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IIFederal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997FEDERAL REGISTER Published daily, Monday through Friday,(not published on Saturdays, Sundays, or on official holidays), bythe Office of the Federal Register, National Archives and RecordsAdministration, Washington, DC 20408, under the Federal RegisterAct (49 Stat. 500, as amended; 44 U.S.C. Ch. 15) and theregulations of the Administrative Committee of the Federal Register(1 CFR Ch. I). Distribution is made only by the Superintendent ofDocuments, U.S. Government Printing Office, Washington, DC20402.The Federal Register provides a uniform system for makingavailable to the public regulations and legal notices issued byFederal agencies. These include Presidential proclamations andExecutive Orders and Federal agency documents having generalapplicability and legal effect, documents required to be publishedby act of Congress and other Federal agency documents of publicinterest. 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ContentsFederal RegisterVol. 62, No. 28Tuesday, February 11, 1997IIIAgency for International DevelopmentNOTICESCommittees; establishment, renewal, termination, etc.:Voluntary Foreign Aid Advisory Committee, 6269Agricultural Marketing ServiceRULESWalnuts grown in—California, 6110–6111PROPOSED RULESVegetables; import regulations:Banana/fingerling potatoes, etc.; removal and exemption,6138–6139Agriculture DepartmentSee Agricultural Marketing ServiceSee Federal Crop Insurance CorporationSee Food Safety and Inspection ServiceSee Forest ServiceSee Grain Inspection, Packers and StockyardsAdministrationArmy DepartmentSee Engineers CorpsCenters for Disease Control and PreventionNOTICESAgency information collection activities:Submission for OMB review; comment request, 6261Commerce DepartmentSee Economics and Statistics AdministrationSee International Trade AdministrationSee National Oceanic and Atmospheric AdministrationSee Patent and Trademark OfficeCommodity Futures Trading CommissionRULESReporting requirements:Options and futures large trader reports; cash positionreports in grains (including soybeans) and cotton,6112–6114NOTICESContract market proposals:Chicago Board of Trade—Long term inflation-indexed U.S. Treasury note futuresand options, 6224–6225Meetings; Sunshine Act, 6225Defense DepartmentSee Engineers CorpsSee Navy DepartmentNOTICESCivilian health and medical program of uniformed services(CHAMPUS):Continued health care benefit program; premium ratechanges, 6225–6226Economics and Statistics AdministrationNOTICESMeetings:2000 Census Advisory Committee, 6168Education DepartmentRULESSpecial education and rehabilitative services:State vocational rehabilitation services program, 6308–6363Employment and Training AdministrationNOTICESGrants and cooperative agreements; availability, etc.:Job Training Partnership Act—Migrant and seasonal farmworker programs, 6272–6276Energy DepartmentSee Energy Research OfficeSee Federal Energy Regulatory CommissionSee Hearings and Appeals Office, Energy DepartmentEnergy Research OfficeNOTICESGrants and cooperative agreements; availability, etc.:Financial assistance programs—Global climate change integrated assessment researchprogram, 6230–6232Engineers CorpsNOTICESEnvironmental statements; availability, etc.:Grand Haven Harbor, MI; long-term dredged materialmanagement, 6226–6227Environmental Protection AgencyRULESAir quality implementation plans; approval andpromulgation; various States:Alaska, 6129–6132Illinois, 6126–6132PROPOSED RULESAir programs:Locomotives and locomotive engines; emission standards,6366–6407Air quality implementation plans; approval andpromulgation; various States:Alaska, 6160Illinois, 6159Toxic substances:Significant new uses—Alkenoic acid, trisubstituted-benzyl-disubstitutedphenylester, etc., 6160–6161NOTICESEnvironmental statements; availability, etc.:Coastal nonpoint pollution control programs; States andterritories—New Hampshire et al., 6216–6217Executive Office of the PresidentSee National Drug Control Policy OfficeFederal Communications CommissionNOTICESAgency information collection activities:Proposed collection; comment request, 6246–6247Reporting and recordkeeping requirements, 6247–6248

IVFederal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / ContentsFederal Crop Insurance CorporationRULESCrop insurance regulations:Dry beans, 6099–6110PROPOSED RULESCrop insurance regulations:Fresh plums, 6134–6138Federal Deposit Insurance CorporationPROPOSED RULESAdvertisement of membership, 6142–6147Practice and procedure:Deposit shifting from Savings Association InsuranceFund to Bank Insurance Fund; prevention, 6139–6142Federal Emergency Management AgencyNOTICESDisaster and emergency areas:Hawaii, 6248Idaho, 6248North Dakota, 6248Pennsylvania, 6248–6249Rhode Island, 6249South Dakota, 6249Federal Energy Regulatory CommissionNOTICESElectric rate and corporate regulation filings:Florida Power & Light Co. et al., 6237–6241Environmental statements; availability, etc.:Algonquin LNG, Inc., 6241Applications, hearings, determinations, etc.:ANR Pipeline Co., 6232Colorado Interstate Gas Co., 6232–6233Florida Gas Transmission Co., 6233Mississippi River Transmission Corp., 6233National Fuel Gas Supply Corp., 6233–6234Niobrara Valley Electric Membership Corp., 6234Northern Natural Gas Co., 6234–6235Pacificorp, 6235Southern California Gas Co., 6235–6236Southern Natural Gas Co., 6236Transwestern Pipeline Co., 6236Trunkline LNG Co., 6236Wyoming Interstate Co., Ltd., 6237Federal Highway AdministrationPROPOSED RULESMotor carrier safety standards:Hours of service; commercial drivers and other interestedpersons; meetings, 6161–6163Federal Maritime CommissionRULESOcean freight forwarders, marine terminal operations, andpassenger vessels:Drug traffickers and possessors; denial of Federalbenefits, 6132NOTICESFreight forwarder licenses:Air Sea International Forwarding, Inc., et al., 6249Federal Reserve SystemNOTICESBanks and bank holding companies:Change in bank control, 6249Change in bank control; correction, 6249–6250Formations, acquisitions, and mergers, 6250Permissible nonbanking activities, 6250Federal Trade CommissionNOTICESPremerger notification waiting periods; early terminations,6250–6255Prohibited trade practices:American Cyanamid Co., 6255–6261Federal Transit AdministrationNOTICESAgency information collection activities:Proposed collection; comment request, 6300–6301Fish and Wildlife ServiceNOTICESEndangered and threatened species permit applications,6264–6265Food and Drug AdministrationNOTICESHuman drugs:Patent extension; regulatory review perioddeterminations—DECTOMAX, 6263–6264DIFFERIN Topical Gel, 6262–6263MERREM I.V., 6261–6262Food Safety and Inspection ServiceRULESMeat and poultry inspection:Voluntary inspection fee increases and laboratoryservices fee reduction; correction, 6111–6112Forest ServiceNOTICESMeetings:California Coast Province Advisory Committee, 6167Grain Inspection, Packers and Stockyards AdministrationNOTICESAgency designation actions:North Dakota, 6167–6168Stockyards; posting and deposting:Arizona Livestock Auction, Inc., AZ, et al., 6168Health and Human Services DepartmentSee Centers for Disease Control and PreventionSee Food and Drug AdministrationHearings and Appeals Office, Energy DepartmentNOTICESCases filed, 6241–6243Decisions and orders, 6243–6246Immigration and Naturalization ServiceNOTICESAgency information collection activities:Proposed collection; comment request, 6270–6271Submission for OMB review; comment request, 6271–6272Interior DepartmentSee Fish and Wildlife ServiceSee Land Management BureauSee Minerals Management ServiceSee National Park Service

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / ContentsVNOTICESCommittees; establishment, renewal, termination, etc.:Glen Canyon Dam Adaptive Management Work Group,6264Internal Revenue ServiceNOTICESAgency information collection activities:Proposed collection; comment request, 6303–6305International Development Cooperation AgencySee Agency for International DevelopmentInternational Trade AdministrationNOTICESAntidumping:Color picture tubes from—Japan, 6168–6171Stainless steel wire rod from—India, 6171–6173Tapered roller bearings and parts, finished andunfinished, from—China, 6173–6215Applications, hearings, determinations, etc.:Centers for Disease Control and Prevention et al., 6215Massachusetts Institute of Technology et al., 6215–6216University of—Wyoming, 6216Judicial Conference of the United StatesNOTICESMeetings:Judicial Conference Advisory Committee on—Appellate Procedure Rules, 6270Bankruptcy Procedure Rules, 6269Civil Procedure Rules, 6270Criminal Procedure Rules, 6270Evidence Rules, 6270Justice DepartmentSee Immigration and Naturalization ServiceLabor DepartmentSee Employment and Training AdministrationSee Occupational Safety and Health AdministrationLand Management BureauNOTICESOil and gas leases:Mississippi, 6265Recreation management restrictions, etc.:Owyhee National Wild and Scenic River Area, OR; fireand boating restrictions, 6265–6266Minerals Management ServicePROPOSED RULESOuter Continental Shelf; geological and geophysicalexplorations, 6149–6159National Drug Control Policy OfficeNOTICESArizona Proposition 200 and California Proposition 215;dangerous drugs availability; Administration response,6164–6166High intensity drug trafficking areas; designations, 6166–6167National Oceanic and Atmospheric AdministrationRULESFishery conservation and management:Alaska; fisheries of Exclusive Economic Zone—Pollock, 6132–6133NOTICESEnvironmental statements; availability, etc.:Coastal nonpoint pollution control programs; States andterritories—New Hampshire et al., 6216–6217Meetings:Gulf of Mexico Fishery Management Council, 6217National Park ServiceNOTICESAgency information collection activities:Proposed collection; comment request, 6266Concession contract negotiations:Lake Roosevelt National Recreation Area, CA; marinafacilities operation, 6266–6267Environmental statements; availability, etc.:Manhattan Sites, NY, 6267Padre Island National Seashore, TX, 6267Meetings:Denali National Park Subsistence Resource Commission,6267–6268Wrangell-St. Elias National Park Subsistence ResourceCommission, 6268National Register of Historic Places:Pending nominations, 6268–6269Navy DepartmentNOTICESBase realignment and closure:Surplus Federal property—Naval Reserve Center, Perth Amboy, NJ, 6227–6228Environmental statements; availability, etc.:Guam and Northern Mariana Islands; military training,6228–6229Meeting:Submarine solid waste management, 6229Nuclear Regulatory CommissionNOTICESEnvironmental statements; availability, etc.:United States Enrichment Corp.—Paducah Gaseous Diffusion Plant, KY, 6279–6280Portsmouth Gaseous Diffusion Plant, OH, 6278–6279Meetings; Sunshine Act, 6280–6281Memorandums of understanding:NRC emergency response data system utilization—Vermont, 6281–6283Applications, hearings, determinations, etc.:Tennessee Valley Authority, 6276–6278Occupational Safety and Health AdministrationRULESOccupational injury and illness; recording and reportingrequirements, 6434–6442Patent and Trademark OfficeNOTICESPatents:Chemical composition species, single prior art reference;claims; examination guidelines, 6217–6224

VIFederal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / ContentsPersonnel Management OfficeNOTICESAgency information collection activities:Submission for OMB review; comment request [EditorialNote: This document, published at 62 FR 5863 in theFederal Register of February 7, 1997, was listedunder the wrong agency in that issue’s Table ofContents.]Public Health ServiceSee Centers for Disease Control and PreventionSee Food and Drug AdministrationSecurities and Exchange CommissionNOTICESMeetings; Sunshine Act, 6288–6289Self-regulatory organizations; proposed rule changes:MBS Clearing Corp., 6289National Association of Securities Dealers, Inc., 6290–6291Applications, hearings, determinations, etc.:John Nuveen & Co. Inc. et al., 6283–6288Mitcham Industries, Inc., 6288Small Business AdministrationPROPOSED RULESSmall business investment companies:Examination fees, 6147–6149NOTICESAgency information collection activities:Proposed collection; comment request, 6291Disaster loan areas:California, 6291–6292Idaho, 6292Oregon, 6292Tennessee, 6292Washington, 6292–6293License surrenders:First Interstate Equity Corp., 6293Social Security AdministrationRULESSocial security benefits:Cycling payments; additional days throughout month onwhich benefits will be paid, 6114–6121Supplemental security income:Disability determination for child under 18 years old,6408–6432Surface Transportation BoardNOTICESRailroad operation, acquisition, construction, etc.:Western Fuels Service Corp et al., 6301Transportation DepartmentSee Federal Highway AdministrationSee Federal Transit AdministrationSee Surface Transportation BoardSee Transportation Statistics BureauNOTICESAgency information collection activities:Submission for OMB review; comment request, 6293–6300Transportation Statistics BureauNOTICESAgency information collection activities:Proposed collection; comment request, 6301–6303Treasury DepartmentSee Internal Revenue ServiceVeterans Affairs DepartmentRULESMedical benefits:Homeless providers grant and per diem program, 6121–6126NOTICESMeetings:Veterans Readjustment Advisory Committee, 6305Separate Parts In This IssuePart IIDepartment of Education, 6308–6363Part IIIEnvironmental Protection Agency, 6366–6407Part IVSocial Security Administration, 6408–6432Part VDepartment of Labor, Occupational Safety and HealthAdministration, 6434–6442Reader AidsAdditional information, including a list of public laws,telephone numbers, reminders, and finding aids, appears inthe Reader Aids section at the end of this issue.Electronic Bulletin BoardFree Electronic Bulletin Board service for Public Lawnumbers, Federal Register finding aids, and a list ofdocuments on public inspection is available on 202–275–1538 or 275–0920.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / ContentsVIICFR PARTS AFFECTED IN THIS ISSUEA cumulative list of the parts affected this month can be found in theReader Aids section at the end of this issue.7 CFR433.....................................6099457.....................................6099984.....................................6110Proposed Rules:401.....................................6134457.....................................6134980.....................................61389 CFR391.....................................611112 CFRProposed Rules:312.....................................6139328.....................................614213 CFRProposed Rules:107.....................................614717 CFR15.......................................612218.......................................612219.......................................612220 CFR404 (2 documents) ...........6114,6408416.....................................640829 CFR1904...................................643430 CFRProposed Rules:251.....................................614934 CFR361.....................................6308363.....................................6308376.....................................6308380.....................................630838 CFR17.......................................612140 CFR52 (3 documents) .............6126,6127, 6129Proposed Rules:52 (3 documents) .............6159,616085.......................................636689.......................................636692.......................................6366721.....................................616046 CFR502.....................................6132510.....................................613249 CFRProposed Rules:395.....................................616150 CFR679.....................................6132

6099Rules and RegulationsFederal RegisterVol. 62, No. 28Tuesday, February 11, 1997This section of the FEDERAL REGISTERcontains regulatory documents having generalapplicability and legal effect, most of whichare keyed to and codified in the Code ofFederal Regulations, which is published under50 titles pursuant to 44 U.S.C. 1510.The Code of Federal Regulations is sold bythe Superintendent of Documents. Prices ofnew books are listed in the first FEDERALREGISTER issue of each week.DEPARTMENT OF AGRICULTUREFederal Crop Insurance Corporation7 CFR Parts 433 and 457RIN 0563–AB02Common Crop Insurance Regulations,Dry Bean Crop Insurance Provisions;and Dry Bean Crop InsuranceRegulationsAGENCY: Federal Crop InsuranceCorporation, USDA.ACTION: Final rule.SUMMARY: The Federal Crop InsuranceCorporation (FCIC) finalizes specificcrop provisions for the insurance of drybeans. The provisions will be used inconjunction with the Common CropInsurance Policy Basic Provisions,which contain standard terms andconditions common to most crops. Theintended effect of this action is toprovide policy changes to better meetthe needs of the insured, include thecurrent dry bean crop insuranceregulation with the Common CropInsurance Policy for ease of use andconsistency of terms, and to restrict theeffect of the current dry bean cropinsurance regulation to the 1996 andprior crop years.EFFECTIVE DATE: February 11, 1997.FOR FURTHER INFORMATION CONTACT:Arden Routh, Program Analyst,Research and Development, ProductDevelopment Division, Federal CropInsurance Corporation, United StatesDepartment of Agriculture, 9435 HolmesRoad, Kansas City, MO 64131,telephone (816) 926–7730.SUPPLEMENTARY INFORMATION:Executive Order No. 12866The Office of Management and Budget(OMB) has determined this rule to beexempt for the purposes of ExecutiveOrder No. 12866 and, therefore, has notbeen reviewed by OMB.Paperwork Reduction Act of 1995Following publication of the proposedrule, the public was afforded 60 days tosubmit written comments, data, andopinions on information collectionrequirements previously approved byOMB under OMB control number 0563–0003 through September 30, 1998. Nopublic comments were received.Unfunded Mandates Reform Act of1995Title II of the Unfunded MandatesReform Act of 1995 (UMRA), PublicLaw 104–4, establishes requirements forFederal agencies to assess the effects oftheir regulatory actions on State, local,and tribal governments and the privatesector. This rule contains no Federalmandates (under the regulatoryprovisions of title II of the UMRA) forState, local, and tribal governments orthe private sector. Thus, this rule is notsubject to the requirements of sections202 and 205 of the UMRA.Executive Order No. 12612It has been determined under section6(a) of Executive Order No. 12612,Federalism, that this rule does not havesufficient federalism implications towarrant the preparation of a FederalismAssessment. The provisions containedin this rule will not have a substantialdirect effect on States or their politicalsubdivisions, or on the distribution ofpower and responsibilities among thevarious levels of government.Regulatory Flexibility ActThis regulation will not have asignificant impact on a substantialnumber of small entities. The effect ofthis regulation on small entities will beno greater than on larger entities. Underthe current regulations, a producer isrequired to complete an application andan acreage report. If the crop is damagedor destroyed, the insured is required togive notice of loss and provide thenecessary information to complete aclaim for indemnity.The insured must also annuallycertify to the previous years productionif adequate records are available tosupport the certification. The producermust maintain the production records tosupport the certified information for atleast three years. This regulation doesnot alter those requirements.The amount of work required of theinsurance companies delivering andservicing these policies will not increasesignificantly from the amount of workcurrently required. This rule does nothave any greater or lesser impact on theproducer. Therefore, this action isdetermined to be exempt from theprovisions of the Regulatory FlexibilityAct (5 U.S.C. 605), and no RegulatoryFlexibility Analysis was prepared.Federal Assistance ProgramThis program is listed in the Catalogof Federal Domestic Assistance underNo. 10.450.Executive Order No. 12372This program is not subject to theprovisions of Executive Order No.12372, which require intergovernmentalconsultation with State and localofficials. See the Notice related to 7 CFR3015, subpart V, published at 48 FR29115, June 24, 1983.Executive Order No. 12778The Office of the General Counsel hasdetermined that these regulations meetthe applicable standards provided insections 2(a) and 2(b)(2) of ExecutiveOrder No. 12778. The provisions of thisrule will not have a retroactive effectprior to the effective date. Theprovisions of this rule will preemptState and local laws to the extent suchState and local laws are inconsistentherewith. The administrative appealprovisions published at 7 CFR part 11must be exhausted before any action forjudicial review may be brought.Environmental EvaluationThis action is not expected to have asignificant impact on the quality of thehuman environment, health, and safety.Therefore, neither an EnvironmentalAssessment nor an EnvironmentalImpact Statement is needed.National Performance ReviewThis regulatory action is being takenas part of the National PerformanceReview Initiative to eliminateunnecessary or duplicative regulationsand improve those that remain in force.BackgroundOn Tuesday, November 26, 1996,FCIC published a proposed rule in theFederal Register at 61 FR 60049–60057to add to the Common Crop InsuranceRegulations (7 CFR part 457) a newsection, 7 CFR 457.150, Dry Bean CropProvisions. The new provisions will be

6100 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationseffective for the 1997 and succeedingcrop years. These provisions willreplace and supersede the currentprovisions for insuring dry beans foundat 7 CFR part 433 (Dry Bean CropInsurance Regulations). FCIC alsoamends 7 CFR part 433 to limit its effectto the 1996 and prior crop years. FCICwill later publish a regulation to removeand reserve part 433.Following publication of the proposedrule, the public was afforded 30 days tosubmit written comments, data, andopinions. A total of 80 comments werereceived from the crop insuranceindustry and FCIC. The commentsreceived, and FCIC’s responses, are asfollows:Comment: The crop insuranceindustry questioned if considerationhad ever been given to having two beanpolices, one for contract seed beans andone for dry beans. It would be easier forpolicyholders to have crop provisionsthat address only the kind of beans theyare insuring.Response: FCIC will consider thisoption for a future rule. However, thereis not sufficient time to divide thispolicy for the 1997 crop year. Therefore,no change has been made.Comment: The crop insuranceindustry recommended defining‘‘properly handled.’’Response: The requirements forhandling seed beans are contained inthe seed bean processor contract.Therefore, it would be difficult for FCICto define ‘‘properly handled’’ due to thediffering requirements of seed beancompanies. However, FCIC will amendthe definition of ‘‘actual value’’ toclarify that production must be handledin accordance with requirementscontained in the seed bean processorcontract.Comment: The crop insuranceindustry recommended that thedefinition of ‘‘Base price’’ be amendedto exclude any bonus offered when thegermination percentage is above theminimum required by the seed contract.Response: FCIC agrees with thecomment and has amended thedefinition accordingly.Comment: The crop insuranceindustry expressed confusion with thedefinitions of ‘‘beans,’’ ‘‘dry beans,’’ and‘‘contract seed beans.’’ The definition of‘‘contract seed beans,’’ is also coveredby the ‘‘dry beans’’ definition whichmakes the definition of ‘‘beans’’ seemredundant. The commenter questions ifthe definition for ‘‘dry beans’’ needs toinclude the intended use of theproduction.Response: Throughout theseprovisions the term ‘‘beans’’ applies toboth dry beans and contract seed beans.The term ‘‘dry beans’’ includes allclasses of beans included in The UnitedStates Standards for Beans. The term‘‘contract seed beans’’ distinguishes drybeans grown under a contract for thespecific purpose of producing seed fora subsequent crop year. The definitionof ‘‘dry beans’’ was changed to excludecontract seed beans.Comment: The crop insuranceindustry agreed that the definition for‘‘county’’ should be deleted in theseprovisions so that the definition in theBasic Provisions will be effective. Thecommenter emphasized that if theseprovisions are approved for the 1997crop year, these changes and subsequentprocedures need to be issued soonenough for companies to providetraining to their agents, rearrange APHdata bases for units that previouslyincluded land in another county, and toallow policyholders to decide whetherto insure any land in another county inwhich they have an interest.Response: FCIC will provideinstructions for changing the data basesfor units that previously included landin another county. These instructionswill be made available at the time thepolicy is released. FCIC does notanticipate that a large number ofproducers farm in more than one countyand, therefore, does not expect a largenumber of data base revisions to benecessary.Comment: The crop insuranceindustry was concerned with thedefinition of ‘‘Good farming practices,’’which makes reference to ‘‘generallyrecognized by the CooperativeExtension Service.’’ The commentersindicated that there are areas orsituations where good, accepted farmingpractices may not necessarily berecognized by the Extension Service.Response: FCIC has removed the word‘‘generally’’ from this part of thedefinition. However, the CooperativeState Research, Education, andExtension Service recognizes mostfarming practices that are consideredacceptable for producing beans. The useof practices not recognized as acceptableby the Cooperative State Research,Education, and Extension Serviceprovides no standards by which tomeasure performance.Comment: The crop insuranceindustry recommended adding thewords ‘‘and quality’’ after the word‘‘quantity’’ in the definition of ‘‘irrigatedpractice.’Response: Water quality is animportant issue. However, since nostandards or procedures have beendeveloped to measure water quality forinsurance purposes, quality cannot beincluded in the definition. Therefore, nochange has been made.Comment: A representative of FCICrecommended changing the secondsentence in the definition of ‘‘localmarket price’’ to ‘‘Moisture and factors* * *’’ and delete ‘‘such as moisturecontent.’’Response: FCIC agrees with thecomment and has amended thedefinition accordingly.Comment: The crop insuranceindustry recommended changing thedefinition of ‘‘net price’’ to read, ‘‘Thedollar value of dry bean productionreceived or that could have beenreceived * * *’’Response: FCIC agrees with commentand has amended the definitionaccordingly.Comment: One comment receivedfrom the insurance industryrecommended changing the definitionof ‘‘pick’’ to consider defects based onthe original grade of the beans.Response: Dockage does not includedefects to the beans and, therefore,should not be included in anycalculation of the pick, which appliesonly to defects of the beans. Therefore,no change has been made.Comment: The crop insuranceindustry recommended adding a finalsentence to the definition of ‘‘preventedplanting,’’ which would require theinsured to have past history of the beantype which the insured is declaring asbeing prevented from being planted.Response: FCIC cannot penalize newproducers of a bean type, who can provethat they had the inputs available toplant that particular bean type, bydenying them prevented plantingcoverage. Therefore, no change has beenmade.Comment: A representative of FCICrecommended replacing the reference to‘‘Special Provisions’’ in the definition of‘‘Production guarantee (per acre)’’ with‘‘Actuarial Table,’’ since the adjustmentfactors are in the Actuarial Table andnot the Special Provisions.Response: FCIC agrees with thecomment and has amended thedefinition accordingly.Comment: The crop insuranceindustry questioned if the term‘‘production guarantee’’ applies only todry beans and if the term ‘‘amount ofinsurance’’ is used only for contractseed beans. If so, it would be helpful toidentify dry beans in the definition of‘‘production guarantee’’ and include adefinition for ‘‘amount of insurance’’ forcontract seed beans.Response: The term ‘‘productionguarantee’’ applies to both dry beansand contract seed beans. The amount ofinsurance for contract seed beans is

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6103Response: Adding the suggestedlanguage would be redundant with thelanguage contained in the definition of‘‘actual value.’’ In addition, not allinsurance providers require that theinsured select a percentage. Therefore,no change has been made.Comment: The crop insuranceindustry recommended adding the word‘‘harvestable’’ to section 13(d)(1) so thatit would read, ‘‘All appraisedharvestable production as follows:’’Response: When making an appraisal,the loss adjuster considers whether thecrop can be harvested. Therefore, nochange has been made.Comment: The crop insuranceindustry recommended clarifyingsection 13(d)(1)(i)(D). It is not necessaryto use the word ‘‘acceptable’’ twice inthis section.Response: FCIC agrees with thecomments and has amended theprovision accordingly.Comment: The crop insuranceindustry questioned whether thereference in section 13(d)(1)(iii), to ‘‘drybeans’’ excludes contract seed beans.Response: The provisions allowadjustment for quality deficiencies andexcess moisture for mature unharvesteddry beans only.Comment: The crop insuranceindustry recommended that section13(d)(1)(iv) be revised as follows: (1)Add the phrase ‘‘harvestable beans’’ tosection 13(d)(1)(iv)(A) which wouldmake the section read: ‘‘* * * (Theamount of production to count for suchacreage will be based on the harvestedproduction or appraisals of harvestablebeans from the samples at the timeharvest should have occurred * * *’’ (2)Add the phrase ‘‘of harvestable beans’’to section 13(d)(1)(iv)(B), which wouldmake this section read: ‘‘If you elect tocontinue to care for the crop, theamount of production to count for theacreage will be the harvestedproduction, or our reappraisal ofharvestable beans if additional damageoccurs and the crop is not harvested;and’’ The comment also questioned theadvisability of ‘‘leaving representativesamples’’ when agreement on theappraised amount of production can notbe reached. The commenterrecommended the use of Arbitration(section 17 of the Basic Provisions) asthe preferable process when agreementon the appraised amount of productioncan not be reached.Response: The ability to harvest thecrop is considered when makingappraisals of the crop. Representativesamples are the most accurate methodavailable to determine an accuraterepresentation of production when theparties disagree on the amount ofappraised production and it allows theinsured to put most of the acreage toanother use. If it is not practical to leaverepresentative samples the insuranceprovider does not have to require suchsamples be left. Therefore, no changehas been made.Comment: The crop insuranceindustry recommended changing theorder of the last two sentences of section13(e) so the exclusion of theseadjustments for contract seed beansdoes not interrupt the information thatapplies to dry edible beans.Response: FCIC agrees with thecomment and has amended theprovision accordingly.Comment: A representative of FCICrecommended deleting any reduction inthe amount of production to count dueto ‘‘pick’’ since it is not a term used in‘‘The United States Standards forBeans’’ upon which quality adjustmentis based. The reason for an excessiveamount of ‘‘pick’’ in the beans (otherthan damage) is generally due tofarming or cultural practices. ‘‘Pick’’ isnormally controllable by the producer.‘‘Pick’’ charts are never the same twoyears in a row and different charts areused each year by different bean dealers.‘‘Pick’’ is driven by the market andsupply and demand, depending on thesize of the crop in a given area. Thecommenter further stated that numerousstudies have been made on whether‘‘pick’’ should be used as a reduction ofproduction to count, and each time ithas been determined that it is notfeasible.Response: ‘‘Pick’’ currently is used forquality adjustment procedures in certainareas and has been found to be anacceptable method to establish quality.It is defined in the rule. Therefore, nochange has been made.Comment: The crop insuranceindustry recommended adding thephrase: ‘‘and the beans are to be sold attime of adjustment or sold based on theoriginal grade;’’ at the end of bothsections 13(e)(2) (i) and (ii).Response: Neither FCIC nor theinsurance provider can require theinsured to sell the production at thetime of adjustment as a condition ofobtaining quality adjustment. Qualityadjustments are applied at the time ofloss adjustment. Any further damage,whether the crop is sold or not, is notcovered. Therefore, no change has beenmade.Comment; The crop insuranceindustry questioned if it was necessaryto say both ‘‘damaged’’ and ‘‘badlydamaged’’ in section 13(e)(2)(ii). Thecommenter recommended just the term‘‘damage’’ should suffice.Response: The provisions areconsistent with different degrees ofdamage defined in ‘‘The United StatesStandards for Beans.’’ Therefore, nochange has been made.Comment: The crop insuranceindustry stated that dry beans are rarelystored in most states. The adjusterwould be required to obtain a sample ofthe beans prior to or during harvest.Most samples of beans are provided bythe facility storing or purchasing thebeans. It is therefore unlikely that theyare a ‘‘disinterested third party,’’ asstated in section 13(e)(3)(iii). Thecommenter recommended that thelanguage be revised to include the‘‘place of storage or sale if the companyfeels the sample is consistent with thequality of beans in the surroundingarea.’’Response: All samples must beobtained by disinterested third partiesto assure that such samples aregenuinely representative of the totalproduction. If the insurance providerbelieves the samples were not obtainedin this manner, or that they are notrepresentative, they should not acceptthe results. Therefore, no change hasbeen made.Comment: The crop insuranceindustry recommended adding thephrase ‘‘based on the applicable gradeor pick which the production is to besold or sold at time of adjustment;’’ atthe end of section 13(e)(4)(i).Response: As stated above, theinsurance provider cannot require thesale of the production at the time of lossadjustment or at any other time. Theamount of loss, including any qualityadjustments, are made at the time of lossadjustment and any subsequent damageis not covered, so the time of saleshould not affect this determination.Therefore, no change has been made.Comment: The crop insuranceindustry stated that conversion factorsadopted for several crops have providedthe industry with consistent qualityadjustment, generally unaffected by themarketplace, and questions whetherFCIC intends to establish conversioncharts for all states in which dry beansare insurable.Response: FCIC agrees that studiesshould be made to determine if similarconversion charts for dry beans can bedeveloped. Until this can be furtheranalyzed, no change will be made.Comment: The crop insuranceindustry: (1) Recommended adding‘‘based on the applicable grade or pickfor the production which you willreceive * * *’’ at the end of the firstsentence and after the word‘‘production’’ in the second sentence ofsection 13(e)(4)(ii)(A); and (2)

6104 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsquestioned whether the current year’smaximum price election for the typeshould be used when a processorrefuses to quote a No. 2 price.Response: The price should bedetermined based on the quality andquantity of the production as it wasoriginally delivered and the provisionsclearly indicate that the value of thedamaged production is used in thiscalculation. Therefore, therecommended change has not beenmade. Further, the current year’smaximum price election is used onlywhen a local market price is notavailable. A local market price may beestablished using price quotes fromusual marketing outlets in the area.Refusal of one processor to quote a pricedoes not automatically mean a localmarket price is not available.Comment: One comment receivedfrom the crop insurance industryrecommended adding ‘‘(to includetrading tare for grade to obtain a highergrade and price),’’ after the word‘‘processing’’ in section13(e)(4)(ii)(A)(3).Response: FCIC agrees with thecomment and has amended theprovisions accordingly.Comment: The crop insuranceindustry recommended that late andprevented planting coverage should notbe provided on crops grown undercontract with a processor. The processordetermines what the producer does ifthe insured crop is not planted duringthe normal planting period.Response: The inclusion of late andprevented planting is appropriate forcontract seed beans. As the commentindicates, the processor may or may notallow planting within the late plantingperiod. Congress has determined thatmarketing windows should be a factorin determining whether a crop has beenprevented from planting. The contractedplanting period, and intended harvestperiod, is considered as a marketingwindow. However, if planting isallowed under the contract, and thecrop can reach maturity, coverageshould be provided. Therefore, nochange has been made.Comment: The crop insuranceindustry recommended adding thephrase ‘‘to a type for which you havehistory’’ after the word ‘‘planted’’ insection 14(c)(1).Response: Changing the provision torequire past history of the bean typewould prevent a new producer fromobtaining late planting coverage ordiversifying their production. To protectthe integrity of the program, theinsurance provider should require theproducer to prove that the producer hadthe inputs available to plant the newbean type. Therefore, no change hasbeen made.Comment: The crop insuranceindustry recommended adding thephrase ‘‘type for which you havehistory’’ after the words ‘‘insured crop’’in the second and last sentences ofsection 14(d)(1)(ii) and at the end of thefirst sentence of section 14(d)(1)(iii)(B).Response: Changing the provision assuggested would prevent a newproducer from having late or preventedplanting coverage or diversifying theirproduction. Therefore, no changes hasbeen made.Comment: The crop insuranceindustry and a representative of FCICrecommended eliminating late andprevented planting provisions thatreference participating in a USDAprogram that limits acreage planted,compliance with conservation plans,and base acreage. These do not apply.Response: FCIC agrees that acreagelimiting programs and base acreage donot apply to dry beans and has amendedthe appropriate provisions. However,conservation plans may allow theinsurance provider to verify an intent toproduce or not produce the crop.Therefore, provisions regarding the useof conservation plans have not beenchanged.Comment: The crop insuranceindustry and a representative of FCICasked whether the prevented plantingcoverage available when a substitutecrop is planted will be dropped, or atleast revised, for all affected crops forthe 1997 crop year, and whether it ispossible to remove (or revise)redesignated sections 14(d)(1)(iii)(B)and 14(d)(2)(iii)(B).Response: The provisions that allow aprevented planting guarantee when asubstitute crop is planted are underreview for all affected crops for the 1998crop year. Any changes will be made ina separate rule for all affected cropprovisions. No change will be made inthese provisions to maintainconsistency with prevented plantingprovisions for other crops.Comment: The crop insuranceindustry questioned if the provisions insection 14(d)(4)(ii) apply to dry beansonly since ‘‘dry beans’’ are referenced,or if this carryover prevented plantingcoverage would be different for contractseed beans due to the requirement thatthey are to be grown under a contractwith a processor.Response: The Federal Crop InsuranceAct requires the insurance period forprevented planting to begin on the salesclosing date for the previous crop yearif coverage has been continuous.Therefore, this ‘‘tail coverage’’ wouldapply if any beans, including contractseed beans, were insured previously.This provision has been clarified byreplacing the term ‘‘dry beans’’ with theterm ‘‘beans.’’Comment: The crop insuranceindustry recommended limiting thenumber of contract seed bean acreseligible for prevented planting to thenumber of acres that are under theprocessor contract for the crop year.Response: FCIC agrees with thecomment and has amended theprovisions in section 14(d)(5)(iv)(A) tolimit the number of acres eligible forprevented planting to those specified inthe seed bean processor contract or thenumber needed to produce thecontracted production based on theAPH yield for the acreage.Comment: The crop insuranceindustry asked whether the languagecontained in section 14(d)(5)(iv)(E)regarding double-cropping would beliberalized or if proof that the acreagehas a history of double-cropping in eachof the last four years would still berequired. The comment recommendedchanging the words ‘‘* * * the acreagehas a history * * *’’ to ‘‘* * * the farmhas a history * * *’’Response: The recommended changewould allow double benefits on anentire farm even though a very smallnumber of acres may have been doublecroppedin the past. Therefore, nochange has been made.Comment: The crop insuranceindustry recommended revising section14(d)(5)(v) if the current languageallows use of total acreage from both dryedible beans and contract seed beans fordetermining eligible prevented plantingacreage. The proposed provision couldresult in a prevented planting paymentfor more than the acreage under contractfor contract seed beans.Response: FCIC has revised section14(d)(5)(iv)(A) to limit the number acresof contract seed beans that are eligiblefor prevented planting to the number ofacres under contract in the current year.Comment: The crop insuranceindustry suggested combining theprovisions contained in section 15(e)with the provisions in section 15(a).Response: Approval of writtenagreements requested after the salesclosing date is the exception, not therule. Therefore, these provisions shouldbe kept separate.Comment: The crop insuranceindustry recommended that therequirement for a written agreement tobe renewed each year be removed.Terms of the agreement should be statedin the agreement to fit the particularsituation for the policy, or if nosubstantive changes occur from one year

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6105to the next, allow the written agreementto be continuous.Response: Written agreements areintended to change policy terms orpermit insurance in unusual situationswhere such changes will not increaserisk. If such practices continue year toyear, they should be incorporated intothe policy or Special Provisions. It isimportant to minimize exceptions toassure that the insured is well aware ofthe specific terms of the policy.Therefore, no change will be made.In addition to the changes describedabove, FCIC has made the followingchanges to the Dry Bean Provisions:1. Section 1—Amended the definitionof ‘‘practical to replant’’ to specify thatit will not be considered practical toreplant contract seed beans unlessproduction from the replanted acreagecan be delivered under the terms of theseed bean processor contract.2. Section 14(d)(3)-Clarified that theinsured must have possessed the inputsto plant and produce the insured crop.3. Revised part 433 to restrict its effectto the 1996 and prior crop years.Good cause is shown to make this ruleeffective upon publication in theFederal Register. This rule improves thedry bean insurance coverage and bringsit under the Common Crop InsurancePolicy Basic Provisions for consistencyamong policies. The earliest contractchange date that can be met for the 1997crop year is February 15, 1997. It istherefore imperative that theseprovisions be made final before thatdate so that the reinsured companiesand insureds may have sufficient timeto implement these changes. Therefore,public interest requires the agency to actimmediately to make these provisionsavailable for the 1997 crop year.List of Subjects in 7 CFR Parts 433 and457Crop insurance, Dry bean cropinsurance regulations, Dry bean.Final RuleAccordingly, for the reasons set forthin the preamble, the Federal CropInsurance Corporation hereby amends 7CFR parts 433 and 457 as follows:PART 433—DRY BEAN CROPINSURANCE REGULATIONS1. The authority citation for 7 CFRpart 433 continues to read as follows:Authority: 7 U.S.C. 1506(l), 1506(p).2. The subpart heading preceding§ 433.1 is revised to read as follows:Subpart—Regulations for the 1986Through 1996 Crop Years3. Section 433.7 is amended byrevising the introductory text ofparagraph (d) to read as follows:§ 433.7 The application and policy.* * * * *(d) The application for the 1986 andsucceeding crop years is found atsubpart D or part 400—GeneralAdministrative Regulations (7 CFR400.37, 400.38). The provisions of theDry Bean Insurance Policy for the 1986through 1996 crop years are as follows:* * * * *PART 457—COMMON CROPINSURANCE REGULATIONS;REGULATIONS FOR THE 1994 ANDSUBSEQUENT CONTRACT YEARS4. The authority citation for 7 CFRpart 457 continues to read as follows:Authority: 7 U.S.C. 1506(l), 1506(p).5. Section 457.150 is added to read asfollows:§ 457.150 Dry bean crop insuranceprovisions.The Dry Bean Crop InsuranceProvisions for the 1997 and succeedingcrop years are as follows:FCIC policies:Department of AgricultureFederal Crop Insurance CorporationReinsured policies:(Appropriate title for insurance provider)Both FCIC and reinsured policies:Dry Bean Crop ProvisionsIf a conflict exists among the BasicProvisions (§ 457.8), these Crop Provisions,and the Special Provisions; the SpecialProvisions will control these Crop Provisionsand the Basic Provisions; and these CropProvisions will control the Basic Provisions.1. DefinitionsActual value—The dollar value received,or that could be received, for contract seedbeans under a seed bean processor contractif the contract seed bean production isproperly handled in accordance with therequirements of such contract.Base price—The price per pound(excluding any discounts or incentives thatmay apply) that is stated in the seed beanprocessor contract and that will be paid tothe producer for at least 50 percent of thetotal production under contract with the seedcompany.Beans—Dry beans and contract seed beans.Combining—A harvesting process that usesa machine to separate the beans from thepods and other vegetative matter and placethe beans into a temporary storage receptacle.Contract seed beans—Dry beans grownunder the terms of a seed bean processorcontract for the purpose of producing seed tobe used for producing dry beans or vegetablebeans in a future crop year.Days—Calendar days.Dry beans—The crop defined by TheUnited States Standards for Beans excludingcontract seed beans.FSA—The Farm Service Agency, an agencyof the United States Department ofAgriculture, or a successor agency.Final planting date—The date contained inthe Special Provisions for the insured crop bywhich the crop must initially be planted inorder to be insured for the full productionguarantee.Good farming practices—The culturalpractices generally in use in the county forthe crop to make normal progress towardmaturity and produce at least the yield usedto determine the production guarantee andare those recognized by the Cooperative StateResearch, Education, and Extension Serviceas compatible with agronomic and weatherconditions in the county.Harvest—Combining the beans. Beanswhich are swathed or knifed prior tocombining are not considered harvested.Interplanted—Acreage on which two ormore crops are planted in a manner that doesnot permit separate agronomic maintenanceor harvest of the insured crop.Irrigated practice—A method of producinga crop by which water is artificially appliedduring the growing season by appropriatesystems and at the proper times, with theintention of providing the quantity of waterneeded to produce at least the yield used toestablish the irrigated production guaranteeon the irrigated acreage planted to theinsured crop.Late planted—Acreage planted to theinsured crop during the late planting period.Late planting period—The period thatbegins the day after the final planting date forthe insured crop and ends 25 days after thefinal planting date.Local market price—The cash price perhundredweight for the U.S. No. 2 grade ofdry beans of the insured type offered bybuyers in the area in which you normallymarket the dry beans. Moisture content andfactors not associated with grading under theUnited States Standards for Beans will not beconsidered in establishing this price.Net price—The dollar value of dry beanproduction received, or that could have beenreceived, after reductions in value due toinsurable causes of loss.Pick—The percentage, on a weight basis, ofdefects including splits, damaged (includingdiscolored) beans, contrasting types, andforeign material that remains in the dry beansafter dockage has been removed by theproper use of screens or sieves.Planted acreage—Land in which seed hasbeen placed by a machine appropriate for theinsured crop and planting method, at thecorrect depth, into a seedbed that has beenproperly prepared for the planting methodand production practice. Beans must initiallybe planted in rows far enough apart to permitcultivation to be considered planted. Acreageplanted in any other manner will not beinsurable unless otherwise provided by theSpecial Provisions or by written agreement.Practical to replant—In lieu of thedefinition of ‘‘Practical to replant’’ contained

6106 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsin section 1 of the Basic Provisions (§ 457.8),practical to replant is defined as ourdetermination, after loss or damage to theinsured crop, based on factors, including butnot limited to moisture availability,condition of the field, time to crop maturity,and marketing window, that replanting theinsured crop will allow the crop to attainmaturity prior to the calendar date for theend of the insurance period. It will not beconsidered practical to replant after the endof the late planting period unless replantingis generally occurring in the area. Forcontract seed beans, it will not be consideredpractical to replant unless production fromthe replanted acreage can be delivered underthe terms of the seed bean processor contractor the seed company agrees to accept suchproduction.Prevented planting—Inability to plant theinsured crop with proper equipment by thefinal planting date designated in the SpecialProvisions for the insured crop in the countyor the end of the late planting period. Youmust have been unable to plant the insuredcrop due to an insured cause of loss that hasprevented the majority of producers in thesurrounding area from planting the samecrop.Production guarantee (per acre)—Thenumber of pounds determined bymultiplying the approved yield per acre bythe coverage level percentage you elect, andmultiplying the result by any applicableadjustment factor specified in the ActuarialTable.Replanting—Performing the culturalpractices necessary to prepare the land toreplace the bean seed and then replacing thebean seed in the insured acreage with theexpectation of growing a successful crop.Seed bean processor contract—A writtenagreement between the contract seed beanproducer and the seed company, containingat a minimum:(a) The contract seed bean producer’spromise to plant and grow one or morespecific varieties of contract seed beans, anddeliver the production from those varieties tothe seed company;(b) The seed company’s promise topurchase all the production stated in thecontract; and(c) A base price, or a method to determinesuch price based on published independentinformation, that will be paid to the contractseed bean producer for the production statedin the contract.Seed company—Any business enterpriseregularly engaged in the processing of seedbeans, that possesses all licenses and permitsfor marketing seed beans required by theState in which it operates, and that possessesor has contracted for facilities, with enoughdrying, screening and bagging or packagingequipment to accept and process the seedbeans within a reasonable amount of timeafter harvest.Swathing or knifing—Severance of thebean plant from the ground, including thepods and beans, and placing them intowindrows.Timely planted—Planted on or before thefinal planting date designated in the SpecialProvisions for the insured crop in the county.Type—A category of beans identified as atype in the Special Provisions.Written agreement—A written documentthat alters designated terms of this policy inaccordance with section 15.2. Unit Division(a) In addition to section 1 (Definitions) ofthe Basic Provisions (§ 457.8), (basic unit) allacreage of contract seed beans qualifies as aseparate basic unit. For production basedseed bean processor contracts, the unit willconsist of all the acreage needed to producethe amount of production under contract,based on the actual production history of theacreage. For acreage based seed beanprocessor contracts, the unit will consist ofall acreage specified in the contract.(b) Unless limited by the SpecialProvisions, a unit as defined in section 1(Definitions) of the Basic Provisions (§ 457.8),(basic unit) and section 2(a) of these cropprovisions, may be divided into optionalunits if, for each optional unit, you meet allthe conditions of this section or if a writtenagreement to such division exists.(c) Basic units may not be divided intooptional units on any basis including, but notlimited to, production practice, variety, andplanting period, other than as described inthis section.(d) Contract seed beans may only qualifyfor optional units as specified in section 2(g)of these Crop Provisions if the seed beanprocessor contract specifies the number ofacres under contract. Contract seed beansproduced under a seed bean processorcontract that specifies only an amount ofproduction are not eligible for optional units.(e) If you do not comply fully with theseprovisions, we will combine all optionalunits that are not in compliance with theseprovisions into the basic unit from whichthey were formed. We will combine theoptional units at any time we discover thatyou have failed to comply with theseprovisions. If failure to comply with theseprovisions is determined to be inadvertent,and the optional units are combined into abasic unit, that portion of the additionalpremium paid for the optional units thathave been combined will be refunded to you.(f) All optional units you selected for thecrop year must be identified on the acreagereport for that crop year.(g) The following requirements must bemet for each optional unit:(1) You must have records, which can beindependently verified, of planted acreageand production for each optional unit for atleast the last crop year used to determineyour production guarantee;(2) You must plant the crop in a mannerthat results in a clear and discernable breakin the planting pattern at the boundaries ofeach optional unit;(3) You must have records of marketedproduction or measurement of storedproduction from each optional unitmaintained in such a manner that permits usto verify the production from each optionalunit, or the production from each unit mustbe kept separate until loss adjustment iscompleted by us; and(4) Subject to section 2(d) each optionalunit must meet one or more of the followingcriteria, as applicable:(i) Optional Units by bean type: A separateoptional unit may be established for eachbean type shown in the Special Provisions.(ii) Optional Units by Section, SectionEquivalent, or FSA Farm Serial Number: Inaddition to, or instead of, establishingoptional units by type, optional units may beestablished if each optional unit is located ina separate legally identified section. In theabsence of sections, we may consider parcelsof land legally identified by other methods ofmeasure including, but not limited toSpanish grants, railroad surveys, leagues,labors, or Virginia Military Lands, as theequivalent of sections for unit purposes. Inareas that have not been surveyed using thesystems identified above, or another systemapproved by us, or in areas where suchsystems exist but boundaries are not readilydiscernable, each optional unit must belocated in a separate farm identified by asingle FSA Farm Serial Number.(iii) Optional Units on Acreage IncludingBoth Irrigated and Non-irrigated Practices: Inaddition to, or instead of, establishingoptional units by type, section, sectionequivalent, or FSA Farm Serial Number,optional units may be based on irrigatedacreage or non-irrigated acreage if both arelocated in the same section, sectionequivalent, or FSA Farm Serial Number. Toqualify as separate irrigated and non-irrigatedoptional units, the non-irrigated acreage maynot continue into the irrigated acreage in thesame rows or planting pattern. The irrigatedacreage may not extend beyond the point atwhich your irrigation system can deliver thequantity of water needed to produce the yieldon which the guarantee is based, except thecorners of a field in which a center-pivotirrigation system is used will be consideredas irrigated acreage if separate acceptablerecords of production from the corners arenot provided. If the corners of a field inwhich a center-pivot irrigation system is useddo not qualify as a separate non-irrigatedoptional unit, they will be a part of the unitcontaining the irrigated acreage. However,non-irrigated acreage that is not a part of afield in which a center-pivot irrigationsystem is used may qualify as a separateoptional unit provided that all requirementsof this section are met.3. Insurance Guarantees, Coverage Levels,and Prices for Determining Indemnities(a) In addition to the requirements ofsection 3(b) (Insurance Guarantees, CoverageLevels, and Prices for DeterminingIndemnities) of the Basic Provisions (§ 457.8),you may select only one price election for allthe dry beans in the county insured underthis policy unless the Special Provisionsprovide different price elections by type, inwhich case you may select one price electionfor each dry bean type designated in theSpecial Provisions. The price elections youchoose for each type are not required to havethe same percentage relationship to themaximum price offered by us for each type.For example, if you choose 100 percent of themaximum price election for one type, youmay also choose 75 percent of the maximumprice election for another type.(b) For contract seed beans only, the dollaramount of insurance is obtained bymultiplying the production guarantee per

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6107acre for each variety in the unit by theinsured acreage of that variety, times theapplicable base price, and times the priceelection percentage you selected. The total ofthese results will be the amount of insurancefor contract seed beans in the unit.4. Contract ChangesIn accordance with section 4 (ContractChanges) of the Basic Provisions (§ 457.8),the contract change date is November 30preceding the cancellation date.5. Cancellation and Termination DatesIn accordance with section 2 (Life ofPolicy, Cancellation, and Termination) of theBasic Provisions (§ 457.8), the cancellationand termination dates are:State and countyCancellation and terminationdatesCalifornia .................................................................................................................. February 28.All other States ........................................................................................................ March 15.6. Report of AcreageFor contract seed beans only, in additionto the requirements of section 6 (Report ofAcreage) of the Basic Provisions (§ 457.8),you must submit a copy of the seed beanprocessor contract on or before the acreagereporting date.7. Insured Crop(a) In accordance with section 8 (InsuredCrop) of the Basic Provisions(§ 457.8), thecrop insured will be all the beans in thecounty for which a premium rate is providedby the actuarial table:(1) In which you have a share;(2) That are planted for harvest as:(i) Dry beans; or(ii) If applicable, contract seed beans, if theseed bean processor contract is executed onor before the acreage reporting date; and(3) That are not (unless allowed by theSpecial Provisions or by written agreement):(i) Interplanted with another crop; or(ii) Planted into an established grass orlegume.(b) For contract seed beans only:(1) An instrument in the form of a ‘‘lease’’under which you retain control of the acreageon which the insured crop is grown and thatprovides for delivery of the crop undersubstantially the same terms as a seed beanprocessor contract may be treated as acontract under which you have an insurableinterest in the crop; and(2) We will not insure any acreage ofcontract seed beans produced by a seedcompany.(c) In addition to the types of dry beansdesignated in the Special Provisions, we willinsure other types if:(1) The type you intend to plant has beendemonstrated to be adapted to the area.Evidence of adaptability must include:(i) Results of test plots for 2 years andrecommendations by a university or seedcompany; or(ii) Two years of production reports thatindicate your experience producing the typein your production area;(2) You submit on or before the salesclosing date your production reports andprices received, or the test plot results, andevidence of market potential, including theprice buyers are willing to pay for the type;and(3) Both parties (you and us) enter into awritten agreement allowing insurance on thetype in accordance with section 15.(d) Any acreage of beans that is destroyedand replanted to a different insurable type ofbeans will be considered insured acreage inaccordance with section 11.8. Insurable AcreageIn addition to the provisions of section 9(Insurable Acreage) of the Basic Provisions(§ 457.8):(a) We will not insure any acreage thatdoes not meet the rotation requirementscontained in the Special Provisions; or(b) Any acreage of the insured cropdamaged before the final planting date, to theextent that the majority of growers in the areawould normally not further care for the crop,must be replanted unless we agree thatreplanting is not practical. We will notrequire you to replant if it is not practical toreplant to the same type of beans asoriginally planted.9. Insurance PeriodIn accordance with the provisions ofsection 11 (Insurance Period) of the BasicProvisions (§ 457.8), the calendar date for theend of the insurance period is the dateimmediately following planting as follows:(a) October 15 in Oklahoma, New Mexico,and Texas;(b) November 15 in California; and(c) October 31 in all other States.10. Causes of LossIn accordance with the provisions ofsection 12 (Causes of Loss) of the BasicProvisions (§ 457.8), insurance is providedonly against the following causes of loss thatoccur during the insurance period:(a) Adverse weather conditions;(b) Fire;(c) Insects, but not damage due toinsufficient or improper application of pestcontrol measures;(d) Plant disease, but not damage due toinsufficient or improper application ofdisease control measures;(e) Wildlife;(f) Earthquake;(g) Volcanic eruption; or(h) Failure of the irrigation water supply,if caused by an insured peril that occursduring the insurance period.11. Replanting Payments(a) In accordance with section 13(Replanting Payment) of the Basic Provisions(§ 457.8), a replanting payment is allowed ifthe bean crop is damaged by an insurablecause of loss to the extent that the remainingstand will not produce at least 90 percent ofthe production guarantee for the acreage andit is practical to replant.(b) The maximum amount of the replantingpayment per acre will be the lesser of 10percent of the production guarantee for thetype to be replanted or 120 poundsmultiplied by your price election for the typeto be replanted and by your insured share.(c) When beans are replanted using apractice that is uninsurable as an originalplanting, the liability for the unit will bereduced by the amount of the replantingpayment. The premium amount will not bereduced.(d) The guarantee and premium for acreagereplanted to a different insurable type will bebased on the replanted type and will becalculated in accordance with sections 3(Insurance Guarantees, Coverage Levels, andPrices for Determining Indemnities) and 7(Annual Premium) of the Basic Provisions(§ 457.8) and section 3 of these CropProvisions.12. Duties in the Event of Damage or LossIn accordance with the requirements ofsection 14 (Duties in the Event of Damage orLoss) of the Basic Provisions (§ 457.8),representative samples of the unharvestedcrop must be at least 10 feet wide and extendthe entire length of each field in the unit. Thesamples must not be harvested or destroyeduntil the earlier of our inspection or 15 daysafter harvest of the balance of the unit iscompleted.13. Settlement of Claim(a) We will determine your loss on a unitbasis. In the event you are unable to provideseparate acceptable production records:(1) For any optional units, we will combineall optional units for which such productionrecords were not provided; or(2) For any basic units, we will allocate anycommingled production to such units inproportion to our liability on the harvestedacreage for the unit.(b) In the event of loss or damage to yourbean crop covered by this policy, we willsettle your claim by:(1) Multiplying the insured acreage of eachdry bean type by its respective productionguarantee;(2) Multiplying each result in section13(b)(1) by the respective price election foreach insured type;(3) Totaling the results in section 13(b)(2);(4) Multiplying the insured acreage of eachcontract seed bean type by its respectiveproduction guarantee;(5 ) Multiplying each result in section13(b)(4) by the applicable base price;(6) Multiplying each result in section13(b)(5) by your selected price electionpercentage;(7) Totaling the results in section 13(b)(6);(8) Totaling the results in section 13(b)(3)and section 13(b)(6);

6108 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations(9) Multiplying the total production to becounted of each dry bean type if applicable,(see section 13(d)) by the respective priceelection;(10) Totaling the value of all contract seedbean production (see section 13(c));(11) Totaling the results in section 13(b)(9)and section 13(b)(10);(12) Subtracting the total in section13(b)(11) from the total in section 13(b)(8);and(13) Multiplying the result by your share.(c) The value of contract seed beanproduction to count for each type in the unitwill be determined as follows:(1) For production meeting the minimumquality requirements contained in the seedbean processor contract and for productionthat does not meet such requirements due touninsured causes:(i) Multiplying the actual value or baseprice per pound, whichever is greater, by theprice election percentage you selected; and(ii) Multiplying the result by the number ofpounds of such production.(2) For production not meeting theminimum quality requirements contained inthe seed bean processor contract due toinsurable causes:(i) Multiplying the actual value by theprice election percentage you selected; and(ii) Multiplying the result by the number ofpounds of such production.(d) The total bean production to count (inpounds) from all insurable acreage on theunit will include:(1) All appraised production as follows:(i) Not less than the production guaranteeper acre for acreage:(A) That is abandoned;(B) That is put to another use without ourconsent;(C) That is damaged solely by uninsuredcauses; or(D) For which you fail to provideproduction records that are acceptable to us;(ii) Production lost due to uninsuredcauses;(iii) Unharvested production (matureunharvested production of dry beans may beadjusted for quality deficiencies and excessmoisture in accordance with section 13(e));and(iv) Potential production on insuredacreage that you intend to put to another useor abandon, if you and we agree on theappraised amount of production. Upon suchagreement, the insurance period for thatacreage will end when you put the acreageto another use or abandon the crop. Ifagreement on the appraised amount ofproduction is not reached:(A) If you do not elect to continue to carefor the crop, we may give you consent to putthe acreage to another use if you agree toleave intact, and provide sufficient care for,representative samples of the crop inlocations acceptable to us (The amount ofproduction to count for such acreage will bebased on the harvested production orappraisals from the samples at the timeharvest should have occurred. If you do notleave the required samples intact, or fail toprovide sufficient care for the samples, ourappraisal made prior to giving you consent toput the acreage to another use will be usedto determine the amount of production tocount); or(B) If you elect to continue to care for thecrop, the amount of production to count forthe acreage will be the harvested production,or our reappraisal if additional damageoccurs and the crop is not harvested; and(2) All harvested production from theinsurable acreage.(e) Mature dry bean production to countmay be adjusted for excess moisture andquality deficiencies. If moisture adjustment isapplicable, it will be made prior to anyadjustment for quality. Adjustment for excessmoisture and quality deficiencies will not beapplicable to contract seed beans.(1) Production will be reduced by 0.12percent for each 0.1 percentage point ofmoisture in excess of 18 percent. We mayobtain samples of the production todetermine the moisture content.(2) Production will be eligible for qualityadjustment if:(i) A pick is designated in the SpecialProvisions and the pick of the damagedproduction exceeds this designation; or(ii) A pick is not designated in the SpecialProvisions and deficiencies in quality, inaccordance with the United States Standardsfor Beans, result in dry beans not meeting thegrade requirements for U.S. No. 2 (gradesU.S. No. 3 or worse) because the beans aredamaged or badly damaged; or(iii) Substances or conditions are presentthat are identified by the Food and DrugAdministration or other public healthorganizations of the United States as beinginjurious to human or animal health.(3) Quality will be a factor in determiningyour loss only if:(i) The deficiencies, substances, orconditions resulted from a cause of lossagainst which insurance is provided underthese crop provisions and which occurswithin the insurance period;(ii) The deficiencies, substances, orconditions result in a net price for thedamaged production that is less than thelocal market price;(iii) All determinations of thesedeficiencies, substances, or conditions aremade using samples of the productionobtained by us or by a disinterested thirdparty approved by us; and(iv) The samples are analyzed by a graderlicensed to grade dry beans under theauthority of the United States AgriculturalMarketing Act or the United StatesWarehouse Act with regard to deficiencies inquality, or by a laboratory approved by uswith regard to substances or conditionsinjurious to human or animal health. (Testweight for quality adjustment purposes maybe determined by our loss adjuster.)(4) Dry bean production that is eligible forquality adjustment, as specified in sections13(e) (2) and (3), will be reduced:(i) If a conversion factor is designated bythe Special Provisions, by multiplying thenumber of pounds of eligible production bythe conversion factor designated in theSpecial Provisions for the applicable grade orpick; or(ii) If a conversion factor is not designatedby the Special Provisions as follows:(A) The market price of the qualifyingdamaged production and the local marketprice will be determined on the earlier of thedate such quality adjusted production is soldor the date of final inspection for the unit.If a local market price is not available for theinsured crop year, the current years’maximum price election available for theapplicable type will be used. The price forthe qualifying damaged production will bethe market price for the local area to theextent feasible. We may obtain prices fromany buyer of our choice. If we obtain pricesfrom one or more buyers located outside yourlocal market area, we will reduce such pricesby the additional costs required to deliver thedry beans to those buyers. Discounts used toestablish the net price of the damagedproduction will be limited to those that areusual, customary, and reasonable. The priceof the damaged production will not bereduced for:(1) Moisture content;(2) Damage due to uninsured causes; or(3) Drying, handling, processing, includingtrading tare for grade to obtain a higher gradeand price, or any other costs associated withnormal harvesting, handling, and marketingof the dry beans; except, if the price of thedamaged production can be increased byconditioning, we may reduce the price of theproduction after it has been conditioned bythe cost of conditioning but not lower thanthe value of the production beforeconditioning;(B) The value per pound of the damagedor conditioned production will be divided bythe local market price to determine thequality adjustment factor; and(C) The number of pounds remaining afterany reduction due to excessive moisture (themoisture-adjusted gross pounds (ifappropriate)) of the damaged or conditionedproduction will then be multiplied by thequality adjustment factor to determine thenet production to count.(f) Any production harvested from plantsgrowing in the insured crop may be countedas production of the insured crop on a weightbasis.14. Late Planting and Prevented Planting(a) In lieu of provisions contained in theBasic Provisions (§ 457.8), regarding acreageinitially planted after the final planting dateand the applicability of a Late PlantingAgreement Option, insurance will beprovided for acreage planted to the insuredcrop during the late planting period (seesection 14(c)), and acreage you wereprevented from planting (see section 14(d)).These coverages provide reduced productionguarantees. The premium amount for lateplanted acreage and eligible preventedplanting acreage will be the same as that fortimely planted. If the amount of premiumyou are required to pay (gross premium lessour subsidy) for late planted acreage orprevented planting acreage exceeds theliability on such acreage, coverage for thoseacres will not be provided, no premium willbe due, and no indemnity will be paid forsuch acreage.(b) You must provide written notice to usnot later than the acreage reporting date ifyou were prevented from planting.(c) Late Planting(1) For bean acreage planted during the lateplanting period, the production guarantee or

