-
sale cases have revealed weaknesses in the FDIC's procedures for
attributing deposits to the two insurance funds and for computing the
growth of the amounts so attributed. The interpretive rules would
repair those weaknesses.
In addition, the FDIC is proposing to simplify and clarify the
existing rule by making changes in nomenclature.
DATES: Comments must be received by the FDIC on or before September 3,
1996.
ADDRESSES: Send comments to the Office of the Executive Secretary,
Federal Deposit Insurance Corporation, 550 17th Street, N.W.,
Washington, D.C. 20429. Comments may be hand- delivered to Room F-400,
1776 F Street, N.W., Washington, D.C., on business days between 8:30
a.m. and 5:00 p.m. (FAX number: 202/898-3838. Internet address:
[email protected]). Comments will be available for inspection in the
FDIC Public Information Center, Room 100, 801 17th Street, N.W.,
Washington, D.C. between 9:00 a.m. and 4:30 p.m. on business days.
FOR FURTHER INFORMATION CONTACT: Allan K. Long, Assistant Director,
Division of Finance, (703) 516-5559; Stephen Ledbetter, Chief,
Assessments Evaluation Section, Division of Insurance (202) 898-8658;
Jules Bernard, Counsel, Legal Division, (202) 898-3731, Federal Deposit
Insurance Corporation, Washington, D.C. 20429.
SUPPLEMENTARY INFORMATION: This proposed interpretive regulation would
alter the method for determining the assessments that Oakar
institutions pay to the two insurance funds. Accordingly, the proposed
regulation would directly affect all Oakar institutions. The proposed
regulation would also indirectly affect non-Oakar institutions,
however, by altering the business considerations that non-Oakar
institutions must take into account when they transfer deposits to or
from an Oakar institution (including an institution that becomes an
Oakar institution as a result of the transfer).
I. Background
Section 5(d)(2) of the FDI Act, 12 U.S.C. 1815(d)(2), places a
moratorium on inter-fund deposit-transfer transactions: mergers,
acquisitions, and other transactions in which an institution that is a
member of one insurance fund (primary fund) assumes the obligation to
pay deposits owed by an institution that is a member of the other
insurance fund (secondary fund). The moratorium is to remain in place
until the reserve ratio of the Savings Association Insurance Fund
(SAIF) reaches the level prescribed by statute. Id. 1815(d)(2)(A)(ii);
see id. 1817(b)(2)(A)(iv) (setting the target ratio at 1.25 percentum).
The next paragraph of section 5(d)--section 5(d)(3) of the FDI
Act--is known as the Oakar Amendment. See Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (FIRREA), Pub. L. 101-73
section 206(a)(7), 103 Stat. 183, 199-201 (Aug. 9, 1989); 12 U.S.C.
1815(d)(3). The Amendment permits certain deposit-transfer transactions
that would otherwise be prohibited by section 5(d)(2) (Oakar
transactions).
The Oakar Amendment introduces the concept of the ``adjusted
attributable deposit amount'' (AADA). An AADA is an artificial
construct: a number, expressed in dollars, that is generated in the
course of an Oakar transaction, and that pertains to the buyer. The
initial value of a buyer's AADA is equal to the amount of the
secondary-fund deposits that the buyer acquires from the seller. The
Oakar Amendment specifies that the AADA then increases at the same
underlying rate as the buyer's overall deposit base--that is, at the
rate of growth due to the buyer's ordinary business operations, not
counting growth due to the acquisition of deposits from another
institution (e.g., in a merger or a branch purchase). Id.
1815(d)(3)(C)(iii). The FDIC has adopted the view that ``growth'' and
``increases'' can refer to ``negative growth'' under the FDIC's
interpretation of the Amendment, an AADA decreases when the
institution's deposit base shrinks.
An AADA is used for the following purposes:
--Assessments. An Oakar institution pays two assessments to the FDIC--
one for deposit in the institution's secondary fund, and the other for
deposit in its primary fund. The secondary-fund assessment is based on
the portion of the institution's assessment base that is equal to its
AADA. The primary-fund assessment is based on the remaining portion of
the assessment base.
--Insurance. The AADA measures the volume of deposits that are
``treated as'' insured by the institution's secondary fund. The
remaining deposits are insured by the primary fund. If an Oakar
institution fails, and the failure causes a loss to the FDIC, the two
insurance funds share the loss in proportion to the amounts of deposits
that they insure.
For assessment purposes, the AADA is applied prospectively, as is
the assessment base. An Oakar institution has an AADA for a current
semiannual period, which is used to determine the institution's
assessment for that period.1 The current-period AADA is calculated
using deposit-growth and other information from the prior period.
---------------------------------------------------------------------------
\1\ Technically, each Oakar transaction generates its own AADA.
Oakar institutions typically participate in several Oakar
transactions. Accordingly, and Oakar institution generally has an
overall or composite AADA that consists of all the individual AADAs
generated in the various Oakar transactions, plus the growth
attributable to each individual AADA. The composite AADA can
generally be treated as a unit as a practical matter, because all
the constituent AADAs (except initial AADAs) grow at the same rate.
---------------------------------------------------------------------------
II. The proposed rule
A. Attribution of transferred deposits
1. The FDIC's Current Interpretation: The ``Rankin'' Rule
The FDIC has developed a methodology for attributing deposits to
the Bank Insurance Fund (BIF) on one hand and to the SAIF on the other
when the seller is an Oakar institution. See FDIC Advisory Op. 90-22, 2
FED. DEPOSIT INS. CORP., LAW, REGULATIONS, RELATED ACTS 4452 (1990)
(Rankin letter). The Rankin letter adopts the following rule: an Oakar
institution transfers its primary-fund deposits first, and only begins
to
[[Page 34752]]
transfer its secondary-fund deposits after its primary-fund deposits
have been exhausted.
The chief virtue of this approach is that of simplicity. Sellers
rarely transfer all their primary-fund deposits. A seller ordinarily
has the same AADA after the transaction as before, and a buyer does not
ordinarily become an Oakar institution. The Rankin letter's approach
also has the virtue of being a well- established and well-understood
interpretation.
Nevertheless, the Rankin letter's approach has certain weaknesses.
For example, if a seller transfers a large enough volume of deposits,
the seller becomes insured and assessed entirely by its secondary
fund--even though it remains a member of its primary fund in name, and
even though its business has not changed in character.
The Rankin letter's approach may also lend itself to ``gaming'' by
Oakar institutions. Oakar banks--and their owners--have an incentive to
eliminate their AADAs, because the SAIF assessment rates are currently
much higher than the BIF rates. If an Oakar bank belonged to a holding
company system, the holding company could purge the AADA from the
system as a whole by having the Oakar bank transfer all its BIF-insured
deposits to an affiliate, and then allowing the remnant of the Oakar
bank to wither away.
2. ``Blended'' deposits
An alternative approach would be to adopt the view that an Oakar
institution transfers a blend of deposits to the assuming institution.
The transferred deposits would be attributed to the two insurance funds
in the same ratio as the Oakar institution's overall deposits were so
attributed immediately prior to the transfer. This ``blended deposits''
approach would have the virtue of maintaining the relative proportions
of the seller's primary-fund deposit-base and the secondary-fund
deposit base, just as they are preserved in the ordinary course of
business.
As a general rule, the ratio would be fixed at the start of the
quarter in which the transfer takes place. If the institution were to
acquire deposits after the start of the quarter but prior to the
transfer, the acquired deposits would be added to the institution's
store of primary-fund and secondary-fund deposits as appropriate, and
the resulting amounts would be used to determine the ratio.
This procedure would be designed to exclude intra-quarter growth
from the calculation of the ratio. The FDIC considers that it would be
desirable to do so for two main reasons: it would keep the methodology
simple; and (in the ordinary case) it would make use of numbers that
are readily available to the parties.
At the same time, the ``blended deposits'' approach would create a
new Oakar institution each time a non-Oakar institution acquired
deposits from an Oakar institution. Accordingly, this approach would
generally subject buyers to more complex reporting and tracking
requirements. This approach would also require more disclosure on the
part of sellers, because buyers would have to be made aware that they
were acquiring high-cost SAIF deposits. But the ``blended deposits''
approach could remove some uncertainty because the buyer would know
that it was acquiring such deposits whenever the seller was an Oakar
institution.
In cases where the seller has acquired deposits prior to the sale
but during the same semiannual period as the sale, the blended-deposit
approach could be more complex. The acquisition of deposits would
change the seller's AADA-to-deposits ratio, which would need to be
calculated and made available in conjunction with the sale. At first,
the FDIC considered that this problem could be addressed by using the
ratio at the beginning of the quarter for all transactions during that
quarter. But the FDIC later came to the view that this technique could
open up the blended-deposit approach to gaming strategies that
institutions could use to decrease their AADAs.
Finally, under the blended-deposit approach, Oakar banks--which are
BIF members--could find it difficult (or expensive) to transfer
deposits to other institutions, due to market uncertainty regarding the
prospect of a special assessment to capitalize SAIF and the alternative
prospect of a continued premium differential between BIF and SAIF.
Any change to a blended-deposit approach would only apply to
transfers that take place on and after January 1, 1997. Accordingly,
the change would not affect any assessments that Oakar institutions
have paid in prior years. Nor would it affect the business aspects of
transactions that have already occurred, or that may occur during the
remainder of 1996.
B. FDIC Computation of the AADA; Reporting Requirements
The FDIC currently requires all institutions that assume secondary-
fund deposits in an Oakar transaction to submit an Oakar transaction
worksheet for the transaction. The FDIC provides the worksheet. The
FDIC provides the name of the buyer and the seller, and the
consummation date of the transaction. The buyer provides the total
deposits acquired, and the value of the AADA thereby generated. In
addition, Oakar institutions must complete a growth adjustment
worksheet to re-calculate their AADA as of December 31 of each year.
Finally, Oakar banks report the value of their AADA, on a quarterly
basis, in their quarterly reports of condition (call reports).
To implement the proposal to adjust AADAs on a quarterly basis, and
to ensure compliance with the statutory requirement that an AADA does
not grow during the semiannual period in which it is acquired, see 12
U.S.C. 1815(d)(3)(C)(iii), the FDIC initially considered replacing the
current annual growth adjustment worksheet with a slightly more
detailed quarterly worksheet. The FDIC was concerned that this approach
might impose a burden on Oakar institutions, however. The FDIC was
further concerned that this approach could result in an increase in the
frequency of errors associated with these calculations. Accordingly,
the FDIC now believes it might be more appropriate to relieve Oakar
institutions of this burden by assuming the responsibility for
calculating each Oakar institution's AADA, and eliminating the growth
adjustment worksheet entirely. The FDIC would calculate the AADA as
part of the current quarterly payment process. The calculation, with
supporting documentation, would accompany each institution's quarterly
assessment invoice.
If the FDIC assumes the responsibility for calculating the AADA,
Oakar institutions would no longer have to report their AADAs in their
call reports. But they would have to report three items on a quarterly
basis. Oakar institutions already report two of the items as part of
their annual growth adjustment worksheets: total deposits acquired in
the quarter, and secondary-fund deposits acquired in the quarter. Oakar
institutions would therefore have to supply one other item: total
deposits sold in the quarter.
These items will be zero in most quarters. Even in quarters in
which some transactions have occurred, the FDIC considers that the
items should be readily available and easy to calculate.
While for operational purposes, the FDIC would prefer to add these
three items to the call report, an alternative approach would be simply
to replace the current growth adjustment worksheet with a very simple
quarterly worksheet essentially consisting only of these items. The
FDIC expects this specific issue to be addressed in a Request for
Comment on Call Report
[[Page 34753]]
Revisions for 1997 currently expected to be issued jointly by the three
banking agencies in July.
In addition, if the FDIC adopts the blended-deposit approach for
attributing transferred deposits, the FDIC would need an additional
quarterly worksheet from Oakar institutions in order to calculate AADAs
accurately. The additional worksheet would report the date and amount
of deposits involved in each transaction in which the Oakar institution
transferred deposits to another institution during the quarter. This
information is not currently collected.
C. Treatment of AADAs on a Quarterly Basis
The FDIC is proposing to adopt the view that--under its existing
regulation--an AADA for a semiannual period may be considered to have
two quarterly components. The increment by which an AADA grows during a
semiannual period may be considered to be the result of the growth of
each quarterly component.
1. Quarterly Components
a. Propriety of quarterly components. The FDIC's assessment
regulation speaks of an institution's AADA ``for any semiannual
period''. 12 CFR 327.32(a)(3). The FDIC currently interprets this
phrase to mean that an AADA has a constant value throughout a
semiannual period. The FDIC has taken this view largely for historical
reasons. Recent changes in the Oakar Amendment give the FDIC room to
alter its view.
The FDIC's ``constant value'' view derives from the 1989 version of
the Oakar Amendment. See 12 U.S.C. 1815(d)(3) (Supp. I 1989). That
version of the Amendment said that an Oakar bank's AADA measured the
``portion of the average assessment base'' that the SAIF could assess.
Id. 1815(d)(3)(B). The FDI Act (as then in effect) defined the
``average assessment base'' as the average of the institution's
assessment bases on the two dates for which the institution was
required to file a call report. Id. 1817(b)(3). As a result, an AADA--
even a newly created one, and even one that was generated in a
transaction during the latter quarter of the prior semiannual period--
served to allocate an Oakar bank's entire assessment base for the
entire current semiannual period. The FDIC issued rules in keeping with
this view. 54 FR 51372 (Dec. 15, 1989).
Congress decoupled the AADA from the assessment base at the
beginning of 1994, as part of the FDIC's changeover to a risk-based
assessment system. See Federal Deposit Insurance Corporation
Improvement Act of 1991 (FDICIA), Pub. L. 102-242, section 302(e) &
(g), 105 Stat. 2236, 2349 (Dec. 19, 1991); see also Defense Production
Act Amendments of 1992, Pub L. 102-558, section 303(b)(6)(B), 106 Stat.
4198, 4225 (Oct. 28, 1992) (amending the FDICIA in relevant part); cf.
58 FR 34357 (June 23, 1993). The Oakar Amendment no longer links the
AADA directly to the assessment base. The Amendment merely declares,
``[T]hat portion of the deposits of [an Oakar institution] for any
semiannual period which is equal to [the Oakar institution's AADA] * *
* shall be treated as deposits which are insured by [the Oakar
institution's secondary fund]''. See 12 U.S.C. 1815(d)(3).
The FDIC has not changed its rules for assessing Oakar
institutions, and has continued to interpret the rules in the same
manner as before. Accordingly, the ``constant value'' concept of the
AADA has continued to be the view of the FDIC.
But the FDIC is no longer compelled to retain this view.
Furthermore, as discussed below, the FDIC has found that this approach
has certain disadvantages. The FDIC is therefore proposing to re-
interpret the phrase ``for any semiannual period'' as it appears in
Sec. 327.32(a)(3) in the light of the FDIC's quarterly assessment
program. The FDIC would take the position that an Oakar institution's
AADA for a semiannual period may be determined on a quarter-by-quarter
basis--just as the assessment base for a semiannual period is so
determined--and may be used to measure the portion of each quarterly
assessment base that is to be assessed by the institution's secondary
fund. The FDIC would also take the view that, if an AADA is generated
in a transaction that takes place during the second calendar quarter of
a semiannual period, the first quarterly component of the AADA for the
current (following) semiannual period is zero; only the second
quarterly component is equal to the volume of the secondary-fund
deposits that the buyer so acquired.
The FDIC considers that this view of the phrase ``for any
semiannual period'' is appropriate because the phrase is the
counterpart of, and is meant to interpret, the following language in
the Oakar Amendment:
(C) DETERMINATION OF ADJUSTED ATTRIBUTABLE DEPOSIT AMOUNT.--The
adjusted attributable deposit amount which shall be taken into
account for purposes of determining the amount of the assessment
under subparagraph (B) for any semiannual period * * *
12 U.S.C. 1815(d)(3)(C).
This passage speaks of the assessment--not the AADA--``for any
semiannual period''. Insofar as the AADA is concerned, the statutory
language merely specifies the semiannual period for which the AADA is
to be computed: the period for which the assessment is due. The FDIC
believes that the phrase ``for a semiannual period'' may properly be
read to have the same meaning.
Moreover, while the Amendment says the AADA must ``be taken into
account'' in determining a semiannual assessment, the Amendment does
not prescribe any particular method for doing so. The FDIC considers
that this language provides enough latitude for the FDIC to apply the
AADA in a manner that is appropriate to the quarterly payment program.
The FDIC's existing regulation is compatible with this
interpretation. The regulation speaks of an assessment base for each
quarter, not of an average of such bases. The regulation further says
that an Oakar institution's AADA fixes a portion of its ``assessment
base''. See 12 CFR 327.32(a)(2) (i) & (ii). Accordingly, the FDIC is
not proposing to modify the text that specifies the method for
computing AADAs.
b. Need for the re-interpretation. Under certain conditions, the
FDIC's ``constant value'' view of the AADA appears to be tantamount to
double-counting transferred deposits for a calendar quarter.
The appearance of ``double-counting'' occurs when an Oakar
institution acquires secondary-fund deposits in the latter half of a
semiannual period--i.e., in the second or fourth calendar quarter. The
seller has the deposits at the end of the first (or third) quarter; its
first payment for the upcoming semiannual period is based on them. At
the same time, the buyer's secondary-fund assessment is approximately
equal to an assessment on the transferred deposits for both quarters in
the semiannual period.2
---------------------------------------------------------------------------
\2\ The correlation is not so close as it first appears. Various
factors distort the relation between an Oakar institution's deposit
base on one hand and its primary-fund and secondary-fund assessment
bases on the other.
The chief factor is the so-called float deduction, which is
equal to the sum of one-sixth of an institution's demand deposits
plus one percentum of its time and savings deposits. See 12 CFR
327.5(a)(2). An Oakar institution's secondary-fund assessment base
is equal to the full value of its AADA, however. See id.
327.32(a)(2). The impact of the float deduction falls entirely on
the primary-fund assessment base.