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6109amount of insurance for each acre will bereduced for each day planted after the finalplanting date by:(i) One percent per day for the 1st throughthe 10th day; and(ii) Two percent per day for the 11ththrough the 25th day.(2) In addition to the requirements ofsection 6 (Report of Acreage) of the BasicProvisions (§ 457.8), you must report thedates the acreage is planted within the lateplanting period.(3) If planting of beans continues after thefinal planting date, or you are prevented fromplanting during the late planting period, theacreage reporting date will be the later of:(i) The acreage reporting date contained inthe Special Provisions for the insured crop;or(ii) Five days after the end of the lateplanting period.(d) Prevented Planting (Including PlantingAfter the Late Planting Period)(1) If you were prevented from timelyplanting beans, you may elect:(i) To plant beans during the late plantingperiod. The production guarantee or amountof insurance for such acreage will bedetermined in accordance with section14(c)(1);(ii) Not to plant this acreage to any cropexcept a cover crop not for harvest. You mayalso elect to plant the insured crop after thelate planting period. In either case, theproduction guarantee or amount of insurancefor such acreage will be 50 percent of theproduction guarantee for timely plantedacres. For example, if your productionguarantee for timely planted acreage is 1,500pounds per acre, your prevented plantingproduction guarantee would be 750 poundsper acre (1,500 pounds multiplied by 0.50).If you elect to plant the insured crop after thelate planting period, production to count forsuch acreage will be determined inaccordance with section 13; or(iii) Not to plant the intended crop butplant a substitute crop for harvest, in whichcase:(A) No prevented planting productionguarantee will be provided for such acreageif the substitute crop is planted on or beforethe 10th day following the final planting datefor the insured crop; or(B) A production guarantee equal to 25percent of the production guarantee fortimely planted acres will be provided forsuch acreage, if the substitute crop is plantedafter the 10th day following the final plantingdate for the insured crop. If you elected theCatastrophic Risk Protection Endorsement orexcluded this coverage, and plant a substitutecrop, no prevented planting coverage will beprovided. For example, if your productionguarantee for timely planted acreage is 30bushels per acre, your prevented plantingproduction guarantee would be 7.5 bushelsper acre (30 bushels multiplied by 0.25). Youmay elect to exclude prevented plantingcoverage when a substitute crop is plantedfor harvest and receive a reduction in theapplicable premium rate. If you wish toexclude this coverage, you must so indicate,on or before the sales closing date, on yourapplication or on a form approved by us.Your election to exclude this coverage willremain in effect from year to year unless younotify us in writing on our form by theapplicable sales closing date for the crop yearfor which you wish to include this coverage.All acreage of the crop insured under thispolicy will be subject to this exclusion.(2) Production guarantees for timely, late,and prevented planting acreage within a unitwill be combined to determine theproduction guarantee for the unit. Forexample, assume you insure one unit inwhich you have a 100 percent share. The unitconsists of 150 acres, of which 50 acres wereplanted timely, 50 acres were planted 7 daysafter the final planting date (late planted),and 50 acres were not planted but are eligiblefor a prevented planting productionguarantee or amount of insurance. Theproduction guarantee for the unit will becomputed as follows:(i) For the timely planted acreage, multiplythe per acre production guarantee or amountof insurance for timely planted acreage by the50 acres planted timely;(ii) For the late planted acreage, multiplythe per acre production guarantee or amountof insurance for timely planted acreage by 93percent and multiply the result by the 50acres planted late; and(iii) For prevented planting acreage,multiply the per acre production guarantee oramount of insurance for timely plantedacreage by:(A) Fifty percent and multiply the result bythe 50 acres you were prevented fromplanting, if the acreage is eligible forprevented planting coverage, and if theacreage is left idle for the crop year, or if acover crop is planted not for harvest.Prevented planting compensation hereunderwill not be denied because the cover crop ishayed or grazed; or(B) Twenty five percent and multiply theresult by the 50 acres you were preventedfrom planting, if the acreage is eligible forprevented planting coverage, and if you electto plant a substitute crop for harvest after the10th day following the final planting date forthe insured crop. (This paragraph (B) is notapplicable, and prevented planting coverageis not available under these crop provisions,if you elected the Catastrophic RiskProtection Endorsement or you elected toexclude prevented planting coverage when asubstitute crop is planted (see section14(d)(1)(iii)). Your premium will be based onthe result of multiplying the per acreproduction guarantee or amount of insurancefor timely planted acreage by the 150 acresin the unit.(3) You must have the inputs available toplant and produce the intended crop with theexpectation of at least producing theproduction guarantee or amount ofinsurance. Proof that these inputs wereavailable may be required.(4) In addition to the provisions of section11 (Insurance Period) of the Basic Provisions(§ 457.8), the insurance period for preventedplanting coverage begins:(i) On the sales closing date contained inthe Special Provisions for the insured crop inthe county for the crop year the applicationfor insurance is accepted; or(ii) For any subsequent crop year, on thesales closing date for the insured crop in thecounty for the previous crop year, providedcontinuous coverage has been in effect sincethat date. For example: If you makeapplication and purchase insurance for beansfor the 1997 crop year, prevented plantingcoverage will begin on the 1997 sales closingdate for beans in the county. If the beancoverage remains in effect for the 1998 cropyear (is not terminated or canceled during orafter the 1997 crop year), prevented plantingcoverage for the 1998 crop year began on the1997 sales closing date. Cancellation for thepurpose of transferring the policy to adifferent insurance provider when there is nolapse in coverage will not be consideredterminated or canceled coverage for thepurpose of the preceding sentence.(5) The acreage to which preventedplanting coverage applies will not exceed thetotal eligible acreage on all FSA Farm SerialNumbers in which you have a share, adjustedfor any reconstitution that may have occurredon or before the sales closing date. Eligibleacreage for each FSA Farm Serial Number isdetermined as follows:(i) The number of acres planted to beanson the FSA Farm Serial Number during theprevious crop year; or(ii) One hundred percent of the simpleaverage of the number of acres planted tobeans during the crop years that you certifiedto determine your yield.(iii) Acreage intended to be planted underan irrigated practice will be limited to thenumber of acres for which you had adequateirrigation facilities prior to the insured causeof loss which prevented you from planting.(iv) A prevented planting productionguarantee or amount of insurance will not beprovided for any acreage:(A) Of contracted seed beans in excess ofthe number of acres required to be grown inthe current crop year under a seed beanprocessor contract executed on or before theacreage reporting date, or the number of acresneeded to produce the amount of contractedproduction, based on the APH yield for theacreage.(B) That does not constitute at least 20acres or 20 percent of the acreage in the unit,whichever is less (Acreage that is less than20 acres or 20 percent of the acreage in theunit will be presumed to have been intendedto be planted to the insured crop planted inthe unit, unless you can show that you hadthe inputs available before the final plantingdate to plant and produce another insuredcrop on the acreage);(C) For which the actuarial table does notdesignate a premium rate unless a writtenagreement designates such premium rate;(D) Used for conservation purposes orintended to be left unplanted under anyprogram administered by the United StatesDepartment of Agriculture;(E) On which another crop is preventedfrom being planted, if you have alreadyreceived a prevented planting indemnity,guarantee or amount of insurance for thesame acreage in the same crop year, unlessyou provide adequate records of acreage andproduction showing that the acreage wasdouble-cropped in each of the last 4 years inwhich the insured crop was grown on theacreage;(F) On which the insured crop is preventedfrom being planted, if any other crop is

6110 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsplanted and fails, or is planted andharvested, hayed or grazed on the sameacreage in the same crop year, (other than acover crop as specified in section 14(d)(2)(iii)(A), or a substitute crop allowed insection 14 (d)(2)(iii)(B)), unless you provideadequate records of acreage and productionshowing that the acreage was double-croppedin each of the last 4 years in which theinsured crop was grown on the acreage;(G) When coverage is provided under theCatastrophic Risk Protection Endorsement ifyou plant another crop for harvest on anyacreage you were prevented from planting inthe same crop year, even if you have a historyof double-cropping. If you have aCatastrophic Risk Protection Endorsementand receive a prevented planting indemnity,guarantee, or amount of insurance for a cropand are prevented from planting another cropon the same acreage, you may only receivethe prevented planting indemnity, guarantee,or amount of insurance for the crop on whichthe prevented planting indemnity, guarantee,or amount of insurance is received; or(H) For which planting history orconservation plans indicate that the acreagewould have remained fallow for crop rotationpurposes.(v) For the purpose of determining eligibleacreage for prevented planting coverage,acreage for all units will be combined and bereduced by the number of bean acres timelyplanted and late planted. For example,assume you have 100 acres eligible forprevented planting coverage in which youhave a 100 percent share. The acreage islocated in a single FSA Farm Serial Numberwhich you insure as two separate optionalunits consisting of 50 acres each. If youplanted 60 acres of beans on one optionalunit and 40 acres of beans on the secondoptional unit, your prevented plantingeligible acreage would be reduced to zero(i.e., 100 acres eligible for prevented plantingcoverage minus 100 acres planted equalszero).(6) In accordance with the provisions ofsection 6 (Report of Acreage) of the BasicProvisions (§ 457.8), you must report by unitany insurable acreage that you wereprevented from planting. This report must besubmitted on or before the acreage reportingdate. For the purpose of determining acreageeligible for a prevented planting productionguarantee, the total amount of preventedplanting and planted acres cannot exceed themaximum number of acres eligible forprevented planting coverage. Any acreageyou report in excess of the number of acreseligible for prevented planting coverage, orthat exceeds the number of eligible acresphysically located in a unit, will be deletedfrom your acreage report.15. Written Agreements.Designated terms of this policy may bealtered by written agreement in accordancewith the following:(a) You must apply in writing for eachwritten agreement no later than the salesclosing date, except as provided in section15(e);(b) The application for a written agreementmust contain all variable terms of thecontract between you and us that will be ineffect if the written agreement is notapproved;(c) If approved, the written agreement willinclude all variable terms of the contract,including, but not limited to, crop type orvariety, the guarantee, premium rate, andprice election;(d) Each written agreement will only bevalid for one year (If the written agreementis not specifically renewed the followingyear, insurance coverage for subsequent cropyears will be in accordance with the printedpolicy); and(e) An application for a written agreementsubmitted after the sales closing date may beapproved if, after a physical inspection of theacreage, it is determined that no loss hasoccurred and the crop is insurable inaccordance with the policy and writtenagreement provisions.Signed in Washington, D.C., on February 6,1997.Kenneth D. Ackerman,Manager, Federal Crop InsuranceCorporation.[FR Doc. 97–3327 Filed 2–10–97; 8:45 am]BILLING CODE 3410–FA–PAgricultural Marketing Service7 CFR Part 984[Docket No. FV96–984–1 FIR]Walnuts Grown in California;Assessment RateAGENCY: Agricultural Marketing Service,USDA.ACTION: Final rule.SUMMARY: The Department ofAgriculture (Department) is adopting asa final rule, without change, theprovisions of an interim final ruleestablishing an assessment rate for theWalnut Marketing Board (Board) underMarketing Order No. 984 for the 1996–97 and subsequent marketing years. TheBoard is responsible for localadministration of the marketing orderwhich regulates the handling of walnutsgrown in California. Authorization toassess walnut handlers enables theBoard to incur expenses that arereasonable and necessary to administerthe program.EFFECTIVE DATE: August 1, 1996.FOR FURTHER INFORMATION CONTACT:Mary Kate Nelson, Marketing Assistant,California Marketing Field Office, Fruitand Vegetable Division, AMS, USDA,2202 Monterey Street, suite 102B,Fresno, CA 93721, telephone 209–487–5901, FAX 209–487–5906, or MarthaSue Clark, Program Assistant, MarketingOrder Administration Branch, Fruit andVegetable Division, AMS, USDA, PO.Box 96456, room 2525–S, telephone202–720–9918, FAX 202–720–5698.Small businesses may requestinformation on compliance with thisregulation by contacting: Jay Guerber,Marketing Order AdministrationBranch, Fruit and Vegetable Division,AMS, USDA, PO. Box 96456, room2525–S, Washington, DC 20090–6456;telephone 202–720–2491; FAX 202–720–5698.SUPPLEMENTARY INFORMATION: This ruleis issued under Marketing Agreementand Order No. 984, both as amended (7CFR part 984), regulating the handlingof walnuts grown in California,hereinafter referred to as the ‘‘order.’’The marketing agreement and order areeffective under the AgriculturalMarketing Agreement Act of 1937, asamended (7 U.S.C. 601–674), hereinafterreferred to as the ‘‘Act.’’The Department is issuing this rule inconformance with Executive Order12866.This rule has been reviewed underExecutive Order 12988, Civil JusticeReform. Under the marketing order nowin effect, California walnut handlers aresubject to assessments. Funds toadminister the order are derived fromsuch assessments. It is intended that theassessment rate as issued herein will beapplicable to all assessable walnutsbeginning August 1, 1996, andcontinuing until amended, suspended,or terminated. This rule will notpreempt any State or local laws,regulations, or policies unless theypresent an irreconcilable conflict withthis rule.The Act provides that administrativeproceedings must be exhausted beforeparties may file suit in court. Undersection 608c(15)(A) of the Act, anyhandler subject to an order may filewith the Secretary a petition stating thatthe order, any provision of the order, orany obligation imposed in connectionwith the order is not in accordance withlaw and request a modification of theorder or to be exempted therefrom. Suchhandler is afforded the opportunity fora hearing on the petition. After thehearing the Secretary would rule on thepetition. The Act provides that thedistrict court of the United States in anydistrict in which the handler is aninhabitant, or has his or her principalplace of business, has jurisdiction toreview the Secretary’s ruling on thepetition, provided an action is filed notlater than 20 days after the date of theentry of the ruling.Pursuant to requirements set forth inthe Regulatory Flexibility Act (RFA), theAgricultural Marketing Service (AMS)has considered the economic impact ofthis rule on small entities.The purpose of the RFA is to fitregulatory actions to the scale ofbusiness subject to such actions in order

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6111that small businesses will not be undulyor disproportionately burdened.Marketing orders issued pursuant to theAct, and the rules issued thereunder, areunique in that they are brought aboutthrough group action of essentiallysmall entities acting on their ownbehalf. Thus, both statutes have smallentity orientation and compatibility.There are approximately 5,000producers of walnuts in the productionarea and approximately 55 handlerssubject to regulation under themarketing order. Small agriculturalproducers have been defined by theSmall Business Administration (13 CFR121.601) as those having annual receiptsless than $500,000, and smallagricultural service firms are defined asthose whose annual receipts are lessthan $5,000,000. The majority ofCalifornia walnut producers andhandlers may be classified as smallentities.The California walnut marketingorder provides authority for the Board,with the approval of the Department, toformulate an annual budget of expensesand collect assessments from handlersto administer the program. Themembers of the Board are producers andhandlers of California walnuts. They arefamiliar with the Board’s needs andwith the costs for goods and services intheir local area and are thus in aposition to formulate an appropriatebudget and assessment rate. Theassessment rate is formulated anddiscussed in a public meeting. Thus, alldirectly affected persons have anopportunity to participate and provideinput.The Board met on September 6, 1996,and unanimously recommended 1996–97 expenditures of $2,301,869 and anassessment rate of $0.0117 perkernelweight pound of merchantablewalnuts certified. In comparison, lastyear’s budgeted expenditures were$2,280,175. The assessment rate of$0.0117 is $0.0001 higher than lastyear’s established rate. Majorexpenditures recommended by theBoard for the 1996–97 year include$232,684 for general expenses, $150,508for office expenses, $1,840,677 forresearch expenses, $48,000 for aproduction research director, and$30,000 for the reserve. Budgetedexpenses for these items in 1995–96were $246,847, $140,908, $1,828,420,$34,000, and $30,000, respectively.The assessment rate recommended bythe Board was derived by dividinganticipated expenses by expectedmerchantable certifications of Californiawalnuts. Walnut shipments for the yearare estimated at 198,000,000kernelweight pounds which will yield$2,316,600 in assessment income,which will be adequate to coverbudgeted expenses. Unexpended fundsmay be used temporarily to defrayexpenses of the subsequent marketingyear, but must be made available to thehandlers from whom collected withinfive months after the end of the year.An interim final rule regarding thisaction was published in the November29, 1996, issue of the Federal Register(61 FR 60512). That rule provided for a30-day comment period. No commentswere received.While this rule will impose someadditional costs on handlers, the costsare in the form of uniform assessmentson all handlers. Some of the additionalcosts may be passed on to producers.However, these costs will be offset bythe benefits derived by the operation ofthe marketing order. Therefore, the AMShas determined that this rule will nothave a significant economic impact ona substantial number of small entities.The assessment rate established inthis rule will continue in effectindefinitely unless modified,suspended, or terminated by theSecretary upon recommendation andinformation submitted by the Board orother available information.Although this assessment rate iseffective for an indefinite period, theBoard will continue to meet prior to orduring each marketing year torecommend a budget of expenses andconsider recommendations formodification of the assessment rate. Thedates and times of Board meetings areavailable from the Board or theDepartment. Board meetings are open tothe public and interested persons mayexpress their views at these meetings.The Department will evaluate Boardrecommendations and other availableinformation to determine whethermodification of the assessment rate isneeded. Further rulemaking will beundertaken as necessary. The Board’s1996–97 budget and those forsubsequent marketing years will bereviewed and, as appropriate, approvedby the Department.After consideration of all relevantmaterial presented, including theinformation and recommendationsubmitted by the Board and otheravailable information, it is hereby foundthat this rule, as hereinafter set forth,will tend to effectuate the declaredpolicy of the Act.Pursuant to 5 U.S.C. 553, it is alsofound and determined that good causeexists for not postponing the effectivedate of this rule until 30 days afterpublication in the Federal Registerbecause: (1) The Board needs to havesufficient funds to pay its expenseswhich are incurred on a continuousbasis; (2) the 1996–97 marketing yearbegan on August 1, 1996, and themarketing order requires that the rate ofassessment for each marketing yearapply to all assessable walnuts handledduring such marketing year; (3) handlersare aware of this action which wasunanimously recommended by theBoard at a public meeting and is similarto other assessment rate actions issuedin past years; and (4) an interim finalrule was published on this action andprovided for a 30-day comment period;no comments were received.List of Subjects in 7 CFR Part 984Marketing agreements, Nuts,Reporting and recordkeepingrequirements, Walnuts.For the reasons set forth in thepreamble, 7 CFR part 984 is amended asfollows:PART 984—WALNUTS GROWN INCALIFORNIAAccordingly, the interim final ruleamending 7 CFR part 984 which waspublished at 61 FR 60512 on November29, 1996, is adopted as a final rulewithout change.Dated: February 5, 1997.Robert C. KeeneyDirector, Fruit and Vegetable Division.[FR Doc. 97–3284 Filed 2–10–97; 8:45 am]BILLING CODE 3410–02–PFood Safety and Inspection Service9 CFR Part 391[Docket No. 96–013C]RIN 0583–AC13Fee Changes for Inspection ServicesAGENCY: Food Safety and InspectionService, USDA.ACTION: Correcting amendments.SUMMARY: This document containscorrections to the final regulation, ‘‘FeeIncrease for Inspection Services,’’ whichwas published on December 13, 1996(61 FR 65459). The final rule changedthe fees charged to meat and poultryestablishments, importers, and exportersfor providing voluntary inspection,identification, and certification services;overtime and holiday services; andlaboratory services.EFFECTIVE DATE: February 11, 1997.FOR FURTHER INFORMATION CONTACT:William L. West, Director, Budget andFinance Division, AdministrativeManagement, (202) 720–3367.

6112 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsSUPPLEMENTARY INFORMATION: OnDecember 13, 1996, FSIS published‘‘Fee Increase for Inspection Services’’(61 FR 65459). Although the preamblediscussion of the fee changes wascorrect, the regulatory amendmentswere incorrect. The regulation continuesto list the old fees. This notice correctsthis oversight.List of Subjects in 9 CFR Part 391Fees and charges, Meat inspection,Poultry products inspection.PART 391—FEES AND CHARGES FORINSPECTION SERVICESAccordingly, 9 CFR 391 is correctedby making the following correctingamendments:1. The authority citation for part 391continues 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.; 21U.S.C. 601–695; 7 CFR 2.18 and 2.53.2. Sections 391.2, 391.3, and 391.4 arerevised to read as follows:§ 391.2 Base time rate.The base time rate for inspectionservices provided pursuant to §§ 350.7,351.8, 351.9, 352.5, 354.101, 355.12, and362.5 shall be $32.88 per hour, perprogram employee.§ 391.3 Overtime and holiday rate.The overtime and holiday rate forinspection services provided pursuantto §§ 307.5, 350.7, 351.8, 351.9, 352.5,354.101, 355.12, 362.5, and 381.38 shallbe $33.76 per hour, per programemployee.§ 391.4 Laboratory services rate.The rate for laboratory servicesprovided pursuant to §§ 350.7, 351.9,352.5, 354.101, 355.12, and 362.5 shallbe $48.56 per hour, per programemployee.Done at Washington, DC, on February 5,1997.Thomas J. Billy,Administrator.[FR Doc. 97–3371 Filed 2–10–97; 8:45 am]BILLING CODE 3410–DM–PCOMMODITY FUTURES TRADINGCOMMISSION17 CFR Parts 15, 18 and 19Reports by Large Traders; CashPosition Reports in Grains (includingSoybeans) and CottonAGENCY: Commodity Futures TradingCommission.ACTION: Final rulemaking.SUMMARY: The Commodity FuturesTrading Commission (Commission) isamending Parts 15, 18 and 19 of theregulations under the CommodityExchange Act (‘‘Act’’), 17 CFR Parts 15,18 and 19 (1996). The amendments toPart 18 require that traders who holdreportable futures or option positionsfile the CFTC Form 40, ‘‘Statement ofReporting Trader,’’ only upon request bythe Commission or its designee. Theamendments to Parts 15 and 19 providethat monthly cash position reports arerequired only if a trader’s net long or netshort combined futures and futuresequivalent options position exceeds thelevels specified in rule 150.2. Theproposal to amend Parts 15, 18 and 19was included with a number of otherproposed amendments that primarilyconcerned option large trader reports.The Commission has determined toproceed with the changes to Parts 15, 18and 19 immediately and will considerthe remaining changes separately at alater time. Consideration of final ruleson those changes relating to optionsreporting are dependent, in part, on thecompletion of upgrades to theCommission’s computer system.EFFECTIVE DATE: April 14, 1997.FOR FURTHER INFORMATION CONTACT:Lamont Reese, Commodity FuturesTrading Commission, Division ofEconomic Analysis, Three LafayetteCentre, 1155 21st Street, N.W.,Washington, D.C. 20581.SUPPLEMENTARY INFORMATION:I. BackgroundOn July 18, 1996, the Commissionpublished a notice of proposedrulemaking in the Federal Register thataffects reports from large traders filedpursuant to rules 18.04 and 19.01(a)(1).See 61 FR 37409 (July 18, 1996). Theamendments to Parts 18 and 19 wereincluded with a number of otherproposed amendments to theCommission’s reporting rules thatprimarily concerned options large traderreports. Consideration of final ruleswith respect to option reporting isdependent, in part, on implementationof certain upgrades to the Commission’scomputer system.Under Commission rule 18.04, traderswho become reportable in futures mustfile a CFTC Form 40, ‘‘Statement ofReporting Trader,’’ within ten businessdays following the day that the trader’sposition equals or exceeds specifiedlevels. 1 Additional filings are required1 A reportable position is any open position heldor controlled by a trader at the close of business inany one futures contract of a commodity traded onany one contract market that is equal to or in excessto be made annually as specified in rule18.04(d). 17 CFR 18.04 (1996). Traderswho become reportable in options arerequired to file the Form 40 only inresponse to a special call by theCommission. The Form 40 requires thedisclosure of information aboutownership and control of futures andoption positions held by the reportingtrader as well as the trader’s use of themarkets for hedging.As explained in the Notice ofProposed Rulemaking, when an accountfirst becomes reportable in futures, thefutures commission merchant, clearingmember or foreign broker reporting theaccount files a CFTC Form 102 thatidentifies all persons having a tenpercent or more financial interest in theaccount and those persons who controlthe trading of the account. Although allpersons named on the Form 102 may beconsidered a ‘‘trader’’ according to theCommission’s definition, as a matter ofadministrative practice Commissionstaff has not initiated requests for initialand updated Form 40s from all suchtraders. Generally staff has taken actionagainst traders only if the traders hadfailed to respond to the staff’s writtenrequest. 61 FR 37414 (July 18, 1996). Inview of this, the Commission proposedto amend rule 18.04 to codify thispractice by requiring that traders fileForm 40s only in response to a specialcall and to delegate the authority tomake these calls to the Director of theDivision of Economic Analysis.With regard to Part 19, theCommission requires that personsowning or controlling futures positionsin commodities for which theCommission has established speculativelimits file reports concerning their longand short cash positions, i.e., stocks ofthe commodities owned and thequantity of their fixed-price purchaseand sale commitments. See 17 CFR Part19 (1996). These commodities includethe grains, the soybean complex andcotton. See 17 CFR Part 150 (1996). Theprimary purpose for these reports is todetermine if the futures and optionpositions of traders that exceed theCommission’s speculative limits qualifyas hedging as defined in section 1.3(z)of the Commission’s regulations.Although the speculative limits set forthin rule 150.2 apply to the net long or netshort combined futures and futuresequivalent option position of a trader,the Commission’s definition of areportable position contained in rule15.00 considers only the futuresposition to determine if a trader isreportable for purposes of reports filedof the quantities fixed by the Commission in § 15.03of the regulations, 17 CFR § 15.03 (1996).

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6113pursuant to rule 19.01(a)(1). 2 TheCommission proposed amendments torules 15.00 and 19.00 so that a trader’snet futures and futures-equivalentoption position would be considered indetermining whether the subject reportsmust be filed. 3II. Review of CommentsThe Commission received eightcomment letters concerning itsproposals published in the July 18, 1996Federal Register. Most commentsaddressed that part of the Commission’sproposed rulemaking concerningoptions large trader reporting. Threecommentors addressed the proposedchanges to Parts 15, 18 and 19. Onecommentor supported adoption of theamendments as proposed, and theothers had no objection to theiradoption. In view of this, theCommission is adopting theamendments as proposed.III. Related MattersA. The Regulatory Flexibility ActThe Regulatory Flexibility Act (RFA),5 U.S.C. §§ 601 et seq., requires thatagencies consider the impact of theserules on small businesses. TheCommission has previously determinedthat large traders and futurescommission merchants are not ‘‘smallentities’’ for purposes of the RegulatoryFlexibility Act, 47 FR 18618–18621(April 30, 1982). Therefore, theChairperson, on behalf of theCommission, hereby certifies, pursuantto 5 U.S.C. § 605(b), that the actiontaken herein will not have a significanteconomic impact on a substantialnumber of small entities.B. Paperwork Reduction Act (PRA)When publishing final rules, thePaperwork Reduction Act of 1995, Pub.L. 104–13 (May 13, 1995), imposescertain requirements on Federalagencies (including the Commission) inconnection with their conducting orsponsoring any collection ofinformation as defined by the2 Commission rules 150.1(f)–(h) define futuresequivalent long and short positions as follows:(f) Futures-equivalent means an option contractwhich has been adjusted by the previous day’s riskfactor, or delta coefficient, for that option which hasbeen calculated at the close of trading andpublished by the applicable exchange under § 16.01of this chapter.(g) Long positions means a long call option, ashort put option or a long underlying futurescontract.(h) Short positions means a short call option, along put option or a short underlying futurescontract.3 Conforming amendments were proposed to rule15.01(d). See 17 CFR 15.01(d) (1996). Theseamendments are adopted as proposed.Paperwork Reduction Act. Incompliance with the Act, these finalrules and/or their associatedinformation collection requirementsinform the public of:1. The reasons the information isplanned to be and/or has been collected;(2) the way such information is plannedto be and/or has been used to further theproper performance of the functions ofthe agency; (3) an estimate, to the extentpracticable, of the average burden of thecollection (together with a request thatthe public direct to the agency anycomments concerning the accuracy ofthis burden); (4) whether responses tothe collection of information arevoluntary, required to obtain or retain abenefit, or mandatory; (5) the nature andextent of confidentiality to be provided,if any; and (6) the fact that an agencymay not conduct or sponsor, and aperson is not required to respond to, acollection of information unless itdisplays a currently valid OMB controlnumber.The Commission previouslysubmitted these rules in proposed formand their associated informationcollection requirements to the Office ofManagement and Budget. The Office ofManagement and Budget approved thecollection of information associatedwith these rules on November 26, 1996,and assigned OMB control number3038–0009 to these rules. The burdenassociated with this entire collection,including these final rules is as follows:Average burden hours per response:.3607 hour.Number of Respondents: 6181.Frequency of response: Daily.The burden associated with thesespecific final rules, is as follows:Average burden hours per response:.5991 hour.Number of Respondents: 5399.Frequency of response: On occasion.Persons wishing to comment on theinformation required by these final rulesshould contact the Desk Officer, CFTC,Office of Management and Budget,Room 10202, NEOP, Washington, DC20503, (202) 395–7340. Copies of theinformation collection submission toOMB are available from the CFTCClearance Officer, 1155 21st Street NW,Washington, DC 20581, (202) 418–5160.List of Subjects17 CFR Part 15Brokers, Reporting and recordkeepingrequirements.17 CFR Part 18Brokers, Commodity futures,Reporting and recordkeepingrequirements.17 CFR Part 19Brokers, Commodity futures,Reporting and recordkeepingrequirements.In consideration of the foregoing, andpursuant to the authority contained inthe Commodity Exchange Act (Act), andin particular, sections 4g, 4i, 5 and 8aof the Act, 7 U.S.C. §§ 6g, 6i, 7 and 12a(1994), the Commission hereby amendschapter I of Title 17 of the Code ofFederal Regulations as follows:PART 15—REPORTS—GENERALPROVISIONS1. The authority citation for part 15continues to read as follows:Authority: 7 U.S.C. 2, 4, 5, 6a, 6c(a)–(d), 6f,6g, 6i, 6k, 6m, 6n, 7, 9, 12a, 19 and 21; 5U.S.C. 552 and 552(b).2. Section 15.00 is amended byrevising paragraph (b)(1)(ii) to read asfollows:§ 15.00 Definitions of terms used in parts15 to 21 of this chapter.* * * * *(b) * * *(l) * * *(ii) For the purposes of reportsspecified in § 19.00(a)(1) of this chapter,any combined futures and futuresequivalentoption open contractposition as defined in part 150 of thischapter in any one month or in allmonths combined, either net long or netshort in any commodity on any onecontract market, excluding futurespositions against which notices ofdelivery have been stopped by a traderor issued by the clearing organization ofa contract market, which at the close ofthe market on the last business day ofthe week exceeds the net quantity limitin spot, in single or in all-months fixedin § 150.2 of this chapter for theparticular commodity and contractmarket.* * * * *3. Section 15.01 is amended byrevising paragraph (d) to read asfollows:15.01 Persons required to report.* * * * *(d) Persons, as specified in part 19 ofthis chapter, either:(1) Who hold or control futures andoption and positions that exceed theamounts set forth in § 150.2 of thischapter for the commodities enumeratedin that section, any part of whichconstitutes bona fide hedging positions(as defined in § 1.3(z) of this chapter); or(2) Who are merchants or dealers ofcotton holding or controlling positionsfor future delivery in cotton that equal

6114 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsor exceed the amount set forth in§ 15.03.PART 18—REPORTS BY TRADERS4. The authority citation for part 18continues to read as follows:Authority: 7 U.S.C. 2, 4, 6a, 6c, 6f, 6g, 6i,6k, 6m, 6n, 12a, and 19; 5 U.S.C. 552 and552(b) unless otherwise noted.5. Part 18 is amended by adding anew § 18.03 as follows:§ 18.03 Delegation of authority to theDirector of the Division of EconomicAnalysis.The Commission hereby delegates,until the Commission orders otherwise,the authority to make special calls ontraders for information as set forth in§§ 18.00, 18.04 and 18.05 to the Directorof the Division of Economic Analysis tobe exercised by the Director or by suchother employee or employees of theDirector as may be designated from timeto time by the Director. The Director ofthe Division of Economic Analysis maysubmit to the Commission for itsconsideration any matter which hasbeen delegated in this paragraph.Nothing in this paragraph prohibits theCommission, at its election, fromexercising the authority delegated inthis paragraph.6. Section 18.04 is amended byremoving paragraph (d) and by revisingthe introductory text to read as follows:§ 18.04 Statement of reporting trader.Every trader who holds or controls areportable options or futures positionshall after a special call upon suchtrader by the Commission or itsdesignee file with the Commission a‘‘Statement of Reporting Trader’’ on theForm 40 at such time and place asdirected in the call. All traders shallcomplete part A of the Form 40 and, inaddition, shall complete:Part B—If the trader is an individual, apartnership or a joint tenant.Part C—If the trader is a corporation ortype of trader other than an individual,partnership, or joint tenant.* * * * *PART 19—REPORTS BY PERSONSHOLDING BONA FIDE HEDGEPOSITIONS PURSUANT TO § 1.3(z) OFTHIS CHAPTER AND BY MERCHANTSAND DEALERS IN COTTON7. The authority section for part 19continues to read as follows:Authority: U.S.C. 6g(a), 6i, and 12a(5),unless otherwise noted.8. Section 19.00 is amended byrevising paragraph (a)(1) to read asfollows:§ 19.00 General provisions.(a) * * *(1) All persons holding or controllingoptions or futures positions that arereportable pursuant to § 15.00(b)(1)(ii) ofthis chapter and any part of whichconstitute bona fide hedging positionsas defined in § 1.3(z) of this chapter,* * * * *Issued in Washington, D.C., January 31,1997 by the Commission.Catherine D. Dixon,Assistant to the Secretary of the Commission.[FR Doc. 97–3395 Filed 2–10–97; 8:45 am]BILLING CODE 6351–01–PSOCIAL SECURITY ADMINISTRATION20 CFR Part 404RIN 0960–AE31Cycling Payment of Social SecurityBenefitsAGENCY: Social Security Administration(SSA).ACTION: Final rules.SUMMARY: Historically, Social Securitybenefits generally have been paid on the3rd of each month. As a result of ourongoing efforts to improve service to ourcustomers, we are establishingadditional days throughout the monthon which Social Security benefits willbe paid. Current beneficiaries are notaffected.EFFECTIVE DATE: These final rules areeffective May 1, 1997.FOR FURTHER INFORMATION CONTACT: LoisBerg, Legal Assistant, Division ofRegulations and Rulings, Social SecurityAdministration, 6401 SecurityBoulevard, Baltimore, MD 21235, (410)965–1713. For information oneligibility, claiming benefits, or coverageof earnings, call our national toll-freenumber, 1–800–772–1213.SUPPLEMENTARY INFORMATION:BackgroundThe second phase of the NationalPerformance Review (NPR), the FederalReinventing Government effort, wasannounced by the President and VicePresident on December 19, 1994. It wasdesigned to focus attention on whateach agency does, examining its missionand looking at its programs andfunctions to see if there are ways toprovide better service to the public and,at the same time, do business in a morecost-effective manner, i.e., ‘‘makegovernment work better and cost less.’’Each agency was asked to assemble ateam to review its own programs andfunctions. SSA’s team worked closelywith a team of representatives from NPRand the Office of Management andBudget (OMB) to developrecommendations for the VicePresident’s consideration.On April 11, 1995, the White Houseformally approved SSA’s reinventionproposals and officially announcedthem the next day. One of theseproposals was to cycle the payment ofbenefits.Recipients of Old-Age, Survivors andDisability Insurance (OASDI) benefitsand Supplemental Security Income(SSI) payments currently are paid in thefirst few days of each month. Whilethese specific payment days have neverbeen required by the Social Security Act(the Act), which in §§ 205(i) and1631(a)(1) commits the time for makingbenefit payments to the discretion of theCommissioner of Social Security, it hasbeen our longstanding administrativepractice to make payment on these days.Monthly benefits are paid to all OASDIbeneficiaries on the same day (generallythe 3rd day of each month for thepreceding month) and to all SSIbeneficiaries on the same day (generallythe 1st day of each month for which thepayment is due).Over the years, a trend has developedthat has resulted in deterioration ofservices we provide face-to-face or overthe telephone on and around ourpayment days. This phenomenon isdescribed fully below and is ofparticular concern to us in light of theAgency’s commitment to provide‘‘world class’’ service to ourbeneficiaries and customers.Executive Order 12862, issued onSeptember 11, 1993, mandates that thestandard of quality for services providedto the public for all governmentagencies shall be ‘‘customer serviceequal to the best in the business.’’ Thisstandard has been incorporated intoSSA’s goal of providing ‘‘world class’’public service. For example, when youconduct business with us, we have setas goals that:• When you make an appointment totalk with someone at one of our fieldoffices, we will serve you within 10minutes to the scheduled time.• When you call our toll-free 800number, you will get through to itwithin 5 minutes of your first try.SSA’s current practice of paying 47million beneficiaries within the first 3days of each month results in a largesurge of work during the first week ofeach month. This surge includes a largenumber of visitors to field offices andcalls to our toll-free 800 number toreport nonreceipt of a check, questionthe amount paid, or ask about otherpayment-related issues. Approximately

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations61159 percent of all calls during check weekconcern nonreceipt, compared to 3percent during the rest of the month. Asan example of the surge that occursaround the current payment days, onApril 3, 1995, 1,091,282 calls wereplaced to SSA’s 800 number. On April14, 1995, the number of calls placed toour 800 number decreased to 229,022.It is important to beneficiaries andcustomers to be able to reach SSA withfewer busy signals, and we havepledged to enable callers to get throughto the 800 number within 5 minutes oftheir original attempt. However, in fiscalyear (FY) 1994, during peak periods,customers encountered busy signals onSSA’s 800 number 40–63 percent of thetime and had to wait more than 5minutes to get through about 30 percentof the time. This delay often occurs ata time when it may be the most criticalfor the individual to reach us, to reporta lost check, for example. Anyone whoexperiences a delay in reaching us toreport a lost check also faces a delay inreceiving a replacement check. Sincemany beneficiaries rely solely on theirSocial Security benefits, this can be areal hardship for them.Our goal is for our customers to haveminimal waits for service when visitinga Social Security field office. Today,SSA does not always meet this goal. InFY 1994 there were 24 million visitorsto our field offices. While the averagewait during check week for individualswith an appointment was 8 minutes,some individuals with appointmentshad to wait over 2 hours. Thirty-twopercent of the visitors to our officeswithout appointments in FY 1994(typically people who have questionsrelated to their payments or who wantto report payment delivery problems)had to wait more than 30 minutes afterarriving to be served. The average waitduring check week for individualswithout appointments was 16 minutes,although some individuals withoutappointments had to wait over 3 hours.This can be a particular hardship tothose who are elderly or disabled, aswell as to people who might take offfrom work to come to our offices.The demographic and resourcechallenges we will face over the next 25years will make it even more difficultfor us to meet our service-deliveryobjectives. Currently, we pay 47 millionOASDI and SSI beneficiaries within thefirst three days of each month. Due tothe aging of the ‘‘baby boomer’’generation, by the year 2020, we will bepaying about 75 million beneficiaries, a60 percent increase over today’sbeneficiary population. This will placean unprecedented demand on ourbenefit delivery system.We are concerned that, in the next 25years, with the prospect of about 75million beneficiaries all receiving theirpayments on single days, there will bea serious deterioration in our service tothe public, and we will not be able toprovide the kind of service to which weare committed. The growth inbeneficiary population is expected toplace an even greater strain on SSA’sresources at the beginning of the month.At the same time that the number ofSSA customers is growing, SSA’sresources are being reduced. Public Law103–226 mandates an overall 12 percentreduction of Federal staffing levels by1999, and this will impact SSA’sresources. As a result, we areparticularly concerned that we will notbe able to cope with the monthlyworkload peaks and still maintain ourgoal of being readily accessible to thepublic unless we make significantchanges in the way in which we deliverservice.In the future, the increased number ofbeneficiaries and customers plus themandated reduction of Federal staffinglevels will have a real impact on thepublic’s ability to contact us. This willbe especially hard on individuals duringcheck week (currently the first week ineach month that benefits are paid) whenthe system will be overloaded. Checkweek is the time that beneficiaries oftenhave the most urgent need to reach usto report nonreceipt or other problemsrelated to their payment, and to requesta replacement check.Each attempted phone contact by anSSA beneficiary, whether over or underage 65, may represent a personal crisisdue, for example, to nonreceipt ofbenefits. Social Security benefits affect,in particular, nearly all individuals age65 and over in the United States (U.S.).For a significant proportion ofindividuals over age 65, the benefitsrepresent 90 percent or more of theirtotal income. For these beneficiaries,nonreceipt is not an abstract concept orstatistic. It may represent the differencebetween paying rent or mortgagepayments on time or late. It may meanthe ability to purchase food. It mayrepresent lack of gasoline or busfare toget to a medical appointment. A phonecontact or visit may be by a recentwidow(er) who is reporting the death ofher/his spouse. One successfultelephone call may be all that isnecessary to enable SSA to convertretirement benefits as a spouse intohigher widow(er)’s benefits. Anunsuccessful phone contact couldprevent us from holding back paymentsto the deceased individual andscheduling benefits to the newlywidowed beneficiary. When individualsare unsuccessful at reaching us bytelephone, either they, or a friend orfamily member, may take time off fromwork to come into a field office. Anyadditional delay waiting in the fieldoffice causes them to lose even moretime from work.Today, we are attempting to cope withthe uneven workload pattern in order tomaintain our level of service through aseries of administrative andmanagement initiatives. For example, atthe beginning of the month, we redeploystaff from other work to handle theincrease in telephone inquiries whichsometimes exceeds two million calls aday. While this practice has beengenerally successful so far, it will notcontinue to be as effective in the futurewhen the number of beneficiariesincreases substantially and our staffingdecreases.We are considering all our options inpreparing for this increase in SSA’sworkloads and staff reductions and,accordingly, are looking for ways toreengineer our various processes toallow us to achieve our world classcustomer service goals and, at the sametime, increase efficiency andproductivity to the maximum extentpossible. It is clear, though, that SSA’sgoal to achieve a level of world classcustomer service cannot be realizedunless our workloads are evened out.This is critical to providing better accessto SSA’s services for our beneficiariesand customers.The release of all OASDI and SSIpayments on single days also has anadverse effect on certain sectors of theeconomy. Based on meetings we heldwith representatives of the banking andbusiness community, the Department ofthe Treasury (DT), the Federal ReserveSystem (FRS) and the U.S. PostalService (USPS), it is clear that the large,once-a-month OASDI and SSI paymentfiles are creating many problems. Thebanking and business community, theDT, FRS and the USPS all have to bearthe expense of providing sufficientresources and processing capacity todeal with OASDI and SSI payments asthey flow through the national paymentsystem at the beginning of the month.This capacity is not needed throughoutthe remainder of the month.Equally significant is the growingoperational risk that is associated withSSA’s current payment pattern.Representatives from several largefinancial institutions made it clear thatwhen the Social Security direct depositpayment file becomes available forprocessing from FRS, they stop all otherbusiness and devote their entireoperation to ensuring the file isprocessed quickly and accurately.

6116 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsBecause of the inordinately largenumber of payments involved, theseinstitutions must ensure that nothinggoes wrong as the file passes throughthe national payment system and isdeposited into individual customers’accounts. Any event that adverselyaffects the operational capacity of DT,FRS or a large financial institution inthe 1 to 4 day window prior to the 3rdof the month may result in the delay ornonreceipt of literally millions of SocialSecurity benefit payments which couldcreate hardship for SSA beneficiaries.Leveling the Social Security paymentfiles through cycling will help preventthis operational risk and resultinghardship.In order to improve our service to thepublic, both now and in the future, wewill spread the payment of OASDIbenefits throughout the month, ratherthan continue to make all benefitpayments on single days at thebeginning of the month. That is, we willestablish several additional paymentdays for each month, and pay the fullmonthly benefit to some beneficiarieson the first of those payment days, toother beneficiaries on the second ofthose payment days, and so forth. Thepayment day, or cycle, on which abeneficiary is paid generally will not bechanged, so that if you are paid on thesecond payment day in one month youwill be paid on the second payment dayin each succeeding month as well. Thisapproach, which we call ‘‘cycling ofpayments,’’ will level the workloadpeaks associated with our currentpractice of paying all benefits on thesame day. Since calls and visitsassociated with receipt of the monthlybenefit payment will be distributedthroughout the month, rather thanconcentrated in a few days, there will beshorter waiting times for assistance andwe will be able to achieve or sustain ourworld class service to the public.It is important to note that paymentcycling will not change the way benefitsare computed. We will continue tofollow the same rules in determiningmonth of entitlement and the paymentamount. People whose benefits arecycled will receive the same amountthey would receive if they were paid onthe 3rd of the month.The benefits to society ofimplementing payment cycling arepotentially significant but extremelydifficult to estimate. Cycling will benefitmembers of the public in that they willhave better access to SSA services,including shorter waiting times in fieldoffices and when calling the 800number, as SSA’s workloads increase inthe future. Cycling will benefit thebusiness and banking communities inthat they will be better able to utilizetheir resources throughout the month,processing Social Security payments ona weekly basis. Cycling will also reducethe risk involved in processing largeonce-a-month files. If we continue topay all beneficiaries on single daysonce-a-month, SSA’s service to thepublic will deteriorate, and the adverseimpact that the once-a-month paymentshave on the business and financialcommunity will continue, as will thegrowing operational risk that goes alongwith processing all benefit payments atone time.After considering how best toimplement the reinvention proposal tocycle the timing of benefit payments, wehave decided the following:1. We will establish three additionalpayment days throughout the month(i.e., the second, third and fourthWednesdays of the month) on whichindividuals may be paid. This schedulewill alleviate to the maximum extentpossible the current Monday workloadpeak which is also now beingexperienced by SSA’s toll-free 800number and field offices when thepayment day falls on Friday, Saturday,Sunday or Monday, which occurs morethan half of the time.2. We will implement paymentcycling prospectively only for newOASDI beneficiaries whose claims arefiled on or after May 1, 1997. Paymentsto current beneficiaries will not becycled, as they are already in theestablished pattern of receiving theirbenefits on the third of the month.In the notice of proposed rulemaking(NPRM) we indicated that we proposedto implement payment cycling byJanuary 1997. However, we are delayingimplementation because we anticipateheavy workloads between December1996 and March 1997 due to recentlyenacted legislation, and we believe itwould be unwise to begin paymentcycling during that time. The May 1,1997 implementation date was alsoselected to allow SSA, DT and FRS, whoshare responsibility for delivery ofSSA’s payments, sufficient time tocomplete the essential modificationsrequired before cycling can begin.Moreover, publishing the finalregulation several months in advance ofthe implementation date allows thebusiness and financial community leadtime to prepare for cycling.3. We will assign one of the newlyestablished payment days to each newOASDI beneficiary based on the date ofbirth of the person on whose recordentitlement is established (the insuredindividual). Generally, new OASDIbeneficiaries who receive auxiliary orsurvivors benefits on an insuredindividual’s record will be assigned tothe payment day based on the insuredindividual’s date of birth. Insuredindividuals born on the 1st through the10th of the month will be paid on thesecond Wednesday of each month.Insured individuals born on the 11ththrough the 20th of the month will bepaid on the third Wednesday of eachmonth. Insured individuals born afterthe 20th of the month will be paid onthe fourth Wednesday of each month.With the few exceptions describedbelow, no new OASDI beneficiaries willreceive payments on the 3rd of themonth.Individuals who are being paidbenefits on one record on the 3rd of themonth, and who become entitled onanother record after April 30, 1997without a break in entitlement, willcontinue to receive all benefits on the3rd of the month.After April 30, 1997, individuals whobecome entitled on one record and laterentitled on another record, without abreak in entitlement, will be paid allbenefits to which they are entitled nolater than their current payment day.They will not be assigned a laterpayment day as long as they remaincontinuously entitled. We believe thischange from our proposed rule isdesirable to ensure that thoseindividuals who have becomeaccustomed to receiving their paymentson a certain day are not required to waitan additional 1 to 2 weeks for paymentwhen the second entitlement begins. Wehave had to establish an interim processto implement this change until suchtime as systems enhancements can fullysupport a permanent process. Under theinterim process, these individuals willbe assigned a payment day based on thenew entitlement situation or, if that islater than the current payment day, theywill be paid on the 3rd of the month.Under the permanent process,individuals will be assigned whicheverpayment day is earlier: the currentpayment day or the payment day whichwould be assigned based on the newentitlement situation.4. We may accommodate somebeneficiaries currently being paid on the3rd of the month who voluntarily wishto change to the payment day thatwould be selected by the date of birthcriteria described above, in order toaccelerate the workload leveling effectof cycling. For example, we plan toallow them to volunteer to switch ifonly one person is being paid on therecord or, if there are other beneficiariesbeing paid on the same record, all othersagree, in writing, to the change.However, once a volunteer is assignedto a new payment day, that day will be

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6117permanent and the person will not beallowed to change back to the 3rd of themonth. We will not allow beneficiariesbeing paid on one of the three new daysto switch to a different payment day.5. We will not include personsreceiving SSI payments, and personsconcurrently entitled to both OASDIand SSI benefits, in payment cycling.Since SSI is a needs-based program, webelieve we should continue to pay theseindividuals as early in the month aspossible. Concurrently entitledindividuals who lose eligibility for SSIwill continue to be paid on the 3rd.6. We will not apply payment cyclingto OASDI beneficiaries whose income isdeemed to SSI beneficiaries. The reasonis that most deeming cases involvefamily members who receive Federalincome maintenance benefits. Thosefamily units should continue to receivepayments as early in the month aspossible. Likewise, payment cyclingwill not apply to OASDI beneficiarieswho, due to their income and/orresources, are not entitled to SSI but theState in which they live covers theirMedicare premium. The Health CareFinancing Administration requestedthat these OASDI beneficiaries be paidearly in the month.7. Payment cycling will not apply tobeneficiaries living in a foreign country.For those beneficiaries who will be paidby check because SSA does not havedirect deposit arrangements with thecountry in which they reside, foreigncheck delivery is often unreliable.However, with one delivery day on the3rd of the month it is easier to targetwhen checks should be received than ifthey were sent four times throughoutthe month. Also, since foreignbeneficiaries do not have access to the800 number or to SSA’s field offices inthe country where they reside, thesefacilities will not be adversely affectedif we continue to pay foreignbeneficiaries on the 3rd of the month.The presence of a foreign address forany beneficiary on a Social Securityrecord will mean that all beneficiarieson that record will be paid on the 3rdof the month. The reason is that, foroperational purposes, we are assigning asingle payment day for all individualswho receive benefits on the earningsrecord of a particular individual. Oncea beneficiary has reported a foreignaddress and all individuals receivingbenefits on that account are changed tothe 3rd of the month, the payment dayfor all of them will remain the 3rd of themonth even if the person with theforeign address returns to the U.S. Thisis to prevent potential confusion causedby beneficiaries frequently leaving andentering the U.S.8. We will notify affectedbeneficiaries in writing of the particularmonthly payment day that is assigned tothem. However, the assignment of apayment day is not an initialdetermination and is not appealable.Beneficiaries have never been able tochoose their payment day and will notbe able to choose a payment day underpayment cycling except under veryspecific and limited circumstances.Early ConsultationsPrior to publishing the NPRM, weconducted 10 focus group meetings at 5locations around the country to solicitcomments and obtain reaction from thepublic to cycling payments throughoutthe month. Two meetings were held ineach location: one with currentbeneficiaries age 21 and over and onewith future beneficiaries age 21 andover. After we described our futureworkload projections and resultantservice delivery deterioration, the vastmajority of future beneficiaries withwhom we met said they would not mindbeing paid later in the month.We also conducted a series of separatemeetings with stakeholders includingrepresentatives from the businesscommunity, financial community, othergovernment agencies and advocacygroups. The overwhelming consensus ofopinion among all stakeholders whoparticipated was that SSA shouldimplement some form of paymentcycling.Comments on NPRMOn January 26, 1996, we publishedproposed regulations in the FederalRegister at 61 FR 2654 and provided a60-day period for interested individualsto comment. On February 15, 1996 weheld an informational briefing forrepresentatives of groups andorganizations, and any others, who wereinterested in attending, to providedetails and to answer questions on howSSA proposed to implement paymentcycling.In response to the NPRM, we receivedcomments from 17 commenters. Most ofthe comments came from financialinstitutions, financial trade associations,and State and local human servicesagencies, as well as DT. Severalcomments came from individuals whodid not identify themselves asrepresenting any particular organizationor advocacy group.The comments on the proposed ruleswere overwhelmingly favorable. Fifteencommenters, including bothorganizations and individuals, fullysupported payment cycling. Only twoindividuals expressed opinions againstthe proposed change. The majority ofcommenters also agreed with SSA’sdecision not to cycle currentbeneficiaries.Most of the financial institutions whocommented indicated that paymentcycling would help them to providebetter customer service on or aroundpayment days. One also mentionedpayment cycling easing concerns theycurrently have for the safety of bankemployees and customers on paymentdays due to the large amount of cashthey have on hand on those days.One commenter who identifiedherself as a future beneficiary whowould be covered by payment cyclingsaid she supported it because she wantsSSA to be able to provide the bestpossible service for current beneficiariesand for her when she is eligible to filefor benefits. A human services agencythat supported payment cycling said itis aware of the problems clientscurrently encounter getting through toSSA on or around payment days. Theagency also mentioned cycling as beinga crime deterrent, since it is well knownthat checks arrive on the 3rd.Only two commenters from thefinancial community responded toSSA’s request for information from thebusiness and financial community aboutthe incremental cost or savings to them.One of these two commenters, who fullysupported payment cycling, said ‘‘* * *gradual enrollment of beneficiaries andanticipated increase in the number ofbeneficiaries make it difficult todetermine the costs the bankingindustry will be able to avoid as a resultof the adoption of this policy.’’ Thiscommenter said, ‘‘In addition toeventual long-term cost savings, thereare also payment system risk reductioneffects flowing from this proposal.’’ Theother commenter who responded to thisrequest from SSA, and who also fullysupported payment cycling, said since itapplies prospectively to newbeneficiaries, it will not reduce theircurrent expenses and that it is difficultto quantify future savings at this time.Some of those who supportedpayment cycling suggested changes insome of the specific details aboutcycling. One of the two individuals whowere not in favor of payment cyclingalso submitted comments. Following aresummaries of those suggested changesand comments and our responses tothem:Comment: One commenter said thatinstead of SSA’s toll free 800 numberbeing busy at the beginning of themonth (and SSA having the rest of themonth to get caught up with its otherwork), the toll free 800 number will beconsistently busy throughout the month.

6118 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsThis will make it more difficult for SSAto get caught up with its work.Response: In cycling benefitpayments, SSA’s objective is to improvepublic service by reducing theinordinate workload peak that nowoccurs when all payments are deliveredat the beginning of the month. Byleveling SSA’s workload, the public willbe able to get a consistent level ofquality service at any time of the month.It is true that eventually paymentcycling will have an effect upon SSA’sworkforce. Employees may receive moretelephone inquiries and field officecontacts in the last 2 weeks of themonth than occur today. Again, this isthe purpose of payment cycling. Byleveling workloads, the public is betterserved because it consistently has betteraccess to SSA services. At the sametime, SSA is in a position to make betteruse of its available resources.Comment: The same commenter wasconcerned that there will be additionalwork and expense for SSA becausesomeone who now receives two types ofbenefits (one on his/her own record andone on a spouse’s record) will nowreceive two checks. Receiving one checklater in the month will cause morepeople to call with inquiries aboutreceipt of the second check. This willalso cost SSA more (i.e., the costsassociated with disbursing two checks).Response: SSA’s intent is to pay eachentitled beneficiary all monies due onone day regardless of whether they aredually entitled on their own workrecord and that of a spouse. Forexample, a woman who receivesbenefits on her husband’s record, but isalso entitled on her own work record,would receive benefits on the paymentdate assigned based on her birth date.On that date, she would receive apayment reflecting the combinedamount of her own benefits and theexcess due for the ‘‘wife’s benefit.’’Comment: This same commenter wasconcerned that payment cycling is morefavorable to someone whose birthday isearlier in the month. Some people willnot receive their payment until 3 or 4weeks after the month for which theyare due, whereas someone whosepayment is not cycled receives it only3 days after the month for which it isdue.Response: There are two issuesmentioned. First, it is true that in usingthe method of cycling based on birthdates, individuals born early in themonth receive their benefits earlier eachmonth. But any formula designed toevenly distribute future beneficiaries’payments throughout the month (e.g.,using the last 2 digits of a person’ssocial security number) will produce thesame result. The birth date formula wasunanimously favored by members of thepublic who participated in SSA’s focusgroups in that it was the easiest for themto relate to and understand.Second, this raises an issue ofperception. Beneficiaries who are paidon the second, third and fourthWednesdays of the month for theprevious month’s entitlement mayperceive that they are not receiving thesame level of service as someone who ispaid on the 3rd of the month. This wasnot an issue that concerned participantsin SSA’s focus groups. Theseindividuals indicated that because theyhad not yet begun receiving SocialSecurity benefits, it was not of concernwhether their future benefits were paidon the 3rd of the month or on thesecond, third or fourth Wednesdaysbecause once their payments start, theywould be paid consistently at the samemonthly interval. Further, these samefocus group participants recognized thatunless SSA did something to levelworkloads that now occur at thebeginning of the month, their ability tofile a claim, have a question answeredor otherwise receive prompt service wasbeing jeopardized as the Agency’sworkloads increased.Comment: The above commenter alsobelieved it is unfair to pay SSIrecipients and OASDI beneficiaries whoqualify for Qualified MedicareBeneficiary (QMB) payments early inthe month while paying all other OASDIbeneficiaries later in the month,particularly since some of these OASDIbeneficiaries miss qualifying for SSI bya small amount. In a similar vein,another commenter recommended thattwo additional groups of individuals beexcluded from payment cycling: thoseliving below 200% of the poverty leveland those who would face ‘‘unduehardship’’ if they received their benefitsafter the 3rd of the month.Response: SSA can readily identifySSI recipients as those individuals oflimited means. Accordingly, we willexempt anyone who receives SSI fromhaving their payment cycled. However,we have no information relating to theeconomic circumstances of anyonereceiving OASDI benefits to enable us todetermine who is of limited means.Even if we did, we would have toestablish a benchmark at some level.Whatever benchmark SSA established,there would be individuals who fall justbelow the mark and those who fall justabove the mark. Therefore, we continueto believe that the use of the SSI meanstest is appropriate from both a policyand operational perspective.We do not believe that creatingadditional criteria for an ‘‘unduehardship’’ test is necessary. Indeed,people who otherwise would have beenpaid on the 3rd of the month will nowbe paid later in the month as a result ofpayment cycling. However, we believethe improved access to SSA’s servicesfor all beneficiaries and customers, aswell as the benefits to the banking andbusiness community which will enablethem to provide better customer service,and the reduction of the risk involvedin processing large once-a-month filesoutweigh the effects of being paid laterin the month. Moreover, as mentionedby many of the focus group participants,individuals paid consistently on thesecond Wednesday of the month fromthe inception of their entitlement arereceiving the same level of service asindividuals paid on the 3rd of themonth from the inception of theirentitlement. In addition, already limitedSSA staff and resources would have tobe assigned to administer an ‘‘unduehardship’’ test.Comment: One commenter thoughtSSA should assign the payment day forcycled payments based on somethingother than the date of birth. Thecommenter believed using the date ofbirth means banks would need to knowthe customer’s date of birth in order toprocess customer inquiries. Thecommenter also indicated the bankingindustry does not know a customer’sdate of birth and some customers willnot give out that information or do notknow it. A suggestion was to use thefirst initial of the customer’s last nameto assign the payment day. However,another commenter said that usingbirthdays to determine distribution‘‘makes a great deal of sense in eveningout the workload.’’ And still anothercommenter suggested givingbeneficiaries a sticker showing thepayment day which they could place ina prominent place in their house so thedate would be easily available.Response: SSA considered a numberof options in developing a means ofevenly distributing paymentsthroughout the month. In addition to thealpha formula suggested in thiscomment, SSA considered using the last2 digits of the individual’s SocialSecurity number. Any of these methodswould result in a random distribution ofpayments. However, the fact thatpeople’s surnames often change makesusing the alpha formula more complex.SSA selected the birth date formulabased on the unanimous endorsement ofthis method by those members of thepublic who participated in the Agency’sfocus groups. All participants expressedtheir belief that the public would relatebest to a formula based on a person’sdate of birth.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6119To do all it can to minimize potentialproblems like those cited in thiscomment, SSA plans to provide all newbeneficiaries with a written noticeinforming the individual of his or herassigned payment date. Included withthe written notice will be a pamphletexplaining payment cycling and acalendar providing the individual withthe scheduled payment dates.Comment: Several commenters urgedSSA to consider requiring all benefits tobe paid by direct deposit.Response: Since these comments weremade, Public Law 104–134, theOmnibus Consolidated Rescissions andAppropriations Act of 1996, has beensigned. This law requires, with limitedexceptions, anyone who files forgovernment benefits after July 25, 1996,to be paid by direct deposit. In addition,with certain limited exceptions, thelegislation requires that by 1999, allgovernment benefits be paid by directdeposit, even for those who beganreceiving payments before July 26, 1996.However, without payment cycling,SSA and the financial community willstill experience workload surges the first10 days of the month in terms of directdeposits all occurring at the same time,calls to SSA and to the financialinstitutions concerning crediting of thedirect deposit, the amount of thedeposit, or many other issues related tothe benefit, as well as bank customerswanting to make withdrawals as soon asthe direct deposit is made.Comment: Several commentersthought SSA should schedule thedelivery of cycled benefits on assignedpayment dates rather than the plannedWednesday schedule. They believedthis would be less confusing forcustomers than having to rememberwhich Wednesday is their payment day.However, another commenter, a nonprofitelectronic banking tradeassociation, said its members supportedpaying on Wednesdays. The commentersaid many beneficiaries currentlybecome confused about when they willreceive their payments if the 3rd is ona holiday or weekend. The commenterbelieved Wednesday payments willclear up this confusion.Response: SSA gave the paymentschedule under cycling a great deal ofconsideration. We decided on theWednesday schedule for the followingreasons:• If the objective of payment cyclingis to improve service by providing thepublic with better access to SSAthrough a leveling of workloads, thenWednesday payments offer the bestopportunity to achieve this. Any fixeddate schedule (e.g., the 10th, 17th and24th of the month) will fall on a Friday,Saturday, Sunday or Monday 57 percentof the time. This is likely to exacerbatethe workload peaks now experienced bySSA every Monday;• A Wednesday schedule avoids theproblem of having to adjust paymentdates because the date coincides with aSaturday or Sunday; and• A Wednesday schedule avoids theproblem of having to adjust paymentdates because the date coincides with aFederal holiday to the maximum extentpossible.Again, SSA plans to provide paymentschedules to both the financialcommunity and the public to minimizequestions or confusion regarding thedate on which beneficiaries will bepaid.Comment: One commenter said thatSSA should clarify how these paymentsshould be counted for means-testedprograms, such as AFDC, food stampsand AFDC-related Medicaid.Response: We do not issue rulesgoverning these other programs andhave no authority to decide how ourpayments should be counted for thoseprograms. It is not clear, however, thatany changes are necessary. Certainly,SSA will provide any additionalguidance to State and local governmentsthat may be needed about ourprocedures. As it has done for the past56 years, Social Security will continueto pay future OASDI beneficiaries in themonth following the month ofentitlement.Comment: Two commenters wantedan appeals process available for thosebeneficiaries for whom receiving theirbenefit payment later in the monthcreates a hardship.Response: The payment date hasnever been appealable and SSA does notplan to make it appealable or establisha new appeals process. This decision isbased on a number of considerations.First, all individuals of limited means(i.e., those identified at or below thepoverty level through their entitlementto SSI) will not be affected by paymentcycling. Accordingly, they will receiveboth their SSI and Social Securitybenefits at the beginning of the month.It is true that people who otherwisewould have been paid on the 3rd of themonth will now be paid later in themonth as a result of payment cycling.However, we believe the improvedaccess to SSA’s services for allbeneficiaries and customers, as well asthe benefits to the banking and businesscommunity which will enable them toprovide better customer service, and thereduction of the risk involved inprocessing large once-a-month filesoutweigh the effects of being paid laterin the month. Moreover, SSA’s decisionreflects the advice given by members ofthe public who participated in theAgency’s focus groups. Theseindividuals expressed a strong beliefthat someone who has not yet begun toreceive Social Security benefits is notdisadvantaged if they receive theirpayment on any of the assignedWednesdays from the outset of theirentitlement.Establishing an appeals processwould place an undue administrativeburden on SSA and could defeat thepurpose of payment cycling.Comment: One commenter indicateddisapproval of payment cycling but gaveno reasons. Therefore, we cannotrespond.Comment: One commenter said thatin some States, individuals can beeligible for State payment of theirMedicare premium under the QMB andSpecified Low Income MedicareBeneficiary programs but not eligible forMedicaid. Therefore, the commentersaid the regulations should be clarifiedto make certain that all individualswhose Medicare premium is paid by theState are excluded from paymentcycling.Response: We are adopting thiscomment and revising § 404.1807(c)(4)to clarify that all OASDI beneficiarieswhose Medicare premiums are paid bythe State in which they live areexcluded from payment cycling.Comment: One commenter urged SSAto include current beneficiaries inpayment cycling by splitting currentrecipients into two groups that would beprocessed as two primary cycles and toadd new beneficiaries to two secondarycycles on alternate weeks.Response: Prior to publishing theNPRM, SSA considered includingcurrent beneficiaries in paymentcycling. We rejected this option becauseshifting the payment date of one half ofcurrent beneficiaries one week laterwould disrupt monthly paymentarrangements for 22 million currentOASDI recipients. Further, without aone-time ‘‘bridge payment’’ (a one-timeadditional payment which would coverthe period of time from the 3rd of themonth to their first payment day) of upto $3.3 billion, affected beneficiarieswould be required to wait more than 5weeks between benefit payments duringthe month of transition. Withoutlegislation, SSA does not have authorityto issue this type of special adjustmentpayment. Current beneficiaries whoparticipated in focus groups wereunanimous in their opinion that SSAshould not change the monthly paymentpatterns of beneficiaries currently on therolls. Finally, the majority of

6120 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationscommenters agreed with SSA’s decisionnot to cycle current beneficiaries.Comment: One commenterrecommended that SSA launch acomprehensive educational program toadvise all stakeholders of the newpayment dates once adopted.Response: Individual beneficiarieswhose benefits are cycled will receivean informational pamphlet explainingpayment cycling and a calendarproviding them with the scheduledpayment dates. Also, SSA is puttingtogether informational material aboutpayment cycling which will be madeavailable to financial institutions andbusinesses to help them respond to anyconcerns raised by their customers.After considering the comments onthe proposed regulations, we havechanged § 404.1807(c)(4), as discussedabove in the response to the publiccomment. Also, upon furtherconsideration, we have decided torevise § 404.1807(c)(5) to show thatindividuals who become entitled on onerecord and later entitled on anotherrecord, without a break in entitlement,will be paid all benefits to which theyare entitled no later than their currentpayment day. In addition, we havemade several nonsubstantive changes tothe proposed regulations. We are,therefore, publishing these regulationsas final regulations.Regulatory ProceduresExecutive Order 12866We have determined that these finalregulations meet the criteria for asignificant regulatory action underExecutive Order 12866. Therefore, weprepared and submitted to OMB anassessment of the potential benefits andcosts of this regulatory action. Thisassessment also contains an analysis ofalternative policies we considered andchose not to adopt. It is available forreview by members of the public bycontacting SSA.Regulatory Flexibility ActThese final regulations affect whenSocial Security recipients receive theirpayments. Recipients are not smallentities within the definition of theRegulatory Flexibility Act. Therefore,these final regulations will not have asignificant impact on a substantialnumber of small entities.Paperwork Reduction ActThese final regulations impose noreporting/recordkeeping requirementsnecessitating clearance by OMB.(Catalog of Federal Domestic AssistanceProgram Nos. 96.001 Social Security-Disability Insurance; 96.002 Social Security-Retirement Insurance; 96.003 Social Security-Special Benefits for Persons Aged 72 andOver; 96.004 Social Security-SurvivorsInsurance)List of Subjects in 20 CFR Part 404Administrative Practice andProcedure, Blind benefits, Old-Age,Survivors and Disability Benefits;Reporting and recordkeepingrequirements; Social Security.Dated: January 28, 1997.Shirley S. Chater,Commissioner of Social Security.For the reasons set forth in thepreamble, subparts J and S of part 404of chapter III of title 20 of the Code ofFederal Regulations are amended as setforth below.PART 404—FEDERAL OLD-AGE,SURVIVORS AND DISABILITYINSURANCE (1950– )Subpart J—[Amended]1. The authority citation for subpart Jof part 404 continues to read as follows:Authority: Secs. 201(j), 205(a), (b), (d)–(h),and (j), 221, 225, and 702(a)(5) of the SocialSecurity Act (42 U.S.C. 401(j), 405 (a), (b),(d)–(h), and (j), 421, 425 and 902(a)(5)); 31U.S.C. 3720A; sec. 5, Pub. L. 97–455, 96 Stat.2500 (42 U.S.C. 405 note); secs. 5, 6 (c)–(e),and 15, Pub. L. 98–460, 98 Stat. 1802 (42U.S.C. 421 note).2. Section 404.903 is amended byremoving the word ‘‘and’’ at the end ofparagraph (q), and by removing theperiod at the end of paragraph (r) andadding a semicolon and the word ‘‘and’’in its place, and adding paragraph (s) toread as follows:§ 404.903 Administrative actions that arenot initial determinations.* * * * *(s) The assignment of a monthlypayment day (see § 404.1807).Subpart S—[Amended]3. The authority citation for subpart Sof part 404 is revised to read as follows:Authority: Secs. 205 (a) and (n), 207,702(a)(5), and 708(a) of the Social SecurityAct (42 U.S.C. 405 (a) and (n), 407, 902(a)(5)and 909(a)).4. Section 404.1805 is amended byrevising paragraph (a)(3) to read asfollows:§ 404.1805 Paying benefits.(a) * * *(3) The time at which the payment orpayments should be made in accordancewith § 404.1807.* * * * *5. Section 404.1807 is added to readas follows:§ 404.1807 Monthly payment day.(a) General. Once we have made adetermination or decision that you areentitled to recurring monthly benefits,you will be assigned a monthly paymentday. Thereafter, any recurring monthlybenefits which are payable to you willbe certified to the Managing Trustee fordelivery on or before that day of themonth as part of our certification under§ 404.1805(a)(3). Except as provided inparagraphs (c)(2) through (c)(6) of thissection, once you have been assigned amonthly payment day, that day will notbe changed.(b) Assignment of payment day. (1)We will assign the same payment dayfor all individuals who receive benefitson the earnings record of a particularinsured individual.(2) The payment day will be selectedbased on the day of the month on whichthe insured individual was born.Insured individuals born on the 1stthrough the 10th of the month will bepaid on the second Wednesday of eachmonth. Insured individuals born on the11th through the 20th of the month willbe paid on the third Wednesday of eachmonth. Insured individuals born afterthe 20th of the month will be paid onthe fourth Wednesday of each month.See paragraph (c) of this section forexceptions.(3) We will notify you in writing ofthe particular monthly payment day thatis assigned to you.(c) Exceptions. (1) If you or any otherperson became entitled to benefits onthe earnings record of the insuredindividual based on an application filedbefore May 1, 1997, you will continueto receive your benefits on the 3rd dayof the month (but see paragraph (c)(6) ofthis section). All persons whosubsequently become entitled tobenefits on that earnings record will beassigned to the 3rd day of the month asthe monthly payment day.(2) If you or any other person becomeentitled to benefits on the earningsrecord of the insured individual basedon an application filed after April 30,1997, and also become entitled toSupplemental Security Income (SSI)benefits or have income which isdeemed to an SSI beneficiary (per§ 416.1160), all persons who are orbecome entitled to benefits on thatearnings record will be assigned to the3rd day of the month as the monthlypayment day. We will notify you inwriting if your monthly payment day isbeing changed to the 3rd of the monthdue to this provision.(3) If you or any other person becomeentitled to benefits on the earningsrecord of the insured individual basedon an application filed after April 30,

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations61211997, and also reside in a foreigncountry, all persons who are or becomeentitled to benefits on that earningsrecord will be assigned to the 3rd dayof the month as the monthly paymentday. We will notify you in writing ifyour monthly payment day is beingchanged to the 3rd of the month due tothis provision.(4) If you or any other person becomeentitled on the earnings record of theinsured individual based on anapplication filed after April 30, 1997,and are not entitled to SSI but are orbecome eligible for the State where youlive to pay your Medicare premiumunder the provisions of § 1843 of theAct, all persons who are or becomeentitled to benefits on that earningsrecord will be assigned to the 3rd dayof the month as the monthly paymentday. We will notify you in writing ifyour monthly payment day is beingchanged to the 3rd of the month due tothis provision.(5) After April 30, 1997, allindividuals who become entitled on onerecord and later entitled on anotherrecord, without a break in entitlement,will be paid all benefits to which theyare entitled no later than their currentpayment day. Individuals who are beingpaid benefits on one record on the 3rdof the month, and who become entitledon another record without a break inentitlement, will continue to receive allbenefits on the 3rd of the month.(6) If the day regularly scheduled forthe delivery of your benefit paymentfalls on a Saturday, Sunday, or Federallegal holiday, you will be paid on thefirst preceding day that is not aSaturday, Sunday, or Federal legalholiday.[FR Doc. 97–3205 Filed 2–10–97; 8:45 am]BILLING CODE 4190–29–PDEPARTMENT OF VETERANSAFFAIRS38 CFR Part 17RIN 2900–AH89VA Homeless Providers Grant and PerDiem Program Clarification of PerDiem EligibilityAGENCY: Department of Veterans Affairs.ACTION: Final rule.SUMMARY: This document amends theregulations implementing the VAHomeless Providers Grant and Per DiemProgram concerning per diem assistanceby: Establishing more detailed criteriafor determining which entities areeligible for obtaining per diemassistance; establishing a priority forfunding eligible entities: Clarifying therequirements for continued receipt ofper diem payments; and clarifying themaximum amount payable for per diemassistance. This rule is designed toensure that the appropriate entitiesreceive the appropriate amount of perdiem assistance under fair and objectiveprocedures.EFFECTIVE DATES: March 13, 1997.FOR FURTHER INFORMATION CONTACT:Roger Casey, VA Homeless ProvidersGrant and Per Diem Program, MentalHealth Strategic Health Group (116E),Department of Veterans Affairs, 810Vermont Avenue, NW, Washington, DC20420; (202) 273–8442. (This is not atoll-free number.)SUPPLEMENTARY INFORMATION: In theFederal Register of July 16, 1996 (61 FR37024), VA published a proposal toamend the regulations implementing theVA Homeless Providers Grant and PerDiem Program. Interested persons wereinvited to submit written comments onor before September 16, 1996. Nocomments were received. Theinformation presented in the proposedrule document still provides a basis forthis final rule. Therefore, based on therationale set forth in the proposed ruledocument, we are adopting theprovisions of the proposed rule as afinal rule with changes discussed belowand with nonsubstantive changes.Paperwork Reduction ActInformation collection andrecordkeeping requirements associatedwith this final rule concerning VAHomeless Providers Grants (38 CFR17.710–17.714) have been approved byOMB under the provisions of thePaperwork Reduction Act (44 U.S.C.3501–3520) and have been assignedOMB Control Number 2900–0554. Theregulations require that the applicationfor VA Homeless Providers Grants besubmitted on VA forms included in theapplication package. The correspondingform numbers are included in the textof the rule.Information collection andrecordkeeping requirements associatedwith this final rule concerning the VAHomeless Providers Per Diem have notbeen approved by OMB under theprovisions of the Paperwork ReductionAct. OMB has withheld approvalpending review of any commentsreceived. VA intends to obtain OMBcontrol numbers for the informationcollection requirements concerning VAHomeless Providers Per Diem. OnceOMB approval is received, OMB controlnumbers will be announced by aseparate Federal Register document.VA is not authorized to impose apenalty on persons for failure to complywith information collectionrequirements which do not display acurrent OMB control number, ifrequired.Regulatory Flexibility ActThe Secretary hereby certifies that theprovisions of the final rule will not havea significant economic impact on asubstantial number of small entities asthey are defined in the RegulatoryFlexibility Act (RFA), 5 U.S.C. 601–602.In all likelihood, only similar entitiesthat are small entities will participate inthe Homeless Providers Grant and PerDiem Program, therefore, pursuant to 5U.S.C. 605(b), this final rule is exemptfrom the initial and final regulatoryflexibility analysis requirement ofsections 603 and 604.The Catalog of Federal DomesticAssistance program number is 64.024.List of Subjects in 38 CFR Part 17Administrative practice andprocedure, Alcohol abuse, Alcoholism,Claims, Day care, Dental health, Drugabuse, Foreign relations, Governmentcontracts, Grant programs-health, Grantprograms-veterans, Health care, Healthfacilities, Health professions, Healthrecords, Homeless, Medical and dentalschools, Medical devices, Medicalresearch, Mental health programs,Nursing homes, Philippines, Reportingand record-keeping requirements,Scholarships and fellowships, Traveland transportation expenses, Veterans.Approved: January 31, 1997.Jesse Brown,Secretary of Veterans Affairs.For the reasons set forth in thepreamble, 38 CFR part 17 is amended asset forth below:PART 17—MEDICAL1. The authority citation for part 17continues to read as follows:Authority: 38 U.S.C. 501, 1721, unlessotherwise noted.§ 17.700 [Amended]2. In § 17.700, paragraph (a) isamended by removing ‘‘17.715(a)’’ andadding, in its place, ‘‘17.716’’.3. Sections 17.710 through 17.719 arerevised to read as follows:§ 17.710 Application requirements.(a) General. Applications for grantsmust be submitted in the formprescribed by VA in the applicationpackage, must meet the requirements ofthis part, and must be submitted withinthe time period established by VA in thenotice of fund availability under

6122 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations§ 17.708 of this part. The applicationpacket includes exhibits to be preparedand submitted as part of the applicationprocess, including:(1) Justification for the project byaddressing items listed in § 17.711(c) ofthis part;(2) Site description, design, and costestimates (VA Forms 10–0362G, 10–0362H);(3) Documentation on eligibility toreceive assistance under this part (VAForm 10–0362J);(4) Documentation on matching fundscommitted to the projects (VA Forms10–0362N, 10–0362M);(5) Documentation on operatingbudget and cost sharing (VA Form 10–0362P);(6) Documentation on supportiveservices committed to the project (VAForm 10–0362o);(7) Documentation on site control andappropriate zoning, and on theboundaries of the area or communityproposed to be served (VA Form 10–0362Q);(8) Applicants who are States mustsubmit any comments orrecommendations by appropriate State(and areawide) clearinghouses pursuantto E.O. 12372 (3 CFR, 1982 Comp., p.197) (Standard Form SF 424); and(9) Reasonable assurances withrespect to receipt of assistance underthis part that (VA Form 10–0362K):(i) The project will be usedprincipally to furnish to veterans thelevel of care for which such applicationis made; that not more than 25 percentof participants at any one time will benonveterans; and that such services willmeet standards prescribed by VA;(ii) Title to such site or van will vestsolely in the applicant;(iii) Each recipient will keep thoserecords and submit those reports as VAmay reasonably require, within the timeframes required; and give VA, upondemand, access to the records uponwhich such information is based; and(iv) Adequate financial support willbe available for the purchase of the vanor completion of the project, and for itsmaintenance, repair and operation.(b) Pre-award expenditures. Costsincurred for a project after the date VAnotifies an applicant that the project isfeasible for VA participation areallowable costs if the application isapproved and the grant is awarded.These pre-award expenditures includearchitectural and engineering fees. Suchnotification occurs when VA requestsinformation for the second submissionportion of the application.(Paperwork requirements were approved bythe Office of Management and Budget undercontrol number 2900–0554.)(Authority: 38 U.S.C. 501, 7721, note)§ 17.711 Rating criteria for applications.(a) General. Applications will beassigned a rating score and placed inranked order, based upon the criterialisted in paragraphs (b) through (d) ofthis section.(b) Threshold review. Applicants willundergo a threshold review prior torating and ranking, to ensure they meetthe following:(1) Forms, time, and adequacy.Applications must be filed in the formprescribed by VA in the applicationprocess and within the time establishedin the Notice of Funding Availability(NOFA).(2) Application eligibility. Theapplicant and project sponsor, ifrelevant, must be eligible to apply forthe specific program.(3) Eligible population to be served.The population proposed to be servedmust be homeless veterans and meetother eligibility requirements of thespecific program.(4) Eligible activities. The activities forwhich assistance is requested must beeligible for funding under this part (e.g.,new programs or new components ofexisting programs).(5) Outstanding audit findings. Noorganization that receives assistancemay have an outstanding obligation toVA that is in arrears or for which apayment schedule has not been agreedto, or whose response to an audit isoverdue or unsatisfactory.(c) Rating and ranking of firstsubmission. Applicants that pass thethreshold review will then be ratedusing the eight selection criteria listedin paragraphs (c)(1) through (c)(8) of thissection. Applicants must receive at least600 points (out of a possible 1,200) andmust receive points under criteria 1, 2,3, 4, and 8. Applicants that are applyingas an innovative supportive housingproject must achieve points under theinnovative quality of the proposalcriterion.(1) Quality of the project—300 points(VA Forms 10–0362A, 10–0362D);.(2) Targeting to persons on streets andin shelters—150 points (VA Form 10–0362C);(3) Ability of the applicants todevelop and operate a project—200points (VA Form 10–0362E);(4) Need for the type of projectproposed in the area to be served—150points (VA Form 10–0362B);(5) Innovative quality of theproposal—50 points (VA Forms 10–0362A, 10–0362D);(6) Leveraging—50 points (VA Form10–0362F);(7) Cost-effectiveness—100 points (VAForm 10–0362A); and(8) Coordination with otherprograms—200 points (VA Form 10–0362D–1).(d) Selection criteria—(1) Quality ofthe project. VA will award up to 300points based on the extent to which theapplication presents a clear, wellconceivedand thorough plan forassisting homeless veterans to achieveresidential stability, increased skillsand/or income, and more influence overdecisions that affect their lives. Higherratings will be assigned to thoseapplications that clearly describe:(i) How program participants willachieve residential stability, includinghow available supportive services willhelp participants reach this goal;(ii) How program participants willincrease their skill level and/or income,including how available supportiveservices will help participants reach thisgoal;(iii) How program participants will beinvolved in making project decisionsthat affect their lives, including howthey will be involved in selectingsupportive services, establishingindividuals goals and developing plansto achieve these goals so that theyachieve greater self-determination;(iv) How permanent affordablehousing will be identified and madeavailable to participants upon leavingthe transitional housing, and howparticipants will be provided necessaryfollow-up services to help them achievestability in the permanent housing;(v) How the service needs ofparticipants will be assessed on anongoing basis;(vi) How the proposed housing, if any,will be managed and operated;(vii) How participants will be assistedin assimilating into the communitythrough access to neighborhoodfacilities, activities and services;(viii) How and when the progress ofparticipants toward meeting theirindividual goals will be monitored andevaluated;(ix) How and when the effectivenessof the overall project in achieving itsgoals will be evaluated and howprogram modifications will be madebased on those evaluations; and(x) How the proposed project will beimplemented in a timely fashion.(2) Targeting to persons on streets andin shelters. VA will award up to 150points based on:(i) The extent to which the projectwill serve homeless veterans living inplaces not ordinarily meant for humanhabitation (e.g., streets, parks,abandoned buildings, automobiles,under bridges, in transportation

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6123facilities) and those who reside inemergency shelters; and(ii) The likelihood that proposedplans for outreach and selection ofparticipants will result in thesepopulations being served.(3) Ability of applicant to develop andoperate a project. VA will award up to200 points based on the extent to whichthose who will be involved in carryingout the project have experience inactivities similar to those proposed inthe application. Ratings will be assignedbased on the extent to which theapplication demonstrates experience inthe following areas:(i) Engaging the participation ofhomeless veterans living in places notordinarily meant for human habitationand in emergency shelters;(ii) Assessing the housing andrelevant supportive service needs ofhomeless veterans;(iii) Accessing housing and relevantsupportive service resources;(iv) If applicable, contracting for and/or overseeing the rehabilitation orconstruction of housing;(v) If applicable, administering arental assistance program;(vi) Providing supportive services forhomeless veterans;(vii) Monitoring and evaluating theprogress of persons toward meetingtheir individual goals; and(viii) Evaluating the overalleffectiveness of a program and usingevaluation results to make programimprovements.(4) Need. VA will award up to 150points based on the applicant’sdemonstrated understanding of theneeds of the specific homeless veteranpopulation proposed to be served in thespecified area or community. Ratingswill be made based on the extent towhich applicants demonstrate:(i) Substantial unmet needs,particularly among the target populationliving in places not ordinarily meant forhuman habitation (e.g., streets) and inemergency shelters, based on reliabledata from surveys of homelesspopulations, a Comprehensive HousingAffordability Strategy (CHAS), or otherreports or data gathering mechanismsthat directly support claims made;(ii) An understanding of the homelesspopulation to be served and its unmethousing and supportive service needs.(5) Innovative quality of the proposal.Applicants who have indicated in theirapplication that they are applying underthe innovative supportive housingcomponent must receive points underthis criteria to be eligible for award. VAwill award up to 50 points based on theinnovative quality of the proposal, whencompared to other applications andprojects; in terms of:(i) Helping homeless veterans orhomeless veterans with disabilities to beserved to reach residential stability,increase their skill level and/or incomeand increase the influence they haveover decisions that affect their lives; and(ii) A clear link between theinnovation(s) and its proposed effect(s);and(iii) Its ability to be used as a modelfor other projects.(6) Leveraging. VA will award up to50 points based on the extent to whichresources from other public and privatesources, including cash and the value ofthird party contributions, have beencommitted to support the project at thetime of application. Note: Any applicantwho wishes to receive points under thiscriterion must submit documentation ofleveraged resources which meets therequirements stated in the application.This is optional; applicants who cannot,or choose not to, provide firmdocumentation of resources as part ofthe application will forego any pointsfor leveraging.(7) Cost-effectiveness. VA will awardup to 100 points for cost-effectiveness.Projects will be rated based on the costand number of new supportive housingbeds made available or the cost, amountand types of supportive services madeavailable, when compared to othertransitional housing and supportiveservices projects, and when adjusted forhigh-cost areas. Cost-effectiveness mayinclude using excess governmentproperties (local, State, Federal), as wellas demonstrating site control at the timeof application.(8) Coordination with other programs.VA will award up to 200 points basedon the extent to which applicantsdemonstrate that they have coordinatedwith Federal, State, local, private andother entities serving homeless personsin the planning and operation of theproject. Such entities may includeshelter transitional housing, health care,or social service providers; providersfunded through Federal initiatives; localplanning coalitions or providerassociations; or other programs relevantto the local community. Applicants arerequired to demonstrate that they havecoordinated with the VA medical carefacility of jurisdiction and VA RegionalOffices of jurisdiction in their area.Higher points will be given to thoseapplicants who can demonstrate that:(i) They are part of an ongoingcommunity-wide planning processwhich is designed to share informationon available resources and reduceduplication among programs that servehomeless veterans;(ii) They have consulted directly withother providers regarding coordinationof services for project participants. VAwill award up to 50 points of the 200points for this criterion based on theextent to which commitments toprovide supportive services areavailable at the time of application.Applicants who wish to receive pointsunder this optional criterion mustsubmit documentation of supportiveservice resources.(Paperwork requirements were approved bythe Office of Management and Budget undercontrol number 2900–0554.)(Authority: 38 U.S.C. 501, 7721, note)§ 17.712 Selecting applications.(a) General. The highest-rankedapplications will be conditionallyselected in accordance with their rankedorder, as determined under § 17.711 ofthis part. Each will be requested, asnecessary, to provide additional projectinformation, as described in § 17.713 ofthis part as a prerequisite to a grant fromVA.(b) Ties between applicants. In theevent of a tie between applicants, VAwill use the selecting criterion in§ 17.711(d)(4) of this part, need for thetype of project proposed in the area tobe served, to determine whichapplication should be selected forpotential funding.(c) Procedural error. If an applicationwould have been selected but for aprocedural error committed by VA, VAwill select that application for potentialfunding when sufficient funds becomeavailable if there is no material changein the information that resulted in itsselection. A new application will not berequired for this purpose.(Paperwork requirements were approved bythe Office of Management and Budget undercontrol number 2900–0554.)(Authority: 38 U.S.C. 501, 7721, note)§ 17.713 Obtaining additional informationand awarding grants.(a) Additional information.Applicants who have been conditionallyselected will be requested by VA tosubmit additional project information,as described in the second submissionof the application, which may include:(1) Documentation to show that theproject is feasible.(2) Documentation showing thesources of funding for the project andfirm financing commitments for thematching requirements described in§ 17.706 of this part.(3) Documentation showing sitecontrol, as described in § 17.731 of thispart.(4) Information necessary for VA toensure compliance with the provisions

6124 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsof the National Environmental PolicyAct of 1969 (42 U.S.C. 4321, et seq.), asdescribed in § 17.714 of this part.(5) A site survey performed by alicensed land surveyor. A description ofthe site shall be submitted noting thegeneral characteristics of the site. Thisshould include soil reports andspecifications, easements, mainroadway approaches, surrounding landuses, availability of electricity, waterand sewer lines, and orientation. Thedescription should also include a maplocating the existing and/or newbuildings, major roads, and publicservices in the geographic area.Additional site plans should show allsite work including property lines,existing and new topography, buildinglocations, utility data, and proposedgrades, roads, parking areas, walks,landscaping, and site amenities.(6) Design development (35 percent)drawings.(i) The applicant shall provide to VAone set of sepias and two sets of prints,rolled individually per set, to expeditethe review process. The drawing shallindicate the designation of all spaces,size of the areas and rooms, and indicatein outline the fixed and moveableequipment and furniture. The drawingsshall be drawn at 1 ⁄8′′ or 1 ⁄4′′ scale.Bedroom and toilet layouts, showingclearances and Uniform FederalAccessibility Standards requirements,should be shown at 1 ⁄4′′ scale. The totalfloor and room areas shall be shown inthe drawings. The drawings shallinclude:(A) A plan of any proposeddemolition work;(B) A plan of each floor. Forrenovation, the existing conditions andextent of new work should be clearlydelineated;(C) Elevations;(D) Sections and typical details;(E) Roof plan;(F) Fire protection plans; and(G) Technical engineering plans,including structural, mechanical,plumbing, and electrical drawings.(ii) If the project involves acquisition,remodeling, or renovation, the applicantshould include the current as-built siteplan, floor plans and building sectionswhich show the present status of thebuilding and a description of thebuilding’s current use and type ofconstruction.(7) Design development outlinespecifications. The applicant shallprovide eight copies of outlinespecifications which shall include ageneral description of the project, site,architectural, structural, electrical andmechanical systems such as elevators,air conditioning, heating, plumbing,lighting, power, and interior finishes(floor coverings, acoustical material, andwall and ceiling finishes).(8) Design development costestimates. The applicant shall providethree copies of cost estimates showingthe estimated cost of the buildings orstructures to be acquired or constructedin the project. Cost estimates should listthe cost of construction, contractcontingency, fixed equipment notincluded in the contract, movableequipment, architect’s fees andconstruction supervision andinspection.(9) A design development conference.After VA reviews design developmentdocuments, a design developmentconference may be recommended inorder to provide applicants and theirarchitects an opportunity to learn VAprocedures and requirements for theproject and to discuss VA reviewcomments.(10) Such other documentation asspecified by VA in writing to theapplicant that confirms or clarifiesinformation provided in the application.(b) Receipt of additional information.The required additional informationmust be received in acceptable formwithin the time frame established by VAin a notice of fund availabilitypublished in the Federal Register. VAreserves the right to remove anyproposed project from furtherconsideration for grant assistance if therequired additional project informationis not received in acceptable form by theestablished deadline.(c) Grant award. Following receipt ofthe additional information in acceptableform (and, where applicable, providedthat the environmental review describedin § 17.714 of this part indicates that theproposed project is environmentallyacceptable to VA), to the extent fundsare available VA will approve theapplication and send a grant agreementfor execution to the applicant.(Paperwork requirements were approved bythe Office of Management and Budget undercontrol number 2900–0554.)(Authority: 38 U.S.C. 501, 7721, note)§ 17.714 Environmental reviewrequirements.(a) General. Project selection issubject to completion of anenvironmental review of the proposedsite, and the project may be modified orthe site rejected as a result of thatreview. The environmental effects mustbe assessed in accordance with therequirements of the NationalEnvironmental Policy Act of 1969(NEPA) (42 U.S.C. 4321, et seq.) asimplemented pursuant to the Councilon Environmental Quality’s applicableregulations (40 CFR parts 1500–1508)and VA’s applicable implementingregulations (38 CFR part 26).(b) Responsibility for review. (1) VAwill perform the environmental review,in accordance with part 26 of this title,for conditionally selected applicationsreceived directly from private nonprofitorganizations and governmental entitieswith special or limited purpose powers.VA is not permitted to approve suchapplications prior to its completion ofthis review. Because of time constraints,any applications subject toenvironmental review by VA thatrequires an Environmental ImpactStatement (EIS) (generally, anapplication that VA determines wouldresult in a major Federal actionsignificantly affecting the quality of thehuman environment in accordance withthe environmental assessmentprocedures at 38 CFR part 26) will notbe eligible for assistance under this part.(2) Applicants that are States,metropolitan cities, urban counties,Indian tribes, or other governmentalentities with general purpose powersshall include environmentaldocumentation for the projectsubmitting information establishing aCategorical Exclusion (CE), a proposedEnvironmental Assessment (EA), or aproposed Environmental ImpactStatement (EIS). The environmentaldocumentation will require approval byVA before final award of a constructionor acquisition grant under this part. (See38 CFR 26.6 for compliancerequirements.) If the proposed actionsinvolving construction or acquisition donot individually or cumulatively have asignificant effect on the humanenvironment, the applicant shall submita letter noting a CE. If constructionoutside the walls of an existing structurewill involve more than 75,000 grosssquare feet (GSF), the application shallinclude an EA to determine if an EIS isnecessary for compliance with section102(2)(c) of the National EnvironmentalPolicy Act 1969. When the applicationsubmission requires an EA, the Stateshall briefly describe the possiblebeneficial and/or harmful effect whichthe project may have on the followingimpact categories:(i) Transportation;(ii) Air quality;(iii) Noise;(iv) Solid waste;(v) Utilities;(vi) Geology (soils/hydrology/floodplains);(vii) Water quality;(viii) Land use;(ix) Vegetation, wildlife, aquatic, andecology/wetlands;(x) Economic activities;

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6125(xi) Cultural resources;(xii) Aesthetics;(xiii) Residential population;(xiv) Community services andfacilities;(xv) Community plans and projects;and(xvi) Other.(3) If an adverse environmentalimpact is anticipated, the action to betaken to minimize the impact should beexplained in the EA. An entity coveredby this section that believes that it doesnot have the legal capacity to carry outthe responsibilities required by 38 CFRpart 26 should contact the VA HomelessProviders Grant and Per Diem Program,Mental Health and Behavioral SciencesService (111C), U.S. Department ofVeterans Affairs, 810 Vermont AvenueNW., Washington, DC 20420, for furtherinstructions. Determinations of legalcapacity will be made on a case-by-casebasis.(Paperwork requirements were approved bythe Office of Management and Budget undercontrol number 2900–0554.)(Authority: 38 U.S.C. 501, 7721, note)§ 17.715 Aid for supportive services andsupportive housing.(a) Per diem payments. Aid in theform of per diem payments may be paidto an entity meeting the requirements ofthe regulations of this part under theheading ‘‘VA Homeless Providers Grantand Per Diem Program,’’ including thespecific criteria of § 17.716 of this part,if:(1) VA referred the homeless veteranto a recipient of a grant under this part(or entity eligible for such a grant asdescribed in § 17.716 of this part); or(2) VA authorized the provision ofsupportive services or supportivehousing for the homeless veteran.(b) In-kind assistance. In lieu of perdiem payments under this section, VAmay, with approval of the grantrecipient (or entity eligible for such agrant as described in § 17.716 of thispart), provide in-kind assistancethrough the services of VA employeesand the use of other VA resources, to agrant recipient (or entity eligible forsuch a grant as described in § 17.716 ofthis part).(c) Selection of per diem applicants.In awarding per diem assistance,applications from grant recipients andnongrant recipients will be reviewedand ranked separately. Funds will firstbe awarded to grant recipients whorequest such assistance. If funds are stillavailable for nongrant recipients, VAwill announce funding through a Noticeof Funding Availability (NOFA) processas described in § 17.708 of this part. VAwill not award per diem payments whendoing so would decrease funding tothose entities already receiving suchpayments. For both grant recipients andnon-grant recipients, eligibility will bedetermined by the criteria described in§ 17.716 of this part, and applicationswill be ranked according to scoresachieved on the portions of theapplication described in § 17.716(b)(4)of this part. Applicants must score aminimum of 500 points on theseportions to be eligible for per diem.Those applications that meet theeligibility criteria will be conditionallyselected for per diem assistance. Fundswill be allocated to the highest-ranked,conditionally selected applicants indescending order until funds areexpended. Payments will be contingentupon meeting the requirements of a siteinspection conducted by VA pursuant to§ 17.721 of this part.(d) Continued receipt of per diemassistance. (1) Continued receipt of perdiem assistance for both grant recipientsand nongrant recipients will becontingent upon maintaining theprogram for which per diem is providedso that it would score at least therequired minimum 500 points asdescribed in § 17.716(b)(4) of this parton the application. VA will ensurecompliance by conducting inspectionsas described in § 17.721 of this part.(2) Where the recipient fails tocomply with paragraph (d)(1) of thissection, VA will issue a notice of theDepartment’s intent to discontinue perdiem payments. The recipient will thenhave 30 days to submit documentationdemonstrating why payments shouldnot be terminated. After review of anysuch documentation, VA will issue afinal decision on termination of perdiem payment.(3) Continued payment is subject toavailability of funds. When necessarydue to funding limitations, VA will, inproportion to the decrease in fundingavailable, decrease the per diempayment for each authorized veteran.(Authority: 38 U.S.C. 501, 7721, note)§ 17.716 Eligibility to receive per diempayments.An entity must be formally recognizedby VA as eligible to receive per diempayments under this section before perdiem payments can be made for the careof homeless veterans, except that perdiem payments may be made on behalfof a veteran up to three days prior tothis recognition.(a) A grant recipient will be eligible ifit receives the minimum score asdescribed in paragraph (b)(4) of thissection.(b) A nongrant recipient will beeligible if it is an entity eligible toreceive a grant, which for the purposesof this section means:(1) At least 75 percent of persons whoare receiving supportive services orsupportive housing from the entity areveterans who may be included incomputation of the amount of aidpayable from VA;(2) The supportive services orsupportive housing program for whichper diem payments is requested wasestablished after November 10, 1992;(3) The entity is a public or nonprofitprivate entity; and(4) The entity score at least 500cumulative points on the followingsections of the Grant/Per Diemapplication: Quality (1); Targeting (2);Ability (3); Description of Need (4); andCoordination with Other Programs (8).These sections correspond to theselection criteria of § 17.711(c) of thispart.(c) For grant recipients, only thoseprograms that provide supportiveservices or supportive housing (or theportions thereof) created with grantfunds will be considered for per diemassistance. For nongrant recipients, onlythose portions of the supportive servicesor supportive housing described in theapplication will be considered for perdiem assistance.(Authority: 38 U.S.C. 501, 7721, note)§ 17.717 Request for recognition ofeligibility.(a) Requests for recognition ofeligibility may be addressed to the VAHomeless Providers Grant and Per DiemPrograms, Mental Health StrategicHealthcare Group (116E), U.S.Department of Veterans Affairs, 810Vermont Avenue NW, Washington, DC20420.(b) For nongrant recipients, thereceipt of application for per diem willconstitute the request for recognition ofeligibility. Grant recipients seeking perdiem assistance will indicate thisrequest on the application. Grantrecipients are not required to completea separate application for per diemassistance. VA will review thoseportions of the grant application thatpertain to per diem. Those entitiesalready receiving a grant must submit arequest for recognition to initiate thescoring of their application for per diempayments.(Authority: 38 U.S.C. 501, 7721, note)§ 17.718 Approval of annexes and newfacilities.Separate applications for recognitionmust be filed for any annex, branch,enlargement, expansion, or relocation ofthe site of service provision of aneligible entity’s facility which is not on

6126 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsthe same or contiguous grounds onwhich the parent facility is located.When an eligible entity establishes siteswhich have not been inspected andapproved by VA, a request for separateapproval of such sites must be made.The prohibitions in § 17.720 of this partare also applicable to applications foraid on behalf of any veterans cared forin a new annex, branch or enlarged,expanded or relocated facility.(Authority: 38 U.S.C. 501, 7721, note)§ 17.719 Amount of aid payable.The per diem amount payable forsupportive housing is the current VAState Home Program per diem rate fordomiciliary care as set forth in 38 U.S.C.1741. The per diem amount payable forsupportive services, not provided inconjunction with supportive housing, is$1.10 for each half-hour during whichsupportive services are provided, up to$17.60 per day. These rates will be paidprovided, however, the per diemamount for supportive housing orsupportive services (not provided inconjunction with supportive housing)does not exceed one-half of the cost tothe per diem recipient of providing theservices. Also, provided further, perdiem payment of supportive housingand supportive services may be lessenedbecause of budget restriction asdescribed in § 17.715(d)(3) of this part.Per diem payments may not be paid fora veteran for both supportive housingand supportive services (not inconjunction with supportive housing).(Authority: 38 U.S.C. 501, 7721, note)§ 17.720 [Amended](4) In § 17.720, paragraphs (a)introductory text, (a)(1) , and (a)(2) areamended by removing ‘‘17.715(a)’’ andadding, in their place, ‘‘17.716’’.[FR Doc. 97–3283 Filed 2–10–97; 8:45 am]BILLING CODE 8320–01–PENVIRONMENTAL PROTECTIONAGENCY40 CFR Part 52[IL154–1a; FRL–5685–7]Approval and Promulgation ofImplementation Plans; IllinoisAGENCY: U.S. Environmental ProtectionAgency (USEPA).ACTION: Direct final rule.SUMMARY: On October 11, 1996, Illinoissubmitted a negative declarationregarding the need for rules controllingair emissions from sources classified aspart of the ‘‘Shipbuilding and ShipRepair Industry’’ (SSRI) or ‘‘MarineCoatings’’ category in the StandardIndustrial Classification (SIC) Manual.This negative declaration indicates thatthe State of Illinois has determined thatthere are no major sources (sources witha potential to emit twenty-five or moretons per year of volatile organic material(VOM)) in Illinois’ ozone nonattainmentareas. In this action, USEPA isapproving the State’s finding that noadditional control measures are neededthrough a ‘‘direct final’’ rulemaking; therationale for this approval is set forthbelow. Elsewhere in this FederalRegister, USEPA is proposing approvaland soliciting comment on this directfinal action; if adverse comments arereceived, USEPA will withdraw thedirect final rulemaking and address thecomments received in a new final rule;otherwise, no further rulemaking willoccur on this requested negativedeclaration.DATES: This action will be effectiveApril 14, 1997 unless adverse commentsnot previously addressed by the State orUSEPA are received by March 13, 1997.If the effective date of this action isdelayed due to adverse comments,timely notice will be published in theFederal Register.ADDRESSES: Written comments shouldbe sent to: J. Elmer Bortzer, Chief,Regulation Development Section, AirPrograms Branch (AR–18J), U.S.Environmental Protection Agency, 77West Jackson Boulevard, Chicago,Illinois, 60604.Copies of the Illinois submittal areavailable for public review duringnormal business hours, between 8:00a.m. and 4:30 p.m., at the above address.FOR FURTHER INFORMATION CONTACT:Randolph O. Cano, RegulationDevelopment Section, Air ProgramsBranch (AR–18J), U.S. EnvironmentalProtection Agency, 77 West JacksonBoulevard, Chicago, Illinois, 60604.Telephone: (312) 886–6036.SUPPLEMENTARY INFORMATION:I. BackgroundSection 183(b)(3) of the Clean Air Actrequires the Administrator of USEPA toissue a Control Technique Guideline(CTG) for controlling VOM emissionsfrom the Marine Coatings SIC categorysources. Illinois was required to adoptrules controlling VOM emissions fromsources in this SIC category with apotential to emit twenty-five or moretons per year of VOM (major sources)and located in either of Illinois’ ozonenonattainment areas. The Chicago ozonenonattainment area is comprised ofCook, DuPage, Kane, Lake, McHenry,Will Counties and Aux Sable and GooseLake Townships in Grundy County andOswego Township in Kendall County.The Metro-East ozone nonattainmentarea is comprised of Madison, Monroe,and St. Clair Counties. Illinois reviewedthe data in its emissions inventory database and determined that there were nomajor sources in the marine coatingscategory located in Illinois ozonenonattainment areas. Illinois alsodetermined that should such a majorsource exist it would be subject toregulation under the provisions of theState non-CTG rules.The USEPA has reviewed thedocumentation on which this Illinoisnegative declaration is based. TheUSEPA agrees with the Illinois findingthat there are no major sources of VOMfrom marine coating facilities located inIllinois’ Chicago or Metro-East ozonenonattainment areas.II. Rulemaking ActionThe USEPA approves theincorporation of Illinois’ negativedeclaration concerning marine coatingsinto the Illinois SIP for ozone.The USEPA is publishing this actionwithout prior proposal because USEPAviews this as a noncontroversialrevision and anticipates no adversecomments. However, in a separatedocument in this Federal Registerpublication, the USEPA is proposing toapprove the SIP revision should adverseor critical comments be filed. Thisaction will be effective on April 14,1997 unless, by March 13, 1997, adverseor critical comments are received.If the USEPA receives suchcomments, this action will bewithdrawn before the effective date bypublishing a subsequent rulemakingthat will withdraw the final action. Allpublic comments received will beaddressed in a subsequent final rulebased on this action serving as aproposed rule. The USEPA will notinstitute a second comment period onthis action. Any parties interested incommenting on this action should do soat this time. If no such comments arereceived, the public is advised that thisaction will be effective on April 14,1997.Nothing in this action should beconstrued as permitting, allowing orestablishing a precedent for any futurerequest for revision to any SIP. Eachrequest for revision to the SIP shall beconsidered separately in light of specifictechnical, economic, and environmentalfactors and in relation to relevantstatutory and regulatory requirements.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6127III. Administrative RequirementsA. Executive Order 12866This action has been classified as aTable 3 action for signature by theRegional Administrator under theprocedures published in the FederalRegister on January 19, 1989 (54 FR2214–2225), as revised by a July 10,1995, memorandum from Mary D.Nichols, Assistant Administrator for Airand Radiation. The Office ofManagement and Budget (OMB) hasexempted this regulatory action fromExecutive Order 12866 review.B. Regulatory FlexibilityUnder the Regulatory Flexibility Act,5 U.S.C. section 600 et seq., USEPAmust prepare a regulatory flexibilityanalysis assessing the impact of anyproposed or final rule on small entities.5 U.S.C. sections 603 and 604.Alternatively, USEPA may certify thatthe rule will not have a significantimpact on a substantial number of smallentities. Small entities include smallbusinesses, small not-for-profitenterprises, and government entitieswith jurisdiction over populations ofless than 50,000.SIP approvals under section 110 andsubchapter I, part D of the Act do notcreate any new requirements, butsimply approve requirements that theState is already imposing. Therefore,because the Federal SIP approval doesnot impose any new requirements, theAdministrator certifies that it does nothave a significant impact on any smallentities affected. Moreover, due to thenature of the Federal-State relationshipunder the Act, preparation of aflexibility analysis would constituteFederal inquiry into the economicreasonableness of the State action. TheClean Air Act forbids USEPA to base itsactions concerning SIPs on suchgrounds. Union Electric Co. v. EPA., 427U.S. 246, 256–66 (1976); 42 U.S.C.7410(a)(2).C. Unfunded MandatesUnder Section 202 of the UnfundedMandates Reform Act of 1995, signedinto law on March 22, 1995, USEPAmust undertake various actions inassociation with any proposed or finalrule that includes a Federal mandatethat may result in estimated costs tostate, local, or tribal governments in theaggregate; or to the private sector, of$100 million or more. This Federalaction affirms a State finding thatadditional regulations covering marinecoatings sources are unnecessarybecause no major sources of this typeare located in the Illinois ozonenonattainment areas. No new Federalrequirements are imposed. Accordingly,no additional costs to state, local, ortribal governments, or the private sector,result from this action.D. Submission to Congress and theGeneral Accounting OfficeUnder section 801(a)(1)(A) as addedby the Small Business RegulatoryEnforcement Fairness Act of 1996,USEPA submitted a report containingthis rule and other required informationto the U.S. Senate, the U.S. House ofRepresentatives and the ComptrollerGeneral of the General AccountingOffice prior to publication of the rule intoday’s Federal Register. This rule isnot a major rule as defined by section804(2).E. Petitions for Judicial ReviewUnder section 307(b)(1) of the Act,petitions for judicial review of thisaction must be filed in the United StatesCourt of Appeals for the appropriatecircuit by April 14, 1997. Filing apetition for reconsideration by theAdministrator of this final rule does notaffect the finality of this rule for thepurposes of judicial review nor does itextend the time within which a petitionfor judicial review may be filed, andshall not postpone the effectiveness ofsuch rule or action. This action may notbe challenged later in proceedings toenforce its requirements. (See section307(b)(2)).List of Subjects in 40 CFR Part 52Environmental protection, Airpollution control, Hydrocarbons, Ozone,and Volatile organic compounds.Dated: January 23, 1997.Steve Rothblatt,Acting Regional Administrator.Part 52, chapter I, title 40 of the Codeof Federal Regulations is amended asfollows:PART 52—[AMENDED]1. The authority citation for part 52continues to read as follows:Authority: 42 U.S.C. 7401–7671q.Subpart O—Illinois2. Section 52.726 is amended byadding paragraph (n) to read as follows:§ 52.726 Control strategy: Ozone.* * * * *(n) Negative declaration—Shipbuilding and ship repair industry.On October 11, 1996, the State ofIllinois certified to the satisfaction of theUnited States Environmental ProtectionAgency that no major sourcescategorized as part of the shipbuildingand ship repair industry are located inthe Chicago, Illinois ozonenonattainment area which is comprisedof Cook, DuPage, Kane, Lake, McHenry,Will Counties and Aux Sable and GooseLake Townships in Grundy County andOswego Township in Kendall County orthe Metro-East, Illinois ozonenonattainment area which is comprisedof Madison, Monroe, and St. ClairCounties.* * * * *[FR Doc. 97–3254 Filed 2–10–97; 8:45 am]BILLING CODE 6560–50–P40 CFR Part 52[IL153–1a; FRL–5685–1]Approval and Promulgation ofImplementation Plans; IllinoisAGENCY: U.S. Environmental ProtectionAgency (USEPA).ACTION: Direct final rule.SUMMARY: On October 11, 1996, Illinoissubmitted a negative declarationregarding the need for rules controllingair emissions from sources classified aspart of the ‘‘Aerospace Manufacturingand Rework Industry’’ (AMRI) or‘‘Aerospace Coatings’’ category in theStandard Industrial Classification (SIC)Manual. This negative declarationindicates that the State of Illinois hasdetermined that there are no majorsources (sources with a potential to emittwenty-five or more tons per year ofvolatile organic material (VOM)) inIllinois’ ozone nonattainment areas. Inthis action, USEPA is approving theState’s finding that no additional controlmeasures are needed through a ‘‘directfinal’’ rulemaking; the rationale for thisapproval is set forth below. Elsewherein this Federal Register, USEPA isproposing approval and solicitingcomment on this direct final action; ifadverse comments are received, USEPAwill withdraw the direct finalrulemaking and address the commentsreceived in a new final rule; otherwise,no further rulemaking will occur on thisrequested negative declaration.DATES: This action is effective April 14,1997 unless adverse comments notpreviously addressed by the State orUSEPA are received by March 13, 1997.If the effective date of this action isdelayed due to adverse comments,timely notice will be published in theFederal Register.ADDRESSES: Written comments shouldbe sent to: J. Elmer Bortzer, Chief,Regulation Development Section, AirPrograms Branch (AR–18J), U.S.Environmental Protection Agency, 77

6128 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsWest Jackson Boulevard, Chicago,Illinois, 60604.Copies of the Illinois submittal areavailable for public review duringnormal business hours, between 8:00a.m. and 4:30 p.m., at the above address.FOR FURTHER INFORMATION CONTACT:Randolph O. Cano, RegulationDevelopment Section, Air ProgramsBranch (AR–18J), U.S. EnvironmentalProtection Agency, 77 West JacksonBoulevard, Chicago, Illinois, 60604.Telephone: (312) 886–6036.SUPPLEMENTARY INFORMATION:I. BackgroundSection 183(b)(3) of the Clean Air Actrequires the Administrator of USEPA toissue a Control Technique Guideline(CTG) for controlling VOM emissionsfrom the Aerospace Coatings SICcategory sources. Illinois was requiredto adopt rules controlling VOMemissions from sources in this SICcategory with a potential to emit twentyfiveor more tons per year of VOM(major sources) and located in either ofIllinois’ ozone nonattainment areas. TheChicago ozone nonattainment area iscomprised of Cook, DuPage, Kane, Lake,McHenry, Will Counties and Aux Sableand Goose Lake Townships in GrundyCounty and Oswego Township inKendall County. The Metro-East ozonenonattainment area is comprised ofMadison, Monroe, and St. ClairCounties. Illinois reviewed the data inits emissions inventory data base anddetermined that there were no majorsources in the aerospace coatingscategory located in Illinois ozonenonattainment areas. Illinois alsodetermined that should such a majorsource exist it would be subject toregulation under the provisions of theState non-CTG rules.The USEPA has reviewed thedocumentation on which this Illinoisnegative declaration is based. TheUSEPA agrees with the Illinois findingthat there are no major sources of VOMfrom aerospace coating facilities locatedin Illinois’ Chicago or Metro-East ozonenonattainment areas.II. Rulemaking ActionThe USEPA approves theincorporation of Illinois’ negativedeclaration concerning aerospacecoatings into the Illinois SIP for ozone.The USEPA is publishing this actionwithout prior proposal because USEPAviews this as a noncontroversialrevision and anticipates no adversecomments. However, in a separatedocument in this Federal Registerpublication, the USEPA is proposing toapprove the SIP revision should adverseor critical comments be filed. Thisaction will be effective on April 14,1997 unless, by March 13, 1997, adverseor critical comments are received.If the USEPA receives suchcomments, this action will bewithdrawn before the effective date bypublishing a subsequent rulemakingthat will withdraw the final action. Allpublic comments received will beaddressed in a subsequent final rulebased on this action serving as aproposed rule. The USEPA will notinstitute a second comment period onthis action. Any parties interested incommenting on this action should do soat this time. If no such comments arereceived, the public is advised that thisaction will be effective on April 14,1997.Nothing in this action should beconstrued as permitting, allowing orestablishing a precedent for any futurerequest for revision to any SIP. Eachrequest for revision to the SIP shall beconsidered separately in light of specifictechnical, economic, and environmentalfactors and in relation to relevantstatutory and regulatory requirements.III. Administrative RequirementsA. Executive Order 12866This action has been classified as aTable 3 action for signature by theRegional Administrator under theprocedures published in the FederalRegister on January 19, 1989 (54 FR2214–2225), as revised by a July 10,1995, memorandum from Mary D.Nichols, Assistant Administrator for Airand Radiation. The Office ofManagement and Budget (OMB) hasexempted this regulatory action fromExecutive Order 12866 review.B. Regulatory FlexibilityUnder the Regulatory Flexibility Act,5 U.S.C. section 600 et seq., USEPAmust prepare a regulatory flexibilityanalysis assessing the impact of anyproposed or final rule on small entities.5 U.S.C. sections 603 and 604.Alternatively, USEPA may certify thatthe rule will not have a significantimpact on a substantial number of smallentities. Small entities include smallbusinesses, small not-for-profitenterprises, and government entitieswith jurisdiction over populations ofless than 50,000.SIP approvals under section 110 andsubchapter I, part D of the Act do notcreate any new requirements, butsimply approve requirements that theState is already imposing. Therefore,because the Federal SIP approval doesnot impose any new requirements, theAdministrator certifies that it does nothave a significant impact on any smallentities affected. Moreover, due to thenature of the Federal-State relationshipunder the Act, preparation of aflexibility analysis would constituteFederal inquiry into the economicreasonableness of the State action. TheClean Air Act forbids USEPA to base itsactions concerning SIPs on suchgrounds. Union Electric Co. v. EPA., 427U.S. 246, 256–66 (1976); 42 U.S.C.7410(a)(2).C. Unfunded MandatesUnder Section 202 of the UnfundedMandates Reform Act of 1995, signedinto law on March 22, 1995, USEPAmust undertake various actions inassociation with any proposed or finalrule that includes a Federal mandatethat may result in estimated costs tostate, local, or tribal governments in theaggregate; or to the private sector, of$100 million or more. This Federalaction affirms a State finding thatadditional regulations coveringaerospace coating sources areunnecessary because no major sourcesof this type are located in the Illinoisozone nonattainment areas. No newFederal requirements are imposed.Accordingly, no additional costs tostate, local, or tribal governments, or theprivate sector, result from this action.D. Submission to Congress and theGeneral Accounting OfficeUnder 5 U.S.C. 801(a)(1)(A) as addedby the Small Business RegulatoryEnforcement Fairness Act of 1996,USEPA submitted a report containingthis rule and other required informationto the U.S. Senate, the U.S. House ofRepresentatives and the ComptrollerGeneral of the General AccountingOffice prior to publication of the rule intoday’s Federal Register. This rule isnot a major rule as defined by 5 U.S.C.804(2).E. Petitions for Judicial ReviewUnder section 307(b)(1) of the Act,petitions for judicial review of thisaction must be filed in the United StatesCourt of Appeals for the appropriatecircuit by April 14, 1997. Filing apetition for reconsideration by theAdministrator of this final rule does notaffect the finality of this rule for thepurposes of judicial review nor does itextend the time within which a petitionfor judicial review may be filed, andshall not postpone the effectiveness ofsuch rule or action. This action may notbe challenged later in proceedings toenforce its requirements. (See Section307(b)(2)).

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6129List of Subjects in 40 CFR Part 52Environmental protection, Airpollution control, Hydrocarbons, Ozone,Volatile organic compounds.Dated: January 23, 1997.Steve Rothblatt,Acting Regional Administrator.Part 52, chapter I, title 40 of the Codeof Federal Regulations is amended asfollows:PART 52—[AMENDED]1. The authority citation for part 52continues to read as follows:Authority: 42 U.S.C. 7401–7671q.Subpart O—Illinois2. Section 52.726 is amended byadding paragraph (o) to read as follows:§ 52.726 Control strategy: Ozone.* * * * *(o) Negative declaration— Aerospacemanufacturing and rework industry. OnOctober 11, 1996, the State of Illinoiscertified to the satisfaction of the UnitedStates Environmental Protection Agencythat no major sources categorized as partof the Aerospace Manufacturing andRework Industry are located in theChicago, Illinois ozone nonattainmentarea which is comprised of Cook,DuPage, Kane, Lake, McHenry, WillCounties and Aux Sable and Goose LakeTownships in Grundy County andOswego Township in Kendall County orthe Metro-East, Illinois ozonenonattainment area which is comprisedof Madison, Monroe, and St. ClairCounties.[FR Doc. 97–3252 Filed 2–10–97; 8:45 am]BILLING CODE 6560–50–P40 CFR Part 52[AK14–7102a; FRL–5686–2]Clean Air Act Approval andPromulgation of Carbon MonoxideImplementation Plan for the State ofAlaska: Anchorage and FairbanksEmission InventoryAGENCY: Environmental ProtectionAgency (EPA).ACTION: Direct final rule.SUMMARY: EPA is approving the 1990base year carbon monoxide (CO)emission inventory portion of theAnchorage and Fairbanks, Alaska COState Implementation Plan (SIP)submitted on December 29, 1993, by theState of Alaska Department ofEnvironmental Conservation (ADEC) forthe purpose of bringing about theattainment of the national ambient airquality standard (NAAQS) for CO. Also,ADEC submitted the required PeriodicUpdate to its 1990 base year COemission inventory on September 27,1996.DATES: This action is effective on April14, 1997 unless adverse or criticalcomments are received by March 13,1997. If the effective date is delayed,timely notice will be published in theFederal Register.ADDRESSES: Written comments shouldbe addressed to: Montel Livingston, SIPManager, Office of Air Quality (OAQ–107), EPA, 1200 Sixth Avenue, Seattle,Washington 98101.Copies of material submitted to EPAmay be examined during normalbusiness hours at the followinglocations: EPA, Region 10, Office of AirQuality, 1200 Sixth Avenue (OAQ–107),Seattle, Washington 98101, and AlaskaDepartment of EnvironmentalConservation, 410 Wiloughby Ave.,Room 105, Juneau, Alaska.FOR FURTHER INFORMATION CONTACT: JohnPavitt, EPA Region 10, AlaskaOperations Office (AOO/A), 222 W. 7thAvenue, Box #19, Anchorage, AK99513–7588, (907) 271–5083.SUPPLEMENTARY INFORMATION:I. BackgroundIn a letter dated March 1, 1991 to theEPA Region 10 Administrator, theGovernor of Alaska recommended theAnchorage and Fairbanks areas bedesignated as nonattainment for CO asrequired by section 107(d)(1)(A) of the1990 Clean Air Act Amendments(CAAA or the Act) (Pub. L. 101–549,104 Stat. 2399, codified at 42 U.S.C.7401–7671q). The areas, which includelands within the Municipality ofAnchorage and the Fairbanks North StarBorough, were designatednonattainment and classified as‘‘moderate’’ under the provisionsoutlined in sections 186 and 187 of theCAA. (See 56 FR 56694, November 6,1991, codified at 40 CFR part 81,§ 81.302.)Because the Anchorage area had adesign value of 13.1 ppm (based on1989 data), it was classified as‘‘moderate > 12.7 ppm’’ (moderate plus).Because the Fairbanks area had a designvalue of 10.4 (based on 1989 data), itwas classified as ‘‘moderate < 12.7ppm’’ (moderate).Under the Clean Air Act as amended,States have the responsibility toinventory emissions contributing toNAAQS nonattainment, to track theseemissions over time, and to ensure thatcontrol strategies are being implementedthat reduce emissions and move areastowards attainment. Under section187(a)(1), the CAAA requires moderateCO nonattainment areas to submit abase year CO inventory that representsactual emissions in the CO season byNovember 15, 1992. Stationary point,stationary area, on-road mobile, andnon-road mobile sources of CO are to beincluded in the inventory. Thisinventory is for calendar year 1990 andis denoted as the base year inventory.The inventory is to address actual COemissions for the area during the peakCO season. The peak CO season shouldreflect the months when peak CO airquality concentrations occur. ModerateCO nonattainment areas are required tosubmit a periodic inventory thatrepresents actual emissions no laterthan September 30, 1995, and everythree years thereafter until the area isredesignated to attainment (section187(a)(5)). ADEC submitted its required1993 Periodic Update. Areas classifiedas moderate >12.7 ppm are required tosubmit an attainment demonstrationplan by November 15, 1992 thatdemonstrates attainment by December31, 1995 (187(a)(7)). To make theattainment demonstration, base year andprojected modeling inventories areneeded. The base year inventory is theprimary inventory from which theperiodic and modeling inventories arederived. Further information on theseinventories and their purpose can befound in the document ‘‘EmissionInventory Requirements for CarbonMonoxide State Implementation Plans,’’EPA, Office of Air Quality Planning andStandards, Research Triangle Park,North Carolina, March 1991.II. Today’s ActionThe EPA is approving the carbonmonoxide (CO) base year 1990 emissioninventory submitted to EPA onDecember 29, 1993, based on the LevelI, II, and III review findings.III. Review of State SubmittalA. The Level I and II review processis used to determine that allcomponents of the base year inventoryare present. The review also evaluatesthe level of supporting documentationprovided by the State and assesseswhether the emissions were developedaccording to current EPA guidance.Alaska’s inventory satisfies both Level Iand Level II requirements. The Level IIIreview process is outlined here andconsists of 9 points that the inventorymust include. For a base year emissioninventory to be acceptable it must passall of the following acceptance criteria:1. An approved Inventory PreparationPlan (IPP) must be provided and theQuality Assurance (QA) program

6130 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationscontained in the IPP must be performedand its implementation documented.2. Adequate documentation must beprovided that enables the reviewer todetermine the emission estimationprocedures and the data sources used todevelop the inventory.3. The point source inventory must becomplete.4. Point source emissions inventorymust have been prepared or calculatedaccording to the current EPA guidance.5. The area source inventory must becomplete.6. The area source emissionsinventory must have been prepared orcalculated according to the current EPAguidance.7. The method (e.g., HighwayPerformance Modeling System or anetwork transportation planning model)used to develop vehicle miles traveled(VMT) estimates must follow EPAguidance. The VMT developmentmethods must be adequately describedand documented in the inventoryreport.8. The MOBILE model must becorrectly used to produce emissionfactors for each of the vehicle classes.9. Non-road mobile emissionsinventory must be prepared according tocurrent EPA guidance for all of thesource categories.B. The EPA is approving this emissioninventory as meeting the requirementsof section 187(a)(1) of the Act. Thereasons why this submittal meets theLevel III criteria are discussed below.Initially, EPA subjected the AlaskaState CO emission inventory to arigorous review. This review pointedout various deficiencies in theinventory. In their updates to theoriginal emissions inventory submittedon August 27, 1992 (Anchorage) andNovember 11, 1992 (Fairbanks), ADECcorrected these deficiencies. Correctionswere made and submitted on December29, 1993 and December 1, 1994. TheDecember 1, 1994 submittal wasprimarily an update to mobile sourcesemission estimates, replacing modelMobile 4.1 with Mobile 5.0a, which isthe EPA approved model consistentwith CAAA requirements andtransporation conformity regulations.1. Inventory Preparation Plan. Alaskasubmitted a final Inventory PreparationPlan (IPP) and accompanying finalQuality Assurance Plan which satisfiedthe EPA’s requirements, and whichwere approved in January 1992.2. Quality assurance. Throughout theemissions inventory, ADEC providesdocumentation of quality assurance. Foreach source category, ADEC identifiesthe methodology employed. WhereADEC methods deviate from EPAsuggested procedures, the rationale forthe alternate method is noted. For eachCO source category, ADEC provides thereference from which it excerptedinformation. When needed, projectionequations are provided to showemission amounts beyond the base year.3. Point Source Inventory. ADEC’spoint source inventory identifiessources whose emissions exceed 10 tonsper year of carbon monoxide. There arefour CO point sources in the Anchoragenonattainment area and nine in theFairbanks nonattainment area. Thedominant industry with CO pointsources for both nonattainment areas iselectric utility power generation. Whilenatural gas is the primary fuel used inAnchorage, it is not available inFairbanks.To compile the point sourceinventory, ADEC reviewed emission andfuel use information available from stateair operating permits, and informationsupplied by permitted facilities throughoperating reports required to besubmitted to ADEC. In addition, ADECcontacted Anchorage and Fairbanks areafuel distributors to identify any sourcesnot already issued an operating permitcapable of emitting more than 10 tonsper year of carbon monoxide. Therewere no such sources.ADEC reports that point sourceemissions for 1990 are 2.35 tons per dayfor Anchorage and 6.06 tons per day forFairbanks.4. Area Source Inventory. ADECsubmitted a complete inventory for COarea sources divided into the followingcategories: natural gas combustion(Anchorage only) fuel oil combustion,coal combustion, propane combustion(Fairbanks only), wood combustion,industrial equipment, solid wasteincineration, and open burning/structural fires. The largest contributorto CO emissions in both nonattainmentareas was wood burning. Emissions foreach source category (except as notedabove) are calculated for the twononattainment areas. The inventoryprovides a discussion per category, anddisplays equations that were used todevelop emissions estimates. Sources ofinformation are provided as needed. Insome cases, ADEC’s methodology differsfrom EPA’s recommended procedures.When this occurs, ADEC notes thereason for the difference. Usually, ADECuses data tailored to the local or statearea rather than using the nationalequations or factors. Area source totalsfor 1990 were 4.96 tons per winter daywithin the Anchorage COnonattainment area, and 12.99 tons perday for the Fairbanks CO nonattainmentarea.5. Vehicle Miles Traveled (VMT). InFairbanks, the Alaska Department ofTransportation and Public Facilities(ADOT&PF) used a combination ofactual 1990 traffic count data and QRS2modeling results for 1990 to provideVMT and travel-weighted speedestimates for each roadway functionalclass. Traffic counts were obtained fromboth the Highway PerformanceMonitoring System (HPMS) andadditional sampling locations operatedby ADOT&PF. ADOT&PF estimatedVMT during an average winter weekdayin Fairbanks to be 1,296,041. InAnchorage, the Municipality usedMinUTP modeling results for 1990 toprovide travel-weighted speed data andVMT for each roadway functional class,generating HPMS-equivalent estimates(based on ADOT&PF guidance). TheMunicipality estimated VMT during anaverage winter weekday in Anchorage tobe 2,854,000.The VMT development methods wereadequately described and documentedin the SIP and satisfy EPA’srequirements. (See 60 FR 33727, June19, 1995.)6. Use of the Mobile Model. TheMobile 4.1 model was used in theoriginal 1992 submittal to EPA, beingthen the most recent emission factormodel, and was retained for the revised1993 submittal for consistency. InDecember 1994, ADEC revised themobile source emission estimates bysubstituting Mobile 5.0a for Mobile 4.1.Today’s approval is based on theDecember 29, 1993 submittal usingMobile 4.1.The model was correctly used toproduce emission factors for each of theeight separate vehicle classes. Inputsspecific to Anchorage and Fairbanksduring the base year were used in themodel: operating mode fractions (cold/hot/stabilized) =65%/0%/35%; VMT formotorcycles =0%; anti-tamperingprogram in place; compliance rate =91%(Anchorage) and 96% (Fairbanks);annual inspection; decentralized I/Mprogram, etc. A default value was usedfor the tampering rate. QualityAssurance is provided within the onroaddiscussion, and methodologiesused to determine each of the inputvariables were presented. On-roadmobile sources are 149.99 tons per dayfor Anchorage and 80.83 tons per dayfor Fairbanks.7. Non-road Inventory. ADECdescribes each category and themethodology employed. When ADEC’smethodology deviates from EPAguidance, it is usually because ADECuses numbers reflective of localscenarios as opposed to nationalaverages. Assumptions, equations, and

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6131sources are noted per source category.Major non-road contributors are aircraft,snowmobiles and railroad sources.Nonroad totals are 13.73 tons per dayfor Anchorage, and 5.40 tons per day forFairbanks.C. Procedural background. The Actrequires States to observe certainprocedural requirements in developingemission inventory submissions to EPA.Section 110(a)(2) of the Act requires thateach emission inventory submitted by aState has to be adopted after reasonablenotice and public hearing. 1 COnonattainment areas with design valuesgreater than 12.7 ppm must submit theentire SIP (emissions inventories,attainment demonstrations, and controlstrategies) by November 15, 1992, andEPA expects the emissions inventoriesto have gone through the public hearingprocess as part of the full CO SIP. 2The State of Alaska held numerouspublic meetings in Anchorage andFairbanks in 1992 to entertain publiccomment on air quality control plans,including the 1990 base year emissioninventories for the Anchorage andFairbanks Carbon MonoxideNonattainment Areas. In both areas,local transportation planning boards(Fairbanks Metropolitan AreaTransportation Study (FMATS) andAnchorage Metropolitan AreaTransportation Study (AMATS)),including citizen advisory committees,reviewed and took public comment onthe control plans and inventories. In1992, following the public meetings, theAnchorage Assembly and the FairbanksNorth Star Borough adopted theirrespective air quality control plans andinventories. The CO Emission Inventorywas submitted to EPA on December 29,1993 as a proposed revision to the SIP.IV. Implications of Today’s ActionThe EPA is approving the Alaskacarbon monoxide emission inventorysubmitted the Alaska SIP on December29, 1993. The State has submitted acomplete inventory containing point,area, on-road, and non-road mobilesource data, and documentation.Emissions for these groupings arepresented in the following table:1 Also Section 172(c)(7) of the Act requires thatplan provisions for nonattainment areas meet theapplicable provisions of section 110(a)(2).2 Memorandum from John Calcagni, Director, AirQuality Management Division, and William G.Laxton, Director, Technical Support Division, toRegional Air Division Directors, Region I–X,‘‘Public Hearing Requirements for 1990 Base-YearEmission Inventories for Ozone and CarbonMonoxide Nonattainment Areas,’’ September 29,1992.Emission categoryDaily emissions(tons/day)Baseyear1990 AnchorageBaseyear1990FairbanksPoint sources ............ 2.35 6.06Area sources ............. 4.96 12.99Non-road mobilesources .................. 13.73 5.40On-road mobilesources .................. 149.99 80.83Total ............... 171.03 105.28This inventory is complete andapprovable according to the criteria setout in the November 12, 1992memorandum from J. David Mobley,Chief Emission Inventory Branch,Technical Support Document (TSD) toG. T. Helms, Chief Ozone/CarbonMonoxide Programs Branch, AQMD.The EPA is publishing this actionwithout prior proposal because theAgency views this as a noncontroversialamendment and anticipates no adversecomments. However, in a separatedocument in this Federal Registerpublication, the EPA is proposing toapprove the SIP revision should adverseor critical comments be filed. Thisaction will be effective April 14, 1997unless, by March 13, 1997, adverse orcritical comments are received.If the EPA receives such comments,this action will be withdrawn before theeffective date by publishing asubsequent document that willwithdraw the final action. All publiccomments received will be addressed ina subsequent final rule based on thisaction serving as a proposed rule. TheEPA will not institute a secondcomment period on this action. Anyparties interested in commenting on thisaction should do so at this time. If nosuch comments are received, the publicis advised that this action will beeffective April 14, 1997.Nothing in this action should beconstrued as permitting or allowing orestablishing a precedent for any futurerequest for revision to any stateimplementation plan. Each request forrevision to the state implementationplan shall be considered separately inlight of specific technical, economic,and environmental factors and inrelation to relevant statutory andregulatory requirements.V. Administrative ReviewA. Executive Order 12866This action has been classified as aTable 3 action for signature by theRegional Administrator under theprocedures published in the FederalRegister on January 19, 1989 (54 FR2214–2225), as revised by a July 10,1995 memorandum from Mary Nichols,Assistant Administrator for Air andRadiation. The Office of Managementand Budget (OMB) has exempted thisregulatory action from E.O. 12866review.B. Regulatory Flexibility ActUnder the Regulatory Flexibility Act,5 U.S.C. 600 et seq., EPA must preparea regulatory flexibility analysisassessing the impact of any proposed orfinal rule on small entities. 5 U.S.C. 603and 604. Alternatively, EPA may certifythat the rule will not have a significantimpact on a substantial number of smallentities. Small entities include smallbusinesses, small not-for-profitenterprises, and government entitieswith jurisdiction over populations ofless than 50,000.SIP approvals under section 110 andsubchapter I, Part D of the CAA do notcreate any new requirements, butsimply approve requirements that thestate is already imposing. Therefore,because the federal SIP-approval doesnot impose any new requirements, Icertify that it does not have a significantimpact on any small entities affected.Moreover, due to the nature of thefederal-state relationship under theCAA, preparation of a regulatoryflexibility analysis would constitutefederal inquiry into the economicreasonableness of state action. The CAAforbids EPA to base its actionsconcerning SIPs on such grounds.Union Electric Co. v. E.P.A., 427 U.S.246, 256–66 (S.Ct. 1976); 42 U.S.C.7410(a)(2).C. Unfunded MandatesUnder Section 202 of the UnfundedMandates Reform Act of 1995(‘‘Unfunded Mandates Act’’), signedinto law on March 22, 1995, EPA mustprepare a budgetary impact statement toaccompany any proposed or final rulethat includes a Federal mandate thatmay result in estimated costs to State,local, or tribal governments in theaggregate; or to the private sector, of$100 million or more. Under Section205, EPA must select the most costeffectiveand least burdensomealternative that achieves the objectivesof the rule and is consistent withstatutory requirements. Section 203requires EPA to establish a plan forinforming and advising any smallgovernments that may be significantlyor uniquely impacted by the rule.EPA has determined that the approvalaction does not include a Federalmandate that may result in estimatedcosts of $100 million or more to either