Accordingly, neither the primary-fund assessment base nor the
secondary-fund assessment base is directly proportional to the
institutional's total deposits. Nor does the split between the
institutions two assessment base match the split between the
institution's primary-fund and secondary-fund deposits.
---------------------------------------------------------------------------
[[Page 34754]]
The source of this apparent effect is that, under the FDIC's
current interpretation of its rule, an AADA--even a newly generated
one--applies to an Oakar institution's entire assessment base for the
entire semiannual period. The following example illustrates the point.
The example focuses on the average assessment base, in order to show
the relationship between the AADA and the assessment base up to the
time the FDIC adopted the quarterly-payment procedure:
----------------------------------------------------------------------------------------------------------------
Seller
(SAIF) Buyer (BIF) Industry total
----------------------------------------------------------------------------------------------------------------
Before the transaction:
Starting assessment bases (ignoring
float, &c.):
SAIF........................... $200 $0 $200.
BIF............................ 0 100 100.
------------------------------------------------------------------------
200 100 300.
The transaction:
March call report...................... 200 100 300.
Deposits sold.......................... (100) +100 (AADA) Neutral.
June call report....................... 100 200 300.
After the transaction:
Ending assessment bases (ignoring
float, &c.):
SAIF........................... 100 100 (AADA) 200.
BIF............................ 0 100 100.
------------------------------------------------------------------------
100 200 300.
Average assessment bases:
(Ignoring float, &c.):
SAIF........................... 150 100 (AADA) 250.
BIF............................ 0 50 50.
------------------------------------------------------------------------
150 150 300.
----------------------------------------------------------------------------------------------------------------
The SAIF-assessable portion of the buyer's average assessment base
is $100. If the SAIF-assessable portion were based directly on the
average of the buyer's SAIF-insured deposits for the prior two
quarters--rather than on the buyer's AADA--that portion would only be
$50. The difference is equivalent to attributing the transferred $100
to the buyer for an extra one-half of the semiannual period: by
implication, for the first (or third) quarter as well as for the second
(or fourth) quarter.
The anomaly is most apparent from the standpoint of the industry as
a whole. The aggregate amount of the SAIF-assessable deposits
temporarily balloons to $250, while the aggregate amount of the BIF-
assessable deposits shrinks to $50. The anomaly only lasts for one
semiannual period, however. In the following period, the seller's
assessment base is $100 for both quarters, making its average
assessment base $100. The buyer's AADA remains $100. Accordingly, the
aggregate amount of SAIF-assessable deposits retreats to $200 once
more; and the aggregate amount of BIF-assessable deposits is back to
the full $100.
Broadening the focus to include both funds also brings out a more
subtle point: the anomaly is not tantamount to double-counting the
transferred deposits for a quarter, but rather to re-allocating the
buyer's assessment base from the BIF to the SAIF. The BIF-assessable
portion of the buyer's average assessment base is $50, not $100. The
difference is equivalent to cutting the buyer's BIF assessment base by
$100 for half the semiannual period.
The FDIC's quarterly-payment procedure has brought attention to
these anomalous effects. The quarterly-payment schedule is merely a new
collections schedule, not a new method for determining the amount due.
See 59 FR 67153 (Dec. 29, 1994). Accordingly, under current procedures,
the buyer and the seller in the illustration would pay the amounts
specified therein even under the quarterly-payment schedule.
When an Oakar transaction occurs in the latter half of a semiannual
period, however, the buyer's call report for the prior quarter does not
show an AADA. The buyer's first payment for the current semiannual
period is therefore based on its assessment base for that quarter, not
on its AADA. Moreover, the entire payment is computed using the
assessment rate for the institution's primary fund. The FDIC therefore
adjusts (and usually increases) the amount to be collected in the
second quarterly payment in order to correct these defects.
Interpreting the semiannual AADA to consist of two quarterly
components would eliminate this anomaly.
2. Quarterly Growth
The Oakar Amendment says that the growth rate for an AADA during a
semiannual period is equal to the ``annual rate of growth of deposits''
of the Oakar institution. The FDIC currently interprets the phrase
``annual rate'' to mean a rate determined over the interval of a full
year. An Oakar institution computes its ``annual rate of growth'' at
the end of each calendar year, and uses this figure to calculate the
AADA for use during the following year.
This procedure has a weakness. An Oakar institution's AADA tends to
drift out of alignment with the deposit base, because the AADA remains
constant while the deposit base changes. At the end of the year, when
the institution computes its AADA for the next year, the AADA
suddenly--but only temporarily--snaps back into its proper proportion.
The FDIC does not believe that Congress intended to cause such a
fluctuation in the relation between an institution's AADA and its
deposit base.
[[Page 34755]]
Moreover, from the FDIC's standpoint as insurer, it would be
appropriate to maintain a relatively steady correlation between the
AADA and the total deposit base. The FDIC is therefore proposing to
revise its view, and take the position that--after the end of the
semiannual period in which an institution's AADA has been established--
the AADA grows and shrinks at the same basic rate as the institution's
domestic deposit base (that is, excluding acquisitions and deposit
sales), measured contemporaneously on a quarter-by-quarter basis. Over
a full semiannual period, any increase or decrease in the AADA would
automatically occur at a rate equal to the ``rate of growth of
deposits'' during the semiannual period, thereby satisfying the
statutory requirement.
The FDIC considers that the statutory reference to an ``annual
rate'' does not foreclose this approach. In ordinary usage, ``annual
rate'' can refer to a rate that is expressed as an annual rate, even
though the interval during which the rate applies, and over which it is
determined, is a shorter interval such as a semiannual period (e.g., in
the case of six-month time deposits). For example, until recently, the
FDIC's rules regarding the payment of interest on deposits spoke of
``the annual rate of simple interest''--a phrase that pertained to
rates payable on time deposits having maturities as short as seven
days. See 12 CFR 329.3 (1993).
Comparison of Annual and Quarterly AADA Growth Adjustment Methods
Consider an Oakar institution that has total deposits of $15 as of
12/31/93, with an AADA of $6.5. Further assume that the institution's
total deposits grow by $1 every quarter, and that it does not
participate in any additional acquisitions or deposit sales. The
following graphs show the effects of making growth adjustments to its
AADA on an annual basis versus a quarterly basis.
BILLING CODE 6714-01-P
[[Page 34756]]
[GRAPHIC] [TIFF OMITTED] TP03JY96.004
[GRAPHIC] [TIFF OMITTED] TP03JY96.005
Since an AADA remains constant until a growth adjustment is
applied, any change in total deposits is reflected in the institution's
primary-fund deposits in the annual-adjustment method, while primary-
fund deposits and the AADA vary together with total deposits in the
quarterly-adjustment method.
The following graphs express this difference in terms of percents
of total deposits.
[[Page 34757]]
[GRAPHIC] [TIFF OMITTED] TP03JY96.006
[GRAPHIC] [TIFF OMITTED] TP03JY96.007
In the annual-adjustment method, the AADA becomes a smaller percent
of total deposits as the total grows. In the quarterly-adjustment
method, the AADA and the primary-fund deposits remain constant percents
of total deposits.
The FDIC considered an alternative approach: using the rate of
growth in the institution's deposit base for the prior four quarters,
measured from the current quarter. This technique would be as
consistent with the letter of the statute as the current method. But
the four-prior-quarters method would preserve the lag between the AADA
and the deposit base.
Comparison of Quarterly AADA Adjustments Using Different Growth Rate
Bases
Consider the same Oakar institution with beginning total deposits
of $15 and constant growth of $1 per quarter. The following graphs
illustrate the effects on deposits of using total-deposit growth rates
on two different bases: rolling one-year growth rates, and quarter-to-
quarter growth rates.
[[Page 34758]]
[GRAPHIC] [TIFF OMITTED] TP03JY96.008
[GRAPHIC] [TIFF OMITTED] TP03JY96.009
In both cases, the primary-fund deposits and the AADA appear to
vary together with total deposits, but it is difficult to discern their
precise relationship. Graphs of the same effects in terms of percents
of total deposits are more illustrative:
[[Page 34759]]
[GRAPHIC] [TIFF OMITTED] TP03JY96.010
[GRAPHIC] [TIFF OMITTED] TP03JY96.011
BILLING CODE 6714-01-C
[[Page 34760]]
In the percent-of-deposits graphs, the AADA and the primary-fund
deposits are shown to converge when the AADA growth adjustment is based
on rolling one-year growth rates. In this particular example, the
effect occurs because the institution's constant growth of $1 per
quarter results in a steadily decreasing rate of growth of total
deposits. Therefore, a rolling one-year growth rate of those total
deposits at any point in time will be more than the actual rate of
growth over the quarter to which the rolling rate is being applied.
While different growth characteristics for total deposits would yield
different relationships between the AADA and the primary fund over
time, the general point is that the relationships of the AADA and the
primary-fund deposits can vary when the AADA is adjusted, unless the
total-deposit rate of growth used for the adjustment is drawn from the
same period for which the rate is applied to the AADA.
As shown in the right-hand graph, applying the actual quarterly
growth rate for total deposits to the AADA results in stable percents
of total deposits for the AADA and primary fund deposits.