6132 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsState, local, or tribal governments in theaggregate, or to the private sector. ThisFederal action approves pre-existingrequirements under State or local law,and imposes no new requirements.Accordingly, no additional costs toState, local, or tribal governments, or tothe private sector, result from thisaction.D. Submission to Congress and theGeneral Accounting OfficeUnder 5 U.S.C. 801(a)(1)(A) as addedby the Small Business RegulatoryEnforcement Fairness Act of 1996, EPAsubmitted a report containing this ruleand other required information to theU.S. Senate, the U.S. House ofRepresentatives and the ComptrollerGeneral of the General AccountingOffice prior to publication of the rule intoday’s Federal Register. This rule isnot a ‘‘major rule’’ as defined by 5U.S.C. 804(2).E. Petitions for Judicial ReviewUnder section 307(b)(1) of the CleanAir Act, petitions for judicial review ofthis action must be filed in the UnitedStates Court of Appeals for theappropriate circuit by April 14, 1997.Filing a petition for reconsideration bythe Administrator of this final rule doesnot affect the finality of this rule for thepurposes of judicial review nor does itextend the time within which a petitionfor judicial review may be filed andshall not postpone the effectiveness ofsuch rule or action. This action may notbe challenged later in proceedings toenforce its requirements. (See section307(b)(2), 42 U.S.C. 7607(b)(2).List of Subjects in 40 CFR Part 52Environmental protection, Airpollution control, Carbon monoxide,Intergovernmental relations, Reportingand recordkeeping requirements.Dated: January 28, 1997.Chuck Clarke,Regional Administrator.Part 52, chapter I, title 40 of the Codeof Federal Regulations is amended asfollows:PART 52—[AMENDED]1. The authority citation for part 52continues to read as follows:Authority: 42 U.S.C. 7401–7671q.Subpart C—Alaska2. Section 52.76 is added to read asfollows:§ 52.76 1990 Base Year EmissionInventory.EPA approves as a revision to theAlaska State Implementation Plan the1990 Base Year Carbon MonoxideEmission Inventory for the Anchorageand Fairbanks areas designated asnonattainment for CO, submitted by theAlaska Department of EnvironmentalConservation on December 29, 1993.This submittal consists of the 1990 baseyear stationary, area, non-road mobile,and on-road mobile sources for thepollutant carbon monoxide.[FR Doc. 97–3363 Filed 2–10–97; 8:45 am]BILLING CODE 6560–50–PFEDERAL MARITIME COMMISSION46 CFR Parts 502 and 510[Docket No. 97–03]Implementation of 21 U.S.C. 862;Denial of Federal Benefits to DrugTraffickers and PossessorsAGENCY: Federal Maritime Commission.ACTION: Final rule.SUMMARY: This amends Commissionregulations to reflect the redesignationof 21 U.S.C. 853a as 21 U.S.C. 862,which was effected by Public Law 101–647. No substantive change is involved.EFFECTIVE DATE: February 11, 1997.FOR FURTHER INFORMATION CONTACT:Joseph C. Polking, Secretary, FederalMaritime Commission, 800 NorthCapitol Street, NW, Room 1046,Washington, D.C. 20573–0001, (202)523–5725.SUPPLEMENTARY INFORMATION:Commission regulations at 46 CFR502.27 and 510.12 contain requirementsfor applicants for admission to practicebefore the Commission and for a freightforwarders license to submit acertification regarding non-convictionfor drug offenses and eligibility forfederal benefits. The prescribedcertification includes a reference to ‘‘21U.S.C. 853a.’’ Subsequent to adoption ofthese rules 21 U.S.C. 853a wasredesignated as 21 U.S.C. 862 by PublicLaw 101–647, 104 Stat. 4827. Thisdocument merely changes the referencesin Commission rules to reflect thisredesignation and involves nosubstantive change.List of Subjects46 CFR Part 502Administrative practice andprocedure.46 CFR Part 510Freight forwarders.For the reason set forth above, parts502 and 510 of 46 CFR are amended asfollows:PART 502—RULES OF PRACTICE ANDPROCEDURE1. The authority citation for part 502is revised to read as follows.Authority: 5 U.S.C. 504, 551, 552, 553,556(c), 559, 561–569, 571–596; 12 U.S.C.1114j(a); 18 U.S.C. 207; 26 U.S.C. 501(c)(3);28 U.S.C. 2112(a); 31 U.S.C. 9701; 46 U.S.C.app. 817, 820, 821, 826, 841a, 1114(b), 1705,1707–1711, 1713–1716; E.O. 11222 of May 8,1965 (30 FR 6469); 21 U.S.C. 862; and Pub.L 88–777 (46 U.S.C. app 817d, 817e).§ 502.27 [Amended]2. In § 502.27(a)(2) the reference to‘‘21 U.S.C. 853a’’ is amended to read‘‘21 U.S.C. 862’’.PART 510—LICENSING OF OCEANFREIGHT FORWARDERS1. The authority citation for part 510is revised to read as follows.Authority: 5 U.S.C. 553; 31 U.S.C. 9701; 46U.S.C. app. 1702, 1707, 1709, 1710, 1712,1714, 1716, and 1718; 21 U.S.C. 862.§ 510.12 [Amended]2. In § 510.12(a)(2) is the reference to‘‘21 U.S.C. 853a’’ is amended to read‘‘21 U.S.C. 862’’.By the Commission.Joseph C. Polking,Secretary.[FR Doc. 97–3251 Filed 2–10–97; 8:45 am]BILLING CODE 6730–01–MDEPARTMENT OF COMMERCENational Oceanic and AtmosphericAdministration50 CFR Part 679[Docket No. 961126333–6333–01; I.D.020597A]Fisheries of the Exclusive EconomicZone Off Alaska; Pollock in StatisticalArea 620AGENCY: National Marine FisheriesService (NMFS), National Oceanic andAtmospheric Administration (NOAA),Commerce.ACTION: Closure.SUMMARY: NMFS is prohibiting directedfishing for pollock in Statistical Area620 in the Gulf of Alaska (GOA). Thisaction is necessary to prevent exceedingthe interim specification for pollock inthis area.EFFECTIVE DATE: 1200 hrs, Alaska localtime (A.l.t.), February 7, 1997, untilsuperseded by the Final 1997 HarvestSpecifications for Groundfish.FOR FURTHER INFORMATION CONTACT:Thomas Pearson, 907–486-6919.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6133SUPPLEMENTARY INFORMATION: Thegroundfish fishery in the GOA exclusiveeconomic zone is managed by NMFSaccording to the Fishery ManagementPlan for Groundfish of the Gulf ofAlaska (FMP) prepared by the NorthPacific Fishery Management Councilunder authority of the Magnuson-Stevens Fishery Conservation andManagement Act. Fishing by U.S.vessels is governed by regulationsimplementing the FMP at subpart H of50 CFR part 600 and 50 CFR part 679.The interim specification of pollocktotal allowable catch in Statistical Area620 was established by the Interim 1997Harvest Specifications (61 FR 64299,December 4, 1996) as 4,575 metric tons(mt), determined in accordance with§ 679.20(c)(2)(i).In accordance with § 679.20(d)(1)(i),the Administrator, Alaska Region,NMFS (Regional Administrator), hasdetermined that the 1997 interimspecification of pollock in StatisticalArea 620 soon will be reached.Therefore, the Regional Administrator isestablishing a directed fishingallowance of 4,375 mt, and is settingaside the remaining 200 mt as bycatchto support other anticipated groundfishfisheries. In accordance with§ 679.20(d)(1)(iii), the RegionalAdministrator finds that this directedfishing allowance will soon be reached.Consequently, NMFS is prohibitingdirected fishing for pollock in StatisticalArea 620 until superseded by the Final1997 Harvest Specifications ofGroundfish.Maximum retainable bycatch amountsfor applicable gear types may be foundin the regulations at § 679.20(e).ClassificationThis action is required by 50 CFR679.20 and is exempt from review underE.O. 12866.Authority: 16 U.S.C. 1801 et seq.Dated: February 5, 1997.Bruce Morehead,Acting Director, Office of SustainableFisheries, National Marine Fisheries Service.[FR Doc. 97–3258 Filed 2–5–97; 4:42 pm]BILLING CODE 3510–22–F

6134Proposed RulesFederal RegisterVol. 62, No. 28Tuesday, February 11, 1997This section of the FEDERAL REGISTERcontains notices to the public of the proposedissuance of rules and regulations. Thepurpose of these notices is to give interestedpersons an opportunity to participate in therule making prior to the adoption of the finalrules.DEPARTMENT OF AGRICULTUREFederal Crop Insurance Corporation7 CFR Parts 401 and 457Fresh Plum Crop InsuranceProvisions; and Common CropInsurance Regulations; Plum CropInsurance ProvisionsAGENCY: Federal Crop InsuranceCorporation, USDA.ACTION: Proposed rule.SUMMARY: The Federal Crop InsuranceCorporation (FCIC) proposes specificcrop provisions for the insurance ofplums. The provisions will be used inconjunction with the Common CropInsurance Policy Basic Provisions,which contain standard terms andconditions common to most crops. Theintended effect of this action is toprovide policy changes to better meetthe needs of the insured, include thecurrent Fresh Plum Crop InsuranceEndorsement with the Common CropInsurance Policy for ease of use andconsistency of terms, and to restrict theeffects of the current Fresh PlumEndorsement to the 1997 and prior cropyears.DATES: Written comments on thisproposed rule will be accepted untilclose of business April 14, 1997, andwill be considered when the rule is tobe made final. The comment period forinformation collections under thePaperwork Reduction Act of 1995continues through April 11, 1997.ADDRESSES: Interested persons areinvited to submit written comments tothe Director, Product DevelopmentDivision, Federal Crop InsuranceCorporation, United States Departmentof Agriculture, 9435 Holmes Road,Kansas City, MO, 64131. Writtencomments will be available for publicinspection and copying in room 0324,South Building, United StatesDepartment of Agriculture, 14th andIndependence Avenue, SW.,Washington, DC, 8:15 a.m. to 4:45 p.m.,est, Monday through Friday, exceptholidays.FOR FURTHER INFORMATION CONTACT:Stephen Hoy, Program Analyst,Research and Development, ProductDevelopment Division, Federal CropInsurance Corporation, at the KansasCity, MO address listed above,telephone (816) 926–7730.SUPPLEMENTARY INFORMATION:Executive Order No. 12866The amendments set forth in thisproposed rule contain informationcollection that requires clearance by theOffice of Management and Budget(OMB) under provisions of 44 U.S.C.chapter 35.Paperwork Reduction Act of 1995The information collectionrequirements contained in theseregulations were previously approvedby OMB pursuant to the PaperworkReduction Act of 1995 (44 U.S.C.chapter 35) under OMB control number0563–0003 through September 30, 1998.Section 7 of the 1998 Plum CropProvisions adds interplanting as aninsurable farming practice as long as itis interplanted with another perennialcrop and does not adversely affect theinsured crop. This practice was notinsurable under the previous fresh plumendorsement and the General CropInsurance Policy 88–G (REV 3–91) towhich it attached. Consequently,interplanting information will need tobe collected using the FCI–12–P Pre-Acceptance Perennial Crop InspectionReport form for approximately twopercent of the insureds who interplanttheir plum crop. Standard interplantinglanguage has been added to mostperennial crops to make insuranceavailable for more perennial cropproducers and reduce the acreage thatwill need to be placed into thenoninsured crop disaster assistanceprogram (NAP).The other amendments set forth inthis proposed rule to not containadditional information collections thatrequire clearance by OMB under theprovisions of 44 U.S.C. chapter 35.The title of this information collectionis ‘‘Catastrophic Risk Protection Planand Related Requirements including,Common Crop Insurance Regulations;Plum Crop Insurance Provision.’’ Theinformation to be collected includes acrop insurance application and anacreage report. Information collectedfrom the application and acreage reportis electronically submitted to FCIC bythe reinsured companies. Potentialrespondents to this informationcollection are producers of plums thatare eligible for Federal crop insurance.The information requested isnecessary for the reinsured companiesand FCIC to provide insurance andreinsurance, determine eligibility,determine the correct parties to theagreement or contract, determine andcollect premiums or other monetaryamounts, and pay benefits.All information is reported annually.The reporting burden for this collectionof information is estimated to average16.9 minutes per response for each ofthe 3.6 responses from approximately1,755,015 respondents. The total annualburden on the public for the informationcollection is 2,669,932 hours.FCIC is requesting comments on thefollowing: (a) Whether the proposedcollection of information is necessaryfor the proper performance of thefunctions of the agency, includingwhether the information shall havepractical utility; (b) the accuracy of theagency’s estimate of the burden of theproposed collection of information; (c)ways to enhance the quality, utility, andclarity of the information to becollected; and (d) ways to minimize theburden of the collection of informationon respondents, including through theuse of automated collection techniquesor other forms of information gatheringtechnology.Comments regarding paperworkreduction should be submitted to theDesk Officer for Agriculture, Office ofInformation and Regulatory Affairs,Office of Management and Budget,Washington, DC 20503.OMB is required to make a decisionconcerning the collections ofinformation contained in theseproposed regulations between 30 and 60days after submission to OMB.Therefore, a comment to OMB is bestassured of having full effect if OMBreceives it within 30 days ofpublication. This does not affect thedeadline for the public to comment onthe proposed regulation.Unfunded Mandates Reform Act of1995Title II of the Unfunded MandatesReform Act of 1995 (UMRA), PublicLaw 104–4, establishes requirements for

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6135Federal agencies to assess the effects oftheir regulatory actions on state, local,and tribal governments and the privatesector. This rule contains no Federalmandates (under the regulatoryprovisions of Title II of the UMRA) forstate, local, and tribal governments orthe private sector. Thus, the rule is notsubject to the requirements of section202 and 205 of the UMRA.Executive Order No. 12612It has been determined under section6(a) of Executive Order No. 12612,Federalism, that this rule does not havesufficient federalism implications towarrant the preparation of a FederalismAssessment. The provisions containedin this rule will not have a substantialdirect effect on states or their politicalsubdivisions, or on the distribution ofpower and responsibilities among thevarious levels of government.Regulatory Flexibility ActThis regulation will not have asignificant impact on a substantialnumber of small entities. Newprovisions included in this rule will notimpact small entities to a greater extentthan large entities. Under the currentregulations, a producer is required tocomplete an application and acreagereport. If the crop is damaged ordestroyed, the insured is required togive notice of loss and provide thenecessary information to complete aclaim for indemnity. The producer mustalso annually certify to the previousyears production, if adequate recordsare available to support the certification,or receive a transitional yield. Theproducer must maintain the productionrecords to support the certifiedinformation for at least three years. Thisregulation does not alter thoserequirements. The amount of workrequired of the insurance companiesdelivering and servicing these policieswill not increase significantly from theamount of work currently required. Thisrule does not have any greater or lesserimpact on the producer. Therefore, thisaction is determined to be exempt fromthe provisions of the regulatoryFlexibility Act (5 U.S.C. 605), and noRegulatory Flexibility Analysis wasprepared.Federal Assistance ProgramThis program is listed in the Catalogof Federal Domestic Assistance underNo. 10.450.Executive Order No. 12372This program is not subject to theprovisions of Executive Order No.12372, which require intergovernmentalconsultation with state and localofficials. See the Notice related to 7 CFRpart 3015, subpart V, published at 48 FR29115, June 24, 1983.Executive Order No. 12778The Office of the General Counsel hasdetermined that these regulations meetthe applicable standards provided insections 2(a) and 2(b)(2) of ExecutiveOrder No. 12778. The provisions of thisrule will not have a retroactive effectprior to the effective date. Theprovisions of this rule will preemptstate and local laws to the extent suchstate and local laws are inconsistentherewith. The administrative appealprovisions published at 7 CFR part 11must be exhausted before any action forjudicial review may be brought.Environmental EvaluationThis action is not expected to have asignificant impact on the quality of thehuman environment, health, and safety.Therefore, neither an EnvironmentalAssessment nor an EnvironmentalImpact Statement is needed.National Performance ReviewThis regulatory action is being takenas part of the National PerformanceReview Initiative to eliminateunnecessary or duplicative regulationsand improve those that remain in force.BackgroundFCIC proposes to add to the CommonCrop Insurance Regulations (7 CFR part457), a new section, 7 CFR 457.157,Plum Crop Insurance Provisions. Thenew provisions will be effective for the1998 and succeeding crop years. Theseprovisions will replace and supersedethe current provisions for insuring freshplums found at 7 CFR 401.146 (FreshPlum Endorsement). FCIC also proposesto amend § 401.146 to limit its effect tothe 1997 and prior crop years. FCIC willlater publish a regulation to remove andreserve § 401.146.This rule makes minor editorial andformat changes to improve the FreshPlum Endorsement’s compatibility withthe Common Crop Insurance Policy. Inaddition, FCIC is proposing substantivechanges in the provisions for insuringplums as follows:1. Remove the word ‘‘fresh’’ from thetitle of the policy since plums marketedfor uses other than fresh packed arecovered.2. Section 1—Add definitions for theterms ‘‘days,’’ ‘‘direct marketing,’’ ‘‘goodfarming practice,’’ ‘‘interplanted,’’‘‘irrigated practice,’’ ‘‘non-contiguous,’’‘‘pitburn and sunburn,’’ ‘‘productionguarantee (per acre),’’ ‘‘scion,’’ ‘‘varietalgroup,’’ and ‘‘written agreement’’ forclarification purposes.3. Section 2(e)(3)(ii)—Add optionalunits by varietal group to be consistentwith other policies that offer insuranceby crop variety.4. Section 3(a)—Specify that theinsured may select only one priceelection for all the plums in the countyinsured under this policy, unless theSpecial Provisions provide differentprice elections by varietal group, inwhich case the insured may select oneprice election for each varietal group.The price election the insured selectsmust have the same percentagerelationship to the maximum priceoffered. This helps to protect againstadverse selection and simplifiesadministration of the program.5. Section 3(b)—Specify that aninsured must report damage, removal oftrees, and any change in practice thatmay reduce yields. For the first year ofinsurance for acreage interplanted withanother perennial crop and anytime theplanting pattern of such acreage ischanged, the insured must report theage and varietal group, if applicable, ofany interplanted perennial crop, itsplanting pattern, and any otherinformation needed to establish theapproved yield. If the insured fails tonotify the insurer of factors that mayreduce yields from previous levels, theinsurer will reduce the productionguarantee at any time the insurerbecomes aware of damage, removal oftrees, or changes in practices. Thisallows the insurance provider to limitliability, if necessary, before insuranceattaches.6. Section 6—Remove the provisionthat restricts crop insurance coverage ifplums are harvested directly by thepublic. Section 10(b) of the proposedrule requires the insured to notify theinsurance provider at least 15 daysbefore any production from any unitwill be sold by direct marketing in orderto accurately determine production tocount.7. Section 6(d)—Specify that at least200 lugs per acre must have beenproduced in at least one of the threemost recent actual production historycrop years. Previous regulationsrequired a minimum of 200 lugs peracre of fresh market production in theprevious crop year unless the acreage isinspected by us and approved forcoverage. Basing the required minimumproduction on only the previous cropyear is too restrictive considering thatone year of adverse growing conditionswould exclude eligibility for cropinsurance.8. Section 6(f)—Allow insurance forplums produced on scions that have notreached the fifth growing season afterbeing grafted to established rootstock. If

6136 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesall other requirements for insurabilityhave been met, the crop should makethe approved yield.9. Section 7—Allow insurance forplums interplanted with anotherperennial crop in order to makeinsurance available on more acreage andreduce the reliance on the noninsuredcrop disaster assistance program (NAP)for protection against crop losses.10. Section 8(a)(1)—Specify that theinsurance period begins on February 1of each crop year, except for the year ofapplication, if the application isreceived after January 22 but prior toFebruary 1, insurance will attach on the10th day after the application isreceived in the insurance provider’slocal office unless the acreage isinspected during the 10 day period anddoes not meet insurability requirements.This provision is consistent with otherperennial crops to prevent producersfrom obtaining insurance only whenthey know a loss is likely.11. Section 8(b)—Add provisions toclarify the procedures when aninsurable share is acquired orrelinquished on or before the acreagereporting date.12. Section 9(a)(2)—Add pitburn andsunburn as insured causes of loss sincethey are common causes of loss.13. Section 9(c)(1)—Clarify thatdisease and insect infestation areexcluded causes of loss unless adverseweather prevents the proper applicationof control measures, causes controlmeasures to be ineffective whenproperly applied, or causes disease orinsect infestation for which no effectivecontrol mechanism is available.14. Section 10(a)—Specify the noticerequirements if the orchard has suffereda loss, and the crop will not beharvested, in order to permit timelyappraisal of any loss.15. Section 10(b)—Require theproducer to give notice at least 15 daysprior to harvest so a preharvestinspection can be made if the insuredintends to engage in direct marketing toconsumers. This is necessary to permitan accurate appraisal of production tocount because it is difficult to verifyproduction that is directly marketed toconsumers.16. Section 10(c)—Require theproducer to give at least 15 days noticeprior to the beginning of harvest orimmediately if damage is discoveredduring harvest to permit the insuranceprovider to make a timely inspection.17. Section 10(d)—Prohibit theinsured from selling or otherwisedisposing of any damaged productionuntil consent is given by the insuranceprovider.18. Section 11(c)(2)(i)—Change thequality specifications for determiningproduction to count from U.S. Number1 standards to the California MarketingOrder grade requirements in effect forthe crop year, since such grade orderrequirements better correspond with thequality specifications used by the plumindustry.19. Sections 11(c)(2)(ii)—Specify theadjustment of the production to countfor harvested production that is packedand sold as fresh fruit but does not meetCalifornia Marketing Order graderequirements.20. Sections 11(c)(2)(iii)—Specify theadjustment of the production to countfor harvested production that is or couldbe marketed for any use other than freshpacked plums.21. Section 12—Add provisions forproviding insurance covered by writtenagreement. FCC has a long standingpolicy of permitting certainmodifications of the insurance contractsby written agreement for some policies.This amendment allows FCC to tailorthe policy to a specific insured incertain instances. The new section willcover the application for and duration ofwritten agreements.List of Subjects in 7 CFR Parts 401 and457Crop insurance, Fresh plumsendorsement, Plums.Proposed RuleAccordingly, for the reasons set forthin the preamble, the Federal CropInsurance Corporation hereby proposesto amend 7 CFR parts 401 and 457 asfollows:PART 401—GENERAL CROPINSURANCE REGULATIONS—REGULATIONS FOR THE 1988 ANDSUBSEQUENT CONTRACT YEARS1. The authority citation for 7 CFRpart 401 continues to read as follows:Authority: 7 U.S.C. 1506(l), 1506(p).2. The introductory text of § 401.146is revised to read as follows:§ 401.146 Fresh plum endorsement.The provisions of the Fresh PlumCrop Insurance Endorsement for the1990 through the 1997 crop years are asfollows:* * * * *PART 457–COMMON CROPINSURANCE REGULATIONS;REGULATIONS FOR THE 1994 ANDSUBSEQUENT CONTRACT YEARS3. The authority citation for 7 CFRpart 457 continues to read as follows:Authority: 7 U.S.C. 1506(l), 1506(p).4. 7 CFR part 457 is amended byadding a new § 457.157 to read asfollows:§ 457.157 Plum Crop InsuranceProvisions.The Plum Crop Insurance Provisionsfor the 1998 and succeeding crop yearsare as follows:FCIC policies:Department of AgricultureFederal Crop Insurance CorporationReinsured policies:(Appropriate title for insurance provider)Both FCIC and reinsured policies:Plum Crop ProvisionsIf a conflict exists among the BasicProvisions (§ 457.8), these crop provisions,and the Special Provisions; the SpecialProvisions will control these crop provisionsand the Basic Provisions; and these cropprovisions will control the Basic Provisions.1. Definitions.Days—Calendar days.Direct marketing—Sale of the insured cropdirectly to consumers without theintervention of an intermediary such as awholesaler, retailer, packer, processor,shipper, or buyer. Examples of directmarketing include selling through an on-farmor roadside stand, farmer’s market, andpermitting the general public to enter thefield for the purpose of picking all or aportion of the crop.Good farming practices—The culturalpractices generally in use in the county forthe crop to make normal progress towardmaturity and produce at least the yield usedto determine the production guarantee, andare those recognized by the Cooperative StateResearch, Education, and Extension Serviceas compatible with agronomic and weatherconditions in the county.Harvest—The picking of mature plumsfrom the trees either by hand or machine.Interplanted—Acreage on which two ormore crops are planted in any form ofalternating or mixed pattern.Irrigated practice—A method of producinga crop by which water is artificially appliedduring the growing season by appropriatesystems and at the proper times, with theintention of providing the quantity of waterneeded to produce at least the yield used toestablish the irrigated production guaranteeon the irrigated acreage planted to theinsured crop.Lug—Twenty-eight (28) pounds of theinsured crop.Non-contiguous—Any two or more tractsof land whose boundaries do not touch at anypoint, except that land separated only by apublic or private right-of-way, waterway, oran irrigation canal will be considered ascontiguous.Pitburn and sunburn—Damage to freshfruit as a result of excessive heat.Production guarantee (per acre)—Thenumber of lugs of plums determined bymultiplying the approved APH yield per acreby the coverage level percentage you elect.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6137Scion—Twig or portion of a twig of oneplant that is grafted on to a stock of another.Varietal group—Different varieties ofplums that are grouped according to thenormal maturity dates as specified in theSpecial Provisions.Written agreement—A written documentthat alters designated terms of this policy inaccordance with section 12.2. Unit Division.(a) Unless limited by the SpecialProvisions, a unit as defined in section 1(Definitions) of the Basic Provisions (§ 457.8)(basic unit), may be divided into optionalunits if, for each optional unit, you meet allthe conditions of this section or if a writtenagreement to such division exists.(b) Basic units may not be divided intooptional units on any basis other than asdescribed in this section.(c) If you do not comply fully with theseprovisions, we will combine all optionalunits that are not in compliance with theseprovisions into the basic unit from whichthey were formed. We will combine theoptional units at any time we discover thatyou have failed to comply with theseprovisions. If failure to comply with theseprovisions is determined to be inadvertent,and the optional units are combined into abasic unit, that portion of the additionalpremium paid for the optional units thathave been combined will be refunded to youfor the units combined.(d) All optional units you selected for thecrop year must be identified on the acreagereport for that crop year.(e) The following requirements must bemet for each optional unit:(1) You must have records, which can beindependently verified, of acreage andproduction for each optional unit for at leastthe last crop year used to determine yourproduction guarantee;(2) You must have records of marketedproduction or measurement of storedproduction from each optional unitmaintained in such a manner that permits usto verify the production from each optionalunit, or the production from each unit mustbe kept separate until loss adjustment iscompleted by us; and(3) Each optional unit must meet one ormore of the following criteria, as applicable:(i) Optional Units on Acreage Located onNon-Contiguous Land: Optional units may beestablished if each optional unit is located onnon-contiguous land.(ii) Optional Units on Acreage by VarietalGroup: In addition to, or instead of,establishing optional units on noncontiguousland, optional units may beestablished by varietal group when providedfor in the Special Provisions.3. Insurance Guarantees, Coverage Levels,and Prices for Determining Indemnities.In addition to the requirements of section3 (Insurance Guarantees, Coverage Levels,and Prices for Determining Indemnities) ofthe Basic Provisions (§ 457.8):(a) You may select only one price electionfor all the plums in the county insured underthis policy unless the Special Provisionsprovide different price elections by varietalgroup, in which case you may select oneprice election for each plum varietal groupdesignated in the Special Provisions. Theprice elections you choose for each varietalgroup must have the same percentagerelationship to the maximum price offered byus for each varietal group. For example, ifyou choose 100 percent of the maximumprice election for one varietal group, youmust also choose 100 percent of themaximum price election for all other varietalgroups.(b) You must report, by the productionreporting date designated in section 3(Insurance Guarantees, Coverage Levels, andPrices for Determining Indemnities) of theBasic Provisions (§ 457.8), by varietal groupif applicable:(1) Any damage, removal of trees, changein practices, or any other circumstance thatmay reduce the expected yield below theyield upon which the insurance guarantee isbased, and the number of affected acres;(2) The number of bearing trees oninsurable and uninsurable acreage;(3) The age of the trees and the plantingpattern; and(4) For the first year of insurance foracreage interplanted with another perennialcrop, and anytime the planting pattern ofsuch acreage is changed:(i) The age of the interplanted crop andvarietal group if applicable;(ii) The planting pattern; and(iii) Any other information that we requestin order to establish your approved yield.We will reduce the yield used to establishyour production guarantee as necessary,based on our estimate of the effect ofinterplanting a perennial crop, removal oftrees, damage, change in practice, and anyother circumstance that may effect the yieldpotential of the insured crop. If you fail tonotify us of any circumstance that mayreduce your yields from previous levels, wewill reduce your production guarantee asnecessary at any time we become aware ofthe circumstance.4. Contract Changes.In accordance with section 4 (ContractChanges) of the Basic Provisions (§ 457.8),the contract change date is October 31preceding the cancellation date.5. Cancellation and Termination Dates.In accordance with section 2 (Life ofPolicy, Cancellation, and Termination) of theBasic Provisions (§ 457.8), the cancellationand termination dates are January 31.6. Insured Crop.In accordance with section 8 (InsuredCrop) of the Basic Provisions (§ 457.8), thecrop insured will be all the plums in thecounty for which a premium rate is providedby the actuarial table:(a) In which you have a share;(b) That are grown on tree varieties that:(1) Were commercially available when thetrees were set out;(2) Are adapted to the area;(3) Are grown on rootstock that is adaptedto the area; and(4) Are regulated by the CaliforniaAdvisory Board Standards, a related cropadvisory board, or the state;(c) That are irrigated;(d) That have produced an average of atleast 200 lugs per acre in at least one of thethree most recent actual production historycrop years, unless we inspect such acreageand give our approval in writing;(e) That are grown in an orchard that, ifinspected, is considered acceptable by us;and(f) That have reached at least the fifth (5th)growing season after set out. Plums producedon scions that have not reached the fifthgrowing season may be insured if theprovisions in section 6 (a), (b), (c), and (e) aremet. Such trees must have produced at least200 lugs per acre in at least one year afterbeing grafted.7. Insurable Acreage.In lieu of the provisions in section 9(Insurable Acreage) of the Basic Provisions(§ 457.8) that prohibit insurance attaching toa crop planted with another crop, plumsinterplanted with another perennial crop areinsurable unless we inspect the acreage anddetermine that it does not meet therequirements contained in your policy.8. Insurance Period.(a) In accordance with the provisions ofsection 11 (Insurance Period) of the BasicProvisions (§ 457.8):(1) Coverage begins on February 1 of eachcrop year, except that for the year ofapplication, if your application is receivedafter January 22 but prior to February 1,insurance will attach on the 10th day afteryour properly completed application isreceived in our local office unless we inspectthe acreage during the 10 day period anddetermine that it does not meet insurabilityrequirements. You must provide anyinformation that we require for the crop orto determine the condition of the orchard.(2) The calendar date for the end of theinsurance period for each crop year isSeptember 30.(b) In addition to the provisions of section11 (Insurance Period) of the Basic Provisions(§ 457.8):(1) If you acquire an insurable share in anyinsurable acreage after coverage begins but onor before the acreage reporting date for thecrop year, and after an inspection weconsider the acreage acceptable, insurancewill be considered to have attached to suchacreage on the calendar date for thebeginning of the insurance period.(2) If you relinquish your insurable shareon any insurable acreage of plums on orbefore the acreage reporting date for the cropyear, insurance will not be considered tohave attached to, and no premium orindemnity will be due for such acreage forthat crop year unless:(i) A transfer of coverage and right to anindemnity, or a similar form approved by us,is completed by all affected parties;(ii) We are notified by you or the transfereein writing of such transfer on or before theacreage reporting date; and(iii) The transferee is eligible for cropinsurance.9. Causes of Loss.(a) In accordance with the provisions ofsection 12 (Causes of Loss) of the BasicProvisions (§ 457.8), insurance is providedonly against the following causes of loss thatoccur during the insurance period:(1) Adverse weather conditions;(2) Pitburn and sunburn;(3) Fire, unless weeds and other forms ofundergrowth have not been controlled or

6138 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulespruning debris has not been removed fromthe orchard;(4) Wildlife;(5) Earthquake;(6) Volcanic eruption;(7) An insufficient number of chillinghours to effectively break dormancy; or(8) Failure of the irrigation water supply,if caused by an insured peril that occursduring the insurance period.(b) In addition to the causes of lossexcluded in section 12 (Causes of Loss) of theBasic Provisions (§ 457.8), we will not insureagainst damage or loss of production due to:(1) Disease or insect infestation, unlessadverse weather:(i) Prevents the proper application ofcontrol measures or causes properly appliedcontrol measures to be ineffective; or(ii) Causes disease or insect infestation forwhich no effective control mechanism isavailable;(2) Rejection of the crop by the packinghouse due to being undersized, immature,overripe, or mechanically damaged; or(3) Inability to market the plums for anyreason other than actual physical damagefrom an insurable cause specified in thissection. For example, we will not pay you anindemnity if you are unable to market due toquarantine, boycott, or refusal of any personto accept production.10. Duties In The Event of Damage or Loss.In addition to the requirements of section14 (Duties in the Event of Damage or Loss)of the Basic Provisions (§ 457.8), thefollowing will apply:(a) You must notify us within 3 days of thedate harvest should have started if the cropwill not be harvested.(b) You must notify us at least 15 daysbefore any production from any unit will besold by direct marketing. We will conduct anappraisal that will be used to determine yourproduction to count for production that issold by direct marketing. If damage occursafter this appraisal, we will conduct anadditional appraisal. These appraisals, andany acceptable records provided by you, willbe used to determine your production tocount. Failure to give timely notice thatproduction will be sold by direct marketingwill result in an appraised amount ofproduction to count of not less than theproduction guarantee per acre if such failureresults in our inability to make the requiredappraisal.(c) If you intend to claim an indemnity onany unit, you must notify us at least 15 daysprior to the beginning of harvest orimmediately if damage is discovered duringharvest, so that we may inspect the damagedproduction.(d) You must not sell or dispose of thedamaged crop until after we have given youwritten consent to do so. If you fail to notifyus and such failure results in our inability toinspect the damaged production, we mayconsider all such production to beundamaged and include it as production tocount.11. Settlement of Claim.(a) We will determine your loss on a unitbasis. In the event you are unable to provideseparate acceptable production records:(1) For any optional units, we will combineall optional units for which acceptableproduction records were not provided; or(2) For any basic units, we will allocate anycommingled production to such units inproportion to our liability on the harvestedacreage for the units.(b) In the event of loss or damage coveredby this policy, we will settle your claim by:(1) Multiplying the insured acreage foreach varietal group, if applicable, by itsrespective production guarantee;(2) Multiplying the results in section11(b)(1) by the respective price election foreach varietal group, if applicable;(3) Totaling the results in section 11(b)(2);(4) Multiplying the total production to becounted of each varietal group, if applicable,(see section 11(c)) by the respective priceelection;(5) Totaling the results in section 11(b)(4);(6) Subtracting the results in section11(b)(5) from the results in section 11 (b)(3);and(7) Multiplying the result in section11(b)(6) by your share.(c) The total production to count (in lugs)from all insurable acreage on the unit willinclude:(1) All appraised production as follows:(i) Not less than the production guaranteeper acre for acreage:(A) That is abandoned;(B) That is sold by direct marketingdirectly if you fail to meet the requirementcontained in section 10;(C) That is damaged solely by uninsuredcauses; or(D) For which you fail to provideproduction records that are acceptable to us.(ii) Production lost due to uninsuredcauses;(iii) Unharvested production; and(iv) Potential production on insuredacreage that you intend to abandon or nolonger care for, if you and we agree on theappraised amount of production. Upon suchagreement, the insurance period for thatacreage will end. If you do not agree with ourappraisal, we may defer the claim only if youagree to continue to care for the crop. We willthen make another appraisal when you notifyus of further damage or that harvest is generalin the area unless you harvested the crop, inwhich case we will use the harvestedproduction. If you do not continue to care forthe crop, our appraisal made prior todeferring the claim will be used to determinethe production to count; and(2) All harvested production from theinsurable acreage:(i) That is packed and sold as fresh fruitand meets the California Marketing Ordergrade requirements, as amended, in effect forthe applicable crop year;(ii) That is packed and sold as fresh fruitbut does not meet the grade requirementsspecified in section 11(c)(2)(i) due toinsurable causes. Such production will beadjusted by:(A) Dividing the value per lug of thisproduction by the highest price electionavailable for the applicable varietal group;and(B) Multiplying the resulting factor, if lessthan 1.0, by the number of lugs of suchplums.(iii) That is damaged and is, or could be,marketed for any use other than fresh packedplums. Such production will be adjusted by:(A) Multiplying the number of tons of suchproduction by the value per ton of thedamaged plums or $50.00, whichever isgreater; and(B) Dividing that result by the highest priceelection available for the applicable varietalgroup.12. Written agreement.Designated terms of this policy may bealtered by written agreement in accordancewith the following:(a) You must apply in writing for eachwritten agreement no later than the salesclosing date, except as provided in section12(e);(b) The application for a written agreementmust contain all terms of the contractbetween you and us that will be in effect ifthe written agreement is not approved;(c) If approved, the written agreement willinclude all variable terms of the contract,including, but not limited to, crop variety,the guarantee, premium rate, and priceelection;(d) Each agreement will only be valid forone year (If the written agreement is notspecifically renewed the following year,insurance coverage for subsequent crop yearswill be in accordance with the printedpolicy); and(e) An application for written agreementsubmitted after the sales closing date may beapproved if, after physical inspection of theacreage, it is determined that no loss hasoccurred and the crop is insurable inaccordance with the policy and writtenagreement provisions.Signed in Washington, DC, on February 6,1997.Kenneth D. Ackerman,Manager, Federal Crop InsuranceCorporation.[FR Doc. 97–3330 Filed 2–10–97; 8:45 am]BILLING CODE 3410–FA–PAgricultural Marketing Service7 CFR Part 980[Docket No. FV96–980–1 PR]Vegetables; Import Regulations;Reopening of Comment Period forFiling Written Comments on Removalof Banana and Fingerling Types ofPotatoes and Exemption of Potatoesfor Potato Salad From the PotatoImport RegulationAGENCY: Agricultural Marketing Service,USDA.ACTION: Proposed rule; reopeningcomment period.SUMMARY: Notice is hereby given thatthe comment period on the proposedremoval of banana and fingerling typesof potatoes and exemption of potatoesfor potato salad from the potato import

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6139regulation is reopened until March 13,1997.DATES: Comments must be received byMarch 13, 1997.ADDRESSES: Interested persons areinvited to submit written commentsconcerning this proposal. Commentsmust be sent in triplicate to the DocketClerk, Fruit and Vegetable Division,AMS, USDA, room 2525–S, P.O. Box96456, Washington, DC 20090–6456,Fax Number (202) 720–5698. Allcomments should reference the docketnumber and the date and page numberof this issue of the Federal Register andwill be available for public inspection inthe Office of the Docket Clerk duringregular business hours.FOR FURTHER INFORMATION CONTACT: TomTichenor, Marketing OrderAdministration Branch, F&V, AMS,USDA, room 2525–S, P.O. Box 96456,Washington, DC 20090–6456: telephone:(202) 720–6862. Small businesses mayrequest information on compliance withthis proposed regulation by contacting:Jay Guerber, Marketing OrderInformation Branch, Fruit and VegetableDivision, AMS, USDA, P.O. Box 96456,room 2525–S, Washington, DC 20090–6456; telephone: (202) 720–2491; Faxnumber: (202) 720–5698.SUPPLEMENTARY INFORMATION: Aproposed rule was issued on December23, 1996, and published in the FederalRegister (61 FR 67499). The proposedrule would: (1) Remove banana/fingerling potatoes from provisions ofthe potato import regulation (importregulation) and; (2) reclassify potatoesused to make fresh potato salad aspotatoes for processing. The commentperiod ended January 22, 1997.The National Potato Council (Council)requested that additional time beprovided for interested persons toanalyze the proposed rule. The Councilstated that members of the industryneed additional time to review allavailable information before makingfinal comments on the proposed rule.Reopening the comment period toMarch 13, 1997, would allow theCouncil and other interested personsmore time to review the proposed rule,perform a more complete analysis, andsubmit any written comments.This delay should not substantiallyadd to the time required to completethis rulemaking action. Accordingly, theperiod in which to file writtencomments is reopened until March 13,1997. This notice is issued pursuant tothe Agricultural Marketing AgreementAct of 1937.Authority: 7 U.S.C. 601–674.Dated: February 5, 1997.Robert C. Keeney,Director, Fruit and Vegetable Division.[FR Doc. 97–3285 Filed 2–10–97; 8:45 am]BILLING CODE 3410–02–PFEDERAL DEPOSIT INSURANCECORPORATION12 CFR Part 312RIN 3064–AC01Prevention of Deposit ShiftingAGENCY: Federal Deposit InsuranceCorporation (FDIC).ACTION: Proposed rule.SUMMARY: The proposed rule wouldimplement a new statute to prevent theshifting of deposits insured under theSavings Association Insurance Fund(SAIF) to deposits insured under theBank Insurance Fund (BIF) for thepurpose of evading the assessment ratesapplicable to SAIF deposits.DATES: Written comments must bereceived by the FDIC on or before April14, 1997.ADDRESSES: Written comments are to beaddressed to the Office of the ExecutiveSecretary, Federal Deposit InsuranceCorporation, 550 17th Street, NW.,Washington, DC 20429. Comments maybe hand-delivered to Room F–402, 1776F Street, NW., Washington, DC 20429,on business days between 8:30 a.m. and5 p.m. (FAX number: (202) 898–3838;Internet address: comments@FDIC.gov).Comments will be available forinspection in the FDIC PublicInformation Center, room 100, 801 17thStreet, NW., Washington, DC, between9:00 a.m. and 5:00 p.m. on businessdays.FOR FURTHER INFORMATION CONTACT:Joseph A. DiNuzzo, Counsel, (202) 898–7349; Richard J. Osterman, SeniorCounsel, (202) 898–3523, LegalDivision; or George Hanc, AssociateDirector, Division of Research andStatistics, (202) 898-8719, FederalDeposit Insurance Corporation,Washington, DC 20429.SUPPLEMENTARY INFORMATION:I. The Proposed RuleA. The Funds Act and the DepositShifting StatuteThe Deposit Insurance Funds Act of1996 (Funds Act) was enacted as part ofthe Economic Growth and RegulatoryPaperwork Reduction Act of 1996,Public Law 104–208, 110 Stat. 3009 etseq., sections 2701–2711, and becameeffective September 30, 1996. TheFunds Act provides for thecapitalization of the SAIF through aspecial assessment on all depositoryinstitutions that hold SAIF-assessabledeposits. Pursuant to this requirement,the FDIC recently issued a final ruleimposing a special assessment oninstitutions holding SAIF-assessabledeposits in an amount sufficient toincrease the SAIF reserve ratio (SAIFreserve ratio) to the designated reserveratio (DRR) of 1.25 percent as of October1, 1996. 61 FR 53834 (Oct. 16, 1996), tobe codified at 12 CFR 327.41.Another provision of the Funds Act,entitled ‘‘Prohibition on DepositShifting’’ (deposit shifting statute),requires the Comptroller of theCurrency, the Board of Directors of theFDIC, the Board of Governors of theFederal Reserve System, and theDirector of the Office of ThriftSupervision (federal banking agencies)to take ‘‘appropriate actions’’ to preventinsured depository institutions andholding companies from ‘‘facilitating orencouraging’’ the shifting of depositsfrom SAIF-assessable deposits to BIFassessabledeposits for the purpose ofevading the assessments applicable toSAIF-assessable deposits. 1 Funds Act,section 2703(d). The ‘‘appropriateactions’’ suggested in the depositshifting statute are: denial ofapplications, enforcement actions andthe imposition of entrance and exit fees.The statute also specifies that itsprovisions shall not be construed toprohibit conduct or activity by anyinsured depository institution that isundertaken in the ‘‘ordinary course ofbusiness’’ and is not directed towardsdepositors of an insured depositoryinstitution affiliate of the insuredinstitution.The statute authorizes the FDIC toissue regulations, including regulationsdefining terms used in the statute, toprevent the shifting of deposits. Thedeposit shifting statute terminates onthe earlier of December 31, 1999, or thedate on which the last savingsassociation ceases to exist.B. Need for a Regulation on DepositShiftingThe issuance of a regulation wouldprovide guidance to the industry on themeaning and impact of the depositshifting statute. This is particularlyimportant in light of the relationship ofthe deposit shifting statute to section1 Although currently the range of risk-basedassessments for BIF-assessable and SAIF-assessabledeposits is the same, a higher assessment payableto the Financing Corporation must be paid on SAIFassessabledeposits. Thus, the overall assessment ishigher for SAIF-assessable deposits than for BIFassessabledeposits.

6140 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules5(d)(2) of the FDI Act (12 U.S.C.1815(d))(section 5(d)(2)).Section 5(d)(2) applies to conversionsof depository institutions from onedeposit insurance fund to the other. Inrelevant part, it provides that: (1)Institutions may not engage in a‘‘conversion transaction’’ without theFDIC’s prior approval; and (2)institutions that engage in an insurancefundconversion must pay prescribedentrance and exit fees. Until recently,with certain specified exceptions,depository institutions were prohibitedby section 5(d)(2) from engaging inconversion transactions. 12 U.S.C.1815(d)(2)(A)(ii). The statute specified,however, that the ‘‘conversionmoratorium’’ would expire when SAIFreached or exceeded its DRR. BecauseSAIF recently reached its DRR, theconversion moratorium no longerapplies; therefore, an institution mayconvert from one fund to another aslong as the FDIC approves theconversion and the institution pays theprescribed entrance and exit fees.The requirement in section 5(d)(2)that converting institutions pay entranceand exit fees underscores the need toimpose entrance and exit fees under thedeposit migration statute: If insureddepository institutions were permittedto shift deposits from a SAIF-insuredinstitution to a BIF-insured institutionoutside the scope of section 5(d)(2),then—but for the existence of thedeposit shifting statute—they would beable to evade the entrance and exit feesimposed by section 5(d)(2) for such fundconversions. The FDIC interprets thedeposit shifting statute, therefore, inpart, to be intended to preserve theintegrity of the fee-paymentrequirements in section 5(d)(2). Indeed,as indicated above, the deposit shiftingstatue specifies that one of the‘‘appropriate actions’’ the agencies maytake to prevent deposit shifting is the‘‘imposition of entrance and exit fees asif such transaction qualified as aconversion transaction pursuant tosection 5(d).’’C. Explanation of the Proposed RuleThe proposed rule is intended tointerpret and implement the depositshifting statute. The proposed ruleconsists of two basic provisions. Thefirst would reiterate the requirement inthe deposit shifting statute that thefederal banking agencies denyapplications and object to notices filedwith them by depository institutions ordepository institution holdingcompanies if the agency determines thatthe transaction for which theapplication or notice is filed is for thepurpose of evading assessmentsimposed on insured depositoryinstitutions with respect to SAIFassessabledeposits. The secondprovision of the proposed rule wouldestablish a presumption under whichentrance and exit fees would beimposed upon depository institutionsfor deposits that are shifted from SAIFassessabledeposits to BIF-assessabledeposits within the contemplation ofthe deposit shifting statute.1. ApplicationsAs noted, the proposed rule reiteratesthe statutory requirement that thefederal banking agencies denyapplications or object to notices if thetransaction for which the application ornotice is filed is for the purpose ofevading SAIF assessments. Theproposed regulation is drafted toencompass any type of application ornotice that might involve depositshifting. It is anticipated that therespective agency would determine thepurpose of the application or noticefrom the materials submitted by thedepository institution or holdingcompany. For example, certain types ofapplications require the filing of abusiness plan which describes thecorporate strategy for and objective ofthe proposed transaction. If the agency’sreview of the business plan indicatesthat the purpose of a proposedtransaction is to shift deposits in orderto evade SAIF assessments, then theagency would deny the application. If abusiness plan is not required to be filedwith an application that might raise aconcern about deposit shifting, then thereviewing agency would otherwisedetermine, based on a review of thematerials provided with the applicationand other available information,whether the underlying purpose of theapplication is to shift deposits withinthe contemplation of the depositshifting statute. All such applicationdeterminations would be made on acase-by-case basis within the agency’sdiscretion. It is also likely that theagencies would condition applicationapprovals on compliance with therequirements of the deposit shiftingstatute.2. Entrance and Exit Fees for DepositShiftingThe proposed rule would establish apresumption under which entrance andexit fees would be imposed upondepository institutions that engage indeposit shifting for the purpose ofevading SAIF assessments. The amountsof the entrance and exit fees would bethose prescribed in part 312 of theFDIC’s regulations (12 CFR part 312).Under the proposed rule the FDICwould use a rebuttable-presumptionapproach to determine whetherdepository institutions have engaged indeposit shifting and, therefore, must payentrance and exit fees. To implementthis approach the FDIC would identifyall bank holding companies and savingsand loan holding companies with bothBIF- and SAIF-member subsidiaries anddetermine each holding company’saggregate average percentage of BIF andSAIF deposits for a period of time priorto the enactment of the deposit shiftingstatute on September 30, 1996. TheFDIC would then compare that averageto the percentage of each such holdingcompany’s BIF and SAIF deposits foreach quarter subsequent to theenactment of the deposit shiftingstatute. The FDIC would determinewhether any increase in the holdingcompany’s percentage of BIF depositsand decrease in its percentage of SAIFdeposits exceeded a normal rangerelative to the holding company’shistorical average and industry averages.If the FDIC determines, on a holdingcompany-by-holding-companybasis,that a BIF-insured institution’s increasein BIF-assessable deposits and decreasein SAIF-assessable deposits is above thenormal range and is not attributable tofactors other than deposit shifting, then,after consulting with each institution’sprimary federal regulator (where theFDIC is not the institution’s primaryfederal regulator) the FDIC would applythe rebuttable presumption that theincrease in BIF-assessable depositsresulted from deposit shiftingencouraged or facilitated by theapplicable depository institutions ortheir holding company for the purposeof evading SAIF assessments. 22 To determine whether a holding companyshould be subject to further scrutiny under theproposed rule, the FDIC would compute an averageratio of BIF-insured deposits to total deposits for allnon-Oakar affiliates of the holding company as ofthe fourth quarter of 1994. This value would becomputed as the average ratio of BIF-insureddeposits for the period from the third quarter of1989 to the fourth quarter of 1994, or the averageratio of BIF-insured deposits from the last quarterthat the holding company acquired or sold a non-Oakar affiliate through the fourth quarter of 1994.The average ratio would then be subtracted from theratio of BIF-insured deposits to total deposits ineach quarter of 1995 and subsequent years to yieldan adjusted BIF-insured deposit ratio. The adjustedratio for each holding company would be dividedby the standard deviation of adjusted ratios of BIFinsureddeposits for all holding companies for theentire period beginning with the first quarter of1995. The resulting value is compared with thevalue 1.65. If it exceeds 1.65, and assuming that theadjusted ratio is a normal random variable, therewould be less than a 5 percent chance that thechange in the BIF-insured deposit ratio is a randomevent. Holding companies for which the adjustedratio of BIF-insured deposits divided by thestandard deviation of adjusted ratios for all holdingcompanies after 1994 exceeded 1.65 would besubject to further scrutiny under the proposed rule.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6141The FDIC would have 90 days afterthe report date (currently the end of acalendar quarter) as of which theapplicable quarterly ConsolidatedReport of Condition and Income orThrift Financial Report (financialreports) of affiliated BIF-member andSAIF-member depository institutionsmust be filed in which to notify theinstitutions of the FDIC’s determinationand the intended imposition of theentrance and exit fees. The depositoryinstitutions would then have 30 daysfrom the date of the FDIC’s notificationto provide to the FDIC information andmaterials to demonstrate that theincrease in BIF-assessable deposits wasattributable to factors other than depositshifting encouraged or facilitated by thedepository institutions or their holdingcompany. Mergers, acquisitions andchanges in market conditions would beamong the types of factors that may besufficient to rebut the presumption ofintentional deposit shifting.The FDIC would review the materialsand information submitted, consult withthe institutions’ primary federalregulator(s) (if other than the FDIC),determine whether the entrance and exitfees should be imposed and, within 60days of receiving the institutions’materials and information, notify theinstitutions of the FDIC’s determination.If the determination is that fees must bepaid, then the institutions would berequired to remit payment to the FDICwithin 15 days of the notice. Theinstitutions then would have 30 daysafter such payment is made to appealthe determination to the FDIC.The details of the procedures forsubmitting materials and information toattempt to rebut the presumption ofdeposit shifting would be provided inwriting to depository institutions whenthey are informed of the FDIC’sintention to impose such fees.D. Effective DateThe FDIC’s review of financial reportsfor purposes of the possible impositionof entrance and exit fees under theproposed rule would begin with thereports filed as of the end of the first fullquarter following the effective date ofthe final rule on deposit shifting.Concurrent with this rulemaking effort,the FDIC is considering what, if any,action it should take to impose thedeposit shifting statute for the periodbetween the enactment date of thedeposit shifting statute (i.e., September30, 1996) and the effective date of thefinal rule on deposit shifting. Any suchaction would be on a case-by-case basisin consultation with the institutions’primary federal regulator(s), if otherthan the FDIC.E. Rationale for the Proposed RuleThe FDIC believes, preliminarily, thatthe proposed rule is the most effectivemeans of enforcing the requirements ofthe deposit shifting statute withoutimposing an undue burden ondepository institutions. A regulationattempting to restrict and controldepository institutions’ conduct andactivities, including advertising, wouldbe difficult to design, implement andenforce. Moreover, such restrictions andcontrols might impose a significantregulatory burden on the industry. Inaddition, FDIC efforts to control andrestrict advertising by depositoryinstitutions might raise FirstAmendment commercial free speechissues.The FDIC believes, preliminarily, thatthe approach used in the proposed rulestrikes the proper balance of enforcingthe law and limiting the regulatoryburden on depository institutions.II. Request for Public CommentThe FDIC is hereby requestingcomment during a 60-day commentperiod on all aspects of this proposedrule. Specifically, comments arerequested on alternate means ofimplementing and enforcing the depositshifting statute. For example, could andshould the statute be applied on a caseby-casebasis without an implementingregulation? And, if applied on a case-bycasebasis, what factors should beconsidered in determining whetherprohibited deposit shifting hasoccurred? More specifically, whatdepository institution conduct andactivities should the FDIC interpret asencouraging or facilitating depositshifting?Comments also are specificallyrequested on the meaning of the rule ofconstruction provided in the depositshifting statute that the statute shall notbe construed as prohibiting conduct oractivity ‘‘undertaken in the ordinarycourse of business * * * and * * * notdirected towards the depositors of aninsured depository institution affiliate* * *.’’ The FDIC would have tointerpret that rule of construction inconsidering whether to impose entranceand exit fees upon depositoryinstitutions.III. Paperwork Reduction ActNo collections of informationpursuant to section 3504(h) of thePaperwork Reduction Act of 1980 (44U.S.C. 3501 et seq.) are contained in thisproposed rule. Consequently, noinformation has been submitted to theOffice of Management and Budget forreview.IV. Regulatory Flexibility ActThe FDIC estimates that, currently,there are 135 bank holding companiesand savings and loan holdingcompanies that own both BIF-memberand SAIF-member affiliates. Thoseholding companies, in turn, ownapproximately 870 banks and thrifts, ofwhich about 250 have assets of $100million or less. Based on the FDIC’scalculations and projections, aninsubstantial number of those 250institutions would be subject to therebuttable presumption and otherprovisions of this proposed rule. Thus,the Board hereby certifies that theproposed rule would not have asignificant economic impact on asubstantial number of small entities 3within the meaning of the RegulatoryFlexibility Act (5 U.S.C. 601 et seq.).Therefore, the provisions of that Actregarding an initial and final regulatoryflexibility analysis (Id. at 603 & 604) donot apply here.List of Subjects in 12 CFR Part 312Bank deposit insurance, Savingsassociations.The Board of Directors of the FederalDeposit Insurance Corporation herebyproposes to amend part 312 of title 12of the Code of Federal Regulations asfollows:PART 312—ASSESSMENT OF FEESUPON ENTRANCE TO OR EXIT FROMTHE BANK INSURANCE FUND OR THESAVINGS ASSOCIATION INSURANCEFUND AND TREATMENT OFAPPLICATIONS AND NOTICES ANDTHE IMPOSITION OF ENTRANCE ANDEXIT FEES IN CONNECTION WITHDEPOSIT SHIFTING1. The part heading of Part 312 isrevised to read as set forth above.2. The authority citation for Part 312is revised to read as follows:Authority: 12 U.S.C. 1815(d), 1819.3. Section 312.11 is added to read asfollows:§ 312.11 Deposit shifting.(a) Purpose and scope. The purpose ofthis section is to implement section2703(d) of Public Law 104–208 whichbecame effective on September 30, 1996(110 Stat. 3009 et seq.). This sectionapplies to all insured depository3 The definition of ‘‘small business entity’’ derivesfrom the definition of a ‘‘small business concern.’’Part 121 of the Small Business Administration’srules and regulations (13 CFR part 121) providesthat any national bank or commercial bank, savingsassociation, or credit union with assets of $100million or less qualifies as a small businessconcern.

6142 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesinstitutions and depository institutionholding companies.(b) Applications and notices.Applications and notices filed by aninsured depository institution, aproposed or newly organized insureddepository institution or a depositoryinstitution holding company shall bedenied or objected to, respectively, bythe appropriate federal banking agencyif the agency determines, in itsdiscretion, that the proposed transactionfor which the application or notice isfiled is for the purpose of evadingassessments imposed on the applicableinsured depository institutions withrespect to SAIF-assessable depositsunder section 7(b) of the Act and section21(f)(2) of the Federal Home Loan BankAct (12 U.S.C. 1441(f)(2)).(c) Imposition of entrance and exitfees. (1) A depository institution thatencourages or facilitates the shifting ofdeposits from SAIF-assessable depositsto BIF-assessable deposits (as defined insection 21(k) of the Federal Home LoanBank Act (12 U.S.C. 1441(k)) for thepurpose of evading SAIF assessmentsshall pay entrance and exit fees, asprovided for in §§ 312.1 through 312.10,as if such deposit shifting constituted a‘‘conversion transaction’’ under section5(d) of the Act (12 U.S.C. 1815(d)).(2) Subject to the FDIC’sdetermination based on themethodology indicated in paragraph(c)(3) of this section, an abnormalincrease in a depository institution’sBIF-assessable deposits and acommensurate decrease in SAIFassessabledeposits of an affiliate of thatdepository institution within the samecalendar quarter shall be presumed to bethe result of deposit shifting for thepurpose of evading SAIF assessments.The entrance and exit fees to beimposed under paragraph (c)(1) of thissection shall apply to the dollar amountof the deposits shifted unless, pursuantto paragraph (c)(5) of this section, theaffiliated depository institutions rebutthe presumption that the increase inBIF-assessable deposits and thecommensurate decrease in SAIFassessabledeposits resulted fromdeposit shifting between the affiliatedinstitutions.(3) For purposes of this section, theFDIC shall obtain deposit data fromquarterly Consolidated Reports ofCondition and Income filed by insureddepository institutions with the FDICand from Thrift Financial Reports filedby insured savings associations with theOffice of Thrift Supervision, startingwith the reports filed for the periodending [on the last day of the first fullcalendar quarter after the effective dateof the final rule on deposit shifting].(4) The FDIC, in its discretion, willdetermine whether to presume that theincrease in an institution’s BIFassessabledeposits and thecommensurate decrease in the affiliatedinstitution’s SAIF-assessable depositsresulted from deposit shifting intendedto evade SAIF assessments by usingstatistical averages and trends for theapplicable affiliated depositoryinstitutions and industry averages andtrends, and other information availableto the FDIC. In determining whether toapply the rebuttable presumption, theFDIC will consult with the appropriatefederal banking agency(ies) in caseswhere the FDIC is not the appropriatefederal banking agency.(5) A depository institution will bedeemed to have rebutted thepresumption of deposit shifting if itprovides to the FDIC information andmaterials that the FDIC, in its discretion,determines demonstrate that theincrease in BIF-assessable deposits andthe commensurate decrease in SAIFassessabledeposits resulted from factorsother than efforts by the depositoryinstitutions or their holding company toencourage or facilitate the shifting ofdeposits for the purpose of evadingSAIF assessments.(6) The FDIC shall notify, in writing,the applicable depository institutions ofthe intended imposition of entrance andexit fees within 90 days after the reportdate of the Consolidated Reports ofCondition and Thrift Financial Reportsfrom which the FDIC determines toapply the rebuttable presumption underparagraph (c)(4) of this section. Thedepository institutions shall have 30days from the date of issuance of suchnotification to provide materials andinformation to the FDIC to rebut theaforementioned presumption. The FDICshall within 60 days of the receipt of thematerials and information consult withthe appropriate federal bankingagency(ies), if the FDIC is not theappropriate federal banking agency, anddetermine and notify the depositoryinstitutions whether they must payentrance and exit fees for depositshifting. If the FDIC indicates in suchnotice that the depository institutionsmust pay entrance and exit fees, thosefees shall be paid within 15 days of thereceipt of such notice. Within 30 daysof the payment of the fees to the FDIC,the depository institution(s) may requesta review of the determination by theFDIC. The details of the procedures forsubmitting materials and information toattempt to rebut the presumption ofdeposit shifting will be provided inwriting to the depository institutions aspart of the initial notice of the intendedimposition of entrance and exit fees.(d) Termination date. The provisionsof this section shall terminate on theearlier of December 31, 1999 or the dateas of which the last savings associationceases to exist.By the order of the Board of Directors.Dated at Washington, D.C., this 4th day ofFebruary, 1997.Federal Deposit Insurance Corporation.Jerry L. Langley,Executive Secretary.[FR Doc. 97–3306 Filed 2–10–97; 8:45 am]BILLING CODE 6714–01–P12 CFR Part 328RIN 3064–AB99Advertisement of MembershipAGENCY: Federal Deposit InsuranceCorporation.ACTION: Notice of proposed rulemaking;request for comment.SUMMARY: The Federal DepositInsurance Corporation (FDIC) isproposing to amend its regulationentitled ‘‘Advertisement ofMembership’’. The proposed rulewould: Consolidate the provisions thatrequire insured institutions to displayofficial signs; extend the officialadvertising statement that is currentlyrequired for insured banks to all insureddepository institutions; streamline theexceptions to the required use of theofficial advertising statement; prohibitthe use of the official advertisingstatement in advertisements concerningnondeposit investment products orsimilar nondeposit products; andspecifically delegate authority toapprove the translation of the officialadvertising statement to certain FDICofficials. The FDIC is inviting commenton all aspects of its proposal as well ascertain alternatives to its proposal asdiscussed herein. In addition, the FDICis soliciting comment with respect toissues raised regarding the applicabilityof this regulation to insured depositoryinstitutions that are transmittinginformation to, or conducting businesswith, existing or potential customers,over a computer network, such as theInternet.DATES: Written comments must bereceived by the FDIC on or before April14, 1997.ADDRESSES: Written comments shall beaddressed to Office of the ExecutiveSecretary, Federal Deposit InsuranceCorporation, 550 17th Street, N.W.,Washington, D.C. 20429. Commentsmay be hand delivered to Room F–402,1776 F Street, N.W., Washington, D.C.,20429, on business days between 8:30

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6143a.m. and 5:00 p.m. [Fax number: (202)898–3838; Internet address:comments@fdic.gov]. Comments will beavailable for inspection at the FDIC’sReading Room, Room 7118, 550 17thStreet, N.W., Washington, D.C. between9:00 a.m. and 4:30 p.m. on businessdays.FOR FURTHER INFORMATION CONTACT:Marc J. Goldstrom, Counsel, LegalDivision, Federal Deposit InsuranceCorporation, Washington, D. C. 20429,telephone (202) 898–8807; Robert W.Walsh, Manager, Policy and ProgramDevelopment, Division of Supervision,Federal Deposit Insurance Corporation,Washington, D.C. 20429, telephone(202) 898–6911.SUPPLEMENTARY INFORMATION:A. Need for the Proposed RuleThe FDIC is issuing this proposed rulein response to two initiatives. Section303 of the Riegle CommunityDevelopment and RegulatoryImprovement Act of 1994 (CDRIA), Pub.L. 103–325, 108 Stat. 2160 (Sept. 23,1994), requires that each federal bankingagency, consistent with the principles ofsafety and soundness, statutory law andpolicy, and the public interest, conducta review of the regulations and writtenpolicies of that agency to, among otherthings: streamline and modify thoseregulations and policies, and removeinconsistencies and outmoded andduplicative requirements. In addition,the FDIC has voluntarily committeditself to review its regulations on a 5-year cycle. See Development andReview of FDIC Rules and Regulations,2 FED. DEPOSIT INS. CORP., LAW,REGULATIONS, RELATED ACTS 5057(1984).As a result of its review of part 328,and as described herein, the FDIC hasdetermined that certain aspects of theregulation may be streamlined, anotheraspect of the regulation treats banks andsavings associations differently andaccordingly should be modified toachieve consistent treatment, anotheraspect of the regulation should bemodified to prohibit the use of theofficial advertising statement withrespect to the advertisement ofnondeposit investment products andsimilar nondeposit products, and a finalaspect of the regulation should clarifywhich FDIC officials are authorized toapprove the translation of the officialadvertising statement. In accordancewith section 303 of CDRIA, the FDICbelieves that this proposal is consistentwith the principles of safety andsoundness, statutory law and policy,and the public interest.B. The Current Rule and the Proposal1. SignsPart 328 contains requirements for thedesign and display of the official banksign of the FDIC. Only insured banksmay use the official bank sign. 12 U.S.C.1828(a). 12 CFR 328.2(a).Part 328 also contains requirementsfor the design and display of the officialsavings association sign. Insured savingsassociations must use the officialsavings association sign, and may notuse the official bank sign. Id. § 328.4(a)and (e). Insured banks may use eithersign at their option. Id. § 328.2(a).The two sets of requirements arevirtually identical. The FDIC proposesto combine them into one.Part 328 speaks of ‘‘automatic servicefacilities’’ in some places, and of‘‘remote service facilities’’ in otherplaces. The two phrases have the samemeaning within part 328, however. TheFDIC proposes to use the phrase‘‘remote service facility’’ in each place.Part 328 contains an outdatedreference to a date in 1989. The FDICproposes to delete it.2. Advertising(a) Proposal To Extend OfficialAdvertising Statement Requirement toSavings AssociationsPart 328 requires insured banks toinclude the official advertisingstatement in all their advertisements(with certain exceptions). Id. § 328.3(a).The basic form of the statement is‘‘Member of the Federal DepositInsurance Corporation’’, which may beshortened to ‘‘Member FDIC’’. Id.§ 328.3(b). There is no equivalentrequirement for insured savingsassociations.In light of the inconsistent treatmentof banks and savings associations, theFDIC proposes to require savingsassociations to use the official statementin advertisements. The effect of thisproposal is that all insured depositoryinstitutions would be required toinclude the statement in theiradvertisements.The FDIC insures both banks andsavings associations to the same extent.See 12 U.S.C. 1811, 1813(c). There is nocompelling justification for applying therule to banks and not savingsassociations. Inconsistent treatment ofbanks and savings associations on thismatter only tends to confuse consumersas to whether the institution’s depositsare insured by the FDIC. We are of theview that a consistent and uniform ruleapplicable to both banks and savingsassociations will best serve the interestsof the public and the protection of theinsurance funds.The proposed rule is premised on thebelief that if all insured institutions arerequired to use the official advertisingstatement, consumers are more likely torecognize the absence of federal depositinsurance in advertisements by non-FDIC insured entities and can betterdistinguish insured depositoryinstitutions from non-insured entities.In today’s environment with many nonbanksproviding banking type services itis more important than ever thatconsumers have a method ofrecognizing insured depositoryinstitutions. Recognition of FDICinsurance is particularly needed inelectronic media such as the Internetwhere advertisements may originatefrom outside the United States or fromnonbank entities.Alternatively, the FDIC could achieveconsistent treatment of banks andsavings associations by eliminating therequirement that insured banks use theofficial statement in advertisements.The effect of such a proposal would bethat all insured depository institutionswould be permitted (but not required) toinclude such a statement if they see fit.In support of such a proposal, onecould argue that, as a general matter, itis no longer necessary to require banksto use the official statement in theiradvertising. Statutory and regulatoryprovisions requiring banks to use thestatement were enacted in 1935 1 , a timewhen the FDIC was new and unfamiliar.Moreover, having endured the worstfinancial crisis in the nation’s history, itwas necessary to restore publicconfidence in the banking system. Overthe years, as a result of the use of theofficial statement and other measures,banks and FDIC insurance have becomeintertwined in consumers’ minds.Indeed, thrift customers arguably areaware of federal deposit insurance, eventhough there is no requirement thatthrifts use the official statement in theiradvertisements.Depository institutions and federaldeposit insurance may be sointerconnected that, as discussed below,many consumers erroneously assumethat all bank products or services areFDIC insured. Accordingly, a rulerequiring all institutions to use theofficial advertising statement may not1 The statutory provision was originally enactedin the Banking Act of 1935. Sec. 101 (v)(2), BankingAct of 1935, ch. 614, 49 Stat. 684, 701 (1935). Threemonths later, the FDIC promulgated a regulationwhich, among other things, required banks to usethe official statement in advertisements. SeeRegulation III, section 3, FDIC Annual Report 92(1935). The statutory requirement for the officialstatement in advertising was repealed in 1989. SeeFinancial Institutions Reform, Recovery andEnforcement Act of 1989 (‘‘FIRREA’’), Pub. L. 101–73, sec. 221, 103 Stat. 183, 266 (Aug. 9, 1989).

6144 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesalleviate such confusion and possiblycould increase confusion amongconsumers.The issue of advertising by depositoryinstitutions is of great importance to theFDIC. We are concerned thatindividuals understand when they areentrusting their money to an FDICinsured institution and when they arenot. We are also extremely concernedthat individuals understand when theirfunds are insured and when they arenot. The FDIC invites comment onwhether the proposed rule or thealternative discussed herein (or someother alternative) would better achievethese objectives. In addition we invitecomment on the related issue of theincreased burden to savings associationsthat the proposed rule would entailversus the potential benefits to beachieved.(b) Proposals To Consolidate andStreamline Exceptions to the RequiredUse of the Official AdvertisingStatement and To Prohibit InsuredDepository Institutions From Using theOfficial Advertising Statement inAdvertisements Concerning NondepositInvestment ProductsPart 328 contains 20 exceptions to therequired use of the official advertisingstatement. 12 CFR 328.3(c). The FDICproposes to consolidate and streamlinethis paragraph into 11 exceptions. Thetwo separate exceptions for radio andtelevision advertisements not exceedingthirty seconds in time, 12 CFR 328.3(8)and (9), would be combined into oneexception without any change insubstance.The nine exceptions foradvertisements relating to various typesof products or services which do notrelate to deposits, 12 CFR 328.3(12)through (20), would be combined into asingle exception for advertisementswhich do not relate to deposit productsor services. The current rule only hasexceptions for advertisements relating tocertain types of nondeposit products orservices. The proposed rule wouldcreate an exception for anyadvertisement which does not relate toa deposit product or service. This wouldhave the effect of broadening theexceptions to the required use of theofficial advertising statement. The FDICbelieves that there is no need to requirethe use of the official advertisingstatement in any advertisement whichdoes not relate to deposit products orservices. This proposal is consistentwith the purpose of the regulation andthe mandates of section 303 of theCDRIA.Paragraph (d) of the proposed rulewould prohibit an insured depositoryinstitution from including the officialadvertising statement or any similarstatement in advertisements relating tonondeposit investment products orsimilar nondeposit products. Inadvertisements containing informationabout both insured deposits andnondeposit investment products (orsimilar nondeposit products), theinformation concerning insureddeposits shall be clearly segregated fromthe information about nondepositinvestment products (or similarnondeposit products) and shall containeither the official statement, or anysimilar statement, including, but notlimited to, statements to the effect thatthe depository institution’s deposits ordepositors are insured by the FederalDeposit Insurance Corporation to themaximum of $100,000 for eachdepositor, or that specific depositproducts are insured by the FederalDeposit Insurance Corporation.As indicated above, many consumerserroneously believe that all bank orthrift products or services are FDICinsured. A recent independent surveyfound that 30% of investors are notaware that the FDIC does not insurebank mutual funds. 2 The FDIC ismaking this proposal because it isextremely concerned that depositoryinstitution customers understand whatis and is not covered by FDIC insurance.The FDIC believes that a prohibition onthe use of the official advertisingstatement in advertisements relating tonondeposit investment products orsimilar nondeposit products and arequirement that advertisementscontaining information about bothinsured deposits and nondepositinvestment products (or similarnondeposit products) clearly segregatethe information about the differentproducts will help to minimizecustomer confusion on this matter.This proposal is premised on thebelief that it would minimize customerconfusion with respect to the noninsuredstatus of nondeposit investmentproducts, such as mutual funds, andother similar nondeposit products.Conversely, there are other alternativeswhich may be more effective atalleviating customer confusion. Forexample, it could be argued that theproposal to require the use of the officialstatement (or similar statement) inadvertisements concerning both types ofproducts will further confuse consumersas to the insured and non-insured status2 Scott Smith, ‘‘Survey Says 70% of InvestorsKnow U.S. Doesn’t Insure Mutual Funds’’,American Banker, May 15, 1996, at 3 (discussingresults of a survey of Investor Protection Trustconducted by Princeton Survey ResearchAssociates).of the products involved. Accordingly,not requiring, or prohibiting, the use ofthe official statement (or similarstatement) in advertisements containinginformation on both types of productsmay be more effective at minimizingcustomer confusion. The FDIC invitescomment on the rule as proposed inparagraph (d), the alternatives discussedherein, or any other possible approach.In addition we invite comment on therelated issue of the increased burden toinsured depository institutions that theproposed rule or the alternatives wouldentail, versus the potential benefits to beachieved.Another alternative to minimizecustomer confusion as to the insured ornon-insured status of the variousproducts offered by insured depositoryinstitutions is to require insureddepository institutions to make certaindisclosures when they advertisenondeposit investment products, suchas mutual funds. Specifically, insureddepository institutions would berequired to disclose that such productsare: not insured by the FDIC; notdeposits or other obligations of, orguaranteed by, the depositoryinstitution; and subject to investmentrisk, including possible loss of theprincipal amount invested.These disclosure requirements wouldnot impose a new obligation on insureddepository institutions. In fact, theseprovisions are contained in the Federalbanking agencies’ ‘‘InteragencyStatement on Retail Sales of NondepositInvestment Products’’. FinancialInstitution Letter FIL 9–94 datedFebruary 17, 1994 (the ‘‘InteragencyStatement’’). Among other things theInteragency Statement provides thatinsured depository institutions shouldmake the aforementioned disclosures inall of their advertising and promotionalmaterials with respect to the retail saleof nondeposit investment products.It may be desirable to include theseprovisions in part 328 in light of therecent FDIC study which showed morethan a fourth of the institutionssurveyed are still failing to make basicdisclosures required under theInteragency Statement. 3 By includingthe advertising disclosure provisions inpart 328, such provisions would be ofgreater weight and enforceability.The FDIC invites comment as towhether codifying these disclosureprovisions in part 328 will moreeffectively minimize customerconfusion with respect to the insured ornon-insured status of the various3 ‘‘Survey of Nondeposit Investment Sales atFDIC-Insured Institutions’’, prepared for the FDICby Market Trends, Inc., dated May 5, 1996.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6145products offered by insured depositoryinstitutions. In addition, we invitecomment on the related issue of anypossible increased burden to insureddepository institutions that suchprovisions would entail versus thepotential benefits to be achieved.(c) Proposals Enhance Safety andSoundness of Insured DepositoryInstitutions and Consumer ProtectionIn testimony before the U.S. House ofRepresentatives’ Subcommittee onFinancial Institutions and ConsumerCredit 4 the Chairman of the Board ofDirectors of the FDIC indicated that inconducting its review of regulationspursuant to section 303 of CDRIA, theFDIC would consider, among otherthings, whether the regulations arenecessary to ensure a safe and soundbanking system and whether theregulations can be justified on strongpublic policy grounds related toconsumer protection. The FDIC believesthat the proposed rule meets thesecriteria. It is intended to promotestability and confidence in the bankingsystem and to minimize the possibilityof customer confusion with respect towhether they are dealing with an FDICinsured institution and whether theadvertised product is insured by theFDIC.(d) Statutory AuthorityThe FDIC has the statutory authorityto, by regulation, require all insureddepository institutions to use the officialstatement in advertising and to prohibitits use in the advertisement ofnondeposit investment products.Section 9 of the FDIA authorizes theFDIC to prescribe ‘‘such rules andregulations as it may deem necessary tocarry out the provisions of [the FDIA] orof any other law which it has theresponsibility of administering orenforcing’’. 12 U.S.C. 1819(a) Tenth.The Supreme Court has stated that‘‘[w]here the empowering provision of astatute states simply that the agencymay ‘make * * * such rules andregulations as may be necessary to carryout the provisions of this Act,’ * * * thevalidity of the regulation will besustained so long as it is ‘reasonablyrelated to the purposes of the enablinglegislation’ ’’. Mourning v. FamilyPublications Service, Inc., 411 U.S. 356,369 (1973) (quoting Thorp v. HousingAuthority of the City of Durham, 393U.S. 268, 280–281 (1969)). Congress, increating the FDIC, sought to instillpublic confidence in the bankingsystem, promote safe and sound banking4 Also reported in 60 FR 62345 (December 6,1995).practices, eliminate runs on banks bydepositors, and safeguard deposits. SeeFDIC v. Allen, 584 F. Supp. 386, 397(E.D. Tenn. 1984); Doherty v. UnitedStates, 94 F.2d 495, 497 (8th Cir. 1938);Weir v. United States, 92 F.2d 634, 636(7th Cir. 1937). The proposed rule seeksto promote stability and confidence inthe banking system and avoid runs onbanks by depositors. It is thereforereasonably related to the enablinglegislation. Similarly, in promoting theaforementioned goals, the use or nonuseof the official statement is related tothe safety and soundness of insureddepository institutions and is thereforesubject to regulation under section 8(a)of the FDIA, 12 U.S.C. 1818(a), andsection 9(a) of the FDIA, 12 U.S.C.1819(a) Tenth. See also FDIC v. SumnerFin. Corp., 451 F.2d 898, 903 (‘‘the FDIChas the power to make such rules as arereasonable and necessary to effectuatethe purposes of the act’’).(e) Clarification of Delegated AuthorityPart 328 provides that the non-Englishequivalent of the official advertisingstatement may be used in anyadvertisement, provided, that thetranslation has had the prior writtenapproval of the Corporation. 12 CFR328.3(e). The proposed rule clarifies thatthe Director, Division of Complianceand Consumer Affairs; the DeputyDirector, Division of Compliance andConsumer Affairs; and any RegionalDirector, Division of Compliance andConsumer Affairs, may provide suchapproval on behalf of the FDIC.C. Request for Comment—ElectronicBanking IssuesIn recent years, new and innovativemedia by which insured depositoryinstitutions may market their productsand transact business have developed.Such media include computer networkssuch as the Internet. Many financialinstitutions have established ‘‘worldwide web sites’’ 5 by which customersmay obtain information about aninstitution and, in certain cases, transactbusiness with the institution. Thisrecent proliferation of world wide websites gives rise to certain issuesconcerning whether and under whatcircumstances part 328 should applywith respect to the Internet or othercomputer networks. The FDIC is notcurrently proposing any changes to therule to address explicit questions arisingout of this new technology. However,these issues are discussed below and theFDIC is also soliciting comment for the5 The FDIC is aware of over 200 insureddepository institutions that have a presence on theInternet.purpose of gathering information fromthe public on such issues.Neither the proposed or existing ruledefine the term ‘‘advertisement’’. Thestaff is of the view that such term asused in the proposed and existing ruleis not limited to television, radio, orprint advertisements. Rather, such termwould include, but not be limited to,advertisements transmitted viacomputer networks such as the Internet.Consumers using the Internet maytypically view any one of aninstitution’s web pages 6 directly, or mayenter the institution’s top level or‘‘home page’’. The staff is of the viewthat every institution’s home page is tosome extent an advertisement andaccordingly should contain the officialstatement to the extent required by therule. 7 Whether subsidiary web pagescontain advertisements will varydepending upon the content of theinformation within the particular webpage. The staff is of the view that eachsuch subsidiary web page that containsan advertisement should include theofficial statement, unless suchadvertisement is subject to one of theexceptions in § 328.3(c).The FDIC also seeks comment onwhether and under what circumstancesit should require insured depositoryinstitutions to utilize the electronicequivalent of the official bank or savingsassociation sign in their world wide websites. Should such determination bedifferent with respect to world wideweb sites at which business may betransacted as opposed to sites whereonly information is conveyed?D. Paperwork Reduction ActThe proposed rule would notconstitute a ‘‘collection of information’’within the meaning of section 3502(3) ofthe Paperwork Reduction Act of 1995(44 U.S.C. 3501 et seq.). Accordingly,the procedural and analyticalrequirements prescribed by that Act donot apply to the proposed rule.E. Regulatory Flexibility ActCompliance with the proposed ruletakes only nominal advertising space ortime and does not add significantly tothe cost of advertisement. Insured bankshave complied with the identicalrequirement for over sixty years withoutsignificant expense. Accordingly, the6 Web pages vary in length and may in certaincases encompass several computer screens ofinformation.7 The staff’s view is with respect to part 328 only.We do not express an opinion as to whetherinstitutions’ home pages are advertisements forother purposes. Furthermore, staff’s views on thismatter would not preclude an institution fromdemonstrating that its home page does not containan advertisement for purposes of part 328.

6146 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed RulesBoard hereby certifies that the proposedrule would not have a significanteconomic impact on a substantialnumber of small entities within themeaning of the Regulatory FlexibilityAct (5 U.S.C. 601 et seq.). Theprovisions of the Regulatory FlexibilityAct relating to an initial and finalregulatory flexibility analysis (5 U.S.C.603 and 604) are not applicable.List of Subjects in 12 CFR Part 328Advertising, Bank deposit insurance,Savings associations, Signs andsymbols.For the reasons stated in thepreamble, the Board of Directors of theFDIC proposes to amend 12 CFR part328 as follows:PART 328—ADVERTISEMENT OFMEMBERSHIP1. The authority citation for part 328is revised to read as follows:Authority: 12 U.S.C. 1818(a), 1819,1828(a).2. Section 328.0 is revised to read asfollows:§ 328.0 Scope.This part 328 describes the officialbank sign and the official savingsassociation sign, and prescribes theiruse by insured depository institutions. Italso prescribes the official advertisingstatement insured depositoryinstitutions must include in certainadvertisements. Finally, it prohibits theuse of the official advertising statementand similar statements inadvertisements concerning nondepositinvestment products. For purposes ofthis part 328, the term ‘‘insureddepository institution’’ includes insuredbranches of a foreign bank. Insureddepository institutions which maintainoffices that are not insured in foreigncountries are not required to include theadvertising statement in advertisementspublished in foreign countries.3. Section 328.2 is revised to read asfollows:§ 328.2 Procurement and display of officialsigns.(a) Display—(1) Official sign. Eachinsured depository institution shallcontinuously display its official sign atthe locations specified in paragraph(a)(2)(i) of this section, as follows:(i) Insured banks. At the option of theinsured bank, its official sign is eitherthe official bank sign or the officialsavings association sign.(ii) Insured savings associations.Insured savings associations shalldisplay the official savings associationsign as provided herein. An insuredsavings association shall not display theofficial bank sign at its principal placeof business or at any of its branches.(2) Locations—(i) Required locations.Except as provided in paragraph(a)(2)(ii) of this section, an insureddepository institution shall display itsofficial sign at each station or windowwhere insured deposits are usually andnormally received in the depositoryinstitution’s principal place of businessand in all its branches.(ii) Other locations—(A) Within theinstitution. An insured depositoryinstitution may display its official signin other locations within the insureddepository institution in other sizes,colors, or materials.(B) Other facilities. An insureddepository institution is permitted, butis not required, to display its officialsign on remote service facilitiesincluding automated teller machines,cash dispensing machines, point-of-saleterminals, and other electronic facilitieswhere deposits are received. If aninsured depository institution displaysits official sign at a remote servicefacility, and if there are any noninsuredinstitutions that share in the remoteservice facility, any insured depositoryinstitution that displays its official signmust clearly show that the sign refersonly to a designated insured depositoryinstitution(s).(3) Newly insured institutions—(i)Initial grace period. A depositoryinstitution becoming an insureddepository institution shall not berequired to display its official sign untiltwenty-one (21) days after its first dayof operation as an insured depositoryinstitution.(ii) Early display permitted. Aninsured depository institution maydisplay its official sign prior to the datedisplay is required.(b) Obtaining signs—(1) Procurementfrom the FDIC—(i) Cost; design. Aninsured depository institution mayprocure the appropriate official signsfrom the Corporation for official use atno charge.(ii) Order blanks. The Corporationshall, upon request, furnish an orderblank to an insured depositoryinstitution for use in procuring officialsigns.(iii) Safe harbor rule. Any insureddepository institution which promptly,after the receipt of an order blank, fillsit in, executes it, and properly directsand forwards it to the Federal DepositInsurance Corporation, Washington,D.C. 20429, shall not be deemed to haveviolated this section on account of notdisplaying an official sign, or signs,unless the insured depositoryinstitution shall omit to display suchofficial sign or signs after receiptthereof.(2) Procurement from other sources.Insured depository institutions mayprocure official signs or signs reflectingvariations in size, colors, or materialsfrom commercial suppliers.(c) Receipt of deposits at same teller’sstation or window as noninsuredinstitution. An insured depositoryinstitution may not receive deposits atany teller’s station or window whereany noninsured institution receivesdeposits or similar liabilities, except aremote service facility as defined in§ 303.0(b)(18) of this chapter.(d) Required changes in signs. TheCorporation may require any insureddepository institution, upon at least 30days’ written notice, to change thewording of its official signs in a mannerdeemed necessary for the protection ofdepositors or others.4. Section 328.3 is revised to read asfollows:§ 328.3 Official advertising statement andmanner of use by insured depositoryinstitutions.(a) Mandatory use. Each insureddepository institution shall include theofficial advertising statement,prescribed in paragraph (b) of thissection, in all of its advertisementsexcept as provided in paragraphs (c) and(d) of this section.(1) An insured depository institutionis not required to include the officialadvertising statement in itsadvertisements until thirty (30) daysafter its first day of operation as aninsured depository institution.(2) In cases where the Board ofDirectors of the Federal DepositInsurance Corporation shall find theapplication to be meritorious, that therehas been no neglect or willful violationin the observance of this section andthat undue hardship will result byreason of its requirements, the Board ofDirectors may grant a temporaryexemption from its provision to aparticular depository institution uponits written application setting forth thefacts. For the procedure to be followedin making such application see § 303.8of this chapter.(3) In cases where advertising copynot including the official advertisingstatement is on hand on the date therequirements of this section becomeoperative, the insured depositoryinstitution may cause the officialadvertising statement to be included byuse of a rubber stamp or otherwise.(4) When a foreign depositoryinstitution has both insured andnoninsured U.S. branches, thedepository institution must identify

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6147which branches are insured and whichbranches are not insured in all of itsadvertisements requiring the use of theofficial advertising statement.(b) Official advertising statement. Theofficial advertising statement shall be insubstance as follows: ‘‘Member of theFederal Deposit Insurance Corporation’’.The word ‘‘the’’ or the words ‘‘of the’’may be omitted. The words ‘‘This bankis a’’, ‘‘This savings association is a’’,‘‘This savings and loan is a’’, or thewords ‘‘This institution is a’’ or thename of the insured depositoryinstitution followed by the words ‘‘is a’’may be added before the word‘‘member.’’ The short title ‘‘Member ofFDIC’’ or ‘‘Member FDIC’’ or areproduction of the ‘‘symbol’’ may beused by insured depository institutionsat their option as the official advertisingstatement. The official advertisingstatement shall be of such size and printto be clearly legible. Where it is desiredto use the ‘‘symbol’’ of the Corporationas the official advertising statement, andthe ‘‘symbol’’ must be reduced to suchproportions that the small lines of typeand the Corporation seal therein areindistinct and illegible, the Corporationseal in the letter C and the two lines ofsmall type may be blocked out ordropped.(c) Types of advertisements which donot require the official advertisingstatement. The following types ofadvertisements need not include theofficial advertising statement:(1) Statements of condition andreports of condition of an insureddepository institution which arerequired to be published by state orfederal law;(2) Stationery (except when used forcircular letters), envelopes, depositslips, checks, drafts, signature cards,deposit passbooks, certificates ofdeposit, and other similar items;(3) Signs or plates in the bankingoffice or attached to the building orbuildings in which the banking officesare located;(4) Listings in directories;(5) Advertisements not setting forththe name of the insured depositoryinstitution;(6) Display advertisements indepository institution directory,provided the name of the depositoryinstitution is listed on any page in thedirectory with a symbol or otherdescriptive matter indicating it is amember of the Federal DepositInsurance Corporation;(7) Joint or group advertisements ofbanking services where the names ofinsured depository institutions andnoninsured institutions are listed andform a part of such advertisements;(8) Advertisements by radio ortelevision, other than displayadvertisements, which do not exceedthirty (30) seconds in time;(9) Advertisements which are of thetype or character making it impracticalto include thereon the officialadvertising statement including, but notlimited to, promotional items such ascalendars, matchbooks, pens, pencils,and key chains;(10) Advertisements which contain astatement to the effect that thedepository institution is a member ofthe Federal Deposit InsuranceCorporation, or that the depositoryinstitution is insured by the FederalDeposit Insurance Corporation, or thatits deposits or depositors are insured bythe Federal Deposit InsuranceCorporation to the maximum of$100,000 for each depositor;(11) Advertisements which do notrelate to insured deposit products orservices.(d) Prohibited use. (1) Except asprovided in paragraph (d)(2) of thissection, an insured depositoryinstitution may not include the officialadvertising statement or refer to eitherfederal deposit insurance or the FederalDeposit Insurance Corporation in anyadvertisement relating to nondepositinvestment products or similarnondeposit products.(2) In advertisements containinginformation about both insured depositsand nondeposit investment products orsimilar nondeposit products, theinformation concerning insureddeposits shall be clearly segregated fromthe information about nondepositinvestment products (or similarnondeposit products) and shall containeither the official statement, or anysimilar statement, including, but notlimited to, statements to the effect thatthe depository institution’s deposits ordepositors are insured by the FederalDeposit Insurance Corporation to themaximum of $100,000 for eachdepositor, or that specific depositproducts are insured by the FederalDeposit Insurance Corporation.(e) Billboard advertisements. Wherean insured depository institution hasbillboard advertisements in use as of[the effective date of the final rule]which are required to include theofficial advertising statement and theinsured depository institution has directcontrol of such advertisements either bypossession or under the terms of acontract, the institution shall, as soon asit can consistent with its contractualobligations, cause the officialadvertising statement to be includedtherein.(f) Official advertising statement innon-English language. The non-Englishequivalent of the official advertisingstatement may be used in anyadvertisement: Provided, That thetranslation has had the prior writtenapproval of the Corporation. Authorityto provide such approval on behalf ofthe Corporation is hereby delegated tothe Director, Division of Complianceand Consumer Affairs; the DeputyDirector, Division of Compliance andConsumer Affairs; and each RegionalDirector, Division of Compliance andConsumer Affairs.§ 328.4 [Removed]5. Section 328.4 is removed.By order of the Board of Directors.Dated at Washington, D.C., this 21st day ofJanuary, 1997.Federal Deposit Insurance Corporation.Jerry L. Langley,Executive Secretary.[FR Doc. 97–3319 Filed 2–10–97; 8:45 am]BILLING CODE 6714–01–PSMALL BUSINESS ADMINISTRATION13 CFR Part 107Small Business Investment CompaniesAGENCY: Small Business Administration.ACTION: Proposed rule.SUMMARY: In response to concernsexpressed by a number of smallbusiness investment companies (SBICs),SBA is proposing to modify theexamination fees charged to SBICs. SBAbelieves that the current fee scheduleplaces a disproportionate burden oncertain classes of licensees (particularlythose with the largest amount of totalassets) and, in some cases, results in feeassessments that exceed reasonablecharges based on the level of effort andtime associated with the examinationprocess.DATES: Comments must be submitted onor before March 13, 1997.ADDRESSES: Written comments shouldbe addressed to Don A. Christensen,Associate Administrator for Investment,U.S. Small Business Administration,409 3rd Street, SW., Suite 6300,Washington, DC 20416.FOR FURTHER INFORMATION CONTACT:Leonard W. Fagan, Investment Division,at (202) 205–7583.SUPPLEMENTARY INFORMATION: OnJanuary 31, 1996 the Small BusinessAdministration (SBA) published finalregulations which, among other things,increased the examination fees chargedto SBICs. See 61 FR 3177. Fees

6148 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulescontinued to be assessed based on totalassets of the licensee, but at higher rates.The new fee schedule was designed toproduce total revenue sufficient to coverthe current direct costs to SBA ofconducting examinations.Since the effective date andimplementation of this regulation(March 1, 1996), SBA has received anumber of comments regarding theimpact of the new fee schedule onlicensees in certain asset size groups. Inparticular, bank-owned SBICs argue thatthey are required to bear an unfairportion of the overall fees. In thisregard, they note that they generallyhave no federal funds at risk. However,because fees are based on total assetsand they generally have the largestamount of total assets, they are requiredto pay fees at levels which far exceedthe level of effort and risk associatedwith the examination process. Similarly,larger SBICs which are not bank-ownedand do rely on federal funds tosupplement private capital argue thatthe fees greatly exceed the amount theypay for financial audits and are notrepresentative of the level of effort andtime attributable to the process.Because of these comments, the SBAhas re-assessed its examination feeschedule and its impact on the variousclasses of licensees. Based on itsreassessment, the SBA has concludedthat the current fee schedule places adisproportionate burden on certainclasses of licensees and, in some cases,results in fee assessments that exceedreasonable charges based on the level ofeffort and time associated with theexamination process.To remedy this situation, the SBA isproposing revisions to § 107.692 toestablish fees that are more reasonablein relation to the level of effort andresources expended by the Agency. Theproposed fee schedule would establish‘‘base fees’’ for examinations. The basefee increases as a licensee’s total assetsincrease, but is capped at $14,000. Thebase fee would be adjusted upward incircumstances where the Agency incursadditional cost or burdens in theprocess because of circumstances solelyrelated to the licensee to be examined.Similarly, the base fee would beadjusted downward wherecircumstances solely related to thelicensee to be examined are such thatthe Agency’s level of effort and time areminimized. In SBA’s view, theseadjustments are incentives for thelicensees to adhere to programregulations and will serve to furtherenhance the safety and soundness of theSBIC program. The new fee schedulewould apply to examinations beginningafter the effective date of a final rule.Compliance With Executive Orders,12612, 12778, and 12866, theRegulatory Flexibility Act (5 U.S.C. 601,et seq.), and the Paperwork ReductionAct (44 U.S.C. Ch. 35)SBA certifies that this proposed rulewould not be a significant regulatoryaction for purposes of Executive Order12866 because it would not have anannual effect on the economy of morethan $100 million, and that it would nothave a significant economic impact ona substantial number of small entitieswithin the meaning of the RegulatoryFlexibility Act, 5 U.S.C. 601, et seq. Thepurpose of the proposed rule is tomodify the existing regulatory guidancerelated to SBIC examination fees. Theproposed regulations would provide formore reasonable and equitableexamination fees. The proposed feestructure would more properly reflectthe level of effort and Agency resourcesexpended to conduct an examination,would encourage continued compliancewith program regulations, and wouldcontinue to allow for efficient andeffective program administration.The proposed regulations would havesome economic effect. The base fee forexaminations would continue to bebased on total assets of a licensee and,for the most part, at the rates prescribedin current regulations. However, nolicensee would have a base fee greaterthan $14,000. The proposed regulationswould provide for discounts of the baseexamination fee for (1) licensees thathad no outstanding regulatory violationsat the time of the examination and therewere no violations noted as a result ofthe most recent prior examination; and(2) licensees that are cooperative withSBA examination personnel by beingfully responsive to the letter ofnotification of examination. Similarly,the proposed regulations would provideincreases to the base examination fee fora licensee that (1) is organized as apartnership or limited liabilitycompany; (2) is authorized to issueParticipating Securities; and/or (3)maintains its records/files in multiplelocations.The largest licensees, those with totalassets exceeding $60 million, wouldrealize substantial fee decreases. Theexamination base fee of all licenseespotentially could be increased ordecreased. Therefore, all licensees withtotal assets below $60 million mayexperience a 5% to 25% increase or a10% to 25% decrease in the cost of anannual examination. The economicimpact in either case is inconsequentialgiven the total number of licensees andthe base fees applicable to the majorityof the licensees. Further, even assumingthe maximum increases provided for inthe proposed regulations, most licenseeswith total assets greater than $60million would realize significantexamination fee reductions.For purposes of the PaperworkReduction Act, 44 U.S.C. Ch. 35, SBAcertifies that this proposed rule, ifadopted in final form, would contain nonew reporting or recordkeepingrequirements that have not already beenapproved by the Office of Managementand Budget.For purposes of Executive Order12612, SBA certifies that this rulewould not have any federalismimplications warranting the preparationof a Federalism Assessment.For purposes of Executive Order12778, SBA certifies that this rule isdrafted, to the extent practicable, inaccordance with the standards set forthin Section 2 of that Order.List of Subjects in 13 CFR Part 107Investment companies, Loanprograms-business, Reporting andrecordkeeping requirements, Smallbusinesses.For the reasons set forth above, SBAhereby proposes to amend Part 107 ofTitle 13 of the Code of FederalRegulations as follows:PART 107—SMALL BUSINESSINVESTMENT COMPANIES1. The authority citation for part 107is revised to read as follows:Authority: 15 U.S.C. 681 et seq., 683,687(c), 687b, 687d, 687g and 687m, Pub. L.104–208.2. Section 107.692 is revised to readas follows:§ 107.692 Examination fees.(a) General. SBA will assess fees forexaminations in accordance with this§ 107.692. Unless SBA determinesotherwise on a case by case basis, SBAwill not assess fees for specialexaminations to obtain specificinformation.(b) Base fee. A base fee will beassessed based on your total assets (atcost) as of the date of your latestcertified financial statement or a morerecent interim statement requested byand submitted to SBA in connectionwith the examination. The base fee tableis as follows:

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6149Total assets of licensee Base fee Plus, percent of assets$0 to $1,500,000 .......................................................................................................... $3,500 +0%.$1,500,001 to $5,000,000 ............................................................................................ 3,700 +.065% of the amount over $1,500,000.$5,000,001 to $10,000,000 .......................................................................................... 6,000 +.02% of the amount over $5,000,000.$10,000,001 to $15,000,000 ........................................................................................ 7,000 +.01% of the amount over $10,000,000.$15,000,001 to $25,000,000 ........................................................................................ 7,700 +.015% of the amount over $15,000,000.$25,000,001 to $50,000,000 ........................................................................................ 9,200 +.015% of the amount over $25,000,000.$50,000,001 to $60,000,000 ........................................................................................ 13,000 +.01% of the amount over $50,000,000.$60,000,001 and above ............................................................................................... 14,000 +0%.(c) Adjustments to base fee. Your basefee, as determined by the table inparagraph (b) of this section, will beadjusted (increased or decreased) basedon the following criteria:(1) If you have no outstandingregulatory violations at the time of thecommencement of the examination andSBA did not identify any violations asa result of the most recent priorexamination, you will receive a 15%discount on your base fee;(2) If you were fully responsive to theletter of notification of examination(that is, you provided all requesteddocuments and information within thetime period stipulated in thenotification letter in a complete andaccurate manner, and you prepared andhad available all information requestedby the examiner for on-site review), youwill receive a 10% discount on yourbase fee;(3) If you are organized as apartnership or limited liabilitycompany, you will pay an additionalcharge equal to 5% of your base fee;(4) If you are a Licensee authorized toissue Participating Securities, you willpay an additional charge equal to 10%of your base fee; and(5) If you maintain your records/filesin multiple locations (as permittedunder § 107.600(b)), you will pay anadditional charge equal to 10% of yourbase fee.(d) Fee discounts and additions table.The following table summarizes thediscounts and additions noted inparagraph (c) of this section:Examination fee discountsAmount ofdiscount—% of baseexaminationfeeExamination fee additionsAmount ofaddition—%of base examinationfeeNo prior violations ............................... 15 Partnership or limited liability co .................................................................... 5Responsiveness .................................. 10 Participating Security Licensee ...................................................................... 10.................... Financing Records at Multiple Locations ....................................................... 10(e) Delay fee. If, in the judgment ofSBA, the time required to complete yourexamination is delayed due to your lackof cooperation or the condition of yourrecords, SBA may assess an additionalfee of up to $500 per day.Dated: February 4, 1997.Philip Lader,Administrator.[FR Doc. 97–3280 Filed 2–10–97; 8:45 am]BILLING CODE 8025–01–PDEPARTMENT OF THE INTERIORMinerals Management Service30 CFR Part 251RIN 1010–AC10Geological and Geophysical (G&G)Explorations of the Outer ContinentalShelfAGENCY: Minerals Management Service(MMS), Interior.ACTION: Proposed rule.SUMMARY: We propose to revise theregulations that specify how to conductG&G exploration and research for oil,gas, and sulphur in the OuterContinental Shelf (OCS) under a permitand to expand the provisions governingresearch by requiring everyoneconducting G&G scientific research inthe OCS without a permit to file a noticewith MMS. These revisions respond tochanges in technology and practice.DATES: MMS will consider all commentswe receive by April 14, 1997. We willbegin reviewing comments then andmay not fully consider comments wereceive after April 14, 1997.ADDRESSES: Mail or hand-carry writtencomments to the Department of theInterior, Minerals Management Service,Mail Stop 4700, 381 Elden Street,Herndon, Virginia 20170–4817,Attention: John V. Mirabella, Chief,Engineering and Standards Branch.FOR FURTHER INFORMATION CONTACT:David R. Zinzer, Geologic AssessmentBranch, (703) 787–1515 or KumkumRay, Engineering and Standards Branch,(703) 787–1600.SUPPLEMENTARY INFORMATION: The OuterContinental Shelf Lands Act (OCSLA)(43 U.S.C. 1331 et seq.) is the basis forMMS regulations to administer G&Gexploration and scientific researchactivities in the OCS. Section 11(a) ofthe OCSLA provides authority for theSecretary of the Interior (Secretary) topermit G&G exploration activities asfollows:(a) Approved exploration plans.(1) Any agency of the United Statesand any person authorized by theSecretary may conduct geological andgeophysical explorations in the outerContinental Shelf, which do notinterfere with or endanger actualoperations under any lease maintainedor granted pursuant to this Act, andwhich are not unduly harmful to aquaticlife in such area.The regulations at 30 CFR part 251implement the Secretary’s authority andprescribe:(1) MMS requirements for a permit orthe filing of a statement of intent(notice) to conduct G&G exploration orscientific research in the OCS,(2) Operating procedures forconducting exploration or scientificresearch,(3) Conditions for reimbursingpermittee for certain costs,(4) Other conditions for conductingexploration and research, and(5) Procedures for drilling deepstratigraphic tests in the OCS.This proposed rule is especiallytimely now. Advances in 3-D seismic

6150 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesacquisition and processing, graphicsimaging, modeling, and othertechnologies have significantlyincreased exploration, especially indeep water, subsalt plays, and in deeperhorizons of the Gulf of Mexico OCS.I. Background for Expanding the NoticeRequirementThe revised requirement for a noticebefore conducting any G&G scientificresearch was developed to addressinstances in which academicinstitutions conducted research and:• They or industry sponsors held thedata and analyzed and processedinformation as proprietary.• They also offered for sale at leastsome of the data and information.MMS defines such activities as G&Gexplorations and does not considerthem G&G scientific research. A permitis required for exploration. For thesereasons, the expanded noticerequirement is needed to keep MMSinformed of any G&G scientific researchconducted on the OCS related to oil,gas, and sulphur. After receiving thenotice, MMS will inform thoseconducting research of all necessaryenvironmental regulations and laws. Inthis way, the researcher will be betterable to follow safe and environmentallysound practices.II. Clarification of Meaning of Terms‘‘Transfer’’ and ‘‘Third Party’The current rule at §§ 251.11 and251.12 specifies what happens whenG&G data and information aretransferred from one person to anotherperson. MMS lists in the proposed ruleseveral different ways by which a‘‘transfer’’ can take place, for example,by sale, sale of rights, license agreement,or trade. The proposed rule clarifies thatif a permittee transfers data andinformation to a third party, no matterhow that transfer is formulated orcharacterized by the participants, theobligation to provide access to MMS ofthe data and information is a conditionof the transfer. Further, MMS clarifiesthat all third party recipients of the dataand information will be subject to thepenalty provisions of part 250, subpartN, if they fail to meet the obligation toprovide access. The term ‘‘third party’’continues to mean ‘‘any person otherthan a representative of the UnitedStates or the permittee’’ as stated in thecurrent rule. The proposed rule clarifiesthat the third party includes ‘‘allpersons to whom the permittee sold,licensed, traded, or otherwisetransferred data or information acquiredunder a permit.’’ These clarifications arenot new requirements. MMS routinelyobtains G&G data and information frompermittees and third parties to whomdata and information were transferredby a permittee.MMS is including these clarificationsin the proposed rule to eliminate anyconfusion that may arise due tomisinterpretation of the rule. Asmentioned earlier in the preamble,MMS administers G&G exploration andcertain scientific research on the publiclands of the OCS under the authority ofthe OCSLA. Since G&G explorationoccurs on public lands, the MMS, beforeissuing a permit, imposes the conditionthat access to any data or informationacquired must be provided to MMS. Theregulated community is aware beforeobtaining a permit and expending anyresources, or collecting any data andinformation, that it must agree toprovide MMS all the data andinformation MMS requests and thatMMS will pay reasonable costs forreproducing the data and information.III. Discussion of Proposed RuleThese revisions bring Part 251—Geological and Geophysical (G&G)Explorations of the Outer ContinentalShelf up to date with recent changes inrelated regulations at 30 CFR part 250.Section 251.1 of the proposedregulation updates the definition list byremoving unnecessary words andadding, modifying, or expandingdefinitions.Section 251.4(b)(2) explains that anotice will be required for all G&Gscientific research related to oil, gas,and sulphur conducted in the OCSexcept for research requiring a permit.Section 251.5(c)(7) clarifies that at theearliest possible time, the data andinformation acquired through scientificresearch will be made available to thepublic or the permittee or person filinga notice.Section 251.5(d) provides currentaddresses of MMS regional offices asfiling locations for permit applicationsand notices.Section 251.6(c) adds requirementsfor consulting and coordinating all G&Gactivities with other users of the area.Section 251.7(d) changes the bondamount for drilling of a deepstratigraphic test for a single test well,or for an area bond, to be consistentwith the current bonding requirementsin 30 CFR part 256, subpart I, fordrilling under an Exploration Plan.MMS published a proposed rulerevising surety bond requirements onDecember 8, 1995 (60 FR 63011). AfterMMS publishes the final rule on suretybond requirements, we will modify 30CFR part 251 to reflect the changes.Section 251.8(b) specifies that apermittee must request in writing tomodify or extend operations and couldproceed with the modifications onlyafter the Regional Director approvesthem.Section 251.8(c) directs a permittee tosubmit status reports on a schedulespecified in the permit rather thanmonthly. This would allow variations inthe reporting requirements among OCSRegions.Section 251.8(c)(2)(ii) requires thatthe final report contain digitalnavigational data in a format theRegional Director specifies in additionto charts, maps, and plats.Section 251.11 adds processedgeological information to the types ofdata requested throughout this section.The revision of § 251.11(b)(2) clarifiesthat washed samples may no longerreplace paleontological reports and, ifmaintained, should be made availablefor MMS inspection if requested by theRegional Director. Sections 251.11(c)and 251.12(d) clarify that any transfer ofgeological or geophysical data andinformation to a third party wouldtransfer the obligations to provideaccess to MMS as well. When the thirdparty accepts the transfer, it must alsoaccept the obligation to provide accessand is subject to the penalty provisionsof 30 CFR part 250 subpart N, if it failsto do so.IV. Procedural MattersExecutive Order (E.O.) 12866This proposed rule is not significantunder E.O. 12866.Regulatory Flexibility ActThe Department of the Interior (DOI)has determined that this proposed rulewill not have a significant economiceffect on a substantial number of smallentities. In many ways MMS offerscustomer service to a number of smallcompanies that participate in G&Gwork. An example is the northern Gulfof Mexico Oil and Gas Atlas whichMMS helped to develop. This atlasclassifies reservoirs based upon geologicand engineering parameters. The atlaswill assist smaller oil and gascompanies to more efficiently discoverand develop hydrocarbons in theoffshore northern Gulf of Mexico. Therevised requirements in this proposedrule contain simple and routinerequirements that can be carried out ata negligible cost. The benefits of therevisions are many. MMS would informthose conducting G&G research ofenvironmental laws and regulations andthus ensure environmentally safe andsound practices. The revisions wouldalso help to minimize conflict withother users of the area. The rule is in

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6151‘‘plain English’’ so small companiesunfamiliar with MMS regulations willfind it easier to follow.Paperwork Reduction ActThis proposed rule contains acollection of information which hasbeen submitted to the Office ofManagement and Budget (OMB) forreview and approval under section 3507(d) of the Paperwork Reduction Act of1995. As part of our continuing effort toreduce paperwork and respondentburdens, MMS invites the public andother Federal agencies to comment onany aspect of the reporting burden.Submit your comments to the Office ofInformation and Regulatory Affairs;OMB; Attention: Desk Officer for theDepartment of the Interior (OMB controlnumber 1010–0048); Washington, D.C.20503. Send a copy of your commentsto the Chief, Engineering and StandardsBranch; Mail Stop 4700; MineralsManagement Service; 381 Elden Street;Herndon, Virginia 20170–4817. Youmay obtain a copy of the supportingstatement for the collection ofinformation by contacting the Bureau’sInformation Collection Clearance Officerat (703) 787–1242.OMB may make a decision to approveor disapprove this collection ofinformation within 30 days after receiptof our request. Therefore, yourcomments are best assured of beingconsidered by OMB if they are receivedwithin the time period. However, MMSwill consider all comments receivedduring the comment period for thisnotice of proposed rulemaking.OMB previously approved theinformation collections in the current 30CFR Part 251 under OMB controlnumbers 1010–0031, 1010–0034, 1010–0036, and 1010–0048. For the proposednew rule, all of the requirements will beincluded under OMB control number1010–0048. The title of this collection ofinformation is ‘‘30 CFR Part 251,Geological and Geophysical (G&G)Explorations of the OCS.’’The collection of information in theproposed rule consists of:(a) A permit application forconducting geological and geophysical(G&G) exploration offshore or filing anotice for monitoring scientific researchactivities (30 CFR 251.5). Thenotification requirement for scientificresearch is new;(b) Reporting the detection ofhydrocarbon occurrences,environmental hazards, or adverseeffects (30 CFR 251.6(b);(c) Informing others in the OCS areaof your G&G activities (30 CFR 251.6(c));(d) Information required for testdrilling activities (30 CFR 251.7);(e) Requesting reimbursement ofexpenses incurred when MMS inspectsyour exploration activity (30 CFR251.8(a));(f) Requesting modifications to andreporting progress of activitiesconducted under a permit (30 CFR251.8(c));(g) Notifying MMS to relinquish apermit (30 CFR 251.9(c)(2));(h) Accurate and completeinformation on G&G data andinformation and subsequent analysesand interpretations (30 CFR 251.11 and251.12); and(i) Requesting reimbursement for costsof:(1) Reproducing the data andinformation MMS selects; and(2) Processing, or reprocessing certaingeophysical information (30 CFR251.13).MMS needs and uses the informationto ensure there is no environmentaldegradation, personal harm, damage tohistorical or archaeological sites, orinterference with other uses; to analyzeand evaluate preliminary or planneddrilling activities; to monitor progressand activities in the OCS; to acquiregeological and geophysical data andinformation collected under a Federalpermit offshore; and to determineeligibility for reimbursement from thegovernment for certain costs.Respondents represent the oil, gas,and sulphur industry or academicinstitutions conducting G&G explorationor scientific research on the FederalOCS. The frequency of response is onoccasion, with the exception of thestatus reports. The frequency of thosewill be specified in the G&G permit.The estimated annual reportingburden is 10,604 hours—an average of7.7 hours per response. Based on $35per hour, the burden hour cost torespondents is estimated to be $371,140.The estimate of other annual costs torespondents is unknown.MMS will summarize writtenresponses to this notice and addressthem in the final rule. All commentswill become a matter of public record.1. MMS specifically solicitscomments on the following questions:(a) Is the proposed collection ofinformation necessary for the properperformance of MMS’s functions, andwill it be useful?(b) Are the estimates of the burdenhours of the proposed collectionreasonable?(c) Do you have any suggestions thatwould enhance the quality, clarity, orusefulness of the information to becollected?(d) Is there a way to minimize theinformation collection burden on thosewho are to respond, including throughthe use of appropriate automatedelectronic, mechanical, or other forms ofinformation technology?2. In addition, the PaperworkReduction Act of 1995 requires agenciesto estimate the total annual cost burdento respondents or recordkeepersresulting from the collection ofinformation. MMS needs yourcomments on this item. Your responseshould split the cost estimate into twocomponents:(a) Total capital and startup costcomponent and(b) Annual operation, maintenance,and purchase of services component.Your estimates should consider thecosts to generate, maintain, and discloseor provide the information. You shoulddescribe the methods you use toestimate major cost factors, includingsystem and technology acquisition,expected useful life of capitalequipment, discount rate(s), and theperiod over which you incur costs.Capital and startup costs include,among other items, computers andsoftware you purchase to prepare forcollecting information; monitoring,sampling, drilling, and testingequipment; and record storage facilities.Generally, your estimates should notinclude equipment or servicespurchased: before October 1, 1995; tocomply with requirements notassociated with the informationcollection; for reasons other than toprovide information or keep records forthe Government; or as part of customaryand usual business or private practices.The Paperwork Reduction Act of 1995provides that an agency may notconduct or sponsor, and you are notrequired to respond to, a collection ofinformation unless it displays acurrently valid OMB control number.Takings Implication AssessmentThe proposed rule does not representa Government action capable ofinterference with constitutionallyprotected property rights. A newrequirement in the rule is a notice forscientific research in the OCS. SinceMMS is not requiring the researcher tosubmit data and information or analysesresulting from the research activity,there is no direct or indirect taking.The proposed rule also clarifies theterms ‘‘transfer’’ and ‘‘third party.’’When a permittee transfers data andinformation to a third party, there is atransfer of the obligation to provideaccess to MMS as well. Further, therecipient of the data and information issubject to the same penalty provisionsas the original permittee—if a thirdparty fails to provide access. These

6152 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesclarifications better define existingrequirements and add no newrequirements.Other changes are not substantive orwere made to put the regulation intoplain English. Thus, a TakingsImplication Assessment need not beprepared pursuant to E.O. 12630,‘‘Governmental Actions and Interferencewith Constitutionally Protected PropertyRights.’’Unfunded Mandates Reform Act of 1995The DOI has determined and certifiesaccording to the Unfunded MandatesReform Act, 2 U.S.C. 1502 et seq., thatthis rule will not impose a cost of $100million or more in any given year onlocal, tribal, and State governments, orthe private sector.E.O. 12988The DOI has certified to OMB that therule meets the applicable reformstandards provided in sections 3 (a) and3 (b)(2) of E.O. 12988, ‘‘Civil JusticeReform.’’National Environmental Policy ActThe DOI has also determined that thisaction does not constitute a majorFederal action affecting the quality ofthe human environment; therefore, anEnvironmental Impact Statement is notrequired.List of Subjects in 30 CFR Part 251Continental shelf, Freedom ofinformation, Oil and gas exploration,Public lands-mineral resources,Reporting and recordkeepingrequirements, Research.Dated: January 23, 1997.Bob Armstrong,Assistant Secretary, Land and MineralsManagement.For the reasons stated in thepreamble, 30 CFR Part 251 is proposedto be revised to read as follows:PART 251—GEOLOGICAL ANDGEOPHYSICAL (G&G) EXPLORATIONSOF THE OUTER CONTINENTAL SHELF(OCS)Sec.251.1 Definitions.251.2 Purpose of this part.251.3 Authority and applicability of thispart.251.4 Types of G&G activities that requirepermits or notices.251.5 Applying for permits or filing notices.251.6 Obligations and rights under a permitor a notice.251.7 Test drilling activities under a permit.251.8 Inspection and reportingrequirements for activities under apermit.251.9 Temporarily stopping, canceling, orrelinquishing activities approved under apermit.251.10 Penalties and appeals.251.11 Inspection, selection, andsubmission of geological data andinformation collected under a permit.251.12 Inspection, selection, andsubmission of geophysical data andinformation collected under a permit.251.13 Reimbursement for the cost ofreproducing data and information andcertain processing cost.251.14 Protecting and disclosing data andinformation submitted to MMS under apermit.251.15 Authority for information collection.Authority: 43 U.S.C. 1331 et seq.§ 251.1 Definitions.Terms used in this part have thefollowing meaning:Act means the OCS Lands Act, asamended (43 U.S.C. 1331 et seq.).Analyzed geological informationmeans data collected under a permit ora lease that have been analyzed.Analysis may include but is not limitedto identification of lithologic and fossilcontent, core analyses, laboratoryanalyses of physical and chemicalproperties, well logs or charts, resultsfrom formation fluid tests, anddescriptions of hydrocarbonoccurrences or hazardous conditions.Archaeological resources means anymaterial remains of human life oractivities that are at least 50 years of ageand of archaeological interest.Coastal environment means thephysical, atmospheric, and biologicalcomponents, conditions, and factorsthat interactively determine theproductivity, state, condition, andquality of the terrestrial ecosystem fromthe shoreline inward to the boundariesof the coastal zone.Coastal Zone means the coastalwaters (including the lands therein andthereunder) and the adjacent shorelands(including the waters therein andthereunder), strongly influenced by eachother and in proximity to the shorelinesof the several coastal States and extendsseaward to the outer limit of the U.S.territorial sea. Section 305(b)(1) of theCoastal Zone Management Act identifiesthe inward boundaries of several coastalStates.Coastal Zone Management Act meansthe Coastal Zone Management Act of1972, as amended (16 U.S.C. 1451 etseq.).Data means facts, statistics,measurements, or samples that have notbeen analyzed, processed, orinterpreted.Deep stratigraphic test means drillingthat involves the penetration into thesea bottom of more than 500 feet (152meters).Director means the Director of theMinerals Management Service, U.S.Department of the Interior, or asubordinate authorized to act on theDirector’s behalf.Exploration means the commercialsearch for oil, gas, and sulphur.Activities classified as explorationinclude but are not limited to:(1) Geological and geophysicalsurveys where magnetic, gravity,seismic reflection, seismic refraction,gas sniffers, coring, or other systems areused to detect or imply the presence ofoil, gas, or sulphur; and(2) Any drilling, whether on or off ageological structure.Geological exploration meansexploration that utilizes geological andgeochemical techniques (e.g., coring andtest drilling, well logging, and bottomsampling) to produce data andinformation on oil, gas, and sulphurresources in support of possibleexploration and development activities.The term does not include geologicalscientific research.Geological and geophysical scientificresearch means any oil, gas, or sulphurrelated investigation conducted in theOCS for scientific and/or researchpurposes. Geological, geophysical, andgeochemical data and informationgathered and analyzed are madeavailable to the public for inspectionand reproduction at the earliest possibletime. The term does not includecommercial geological or geophysicalexploration.Geophysical exploration meansexploration that utilizes geophysicaltechniques (e.g., gravity, magnetic, orseismic) to produce data andinformation on oil, gas, and sulphurresources in support of possibleexploration and development activities.The term does not include geophysicalscientific research.Governor means the Governor of aState or the person or entity lawfullydesignated to exercise the powersgranted to a Governor pursuant to theAct.Human environment means thephysical, social, and economiccomponents, conditions, and factors.These factors interactively determinethe quality of life of those affected,directly or indirectly, by OCS activities.Hydrocarbon occurrence means thedirect or indirect detection duringdrilling operations of any liquid orgaseous hydrocarbons by examination ofwell cuttings, cores, gas detectorreadings, formation fluid tests, wirelinelogs, or by any other means. The termdoes not include background gas, minoraccumulations of gas, or heavy oilresidues on cuttings and cores.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6153Information means geological andgeophysical data that have beenanalyzed, processed, or interpreted.Interpreted geological informationmeans knowledge, often in the form ofschematic cross sections, 3-dimensionalrepresentations, and maps, developedby determining the geologicalsignificance of geological data andanalyzed geologic information.Interpreted geophysical informationmeans knowledge, often in the form ofseismic cross sections, 3-dimensionalrepresentations, and maps, developedby determining the geologicalsignificance of geophysical data andprocessed geophysical information.Lease means:(1) Any form of authorization whichis issued under section 8 or maintainedunder section 6 of the Act and whichauthorizes exploration for, and/ordevelopment and production of,minerals; or(2) The area covered by suchauthorization, whichever is required bythe context.Lessee has the same meaning asprovided in 30 CFR 250.2.Marine environment means thephysical, atmospheric, and biologicalcomponents, conditions, and factorsthat interactively determine the qualityof the marine ecosystem in the coastalzone and in the OCS.Minerals means oil, gas, sulphur,geopressured-geothermal and associatedresources, and all other minerals whichare authorized by an Act of Congress tobe produced from ‘‘public lands’’ asdefined in section 103 of the FederalLand Policy and Management Act of1976 (43 U.S.C. 1702).Notice means a written statement ofintent to conduct geological orgeophysical scientific research related tooil, gas, and sulphur in the OCS otherthan under a permit.Oil, gas, and sulphur means oil, gas,sulphur, geopressured-geothermal, andassociated resources.Outer Continental Shelf (OCS) meansall submerged lands lying seaward andoutside the area of lands beneathnavigable waters as defined in section 2of the Submerged Lands Act (43 U.S.C.1301), and of which the subsoil andseabed appertain to the United Statesand are subject to its jurisdiction andcontrol.Permit means the contract oragreement, other than a lease, issuedpursuant to this part, under which aperson acquires the right to conduct inthe OCS:(1) Geological exploration for mineralresources;(2) Geophysical exploration formineral resources;(3) Geological scientific research; or(4) Geophysical scientific research inaccordance with appropriate statutes,regulations, and stipulations.Permittee means the personauthorized by a permit issued pursuantto this part to conduct activities in theOCS.Person means a citizen or national ofthe United States; an alien lawfullyadmitted for permanent residence in theUnited States as defined in section 8U.S.C. 1101(a)(20); a private, public, ormunicipal corporation organized underthe laws of the United States or of anyState or territory thereof; andassociations of such citizens, nationals,resident aliens, or private, public, ormunicipal corporations, States, orpolitical subdivisions of States oranyone operating in a manner providedfor by treaty or other applicableinternational agreements. The term doesnot include Federal agencies.Processed geological or geophysicalinformation means data collected undera permit and later processed orreprocessed. Processing involveschanging the form of data so as tofacilitate interpretation. Processingoperations may include, but are notlimited to, applying corrections forknown perturbing causes, rearranging orfiltering data, and combining ortransforming data elements.Reprocessing is the additionalprocessing other than ordinaryprocessing used in the general course ofevaluation. Reprocessing operationsmay include varying identifiedparameters for the detailed study of aspecific problem area.Secretary means the Secretary of theInterior or a subordinate authorized toact on the Secretary’s behalf.Shallow test drilling means drillinginto the sea bottom to depths less thanthose specified in the definition of adeep stratigraphic test.Third Party means any person otherthan a representative of the UnitedStates or the permittee, including allpersons to whom the permittee sold,licensed, traded, or otherwisetransferred data or information acquiredunder a permit.Violation means a failure to complywith any provision of the Act, or aprovision of a regulation or order issuedunder the Act, or any provision of alease, license, or permit issued underthe Act.You means a person who inquiresabout or obtains a permit or files anotice to conduct geological orgeophysical exploration or scientificresearch related to oil, gas, and sulphurin the OCS.§ 251.2 Purpose of this part.(a) To allow you to conduct G&Gactivities in the OCS related to oil, gas,and sulphur on unleased lands or onlands under lease to a third party.(b) To ensure that you carry out G&Gactivities in a safe and environmentallysound manner so as to prevent harm ordamage to, or waste of, any naturalresources (including any mineraldeposit in areas leased or not leased),any life (including fish and otheraquatic life), property, or the marine,coastal, or human environment.(c) To inform you of your legal andcontractual obligations.§ 251.3 Authority and applicability of thispart.MMS authorizes you to conductexploration or scientific researchactivities under this part in accordancewith the Act, the regulations in thispart, orders of the Director/RegionalDirector, and other applicable statutes,regulations, and amendments.(a) This part does not apply to G&Gexploration conducted by or on behalfof the lessee on a lease in the OCS. Referto 30 CFR part 250 if you plan toconduct G&G activities related to oil,gas, or sulphur under terms of a lease.(b) Federal agencies are exempt fromthe regulations in this part.(c) G&G exploration or G&G scientificresearch related to minerals other thanoil, gas, and sulphur is covered byregulations at 30 CFR part 280.§ 251.4 Types of G&G activities thatrequire permits or notices.(a) Exploration. You must have anMMS-approved permit to conduct G&Gexploration, including deepstratigraphic tests, for oil, gas, orsulphur resources. If you conduct bothgeological and geophysical exploration,you must have a separate permit foreach.(b) Scientific research. You may onlyconduct G&G scientific research relatedto oil, gas, and sulphur in the OCS afteryou obtain an MMS-approved permit orfile a notice.(1) Permit. You must obtain a permitif the research activities you propose toconduct involve:(i) Using solid or liquid explosives; or(ii) Drilling a deep stratigraphic test.(2) Notice. Any other G&G scientificresearch that you conduct related to oil,gas, and sulphur in the OCS requiresyou to file a notice with the RegionalDirector at least 30 days before youbegin. If circumstances preclude a 30-day notice, you must provide oral noticeand followup in writing. You must alsonotify MMS in writing when youconclude your work.