In sum, the FDIC considers that the quarterly approach is
permissible under the statute, and is preferable to any approach that
relies on a yearly interval to determine growth in the AADA.
D. Negative Growth of the AADA
One element of an Oakar institution's AADA for a current semiannual
period is ``the amount by which [the AADA for the preceding semiannual
period] 3 would have increased during the preceding semiannual
period if such increase occurred at a rate equal to the annual rate of
growth of [the Oakar institution's] deposits''. 12 U.S.C.
1815(d)(3)(C)(iii). The FDIC is proposing to codify its view that the
terms ``growth'' and ``increase'' encompass negative growth
(shrinkage). But the FDIC is proposing to change its interpretation by
excluding shrinkage due to deposit sales.
---------------------------------------------------------------------------
\3\ Theoretically, the growth rate is not applied directly to
the prior AADA, but rather to an amount that is computed afresh each
time--which amount is the sum of the various elements of the prior
AADA.
---------------------------------------------------------------------------
1. Negative Growth in General
The 1989 version of the Oakar Amendment focused on an Oakar bank's
underlying rate of growth for the purpose of determining the Oakar
bank's AADA. The 1989 version of the Amendment set a minimum growth
rate for an AADA of 7 percent. The Amendment then specified that, if an
Oakar bank's deposit base grew at a higher rate, the AADA would grow at
the higher rate too. But the Amendment excluded growth attributable to
mergers, branch purchases, and other acquisitions of deposits from
other BIF members: the deposits so acquired were to be subtracted from
the Oakar bank's total deposits for the purpose of determining the
growth in the Oakar bank's deposit base (and therefore the rate of
growth of the AADA). See 12 U.S.C. 1813(d)(3)(C)(3)(iii) (Supp. I
1989).
The 1989 version of the Oakar Amendment spoke only of ``growth''
and ``increases'' in the AADA. Id. The statute was internally
consistent in this regard, because AADAs could never decrease.
Congress eliminated the minimum growth rate as of the start of
1992. FDICIA section 501 (a) & (b), 105 Stat. 2389 & 2391. As a result,
the Oakar Amendment now specifies that an Oakar institution's AADA
grows at the same rate as its domestic deposits (excluding mergers,
branch acquisitions, and other acquisitions of deposits). 12 U.S.C.
1813(d)(3)(C).
The modern version of the Oakar Amendment continues to speak only
of ``growth'' and ``increases,'' however. Congress has not--at least
not explicitly--modified it to address the case of an institution that
has a shrinking deposit base. Nor has Congress addressed the case of an
institution that transfers deposits in bulk to another insured
institution.
The FDIC regards this omission as a gap in the statute that
requires interpretation. The FDIC does so because, if the statute were
read to allow only increases in AADAs, the statute would generate a
continuing shift in the relative insurance burden toward the SAIF. Most
Oakar institutions--and nearly all large Oakar institutions--are BIF-
member Oakar banks. If an Oakar bank's deposit base were to shrink
through ordinary business operations, but its AADA could not decline in
proportion to that shrinkage, the SAIF's share of the risk presented by
the Oakar bank would increase. But the reverse would not be true: if an
Oakar bank's deposit base increased, its AADA would rise as well, and
the SAIF would continue to bear the same share of the risk. The result
would be a tendency to displace the insurance burden from the BIF to
the SAIF.4
---------------------------------------------------------------------------
\4\ A shrinking Oakar thrift would have the opposite effect: The
BIF's exposure would increase, and the SAIF's exposure would
decrease. The Oakar thrifts are comparatively rare, however. The net
bias would run against the SAIF.
---------------------------------------------------------------------------
The FDIC further considers that the main themes of the changes that
Congress made to the Oakar Amendment in 1991 are those of
simplification, liberalization, and symmetry. Congress allowed savings
associations to acquire banks, as well as the other way around.
Congress allowed institutions to deal with one another directly,
eliminating the requirement that the institutions must belong to the
same holding company (and the need for approval by an extra federal
supervisor). Congress established a mirror-image set of rules for
assessing Oakar banks and Oakar thrifts. As noted above, Congress
repealed the 7 percentum floor on AADA growth, thereby eliminating the
most prominent cause of divergence between an Oakar institution's
assessment base and its deposit base. Congress expanded the scope of
the Oakar Amendment and made it congruent with the relevant provisions
of section 5(d)(2). See FDICIA section 501(a), 105 Stat. 2388-91 (Dec.
19, 1991).
In keeping with this view of the 1991 amendments, the FDIC
interprets the growth provisions of the Oakar Amendment symmetrically:
that is, to encompass negative growth rates as well as positive ones.
The FDIC takes the position that an Oakar institution's AADA grows and
shrinks at the same underlying rate of growth as the institution's
domestic deposits.
The FDIC considers that this interpretation is appropriate because
it accords with customary usage in the banking industry, and because it
is consistent with the purposes and the structure of the statute. Under
the FDIC's interpretation, each fund continues to bear a constant share
of the risk posed by the institution, and continues to draw assessments
from a constant proportion of the institution's deposit base.
Moreover, the FDIC's interpretation encourages banks to make the
investment that Congress wished to promote. If ``negative increases''
were disallowed, Oakar banks would see their SAIF assessments (which
currently carry a much higher rate) grow disproportionately when their
deposits shrank through ordinary business operations.
Finally, the interpretation is designed to avoid--and has generally
avoided--the anomaly of an institution having an AADA that is larger
than its total deposit base.
2. Negative Growth Due to Deposit-Transfers
As noted above, for the purpose of analyzing deposit sales, the
FDIC
[[Page 34761]]
follows the deposit-attribution principles set forth in the Rankin
letter: the Oakar institution transfers its primary-fund deposits until
they have been exhausted, and only then transfers its secondary-fund
deposits. The FDIC further considers that--consistent with the
moratorium imposed by section 5(d)(2)--the deposits continue to have
the same status for insurance purposes after the deposit sale as
before. The industry-wide stock of BIF-insured and SAIF-insured
deposits should remain the same.
The FDIC's procedure for calculating the growth of the AADA upsets
that balance, however. The deposit sale reduces the Oakar bank's total
deposit base by a certain percentage: accordingly, the Oakar bank's
AADA--and therefore its volume of SAIF-insured deposits--is reduced by
the same percentage. Its BIF-insured deposits increase correspondingly.
In effect, SAIF deposits are converted into BIF deposits, in violation
of the moratorium.
This effect occurs without regard for whether the transferred
deposits are primary-fund or secondary-fund deposits. Even when a BIF-
member Oakar bank transfers deposits to another BIF-member bank--a
transfer that, under the Rankin letter, would only involve BIF-insured
deposits--the deposit sale serves to shrink the transferring bank's
AADA.
The FDIC is proposing to cure this defect by excluding deposit
sales from the growth computation. The FDIC continues to believe that
the terms ``growth'' and ``increase'' as used in the statute are broad
enough to refer to a negative rate as well as a positive one. But the
FDIC does not consider that it is required to extend these terms beyond
reasonable limits. In particular, the FDIC does not believe that it
must necessarily interpret these terms to include a decrease that is
attributable to a bulk transfer of deposits. The statute itself
excludes the effect of an acquisition or other deposit-assumption from
the computation of growth. The FDIC considers that it has ample
authority to make an equivalent exclusion for deposit sales.
The FDIC believes its proposed interpretation is sound because
deposit sales do not--in and of themselves--represent any change in the
industry-wide deposit base of each fund. It is inappropriate for the
FDIC to generate such a change on its own as a collateral effect of its
assessment procedures. Moreover, the proposed interpretation is in
accord with the tenor of the amendments made by the FDICIA, because it
treats deposit sales symmetrically with deposit-acquisitions.
E. Value of an Initial AADA
The Oakar Amendment says that an Oakar institution's initial AADA
is equal to ``the amount of any deposits acquired by the institution in
connection with the transaction (as determined at the time of such
transaction)''. Id. 1815(d)(3)(C). The FDIC has by regulation
interpreted the phrase ``deposits acquired by the institution''. 12 CFR
327.32(a)(4). The regulation distinguishes between cases in which a
buyer assumes deposits from a healthy seller (healthy-seller cases),
and cases in which the FDIC is serving as conservator or receiver for
the seller at the time of the transaction (troubled-seller
cases).5
---------------------------------------------------------------------------
\5\ The regulation also refers to the Resolution Trust
Corporation (RTC). The reference is obsolete, as the RTC no longer
exists.
---------------------------------------------------------------------------
The FDIC proposes to retain but refine its interpretation with
respect to healthy-seller cases. The FDIC also proposes to codify its
``conduit'' rule for certain deposits that a buyer promptly retransfers
to a third party. The FDIC proposes to eliminate the special provisions
for troubled-seller cases.
1. The ``Nominal Amount'' Rule
The general rule is that a buyer's initial AADA equals the full
nominal amount of the assumed deposits. 12 CFR 327.32(a)(3)(4).
The FDIC is proposing to retain the substance of this provision.
The proposed rule would continue to emphasize the point that the amount
of the transferred deposits is to be measured by focusing on the volume
divested by the seller. The purpose of the rule is to make it clear
that post-transaction events--such as deposit run-off--have no bearing
on the calculation of the buyer's AADA.