6154 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules§ 251.5 Applying for permits or filingnotices.(a) Permits. You must submit theoriginal and three copies of the MMSpermit application form (Form MMS–327). The form includes names ofpersons, type, location, purpose, anddates of activity, and environmental andother information.(b) Disapproval of permit application.If MMS disapproves your applicationfor a permit, the Regional Director willstate the reasons for the denial and willadvise you of the changes needed toobtain approval.(c) Notices. You must sign and date anotice and state:(1) The name(s) of the person(s) whowill conduct the proposed research;(2) The name of any other person(s)participating in the proposed research,including the sponsor;(3) The type of research and a briefdescription of how you will conduct it;(4) The location in the OCS, indicatedon a map, plat, or chart, where you willconduct research;(5) The proposed dates you project foryour research activity to start and end;(6) The name, registry number,registered owner, and port of registry ofvessels used in the operation;(7) The earliest time you expect tomake the data and information resultingfrom your research activity available tothe public;(8) Your plan of how you will makethe data and information you collectedavailable to the public;(9) That you and others involved willnot sell or withhold for exclusive usethe data and information resulting fromyour research; and(10) At your option, you may submit(as a substitute for the material requiredin paragraphs (c)(7), (c)(8), and (c)(9) ofthis section) the nonexclusive useagreement for scientific researchattachment to Form 327.(d) Filing locations. You must applyfor a permit or file a notice at one of thefollowing locations:(1) For the OCS off the State ofAlaska—the Regional Supervisor forResource Evaluation, MineralsManagement Service, Alaska OCSRegion, 949 East 36th Avenue,Anchorage, Alaska 99508–4302.(2) For the OCS off the Atlantic Coastand in the Gulf of Mexico—the RegionalSupervisor for Resource Evaluation,Minerals Management Service, Gulf ofMexico OCS Region, 1201 ElmwoodPark Boulevard, New Orleans, Louisiana70123–2394.(3) For the OCS off the coast of theStates of California, Oregon,Washington, or Hawaii—the RegionalSupervisor for Resource Evaluation,Minerals Management Service, PacificOCS Region, 770 Paseo Camarillo,Camarillo, California 93010–6064.§ 251.6 Obligations and rights under apermit or a notice.While conducting G&G exploration orscientific research activities under anMMS permit or notice:(a) You must not:(1) Interfere with or endangeroperations under any lease, or right-ofway,or permit issued or maintainedunder the Act;(2) Cause harm or damage to life(including fish and other aquatic life) orto the marine, coastal, or humanenvironment;(3) Cause harm or damage to propertyor to any mineral (in areas leased or notleased);(4) Cause pollution;(5) Disturb archaeological resources;(6) Create hazardous or unsafeconditions; or(7) Interfere with or cause harm toother uses of the area.(b) You must immediately report tothe Regional Director if you:(1) Detect hydrocarbon occurrences;(2) Detect environmental hazardswhich imminently threaten life andproperty; or(3) Adversely affect the environment,aquatic life, archaeological resources, orother uses of the area where you areconducting exploration or scientificresearch activities.(c) You must also consult andcoordinate your G&G activities withother users of the area, such as thefishing, marine transportation, oil andgas, and geophysical survey industries,U.S. Navy, Coast Guard, etc.(d) You must use the best availableand safest technologies that the RegionalDirector determines to be economicallyfeasible.(e) You may not claim any oil, gas,sulphur, or other minerals you discoverwhile conducting operations under apermit or notice.§ 251.7 Test drilling activities under apermit.(a) Shallow test drilling. Before youbegin shallow test drilling under apermit, the Regional Director mayrequire you to:(1) Gather and submit seismic,bathymetric, sidescan sonar,magnetometer, or other geophysical dataand information to determine shallowstructural detail across and in thevicinity of the proposed test.(2) Submit information for coastalzone consistency certification accordingto paragraphs (b)(3) and (b)(4) of thissection and for protecting archaeologicalresources according to paragraph (b)(5)of this section.(3) Allow all interested parties theopportunity to participate in theshallow test according to paragraph (c)of this section and meet bondingrequirements according to paragraph (d)of this section.(b) Deep stratigraphic tests. You mustsubmit to the Regional Director at theaddress given in § 251.5, a drilling plan,an environmental report, and anapplication for permit to drill asfollows:(1) Drilling plan. The drilling planmust include:(i) The proposed type, sequence, andtimetable of drilling activities;(ii) A description of your drilling rig,indicating the important features withspecial attention to safety, pollutionprevention, oil-spill containment andcleanup plans, and onshore disposalprocedures;(iii) The location of each deepstratigraphic test you will conduct,including the location of the surface andprojected bottomhole of the borehole;(iv) The types of geophysical surveyinstruments you will use before andduring drilling;(v) Seismic, bathymetric, sidescansonar, magnetometer, or othergeophysical data and informationsufficient to evaluate seafloorcharacteristics, shallow geologichazards, and structural detail across andin the vicinity of the proposed test tothe total depth of the proposed test well;and(vi) Other relevant data andinformation that the Regional Directorrequires.(2) Environmental report. Theenvironmental report must include allof the following material:(i) A summary with data andinformation available at the time yousubmitted the related drilling plan.MMS will consider site-specific dataand information developed since themost recent environmental impactstatement or other environmentalimpact analysis in the immediate area.The summary must meet the followingrequirements:(A) You must concentrate on theissues specific to the site(s) of drillingactivity. However, you only need tosummarize data and informationdiscussed in any environmental reports,analyses, or impact statements preparedfor the geographic area of the drillingactivity.(B) You must list referenced material.Include brief descriptions and astatement of where the material isavailable for inspection.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6155(C) You must refer only to data thatare available to MMS.(ii) Details about your project such as:(A) A list and description of new orunusual technologies;(B) The location of travel routes forsupplies and personnel;(C) The kinds and approximate levelsof energy sources;(D) The environmental monitoringsystems; and(E) Suitable maps and diagramsshowing details of the proposed projectlayout.(iii) A description of the existingenvironment. For this section, you mustinclude the following information onthe area:(A) Geology;(B) Physical oceanography;(C) Other uses of the area;(D) Flora and fauna;(E) Existing environmental monitoringsystems; and(F) Other unusual or uniquecharacteristics that may affect or beaffected by the drilling activities.(iv) A description of the probableimpacts of the proposed action on theenvironment and the measures youpropose for mitigating these impacts.(v) A description of any unavoidableor irreversible adverse effects on theenvironment that could occur.(vi) Other relevant data that theRegional Director requires.(3) Copies for coastal States. Youmust submit copies of the drilling planand environmental report to theRegional Director for transmittal to theGovernor of each affected coastal Stateand the coastal zone managementagency of each affected coastal State thathas an approved program under theCoastal Zone Management Act. (TheRegional Director will make the drillingplan and environmental report availableto appropriate Federal agencies and thepublic according to DOI policies andprocedures.)(4) State concurrence. When requiredunder an approved coastal zonemanagement program of an affectedState, your proposed activities mustreceive State concurrence before theRegional Director can approve theactivities.(5) Protecting archaeologicalresources. The Regional Director mayrequire you to conduct and submitstudies that determine whether anyarchaeological resources exist in thearea that the drilling may affect.(i) You must include a description ofany archaeological resources you detect.(ii) You must not take any action thatcould disturb the archaeologicalresources.(iii) If you discover any archaeologicalresource after you submit the studyresults (i.e., during site preparation ordrilling), you must immediately haltoperations within the area of discovery,and you must report the discovery to theRegional Director.(iv) If investigations determine thatthe resource is significant, the RegionalDirector will inform you how to protectit. You must make every reasonableeffort to protect the archaeologicalresource from damage until the RegionalDirector has given you further directionsfor preserving it.(6) Application for permit to drill(APD). Before commencing deepstratigraphic test drilling activitiesunder an approved drilling plan, youmust submit an APD and receiveapproval. You must comply with allregulations relating to drillingoperations in 30 CFR part 250.(7) Revising an approved drillingplan. Before you revise an approveddrilling plan, you must obtain theRegional Director’s approval.(8) After drilling. When you completethe test activities, you mustpermanently plug and abandon theborehole of all deep stratigraphic testsin compliance with 30 CFR part 250. Ifthe tract on which you conducted adeep stratigraphic test is leased toanother party for exploration anddevelopment, and if the lessee has notdisturbed the borehole, MMS will holdyou and not the lessee responsible forproblems associated with the test hole.(9) Deadline for completing a deepstratigraphic test. If your deepstratigraphic test well is within 50geographic miles of a tract that MMShas identified for a future lease sale, aslisted on the currently approved OCSleasing schedule, you must complete alldrilling activities and submit the dataand information to the Regional Directorat least 60 days before the first day ofthe month in which MMS schedules thelease sale. However, the RegionalDirector may extend your permitduration to allow you to completedrilling activities and submit data andinformation if the extension is in thenational interest.(c) Group participation in test drilling.MMS encourages group participation fordeep stratigraphic tests.(1) Purpose of group participation.The purpose is to minimize duplicativeG&G activities involving drilling intothe seabed of the OCS.(2) Providing opportunity forparticipation in a deep stratigraphictest. When you propose to drill a deepstratigraphic test, you must give allinterested persons an opportunity toparticipate in the test drilling through asigned agreement on a cost-sharingbasis. You may include a penalty forlate participation of not more than 100percent of the cost to each originalparticipant in addition to the originalshare cost.(i) The participants must assess anddistribute penalties in accordance withthe terms of the agreement.(ii) For a significant hydrocarbonoccurrence that the Regional Directorannounces to the public, the penalty forsubsequent late participants may beraised to not more than 300 percent ofthe cost of each original participant inaddition to the original share cost.(3) Providing opportunity forparticipation in a shallow test drillingproject. When you apply to conductshallow test drilling activities, youmust, if ordered by the RegionalDirector or required by the permit, giveall interested persons an opportunity toparticipate in the test activity on a costsharingbasis. You may include apenalty provision for late participationof not more than 50 percent of the costto each original participant in additionto the original share cost.(4) Procedures for group participationin drilling activities. You must:(i) Publish a summary statement thatdescribes the approved activity in arelevant trade publication;(ii) Forward a copy of the publishedstatement to the Regional Director;(iii) Allow at least 30 days from thesummary statement publication date forother persons to join as originalparticipants;(iv) Compute the estimated cost bydividing the estimated total cost of theprogram by the number of originalparticipants; and(v) Furnish the Regional Director witha complete list of all participants beforestarting operations or at the end of theadvertising period if you beginoperations before the advertising periodis over. Forward the names of all lateparticipants to the Regional Director.(5) Changes to the original applicationfor test drilling. If you propose changesto the original application and theRegional Director determines that thechanges are significant, the RegionalDirector will require you to publish thechanges for an additional 30 days togive other persons a chance to join asoriginal participants.(d) Bonding requirements. You mustsubmit a bond under this part beforeyou may start a deep stratigraphic test.You must submit a bond for shallowdrilling if the Regional Director sorequires.(1) Before MMS authorizes thedrilling of a deep stratigraphic test, youmust furnish to MMS:(i) A corporate surety bond in theamount specified at 30 CFR 256.61(a)(1)

6156 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesconditioned on compliance with theterms of the permit.(ii) An areawide bond in the amountspecified at 30 CFR 256.61(a)(2)conditioned on compliance with theterms of the permit issued to you.(2) If the Regional Director requires abond for shallow drilling, you mustfurnish the appropriate bond.(3) Any bond you furnish or maintainunder this section must be on a formthat the Regional Director has approvedor prescribed.(4) The Regional Director may requireadditional security in the form of asupplemental bond or bonds or increasethe coverage of an existing surety bondwhen the Regional Director deems thatadditional security is necessary.§ 251.8 Inspection and reportingrequirements for activities under a permit.(a) Inspection of permit activities. Youmust allow MMS representatives toinspect your exploration or scientificresearch activities under a permit. Theywill determine whether operations areadversely affecting the environment,aquatic life, archaeological resources, orother uses of the area. MMS willreimburse you for food, quarters, andtransportation that you provide forMMS representatives if you send inyour reimbursement request within 90days of the inspection.(b) Approval for modifications. Beforeyou begin modified operations, youmust submit a written requestdescribing the modifications and receivethe Regional Director’s oral or writtenapproval.(c) Reports. (1) You must submitstatus reports on a schedule specified inthe permit and include a daily log ofoperations.(2) You must submit a final report ofexploration or scientific researchactivities under a permit within 30 daysafter the completion of activities. Youmay combine the final report with thelast status report and must include:(i) A description of the workperformed.(ii) Charts, maps, plats, and digitalnavigational data in a format specifiedby the Regional Director, showing theareas and blocks in which anyexploration or permitted scientificresearch activities were conducted.Identify the lines of geophysicaltraverses and their locations including areference sufficient to identify the dataproduced during each activity.(iii) The dates on which youconducted the actual exploration orscientific research activities.(iv) A summary of any:(A) Hydrocarbon or sulphuroccurrences encountered;(B) Environmental hazards; and(C) Adverse effects of the explorationor scientific research activities on theenvironment, aquatic life,archaeological resources, or other usesof the area in which the activities wereconducted.(v) Other descriptions of the activitiesconducted as specified by the RegionalDirector.§ 251.9 Temporarily stopping, canceling,or relinquishing activities approved under apermit.(a) MMS may temporarily stopexploration or scientific researchactivities under a permit when theRegional Director determines that:(1) Activities pose a threat of serious,irreparable, or immediate harm. Thisincludes damage to life (including fishand other aquatic life), property, anymineral deposit (in areas leased or notleased), to the marine, coastal, or humanenvironment, or to an archaeologicalresource;(2) You failed to comply with anyapplicable law, regulation, order, orprovision of the permit. This wouldinclude MMS’s required submission ofreports and well records or logs withinthe time specified; or(3) Stopping the activities is in theinterest of national security or defense.(b) Procedures to temporarily stopactivities. (1) The Regional Director willnotify you either orally or in writing.MMS will confirm an oral notificationin writing and deliver all writtennotifications by courier or certified orregistered mail. You must halt allactivities under a permit as soon as youreceive an oral or written notification.(2) The Regional Director will notifyyou when you may start your permitactivities again.(c) Procedure to cancel or relinquisha permit. The Regional Director maycancel, or a permittee may relinquish, apermit at any time.(1) If MMS cancels your permit, theRegional Director will notify you bycertified or registered mail 30 daysbefore the cancellation date and willstate the reason.(2) You may relinquish the permit bynotifying the Regional Director bycertified or registered mail 30 days inadvance.(3) After MMS cancels your permit oryou relinquish it, you are stillresponsible for proper abandonment ofany drill sites in accordance with therequirements of § 251.7 (b)(8). You mustalso comply with all other obligationsspecified in this part or in the permit.§ 251.10 Penalties and appeals.(a) Penalties for noncompliance undera permit issued by MMS. You are subjectto the penalty provisions of:(1) Section 24 of the Act (43 U.S.C.1350); and(2) The procedures contained in 30CFR part 250, subpart N, fornoncompliance with:(i) Any provision of the Act;(ii) Any provision of the permit; or(iii) Any regulation or order issuedunder the Act.(b) Penalties under other laws andregulations. The penalties prescribed inthis section are in addition to any otherpenalty imposed by any other law orregulation.(c) Procedures to appeal orders ordecisions MMS issues. You may appealany orders or decisions that MMS issuesunder the regulations in this part byreferring to 30 CFR part 290. When youfile an appeal with the Director, youmust continue to follow allrequirements for compliance with anorder or decision other than payment ofa civil penalty.§ 251.11 Inspection, selection, andsubmission of geological data andinformation collected under a permit.(a) Availability of geological data andinformation collected under a permit.(1) You must notify the RegionalDirector immediately, in writing, afteryou acquire, analyze, process, orinterpret geological data andinformation.(2) Within 30 days of the RegionalDirector’s request, you must informMMS in writing of subsequent analysis,processing, or interpretation ofgeological data and information.(3) The Regional Director may, atsome time, request that you submit theanalyzed, processed, and interpretedgeologic data and information forinspection and/or permanent retentionby MMS.(b) Submission of geological data andinformation collected under a permit.Unless the Regional Director specifiesotherwise, geological data andinformation must include:(1) An accurate and complete recordof all geological (including geochemical)data and information describing eachoperation of analysis, processing, andinterpretation;(2) Paleontological reports identifyingmicroscopic fossils by depth, includingthe reference datum to whichpaleontological sample depths arerelated; and, if the Regional Directorrequests, washed samples that youmaintain for paleontologicaldeterminations;(3) Copies of well logs or charts in adigital format, if available;

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6157(4) Results and data obtained fromformation fluid tests;(5) Analyses of core or bottomsamples and/or a representative cut orsplit of the core or bottom sample;(6) Detailed descriptions of anyhydrocarbons or hazardous conditionsencountered during operations,including near losses of well control,abnormal geopressures, and losses ofcirculation; and(7) Other geological data andinformation that the Regional Directormay specify.(c) Permit obligations whentransferring geological data andinformation to a third party. If youtransfer geological data and information,in any manner, such as by sale, sale ofrights, license agreement, or trade to athird party; or if a third party transfersdata and information to another thirdparty, the recipient of the data andinformation assumes the obligations of apermittee under this section and issubject to the penalty provisions ofsubpart N of part 250.(1) The party transferring the data andinformation must notify the recipient, inwriting, that accepting these obligationsis a condition of the transfer. Therecipient must accept those obligationsbefore the transfer of data andinformation can occur.(2) The party transferring the data andinformation must notify the RegionalDirector of the transfer of the data andinformation within 30 days of transfer.§ 251.12 Inspection, selection, andsubmission of geophysical data andinformation collected under a permit.(a) Availability of geophysical dataand information collected under apermit. (1) You must notify the RegionalDirector immediately, in writing, afteryou initially acquire, process, andinterpret any geophysical data andinformation you collect under a permit.(2) Within 30 days of a request fromthe Regional Director, you must informMMS in writing of the availability ofany geophysical data and informationthat you further processed orinterpreted.(b) Review and selection ofgeophysical data and informationcollected under a permit. The RegionalDirector is authorized to inspectgeophysical data and information beforemaking a final selection for retention.MMS representatives may inspect andselect the data and information on yourpremises, or the Regional Director canrequest that you deliver data andinformation to the appropriate MMSregional office for review.(1) You must submit the geophysicaldata and information within 30 days ofreceiving the request, unless theRegional Director extends the deliverytime.(2) At any time before final selection,the Regional Director may return any orall geophysical data and informationfollowing review. You will be notifiedin writing of all or portions of those datathe Regional Director decides to retain.(c) Submission of geophysical dataand information collected under apermit. Unless the Regional Directorspecifies otherwise, you must include:(1) An accurate and complete recordof each geophysical survey conductedunder the permit, including digitalnavigational data and final locationmaps;(2) All seismic data developed undera permit presented in a format and of aquality suitable for processing;(3) Processed geophysical informationderived from seismic data withextraneous signals and interferenceremoved, presented in a quality formatsuitable for interpretive evaluation,reflecting state-of-the-art processingtechniques; and(4) Other geophysical data, processedgeophysical information, andinterpreted geophysical informationincluding, but not limited to, shallowand deep subbottom profiles,bathymetry, sidescan sonar, gravity andmagnetic surveys, and special studiessuch as refraction and velocity surveys.(d) Permit obligations whentransferring geophysical data andinformation to a third party. If youtransfer geophysical data, processedgeophysical information, or interpretedgeophysical information in any manner,such as by sale of rights, licenseagreement, or trade to a third party; orif a third party transfers the data andinformation to another third party, therecipient of the data and informationassumes the obligations of a permitteeunder this section and is subject to thepenalty provisions of part 250, subpartN.(1) The party that transfers the dataand information must notify therecipient of the data, in writing, thataccepting these obligations is acondition of the transfer. The recipientmust accept those obligations before thetransfer of data and information canoccur.(2) The party that transfers the dataand information must notify theDirector of the transfer of the data andinformation within 30 days of transfer,unless the transfer is by means of alicense agreement.(3) If the transfer is by means of alicense agreement, you or the nexttransferor must notify the RegionalDirector of any transfers of data andinformation within 30 days of a requestby the Regional Director.§ 251.13 Reimbursement for the costs ofreproducing data and information andcertain processing cost.(a) MMS will reimburse you or a thirdparty for reasonable costs ofreproducing data and information thatthe Regional Director requests if:(1) You deliver G&G data andinformation to MMS for the RegionalDirector to review, or select and retain(according to §§ 251.11 or 251.12);(2) MMS receives your request forreimbursement and the RegionalDirector determines that the requestedreimbursement is proper; and(3) The cost is at your lowest rate (ora third party’s) or at the lowestcommercial rate established in the area,whichever is less.(b) MMS will reimburse you or thethird party for the reasonable costs ofprocessing geophysical information(which does not include cost of dataacquisition):(1) If at the request of the RegionalDirector, you processed the geophysicaldata or information in a form or mannerother than that used in the normalconduct of business; or(2) If you collected the informationunder a permit that MMS issued to youbefore October 1, 1985, and the RegionalDirector requests and retains theinformation.(c) When you request reimbursement,you must identify reproduction andprocessing costs separately fromacquisition costs.(d) MMS will not reimburse you or athird party for data acquisition costs orfor the costs of analyzing or processinggeological information or interpretinggeological or geophysical information.§ 251.14 Protecting and disclosing dataand information submitted to MMS under apermit.(a) Disclosure of data and informationto the public by MMS. (1) In making dataand information available to the public,the Regional Director will follow theapplicable requirements of:(i) The Freedom of Information Act (5U.S.C. 552);(ii) The implementing regulations at43 CFR part 2;(iii) The Act; and(iv) The regulations at 30 CFR parts250 and 252 of this chapter.(2) Except as specified in this sectionor in 30 CFR parts 250 and 252, if theDirector determines any data orinformation is exempt from publicdisclosure under paragraph (a) of thissection, MMS will not provide the dataand information to any State or to the

6158 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesexecutive of any local government or tothe public, unless you and all thirdparties agree to the disclosure. (Thirdparty includes all persons to whom yousold, licensed, traded, or otherwisetransferred the data or information.)(3) When you detect any significanthydrocarbon occurrences orenvironmental hazards on unleasedlands during drilling operations, theRegional Director will immediatelyissue a public announcement. Theannouncement must further the nationalinterest but without unduly damagingyour competitive position.(b) Timetable for release of G&G dataand information that MMS acquires.MMS will release data and informationthat you or a third party submits andMMS retains in accordance withparagraphs (b)(1) and (b)(2) of thissection.(1) If the data and information are notrelated to a deep stratigraphic test, MMSwill release them to the public inaccordance with the following table:If you or a third partysubmits and MMS retainsGeological data andinformation.Geophysical data ......Geophysical information.The Regional Directorwill disclose them tothe public10 years after issuingthe permit.50 years after yousubmit the data.25 years after yousubmit the information.(2) If the data and information arerelated to a deep stratigraphic test, MMSwill release them to the public at theearlier of the following times:(i) Twenty-five years after youcomplete the test; or(ii) If a lease sale is held after youcomplete a test well, 60 calendar daysafter MMS issues the first lease, aportion of which is located within 50geographic miles (92.7 kilometers) of thetest.(c) Procedure that MMS follows todisclose acquired data and informationto a contractor for reproduction,processing, and interpretation. (1) Whenpracticable, the Regional Director willnotify you of the intent to disclose thedata or information to an independentcontractor or agent.(2) The notice will give you at least 5working days to comment on the action.(3) When the Regional Directornotifies you, all other owners of suchdata or information will be consideredto have been so notified.(4) Before disclosure, the contractor oragent must sign a written commitmentnot to transfer or disclose data orinformation to anyone without theRegional Director’s consent.(d) Sharing data and information withcoastal States. (1) When MMS solicitsnominations for leasing lands locatedwithin 3 geographic miles (5.6kilometers) of the seaward boundary ofany coastal State, the Regional Directorin accordance with 30 CFR 252.7 (a)(4)and (b) and subsections 8(g) and 26(e)of the Act (43 U.S.C. 1337(g) and1352(e)) will provide the Governor with:(i) All information on thegeographical, geological, and ecologicalcharacteristics of the areas and regionsMMS proposes to offer for lease;(ii) An estimate of the oil and gasreserves in the areas proposed forleasing; and(iii) An identification of any field,geological structure, or trap on the OCSwithin 3 geographic miles (5.6kilometers) of the seaward boundary ofthe State.(2) After receiving nominations forleasing an area of the OCS within 3geographic miles of the seawardboundary of any coastal State, MMS willcarry out a tentative area identificationaccording to 30 CFR part 256, subpartsD and E. At that time, the RegionalDirector will consult with the Governorto determine whether any tracts furtherconsidered for leasing may contain anyoil or gas reservoirs that underlie boththe OCS and lands subject to thejurisdiction of the State.(3) Before a sale, if a Governorrequests, the Regional Director, inaccordance with 30 CFR 252.7(a)(4) and(b) and sections 8(g) and 26(e) of the Act(43 U.S.C. 1337(g) and 1352(e)) willshare with the Governor informationthat identifies potential and/or provencommon hydrocarbon bearing areaswithin 3 geographic miles of theseaward boundary of that State.(4) Knowledge received by the Stateofficial who receives informationdescribed in paragraph (d) of thissection is subject to applicableconfidentiality requirements of:(i) The Act; and(ii) The regulations at 30 CFR parts250, 251, and 252 of this chapter.§ 251.15 Authority for informationcollection.(a) The Office of Management andBudget has approved the informationcollection requirements in part under 44U.S.C. 3501 et seq. and assigned OMBcontrol number 1010–0048. The title ofthis information collection is ‘‘30 CFRPart 251, Geological and Geophysical(G&G) Explorations of the OCS.’’Paragraph (d) of this section lists thesections in this part requiring theinformation collection, summarizes howMMS will use the information, andindicates the reason for the response.(b) An agency may not conduct orsponsor, and a person is not required torespond to, a collection of informationunless it displays a currently valid OMBcontrol number.(c) Send comments regarding anyaspect of the collection of informationunder this part, including suggestionsfor reducing the burden, to theInformation Collection ClearanceOfficer, Minerals Management Service,Mail Stop 2053, 381 Elden Street,Herndon, Virginia 20170–4817; and tothe Office of Information and RegulatoryAffairs, Office of Management andBudget, Attention: Desk Officer for theDepartment of the Interior (1010–0048),725 17th Street, NW, Washington, DC20503.(d) MMS is collecting this informationfor the reasons given in the followingtable:Regulation cite Information used Response30 CFR 251.5 ................................. To evaluate permit applications and to monitor scientific research activitiesfor environmental and safety reasons.30 CFR 251.6(b) ............................ To determine that explorations do not harm resources, result in pollutionor create hazardous or unsafe conditions.30 CFR 251.6(c) ............................ To coordinate activities in the OCS and not harm or interfere withother users in the area.30 CFR 251.7: The burden for this To analyze and evaluate preliminary or planned drilling activities ofsection is included with 30 CFR permittees in the OCS.250.31 and 250.33 (OMB ControlNo. 1010–0049).The response is required to obtaina benefit.The response is mandatory.The response is required to obtaina benefit.The response is mandatory.30 CFR 251.8(a) ............................ To approve reimbursement of certain expenses ................................... The response is required to obtaina benefit.30 CFR 251.8 (b) and (c) .............. To monitor the progress of activities carried out under an OCS G&Gpermit.The response is mandatory.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6159Regulation cite Information used Response30 CFR 251.9(c)(2) ........................ To monitor the activities carried out under an OCS G&G permit .......... The response is mandatory.30 CFR 251.11 and 251.12 ........... To inspect and select G&G data and information collected under an The response is mandatory.OCS G&G permit.30 CFR 251.13 ............................... To determine eligibility for reimbursement from the Government forcertain costs.The response is required to obtaina benefit.[FR Doc. 97–3200 Filed 2–10–97; 8:45 am]BILLING CODE 4310–MR–PENVIRONMENTAL PROTECTIONAGENCY40 CFR Part 52[IL154–b–1; FRL–5685–8]Approval and Promulgation ofImplementation Plans; IllinoisAGENCY: Environmental ProtectionAgency (USEPA).ACTION: Proposed rule.SUMMARY: On October 11, 1996, Illinoissubmitted a negative declarationregarding the need for rules controllingair emissions from sources classified aspart of the ‘‘Shipbuilding and ShipRepair Industry’’ (SSRI) or ‘‘MarineCoatings’’ category in the StandardIndustrial Classification (SIC) Manual.This negative declaration indicates thatthe State of Illinois has determined thatthere are no major sources (sources witha potential to emit twenty-five or moretons per year of volatile organic material(VOM)) in the Chicago ozonenonattainment area or the Metro-Eastozone nonattainment area. In thisaction, USEPA is proposing to approvethe State’s finding that no additionalcontrol measures are needed. In thefinal rules section of this FederalRegister, the USEPA is approving theseactions as a direct final rule withoutprior proposal because USEPA viewsthis as a noncontroversial action andanticipates no adverse comments. Adetailed rationale for the approval is setforth in the direct final rule. If noadverse comments are received inresponse to that direct final rule, nofurther activity is contemplated inrelation to this proposed rule. If USEPAreceives adverse comments, the directfinal rule will be withdrawn and allpublic comments received will beaddressed in a subsequent final rulebased on the proposed rule. USEPA willnot institute a second comment periodon this action. Any parties interested incommenting on this notice should do soat this time.DATES: Comments on this proposed rulemust be received on or before March 13,1997.ADDRESSES: Written comments shouldbe mailed to: J. Elmer Bortzer, Chief,Regulation Development Section, AirPrograms Branch (AR18–J), U.S.Environmental Protection Agency,Region 5, 77 West Jackson Boulevard,Chicago, Illinois 60604.Copies of the State submittal andUSEPA’s analysis of it are available forinspection at: Regulation DevelopmentSection, Air Programs Branch (AR18–J),U.S. Environmental Protection Agency,Region 5, 77 West Jackson Boulevard,Chicago, Illinois 60604.FOR FURTHER INFORMATION CONTACT:Randolph O. Cano, RegulationDevelopment Section, Air ProgramsBranch (AR–18J), U.S. EnvironmentalProtection Agency, Region 5, 77 WestJackson Boulevard, Chicago, Illinois60604, (312) 886–6036.SUPPLEMENTARY INFORMATION: Foradditional information see the directfinal rule published in the rules sectionof this Federal Register.Dated: January 23, 1997.Steve Rothblatt,Acting Regional Administrator.[FR Doc. 97–3255 Filed 2–10–97; 8:45 am]BILLING CODE 6560–50–P40 CFR Part 52[IL153–b1; FRL–5684–9]Approval and Promulgation ofImplementation Plans; IllinoisAGENCY: U.S. Environmental ProtectionAgency (USEPA).ACTION: Proposed rule.SUMMARY: On October 11, 1996, Illinoissubmitted a negative declarationregarding the need for rules controllingair emissions from sources classified aspart of the ‘‘Aerospace Manufacturingand Rework Industry’’ (AMRI)) or‘‘Aerospace Coatings’’ category in theStandard Industrial Classification (SIC)Manual. This negative declarationindicates that the State of Illinois hasdetermined that there are no majorsources (sources with a potential to emittwenty-five or more tons per year ofvolatile organic material (VOM) in theChicago ozone nonattainment area orthe Metro-East ozone nonattainmentarea. In this action, USEPA is proposingto approve the State’s finding that noadditional control measures are needed.In the final rules section of this FederalRegister, the USEPA is approving theseactions as a direct final rule withoutprior proposal because USEPA viewsthis as a noncontroversial action andanticipates no adverse comments. Adetailed rationale for the approval is setforth in the direct final rule. If noadverse comments are received inresponse to that direct final rule, nofurther activity is contemplated inrelation to this proposed rule. If USEPAreceives adverse comments, the directfinal rule will be withdrawn and allpublic comments received will beaddressed in a subsequent final rulebased on the proposed rule. USEPA willnot institute a second comment periodon this action. Any parties interested incommenting on this notice should do soat this time.DATES: Comments on this proposed rulemust be received on or before March 13,1997.ADDRESSES: Written comments shouldbe mailed to: J. Elmer Bortzer, Chief,Regulation Development Section, AirPrograms Branch (AR18–J), U.S.Environmental Protection Agency,Region 5, 77 West Jackson Boulevard,Chicago, Illinois 60604.Copies of the State submittal andUSEPA’s analysis of it are available forinspection at: Regulation DevelopmentSection, Air Programs Branch (AR18–J),U.S. Environmental Protection Agency,Region 5, 77 West Jackson Boulevard,Chicago, Illinois 60604.FOR FURTHER INFORMATION CONTACT:Randolph O. Cano, RegulationDevelopment Section, Air ProgramsBranch (AR–18J), U.S. EnvironmentalProtection Agency, Region 5, 77 WestJackson Boulevard, Chicago, Illinois60604, (312) 886–6036.SUPPLEMENTARY INFORMATION: Foradditional information see the directfinal rule published in the rules sectionof this Federal Register.Dated: January 23, 1997.Steve Rothblatt,Acting Regional Administrator.[FR Doc. 97–3253 Filed 2–10–97; 8:45 am]BILLING CODE 6560–50–P

6160 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules40 CFR Part 52[AK14–7102b; FRL–5686–3]Approval and Promulgation of StateImplementation Plans: AlaskaAGENCY: Environmental ProtectionAgency (EPA).ACTION: Proposed rule.SUMMARY: The EPA proposes to approvethe State Implementation Plan (SIP)revision submitted by the State ofAlaska for the purpose of approving the1990 base year carbon monoxideemission inventory portion of theAnchorage and Fairbanks, Alaskacarbon monoxide (CO) StateImplementation Plan (SIP) submitted onDecember 29, 1993, by the State ofAlaska Department of EnvironmentalConservation (ADEC). The SIP revisionwas submitted by the State to satisfycertain Federal Clean Air Actrequirements for the purpose of bringingabout the attainment of the nationalambient air quality standard (NAAQS)for CO. In the Final Rules Section of thisFederal Register, the EPA is approvingthe State’s SIP revision as a direct finalrule without prior proposal because theAgency views this as a noncontroversialrevision amendment and anticipates noadverse comments. A detailed rationalefor the approval is set forth in the directfinal rule. If no adverse comments arereceived in response to this proposedrule, no further activity is contemplatedin relation to this rule. If the EPAreceives adverse comments, the directfinal rule will be withdrawn and allpublic comments received will beaddressed in a subsequent final rulebased on this proposed rule. The EPAwill not institute a second commentperiod on this action.DATES: Comments on this proposed rulemust be received in writing by March13, 1997.ADDRESSES: Written comments shouldbe addressed to Montel Livingston,Environmental Protection Specialist(OAQ–107), Office of Air Quality, at theEPA Regional Office listed below.Copies of the documents relevant to thisproposed rule are available for publicinspection during normal businesshours at the following locations. Theinterested persons wanting to examinethese documents should make anappointment with the appropriate officeat least 24 hours before the visiting day.Environmental Protection Agency,Region 10, Office of Air Quality, 12006th Avenue, Seattle, WA 98101.Alaska Department of EnvironmentalConservation, 410 Willoughby, Suite105, Juneau, Alaska 99801–1795.FOR FURTHER INFORMATION CONTACT: JohnPavitt, EPA Region 10, AlaskaOperations Office (AOO/A), 222 W. 7thAvenue, Box #19, Anchorage, AK99513–7588, (907) 271–5083.SUPPLEMENTARY INFORMATION: See theinformation provided in the Direct Finalaction which is located in the RulesSection of this Federal Register.Dated: January 28, 1997.Chuck Clarke,Regional Administrator.[FR Doc. 97–3364 Filed 2–10–97; 8:45 am]BILLING CODE 6560–50–P40 CFR Part 721[OPPTS–50581B; FRL–5580–8]Proposed Revocation of SignificantNew Use Rules for Certain ChemicalSubstancesAGENCY: Environmental ProtectionAgency (EPA).ACTION: Proposed rule.SUMMARY: EPA is proposing to revoketwo significant new use rules (SNUR)promulgated under section 5(a)(2) of theToxic Substances Control Act (TSCA)for certain chemical substances basedon new toxicity data. Based on the datathe Agency determined that it could nolonger support a finding that activitiesnot described in the TSCA section 5(e)consent order may result in significantchanges in human exposure.DATES: Written comments must bereceived by March 13, 1997.ADDRESSES: Each comment must bearthe docket control number OPPTS–50581B. All comments should be sent intriplicate to: OPPT Document ControlOfficer (7407), Office of PollutionPrevention and Toxics, EnvironmentalProtection Agency, 401 M Street, SW.,Room G–099, East Tower, Washington,DC 20460.All comments which are claimedconfidential must be clearly marked assuch. Three additional sanitized copiesof any comments containingconfidential business information (CBI)must also be submitted. Nonconfidentialversions of comments on this rule willbe placed in the rulemaking record andwill be available for public inspection.Unit III of this preamble containsadditional information on submittingcomments containing CBI.Comments and data may also besubmitted electronically by sendingelectronic mail (e-mail) to: opptncic@epamail.epa.gov.Electroniccomments must be submitted as anASCII file avoiding the use of specialcharacters and any form of encryption.Comments and data will also beaccepted on disks in WordPerfect 5.1file format or ASCII file format. Allcomments and data in electronic formmust be identified by (OPPTS–50581B).No CBI should be submitted through e-mail. Electronic comment on this noticemay be filed online at many FederalDepository Libraries. Additionalinformation on electronic submissionscan be found under Unit IV of thispreamble.FOR FURTHER INFORMATION CONTACT:Susan B. Hazen, Director,Environmental Assistance Division(7408), Office of Pollution Preventionand Toxics, Environmental ProtectionAgency, Rm. E–543A, 401 M St., SW.,Washington, DC 20460; telephone: (202)554–1404; TDD: (202) 554–0551; e-mail:TSCA-Hotline@epamail.epa.gov.SUPPLEMENTARY INFORMATION: In theFederal Register of October 31, 1990 (55FR 45994) EPA issued a SNURestablishing significant new uses for thesubstances listed in Unit I of thispreamble. Because of additional dataEPA has received for these substances,EPA is proposing to revoke the SNURs.I. Proposed RevocationEPA is proposing to revoke thesignificant new use and recordkeepingrequirements for the following chemicalsubstances under 40 CFR part 721,subpart E. In this unit, EPA provides abrief description for the substances,including its premanufacture notice(PMN) number, chemical name (genericname if the specific name is claimed asCBI), CAS number (if assigned), basis forthe revocation of the section 5(e)consent order for the substance, and theCFR citation removed in the regulatorytext section of this proposed rule.Further background information for thesubstances is contained in therulemaking record referenced below inUnit IV of this preamble.PMN Number P–89–697Chemical name: (generic) Alkenoic acid,trisubstituted-benzyl-disubstitutedphenylester.CAS number: Not available.Basis for revocation of SNUR: Based ondata for triethylene glycol diacrylatewhich was not carcinogenic in a longterm dermal bioassay in mice and a 28-day study for P–89–694 whichdemonstrated no dermal absorption ortoxic effects by the dermal route, EPAno longer supports the carcinogenicityconcern for this substance. Based onthat assessment EPA determined that itcould no longer support anunreasonable risk finding under section5(e) of TSCA and is revoking theconsent order. EPA can no longer make

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6161the finding that activities not describedin the TSCA section 5(e) consent ordermay result in significant changes inhuman exposure.CFR Number: 40 CFR 721.3020.PMN Number P–89–694Chemical name: (generic) Alkenoic acid,trisubstituted-phenylalkyldisubstituted-phenylester.CAS number: Not available.Basis for revocation of SNUR: Based ondata for triethylene glycol diacrylatewhich was not carcinogenic in a longterm dermal bioassay in mice, and a 28-day study for this substance whichdemonstrated no dermal absorption ortoxic effects by the dermal route, EPAno longer supports the carcinogenicityconcern for this substance. Based onthat assessment EPA determined that itcould no longer support anunreasonable risk finding under section5(e) of TSCA and is revoking theconsent order. EPA can no longer makethe finding that activities not describedin the TSCA section 5(e) consent ordermay result in significant changes inhuman exposure.CFR Number: 40 CFR 721.3040.II. Background and Rationale forRevocation of the RuleDuring review of the PMNs submittedfor the chemical substances that are thesubject of this revocation, EPAconcluded that regulation waswarranted based on the fact thatactivities not described in the section5(e) consent order may result insignificant changes in human exposure.Based on these findings, SNURs werepromulgated.EPA will revoke the section 5(e)consent order that is the basis for theseSNURs and has determined that it canno longer support a finding thatactivities not described in the section5(e) consent order may result insignificant changes in human exposure.The proposed revocation of SNURprovisions for these substancesdesignated herein is consistent with thisfinding.In light of the above, EPA is proposingto revoke the SNUR provisions for thesechemical substances. When thisrevocation becomes final, EPA will nolonger require notice of any company’sintent to manufacture, import, orprocess these substances. In addition,export notification under section 12(b)of TSCA will no longer be required.III. Comments Containing ConfidentialBusiness InformationAny person who submits commentsclaimed as CBI must mark thecomments as ‘‘confidential,’’ ‘‘tradesecret,’’ or other appropriatedesignation. Comments not claimed asconfidential at the time of submissionwill be placed in the public file. Anycomments marked as confidential mustprepare and submit a public version ofthe comments that EPA can place in thepublic file.IV. Rulemaking RecordA record has been established for thisrulemaking under docket numberOPPTS 50581B (including commentsand data submitted electronically asdescribed below). A public version ofthis record, including printed, paperversions of electronic comments, whichdoes not include any informationclaimed as CBI is available forinspection from 12 noon to 4 p.m.,Monday through Friday, except legalholidays. The public record is located inthe TSCA Nonconfidential InformationCenter Rm. NE–B607, 401 M St., SW.,Washington, DC 20460.Electronic comments can be sentdirectly to EPA at: opptncic@epamail.epa.gov.Electroniccomments must be submitted as anASCII file avoiding the use of specialcharacters and any form of encryption.The official record for thisrulemaking, as well as the publicversion, as described above will be keptin paper form. Accordingly, EPA willtransfer all comments receivedelectronically into printed, paper formas they are received and will place thepaper copies in the official rulemakingrecord which will also include allcomments submitted directly in writing.The official rulemaking record is thepaper record maintained at the addressin ‘‘ADDRESSES’’ at the beginning ofthis document.V. Regulatory AssessmentRequirementsEPA is revoking the requirements ofthis rule. Any costs or burdensassociated with this rule will also beeliminated when the rule is revoked.Therefore, EPA finds that no costs orburdens must be assessed underExecutive Order 12866, the RegulatoryFlexibility Act (5 U.S.C. 605(b)), or thePaperwork Reduction Act (44 U.S.C.3501 et seq.).List of Subjects in 40 CFR Part 721Environmental protection, Chemicals,Hazardous materials, Recordkeepingand reporting requirements.Dated: February 3, 1997.Charles M. Auer,Director, Chemical Control Division, Officeof Pollution Prevention and Toxics.Therefore, it is proposed that 40 CFRpart 721 be amended as follows:PART 721—[AMENDED]1. The authority citation for part 721would continue to read as follows:Authority: 15 U.S.C. 2604, 2607, and2625(c).§ 721.3020 [Removed]2. By removing § 721.3020.§ 721.3040 [Removed]3. By removing § 721.3040.[FR Doc. 97–3382 Filed 2–10–97; 8:45 am]BILLING CODE 6560–50–FDEPARTMENT OF TRANSPORTATIONFederal Highway Administration49 CFR Part 395FHWA Docket No. MC–96–28RIN 2125–AD93Public Meetings for Drivers and OtherInterested PersonsAGENCY: Federal HighwayAdministration (FHWA), DOT.ACTION: Notice of meetings.SUMMARY: The FHWA is announcingseven public meeting listening sessionsfor commercial motor vehicle driversand other interested persons to speakwith FHWA officials about theirproblems with the FHWA’s hours-ofserviceregulations. This action isnecessary to inform the public about thedates, times, and locations of thelistening sessions. The FHWA hopes tohear from the public, specificallydrivers of trucks and buses, about howthe hours-of-service regulations affecttheir professional, personal, and familylife. All oral comments will betranscribed and placed in therulemaking docket for the FHWA’sconsideration.DATES: Session 1—Monday, March 10,1997, Kansas City, Missouri.Session 2—Wednesday, March 12,1997, Billings, Montana.Session 3—Friday, March 14, 1997,Ontario, California.Session 4—Friday, March 14 throughSaturday, March 15, 1997, Ontario,California.Session 5—Tuesday, March 18, 1997,Doswell, Virginia.

6162 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed RulesSession 6—Wednesday, March 26,1997, Birmingham, Alabama.Session 7—Monday, March 31, 1997,Washington, District of Columbia.The listening sessions will start at8:30 a.m. and end at 5:00 p.m. localtime, on each of these dates, except forSessions 4 and 7. The ending time maybe extended at any session toaccommodate the attendees, except forSession 7 in Washington, D.C. Thelistening session for Session 4 will startat 10:00 p.m. March 14, 1997 and endat 4:00 a.m. March 15, 1997, local time.Session 7 in Washington, D.C. will endat 4:00 p.m. local time.Written comments to the generalANPRM should be submitted to thepublic docket no later than March 31,1997. Late comments will be consideredto the extent practicable.ADDRESSES:Written Comments. Written commentsshould be sent to: Docket Clerk, Attn:FHWA Docket No. MC–96–28, FederalHighway Administration, Department ofTransportation, Room 4232, 400Seventh Street, SW., Washington, D.C.20590. Persons who requireacknowledgment of the receipt of theircomments must enclose a stamped, selfaddressedpostcard. Comments may bereviewed at the above address from 8:30a.m. through 3:30 p.m. Monday throughFriday, except Federal holidays.FOR FURTHER INFORMATION CONTACT:General Information. To request timeto be heard at the Washington, D.C.listening session and for other generalinformation about all listening sessions,contact Mr. Stan Hamilton, Office orMotor Carrier Planning and CustomerLiaison, telephone (202) 366–0665.Specific ANPRM Information. Forinformation concerning the rulemaking,contact Mr. David Miller, Office ofMotor Carrier Research and Standards,(202) 366–1790.SUPPLEMENTARY INFORMATION:Addresses for Listening SessionsThe listening sessions will be held atthese locations:Session 1—Monday, March 10, 1997,Kansas City, Missouri, Park Place Hotel,1601 North Universal (on west side ofInterstate 435), Kansas City, Missouri64120, Hotel Telephone: (816) 483–9900. Directions to Session 1: FromInterstate 435, exit number 57. Trucktractor-trailer combinations andmotorcoaches may park at the Flying JTruck Stop (on the east side of Interstate435, exit 57). A van shuttle service willbe provided.Session 2—Wednesday, March 12,1997, Billings, Montana, Holiday InnPlaza, 5500 Midland Road, Billings,Montana 59101, Hotel Telephone: (406)248–7701. Directions to Session 2: FromInterstate 90, use exit 446 (MidlandRoad). Hotel parking area capacity: 70truck tractor-trailer combinations.Additional truck and motorcoachparking may be found at Sinclair WestParkway Truck Stop, 5400 Laurel Road(exit 446 toward City Center, one blocknorth of Interstate 90 and hotel). A vanshuttle service will be provided.Session 3—Friday, March 14, 1997,Ontario, California, Ontario AirportHilton Hotel, 700 North Haven Avenue,Ontario, California 91764–4902, HotelTelephone: 909–980–0400. Directions toSessions 3 and 4: From Interstate 10,truck tractor-trailer combinations andmotorcoaches exit onto southboundMilliken Avenue. Park at the OntarioUnion 76 Truck Stop. Truck stopparking capacity: 500 truck tractortrailercombinations. A van shuttleservice will be provided. Truck tractorswith no trailers, ‘‘bobtails,’’ may park atthe hotel by exiting Interstate 10 on tonorthbound Haven Avenue. Turn rightat Inland Empire Boulevard. Only‘‘bobtails’’ may park in the hotel parkinglot.Session 4—Friday night, March 14through Saturday, before dawn, March15, 1997, Ontario, California, OntarioAirport Hilton Hotel, 700 North HavenAvenue, Ontario, California 91764–4902, Hotel Telephone: 909–980–0400.Session 5—March 18, 1997, Doswell,Virginia, Doswell All-American TravelPlaza, Interstate 95 at exit 98, Doswell,Virginia 23047, All-AmericanTelephone: (804) 876–3712. Directionsto Session 5: From Interstate 95, use exit98 (same exit as King’s DominionAmusement Park). All trucks andmotorcoaches may park at the travel/truck stop plaza.Session 6—March 26, 1997,Birmingham, Alabama, Birmingham-Jefferson Civic Center, 1 Civic CenterPlaza (950 22nd Street, North),Birmingham, Alabama 35203, CivicCenter Telephone: (800) 972–8007.Listening sessions will be held inMedical Forum Rooms A and B.Motorcoaches and truck tractor-trailercombinations may park at the BestWestern Hotel across the street from theCivic Center. Best Western Hotelparking area capacity: 15 to 20 trucktractor-trailer combinations. Additionalmotorcoach and truck parking may befound at the Civic Center large vehicleparking lot at 18th Street and 11thAvenue North (approximately fourblocks from Civic Center—MedicalForum). Directions to Session 6:Interstate 65 North: From Montgomerygoing North, exit onto Interstate 20 and59 North toward Atlanta. Exit onto 22ndStreet North exit number 125–B.Proceed north one block to 23rd Street.Turn left. Proceed west one block toCivic Center Boulevard. Interstate 65South: From Huntsville/Nashville goingsouth, exit onto Interstate 20 and 59North toward Atlanta. Mergeimmediately to the right side of thefreeway and exit onto 22nd Street Northexit number 125–B. Proceed north oneblock to 23rd Street. Turn left. Proceedwest one block to Civic CenterBoulevard. Interstate 20 and 59 North:From Tuscaloosa and points Southwest,exit onto 22nd Street North exit number125–B. Proceed north one block to 23rdStreet. Turn left. Proceed west one blockto Civic Center Boulevard. Interstate 20and 59 South: From Atlanta, exit atCarraway Boulevard exit number 125–A. Follow signs to 11th Avenue North.Follow the Civic Center signs to CivicCenter Boulevard. Turn right onto CivicCenter Boulevard.Session 7—March 31, 1997,Washington, D.C., DOT Building, 400Seventh Street, S.W., Room 2230,Telephone (202) 366–1790. Session 7Directions: From the left lane ofInterstate 295, exit onto Westbound EastCapitol Street, drive around Robert F.Kennedy (RFK) Memorial Stadium. Parkin the south RFK Stadium lot, markedLot 8. Walk to the Metrorail subwaysystem (about five city blocks). It is onthe opposite side of the D.C. Armoryfrom the parking lot. When you walk tothe front of the D.C. Armory, theMetrorail station will be on your rightabout two more blocks. It is located atthe intersection of 19th Street and ‘‘A’’Street, S.E.Enter the station by going down theescalator. Obtain a farecard from thevending machine ($1.10 one-way). Placethe farecard in an entrance gate markedwith a green arrow. Be sure you take thefarecard out of the machine when itcomes out, you will need the farecardwhen you get to L’Enfant Plaza station.If you need help buying a farecard orpassing through the entrance gate,please ask the station attendant forassistance. Board a train going towardVan Dorn or Vienna. Flashing lightsnear a track means a train is about toenter the station on that track. Trainsrun about every 15 minutes. TheL’Enfant Plaza station is five (5) stationsaway from the Stadium/Armory station.When exiting the subway trains, usethe escalators to the left (rear of thetrain) to go up to the U.S. Departmentof Transportation. Place the farecard inan exit gate marked with a green arrow.If you purchased a farecard for $1.10,the exit gate will keep your farecard. Ifyou bought a farecard for more than$1.10, be sure you take the farecard out

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6163of the machine when it comes out, asyou will need the farecard to re-enterthe station for the return trip. If youneed help passing through the exit gate,please ask the station attendant forassistance. After exiting the exit gate,ride the second set of escalators to theplaza. Enter the U.S. DOT buildingthrough the Southwest Entrance(farthest entrance to the right across theplaza as you get off the escalator). Amap on a column at the top of theescalator will also indicate theSouthwest corner of the DOT building.When you are ready to return to theRFK Stadium parking lot, re-enter theL’Enfant Plaza metrorail station at theDOT building. Purchase an additionalfarecard, enter the station and go downto the platform on the lowest level.Board a blue or orange train headedtoward New Carrollton or AddisonRoad. When you get off the escalator,the correct train track will be to yourleft. Take the train five (5) stops to theStadium/Armory station and walk backto the RFK Stadium parking lots bygoing around the D.C. Armory.The FHWA is providing thisopportunity to listen particularly todrivers who must live with, and follow,these regulations on a daily basis. TheFHWA is specifically interested inhearing about problems drivers havewith any aspect of the hours-of-serviceissue.The FHWA will not have developedany proposals for this rulemaking by thetime these listening sessions are held.These sessions are being held to obtainadditional information that may assistus in formulating proposals that wouldminimize crashes, minimize regulatoryburdens, are cost-effective, and are easyto understand. The FHWA would like todevelop new proposals based uponsupportable scientific data or, ifscientific data is not supportable, by thebest available professional judgment.The FHWA does not intend to base newproposals upon anecdotal informationor intuitive opinion.Anecdotal information or intuitiveopinions from drivers and othermembers of the public, however, mayassist us in developing proposals thatare easy to understand, comply with,and are enforceable.At all listening sessions, except inWashington, D.C., FHWA officials willrecognize and listen to all persons withan interest in the hours-of-serviceregulations. An individual will not berequired to make a formal statement atthese listening sessions. It is notnecessary to request time to be heard atthe sessions, except for the Washington,D.C. session. All persons will be givenan opportunity to participate. Alldiscussions and comments made at thelistening sessions will be recorded andtranscribed and will be placed in therulemaking docket.For Washington, D.C. Participants OnlyAll persons who would like toparticipate at the Washington, D.C.session must request notice of theirdesire to participate by telephoning Mr.Stan Hamilton at (202) 366–0665 by4:00 p.m. eastern standard time onFriday, March 28, 1997.All persons participating at theWashington, D.C. session will be subjectto Federal and DOT workplace securitymeasures. All persons will needidentification with their picture on itand must display the identification toDOT Security officers. The DOT’sSecurity office will search all non-Government personnel. Please leaveknives, guns, and other weapons athome. These weapons may beconfiscated by DOT Security officers orthe Metropolitan Police Department.All persons will be required to signinat the guard’s desk, walk-throughmetal detection devices (and possibly besearched with a hand-held metaldetection device). All handbags andpackages will be X-rayed by detectionequipment. All visitors to DOT will berequired to wear a ‘‘Visitor’’ badge at alltimes while in the DOT building.The DOT’s Security office will limitand monitor the public’s access andmovement through the DOT building.All persons requesting to participate inthe session, but failing to satisfy DOTSecurity requirements, will be deniedentry into the building and will forfeittheir opportunity to participate in theWashington, D.C. listening session.Such persons will be allowed to submitwritten comments to the docket, at theabove address, by the close of businesson March 31, 1997.Authority: 23 U.S.C. 315 and 49 CFR 1.48.Issued on: February 6, 1997.George L. Reagle,Associate Administrator for Motor Carriers.[FR Doc. 97–3387 Filed 2–10–97; 8:45 am]BILLING CODE 4910–22–P

6164NoticesFederal RegisterVol. 62, No. 28Tuesday, February 11, 1997This section of the FEDERAL REGISTERcontains documents other than rules orproposed rules that are applicable to thepublic. Notices of hearings and investigations,committee meetings, agency decisions andrulings, delegations of authority, filing ofpetitions and applications and agencystatements of organization and functions areexamples of documents appearing in thissection.EXECUTIVE OFFICE OF THEPRESIDENTOffice of National Drug Control PolicyAdministration Response to ArizonaProposition 200 and CaliforniaProposition 215AGENCY: Office of National Drug ControlPolicy, Executive Office of thePresident.ACTION: Notice.SUMMARY: This notice lists the Federalgovernment response to the recentpassage of propositions which makedangerous drugs more available inCalifornia and Arizona. These measurespose a threat to the National DrugControl Strategy goal of reducing drugabuse in the United States. At thedirection of the President, the Office ofNational Drug Control Policy (ONDCP)developed a coordinated administrationstrategy to respond to the actions inArizona and California with the otheragencies of the Federal Government tominimize the tragedy of drug abuse inAmerica.FOR FURTHER INFORMATION CONTACT:Comments and questions regarding thisnotice should be directed to Mr. DanSchecter, Office of Demand Reduction,ONDCP, Executive Office of thePresident, 750 17th Street N.W.,Washington, D.C. 20503, (202) 395–6733.SUPPLEMENTARY INFORMATION: A Federalinteragency working group chaired byONDCP met four times in Novemberand December. In developing thisstrategy, the inter-agency group gavedue consideration to two key principles:federal authority vis a vis that of thestates, and the requirement to ensureAmerican citizens are provided safe andeffective medicine. The President hasapproved this strategy, and Federal drugcontrol agencies will undertake thefollowing coordinated courses of action:A. Objective 1—Maintain EffectiveEnforcement Efforts Within theFramework Created by the FederalControlled Substances Act and theFood, Drug, and Cosmetic ActDepartment of Justice’s (DOJ) positionis that a practitioner’s action ofrecommending or prescribing ScheduleI controlled substances is not consistentwith the ‘‘public interest’’ (as thatphrase is used in the federal ControlledSubstances Act) and will lead toadministrative action by the DrugEnforcement Administration (DEA) torevoke the practitioner’s registration.DOJ and Department of Health andHuman Services (HHS) will send a letterto national, state, and local practitionerassociations and licensing boards whichstates unequivocally that DEA will seekto revoke the DEA registrations ofphysicians who recommend or prescribeSchedule I controlled substances. Thisletter will outline the authority of theInspector General for HHS to excludespecified individuals or entities fromparticipation in the Medicare andMedicaid programs.DOJ will continue existingenforcement programs using thefollowing criteria: (a) the absence of abona fide doctor-patient relationship; (b)a high volume of prescriptions orrecommendations of Schedule Icontrolled substances; (c) theaccumulation of significant profits orassets from the prescription orrecommendation of Schedule Icontrolled substances; (d) Schedule Icontrolled substances being provided tominors; and/or (e) specialcircumstances, such as when death orserious bodily injury results fromdrugged driving. The five U.S. Attorneysin California and Arizona will continueto review cases for prosecution usingthese criteria.DEA will adopt seizures of ScheduleI controlled substances made by stateand local law enforcement officialsfollowing an arrest where state and localprosecutors must decline prosecutionbecause of the Propositions. Once inDEA’s possession the drugs can besummarily forfeited and destroyed byDEA. State and local law enforcementofficials will be encouraged to continueto execute state law to the fullest extentby having officers continue to makearrests and seizures under state law,leaving defendants to raise the medicaluse provisions of the Propositions onlyas a defense to state prosecution.Department of the Treasury (Treasury)and the Customs Service will continueto protect the nation’s borders and takestrong and appropriate enforcementaction against imported or exportedmarijuana and other illegal drugs. TheCustoms Service will continue to: (a)seize unlawfully imported or exportedmarijuana and other illegal drugs; (b)assess civil penalties against personsviolating federal drug laws; (c) seizeconveyances facilitating the illegalimport or export of marijuana and otherillegal drugs; and (d) arrest personscommitting Federal drug offenses andrefer cases for prosecution to theappropriate Federal or state prosecutor.Treasury and the Internal RevenueService (IRS) will continue theenforcement of existing Federal tax lawswhich discourage illegal drug activities.IRS will enforce existing Federal taxlaw as it relates to the requirement toreport gross income from whateversource derived, including income fromactivities prohibited under Federal orstate law.Treasury will recommend that the IRSissue a revenue ruling, to the extentpermissible under existing law, thatwould deny a medical expensededuction for amounts expended forillegal operations or treatments and fordrugs, including Schedule I controlledsubstances, that are illegally procuredunder Federal or state law.IRS will enforce existing Federal taxlaw as it relates to the disallowance ofexpenditures in connection with theillegal sale of drugs. To the extent thatstate laws result in efforts to conductsales of controlled substancesprohibited by Federal law, the IRS willdisallow expenditures in connectionwith such sales to the fullest extentpermissible under existing Federal taxlaw.U.S. Postal Service will continue topursue aggressively the detection andseizure of Schedule I controlledsubstances mailed through the USmails, particularly in California andArizona, and the arrest of those usingthe mail to distribute Schedule Icontrolled substances.DEA together with other Federal, stateand local law enforcement agencies willwork with private mail, parcel andfreight services to ensure continuingcompliance with internal company

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6165policies dictating that these companiesrefuse to accept for shipment ScheduleI controlled substances and that theynotify law enforcement officials of suchactivities. Federal investigations andprosecutions will be institutedconsistent with appropriate criteria.B. Objective 2—Ensure the Integrity ofthe Medical-Scientific Process byWhich Substances are Approved asSafe and Effective Medicines in Orderto Protect Public HealthThe Controlled Substances Actembodies the conclusion of theCongress, affirmed by DEA and HHS,that marijuana, as a Schedule I drug, has‘‘high potential for abuse’’ and ‘‘nocurrently accepted medical use intreatment in the United States.’’ Toprotect the public health, all evaluationsof the medical usefulness of anycontrolled substance should beconducted through the Congressionallyestablished research and approvalprocess managed by the NationalInstitutes of Health (NIH) and the Foodand Drug Administration (FDA).Currently there are a few patients whoreceive marijuana through FDAapproved investigations.HHS to ensure the continuedprotection of the public health will: (a)examine all medical and scientificevidence relevant to the perceivedmedical usefulness of marijuana; (b)identify gaps in knowledge and researchregarding the health effects ofmarijuana; (c) determine whetherfurther research or scientific evaluationcould answer these questions; and (d)determine how that research could bedesigned and conducted to yieldscientifically useful results.HHS will undertake discussions withmedical organizations throughout thenation: (a) to address the‘‘compassionate use’’ message; and (b)to educate medical and public healthprofessionals by underscoring thedangers of smoked marijuana andexplaining the views of NIH that avariety of approved medications areclinically proven to be safe and effectivein treating the illnesses for whichmarijuana is purported to provide relief,such as pain, nausea, wasting syndrome,multiple sclerosis, and glaucoma.C. Objective 3—Preserve Federal Drug-Free Workplace and Safety ProgramsTransportation Workers: Departmentof Transportation (DOT) has issued aformal advisory to the transportationindustry that safety-sensitivetransportation workers who test positiveunder the Federally-required drugtesting program may not under anycircumstance use state law as alegitimate medical explanation for thepresence of prohibited drugs. DOT isencouraging private employers to followits example.General Contractors and Grantees:Under the Drug-Free Workplace Act, therecipients of Federal grants or contractsmust have policies that prohibit the useof illegal drugs. Each Federal agencywill issue a notice to its grantees andcontractors to remind them: (a) of theirresponsibilities; (b) that any use ofmarijuana or other Schedule I controlledsubstances remains a prohibitedactivity; and (c) that the failure tocomply with this prohibition will makethe grantee or contractor subject to theloss of eligibility to receive Federalgrants and contracts. Further, Federalagencies will increase their efforts tomonitor compliance with the provisionsof the Act, and to institute suspensionor debarment actions against violators—with special priority given to statesenacting drug medicalization measures.Federal Civilian Employees: HHS willissue policy guidance to all 130 FederalAgency Drug-Free Workplace programcoordinators, the 72 laboratoriescertified by HHS to conduct drug tests,and trade publications that reachmedical review officers. This policyguidance states that the Propositions donot change the requirements of theFederal Drug-Free Workplace Program,which will continue to be fully enforcedfor federal civilian employeesnationwide. Medical Review Officerswill not accept physicianrecommendations for Schedule Isubstances as a legitimate explanationfor a positive drug test.Department of Defense (DOD) and theMilitary Services: DOD will instructcivilian employees and militarypersonnel in the active, reserve andNational Guard components, that DODis a drug-free organization, a fact that isnot changed by the Propositions. Therequirement that all DOD contractorsmaintain drug-free workplaces willcontinue to be enforced.Nuclear Industry Workers: TheNuclear Regulatory Commission willcontinue to demand drug-freeemployees in the nuclear powerindustry, and will develop a formaladvisory to emphasize that its drug freeworkplace regulations continue toapply.Public Housing: The Propositions willnot affect the Department of Housingand Urban Development’s (HUD)continued aggressive execution of the‘‘One Strike and You’re Out’’ policy toimprove the safety and security of ournation’s public housing developments.HUD’s principal tool for implementing‘‘One Strike’’ will be the systematicevaluation of public housing agenciesscreening and evictions efforts throughthe Public Housing ManagementAssessment Program. This program willgive HUD a standard measurement ofthe progress of all public housingauthorities in developing effective lawenforcement, screening, and occupancypolicies to reduce the level of drug use,crime, and drug distribution and salesin their communities.Safe Work Places: Department ofLabor (DOL) will continue to implementits Working Partners Initiative,providing information to smallbusinesses about workplace substanceabuse prevention programs, focusingspecific attention on trade and businessorganizations located in California andArizona. DOL will accelerate its effort topost its updated Substance AbuseInformation Database (SAID) on theInternet. SAID will provide informationto businesses about workplacesubstance abuse and how to establishworkplace substance abuse preventionprograms. DOL will give priority to itsefforts in California and Arizona.DOL’s Occupational Safety andHealth Administration (OSHA) willsend letters to the California andArizona Occupational Safety and HealthAdministrations reiterating the dangersof drugs in the workplace and providinginformation on programs to helpemployers address these problems.DOL’s Mine Safety and HealthAdministration will continue to strictlyenforce the prohibition on the use ofalcohol and illegal drugsnotwithstanding these Propositions.D. Objective 4—Protect Children fromIncreased Marijuana Availability andUseHHS and the Department of Educationwill educate the public in both Arizonaand California about the real and provendangers of smoking marijuana. Amessage will be tailored for preteens,teens, parents, educators, and medicalprofessionals. Research demonstratesthat, marijuana: (a) harms the brain,heart, lungs, and immune system; and(b) limits learning, memory, perception,judgment, and the ability to drive amotor vehicle. In addition, researchshows that marijuana smoke typicallycontains over 400 carcinogeniccompounds and may be addictive. Themessage will remind the public there isno medical use for smoked marijuanaand will educate the public aboutstrategies to prevent marijuana use. Themessage will also remind the public thatthe production, sale, and distribution ofmarijuana for medical uses notapproved by DEA violates the

6166 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesControlled Substances Act and theFederal Food, Drug, and Cosmetic Act.HHS will analyze all available data onmarijuana use, expand ongoing surveysto determine current levels of marijuanause in California and Arizona, and trackchanges in marijuana use in those states.HHS will develop the survey capacityto assess trends in drug use in all stateson a state-by-state basis.The Department of Education(Education) will use provisions of theSafe and Drug Free Schools Act toreinforce the message to all localeducation agencies receiving FederalSafe and Drug Free School funds thatany drug possession or use will not betolerated in schools. This affectsapproximately 95% of school districts.Notwithstanding the passage of the twoPropositions, local education agenciesmust continue to: (a) develop programswhich prevent the use, possession, anddistribution of tobacco, alcohol, andillegal drugs by students; (b) developprograms which prevent the illegal use,possession, and distribution of suchsubstances by school employees; and (c)ensure that programs supported by andwith Federal Safe and Drug FreeSchools funds convey the message thatthe illegal use of alcohol and otherdrugs, including marijuana, is wrongand harmful.Education will review with educatorsin Arizona and California the effectPropositions 200 and 215 will have ondrug use by students. They will alsocommunicate nationally with schoolsuperintendents, administrators,principals, boards of education, andPTAs about the Arizona and CaliforniaPropositions and the implications fortheir states.Education will develop a modelpolicy to confront ‘‘medical marijuana’’use in schools and outline actionseducators can take to prevent illicitdrugs from coming into schools.Education will develop model drugprevention programs to discouragemarijuana use. These models will bedisseminated to the states at a Spring1997 conference.ONDCP and DOT will providerecommendations pursuant to theOctober 19, 1996 Presidential directiveto deter teen drug use and druggeddriving through pre-license drug testing,strengthened law enforcement and othermeans. The recommendations willunderscore the point that the use ofmarijuana for any reason endangers thehealth and safety of the public.Legislative Enactments: ONDCP, HHSand DOJ will work with Congress toconsider changes to the Federal Food,Drug, and Cosmetic Act and theControlled Substances Act, asappropriate, to limit the states’’ abilityto rely on these and similar medical useprovisions. The Administration believesthat working with Congress is the courseof action that will affirm the nationalpolicy to control substances that have ahigh potential for abuse and no acceptedmedical use. The objective is to providea uniform policy which preserves theintegrity of the medical-scientificprocess by which substances areapproved as safe and effectivemedicines. We will also consideradditional steps, including conditioningFederal funds on compliance with theControlled Substances Act and theNational Drug Control Strategy.Signed at Washington, D.C. this 15th dayof January, 1997.Barry R. McCaffrey,Director.[FR Doc. 97–3334 Filed 2–10–97; 8:45 am]BILLING CODE 3180–02–PDesignation of New High IntensityDrug Trafficking AreasAGENCY: Office of National Drug ContolPolicy, Executive Office of thePresident.ACTION: Notice.SUMMARY: This notice lists the five newHigh Intensity Drug Trafficking Areas(HIDTAs) designated by the Director,Office of National Drug Control Policy.HIDTAs are regions identified as havingthe most critical drug traffickingproblems that adversely affect theUnited States. These new HIDTAs aredesignated pursuant to 21 U.S.C.1504(c), as amended, to promote moreeffective coordination of drug controlefforts. The additional resourcesprovided by Congress enable task forcesof local, State, and Federal officials toassess regional drug threats, designstrategies to combat the threats, developinitiatives to implement the strategies,and evaluate effectiveness of thesecoordinated efforts.FOR FURTHER INFORMATION CONTACT:Comments and questions regarding thisnotice should be directed to Mr. RichardY. Yamamoto, Director, HIDTA, Officeof National Drug Control Policy,Executive Office of the President, 75017th Street N.W., Washington, D.C.20503, (202) 395–6755.SUPPLEMENTARY INFORMATION: In 1990,the Director of ONDCP designated thefirst five HIDTAs. These originalHIDTAs, areas through which mostillegal drugs enter the United States, areHouston, Los Angeles, New York/NewJersey, South Florida, and theSouthwest Border. In 1994, the Directordesignated the Washington/BaltimoreHIDTA to address the extensive drugdistribution networks serving hardcoredrug users. Also in 1994, the Directordesignated Puerto Rico/U.S. VirginIslands as a HIDTA based on thesignificant amount of drugs entering theUnited States through this region.In 1995, the Director designated threemore HIDTAs in Atlanta, Chicago, andPhiladelphia/Camden to target drugabuse and drug trafficking in thoseareas, specifically augmentingEmpowerment Zone programs.The five new HIDTAs will build uponthe effective efforts of previouslyestablished HIDTAs. In Fiscal Year1997, the HIDTA program will receive$140 million in Federal resources. Theprogram will support more than 150 colocatedofficer/agent task forces;strengthen mutually supporting local,State, and Federal drug trafficking andmoney laundering task forces; bolsterinformation analysis and sharingnetworks; and, improve integration oflaw enforcement, drug treatment, anddrug abuse prevention programs. Thestates and counties included in the fivenew HIDTAs are:(1) Cascade HIDTA: State ofWashington; King, Pierce, Skagit,Snohomish, Thurston, Whatcom, andYakima counties;(2) Gulf Coast HIDTA: State ofAlabama; Baldwin, Jefferson, Mobile,and Montgomery counties; State ofLouisiana; Caddo, East Baton Rouge,Jefferson, and Orleans parishes; andState of Mississippi; Hancock, Harrison,Hinds, and Jackson counties.(3) Lake County HIDTA: State ofIndiana; Lake County.(4) Midwest HIDTA: State of Iowa;Muscatine, Polk, Pottawattamie, Scott,and Woodbury counties; State ofKansas; Cherokee, Crawford, Johnson,Labette, Leavenworth, Saline, Seward,and Wyandotte counties; State ofMissouri; Cape Girardeau, Christian,Clay, Jackson, Lafayette, Lawrence, Ray,Scott, and St. Charles counties, and thecity of St. Louis; State of Nebraska;Dakota, Dawson, Douglas, Hall,Lancaster, Sarpy, and Scott’s Bluffcounties; State of South Dakota; Clay,Codington, Custer, Fall River, Lawrence,Lincoln, Meade, Minnehaha,Pennington, Union, and Yanktoncounties.(4) Rocky Mountain HIDTA: State ofColorado; Adams, Arapahoe, Denver,Douglas, Eagle, El Paso, Garfield,Jefferson, La Plata, and Mesa counties;State of Utah; Davis, Salt Lake, Summit,Utah, and Weber counties; and State ofWyoming; Laramie, Natrona, andSweetwater counties.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6167Signed at Washington, D.C. this 15th dayof January, 1997.Barry R. McCaffrey,Director.[FR Doc. 97–3334 Filed 2–10–97; 8:45 am]BILLING CODE 3180–02–PDEPARTMENT OF AGRICULTUREForest ServiceCalifornia Coast Province AdvisoryCommittee (PAC)AGENCY: Forest Service, USDA.ACTION: Notice of meeting.SUMMARY: The California Coast ProvinceAdvisory Committee (PAC) will meetfrom 1:00 p.m. to 5:00 p.m., on February26, 1997, and from 8:30 a.m. to 3 p.m.February 27, 1997, at the Six RiversNational Forest Supervisor’s OfficeConference Room, 1330 Bayshore Way,Eureka, CA. Agenda items to be coveredinclude: (1) Survey and Manage speciesinformation presentation; (2) Provinceimpacts of fish species listed/potentiallylisted as Threatened or Endangered; (3)Report and recommendations fromPublic/Private Subcommittee (4) Reportand recommendations from MonitoringSubcommittee; (5) Report andrecommendations from Work on theGround Subcommittee; (6) Agencyupdates; (7) North Coast EnvironmentalCenter presentation; (8) Agency reportson December/January flood and stormdamage on federal lands in theProvince; (9) Update on HeadwatersForest; (10) USFWS request forproposals for restoration projects; and(11) Open public forum. All CaliforniaCoast Province Advisory Committeemeetings are open to the public.Interested citizens are encouraged toattend.FOR FURTHER INFORMATION CONTACT:Direct questions regarding this meetingto Daniel Chisholm, USDA, ForestSupervisor, Mendocino National Forest,825 N. Humboldt Avenue, Willows, CA,95988, (916) 934–3316 or Phebe Brown,Province Coordinator, USDA,Mendocino National Forest, 825 N.Humboldt Avenue, Willows, CA 95988,(916) 934–3316.Dated: February 2, 1997.Daniel K. Chisholm,Forest Supervisor.[FR Doc. 97–3264 Filed 2–10–97; 8:45 am]BILLING CODE 3410–FK–MGrain Inspection, Packers andStockyards AdministrationOpportunity for Designation in theJamestown (ND) AreaAGENCY: Grain Inspection, Packers andStockyards Administration (GIPSA).ACTION: Notice.SUMMARY: The United States GrainStandards Act, as amended (Act),provides that official agencydesignations will end not later thantriennially and may be renewed. Thedesignation of Grain Inspection, Inc.(Jamestown), will end July 31, 1997,according to the Act. In the January 2,1997 Federal Register (62 FR 91),GIPSA asked for applications frompersons interested in providing officialservices in the Jamestown area.Applications were due on or beforeJanuary 31, 1997; no applications werereceived. GIPSA is again asking forapplications from persons interested inproviding official services in theJamestown area.DATES: Applications must bepostmarked or sent by telecopier (FAX)on or before March 13, 1997.ADDRESSES: Applications must besubmitted to USDA, GIPSA, Janet M.Hart, Chief, Review Branch, ComplianceDivision, STOP 3604, 1400Independence Avenue, S.W.,Washington, DC 20250–3604.Applications may be submitted by FAXon 202–690–2755. If an application issubmitted by FAX, GIPSA reserves theright to request an original application.All applications will be made availablefor public inspection at this addresslocated at 1400 Independence Avenue,S.W., during regular business hours.FOR FURTHER INFORMATION CONTACT:Janet M. Hart, telephone 202–720–8525.SUPPLEMENTARY INFORMATION:This action has been reviewed anddetermined not to be a rule or regulationas defined in Executive Order 12866and Departmental Regulation 1512–1;therefore, the Executive Order andDepartmental Regulation do not applyto this action.Section 7(f)(1) of the Act authorizesGIPSA’ Administrator to designate aqualified applicant to provide officialservices in a specified area afterdetermining that the applicant is betterable than any other applicant to providesuch official services. GIPSA designatedJamestown, main office located inJamestown, North Dakota, to provideofficial inspection services under theAct on August 1, 1994.Section 7(g)(1) of the Act providesthat designations of official agenciesshall end not later than triennially andmay be renewed according to thecriteria and procedures prescribed inSection 7(f) of the Act. The designationof Jamestown ends on July 31, 1997,according to the Act.Pursuant to Section 7(f)(2) of theUSGSA, the following geographic area,in the State of North Dakota, is assignedto Jamestown.Bounded on the North by Interstate 94east to U.S. Route 85; U.S. Route 85north to State Route 200; State Route200 east to U.S. Route 83; U.S. Route 83southeast to State Route 41; State Route41 north to State Route 200; State Route200 east to State Route 3; State Route 3north to U.S. Route 52; U.S. Route 52southeast to State Route 15; State Route15 east to U.S. Route 281; U.S. Route281 south to Foster County; the northernFoster County line; the northern GriggsCounty line east to State Route 32;Bounded on the East by State Route32 south to State Route 45; State Route45 south to State Route 200; State Route200 west to State Route 1; State Route1 south to the Soo Railroad line; the SooRailroad line southeast to Interstate 94;Interstate 94 west to State Route 1; StateRoute 1 south to the Dickey County line;Bounded on the South by thesouthern Dickey County line west toU.S. Route 281; U.S. Route 281 north tothe Lamoure County line; the southernLamoure County line; the southernLogan County line west to State Routel3; State Route l3 west to U.S. Route 83;U.S. Route 83 south to the EmmonsCounty line; the southern EmmonsCounty line; the southern Sioux Countyline west State Route 49; State Route 49north to State Route 21; State Route 21west to the Burlington-Northern (BN)line; the Burlington-Northern (BN) linenorthwest to State Route 22; State Route22 south to U.S. Route 12; U.S. Route 12west-northwest to the North DakotaState line; andBounded on the West by the westernNorth Dakota State line north toInterstate 94.The following grain elevators, locatedoutside of the above contiguousgeographic area, are part of thisgeographic area assignment: FarmersCoop Elevator, Fessenden, FarmersUnion Elevator, and Manfred Grain,both in Manfred, all in Wells County(located inside Grand Forks GrainInspection Department, Inc.’s, area); andNorway Spur, and Oakes Grain, both inOakes, Dickey County (located insideNorth Dakota Grain Inspection Service,Inc.’s, area).Jamestown’s assigned geographic areadoes not include the following grainelevators inside Jamestown’s area whichhave been and will continue to be

6168 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesserviced by the following officialagency: Minot Grain Inspection, Inc.:Benson Quinn Company, Underwood;and Missouri Valley Grain Company,Washburn, all in McLean County.Interested persons, includingJamestown, are hereby given theopportunity to apply for designation toprovide official services in thegeographic areas specified above underthe provisions of Section 7(f) of the Actand section 800.196(d) of theregulations issued thereunder.Designation in the Jamestowngeographic area is for the periodbeginning August 1, 1997, and endingJuly 31, 2000. Persons wishing to applyfor designation should contact theCompliance Division at the addresslisted above for forms and information.Applications and other availableinformation will be considered indetermining which applicant will bedesignated.AUTHORITY: Pub. L. 94–582, 90 Stat. 2867,as amended (7 U.S.C. 71 et seq.)Dated: February 5, 1997Neil E. PorterDirector, Compliance Division[FR Doc. 97–3374 Filed 2–10–97; 8:45 am]BILLING CODE 3410–EN–FDeposting of StockyardsNotice is hereby given, that thelivestock markets named herein,originally posted on the dates specifiedbelow as being subject to the Packersand Stockyards Act, 1921, as amended(7 U.S.C. 181 et seq.), no longer comewithin the definition of a stockyardunder the Act and are therefore, nolonger subject to the provisions of theAct.Facility No., name, and location of stockyardDate of postingAZ–100, Arizona Livestock Auction, Inc., Phoenix, Arizona ................................................................................................... February 12, 1975.IA–111, Audubon County Livestock Exchange, Audubon, Iowa ............................................................................................. May 28, 1959.IA–127, Coggon Livestock Sales Co., Coggon, Iowa ............................................................................................................. May 18, 1959.IA–163, Independence Livestock Sales Company, Independence, Iowa ............................................................................... May 23, 1959.IA–259, The Auction Farm, Sheldon, Iowa ............................................................................................................................. July 21, 1987.NB–177, Spalding Livestock Market, Spalding, Nebraska ...................................................................................................... January 27, 1950.NY–157, Bast’s Livestock Exchange, Watertown, New York ................................................................................................. August 2, 1978.NC–167, Foothills Livestock Auction, Inc., Spindale, North Carolina ..................................................................................... July 11, 1994.PA–115, Green Dragon Livestock Sales, Ephrata, Pennsylvania .......................................................................................... December 10, 1959.This notice is in the nature of achange relieving a restriction and, thus,may be made effective in less than 30days after publication in the FederalRegister without prior notice or otherpublic procedure. This notice is givenpursuant to section 302 of the Packersand Stockyards Act (7 U.S.C. 202) andis effective upon publication in theFederal Register.Done at Washington, D.C. this 3rd day ofFebruary 1997.Daniel L. Van Ackeren,Director, Livestock Marketing Division,Packers and Stockyards Programs.[FR Doc. 97–3375 Filed 2–10–97; 8:45 am]BILLING CODE 3210–KD–PDEPARTMENT OF COMMERCEEconomics and StatisticsAdministration2000 Census Advisory CommitteeAGENCY: Economics and StatisticsAdministration, Department ofCommerce.ACTION: Notice of public meeting.SUMMARY: Pursuant to the FederalAdvisory Committee Act (Pub. L. 92–463, as amended by Pub. L. 94–409,Pub. L. 96–523, and 97–375), we aregiving notice of a meeting of the 2000Census Advisory Committee. Themeeting will convene on March 6–7,1997, at the Bureau of the Census,Conference Center, Federal Building 3,Suitland, MD 20746.The Advisory Committee is composedof a Chair, Vice Chair, and up to thirtyfivemember organizations, allappointed by the Secretary ofCommerce. The Advisory Committeewill consider the goals of Census 2000and user needs for information providedby that census, and provide aperspective from the standpoint of theoutside user community about howoperational planning andimplementation methods proposed forCensus 2000 will realize those goals andsatisfy those needs. The AdvisoryCommittee shall consider all aspects ofthe conduct of the 2000 census ofpopulation and housing, and shall makerecommendations for improving thatcensus.DATES: On Thursday, March 6, 1997, themeeting will begin at 9:00 a.m. andadjourn for the day at 4:30 p.m. OnFriday, March 7, 1997, the meeting willbegin at 9:00 a.m. and adjourn at 3:30p.m.ADDRESSES: The meeting will take placeat the Bureau of the Census, ConferenceCenter, Federal Building 3, Suitland,MD 20746.FOR FURTHER INFORMATION CONTACT:Anyone wishing additional informationabout this meeting, or who wishes tosubmit written statements or questions,may contact Maxine Anderson-Brown,Committee Liaison Officer, Departmentof Commerce, Bureau of the Census,Room 3039, Federal Building 3,Washington, DC 20233, telephone: 301–457–2308.SUPPLEMENTARY INFORMATION: A briefperiod will be set aside for publiccomment and questions. However,individuals with extensive questions orstatements for the record must submitthem in writing to the CommerceDepartment official named above atleast three working days prior to themeeting.The meeting is physically accessibleto people with disabilities. Requests forsign language interpretation or otherauxiliary aids should be directed toKathy Maney; her telephone number is301–457–2308.Dated: February 6, 1997.Everett M. Ehrlich,Under Secretary for Economic Affairs,Economics and Statistics Administration.[FR Doc. 97–3378 Filed 2–10–97; 8:45 am]BILLING CODE 3510–EA–MInternational Trade Administration[A–588–609]Color Picture Tubes From Japan;Preliminary Results of AntidumpingAdministrative ReviewAGENCY: Import Administration,International Trade Administration,Department of Commerce.ACTION: Notice of preliminary results ofantidumping duty administrative reviewof color picture tubes from Japan.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6169SUMMARY: In response to a request by thepetitioners, the Department ofCommerce (the Department) isconducting an administrative review ofthe antidumping duty order on colorpicture tubes (CPTs) from Japan. Theperiod of review (POR) is January 1,1995 through December 31, 1995. Thereview indicates the existence ofdumping margins during this period.We have preliminarily determinedthat subject merchandise has been soldat less than normal value (NV) duringthe POR. If these preliminary results areadopted in our final results ofadministrative review, we will instructthe U.S. Customs Service to assessantidumping duties on entries duringthe POR. Interested parties are invited tocomment on these preliminary results.EFFECTIVE DATE: February 11, 1997.FOR FURTHER INFORMATION CONTACT:Charles Riggle or Kris Campbell, ImportAdministration, International TradeAdministration, U.S. Department ofCommerce, 14th Street and ConstitutionAvenue, N.W., Washington D.C. 20230;telephone (202) 482–4733.Applicable StatuteUnless otherwise indicated, allcitations to the Tariff Act of 1930, asamended, (the Act) are references to theprovisions effective January 1, 1995, theeffective date of the amendments madeto the Act by the Uruguay RoundAgreements Act (URAA). In addition, allcitations to the Department’s regulationsare to the current regulations, asamended by the interim regulationspublished in the Federal Register onMay 11, 1995 (60 FR 25130).BackgroundOn January 26, 1996, the Departmentpublished in the Federal Register (61FR 2488) a notice of ‘‘Opportunity ToRequest an Administrative Review’’ ofthe antidumping duty order on CPTsfrom Japan (52 FR 44171 (November 18,1987)). In accordance with 19 C.F.R.353.22(a), the petitioners, theInternational Association of Machinistsand Aerospace Workers, InternationalUnion of Electronic, Electrical, Salaried,Machine & Furniture Workers, AFL–CIO, Industrial Union Department AFL–CIO, requested that we conduct anadministrative review of sales of CPTsfrom Japan by Mitsubishi ElectricCorporation (MELCO). We published anotice of initiation of this antidumpingduty administrative review on February20, 1996 (61 FR 6347), covering theperiod January 1, 1995 throughDecember 31, 1995.Because it was not practicable tocomplete this review within the normaltime frame, on October 25, 1996, wepublished in the Federal Register ournotice of extension of the time limit forthese preliminary results to January 30,1997 (61 FR 55271). The deadline forthe final results will continue to be 120days after publication of thesepreliminary results.Scope of ReviewImports covered by this review areshipments of CPTs from Japan. CPTs aredefined as cathode ray tubes suitable foruse in the manufacture of colortelevisions or other color entertainmentdisplay devices intended for televisionviewing. This merchandise isclassifiable under the Harmonized TariffSchedule (HTS) item numbers8540.11.00.10, 8540.11.00.20,8540.11.00.30, 8540.11.00.40,8540.11.00.50 and 8540.11.00.60.Although the HTS item numbers areprovided for convenience and customspurposes, our written description of thescope of this proceeding is dispositive.VerificationIn accordance with section 782(i) ofthe Act, we verified informationprovided by MELCO by using standardverification procedures, includingonsite inspection of the manufacturer’sfacilities, the examination of relevantsales and financial records, andselection of original documentationcontaining relevant information. Weconducted the verification at thecompany’s headquarters in Kyoto,Japan, from September 17 throughSeptember 20, 1996. Our verificationresults are outlined in the publicversion of the verification report. SeeMemorandum from Case Analyst to File,dated December 27, 1996.Product ComparisonsWe calculated NV on a monthlyweighted-average basis. Where possible,we compared U.S. sales to sales ofidentical merchandise in Japan. For U.S.sales in which identical merchandisewas not sold during the relevantcontemporaneous period, we comparedU.S. sales to the most similar foreignlike product on the basis ofcharacteristics listed in MELCO’s April1, 1996 response to section A of ourquestionnaire.Constructed Export PriceWe calculated a constructed exportprice (CEP) for MELCO’s U.S.transactions, in accordance with section772(b) of the Act, because sales to thefirst unrelated purchaser took place afterimportation into the United States.We calculated CEP based on thepacked, ex-warehouse price from theU.S. subsidiary to unrelated customers.We made deductions from CEP for U.S.packing in the United States,international freight, foreign inlandfreight, marine insurance, U.S. customsduties, U.S. inland freight insurance andU.S. inland freight. In accordance withsection 772(d)(1) of the Act, wededucted from CEP the following sellingexpenses that related to economicactivity in the United States:commissions, direct selling expenses,including advertising, warranties, creditexpenses, discounts, rebates, andindirect selling expenses, includinginventory carrying costs, and furthermanufacturing. We also made anadjustment for CEP profit in accordancewith section 772 (d)(3) of the Act.Normal ValueIn order to determine whether therewas a sufficient volume of sales in thehome market to serve as a viable basisfor calculating NV, we comparedrespondent’s volume of home marketsales of the foreign like product to thevolume of U.S. sales of the subjectmerchandise, in accordance withsection 773(a)(1)(C) of the Act. Sincerespondent’s aggregate volume of homemarket sales of the foreign like productwas greater than five percent of itsaggregate volume of U.S. sales for thesubject merchandise, we determinedthat the home market was viable.Therefore, we have based NV on homemarket sales. We based NV on thepacked, delivered price to unrelatedpurchasers in the home market.Where applicable, we madeadjustments to home market prices fordiscounts, rebates, technical serviceexpenses, pre-sale warehouse expenses,and royalties. To adjust for differencesin circumstances of sale between thehome market and the United States, wededucted post-sale inland freight andcredit expense from NV in accordancewith section 773(a)(6)(C) of the Act. Inaccordance with 19 C.F.R. 353.56(b), wemade an adjustment to NV for indirectselling expenses in the home market tooffset the sum of commissions in theUnited States.In order to adjust for differences inpacking between the two markets, wededucted home market packing costsfrom NV and added U.S. packing costs.We compared U.S. sales of CPTs toNV based on constructed value (CV)when MELCO did not havecontemporaneous home market sales ofCPTs with which we could compare theU.S. sale. We calculated CV inaccordance with section 773(e) of theTariff Act. We included the cost ofmaterials, labor, general expenses, profitand packing. Where appropriate, we

6170 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesmade adjustments to CV, in accordancewith 19 C.F.R. 353.56, for differences incircumstances of sale.The home market and CV databasesthat MELCO submitted did not containmatches for certain U.S. sales. SeeMemorandum from Analyst to File:Preliminary Results for MELCO, January30, 1997. Therefore, in accordance withsection 776 of the Act, we applied a ratebased on the facts available to thesesales. Given the nature and extent of thedeficiency, we have selected theweighted-average rate that we calculatedfor all other sales in this review (1.92percent) as facts available. See section776(a) of the Act.Level of Trade and CEP OffsetAs set forth in section 773(a)(7) of theAct and in the Statement ofAdministrative Action (H.R. Doc. 316,Vol. 1, 103d Cong., 2d Sess. (1994))(SAA) at 829–831, to the extentpracticable, we will calculate NV basedon sales at the same level of trade as theU.S. sale. In this review, we were unableto find comparison sales at the samelevel of trade as the U.S. sales.Accordingly, we compared the sales inthe United States to sales at a differentlevel of trade in the comparison market.In accordance with section773(a)(7)(A) of the Act, if we compare aU.S. sale with a home market sale madeat a different level of trade, we willadjust the NV to account for thisdifference if two conditions are met.First, there must be differences betweenthe actual selling functions performedby the seller at the level of trade of theU.S. sale and at the level of trade of thecomparison market sale used todetermine NV. Second, the differencesmust affect price comparability asevidenced by a pattern of consistentprice differences between sales at thedifferent levels of trade in the market inwhich NV is determined. For CEP sales,section 773(a)(7)(B) of the Actestablishes the procedures for making aCEP ‘‘offset’’ when two conditions exist:(1) NV is established at a level of tradewhich constitutes a more advancedstage of distribution than the level oftrade of the CEP; and (2) the dataavailable do not provide an appropriatebasis for a level-of-trade adjustment.We based the level of trade of CEPsales on the price in the United Statesafter making the CEP deductions undersection 772(d) but before making thedeductions under section 772(c). Wherehome market sales served as the basisfor NV, we determined the NV level oftrade based on starting prices in thehome market. Where NV was based onCV, we determined the NV level of tradebased on the level of trade of the salesfrom which we derived SG&A and profitfor CV.In order to determine whether sales inthe comparison market are at a differentlevel of trade than the CEP, weexamined whether the comparison saleswere at different stages in the marketingprocess than the CEP. We made thisdetermination on the basis of a reviewof the distribution system in thecomparison market, including sellingfunctions, class of customer, and thelevel of selling expenses for each typeof sale. Different stages of marketingnecessarily involve differences inselling functions, but differences inselling functions, even substantial ones,are not alone sufficient to establish adifference in the level of trade.Similarly, while customer categoriessuch as ‘‘distributor’’ and ‘‘wholesaler’’may be useful in identifying differentlevels of trade, they are insufficient inthemselves to establish that there is adifference in the level of trade. SeeCertain Corrosion-Resistant CarbonSteel Flat Products and Certain Cut-to-Length Carbon Steel Plate from Canada:Preliminary Results of AntidumpingDuty Administrative Review, 61 FR51896 (October 4, 1996).MELCO requested that we make alevel-of-trade adjustment, or a CEPoffset if we could not quantify a levelof-tradeadjustment, because sales in thehome market involved a more advancedlevel of trade than the level of trade ofthe CEP. Our analysis of the reportedselling expenses, selling functions, andcustomer classes of U.S. and homemarket sales demonstrates that the homemarket sales are distributed through amore advanced marketing stage thanthat involved at the level of trade of theCEP.Because we compared CEP sales tohome market sales at a different level oftrade, we examined whether a level-oftradeadjustment was appropriate. Inthis case, we were unable to quantifyprice differences involving comparisonsof sales made at different levels of tradebecause the same level of trade as thatof the CEP did not exist in the homemarket. Therefore, we could notdetermine whether there was a patternof consistent price differences betweenthe levels of trade based on respondent’shome market sales of merchandiseunder review.Because we were unable to quantify alevel-of-trade adjustment based on apattern of consistent price differences,we granted a CEP offset where thecomparison sales were at a moreadvanced level of trade than the sales tothe United States, in accordance withsection 773(a)(7)(B) of the Act.To calculate the CEP offset, inaccordance with section 772(d)(1)(D) ofthe Act, we considered the home marketindirect selling expenses and deductedthis amount from NV on home marketsales which we compared to U.S. CEPsales. We limited the home marketindirect selling expense deduction bythe amount of the indirect sellingexpenses incurred in the United States.Currency ConversionWe made currency conversions inaccordance with section 773A of theAct. Currency conversions were made atthe rates certified by the Federal ReserveBank. Section 773A(a) directs theDepartment to use a daily exchange rateto convert foreign currencies into U.S.dollars unless the daily rate involves a‘‘fluctuation.’’ It is our practice to findthat a fluctuation exists when the dailyexchange rate differs from a benchmarkrate by 2.25 percent. See PreliminaryResults of Antidumping DutyAdministrative Review: Certain WeldedCarbon Steel Pipe and Tube fromTurkey, 61 FR 35188, 35192 (July 5,1996). The benchmark rate is defined asthe rolling average of the rates for thepast 40 business days. Because wefound no fluctuation in this case, webelieve it is appropriate to use a dailyexchange rate for currency conversionpurposes.Preliminary Results of the ReviewAs a result of our comparison of theCEP to NV, we preliminarily determinethat the following dumping marginexists for the period January 1, 1995through December 31, 1995:Manufacturer/exporterMargin(percent)MELCO ..................................... 1.92Parties to the proceeding may requestdisclosure within five days of the dateof publication of this notice. Anyinterested party may request a hearingwithin 10 days of publication. Anyhearing, if requested, will be heldapproximately 44 days after thepublication of this notice. Interestedparties may submit written comments(case briefs) within 30 days of the dateof publication of this notice. Rebuttalcomments (rebuttal briefs), which mustbe limited to issues raised in the casebriefs, may be filed not later than 37days after the date of publication. TheDepartment will publish a notice offinal results of this administrativereview, including the results of itsanalysis of issues raised in any suchwritten comments, within 120 days ofpublication of these preliminary results.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6171The Department shall determine, andthe Customs Service shall assess,antidumping duties on all appropriateentries. Because the inability to linksales with specific entries preventscalculation of duties on an entry-byentrybasis, we have calculated animporter-specific ad valorem dutyassessment rate for the merchandisebased on the ratio of the total amount ofantidumping duties calculated for theexamined sales made during the POR tothe total customs value of the sales usedto calculate those duties. This rate willbe assessed uniformly on all entries ofthat particular importer made during thePOR. (This is equivalent to dividing thetotal amount of antidumping duties,which are calculated by taking thedifference between NV and CEP, by thetotal CEP value of the sales compared,and adjusting the result by the averagedifference between CEP and customsvalue for all merchandise examinedduring the POR.) The Department willissue appraisement instructions directlyto the Customs Service.Furthermore, the following cashdeposit requirements will be effectiveupon publication of the final results ofthis administrative review for allshipments of the subject merchandiseentered, or withdrawn from warehouse,for consumption on or after thepublication date, as provided for bysection 751(a)(1) of the Act: (1) ForMELCO the cash deposit rate will be therate established in the final results ofthis review; (2) if the exporter is not afirm covered in this review, a previousreview, or the original less-than-fairvalue investigation (LTFV), but themanufacturer is, the cash deposit ratewill be that which was established forthe most recent period for themanufacturer of the merchandise; (3) fornon-Japanese exporters of subjectmerchandise from Japan, the cashdeposit rate will be the rate applicableto the Japanese supplier of that exporter;(4) if neither the exporter nor themanufacturer is a firm covered in this orany previous reviews, the cash depositrate will be 27.93 percent, the ‘‘allothers’’ rate established in the LTFVinvestigation, as explained below. Thesedeposit requirements, when imposed,shall remain in effect until publicationof the final results of the nextadministrative review.On May 25, 1993, the Court ofInternational Trade (CIT) in FloralTrade Council v United States, 822F.Supp. 766 (CIT 1993), and Federal-Mogul Corporation and The TorringtonCompany v. United States, 822 F.Supp.782 (CIT) 1993), decided that once an‘‘All Others’’ rate is established for acompany it can only be changedthrough an administrative review. Wehave determined that, in order toimplement these decisions, it isappropriate to reinstate the ‘‘All Others’’rate from the LTFV investigation (or thatrate as amended for correction ofclerical errors or as a result of litigation)in proceedings governed byantidumping duty orders. Therefore, weare reinstating the ‘‘All Others’’ ratemade effective by the finaldetermination of sales at LTFV (seeColor Pictures Tubes, 52 FR 44171,November 18, 1987).This notice also serves as apreliminary reminder to importers oftheir responsibility under 19 C.F.R.353.26 to file a certificate regarding thereimbursement of antidumping dutiesprior to liquidation of the relevantentries during this review period.Failure to comply with this requirementcould result in the Secretary’spresumption that reimbursement ofantidumping duties occurred and thesubsequent assessment of doubleantidumping duties.This administrative review and noticeare in accordance with section 751(a)(1)of the Act (19 U.S.C. 1675(a)(1)) and 19C.F.R. 353.22.Dated: January 30, 1997.Robert S. LaRussa,Acting Assistant Secretary for ImportAdministration.[FR Doc. 97–3361 Filed 2–10–97; 8:45 am]BILLING CODE 3510–DS–P[A–533–808]Certain Stainless Steel Wire Rod FromIndia; Preliminary Results of NewShipper Antidumping DutyAdministrative ReviewAGENCY: Import Administration,International Trade Administration,Department of Commerce.ACTION: Notice of preliminary results ofnew shipper antidumping dutyadministrative review; Certain stainlesssteel wire rod from India.SUMMARY: The Department of Commerce(the Department) is conducting a newshipper administrative review of theantidumping duty order on certainstainless steel wire rods (SSWR) fromIndia in response to a request by onemanufacturer/exporter, Isibars Limited(Isibars). This review covers sales of thismerchandise to the United States duringthe period January 1, 1996 through June30, 1996.We have preliminarily determinedthat sales have not been made belownormal value (NV). If these preliminaryresults are adopted in our final resultsof administrative review, we willinstruct the U.S. Customs Service toliquidate subject entries without regardto antidumping duties.Interested parties are invited tocomment on these preliminary results.Parties who submit argument arerequested to submit with the argument(1) a statement of the issue and (2) abrief summary of the argument.EFFECTIVE DATE: February, 11, 1997.FOR FURTHER INFORMATION CONTACT:Donald Little or Maureen Flannery,Import Administration, InternationalTrade Administration, U.S. Departmentof Commerce, 14th Street andConstitution Avenue, N.W., WashingtonD.C. 20230; telephone (202) 482–4733.Applicable Statute and RegulationsUnless otherwise indicated, allcitations to the statute are references tothe provisions effective January 1, 1995,the effective date of the amendmentsmade to the Tariff Act of 1930 (the Act)by the Uruguay Round Agreements Act(URAA). In addition, unless otherwiseindicated, all citations to theDepartment’s regulations are to thecurrent regulations, as amended by theinterim regulations published in theFederal Register on May 11, 1995 (60FR 25130).SUPPLEMENTARY INFORMATION:BackgroundOn June 28, 1996, the Departmentreceived a request from Isibars for a newshipper review pursuant to section751(a)(2)(B) of the Act and section353.22(h) of the Department’s interimregulations, which governdeterminations of antidumping dutiesfor new shippers. These provisions statethat, if the Department receives arequest for review from an exporter orproducer of the subject merchandisestating that it did not export themerchandise to the United States duringthe period of investigation (POI) andthat such exporter and producer is notaffiliated with any exporter or producerwho exported the subject merchandiseduring that period, the Department shallconduct a new shipper review toestablish an individual weightedaveragedumping margin for suchexporter or producer, if the Departmenthas not previously established such amargin for the exporter or producer. Toestablish these facts, the exporter orproducer must include with its request,with appropriate certification: (i) thedate on which the merchandise was firstentered, or withdrawn from warehouse,for consumption, or, if it cannot certifyas to the date of first entry, the date onwhich it first shipped the merchandise

6172 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesfor export to the United States; (ii) a listof the firms with which it is affiliated;and (iii) a statement from such exporteror producer, and from each affiliatedfirm, that it did not, under its current ora former name, export the merchandiseduring the POI.Isibars’ request was accompanied byinformation and certificationestablishing the names of Isibar’saffiliated parties and statements thatIsibars and its affiliated parties did not,under any name, export the subjectmerchandise during the POI. Isibarssupplied the date of shipment in a letterdated July 29, 1996.On August 6, 1996, we published inthe Federal Register (60 FR 40819) anotice of initiation of this new shipperantidumping duty administrative reviewof Isibars. The Department is nowconducting this review in accordancewith section 751 of the Act and section353.22 of its interim regulations.Scope of ReviewThe products covered by the order areSSWR which are hot-rolled or hot-rolledannealed and/or pickled rounds,squares, octagons, hexagons or othershapes, in coils. SSWR are made of alloysteels containing, by weight, 1.2 percentor less of carbon and 10.5 percent ormore of chromium, with or withoutother elements. These products are onlymanufactured by hot-rolling and arenormally sold in coiled form, and are ofsolid cross section. The majority ofSSWR sold in the United States areround in cross-section shape, annealedand pickled. The most common size is5.5 millimeters in diameter.The SSWR subject to this review arecurrently classifiable under subheadings7221.00.0005, 7221.00.0015,7221.00.0020, 7221.00.0030,7221.00.0040, 7221.00.0045,7221.00.0060, 7221.00.0075, and7221.00.0080 of the Harmonized TariffSchedule of the United States (HTSUS).Although the HTSUS subheading isprovided for convenience and customspurposes, the written description of thescope of this order is dispositive.This review covers one manufacturer/exporter, Isibars, and the period January1, 1996 through June 30, 1996.VerificationAs provided in section 776(b) of theAct, we verified information providedby the respondent by using standardverification procedures, including onsiteinspection of the respondent’sfacilities, the examination of relevantsale and financial records, and selectionof original documentation containingrelevant information. Our verificationresults are outlined in the publicversion of the verification report.United States PriceIn calculating United States Price(USP), we used export price (EP), inaccordance with section 772(a) of theAct, because the subject merchandisewas sold directly to the first unaffiliatedpurchaser in the United States prior toimportation into the United States andconstructed export price was nototherwise indicated.We calculated EP based on the pricefrom Isibars to an unaffiliated customerprior to importation into the UnitedStates. In accordance with section772(c)(2) of the Act, we madedeductions for terminal handlingcharges, foreign inland freight, oceanfreight, and marine insurance. No otheradjustments were claimed or allowed.Normal ValueBecause there were no sales of thesubject merchandise in the home marketduring the period of review (POR), webased NV on third country sales inaccordance with section 773(a)(1)(C)(i)of the Act. In accordance with section773(a)(1)(B)(ii) of the Act, we based NVon sales of the foreign like product tothe Philippines because the prices wererepresentative, the aggregate quantity ofsales to the Philippines exceeded fivepercent of the aggregate quantity of thesubject merchandise sold for export tothe United States, and we did not findthat the particular market situationprevented a proper comparison with EP.We based NV on the packed, C&Fprice to unaffiliated purchasers in thePhilippines. We made deductions forterminal handling charges, foreigninland freight, and ocean freight. Weadjusted for differences in packing costsbetween the two markets. We madecircumstance-of-sale adjustments fordifferences in credit costs and bankcharges between the two markets. Wededucted third country commissionsand added U.S. indirect sellingexpenses up to the amount of the thirdcountry commission. Because Isibarsfailed to report U.S. indirect sellingexpenses, as facts available we basedU.S. indirect selling expenses on theamount of the third countrycommission.Preliminary Results of the ReviewAs a result of our comparison of EPand NV, we preliminarily determinethat the following weighted-averagedumping margin exists:Manufacturer/exporterPeriodMarginIsibars .............. 1/1/96–6/30/96 0.00Parties to the proceeding may requestdisclosure within five days of the dateof publication of this notice. Anyinterested party may request a hearingwithin 10 days of publication. Anyhearing, if requested, will be held 34days after the publication of this notice,or the first workday thereafter.Interested parties may submit case briefswithin 20 days of the date of publicationof this notice. Rebuttal briefs, whichmust be limited to issues raised in thecase briefs, may be filed not later than27 days after the date of publication ofthis notice. Parties who submitargument are requested to submit withthe argument (1) a statement of the issueand (2) a brief summary of theargument. The Department will issuethe final results of this new shipperadministrative review, which willinclude the results of its analysis ofissues raised in any such comments,within 90 days of issuance of thesepreliminary results.Upon completion of this new shipperreview, the Department will issueappraisement instructions directly tothe Customs Service. The results of thisreview shall be the basis for theassessment of antidumping duties onentries of merchandise sold during thePOR and covered by the determinationand for future deposits of estimatedduties.Furthermore, upon completion of thisreview, the posting of a bond or securityin lieu of a cash deposit, pursuant tosection 751(a)(2)(B)(iii) of the Act andsection 353.22(h)(4) of the Department’sinterim regulations, will no longer bepermitted and, should the final resultsyield a margin of dumping, a cashdeposit will be required for each entryof the merchandise.The following deposit requirementwill be effective upon publication of thefinal results of this new shipperantidumping duty administrative reviewfor all shipments of stainless steel wirerod from India entered, or withdrawnfrom warehouse, for consumption on orafter the publication date, as providedfor by section 751(a)(1) of the Act: (1)The cash deposit rate for the reviewedcompany will be the rate established inthe final results of this new shipperreview; (2) if the exporter is not a firmcovered in this new shipper review, butwas covered in a previous review or theoriginal less-than-fair-value (LTFV)investigation, the cash deposit rate willcontinue to be the company-specific ratepublished for the most recent period; (3)

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6173if the exporter is not a firm covered inthis review, a previous review, or theoriginal LTFV investigation, but themanufacturer is, the cash deposit ratewill be the rate established for the mostrecent period for the manufacturer ofthe merchandise; and (4) the cashdeposit rate for all other manufacturersand/or exporters of this merchandise,shall be 48.80 percent, the ‘‘all others’’rate established in the LTFVinvestigation (58 FR 63335, December 1,1993).These requirements, when imposed,shall remain in effect until publicationof the final results of the nextadministrative review.This notice also serves as apreliminary reminder to importers oftheir responsibility under 19 CFR353.26 to file a certificate regarding thereimbursement of antidumping dutiesprior to liquidation of the relevantentries during this review period.Failure to comply with this requirementcould result in the Secretary’spresumption that reimbursement ofantidumping duties occurred and thesubsequent assessment of doubleantidumping duties.This new shipper administrativereview and notice are in accordancewith section 751(a)(2)(B) of the Act (19U.S.C. 1675(a)(2)(B)) and 19 CFR353.22(h).Dated: January 31, 1997.Robert S. LaRussa,Acting Assistant Secretary for ImportAdministration.[FR Doc. 97–3357 Filed 2–10–97; 8:45 am]BILLING CODE 3510–DS–P[A–570–601]Tapered Roller Bearings and PartsThereof, Finished and Unfinished,From the People’s Republic of China;Final Results and Partial Terminationof Antidumping Duty AdministrativeReviewAGENCY: Import Administration,International Trade Administration,Department of Commerce.ACTION: Notice of final results andpartial termination of antidumping dutyadministrative review on tapered rollerbearings and parts thereof, finished andunfinished, from the People’s Republicof China.SUMMARY: On August 5, 1996, theDepartment of Commerce (theDepartment) published the preliminaryresults of its administrative review ofthe antidumping duty order on taperedroller bearings (TRBs) and parts thereof,finished and unfinished, from thePeople’s Republic of China (PRC). Theperiod of review (POR) is June 1, 1994,through May 31, 1995.Based on our analysis of commentsreceived, we have made changes to themargin calculations, includingcorrections of certain clerical errors.Therefore, the final results differ fromthe preliminary results. The finalweighted-average dumping margins arelisted below in the section entitled‘‘Final Results of Review.’’We have determined that sales havebeen made below normal value (NV)during the POR. Accordingly, we willinstruct the U.S. Customs Service toassess antidumping duties based on thedifference between export price (EP) orconstructed export price (CEP) and NV.We have terminated this review withrespect to Shanghai General BearingCompany (Shanghai) based on ourrevocation of the company from thisorder in the final results of the 1993–94review. See Tapered Roller Bearingsand Parts Thereof, Finished andUnfinished, from the PRC (to bepublished in Vol. 62 of the FederalRegister in February 1997) (TRBs VII).EFFECTIVE DATE: February 11, 1997.FOR FURTHER INFORMATION CONTACT:Charles Riggle, Andrea Chu, KristieStrecker, or Kris Campbell, ImportAdministration, International TradeAdministration, U.S. Department ofCommerce, 14th Street and ConstitutionAvenue, NW., Washington DC 20230;telephone (202) 482–4733.APPLICABLE STATUTE AND REGULATIONS:Unless otherwise indicated, all citationsto the statute and to the Department’sregulations are references to theprovisions effective January 1, 1995, theeffective date of the amendments madeto the Tariff Act of 1930 (the Act) by theUruguay Round Agreements Act(URAA).SUPPLEMENTARY INFORMATION:BackgroundOn August 5, 1996, we published inthe Federal Register the preliminaryresults of administrative review of theantidumping duty order on TRBs fromthe PRC. See Tapered Roller Bearingsand Parts Thereof, Finished andUnfinished, From the People’s Republicof China; Preliminary Results ofAntidumping Duty AdministrativeReview, 61 FR 40610 (August 5, 1996)(Preliminary Results). We gaveinterested parties an opportunity tocomment on our preliminary results andheld a public hearing on September 25,1996. The following parties submittedcomments: The Timken Company(Petitioner); Guizhou Machinery Importand Export Corporation (GuizhouMachinery), Jilin Province MachineryImport and Export Corporation (Jilin),Liaoning MEC Group Company Limited(Liaoning), Luoyang BearingCorporation (Luoyang), ShandongMachinery and Equipment Import &Export Group Corporation (Shandong),Tianshui Hailin Bearing Factory(Tianshui), China National MachineryImport and Export Corporation (CMC),China National Automotive IndustryImport & Export Guizhou Corporation(Guizhou Automotive), Wanxiang GroupCorporation (Wanxiang), XiangfanMachinery Foreign Trade CorporationHubei China (Xiangfan), ZhejiangMachinery Import & Export Corporation(Zhejiang), and Wafangdian BearingIndustry Corporation (Wafangdian)(collectively referred to as GuizhouMachinery et al.); Premier Bearing andEquipment Company (Premier); GreatWall Industry Corporation (Great Wall);East Sea Bearing Company Limited/PeerBearing Company (East Sea); Transcom,Incorporated (Transcom); and L&SBearing Company/LSB Industries (L&S).We have conducted thisadministrative review in accordancewith section 751(a)(1) of the Act and 19CFR 353.22.Scope of ReviewsImports covered by these reviews areshipments of TRBs and parts thereof,finished and unfinished, from the PRC.This merchandise is classifiable underthe Harmonized Tariff Schedule (HTS)item numbers 8482.20.00,8482.91.00.60, 8482.99.30, 8483.20.40,8483.20.80, 8483.30.80, 8483.90.20,8483.90.30 and 8483.90.80. Althoughthe HTS item numbers are provided forconvenience and customs purposes, ourwritten description of the scope of thisproceeding is dispositive.Facts AvailableIn accordance with section 776(a) ofthe Act, we have determined that theuse of adverse Facts Available isappropriate for certain firms, asdiscussed in the Preliminary Results at40613–14.Analysis of Comments Received1. Separate RatesComment 1Petitioner states that the Departmentincorrectly determined that all fourteenPRC companies that participated in thisreview are entitled to a separate rate.Petitioner requests that the Departmentreview these firms as a single entity.Petitioner claims that theDepartment’s finding that a PRC list ofproducts subject to direct governmentcontrol does not name ‘‘TRBs’’ is

6174 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesinaccurate because the list does name‘‘bearings’’ (citing ‘‘TemporaryProvisions for Administration of ExportCommodities’’). Petitioner states that thefact that TRBs, as ‘‘bearings,’’ appear onthis list eliminates a significant reasonfor the Department’s decision todetermine separate rates.Petitioner adds that, in thepreliminary results, the Departmentmisapplied its standard criteria byignoring the presumption thatrespondents constitute a single entity.Petitioner argues that, in fact, theDepartment has presumed in favor ofthe absence of de jure and de factocontrol and has accepted unsupportedclaims and non-market-economy (NME)laws as the basis for single rates despitecommon ownership of entities.Petitioner cites as evidence for theswitch in the presumption the fact that,in the preliminary results, theDepartment stated that ‘‘there is noevidence that [the authority of generalmanagers to enter into contracts] issubject to any level of governmentcontrol’’ (citing the Preliminary Resultsat 40612). Petitioner claims that,instead, the Department should have tofind that ‘‘it has firm evidence that thisauthority is not subject to any level ofgovernment control.’’Petitioner also argues that theDepartment should make its separaterateanalysis consistent with rules forevaluating affiliated parties and forcollapsing firms (citing section 771(33)of the Act with respect to thedetermination of affiliated parties). Inthis regard, Petitioner states that theDepartment should consider whetherthe common owners have the ability toexercise restraint or direction over thecompanies, including whether theowners can shift production or exportactivities among firms. Petitioner arguesthat, if the Department undertook suchan analysis, it would find that none ofthe respondents is entitled to a separaterate because the PRC government hasthe ability, whether or not it exercisesit in an apparent manner, to controlexport and pricing activities, select keymanagement, direct the disposition ofrevenues (including export revenues),negotiate contracts, and shift exports tofirms with low dumping margins.Petitioner contends further that theDepartment’s de jure and de factoseparate-rates analysis places animpossible burden of proof on domesticinterested parties because a statecontrolledeconomy can amend its lawsand regulations without in factrelinquishing control. Petitioner claimsthat the state can simply delete anyevidence of de jure control from laws,regulations, corporate charters and otherdocuments. Given this situation,Petitioner argues, both the domesticindustry and the Department areconfronted with the requirement thatthey prove a negative without havingaccess to information that wouldindicate continuing control overproduction and pricing decisions by thestate. Thus, Petitioner states, claimsmade by plant managers, themselvesinterested in obtaining separate rates,become the basis for the Department’sde facto analysis and, without access tonecessary information, domesticinterested parties confront anirrebuttable presumption.Guizhou Machinery et al. respondthat the Department properlydetermined that the PRC respondentsare entitled to separate rates. GuizhouMachinery et al. argue that, whether theDepartment states, ‘‘there is no evidenceof control’’ or it has ‘‘firm evidence’’ ofno control, both statements indicate thatthe Department in fact found noevidence of control. Guizhou Machineryet al. assert that Petitioner objects to thetest itself, not the words the Departmentused to describe its findings.Guizhou Machinery et al. alsocontend that Petitioner’s proposal toapply the affiliated-party definition insection 771(33) of the Act wouldeliminate the possibility of separaterates for PRC-owned firms. GuizhouMachinery et al. acknowledge that, inCompact Ductile Iron WaterworksFittings from the PRC, 58 FR 37908 (July14, 1993) (CDIW), the Departmentdetermined that it would not consider arequest for separate rates for any stateownedcompany on the basis that nostate-owned company could besufficiently independent of state controlto be entitled to separate rates. However,Guizhou Machinery et al. note, theDepartment subsequently departed fromthe CDIW decision and returned to itsformer practice, with somemodifications (citing FinalDetermination of Sales at Less ThanFair Value: Silicon Carbide From thePeople’s Republic of China, 59 FR 22585(May 2, 1994) (Silicon Carbide)).Guizhou Machinery et al. argue that, inthe preliminary results, the Departmentproperly employed its more recentseparate-rates analysis methodologyfrom Silicon Carbide.Guizhou Machinery et al. add thatnothing in the Statement ofAdministrative Action (SAA) suggeststhat Congress or the Administrationintended that the Department wouldapply the affiliated-party provision inNME cases in a manner that wouldresult in eliminating separate rates and,if the SAA had intended that result, theSAA would not be silent on thequestion. Guizhou Machinery et al. addthat, in the House Report to the URAA,there is no mention of regulatory controlby state or provincial governments andno mention of ‘‘affiliation’’ stemmingfrom the fact that two entities are bothregulated by the same governmentalentity. Further, Guizhou Machinery etal. claim, while the SAA explicitlydiscusses the question of affiliation withrespect to a number of price and costissues, it does not mention separaterates issues. Guizhou Machinery et al.add that section 771(33) has its roots inArticle 4.1, note 11 of the Agreement onImplementation of Article VI of theUruguay Round of the GeneralAgreement on Tariffs and Trade(GATT), which contemplated controlonly over producers and exporters, notaffiliation of otherwise competingexporters because of governmentauthority or centrally exercised control.Finally, with respect to Petitioner’sargument that the nature of the de jureand de facto tests imposes animpossible burden of proof onPetitioner, Guizhou Machinery et al.state that it is not reasonable to believethat the PRC would repeal all of itslaws, regulations, and corporate charterssolely to guarantee that the Departmentwill be incapable of discovering anyevidence of de jure control inantidumping proceedings.Department’s PositionWe disagree with Petitioner. We havecalculated separate rates for theresponding PRC companies in thesefinal results because each hasdemonstrated an absence of governmentcontrol over its export activities.In CDIW, we adopted the position thatstate ownership (i.e., ‘‘ownership by allthe people’’) ‘‘provides the centralgovernment the opportunity tomanipulate [the exporter’s] prices,whether or not it has taken advantage ofthat opportunity during the period ofinvestigation.’’ CDIW at 37909. Wedetermined, therefore, that state-ownedenterprises would not be eligible forseparate rates. However, we havemodified our separate-rates policy as setforth in CDIW. We subsequentlydetermined that ownership ‘‘by all thepeople’’ in and of itself cannot beconsidered dispositive in establishingwhether a company can receive aseparate rate. See Silicon Carbide at22586. As such, it is our policy that aPRC-based respondent is entitled to aseparate rate if it demonstrates on a dejure and a de facto basis that there is anabsence of government control over itsexport activities.A separate-rate determination doesnot presume to speak to more than an

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6175individual company’s independence inits export activities. The analysis isnarrowly focused and the result, ifindependence is found, is accordinglynarrow—we analyze that singlecompany’s U.S. sales of the subjectmerchandise separately and calculate acompany-specific antidumping rate.Thus, for purposes of calculatingmargins, we analyze whether specificexporters are free of government controlover their export activities, using thecriteria set forth in Silicon Carbide at22585. Those exporters who establishtheir independence from governmentcontrol are entitled to a separate margincalculation. Thus, a finding that acompany is entitled to a separate rateindicates that the company hassufficient control over its exportactivities such that the manipulation ofsuch activities by a government seekingto channel exports through companieswith relatively low dumping rates is nota concern. See Disposable PocketLighters from the PRC, 60 FR 22359,22363 (May 5, 1995) (DisposableLighters); Tapered Roller Bearings andParts Thereof, Finished and Unfinished,from the PRC, 61 FR 65527, 65527–65528 (December 13, 1996) (TRBs IV–VI); TRBs VII, Comment 1.Having rejected the CDIW positionthat state ownership per se eliminatesthe possibility of a company gaining aseparate rate, we do not acceptPetitioner’s argument that the statutorydefinition of affiliated persons at section771(33) of the Act should determine ourseparate-rates analysis. The applicationof this standard is overly broad for thepurpose of determining whether toassign separate rates to the PRC-ownedcompanies under review.First, the type of state ‘‘ownership’’involved (ownership by ‘‘all of thepeople’’) is not the type of ‘‘ownership’’addressed by section 771(33).Ownership by all of the people signifiesonly that ‘‘no individual can take thecompany . . . it belongs to thecommunity.’’ Silicon Carbide at 22586.It does not mean that a single entity‘‘controls’’ all such firms. Id.Second, even if such firms did meetthe section 771(33) ‘‘affiliated party’’standard, this definition does notdetermine the issue of whether weshould calculate separate rates for thestate-owned firms in this review.Instead, in order to make thatdetermination, we must consider thespecific issue of de jure and de factogovernment control over exportactivities. This is analogous to ourpractice in market-economy cases ofcalculating individual dumping rates foraffiliated parties unless we determinethat there is a significant potential formanipulation of pricing or productiondecisions. With respect to NME firms,we examine the potential formanipulation by the government usingthe de jure and de facto test set forth inSilicon Carbide. Thus, if the SiliconCarbide test shows that no governmententity controls the export activities ofthe firms in question so as to present asignificant potential for manipulation ofsuch activities, it is not appropriate toassign a single rate.In investigating the extent ofgovernment control over these firms’’export activities, we obtainedinformation regarding this specificissue, and the PRC companies thatresponded to our questionnairesubmitted information indicating a lackof both de jure and de facto governmentcontrol over their export activities.Contrary to Petitioner’s assertions, ourdetermination in this regard did nothinge on the fact that the term ‘‘TRBs’’does not appear on the ‘‘TemporaryProvisions for Administration of ExportCommodities.’’ Further, we are notpersuaded to change our separate-ratesdeterminations based on the fact thatthe term ‘‘bearings’’ appears on the list,particularly since the term ‘‘bearings’’appears on a section of the list thatsimply indicates that an exporter mustobtain an ‘‘ordinary’’ license in order toexport bearings. Instead, as detailed inthe Preliminary Results (at 40611), therecord evidence in this case, includingour verification findings, clearlyindicates a lack of both de jure and defacto government control over theexport activities of the firms to whichwe have assigned separate rates.We also do not accept Petitioner’sargument that we have misapplied thepresumption of state control in thiscase. Given the information thatrespondents provided in this review,our statement in the Preliminary Resultsthat ‘‘there is no evidence ofgovernment control over exports’’ isequivalent to an affirmative statementthat ‘‘the government does not controlthe export activities of thesecompanies.’’ We were able to make thisdetermination because the companiesprovided information affirmativelyindicating a lack of government control.Finally, contrary to Petitioner’s claimthat the necessary informationconcerning the de facto portion of theanalysis is inaccessible to bothPetitioner and to the Department, suchinformation was, in fact, subject toverification and was discussed in therelevant verification reports. Based onour analysis of the Silicon Carbidefactors, the verified information on therecord supports our determination thatthese respondents are, both in law andin fact, free of government control overtheir export activities. Thus, it would beinappropriate to treat these firms as asingle enterprise and assign them asingle margin. Accordingly, we havecontinued to calculate separate marginsfor these companies. See TRBs IV–VI at65528.Comment 2Petitioner claims that the Departmentimproperly granted Shandong andWanxiang separate rates based onvoluntary responses to the separate-ratesquestionnaire, although thesecompanies did not request review anddid not respond to any other part of theDepartment’s questionnaire. Petitionerstates that the result of this finding,which will allow these companies tohave their POR entries assessed at theirPOR deposit rates, is an abuse of thesingle-rate methodology. Petitionerstates that it is inappropriate that these‘‘non-respondents’’ are able to obtainmore favorable treatment than othernon-respondents. Petitioner claims thatthis approach is unfair because it didnot know of the existence of thesecompanies and could not have askedthat the review cover them. Petitionersuggests that the Department defergranting separate rates for Shandongand Wanxiang until it conducts a reviewin which they are named in a reviewrequest, in which case they must fullyparticipate in the review. Petitionermakes the same suggestion for GreatWall, a company that requested aseparate rate but whose separate-ratesresponse the Department did notanalyze in the preliminary results.Petitioner adds that, even if these threefirms are permitted to establishseparate-rate entitlement in this review,the rate applicable for this periodshould be the rate applicable had theynot submitted their voluntary separaterates responses, which is the PRC rate.Guizhou Machinery et al. respondthat Petitioner provides no support forits objection to the Department’s statedintention to liquidate Shandong andWanxiang’s POR entries at the depositrate in effect at the time of entry.Guizhou Machinery et al. and L&S statethat, since the Department did notreview these companies’’ entries duringthis segment of the proceeding, the Actrequires the liquidation of their PORentries at the deposit rate in effect at thetime of entry. Guizhou Machinery et al.state no party requested review ofShandong and Wanxiang nor did theDepartment name them in the notice ofinitiation. Citing 19 CFR 353.22(e),Guizhou Machinery et al. contend that,pursuant to the Department’sregulations, non-reviewed companies

6176 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesare subject to assessment ofantidumping duties at the rate in effectat the time of entry which, for thesecompanies, is 8.83 percent.Great Wall requests that theDepartment analyze the information thatit submitted during the course of thereview regarding the extent ofgovernment control over exportactivities and grant Great Wall aseparate rate, thereby permittingassessment of Great Wall’s POR entriesat its POR deposit rate.Department’s PositionWe disagree with Petitioner. For thesefinal results, we have determined thatthe export activities of Shandong,Wanxiang, and Great Wall are notsubject to de jure or de factogovernment control. Accordingly, thesefirms are not part of the ‘‘PRCenterprise’’ under review and, becauseno interested party requested a reviewof these firms, they are not subject tothis review. Because we did not includethese firms in this review, we willinstruct Customs to apply the respectivedeposit rates to these companies’’ PORentries for purposes of assessment.As explained in our response tocomment 1, it is our policy to treat allexporters of subject merchandise inNME countries as a single governmentcontrolledenterprise in the absence ofsufficient evidence to the contrary. Weassign that enterprise a single rate (the‘‘PRC rate’), except for those exportersthat demonstrate an absence ofgovernment control over export activity.Pursuant to this policy, if any companyfor which a review was requested isfound to be part of the ‘‘PRCenterprise,’’ the entire enterprise(including those companies that we donot name in the initiation) is subject tothe review. Thus, we request that thePRC government identify all firms thatexported during the POR and contactsuch firms regarding their participationin the review. This ensures that we fullycapture the presumed ‘‘PRC enterprise’’(further explained in our response tocomment 27). Any company that doesnot place information on the recordindicating that it is separate from thePRC government with respect to exportactivities will be covered by the reviewas part of the PRC enterprise and willreceive the PRC rate as an assessmentrate for POR entries. The PRC enterpriseis not subject to review only if all firmsfor which a review is requested respondand demonstrate that they areindependent from government controlover exports. That is not the case in thisreview.The three firms at issue havedemonstrated that they are independentfrom PRC-government control over theirexport activities. See PreliminaryResults at 40611–12 regarding Shandongand Wanxiang; see Memorandum fromAnalyst to File: Separate-RateDetermination for Great Wall BearingCompany, February 3, 1997, regardingGreat Wall. Thus, we have determinedthat they are not part of the PRCenterprise. Because these companies arenot part of the PRC enterprise and noreview of these companies wasrequested, they are not subject to thisreview. Therefore, the automaticassessment provisions (19 CFR353.22(e)) apply. Petitioner’s contentionthat we should, in effect, reviewcompanies for which no review wasrequested is inconsistent with ournormal practice of conducting reviewsupon request only, as provided insection 751(a) of the Act. Accordingly,as with all unreviewed companies, PORentries of Shandong, Wanxiang andGreat Wall will be liquidated at thedeposit rates.2. Valuation of Factors of ProductionComment 3Petitioner argues that the Departmentshould base the values of all factors ofproduction (FOP) on the annual reportof SKF India (SKF). Petitioner notesthat, for the preliminary results, theDepartment used the SKF report tovalue three factors (overhead; selling,general, and administrative expenses(SG&A); and profit), whereas theDepartment derived values for the directlabor and raw-material factors from twoother, unrelated, sources (Investing,Licensing & Trading Conditions Abroad,India (IL&T India) statistics and Indianimport statistics, respectively).Petitioner claims that it is inherentlydistortive to use sources other than theSKF report to value labor and rawmaterials because SKF’s labor and rawmaterialcosts are included in the costsused in calculating SKF’s overhead,SG&A, and profit ratios, which theDepartment uses in its surrogatecalculation.Petitioner also contends that SKF’smaterials and labor costs are the ‘‘bestinformation’’ with respect to thesefactors because they represent actualcosts in the preferred surrogate country,whereas the steel-import statistics andlabor data have little connection withcosts related to production of TRBs.Thus, Petitioner argues, whereasSKF’s costs and expenses representthose of a producer of the class or kindof merchandise subject to review, thesurrogate data for raw materials anddirect labor which the Department usedcover a broad range of industries andproducts. With respect to raw materials,Petitioner asserts that the ‘‘other’’ alloysteelcategory from the Indian importstatistics, which the Department used tovalue material costs for the preliminaryresults, is broad and may or may notinclude imports of the steel used toproduce bearings. Petitioner contendsthat, even if this category includes steelused to produce bearings, such steellikely represents only a small part ofsteel imports in the basket category.With respect to direct labor, Petitionerclaims that the classification theDepartment used covers, in addition tobearings producers, hundreds ofindustry sectors under broad headingsunrelated to bearings production andargues that there is no rational basis forusing such a non-specific source as asurrogate. Petitioner states that it isappropriate to apply SKF’s average laborcost to all types of labor, includingdirect production, production overhead,and SG&A, since all of these laborcategories would be part of the aggregatelabor cost in SKF’s annual report.Petitioner states that the use of theSKF report for all FOP values isconsistent with the importance thecourts attach to internal coherence andthe use of a single source when possible(citing Timken Co. v. United States, 699F. Supp. 300, 306, 307 (1988), affirmed,894 F.2d 385 (Fed. Cir. 1990)(collectively Timken)). Petitioner urgesthe Department to use the same annualreport.Petitioner argues in the alternativethat, in the event the Department doesnot use the SKF report to value all FOP,the Department must adjust theoverhead, SG&A, and profit rates toreflect the use of lower materials andlabor values from the separate sources.Petitioner claims that the Department’spreliminary calculations were distortivebecause the Department used SKF’s fullmaterial and labor costs in the cost ofmanufacturing (COM) denominator butapplied this ratio to material and laborfactors that it developed using lowervaluedsources (Indian import statisticsand ILT labor data, respectively).Petitioner concludes that, because ofSKF’s overhead, SG&A and profitpercentages are linked to SKF’s ownmaterials and labor costs, thosepercentages must be adjusted upward(by reducing the denominators used toderive these percentages) if theDepartment multiplies these ratios bymaterial and labor costs from othersources to derive the per-unit overhead,SG&A, and profit rates.Petitioner proposes that, in order toderive non-distortive material and laborportions of the overhead and SG&A ratiodenominators, the Department should

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6177multiply the total weight of materials forSKF by the highest value of steel that ituses in the final results and shouldmultiply the total number of hoursworked at SKF by the IL&T India laborvalue it uses for the final results.Petitioner adds that this calculation ispreferable to the overhead, SG&A, andprofit denominators that the Departmentused in the preliminary results becauseit will result in a materials costexclusive of Indian import duties.Guizhou Machinery et al. respondthat it is irrelevant whether the SKFreport represents a single source forvaluing all FOP components and notethat the Department consistently usesmultiple sources of information forsurrogate data in NME cases, selectingthe best source for each element of theFOP. Guizhou Machinery et al. arguethat the fact that SKF India is a producerof TRBs in the surrogate country doesnot mean that its report is a propersource for all surrogate data, addingthat, in most NME cases, theDepartment uses multiple sources ofinformation for surrogate data, choosingthe best one for each element for thefactors of production. GuizhouMachinery et al. state that Petitioner’scitation to Timken is misplacedbecause, in that case, the Court ofInternational Trade (CIT) remanded thecase to the Department because therationale for selecting a particular valuefor steel scrap was inconsistent with therecord and the Department had notexplained the inconsistency. GuizhouMachinery et al. claim that theDepartment was not criticized inTimken for the use of different sourcesof surrogate data. East Sea adds that theSKF report, though audited, is notverified data and notes that theDepartment has a preference forverifiable, public information.With respect to Petitioner’s proposalthat the Department use SKF data todetermine the raw-material-factor value,East Sea and Guizhou Machinery et al.argue that the raw-material data in theSKF report is inferior to import statisticsdue to a lack of detail regarding thetypes of steel SKF used. GuizhouMachinery et al. state that, in thisreview, the raw-material-input value isthe critical factor in the analysis andthere is no evidence to indicate that SKFIndia used the same kind of steel as therespondents, whereas import statisticsallow the Department to pinpoint aparticular input. East Sea notes that theSKF report does not provide separateprices for bar, rod or steel sheet butinstead provides a single value for allsteel used in the factory, including steelused in the production of non-subjectmerchandise. East Sea submits thatPetitioner, Respondents, and theDepartment do not know what types ofsteel were included in SKF’s materialcostcalculation. East Sea suggests thatthe steel referenced in the SKF reportcould be tube steel (instead of bar steel),stainless steel (a much more expensiveproduct), already machined ‘‘greenparts’’ supplied by SKF’s many relatedcompanies, or innumerable other typesof steel. Guizhou Machinery et al. addthat Petitioner has provided noinformation demonstrating that the SKFreport covers the specific steel inputsrelevant to subject merchandise.With respect to Petitioner’s claim thatthe Department should calculate thelabor factor using SKF data, GuizhouMachinery et al. contend that Petitionerhas provided no evidence to support itsclaim that the labor costs of a subsidiaryof a Swedish company, SKF, are a bettersurrogate for labor costs than is anaverage for the surrogate country.Guizhou Machinery et al. state that it isthe Department’s practice to useindustry-wide data, not producerspecificdata, where possible, andsuggest that Petitioner’s proposal wouldrisk introducing abnormalities unique tothat producer. East Sea adds that,because the SKF report does notdifferentiate between administrative andmanufacturing personnel, theDepartment cannot use the SKF data tovalue labor. East Sea explains that themajority of workers producing subjectmerchandise in this review areunskilled laborers and, because theDepartment verified the Chinese bearingproducers, the Department has specificknowledge of the skill level in China.With respect to Petitioner’s argumentthat, if the Department continues tovalue the material and labor factorsusing non-SKF sources, the Departmentmust adjust the overhead, SG&A, andprofit rates to reflect the use of lowermaterials and labor values, GuizhouMachinery et al. respond that theDepartment’s use of data in SKF’sannual report to establish percentages orratios to be used for determination ofthe surrogate values for overhead andSG&A is fully consistent with theDepartment’s standard surrogatemethodology. Guizhou Machinery et al.state that the Department’s NME/surrogate-country methodology is basedupon the application of reliable andrepresentative ratios and input valuesfrom multiple sources and contend thatthe Department does not typically‘‘adjust’’ the component values used toderive SG&A and overhead ratios in themanner suggested by Petitioner.Consequently, Guizhou Machinery et al.argue, the Department should not adjustthe expenses taken from the SKF report,as suggested by Petitioner, to formulaterepresentative ratios for use indetermining actual amounts foroverhead and SG&A. In support of thiscontention, Guizhou Machinery et al.cite Final Determination of Sales at LessThan Fair Value: Coumarin From thePeople’s Republic of China, 59 FR 66895(December 28, 1994) (Coumarin), inwhich the Department calculatedmaterials costs from various sources andused the Reserve Bank of India Bulletin(RBI) data to calculate SG&A but did notadjust SG&A and overhead costs.East Sea adds that it would beillogical to adjust overhead and SG&Aas the Petitioner suggests for threereasons: (1) the Department has no ideawhat kind of steel SKF uses andreplacement of SKF’s material costs inthe overhead and SG&A denominatorswith Indian import costs does notimprove the reliability of the SKFoverhead or SG&A data; (2) SKF’soverhead rate reflects the experience ofa sophisticated bearing factory and theDepartment has long recognized thatindustrialized countries have higheroverhead rates than do companies inless industrialized countries, so that theoverhead rate should not be adjustedupward; and (3) SKF’s overhead costsreflect the unique experience of SKF,which is the leading producer in theworld and uses the finest raw materialsand state-of-the-art technology toproduce its bearings—as such, theDepartment would be mixing applesand oranges to substitute Indian importsteel prices for SKF’s own prices inorder to create a hybrid overhead orSG&A rate.Department’s Position:We agree with Respondents. Section773(c)(1) of the Act states that, forpurposes of determining NV in a NME,‘‘the valuation of the FOP shall be basedon the best available informationregarding the values of such factors.. . .’’ As we stated in TRBs IV–VI andTRBs VII, our preference is to valuefactors using published information (PI)that is closest in time with the specificPOR. See also Final Determination ofSales at Less Than Fair Value: CertainPartial-Extension Drawer Slides Fromthe People’s Republic of China, 60 FR54472, 54476 (October 24, 1995)(Drawer Slides). Based on the recordevidence we have determined thatsurrogate-country import statistics(Indonesian for valuing steel used toproduce cups and cones, Indian for steelused to produce rollers and cages),exclusive of import duties, comprise thebest available information for valuingraw-material costs. Our reasons forpreferring data for Indonesia, rather