The FDIC considers that the nominal-value rule is appropriate for
two chief reasons. Most importantly, it reflects the manifest intent of
the statute, which says that the volume of the acquired deposits are to
be ``determined at the time'' of the transaction. Second, the nominal-
value rule has the virtues of clarity and precision. A buyer and a
seller will both know precisely the value of an AADA that is generated
in an Oakar transaction. The buyer's expected secondary-fund
assessments can be an important cost for the parties to consider when
deciding on an acceptable price. The FDIC considers that the nominal-
value rule reduces uncertainty on this point.
The proposed rule would update this aspect of the regulation in two
minor ways. The existing rule is somewhat obsolete: it presumes that
the buyer assumes all the seller's deposits, and that all such deposits
are insured by the buyer's secondary fund. The reason for these
presumptions is purely historical. At the time the regulation was
adopted, the Oakar Amendment only spoke of cases in which the seller
merged into or consolidated with the buyer, or in which the buyer
acquired all the seller's assets and liabilities. See 12 U.S.C.
1815(d)(3)(A) (Supp. I 1989). The Amendment did not allow for less
comprehensive Oakar transactions (e.g., branch sales). Nor did it
contemplate a transaction in which the seller was an Oakar institution
in its own right.
The proposed rule would make it clear that the nominal-amount rule
applies to all Oakar transactions. The proposed rule would also specify
that the AADA is only equal to the nominal amount of the transferred
deposits that are insured by the secondary fund of the buyer, not
necessarily all the transferred deposits. Both these points represent
the current view of the FDIC.
2. Deposits Acquired From Troubled Institutions
The FDIC's current regulation provides various discounts that serve
to reduce the buyer's AADA when the seller is in conservatorship or
receivership at the time of the sale. See 12 CFR 327.32(a)(3)(4). The
FDIC is proposing to eliminate the discounts, on the ground that they
are no longer needed.
In adopting the rule, the FDIC observed that the deposits that a
buyer assumes from a troubled seller are quite volatile: the buyer
generally loses a certain percentage of the deposits almost
immediately. The FDIC characterized the lost deposits as ``phantom
deposits'', and said it would make no sense to require the bank to
continue to pay assessments on them. The FDIC further said that such a
requirement would impair its ability to transfer the business of such
thrifts to healthy enterprises, to the detriment of the communities the
thrifts were serving. See 54 FR at 51373. The FDIC accordingly adopted
an interpretive rule stating that the nominal amount of the deposits
transferred in such cases were to be discounted for the purpose of
computing the AADA generated in the transaction, as follows:
--Brokered deposits: All brokered deposits are subtracted from the
nominal volume of the transferred deposits.
--The ``80/80'' rule: Each remaining deposit is capped at $80,000. The
[[Page 34762]]
AADA is equal to 80% of the aggregate of the deposits as so capped.
The FDIC explained that these discounts reflected its actual
experience--that is, its experience with arranging purchase-and-
assumption transactions for institutions in receivership. Id. But the
discounts were not intended to represent the actual run-off that an
individual Oakar institution would sustain in a particular case.
Rather, they were an approximation or estimate of the run-off that
Oakar institutions ordinarily sustain in troubled-seller cases.
As an historical matter, the FDIC determined that it was
appropriate to provide the discounts because the funding decisions for
troubled thrift institutions were subject to constraints and
considerations that fell outside the normal range of factors
influencing such decisions in the market place for healthy thrifts. The
sellers had often been held in conservatorship for some time. In order
to maintain the assets in such institutions, it often was necessary for
the conservator to obtain large and other high-yielding deposits for
funding purposes. Both the size of the discounts, and the fact that the
discounts were restricted to troubled-seller cases, were known publicly
in 1989 and were relevant to every potential buyer's decision to
acquire and price a thrift institution.
Although healthy sellers in unassisted transactions also sometimes
relied upon volatile deposits for funding, these funding decisions were
part of a strategy to maximize the profits of a going concern, and the
management of the purchasing institutions were accountable to
shareholders. The comparable decisions for troubled sellers in assisted
transactions were made by managers of government conservatorships that
were subject to funding constraints, relatively inflexible operating
rules (necessary to control a massive government effort to sell failed
thrifts), and other considerations outside the scope of the typical
private transaction.
While the FDIC recognized that it was incumbent upon any would-be
buyer to evaluate and price all aspects of a transaction, the FDIC
determined that it would be counterproductive to require bidders to
price the contingencies related to volatile deposits in assisted
transactions, given that these deposits primarily were artifacts of
government conservatorships. Considering the objective of attracting
private capital in order to avoid additional costs to the taxpayer, the
FDIC sought to avoid the potential deterrent effect of including these
artificial elements in the pricing equation. In order to reflect the
volatile deposits acquired in assisted transactions, the FDIC
determined to provide the above-described discounts.
The FDIC adopted this interpretive rule at a time when troubled and
failed thrifts were prevalent, and the stress on the safety net for
such institutions was relatively severe. The stress has been
considerably relieved, however. The FDIC considers that, under current
conditions, there is no longer any need to maintain a special set of
rules for troubled-seller cases.
Moreover, the discounts are, at bottom, simply another factor that
helps to determine the price that a buyer will pay for a troubled
institution. The FDIC ordinarily must contribute its own resources to
induce buyers to acquire such institutions. Any reduction in future
assessments that the FDIC offers as an incentive merely reduces the
amount of money the FDIC must contribute at the time of the
transaction. The simpler and more straightforward approach is to
reflect all such considerations in the net price that buyers pay for
such institutions at the time of the transaction.
3. Conduit Deposits
The FDIC staff has taken the position that, under certain
circumstances, when an Oakar institution re-transfers some of the
secondary-fund deposits it has assumed in the course of an Oakar
transaction, the re-transferred deposits will not be counted as
``acquired'' deposits for purposes of computing the Oakar institution's
AADA. The Oakar institution is regarded as a mere conduit for the re-
transferred deposits. The deposits themselves retain their original
status as BIF-insured or SAIF-insured after the re-transfer: whatever
their status in the hands of the original transferor, the deposits have
that status in the hands of the ultimate transferee.
The FDIC has applied its ``conduit'' principle only in very narrow
circumstances. The FDIC has done so only when the Oakar institution has
been required to commit to re-transfer specified branches as a
condition of approval of the acquisition of the seller; the commitment
has been enforceable; and the re-transfer has been required to occur
within six months after consummation of the initial Oakar transaction.
See, e.g., FDIC Advisory Op. 94-48, 2 FED. DEPOSIT INS. CORP., LAW,
REGULATIONS, RELATED ACTS 4901-02 (1994).
The FDIC is proposing to codify and refine this view. As codified,
secondary-fund deposits would have the status of ``conduit'' deposits
in the hands of an Oakar institution only if a Federal banking
supervisory agency or the United States Department of Justice
explicitly ordered the Oakar institution to re-transfer the deposits
within six months, if the institution's obligation to make the re-
transfer was enforceable, and if the re-transfer had to be completed in
the six-month grace period.
Conduit deposits would be included in the Oakar institution's AADA
only on a temporary basis: for one semiannual period, or in some cases
two periods, but no more. The deposits would be counted in the ``amount
of deposits acquired'' by the Oakar institution--and therefore in its
AADA--during the semiannual period in which the transaction occurs. The
AADA so computed would be used to determine the assessment due for the
following semiannual period. In addition, if the Oakar institution
retained the deposits during part of that following period, the
deposits would again be included in the ``amount of deposits
acquired''--and would again be part of the institution's AADA--for the
purpose of computing the assessment for the semiannual period after
that. But thereafter the deposits would be excluded from the ``amount
of deposits acquired'' by the Oakar institution.
If the conditions were not satisfied, the conduit principle would
not come into play, and the deposits would be regarded as having been
assumed by the Oakar institution at the time of the original Oakar
transaction. Any subsequent transfer of the deposits would be treated
as a separate transaction, and analyzed independently of the Oakar
transaction.
The FDIC is currently considering alternative methodologies for
attributing any deposits that an Oakar institution might transfer to
another institution. The conduit principle's economic impact is
somewhat greater in the context of one such methodology than in that of
the other.
The FDIC currently takes the view that, when an Oakar institution
transfers deposits to another institution, the seller transfers its
primary-fund deposits until they have been exhausted, and only then
transfers its secondary-fund deposits. A BIF-member Oakar bank has a
comparatively strong incentive to invoke the conduit principle under
this methodology. If an Oakar bank can succeed in characterizing re-
transferred deposits as conduit deposits, the bank will escape the full
impact of the SAIF assessment on those deposits, which is comparatively
high at the present time.
The FDIC is also considering a ``blended'' approach, however. Under
[[Page 34763]]
this methodology, whenever an Oakar institution transferred any
deposits to another institution, the transferred deposits would be
regarded as consisting of a blend of primary-fund and secondary-fund
deposits. The ratio of the blend would be the same as that of the
institution as a whole. This methodology would reduce the incentive for
Oakar banks to invoke the conduit principle to some extent,
particularly in the case of Oakar banks having large AADAs. An Oakar
bank's AADA would shrink as a result of any transfer of deposits, even
one that did not involve conduit deposits. The comparative benefit of
invoking the conduit rule would be correspondingly reduced.
F. Transitional Considerations
1. Freezing Prior AADAs
In theory, an Oakar institution's AADA is computed anew for each
semiannual period. An AADA for a current semiannual period is equal to
the sum of three elements:
--Element 1: The volume of secondary-fund deposits that the institution
originally acquired in the Oakar transaction;
--Element 2: The aggregate of the growth increments for all semiannual
periods prior to the one for which Element 3 is being determined; and
--Element 3: The growth increment for the period just prior to the
current period (i.e., just prior to the one for which the assessment is
due). Element 3 is calculated on a base that equals the sum of elements
1 and 2.
The FDIC has consistently interpreted its existing rules to mean
that, when a growth increment has already been determined for an AADA
for a semiannual period, the growth increment continues to have the
same value thereafter. See, e.g., FDIC Advisory Op. 92- 19, 2 FED.
DEPOSIT INS. CORP., LAW, REGULATIONS, RELATED ACTS 4619, 4620-21
(1992). The net effect has been to ``freeze'' AADAs-- and their
elements--for prior semiannual periods. The proposed rule would codify
this principle.
Accordingly, the new interpretations set forth in the proposed rule
would apply on a purely prospective basis. They would come into play
only for the purpose of computing future elements of future AADAs. The
new interpretations would not affect AADAs already computed for prior
semiannual periods (or the assessments that Oakar institutions have
already paid on them). Nor would they affect the prior-period elements
of AADAs that are to be determined for future semiannual periods. In
short, the proposed rule would ``leave prior AADAs alone''.
2. 1st-Half 1997 Assessments: Excluding Deposit Sales From the Growth
Calculation
The FDIC proposes to follow its existing procedures in computing
AADAs for the first semiannual period of 1997, with one exception. In
particular, an institution's AADA for the first semiannual period of
1997 would be based on the growth of the institution's deposits as
measured over the entire calendar year 1996. The AADA so determined
would be used to compute both quarterly payments for the first
semiannual period of 1997.
The exception is that, when computing the growth rate for deposits
during the second semiannual period of 1996, the FDIC would apply its
new interpretation of ``negative'' growth, and would decline to
consider shrinkage attributable to transactions that occurred during
July-December 1996.
The FDIC acknowledges that its proposed new interpretation would
make a significant break with the past. The FDIC further recognizes
that the new interpretation could affect the business considerations
that the parties must evaluate when they enter into deposit-transfer
transactions. The FDIC considers that the industry has ample notice of
the proposed exclusion, however, and that the parties to any such
transaction can factor in any costs that the exclusion might produce.
At the same time, the FDIC agrees that it would be inappropriate to
apply its new interpretation retroactively to transactions that have
been completed earlier in 1996. The parties to these transactions did
not have notice of the FDIC's proposal. The FDIC would therefore
include shrinkage attributable to deposit sales that occurred during
the first semiannual period of 1996 when determining the annual growth
rate to be used in computing Oakar institutions' AADAs for the first
semiannual period of 1997.
3. 2nd-Half 1997 Assessments: Use of Quarterly AADAs
The FDIC proposes to begin measuring AADAs on a quarterly basis
during the first semiannual period of 1997. The first payment that
would be computed using a quarterly component of an AADA would be the
initial payment for the next semiannual period--the payment due at the
end of June.
The first time the FDIC would identify and measure a quarterly
component of a semiannual AADA would be as of March 31, 1997. The
quarterly component with respect to that date would reflect the basic
rate of growth of the institution's deposits during the first calendar
quarter of 1997 (January-March). The quarterly AADA component so
measured would be used to determine the institution's first quarterly
payment for the second semiannual period in 1997 (the June payment).
The second quarterly AADA component would reflect the basic rate of
growth of the institution's deposits during the second calendar quarter
of 1997 (April-June). The quarterly AADA component so measured would be
used to determine the institution's second quarterly payment for the
second semiannual period in 1997 (the September payment).
G. Simplification and Clarification of the Regulation
In some respects, the proposed rule would simplify and clarify the
current regulation without changing its meaning. The FDIC is doing so
in response to two initiatives. Section 303 of the Riegle Community
Development and Regulatory Improvement Act of 1994, Pub. L. 103-325,
108 Stat. 2160 (Sept. 23, 1994), requires federal agencies to
streamline and modify their regulations. In addition, the FDIC has
voluntarily committed itself to review its regulations on a 5-year
cycle. See Development and Review of FDIC Rules and Regulations, 2 FED.
DEPOSIT INS. CORP., LAW, REGULATIONS, RELATED ACTS 5057 (1984). The
FDIC considers that subpart B of part 327 is a fit candidate for review
under each of these initiatives.
The proposed rule would clarify subpart B by defining and using the
terms ``primary fund'' and ``secondary fund''. An Oakar institution's
primary fund would be the fund to which it belongs; it would be the
other insurance fund. Using these terms, the FDIC is proposing to
simplify paragraphs (1) and (2) of Sec. 327.32(a) by eliminating
redundant language; the changes would not alter the meaning of these
provisions.
In addition, the FDIC would clarify Sec. 327.6(a) by changing the
nomenclature used therein. ``Deposit-transfer transaction'' would be
replaced by ``terminating transaction;'' ``acquiring institution''
would be replaced by ``surviving institution;'' and ``transferring
institution'' would be replaced by ``terminating institution''. The
terms now found in Sec. 327.6(a) are also used in other provisions of
part 327, where they have different and less specialized meaning. The
change in nomenclature in Sec. 327.6(a) is intended
[[Page 34764]]
to avoid any confusion that the current terminology might cause.
III. Proposed Effective Date
Section 302(b) of the Riegle Community Development and Regulatory
Improvement Act of 1994, Pub. L. 103-325, 108 Stat. 2160, 2214-15
(1994), requires that new and amended regulations imposing additional
reporting, disclosure, or other new requirements on insured depository
institutions must generally take effect on the first day of a calendar
quarter. In keeping with this requirement, the FDIC is proposing that
the rule, if adopted, would take effect on January 1, 1997.
IV. Request for Public Comment
The FDIC hereby solicits comment on all aspects of the proposed
rule. In particular, the FDIC solicits comment on the following points:
attributing deposits that an Oakar institution transfers to another
institution according to principles articulated in the Rankin letter,
or treating the transferred deposits as a blend of deposits insured by
both funds; having the FDIC, rather than individual institutions,
compute AADAs using information provided by the institutions;
interpreting AADAs as consisting of quarterly components, and computing
the growth of AADAs on a quarterly cycle rather than an annual one;
retaining the concept of negative growth for the purpose of computing
AADAs; excluding deposit sales from the computation of growth; applying
the nominal-amount principle for determining initial AADAs in all
cases, including troubled-seller cases; and preserving the conduit-
deposit concept.
In addition, in accordance with section 3506(c)(2)(B) of the
Paperwork Reduction Act, 44 U.S.C. 3506(c)(2)(B), the FDIC solicits
comment for the following purposes on the collection of information
proposed herein:
--to evaluate whether the proposed collection of information is
necessary for the proper performance of the functions of the FDIC,
including whether the information has practical utility;
--to evaluate the accuracy of the FDIC's estimate of the burden of the
proposed collection of information;
--to enhance the quality, utility, and clarity of the information to be
collected; and
--to minimize the burden of the collection of information on those who
are to respond, including through the use of automated collection
techniques or other forms of information technology.
The FDIC also solicits comment on all other points raised or
options described herein, and on their merits relative to the proposed
rule.
V. Paperwork Reduction Act
Under the FDIC's existing procedures, each Oakar institution must
compute its AADA at the end of each year, using a worksheet provided by
the FDIC (annual growth worksheet). The annual growth worksheet shows
the computation of the institution's AADA for the first semiannual
period of the current year--that is, the AADA that is used to compute
the assessment due for the first semiannual period of the current
year--which is based on the institution's growth during the prior year.
The institution must provide the annual growth worksheet to the FDIC as
a part of the institution's certified statement.
In addition, whenever an institution is the buyer in an Oakar
transaction, it must submit a transaction worksheet showing the total
deposits acquired on the transaction date. If the seller is an Oakar
institution, and if the buyer acquires the entire institution, the
buyer must also report the seller's last AADA (as shown in the seller's
last call report). The buyer must then subtract this number from the
total deposits acquired in order to determine its new AADA.
The proposed rule would change this procedure for the annual growth
worksheets for the first semiannual period of 1997 (i.e., for the
worksheets that show the growth of deposits during 1996). The change
would only affect Oakar institutions that transferred deposits to other
institutions during 1996. Such an institution would have to report the
total amount of deposits that it transferred in transactions from July
1-December 31, 1996.
Thereafter the FDIC would compute the AADAs for all Oakar
institutions, using information taken from their quarterly call
reports. Institutions would not have to report additional information
in most cases. An Oakar institution that neither acquired nor
transferred deposits in the prior quarter would not have to provide any
additional information at all. An Oakar institution that acquired
deposits would have to provide the same information at the end of the
quarter that it now provides at the end of the year; there would be a
change in the timing, but no change in burden.
Only an Oakar institution that transferred deposits would have to
provide additional information. The items of information needed, and
the number of institutions affected, would depend on the deposit-
attribution methodology chosen by the FDIC. Under the Rankin letter's
approach, the FDIC presently anticipates that approximately 100
institutions per year would report deposit sales. Sellers would have to
report the volume of deposits they transferred in the transaction.
Under the ``blended deposits'' approach, the FDIC estimates that
approximately 250 Oakar institutions per year would report deposit
sales. Sellers would have to report both the volume of deposits
transferred, and the date of the transaction. In either case, the
information would be readily available: the extra reporting burden
would be small.
The FDIC expects that the net effect would be to reduce the overall
reporting burden on Oakar institutions. The burden of submitting extra
information in deposit-sale cases would be more than offset by the
elimination of the growth worksheet and by the FDIC's assumption of the
burden of computing AADAs.
Accordingly, the FDIC is proposing to revise an existing collection
of information. The revision has been submitted to the Office of
Management and Budget for review and approval pursuant to the Paperwork
Reduction Act of 1980 (44 U.S.C. 3501 et seq.). Comments on the
accuracy of the burden estimate, and suggestions for reducing the
burden, should be addressed to the Office of Management and Budget,
Paperwork Reduction Project (3064-0057), Washington, D.C. 20503, with
copies of such comments sent to Steven F. Hanft, Assistant Executive
Secretary (Administration), Federal Deposit Insurance Corporation, Room
F-400, 550 17th St., N.W., Washington, D.C. 20429. The impact of this
proposal on paperwork burden would be to require a one-time de minimis
report from approximately 100 Oakar institutions for the first
semiannual period in 1997, and thereafter to eliminate the annual
growth worksheet for all 900 Oakar institutions, which takes an
estimated two hours to prepare. The FDIC would then compute each Oakar
institution's AADA from the deposit data in the institution's quarterly
call report. The effect of this proposal on the estimated annual
reporting burden for this collection of information is a reduction of
1,800 hours:
Approximate Number of Respondents: 900.
Number of Responses per Respondent: -1.
Total Annual Responses: 900.
Average Time per Response: 2 hours.
Total Average Annual Burden Hours: -1800 hours.
[[Page 34765]]
The FDIC expects the Federal Financial Institutions Examination
Council to require (as needed) the information in the quarterly call
reports, starting with the report for March 31, 1997. If the Council
does recommend these changes, they will be submitted to the Office of
Management and Budget for review and approval as part of the call
report submission.
VI. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C. 601-612) does not apply to
the proposed rule. Although the FDIC has chosen to publish general
notice of the proposed rule, and to ask for public comment on it, the
FDIC is not obliged to do so, as the proposed rule is interpretive in
nature. See id. 553(b) and 603(a).
Moreover, the FDIC considers that the proposed rule would amount to
a net reduction in burden for all Oakar institutions, as they would no
longer have to prepare or file regular annual growth worksheets after
the worksheet with respect to 1996. Instead, a limited number of Oakar
institutions would have to submit one new piece of information, and
would have to do so only for quarters in which they transferred
deposits.
In addition, although the Regulatory Flexibility Act requires a
regulatory flexibility analysis when an agency publishes a rule, the
term ``rule'' (as defined in the Regulatory Flexibility Act) excludes
``a rule of particular applicability relating to rates''. Id. 601(2).
The proposed rule relates to the rates that Oakar institutions must
pay, because it addresses various aspects of the method for determining
the base on which assessments are computed. The Regulatory Flexibility
Act is therefore inapplicable to this aspect of the proposed rule.
Finally, the legislative history of the Regulatory Flexibility Act
indicates that its requirements are inappropriate to this aspect of the
proposed rule. The Regulatory Flexibility Act is intended to assure
that agencies' rules do not impose disproportionate burdens on small
businesses:
Uniform regulations applicable to all entities without regard to
size or capability of compliance have often had a disproportionate
adverse effect on small concerns. The bill, therefore, is designed
to encourage agencies to tailor their rules to the size and nature
of those to be regulated whenever this is consistent with the
underlying statute authorizing the rule.
126 Cong. Rec. 21453 (1980) (``Description of Major Issues and
Section-by-Section Analysis of Substitute for S. 299'').
The proposed rule would not impose a uniform cost or requirement on
all Oakar institutions regardless of size: to the extent that it
imposes any costs at all, the costs have to do with the effects that
the proposed rule would have on Oakar institutions' assessments.
Assessments are proportional to an institution's size. Moreover, while
the FDIC has authority to establish a separate risk-based assessment
system for large and small members of each insurance fund, se
FR Doc. 96-16349 Assessments
e 12
U.S.C. 1817(b)(1)(D), the FDIC has not done so. Within the current
assessment scheme, the FDIC cannot ``tailor'' assessment rates to
reflect the ``size and nature'' of institutions.
List of Subjects in 12 CFR Part 327
Assessments, Bank deposit insurance, Banks, banking, Financing
Corporation, Reporting and recordkeeping requirements, Savings
associations.
For the reasons set forth in the preamble, the Board of Directors
of the Federal Deposit Insurance Corporation proposes to amend 12 CFR
part 327 as follows:
PART 327--ASSESSMENTS
1-2. The authority citation for part 327 is revised to read as
follows:
Authority: 12 U.S.C. 1441, 1441b, 1815, 1817-1819.
3. In Sec. 327.6 the section heading and paragraph (a) are revised
to read as follows:
Sec. 327.6 Terminating transfers; other terminations of insurance.
(a) Terminating transfer--(1) Assessment base computation. If a
terminating transfer occurs at any time in the second half of a
semiannual period, each surviving institution's assessment base (as
computed pursuant to Sec. 327.5) for the first half of that semiannual
period shall be increased by an amount equal to such institution's pro
rata share of the terminating institution's assessment base for such
first half.
(2) Pro rata share. For purposes of paragraph (a)(1) of this
section, the phrase ``pro rata share'' means a fraction the numerator
of which is the deposits assumed by the surviving institution from the
terminating institution during the second half of the semiannual period
during which the terminating transfer occurs, and the denominator of
which is the total deposits of the terminating institution as required
to be reported in the quarterly report of condition for the first half
of that semiannual period.
(3) Other assessment-base adjustments. The Corporation may in its
discretion make such adjustments to the assessment base of an
institution participating in a terminating transfer, or in a related
transaction, as may be necessary properly to reflect the likely amount
of the loss presented by the institution to its insurance fund.
(4) Limitation on aggregate adjustments. The total amount by which
the Corporation may increase the assessment bases of surviving or other
institutions under this paragraph (a) shall not exceed, in the
aggregate, the terminating institution's assessment base as reported in
its quarterly report of condition for the first half of the semiannual
period during which the terminating transfer occurs.
* * * * *
4. Section 327.8 is amended by revising paragraph (h) and adding
paragraphs (j) and (k) to read as follows:
Sec. 327.8 Definitions.
* * * * *
(h) As used in Sec. 327.6(a), the following terms are given the
following meanings:
(1) Surviving institution. The term surviving institution means an
insured depository institution that assumes some or all of the deposits
of another insured depository institution in a terminating transfer.
(2) Terminating institution. The term terminating institution means
an insured depository institution some or all of the deposits of which
are assumed by another insured depository institution in a terminating
transfer.
(3) Terminating transfer. The term terminating transfer means the
assumption by one insured depository institution of another insured
depository institution's liability for deposits, whether by way of
merger, consolidation, or other statutory assumption, or pursuant to
contract, when the terminating institution goes out of business or
transfers all or substantially all its assets and liabilities to other
institutions or otherwise ceases to be obliged to pay subsequent
assessments by or at the end of the semiannual period during which such
assumption of liability for deposits occurs. The term terminating
transfer does not refer to the assumption of liability for deposits
from the estate of a failed institution, or to a transaction in which
the FDIC contributes its own resources in order to induce a surviving
institution to assume liabilities of a terminating institution.
* * * * *
(j) Primary fund. The primary fund of an insured depository
institution is the
[[Page 34766]]
insurance fund of which the institution is a member.
(k) Secondary fund. The secondary fund of an insured depository
institution is the insurance fund that is not the primary fund of the
institution.
5. In Sec. 327.32, paragraph (a) is amended by revising paragraphs
(a)(1) and (a)(2), and by removing paragraphs (a)(4) and (a)(5), to
read as follows:
Sec. 327.32 Computation and payment of assessment.
(a) Rate of assessment--(1) BIF and SAIF member rates. (i) Except
as provided in paragraph (a)(2) of this section, and consistent with
the provisions of Sec. 327.4, the assessment to be paid by an
institution that is subject to this subpart B shall be computed at the
rate applicable to institutions that are members of the primary fund of
such institution.
(ii) Such applicable rate shall be applied to the institution's
assessment base less that portion of the assessment base which is equal
to the institution's adjusted attributable deposit amount.
(2) Rate applicable to the adjusted attributable deposit amount.
Notwithstanding paragraph (a)(1)(i) of this section, that portion of
the assessment base of any acquiring, assuming, or resulting
institution which is equal to the adjusted attributable deposit amount
of such institution shall:
(i) Be subject to assessment at the assessment rate applicable to
members of the secondary fund of such institution pursuant to subpart A
of this part; and
(ii) Not be taken into account in computing the amount of any
assessment to be allocated to the primary fund of such institution.
* * * * *
6. New Secs. 327.33 through 327.36 are added to read as follows:
Sec. 327.33 ``Acquired'' deposits.
This section interprets the phrase ``deposits acquired by the
institution'' as used in Sec. 327.32(a)(3)(i).
(a) In general. (1) Secondary-fund deposits. The phrase ``deposits
acquired by the institution'' refers to deposits that are insured by
the secondary fund of the acquiring institution, and does not include
deposits that are insured by the acquiring institution's primary fund.
(2) Nominal dollar amount. Except as provided in paragraph (b) of
this section, an acquiring institution is deemed to acquire the entire
nominal dollar amount of any deposits that the transferring institution
holds on the date of the transaction and transfers to the acquiring
institution.
(b) Conduit deposits--(1) Defined. As used in this paragraph (b),
the term ``conduit deposits'' refers to deposits that an acquiring
institution has assumed from another institution in the course of a
transaction described in Sec. 327.31(a), and that are treated as
insured by the secondary fund of the acquiring institution, but which
the acquiring institution has been explicitly and specifically ordered
by the Corporation, or by the appropriate federal banking agency for
the institution, or by the Department of Justice to commit to re-
transfer to another insured depository institution as a condition of
approval of the transaction. The commitment must be enforceable, and
the divestiture must be required to occur and must occur within 6
months after the date of the initial transaction.
(2) Exclusion from AADA computation. Conduit deposits are not
considered to be acquired by the acquiring institution within the
meaning of Sec. 327.32(a)(3)(i) for the purpose of computing the
acquiring institution's adjusted attributable deposit amount for a
current semiannual period that begins after the end of the semiannual
period following the semiannual period in which the acquiring
institution re-transfers the deposits.
Sec. 327.34 Application of AADAs.
This section interprets the meaning of the phrase ``an insured
depository institution's `adjusted attributable deposit amount' for any
semiannual period'' as used in the opening clause of Sec. 327.32(a)(3).
(a) In general. The phrase ``for any semiannual period'' refers to
the current semiannual period: that is, the period for which the
assessment is due, and for which an institution's adjusted attributable
deposit amount (AADA) is computed.
(b) Quarterly components of AADAs. An AADA for a current semiannual
period consists of two quarterly AADA components. The first quarterly
AADA component for the current period is determined with respect to the
first quarter of the prior semiannual period, and the second quarterly
AADA component for the current period is determined with respect to the
second quarter of the prior period.
(c) Application of AADAs. The value of an AADA that is to be
applied to a quarterly assessment base in accordance with
Sec. 327.32(a)(2) is the value of the quarterly AADA component for the
corresponding quarter.
(d) Initial AADAs. If an AADA for a current semiannual period has
been generated in a transaction that has occurred in the second
calendar quarter of the prior semiannual period, the first quarterly
AADA component for the current period is deemed to have a value of
zero.
(e) Transition rule. Paragraphs (b), (c) and (d) of this section
shall apply to any AADA for any semiannual period beginning on or after
July 1, 1997.
Sec. 327.35 Grandfathered AADA elements.
This section explains the meaning of the phrase ``total of the
amounts determined under paragraph (a)(3)(iii)'' in
Sec. 327.32(a)(3)(ii). The phrase ``total of the amounts determined
under paragraph (a)(3)(iii)'' refers to the aggregate of the increments
of growth determined in accordance with Sec. 327.32(a)(3)(iii). Each
such increment is deemed to be computed in accordance with the
contemporaneous provisions and interpretations of such section.
Accordingly, any increment of growth that is computed with respect to a
semiannual period has the value appropriate to the proper calculation
of the institution's assessment for the semiannual period immediately
following such semiannual period.
Sec. 327.36 Growth computation.
This section interprets various phrases used in the computation of
growth as prescribed in Sec. 327.32(a)(3)(iii).
(a) Annual rate. The annual rate of growth of deposits refers to
the rate, which may be expressed as an annual percentage rate, of
growth of an institution's deposits over any relevant interval. A
relevant interval may be less than a year.
(b) Growth; increase; increases. Except as provided in paragraph
(c) of this section, references to ``growth,'' ``increase,'' and
``increases'' may generally include negative values as well as positive
ones.
(c) Growth of deposits. ``Growth of deposits'' does not include any
decrease in an institution's deposits representing deposits transferred
to another insured depository institution, if the transfer occurs on or
after July 1, 1996.
(d) Quarterly determination of growth. For the purpose of computing
assessments for semiannual periods beginning on July 1, 1997, and
thereafter, the rate of growth of deposits for a semiannual period, and
the amount by which the sum of the amounts specified in
Sec. 327.32(a)(3) (i) and (ii) would have grown during a semiannual
period, is to be determined by computing such rate of growth and such
sum of amounts for each calendar quarter within the semiannual period.
7. Section 327.37 is added to read as follows:
[[Page 34767]]
ALTERNATIVE ONE
Sec. 327.37 Attribution of transferred deposits.
This section explains the attribution of deposits to the BIF and
the SAIF when one insured depository institution (acquiring
institution) acquires deposits from another insured depository
institution (transferring institution). For the purpose of determining
whether the assumption of deposits (assumption transaction) constitutes
a transaction undertaken pursuant to section 5(d)(3) of the Federal
Deposit Insurance Act, and for the purpose of computing the adjusted
attributable deposit amounts, if any, of the acquiring and the
transferring institutions after the transaction:
(a) Transferring institution--(1) Transfer of primary-fund
deposits. To the extent that the aggregate volume of deposits that is
transferred by a transferring institution in a transaction, or in a
related series of transactions, does not exceed the volume of deposits
that is insured by its primary fund (primary-fund deposits) immediately
prior to the transaction (or, in the case of a related series of
transactions, immediately prior to the initial transaction in the
series), the transferred deposits shall be deemed to be insured by the
institution's primary fund. The primary institution's volume of
primary-fund deposits shall be reduced by the aggregate amount so
transferred.
(2) Transfer of secondary-fund deposits. To the extent that the
aggregate volume of deposits that is transferred by the transferring
institution in a transaction, or in a related series of transactions,
exceeds the volume of deposits that is insured by its primary fund
immediately prior to the transaction (or, in the case of a related
series of transactions, immediately prior to the initial transaction in
the series), the following volume of the deposits so transferred shall
be deemed to be insured by the institution's secondary fund (secondary-
fund deposits): the aggregate amount of the transferred deposits minus
that portion thereof that is equal to the institution's primary-fund
deposits. The transferring institution's volume of secondary-fund
deposits shall be reduced by the volume of the secondary-fund deposits
so transferred.
(b) Acquiring institution. The deposits shall be deemed, upon
assumption by the acquiring institution, to be insured by the same fund
or funds in the same amount or amounts as the deposits were so insured
immediately prior to the transaction.
ALTERNATIVE TWO
Sec. 327.37 Attribution of transferred deposits.
This section explains the attribution of deposits to the BIF and
the SAIF when one insured depository institution (acquiring
institution) assumes the deposits from another insured depository
institution (transferring institution). On and after January 1, 1997,
for the purpose of determining whether the assumption of deposits
constitutes a transaction undertaken pursuant to section 5(d)(3) of the
Federal Deposit Insurance Act, and for the purpose of computing the
adjusted attributable deposit amounts, if any, of the acquiring and the
transferring institutions after the transaction:
(a) Attribution of the deposits as to the transferring institution.
The deposits shall be attributed to the primary and secondary funds of
the transferring institution in the same ratio as the transferring
institution's total deposits were so attributed immediately prior to
the deposit-transfer transaction. The transferring institution's stock
of BIF-insured deposits and of SAIF-insured deposits shall each be
reduced in the appropriate amounts.
(b) Attribution of deposits as to the acquiring institution. Upon
assumption by the acquiring institution, the deposits shall be
attributed to the same insurance funds in the same amounts as the
deposits were so attributed immediately prior to the transaction. The
acquiring institution's stock of BIF-insured deposits and of SAIF-
insured deposits shall each be increased in the appropriate amounts.
(c) Ratio fixed at start of quarter. For the purpose of determining
the ratio specified in paragraph (a) of this paragraph for any
transaction:
(1) In general. The ratio shall be determined at the beginning of
the quarter in which the transaction occurs. Except as provided in
paragraph (c)(2) of this section, the ratio shall not be affected by
changes in the transferring institution's deposit base.
(2) Prior acquisitions by a transferring institution. If the
transferring institution acquires deposits after the start of the
quarter but prior to the transaction, the deposits so acquired shall be
added to the transferring institution's deposit base, and shall be
attributed to the transferring institution's primary and secondary
funds in accordance with this section.
By order of the Board of Directors.
Dated at Washington, DC, this 17th day of June 1996.
Federal Deposit Insurance Corporation.
Robert E. Feldman,
Deputy Executive Secretary.
[FR Doc. 96-16349 Filed 7-2-96; 8:45 am]
BILLING CODE 6714-01-P
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