6178 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesthan for our primary surrogate, India, forvaluing steel used to produce cups andcones are set forth in our response toComment 4.We prefer published surrogate importdata to the SKF data in valuing thematerial FOP for the following reasons.First, we are able to obtain data specificto the POR, which more closely reflectthe costs to producers during the POR.Second, the raw-material costs from theSKF report do not specify the types ofsteel SKF purchased. The record doesnot indicate whether SKF purchased barsteel (the type used by the Chinesemanufacturers) or more expensive tubesteel to produce bearings parts. Third,although we agree with Petitioner thatSKF is a producer of subjectmerchandise, the report also identifiesother products it manufactures. Fromthe information in the SKF report, weare unable to allocate direct labor andraw-materials expenses to theproduction of subject merchandise. Forthese reasons, we have valued thematerial FOP using surrogate importdata.Furthermore, we agree withRespondents that Petitioner’s citation toTimken for the proposition that theDepartment must use a single surrogatesource when possible is misplaced. Thatcase, although critical of theDepartment, does not state that allfactors must be valued in the samesurrogate country. Indeed, the opinionin Timken explicitly states that‘‘Commerce may avail itself of data froma country other than the designatedconduit, adoption of such an intersurrogatemethodology [althoughdeparting from the normal practice atthat time] remains within the scope ofCommerce’s discretionary power.’’Timken at 304.We also disagree with Petitioner’scontention that we should adjust theoverhead and SG&A rates if we continueto use the SKF report to value theserates while valuing the material andlabor FOP using other sources. As notedabove, we prefer to base our factorsinformation on industry-wide PI.Because such information is notavailable regarding overhead and SG&Arates for producers of subjectmerchandise during the POR (except forthe indirect labor portion of overheadand SG&A, which we valuedseparately—see Comment 8, below), weused the overhead and SG&A ratesapplicable to SKF India, a company thatproduces subject and non-subjectmerchandise.In deriving these rates, we used theSKF data both with respect to thenumerators (total overhead and SG&Aexpenses, respectively) anddenominator (total cost ofmanufacturing). This methodologyallowed us to derive internallyconsistent ratios of SKF India’soverhead and SG&A expenses. Theseratios, when multiplied by the FOP weused in our analysis, thereby constitutethe best available informationconcerning the overhead and SG&Aexpenses that would be incurred by aPRC bearings producer given such FOP.Petitioner’s recommended adjustmentwould affect (reduce) the denominator,but it would leave the overhead andSG&A expenses in the numeratorunchanged. As such, we find that thisadjustment would itself distort theresulting ratio, rather than curing thealleged distortion in our calculations.Finally, with respect to Petitioner’sassertion that the overhead, SG&A, andprofit denominators we used in thepreliminary results improperly includedimport duties paid, we note thatPetitioner has not provided anyinformation regarding the amount ofimport duties that are included nor hasPetitioner provided a means ofidentifying and eliminating such dutiesfrom our calculations. Although wewould not include duties paid on theimportation of merchandise by SKF, wehave no evidence as to the amount ofduties, if any, that are included in SKF’sraw-materials costs. Therefore, we didnot subtract any amount for importduties in our calculation of overheadand SG&A percentages. See TRBs IV–VIat 65529–65530 and TRBs VII, Comment2.2. (a) Material ValuationComment 4East Sea and Guizhou Machinery etal. contend that the Indian importcategory (7228.30.19) which theDepartment used to value the steel usedto produce cups and cones in thepreliminary results is an inappropriatesource because the values derived usingthis category do not accurately reflectthe cost to PRC producers of the hotrolledalloy-steel bar used to producethese components. Respondents statethat the Department should value thissteel using a source that more accuratelyreflects the input costs incurred by PRCproducers.East Sea argues that Indian importcategory 7228.30.19 contains a widevariety of steel products and acorrespondingly wide range of prices. Inthis regard, East Sea notes that theaverage price per metric ton of steelcontained in this category ranges from$610 to $4,860. East Sea states that theoverall steel value per metric ton theDepartment derived using this category(over $1,400) far exceeds the value ofsteel used by PRC producers tomanufacture TRBs.East Sea states that it is Departmentpractice to compare the surrogate steelprices it selects with world prices todetermine if the proposed surrogatevalues for steel are aberrational. East Seanotes that, in Heavy Forged Hand Toolsfrom the PRC, the Departmentdetermined that Indian import statisticswere aberrational in comparison withIndonesian and U.S. import statistics(citing Final Results of AntidumpingDuty Administrative Review: HeavyForged Hand Tools from the PRC, 60 FR49241, 49254 (September 22, 1995)(Hand Tools), Furfuryl Alcohol from thePRC, 60 FR 225444 (May 8, 1995)(Furfuryl Alcohol), and Certain CasedPencils from the PRC, 59 FR 55625(November 4, 1994) (Pencils)). East Seaadds that the Department’s ProposedRules also indicate that the Departmentwill test surrogate values againstinternational prices.East Sea suggests, as an alternative tothe Indian data the Department used inthe preliminary results, an‘‘international’’ price of $673 per metricton, which it derived using U.S.,Japanese, and European Union (E.U.)import statistics. East Sea contends thatthis value approximates thecorresponding steel value used in arecent review of TRBs from Romania,where the surrogate value for steel usedin cups and cones was $718 per metricton (citing Preliminary Results ofAntidumping Administrative Review:Tapered Roller Bearings from theRomania, 68 FR 15465 (April 8, 1996)).East Sea argues in the alternative that,if the Department continues to valuecups and cones using Indian importstatistics, it should modify this value byexcluding from its calculations allindividual steel import values in excessof $1,421 per metric ton as not reflectiveof the price of bearing-quality steel. EastSea states that this ceiling is notarbitrary because it is the average valuederived in the preliminary results and isthe highest surrogate value that theDepartment has ever selected in itsbearings cases.Guizhou Machinery et al. agree withEast Sea that: (1) the surrogate value thatthe Department used in the preliminaryresults is aberrational when comparedwith U.S., E.U., and Japanese importstatistics, and (2) the Department has anestablished practice, as noted in theProposed Regulations, of testingpotential surrogate values againstinternational prices (citing, inter alia,Disposable Lighters; Coumarin; SiliconCarbide; Drawer Slides; Helical SpringLock Washers from the PRC, 58 FR

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices617948833, 48835 (September 20, 1993)(Lock Washers); and Saccharin from thePRC, 59 FR 58818 (November 15, 1994)(Saccharin)). Guizhou Machinery et al.add that the Indian import values thatthe Department used in the preliminaryresults are nearly three times the valueof Indian export prices of the same steeland state that this constitutes furtherevidence that the import values areaberrational.With respect to the appropriatealternative to Indian import values,Guizhou Machinery et al. support EastSea’s proposed surrogate value of $673per metric ton, based on an average ofU.S., E.U., and Japanese importstatistics, as the best alternative value.Guizhou Machinery et al. state that thisvalue is in accord with the Department’spractice of basing factor values onmultiple sources when necessary and ispreferable to using data from othercountries listed on the Department’sSurrogate Country SelectionMemorandum because none of thesecountries is a significant producer ofbearings.Petitioner contends that Respondents’arguments that the value of steel inIndian import category 7228.30.19 usedin the preliminary results far exceedsthe value of steel used to manufactureTRBs are incorrect. Petitioner maintainsthat this category is the best valuationsource for the steel used to producecups and cones if the Departmentdetermines not to use the SKF Reportfor this purpose (see Comment 3).Petitioner states that Indian data ispreferable to the U.S./E.U./Japanaverage import value proposed byRespondents because India meets thestatutory criteria for factor valuation,i.e., it is a comparable economy to thePRC and is a significant producer ofcomparable merchandise (citing section773(c) of the Act). Petitioner claims thatthe use of a developed-country average,as suggested by Respondents, wouldviolate the statute and adds that theDepartment previously rejected the useof E.U. statistics for valuation purposesin the 1989–90 review of this order.Petitioner adds that Respondents’analysis of Japanese import statistics isbased on a questionable reading ofJapanese HTS classifications.With respect to the cases thatRespondents cite in support of theirposition that their proposal is in accordwith Department practice regardingseeking alternative valuation sourceswhere the primary surrogate value isaberrational, Petitioner responds that, inthose cases, unlike this proceeding, theDepartment had a plausible reason todeviate from its preferred practicebecause the preferred data wereunsupported by reliable evidence andwere contradicted by consistentinformation from other sources, whichusually included another surrogate.Petitioner states that the casesRespondents cite may be distinguishedfrom the present review as follows: (1)in Coumarin, the rejected Indian sourceconflicted with other sources withinIndia; (2) in Silicon Carbide, theDepartment did not use the preferreddata because they either pertained tofurther-processed products or involveda small tonnage priced too high to beconsidered reasonable; (3) in DisposableLighters, the Department used exportsfrom India instead of imports becauseimports were not significant; (4) inPencils, the Department used importsfrom a secondary surrogate instead ofthe primary surrogate (India) becausethe Indian values were inconsistentwith both Pakistani values and valuesprovided in the petition; (5) in LockWashers, the Indian values theDepartment rejected were over 1,000percent higher than the comparisonvalues; (6) in Drawer Slides, the Indianvalues the Department rejected wereseveral times higher than thecomparison values; (7) in Saccharin, theDepartment used an average of exportstatistics from five developed countriesbecause it had difficulty finding anappropriate surrogate; (8) in HandTools, the Department rejected Indianimport values in favor of Indonesianand U.S. values because imports intoIndia were not significant; (9) inFurfuryl Alcohol, the Departmentrejected the primary surrogate’s(Indonesia) import data in favor ofexport data from the same surrogate;and (10) in Steel Pipe, the Departmentexcluded certain imports that wereclearly of a higher quality than the steelused by Respondent in that case.Petitioner adds that East Sea’salternative proposal, that, if theDepartment continues to use Indianimport statistics it should exclude allindividual import values greater than$1,421, is incorrect because it focusesonly on individual import values thatmay be aberrationally high whileignoring those values that may beaberrationally low.Department PositionWe agree with East Sea and GuizhouMachinery et al. None of the eight-digittariff categories within the Indian7228.30 steel group correspondsspecifically to bearing-quality steel usedto manufacture cups and cones, and wedo not agree with Petitioner that the bestalternative, aside from valuing steelusing the SKF Report, is to use theeight-digit ‘‘others’’ category(7228.30.19) within this group. Instead,we have determined that the use ofIndian import data is not appropriate tovalue steel used to produce cups andcones in this case because we are unableto isolate an Indian import value forbearing-quality steel and, moreimportantly, the steel values in theIndian import data are not reliable, asfurther discussed below.As in TRBs IV–VI and TRBs VII, wehave examined each of the eight-digitcategories within the Indian 7228.30group and have found that, althoughbearing-quality steel used tomanufacture cups and cones is mostlikely contained within this basketcategory, there is no eight-digit subcategorythat is reasonably specific tothis type of steel. We eliminated thespecific categories of alloy steel that areclearly not bearing-quality steel asfollows. Under the Indian tariff system,bearing-quality steel used tomanufacture cups and cones iscontained within the broad category7228.30 (Other Bars & Rods, Hot-Rolled,Hot-Drawn & Extruded). However, noneof the named sub-categories of thisgrouping (7228.30.01—bright bars ofalloy tool steel; 7228.30.09—bright barsof other steel; 7228.30.12—bars and rodsof spring steel; and 7228.30.14—barsand rods of tool and die steel) containssteel used in the production of subjectmerchandise. This leaves an ‘‘others’’category of steel, 7228.30.19. However,we have no information concerningwhat this category contains, and none ofthe parties in this proceeding hassuggested that this category specificallyisolates bearing-quality steel. Further,the value of steel in this eight-digitresidual category is greater than thevalue of the general six-digit basketcategory (7228.30) which, in turn, isvalued too high to be considered areliable indicator of the price of bearingqualitysteel, as shown below.Where questions have been raisedabout PI with respect to particularmaterial input prices in a chosensurrogate country, it is the Department’sresponsibility to examine that PI. SeeDrawer Slides at 54475–76, CasedPencils, 59 FR 55633, 55629 (1994),TRBs IV–VI at 65531, and TRBs VII.Because all parties raised questionsabout the validity of the Indian importdata used to value cups and cones in thepreliminary results, we compared thevalue of Indian imports in category7228.30 with the only record source thatspecifically isolates bearing-quality steelused to manufacture cups and cones:U.S. import data regarding tariffcategory 7228.20.30 (‘‘bearing-qualitysteel’’). We found that, for the timeperiod covered by the POR, the value of

6180 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesthe Indian basket category 7228.30 wassignificantly higher than that for thebearing-quality steel imported into theUnited States. It was also significantlyhigher in comparison with E.U. importstatistics. 1 The Indian eight-digit‘‘others’’ category recommended byPetitioner was higher than any of thesesources.In light of these findings, we havedetermined that the Indian import datathat we used to value cups and cones inthe preliminary results are not reliable.For these final results, we have usedimport data from another surrogatecountry, Indonesia, a producer ofmerchandise comparable to TRBs, tovalue steel used to produce thesecomponents. As with the Indian data,we were unable to isolate the value ofbearing-quality steel or identify aneight-digit category containing suchsteel imported into Indonesia; however,unlike the Indian data, the Indonesiansix-digit category 7228.30 is consistentwith the value of U.S. imports ofbearing-quality steel, as well as thecomparable six-digit category in theUnited States. Thus, we havedetermined that Indonesian category7228.30, which is the narrowestcategory we can determine wouldcontain bearing-quality steel, is the bestavailable information for valuing steelused to produce cups and cones.Although Indonesia is not the firstchoicesurrogate country in this review,in past cases the Department has usedvalues from other surrogate countries forinputs where the value for the firstchoicesurrogate country wasdetermined to be unreliable. See DrawerSlides at 54475–76, Cased Pencils at55629, and Lock Washers at 48835.Further, Indonesia has previously beenused as a secondary source of surrogatedata in cases involving the PRC where,as here, use of Indian data wasinappropriate even though India was theprimary surrogate. See, e.g., Chrome-Plated Lug Nuts from the PRC; FinalResults of Antidumping DutyAdministrative Review, 61 FR 58514,58517–18 (November 15, 1996).Petitioner’s attempt to distinguish theinstant proceeding from the cases inwhich we have departed from a primarysurrogate in fact demonstrates that thereare a variety of factual situations inwhich recourse to a secondary source is1 Although the E.U. import data do not explicitlyidentify ‘‘bearing-quality steel,’’ the relevantsubheadings (7228.30.40, 7228.30.41, and7228.30.49) provide narrative descriptions thatclosely match the chemical composition of the barsteel that the PRC respondents used to producecups and cones. See Memorandum from Analyst toFile: Factors of Production for the Final Results ofthe 1994–95 Administrative Review of TRBs fromthe PRC, February 3, 1997.appropriate with respect to thevaluation of a given factor. Accordingly,we must determine the reliability ofeach factor based on the facts of eachcase. In this review, as noted above, acomparison of the Indian import valuesfor the basket category containing steelused by the PRC respondents to producecups and cones with other, moreprecise, data regarding such ‘‘bearingquality’’steel indicates that the Indianvalues are inappropriate. In contrast, theIndonesian data that we have chosenclosely approximate observable marketprices for this specific input andtherefore constitute a more appropriatevaluation source.Finally, we note that, because we arevaluing the steel used to produce cupsand cones using Indonesian import data,we are valuing the scrap offset to thissteel value using the same source.Comment 5Petitioner asserts that the Departmentused the incorrect Indian tariffclassification number to value steel forcages in the preliminary results.Petitioner states that the Departmentused subheading 7209.42.00, a categorythat does not specify carbon content, anessential characteristic that Respondentsused in their descriptions of the Chinesegrade GB699–65 steel used to producecages. Petitioner states that this steeltype is low-carbon steel, with a carboncontent ranging between 0.07 and 0.14percent by weight. Petitioner suggeststhat, if the Department does not valuesteel using the SKF Report, it should useIndian subheading 7211.41.00, whichspecifies a carbon content of less than0.25 percent carbon by weight, to valuesteel used to produce cages.Guizhou Machinery et al. respondthat subheading 7211.41.00 is not anappropriate valuation source for cagesteel because there is insufficientinformation on the record regarding thethickness of steel entering into thiscategory. In this regard, Respondentsnote that all that is known is that thethickness of such steel is greater than600 mm, while the thickness ofsubheading 7209.42.00 has moredefined boundaries (between 0 and 600mm). Respondents also state that,although subheading 7211.41.00 listscarbon content, it does not specify thecontent of a number of other elements,including manganese, silicon, andchromium. Accordingly, Respondentscontend, the fact that Petitioner’spreferred subheading specifies carboncontent is insufficient reason to changeits established preference.Department’s PositionWe disagree with Petitioner. As inpast reviews, we are using Indian tariffsubheading 7209.42.00. Thissubheading involves cold-rolled steelsheet, which the PRC respondents use toproduce cages. Conversely, thesubheading that petitioner recommends(7211.41.00) involves hot-rolled sheetand is not, therefore, an appropriatecategory for valuing steel used toproduce cages.Comment 6Petitioner states that the Department’sFOP Memorandum indicates that it usedIndian tariff subheading 7204.49 tovalue non-alloy scrap resulting from theproduction of cages while the actualcalculations indicate that theDepartment used subheading7204.41.00. Petitioner suggests that, ifthe Department in fact uses subheading7204.49 for the final results, it shouldonly use data for item 7204.49.09(‘‘other’), which will allow theDepartment to exclude the inapplicabledata for ‘‘defective sheet of iron andsteel’’ at item 7204.49.01.Guizhou Machinery et al. respondthat the Department should usesubheading 7204.49, as it stated in itsFOP Memorandum. Respondents statethat subheading 7204.41.00 isinappropriate because it does notinclude waste from steel-sheet products.Respondents add that, contrary toPetitioner’s assertion, the Departmentneed not exclude subheading7204.40.01, since this categoryspecifically includes scrap from steelsheet.Department’s PositionWe disagree with Guizhou Machineryet al. For these final results, we haveused Indian import category 7204.41.00to value scrap used in the production ofcages. As we noted in TRBs VII(Comment 5), this category bestdescribes the types of scrap createdduring the production of cages, i.e.,turnings, shavings, chips, trimmings,stampings, etc. Further, although weagree with Petitioner that our FOPMemorandum and our calculations wereinconsistent in the preliminary results,its comments regarding the exclusion ofcertain data from subheading 7204.49are moot because we have not used thissubheading for the final results.Comment 7Petitioner states that Respondentsfailed to make allowance for defectiveproducts in their calculations of perunitmaterial and labor quantities.Petitioner recommends adjustment of

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6181Respondents’’ COM upward to accountfor defective products.Petitioner states that, in calculatingmaterials and labor usage per unit ofoutput, most Respondents reported thatthey divided the weight of steel issuedand the total labor hours worked by thenumber of units produced. Petitionercontends that these calculations do nottake into account that a percentage oftotal units produced will inevitably bedefective products which consumematerials, labor, and overhead butcannot be sold. Petitioner claims forinstance that, in the previous review,Shanghai General Bearing Company 2reported publicly that it uses a ‘‘twopercentallowance . . . based on thecompany’s empirical evidence of howmuch production fails to passinspection’’ (citing Shanghai GeneralPublic Verification Report for 1993–94Review). Petitioner suggests that theDepartment revise its calculations ofCOM upward by 0.2 percent for allrespondents in order to account forunreported defective production.Guizhou Machinery et al. respondthat the Department’s questionnairedoes not request that Respondentsprovide any data on production defectrates and, therefore, the Department hasno basis for making any inferencesregarding the production of defectivebearings. Guizhou Machinery et al. addthat Petitioner offers no evidence tosupport the theory that the experienceof Shanghai General is representative ofother Chinese producers.East Sea claims that Petitioner’ssuggestion that the Department increaseCOM by 0.2 percent is misguidedbecause there is no evidence thatRespondents have accountedimproperly for defective products. EastSea states that, in fact, it has reportedFOP for finished products, i.e., factorsdata required to produce satisfactory,non-defective products.Department’s PositionWe disagree with Petitioner. While weagree that, in calculating per-unitmaterial and labor quantities,Respondents must account for defectiveproducts properly, Petitioner hasprovided no evidence that Respondentsdid not do so. The fact that onecompany, Shanghai General, that statedexplicitly it accounted for defectiveproducts properly does not mean that2 Because we revoked Shanghai General in the1993–94 administrative review, we are notaddressing issues involving this company in the1994–95 review. However, we include reference toShanghai General here because Petitioner’scontention concerns the application of ShanghaiGeneral data to other respondents that are involvedin this review.Respondents in this review did not,particularly since that statement wasmade in a previous review. In fact,Respondents generally account fordefective products by including allmaterial and labor quantities for allproducts produced (including defectiveproducts) in the numerator of the perunitmaterial and labor calculationswhile basing the denominator (numberof units produced) only on those unitsthat pass inspection and are saleable.Where we find, generally throughverification, that this is not the case, weadjust the denominator accordingly. SeeTRBs IV–VI at 65540 (Comment 23).However, as Guizhou Machinery et al.note, we did not ask Respondents toprovide specific data regardingproduction-defect rates in ourquestionnaire nor would we use suchrates in our calculations. Therefore, itwould be inappropriate to draw anadverse inference from the lack of dataon the record regarding such rates.2.(b)Comment 8Labor ValuationPetitioner objects to the Department’streatment of indirect labor. Specifically,Petitioner claims that, in thepreliminary results, the Departmentvalued indirect labor as a percentage ofSKF’s total labor cost and included aportion of indirect labor in overheadand a portion in SG&A. Petitionercontends that, instead of valuingindirect labor in this manner, theDepartment should value this expenseusing its FOP methodology, as it didwith direct labor, then combine directand indirect labor to derive a total laborexpense. Petitioner states that, unlikeindirect labor, the Departmentcalculated direct labor in the mannerthe statute envisions, as a factor ofproduction to which the Departmentapplied the Indian surrogate value.Petitioner suggests valuing indirectlabor as follows. Petitioner claims thatmost respondents reported that indirectoverhead labor is 20 percent of directlabor and that indirect SG&A labor isalso 20 percent of direct labor.Petitioner suggests that, since indirectlaborhours are 40 percent of directlaborhours, the Department shouldcalculate a total (direct plus indirect)labor value by multiplying the directlaborhours by 1.4, then applying theIndian surrogate-labor value to thisquantity.Guizhou Machinery et al. respond bynoting that, in NME cases, theDepartment has treated indirect labor asan overhead cost, not as a direct laborcost. Guizhou Machinery et al. add thatthe questionnaire requests thatRespondents report assembly labor andindirect labor separately and contend,therefore, that the Department shouldreject Petitioner’s proposal.Department’s PositionWe agree with Petitioner, in part.Petitioner is correct in asserting that,where we have the data to calculateexpenses incurred by NME respondentsusing the factors of productionmethodology (i.e., multiplying arespondent’s reported per-unit usagerates by surrogate values), we should doso. See section 776(c) of the Act. Withrespect to indirect labor, data on therecord allow us to calculate the per-unitquantities of such labor attributable tooverhead and to SG&A. We also havereliable surrogate information regardinglabor values in India (IL&T data).Accordingly, for the final results, wevalued indirect labor attributable tooverhead and indirect labor attributableto SG&A by multiplying the respectiveper-unit labor hours by the IL&T laborrate.However, although we agree withPetitioner regarding the appropriatemethodology for deriving the indirectlabor expense, we disagree withPetitioner’s proposal that we shouldinclude the total per-unit indirect-laborexpense together with the per-unitdirect-labor expense, effectivelycalculating a single, per-unit laborexpense. In recommending that wecreate a single, total labor amount,presumably to be included as part ofCOM (Petitioner does not specify whereto include this total labor value),Petitioner incorrectly attributes allindirect labor to COM instead ofallocating this expense to both overheadand SG&A, as reported by Respondents.In this respect, the methodology that weused in the preliminary results, whereinwe allocated indirect labor to overheadand to SG&A using the allocationpercentages reported by Respondents,conforms to our practice of consideringindirect labor as labor attributable toboth overhead and to SG&A operations(e.g., supervisory and sales personnel).See Final Determination of Sales at LessThan Fair Value: Sebacic Acid from thePRC, 59 FR 28053, 28059–60 (SebacicAcid). Accordingly, while we havevalued indirect labor in the manner thatPetitioner recommends, we haveallocated this expense to both overheadand SG&A.Comment 9Petitioner argues that, in calculatingthe surrogate value for labor, theDepartment should make allowance forvacation, sick leave and casual leavewhen calculating the number of weeks

6182 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesper month actually worked. Petitionerstates that the Department calculatedthe hourly wage rate on the basis of4.333 working weeks per month, basedon a full 52-week year, which assumesthat workers never get sick, takevacations or have other days off.Petitioner observes that IL&T Indiashows that mandatory benefits includeone day of paid vacation for every 20days worked, sick leave of seven days ayear with full pay, and seven to ten daysof casual leave. Petitioner claims thatRespondents have not allocated anyportion of vacation or sick leave to thelabor hours they reported as their factorsof production. Petitioner states that thegoal is to determine the cost to anemployer of each hour that an employeeis on the job and, therefore, the laborhours used in the denominator of thesurrogate labor-rate calculation mustinclude only time on the job. Petitionersuggests that the number of weeks permonth should be recalculated to takeinto account at least the minimumbenefits and derives a figure of 3.72working weeks per month using thisapproach.Guizhou Machinery et al. respondthat the Department should rejectPetitioner’s argument to adjust thecalculated labor rate which theDepartment used in the preliminaryresults for vacation, sick leave andcasual leave. Guizhou Machinery et al.claim that Petitioner provides nosupport for the statement that hourlylabor costs should reflect only theexpenses accrued to an employer for thetime the employee is on the job.Guizhou Machinery et al. state that thereal hourly cost to the employer reflectsmany factors, including fringe benefitssuch as paid vacation, sick leave, etc.Guizhou Machinery et al. suggest thatthe Department’s calculations shouldinclude the cost of fringe benefits suchas vacation and sick leave in thenumerator and, because the numeratordoes include such fringe benefit costs,the denominator should likewise reflectthese fringe benefits by including hoursrelated to vacation and sick leave. .Department’s PositionWe disagree with Petitioner. In ourpreliminary results we valued directlabor using rates reported in IL&T India,which states that fringe benefitsnormally add between 40 percent and50 percent to base pay. SeeMemorandum to the File from CaseAnalyst: Factors of Production ValuesUsed for the Eighth Antidumping DutyAdministrative Review (Memorandum),September 1, 1995, attachment 5.Accordingly, we multiplied base pay by1.45 in order to incorporate fringebenefits. Memorandum at 3–4.Whereas Petitioner suggests wecalculate a wage rate based only on timespent on the job, we find that expensesrelated to holidays, vacation, sick leave,etc., belong in the numerator of thesurrogate labor-rate calculation and timespent on vacation and sick leave belongsin the denominator of the calculation.Because the employer incurs expensesboth for employees on vacation andemployees on the job, it incurs a fullyloaded labor cost to produce themerchandise. By adjusting the base payto include such fringe benefits asvacation, sick leave, casual leave, etc.,we calculated a fully loaded direct-laborrate that more accurately represents theactual direct-labor cost to themanufacturer. See TRBs VII at 49–50.2.(c) Overhead, SG&A and ProfitValuationComment 10Petitioner contends that theDepartment incorrectly designated theline item ‘‘power and fuel’’ in the SKFReport as a material cost, not anoverhead cost, in its calculation ofoverhead expenses. Petitioner arguesthat power and fuel are not materialsincorporated into the subjectmerchandise and Respondents did notreport this expense as a material factoror any other factor. Rather, Petitionercontends, energy is generally used tooperate the manufacturing plants and isproperly considered as part of factoryoverhead. For the final results,Petitioner suggests that the Departmentinclude power and fuel costs in SKF’soverhead cost or calculate this expenseas a separate factor but notes that nopurpose is served by isolating theenergy costs as a separate factor.East Sea argues that the statute doesnot specifically list ‘‘power and fuel’’ aspart of overhead, citing section773(c)(3)(C) of the Act. East Sea asserts,therefore, that the Department’sinclusion of these items within rawmaterials was not improper.Department’s PositionWe agree with Petitioner that powerand fuel are not direct material inputs.Power and fuel consumption cannot bedirectly linked to the output of thesubject merchandise. Therefore, forthese final results, we have incorporatedpower and fuel as part of overhead.Comment 11Petitioner contends that theDepartment incorrectly designated theline item ‘‘stores and spares consumed’’in the SKF Report as a material cost, notan overhead cost, in its calculation ofoverhead expenses. Petitioner states thatthis line item concerns expenses relatedto tools, grinding wheels, and spareparts used in the production process orincorporated into the equipment andmachinery, but which are notincorporated into the finished product.Petitioner argues that Respondents didnot report ‘‘stores and sparesconsumed’’ as part of the materialsfactor of production, which is properbecause this item is an overheadexpense. Petitioner explains that ‘‘storesand spares’’ are listed under ‘‘expensesfor manufacture,’’ not under ‘‘rawmaterials’’ in the SKF Report, and notesthat the SKF Report refers to ‘‘stores andspares’’ as tools.East Sea contends that the footnotes ofthe SKF Report state that ‘‘stores andspares consumed’’ includes ‘‘work-inprocess.’’East Sea states that it isunclear whether this line item relates tosteel or other types of materials and,given the lack of clarity, it would beunfair to allocate all of this item tooverhead. East Sea suggests that,because this item relates to ‘‘stores’’taken from inventory, it is logical toclassify this expense as non-overhead.Department’s PositionWe agree with Petitioner. Because thisline item involves expenses relating toequipment and machinery used in theproduction process but not incorporatedinto the finished product, we considerthis expense as part of overhead, eventhough the SKF Report does notdescribe the nature of this line itementirely. Accordingly, for the finalresults, we have treated ‘‘stores andspares consumed’’ as an overhead item.Comment 12Petitioner argues that the Departmentincorrectly designated the line item‘‘traded goods’’ in the SKF Report as amaterials cost to be included in thedenominator of the calculation of theoverhead, SG&A, and profit rates.Petitioner states that ‘‘traded goods’’ arefinished products purchased and soldby SKF that have nothing to do with itsmanufacturing operations. Petitionernotes that the SKF Report segregates‘‘purchases of traded goods’’ from ‘‘rawmaterials and bought out componentsconsumed’’ and, in a different part ofthe report, separates them from productsSKF ‘‘manufactured and sold during theyear.’’ Petitioner states further that thereport identifies ‘‘purchases of tradedgoods’’ as ‘‘ball and roller bearings,’’‘‘bearing accessories and maintenanceproducts,’’ and ‘‘textile machinerycomponents.’’ Petitioner notes that, inpast reviews, the Department included

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6183only steel costs in the cost of materials,not finished products. Petitioner statesthat this prior approach is correct and,because purchases of traded goods arealready manufactured and do not affectproduction, the Department shouldexclude them from the overheaddenominator.East Sea responds that Petitioner’sargument with regard to ‘‘traded goods’’is misguided and that the Department’scalculations in the preliminary resultsconcerning this line item were correct.Department’s PositionWe disagree with Petitioner. In pastreviews we did not include a line itemfor ‘‘purchases of traded goods’’ in theCOM that we used as the denominatorof the overhead, SG&A, and profit-ratecalculations because the SKF reportsthat we used in those reviews did notinclude this line item. In this review,the SKF Report includes a separate lineitem for this cost. We have included itin the denominator of these calculations(as part of the COM) because, incalculating SKF’s COM, we mustinclude those line items listed on theSKF Report that reflect the costsassociated with the production of themerchandise that are not overhead orSG&A expenses.According to the description in theSKF Report, ‘‘purchases of tradedgoods’’ are properly considered as COMexpenses. They are not overhead orSG&A expenses but instead reflect thecommon practice of manufacturerspurchasing finished and semi-finishedgoods to meet their clients’’ demand.SKF does not incur direct materials ordirect labor expenses with respect tothese products but instead incurs theexpense of purchasing them. Becausethese purchased goods are an integralportion of cost of goods sold, they areordinary business expenses that wecannot ignore, as suggested byPetitioner, simply because they involveproducts that SKF did not manufacture.Therefore, for the final results, we haveincluded ‘‘purchases of traded goods’’ aspart of the denominators we used in theoverhead, SG&A, and profit-ratecalculations.Comment 13Petitioner states that the Departmentdid not include interest expenses SKFincurred in the constructed value (CV)calculations. Petitioner recommendsthat the Department include theseexpenses in the calculation of SG&A.Petitioner states that, according to theDepartment’s Antidumping Manual andDepartment practice, interest expensesshould be included in the CV.East Sea responds that, althoughPetitioner points to the AntidumpingManual as support that SKF’s interestexpenses are SG&A expenses, theinterest expenses to which the manualrefers are selling expenses and there isno evidence that any of SKF’s interestexpenses pertain to sales. Accordingly,East Sea asserts that the Departmentshould not include interest expenses inits CV calculations.Department’s PositionWe agree with Petitioner that,consistent with our practice, the interestexpenses in question are ordinarybusiness expenses relating to SG&A.Therefore, we have included, in theSG&A expense for these final results,interest expenses as reported in the SKFReport.Comment 14Petitioner states that, for thepreliminary results, the Departmentcalculated profit on an after-tax basis.This methodology, Petitioner contends,is contrary to the Department’s policy toachieve an ‘‘apples-to-applescomparison’’ (citing the Department’sAntidumping Manual). Petitioner statesthat, because the export prices andconstructed export prices used in themargin calculations include all profits,i.e., are pre-tax values, the Departmentmust calculate the profit used inestablishing NV on the same basis.East Sea responds that Petitioner citesno case law to support its assertion andthe Department should continue tocalculate SKF’s profit net of expenses.Department’s PositionWe agree with Petitioner that weshould use a pre-tax amount to calculatethe profit ratio, for the reasons thatPetitioner provided in its comment.Therefore, for the final results, we havecalculated a profit rate for NV on a pretaxbasis.Comment 15East Sea argues that the Departmentimproperly designated the line item‘‘goodwill,’’ as listed in the SKF Report,as an SG&A expense. East Sea states thatgoodwill expenses are related to fixedassets and are listed as such in the SKFReport. East Sea adds that there is noDepartmental precedent for includinggoodwill as part of SG&A and, therefore,the Department should remove thisexpense from the SG&A calculation.Petitioner responds that the fact thatthe SKF Report states that theseexpenses are related to fixed assets isnot a sufficient reason to disregard themin calculating the SG&A expense.Petitioner states that, using the samereasoning, the Department would haveto eliminate depreciation from theoverhead expense, which would clearlybe incorrect. Petitioner adds that EastSea provided no evidence that SKF, thesurrogate producer, did not comply withIndian Generally Accepted AccountingPrinciples (GAAP) or that its accountingpractices should otherwise bedisregarded and the goodwill expensedisallowed.Department’s PositionWe agree with Petitioner that the factthat the SKF Report states that thegoodwill expense line item is related tofixed assets does not render it a materialcost. However, the evidence on therecord does not allow us to determinethe extent to which SKF’s goodwillexpense is attributable to overhead orSG&A. For these final results, we haveallocated 50 percent of SKF’s goodwillexpense to overhead and 50 percent toSG&A.Comment 16East Sea argues that the Departmentimproperly designated the line item‘‘rates and taxes’’ in the SKF Report asan overhead expense instead ofincluding it in SG&A. East Sea statesthat this expense is an SG&A expensebecause taxes are traditionallyconsidered an administrative expense,not a manufacturing expense.Petitioner responds that shiftingallocations from overhead to SG&A orvise versa should not affect the bottomline of the NV calculation. Petitionerstates, however, that it is morereasonable to assign the ‘‘rates andtaxes’’ line item to overhead becauseSKF is a manufacturing company and,presumably, most of its rates and taxeswould relate to its plant and equipmentand other aspects of its manufacturingoperations.Department’s PositionWe agree with East Sea that weshould allocate the ‘‘rates and taxes’’line item to SG&A and not to overhead.This allocation methodology isconsistent with our practice in previousadministrative reviews of thisproceeding. See TRBs IV–VI at 65540.Comment 17East Sea contends that the Departmentshould not include the line item ‘‘profit(loss) on fixed assets sold’’ as part ofoverhead. East Sea states that SKFincurred this expense independent ofany manufacturing or selling activities;rather, as its title suggests, it is relatedto the value of fixed assets.Petitioner responds that selling fixedassets that were used in manufacturing

6184 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesis not a manufacturing activity, anymore than an accounting entry to reflectdepreciation is a manufacturing activity.Petitioner contends, however, that thisline item does identify the relevantcapital cost of the assets used inmanufacturing and therefore, as withdepreciation, the loss on the sale offixed assets should be included inoverhead.Department PositionWe agree with Petitioner that the lossSKF India incurred in selling fixedassets used to manufacture merchandiseclearly is related to manufacturingactivities. Therefore, we have includedthis loss as an overhead item.Comment 18East Sea argues that the Departmentimproperly allocated all of SKF’s lineitem ‘‘repairs to buildings’’ to overheadin the preliminary results. East Seasuggests that Department allocate thisitem partially to SG&A as there is noproof that repairs were made solely tomanufacturing buildings.Department’s PositionWe agree with East Sea that it isimproper to include all of SKF’sbuilding-repair expenses in overheadbecause depreciation associated withoffice buildings and office equipmentshould be included in SG&A. Therefore,for the final results, we allocated repaircosts to overhead and SG&A accordingto the function and value of the assets;that is, we included in overhead onlythe depreciation expenses allocated tomanufacturing. We obtained theinformation pertaining to the functionand value of SKF’s assets from the SKFReport.Comment 19East Sea claims that the Departmentshould allocate insurance to bothoverhead and SG&A on a 75-percent/25-percent basis as there is no proof thatinsurance costs are related to overheadalone.Petitioner contends that it does notmake a difference in the CV calculationwhether the insurance is allocated toSG&A or overhead. Petitioner adds,however, that SKF is a manufacturingcompany and most of its insurance costswould relate to its plant and equipmentand similar items related to itsmanufacturing operations, i.e.,overhead. Petitioner also asserts thatcertain PRC companies have includedinsurance as part of factory overhead.Moreover, Petitioner argues that EastSea’s recommended 75-percent/25-percent ratio is totally arbitrary.Department’s PositionWe agree with East Sea that weshould allocate insurance expenses toboth overhead and SG&A. However,because East Sea did not provide anysupport for the 75-percent/25-percentallocation ratio, we are not using thisratio for the final results. Furthermore,even though, as Petitioner notes, SKFIndia is a manufacturing company, wehave no information which will allowus to allocate insurance expensesprecisely. For the final results, weallocated insurance expenses equally toSG&A and overhead (i.e., 50 percent toSG&A and 50 percent to overhead), dueto the fact that the SKF Report does notidentify the nature of these expenses.Comment 20East Sea contends that the Departmentshould continue its past practice ofusing an eight-percent profit rate for thefinal results. East Sea emphasizes thatSKF India is related to SKF Swedenand, therefore, the transfer price andother related-party transactions betweenparent and subsidiary could radicallyaffect SKF’s profit margins.Petitioner argues that the formereight-percent rate was an arbitrary rateand is contrary to the new law.Petitioner adds that East Sea does notprovide any evidence that such relatedpartytransactions actually occurred orthat, if they occurred, they had anyactual impact upon SKF India’s profits.Department’s PositionWe agree with Petitioner. Consistentwith section 773(c) of the Act, wecalculated a profit rate using surrogatedata, in this case the SKF Report.Regarding the appropriateness of thisreport for the profit calculation, we notethat East Sea did not provide anyevidence to support its claim that theprofit rate is inappropriate because thecompany had affiliated-partytransactions.Comment 21Petitioner contends that theDepartment improperly accepted CMC’sclaim that it incurred no U.S. sellingexpenses on constructed export pricesales made during the POR. Petitionerrecommends that the Departmentcalculate these expenses on the basis ofthe facts available and use the highestSG&A expense of any respondent in thisreview.Department’s PositionWe disagree with Petitioner. Weacknowledge that, aside from our initialquestionnaire, we did not pursue theissue of CMC’s U.S. selling expenses ineither the supplemental questionnaireor by conducting a verification of CMC’sU.S. facility. Because we did notprovide CMC an opportunity to cure anyperceived deficiency in its responseconcerning such expenses and becausewe do not have information on therecord contradicting the informationthat CMC provided, we have acceptedthis information for the final results.3. FreightComment 22Petitioner claims that the Departmentcalculated freight expenses incorrectlyby multiplying the surrogate freight rateby the net weight of each bearing ratherthan by the gross weight of the bearingas packaged for shipment. Petitionerstates that a reasonable allowance forthe weight of packaging materialsshould be made in calculating bothocean-freight and inland-freight rates,arguing that packaging does not travelfree of charge. Petitioner suggests thatthe Department could use, as a PI sourceon the record for this review, a packinglist of CMC Guizhou, submitted byDistribution Services, Ltd. (DSL), onSeptember 27, 1995. Petitioner statesthat the packing list shows both grossand net weights of pallets of severalcommon TRB models and that theaverage weight difference is about eightpercent. Therefore, Petitioner asserts,the Department should multiply the netweights by 1.08 to reflect the weight ofpackaging.Department’s PositionWe agree with Petitioner that a cost isincurred with respect to shipment ofpacking materials. Upon reviewing thepacking list of CMC Guizhou, we havedetermined that the packing documentDSL submitted in this review is anindependent and reliable source forsuch information. Accordingly, for thefinal results, we have derived the grossweight used in calculating the oceanfreightexpense by multiplying the netweight by 1.08.Comment 23Petitioner states that the Departmenterroneously used the Indian wholesalepriceindex (WPI) to adjust for inflationof ocean-freight cost. Petitionercontends that, because the Departmentused the U.S. dollar rates quoted byMaersk, Inc., a U.S. company, anyadjustment for inflation should be basedon dollar inflation. Petitioner suggeststhat the Department adjust ocean freightcosts using the U.S. producer-priceindex for finished goods, the U.S.equivalent of the Indian WPI.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6185Department’s PositionWe agree with Petitioner that weshould adjust ocean-freight costs usingthe U.S. producer-price index becauseocean-freight costs are based on U.S.rates in U.S. dollars. For the finalresults, we deflated the July 1996 oceanfreight-ratequotes from Maersk Inc.using the U.S. WPI to reflect the PORcosts.Comment 24Petitioner contends that theDepartment has understated the marineinsuranceexpense by applying aninsurance rate per ton applicable tosulfur dyes from India. Petitioner arguesthat insurance protects against lostvalue and that, if a container of bearingswere lost at sea, there is no basis tosuppose that payment for the loss of oneton of sulfur dyes would have anyrelationship to the value of the bearings.Petitioner adds that the Department’squestionnaire indicates that insurancepremiums are normally based on thevalue of the merchandise. Petitionerrecommends that the Departmentcalculate a marine-insurance factorbased on the ratio of the insurancecharge per ton of sulfur dye divided bythe value of sulfur dye per ton (based onU.S. Customs value) and apply thisfactor to the price of TRBs sold in theUnited States.Guizhou Machinery et al. respondthat it is not reasonable to assume thatthe difference in Indian marineinsurancerates applicable to sulfur dyesand TRBs can be measured accuratelysimply by comparing the difference inproduct values. Guizhou Machinery etal. further assert that Petitioner’sargument is based on customs valuesobtained from the Sulfur Dyes petition,information which has not beenpreviously submitted on the record forthe current review. Guizhou Machineryet al. state that the Department’sapproach of using the marine-insurancerates from the sulfur-dyes investigationis consistent with its calculations inother NME cases.Department’s PositionWe disagree with Petitioner withrespect to our use of the sulfur-dyesdata. We have relied on the publicinformation on marine insurance forsulfur dyes that we used for thepreliminary results, as these data are theonly public information available to us;further, we have used the same raterepeatedly for other PRC analyses. SeeFinal Results of Administrative Review:Certain Helical Spring Lock Washersfrom the PRC, 61 FR 41994 (August 13,1996) (Lock Washers), and TRBs IV–VIat 65537.Comment 25Guizhou Machinery et al. claim that,with respect to Guizhou Machinery andGuizhou Automotive, the Departmentdid not convert the charge for marineinsurance from rupees into U.S. dollarsand, therefore, this expense isoverstated. Guizhou Machinery andGuizhou Automotive explain that theDepartment calculated marine insuranceby multiplying the rate per kilogram bythe net weight of the bearing and thenadjusted for inflation, yielding a figurein rupees, which must be converted intoU.S. dollars in order to calculate a U.S.price. Guizhou Machinery and GuizhouAutomotive request that the Departmentconvert all marine-insurance rates inrupees to U.S. dollars.Additionally, Guizhou Machinery andGuizhou Automotive claim that theDepartment calculated the foreigninland-freightcharge incorrectly.Respondents explain that, for all othercompanies, the Department calculatedthis charge properly but, for GuizhouMachinery and Guizhou Automotive,the Department’s formula resulted in aninflated expense. Guizhou Machineryand Guizhou Automotive request thatthe Department correct this error for thefinal results.Petitioner agrees that the Departmentshould check its calculations and ensurethat amounts denominated in rupees areconverted into dollars and that it shouldapply the proper formula for inlandfreight.Department’s PositionWe agree with both parties. For thefinal results, we have corrected theseerrors.4. Facts AvailableComment 26Petitioner disagrees with theDepartment’s acceptance of Premier’sFOP data even though, in most cases,the data did not relate to themanufacturer whose merchandisePremier sold to the United States.Petitioner recommends the use of factsavailable to calculate Premier’s rate.Petitioner argues that there is noindication that Premier’s selectivereporting is representative of itssuppliers’’ actual experience, notingthat the questionnaire states that, if aproducer uses more than one facility toproduce subject merchandise, it mustreport the factor use at each location.Petitioner asserts that the Department’sacceptance of Premier’s selectiveresponses, as well as the use of othersurrogate producers’ costs when those ofPremier’s suppliers were not available,is contrary to the Department’s policyregarding the appropriate deposit ratefor unreviewed non-PRC exporters ofsubject merchandise from the PRC.Petitioner states that Premier and itssuppliers should not be allowed toselect the suppliers on the basis ofwhose data the Department willcalculate Premier’s margin.Petitioner states that only Premierknows the efforts it made to supply thisinformation and, moreover, Premier’sefforts are irrelevant because the focusshould be on the efforts Premier’ssuppliers made. Petitioner contendsthat, since certain suppliers refused tocome forward and claim eligibility for aseparate rate, the Department mustpresume them to be part of the singleentity to which the PRC rate appliesand, as non-responsive companies, theyare subject to the use of adverse factsavailable. Petitioner adds that allcompanies are conditionally covered inthis review and are subject to the PRCrate.Finally, Petitioner argues that theDepartment cannot justify its approachon practical grounds. In this regard,Petitioner contends that, although theDepartment states there is littlevariation in factor-utilization ratesamong the TRB producers from whom ithas FOP data, the available data reflectsonly a small number of PRC producersand the preliminary results showmargins ranging from zero to 129.97percent.Premier responds that, despite itsrepeated efforts to obtain FOP datadirectly from its PRC-based suppliers, itwas unsuccessful in obtaining this data.Premier claims that it has been asresponsive and cooperative as possiblewith the Department in the course ofthis review. Premier explains that, giventhis lack of supplier data for certain U.S.sales, it analyzed the record to identifyFOP data that could be used in place ofthe data its suppliers had refused tosupply, and it submitted FOP data formodels that constituted 94 percent of itsPOR U.S. sales as follows: for 69 percentof its U.S. sales, Premier provided FOPdata for the supplier from whomPremier purchased the merchandise; for25 percent of its U.S. sales, Premiersupplied data from other Chineseproducers. Premier states that,accordingly, it could not locate any FOPdata for only six percent of its U.S. PORsales and the Department was correct touse Premier’s U.S. sales and FOP datawhen calculating Premier’s dumpingmargin.Premier claims that it did not choosethe production facility from which to

6186 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesobtain cost data selectively, stating thatit linked its FOP reporting to itssuppliers if that supplier’s data was onthe record. Finally, Premier states thatPetitioner is incorrect in asserting thatthe real focus should be on the PRCproducers. Premier states that any PRCproducer who sells merchandise totrading companies without priorknowledge that the merchandise isdestined for the United States is notsubject to a separate dumping-margincalculation and by law cannot be thefocus for resolution of this issue.Department’s PositionWe disagree with Petitioner. Premierresponded to the best of its ability to ourrequests for information regarding FOPdata. Given the level of cooperationevidenced by Premier in this review,including the submission of responsiveinitial and supplemental questionnaireresponses as well as its participation ina complete verification of its data, andthe amount of usable informationprovided, Premier’s inability to providecertain FOP data does not warrant theuse of adverse facts available incalculating a margin in this case.Premier provided enough information toallow us to calculate an accuratemargin, and we used our discretionappropriately to determine how to applyfacts available to account for the missingdata. Accordingly, for these final results,we are following our methodology fromthe preliminary results.Premier was able to provide factorsdata from its suppliers for models thatrepresented most of Premier’s sales byvalue. For those U.S. sales for whichPremier was unable to provide FOP datafrom its own suppliers, it provided FOPdata from other PRC suppliers of thesame models. For such merchandise, wedetermined that there is little variationin factor-utilization rates among TRBproducers from whom we have receivedFOP data. Accordingly, we used suchdata for Premier for U.S. sales of thosemodels. For a small percentage of sales,Premier was unable to report any FOPdata. We determined that a simpleaverage of the calculated margins forother companies in this review is areasonable rate to apply, as factsavailable, for these sales by Premier.5. AssessmentComment 27Transcom and L&S, domesticimporters of subject merchandise, arguethat the Department’s decision to applywhat they consider to be punitive factsavailableappraisement and depositrates to companies that were never partof the review is unlawful. Transcom andL&S state that, for this review, therewere various companies from whichthey purchased subject merchandise,none of which received a questionnaireor was named in the notice of initiationof review. Transcom states that entriesfrom each of the unnamed companieswere subject to estimated antidumpingduty deposits at the ‘‘all others’’ rate ineffect at the time of entry and arguesthat the Department is precluded as amatter of law from either assessing finalantidumping duties on the unreviewedcompanies at any rate other than that atwhich estimated antidumping dutydeposits were made or imposing thenew facts-available-based deposit rateon shipments from unreviewedcompanies.Transcom and L&S, citing section751(a) of the Act, state that theDepartment is directed to determine theamount of antidumping duties to beimposed pursuant to periodic reviews.They add that, in accordance with 19CFR 353.22(e), unreviewed companiesare subject to automatic assessment ofantidumping duties and a deposit ofestimated duties at the rate previouslyestablished. Transcom and L&S notethat the Court of International Trade(CIT) has concluded that, in situationswhere a company’s entries are notreviewed, the prior cash deposit ratefrom the less-than-fair-value (LTFV)investigation becomes the assessmentrate, ‘‘which must in turn become thenew cash deposit rate for that company’’(citing Federal Mogul Corp. v. UnitedStates, 822 F. Supp. 782, 787–88 (CIT1993) (Federal Mogul II)). Transcom andL&S claim that the CIT has affirmed thisrationale in other, more recent,decisions as well, concluding that theDepartment’s use of a new ‘‘all others’’rate calculated during a particularadministrative review as the new cashdeposit rate for unreviewed companieswhich have previously received the ‘‘allothers’’ rate is not in accordance withlaw (citing Federal Mogul Corp. v.United States, 862 F. Supp. 384 (CIT1994), and UCF America, Inc. v. UnitedStates, 870 F. Supp. 1120, 1127–28 (CIT1994) (UCF America)).Based on these CIT decisions,Transcom contends that an exporter thatis not under review would have noreason to anticipate that antidumpingduties assessed on its merchandisewould vary from the amount deposited.Transcom notes that Federal Mogul II (at788) states that parties rely on the cashdeposit rates in making their decisionwhether to request an administrativereview of certain merchandise. In viewof the Department’s regulations,Transcom claims that the absence of anynotice from the Department thatunnamed companies faced thepossibility of increased antidumpingduty liability is fundamentallyprejudicial to the unnamed companies.Transcom states that previous attemptsby the Department to impose a ratebased on the facts available on anexporter neither named in the reviewrequest nor in the notice of initiationhave been overturned, citing SigmaCorp. v. United States, 841 F. Supp.1255 (CIT 1993) (Sigma Corp. I). In thatcase, Transcom contends, the CIT heldthat the Department was required toprovide the company in questionadequate notice to defend its interestsand, because it failed to do so, orderedthe liquidation of entries ofmerchandise exported by that companyat the entered deposit rate.Transcom argues that theDepartment’s statement that allexporters of subject merchandise are‘‘conditionally covered by this review’’(Initiation of Antidumping DutyAdministrative Reviews and Request forRevocation in Part (Initiation Notice), 59FR 43537, 43539 (August 24, 1994)) isinadequate in that it fails to explainunder what ‘‘conditions’’ exporters arecovered and whether such ‘‘conditions’’were met. If the statement is meant toinclude unconditionally all unnamedexporters, Transcom asserts that it iscontrary to the regulatory requirement at19 CFR 353.22(a)(1) that the reviewcover ‘‘specified individual producersor resellers covered by an order.’’Because the importers in question werenever served notice that they weresubject, conditionally or otherwise, toreview, Transcom claims that theDepartment is precluded from applyinga punitive rate to the company’sexports.Transcom contends that, inaccordance with section 776 of the Act,the Department must have requestedand been unable to obtain informationbefore applying adverse facts available.Transcom claims that the Departmentmay not resort to facts available‘‘because of an alleged failure to providefurther explanation when thatadditional explanation was neverrequested’’ (quoting Olympic Adhesives,Inc. v. United States, 899 F.2d 1565,1574 (1990); also citing Mitsui & Co.,Ltd. v. United States, 18 CIT 185 (March11, 1994); Usinor Sacillor v. UnitedStates, 872 F. Supp. 1000 (1994); andSigma Corp. I at 1263). Finally,Transcom argues that the factsavailable-basedPRC-wide rate cannot beapplied to exports by companies outsideof China because these companies arenot PRC companies.L&S requests that the Departmentliquidate entries of the company’s

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6187imports from companies that were notspecifically reviewed at the entered raterather than the punitive ‘‘PRC-wide’’rate. L&S also states that the prospectivedeposit rate for these unreviewedcompanies should be 2.96 percent,which was the ‘‘all others’’ rate in theinitial investigation.Petitioner states that it is its intentionthat all exporters are covered by thisreview and points out that theDepartment’s notice of initiationspecified that all ‘‘otherexporters * * * are conditionallycovered.’’ Therefore, Petitioner argues,all other suppliers of Transcom notentitled to a separate rate should beexpressly listed in the final results asamong those to which the ‘‘PRC rate’’applies.Department’s PositionWe disagree with Transcom and L&S.It is our policy to treat all exporters ofsubject merchandise in NME countriesas a single government-controlled entityand assign that entity a single rate,except for those exporters whichdemonstrate an absence of governmentcontrol, both in law and in fact, withrespect to exports. Our guidelinesconcerning the de jure and de factoseparate-rates analyses, as well as thecompany-specific separate-ratesdeterminations, are discussed in thePreliminary Results at 40611–12. Wehave determined that companies in thegovernment-controlled entity failed torespond to our requests for informationin this review and, accordingly, we haveestablished the rate applicable to suchcompanies (the PRC rate) usinguncooperative facts available. Asdiscussed below, the Act mandatesapplication of facts available for suchcompanies because they are subject tothe review and they failed to cooperateby responding to our requests forinformation.Pursuant to our NME policy, wepresume that all PRC exporters orproducers that have not demonstratedthat they are separate from PRCgovernment control belong to a single,state-controlled entity (the ‘‘PRCenterprise’’) for which we mustcalculate a single rate (the ‘‘PRC rate’).The CIT has upheld our presumption ofa single, state-controlled entity in NMEcases. See UCF America, Inc. v. UnitedStates, 870 F. Supp. 1120, 1126 (CIT1994), Sigma Corp I, and TianjinMachinery Import & Export Corp. v.United States, 806 F. Supp. 1008, 1013–15 (CIT 1992). Section 353.22(a) of ourregulations allows interested parties torequest an administrative review of anantidumping duty order once a yearduring the anniversary month. Thisregulation specifically states thatinterested parties must list the‘‘specified individual producers’’ to becovered by the review. In the context ofNME cases, we interpret this regulationto mean that, if at least one namedproducer or exporter does not qualifyfor a separate rate, the PRC enterprise asa whole (i.e., all exporters that have notqualified for a separate rate) is part ofthe review (this is analogous to ourpractice in market-economy cases ofincluding in reviews persons affiliatedto a company for which a review wasrequested). On the other hand, if allnamed producers or exporters areentitled to separate rates, there has beenno request for a review of the PRCenterprise and, therefore, the NME rateremains unchanged. Accord Federal-Mogul II (‘‘[i]n a situation where acompany’s entries are unreviewed, theprior cash deposit rate from the LTFVinvestigation becomes the assessmentrate, which must in turn become thenew cash deposit rate for thatcompany’’).In this review, numerous companiesnamed in the notice of initiation did notrespond to our questionnaires. We senta letter to the PRC embassy inWashington and to the Ministry ofForeign Trade and EconomicCooperation (MOFTEC) in Beijing,requesting the identification of TRBproducers and manufacturers, as well asinformation on the production of TRBsin the PRC and the sale of TRBs to theUnited States. MOFTEC informed usthat the China Chamber of Commercefor Machinery and Electronics ProductsImport & Export (CCCME) wasresponsible for coordinating the TRBscase. MOFTEC also said it forwardedour letter and questionnaire to theCCCME. We also sent a copy of ourletter and the questionnaire directly tothe CCCME, asking that thequestionnaire be transmitted to allcompanies in the PRC that producedTRBs for export to the United States andto all companies that exported TRBs tothe United States during the POR.Because we did not receiveinformation concerning many of thecompanies named in the notice ofinitiation, we have presumed that thesecompanies are under governmentcontrol. In accordance with our NMEpolicy, therefore, the governmentcontrolledenterprise, which iscomprised of all exporters of subjectmerchandise that have notdemonstrated they are separate fromPRC control, is part of this review.Therefore, we must assign a reviewspecific‘‘PRC’’ rate to that enterprise.Because we did not receive responsesfrom these exporters, we have based thePRC rate on the facts available, pursuantto section 776(c) of the Act. This ratewill form the basis of assessment for thisreview as well as the cash deposit ratefor future entries. In this regard,Transcom’s reliance on OlympicAdhesives and other cases is misplacedbecause the PRC entity to which weassigned the review-specific PRC ratewas requested to respond to ourquestionnaire.We acknowledge a recent CITdecision cited by Transcom and by L&S,UCF America Inc. v. United States, SlipOp. 96–42 (CIT Feb. 27, 1996), in whichthe Court affirmed the Department’sremand results for reinstatement of therelevant cash deposit rate but expresseddisagreement with the PRC-ratemethodology which formed theunderlying rationale for reinstatement.In UCF, the Court suggested that theDepartment lacks authority for applyinga PRC rate in lieu of an ‘‘all others’’ rate.However, despite the concernsexpressed by the Court, it is our viewthat we have the authority to use thePRC rate in lieu of an ‘‘all others’’ rate.See Hand Tools at 15221. Further, asubsequent CIT decision accepted ourapplication of a review-specific PRC rateto non-responding PRC firms notindividually named in the notice ofinitiation. See Yue Pak, Ltd. v. UnitedStates, Slip Op. 96–65, at 66 (April 18,1996).The PRC rate is consistent with thestatute and regulations. As discussedabove, in NME cases, all producers andexporters which have not demonstratedtheir independence are deemed tocomprise a single enterprise. Thus, weassign the PRC rate to the PRCenterprise just as we may assign a singlerate to a group of affiliated exporters orproducers operating in a marketeconomy. Because the PRC rate is theequivalent of a company-specific rate, itchanges only when we review the PRCenterprise. As noted above, all exportersor producers will either qualify for aseparate company-specific rate or willbe part of the PRC enterprise andreceive the PRC rate. Consequently,whenever the PRC enterprise has beeninvestigated or reviewed, calculation ofan ‘‘all others’’ rate for PRC exporters isunnecessary.Thus, contrary to the argument byTranscom and L&S, the Department’sautomatic-assessment regulation (19CFR 353.22(e)) does not apply to thisreview except in the case of companiesthat demonstrate that they are separatefrom PRC government control and arenot part of this review. See Comment 2,above.We also disagree with the assertion byTranscom and L&S that companies not

6188 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesnamed in the initiation notice did nothave an opportunity to defend theirinterests by demonstrating theirindependence from the PRC entity. Anycompany that believes it is entitled to aseparate rate may place evidence on therecord supporting its claim. Thecompanies referenced by Transcom andL&S made no such showing, despite ourefforts to transmit the questionnaire toall PRC companies that produce TRBsfor export to the United States.Furthermore, Transcom’s argumentthat the facts-available-based PRC-widerate cannot be applied to exports bycompanies outside of China becausethese companies are not PRC companiesis also unfounded. Because theseexporters’ Chinese suppliers did notrespond to the Department’squestionnaire, we were unable todetermine, with respect to sales by theseexporters, whether the exporter or theChinese suppliers were the first sellersin the chain of distribution to know thatthe merchandise they sold was destinedfor the United States. See Yue Pak at 6.When resellers choose to useuncooperative suppliers that are underan antidumping order, they must bearthe consequences. See Yue Pak at 16.Otherwise, uncooperative PRC exporterswould be free to hide behind andcontinue exporting through low-rateresellers in other countries.6. Miscellaneous IssuesComment 28Guizhou Machinery et al. state thatthe Department identified Xiangfan as‘‘Xiangfan International TradeCorporation’’ in the preliminary results,despite the fact the Xiangfan providedinformation on the record indicatingthat its name had changed to ‘‘XiangfanMachinery Foreign Trade Corporation,Hubei China.’’ Guizhou Machinery et al.request that the Department identifyXiangfan by this name for the finalresults.Petitioner responds that this namechange illustrates the ease with whichentities can make name changes andthereby circumvent the order. Petitionerasks that the Department consider suchevidence when making its separate-ratesdeterminations.Department’s PositionWe agree with Guizhou Machinery etal. and have made this change for thefinal results. This name change by asingle company in this review does notaffect our separate-rates analysis (seeour responses to Comments 1 and 2).Comment 29Guizhou Machinery et al. request thatthe Department specifically identify allbranches of CMC that sold subjectmerchandise to the United States duringthe POR. Respondents state that,although the Department properlyincluded sales made by CMC branchesCMC Bali, CMC Yantai, and Yantai CMCBearing Company in its analysis ofCMC, it did not identify these exporters.Respondents state that suchidentification is necessary in order toensure that entries of merchandise fromthese exporters receive the appropriatedeposit and assessment rates.Petitioner responds that theDepartment has not made an individualseparate-rate finding for each of thesefirms and, therefore, it should denyRespondents’ request.Department’s PositionWe agree with Guizhou Machinery etal. We included all sales by the abovenamedcompanies in our analysis ofCMC in these final results and ourassessment and cash deposit ratesreflect this analysis.Final Results of ReviewAs a result of our analysis of thecomments we received, we determinethe following weighted-average marginsto exist for the period June 1, 1994through May 31, 1995:Manufacturer/exporterMargin(percent)Premier Bearing and Equipment,Limited ......................................... 2.76Guizhou Machinery Import and ExportCorporation .......................... 17.65Luoyang Bearing Factory ............... 0.00Jilin Machinery Import and ExportCorporation .................................. 29.40Wafangdian Bearing Factory .......... 29.40Liaoning Co.; Ltd ............................ 9.72China National Machinery Importand Export Corp .......................... 0.00China Nat’l Automotive Industry Importand Export Corp .................. 25.66Tianshui Hailin Import and ExportCorp ............................................. 24.17Zhejiang Machinery Import and ExportCorp ..................................... 2.75Xiangfan Machinery Foreign TradeCorporation, Hubei China ........... 0.00East Sea Bearing Co., Ltd .............. 3.23PRC Rate ........................................ 29.40The Department shall determine, andthe Customs Service shall assess,antidumping duties on all appropriateentries. Individual differences betweenexport price or constructed export priceand NV may vary from the percentagesstated above. The Department will issueappraisement instructions directly tothe Customs Service.Furthermore, the following cashdeposit requirements will be effectiveupon publication of these final resultsfor all shipments of the subjectmerchandise entered, or withdrawnfrom warehouse, for consumption on orafter the publication date, as providedfor by section 751(a)(1) of the Act: (1) forthe companies named above that haveseparate rates and were reviewed(Premier, Guizhou Machinery, Jilin,Luoyang, Liaoning, Tianshui, Zhejiang,CMC, China National AutomotiveIndustry Import and Export Guizhou,Xiangfan, East Sea, and Wafangdian),the cash deposit rates will be the rateslisted above; (2) for Shandong,Wanxiang, and Great Wall, which wedetermine to be entitled to separaterates, the rate will continue be thatwhich currently applies (8.83 percent);(3) for all remaining PRC exporters, allof which were found not to be entitledto separate rates, the cash deposit willbe 29.40 percent; and (4) for other non-PRC exporters of subject merchandisefrom the PRC, the cash deposit rate willbe the rate applicable to the PRCsupplier of that exporter. These depositrequirements shall remain in effect untilpublication of the final results of thenext administrative review.This notice serves as a reminder toimporters of their responsibility under19 CFR 353.26 to file a certificateregarding the reimbursement ofantidumping duties prior to liquidationof the relevant entries during thisreview period. Failure to comply withthis requirement could result in theSecretary’s presumption thatreimbursement of antidumping dutiesoccurred and the subsequent assessmentof double antidumping duties.This notice also serves as a reminderto parties subject to APOs of theirresponsibility concerning disposition ofproprietary information disclosed underAPO in accordance with 19 CFR353.34(d). Timely written notification ofthe return/destruction of APO materialsor conversion to judicial protectiveorder is hereby requested. Failure tocomply with the regulations and theterms of an APO is a sanctionableviolation.This administrative review and noticeare in accordance with section 751(a)(1)of the Act (19 U.S.C. 1675(a)(1)) and 19CFR 353.22.Dated: February 3, 1997.Robert S. LaRussa,Acting Assistant Secretary for ImportAdministration.[FR Doc. 97–3355 Filed 2–10–97; 8:45 am]BILLING CODE 3510–DS–P

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6189[A–570–601]Tapered Roller Bearings and PartsThereof, Finished and Unfinished,From the People’s Republic of China;Final Results of Antidumping DutyAdministrative Review and Revocationin Part of Antidumping Duty OrderAGENCY: Import Administration,International Trade Administration,Department of Commerce.ACTION: Final results of antidumpingduty administrative review andrevocation in part of antidumping dutyorder on tapered roller bearings andparts thereof, finished and unfinished,from the People’s Republic of China.SUMMARY: On September 26, 1995, theDepartment of Commerce (theDepartment) published the preliminaryresults of its administrative review ofthe antidumping duty order on taperedroller bearings (TRBs) and parts thereof,finished and unfinished, from thePeople’s Republic of China (PRC). Theperiod of review (POR) is June 1, 1993,through May 31, 1994.Based on our analysis of commentsreceived, we have made changes to themargin calculations, includingcorrections of certain clerical errors.Therefore, the final results differ fromthe preliminary results. The finalweighted-average dumping margins arelisted below in the section entitled‘‘Final Results of Review.’’We have determined that sales havebeen made below foreign market value(FMV) during the period of review.Accordingly, we will instruct the U.S.Customs Service to assess antidumpingduties on all appropriate entries.We have also determined that onecompany has demonstrated that it hasmade sales at not less than fair value forthree consecutive review periods.Therefore, we are revoking the order inpart with respect to this firm.EFFECTIVE DATE: February 11, 1997.FOR FURTHER INFORMATION CONTACT:Charles Riggle, Hermes Pinilla, AndreaChu, Kristie Strecker, or Kris Campbell,Import Administration, InternationalTrade Administration, U.S. Departmentof Commerce, 14th Street andConstitution, Avenue N.W.,Washington, D.C. 20230; telephone(202) 482–4733.APPLICABLE STATUTE AND REGULATIONS:Unless otherwise indicated, all citationsto the statute and to the Department’sregulations are references to theprovisions as they existed on December31, 1994.SUPPLEMENTARY INFORMATION:BackgroundOn September 26, 1995, theDepartment published in the FederalRegister the preliminary results of itsadministrative review of theantidumping duty order on TRBs fromthe PRC. See Tapered Roller Bearingsand Parts Thereof, Finished andUnfinished, From the People’s Republicof China; Preliminary Results ofAntidumping Duty AdministrativeReviews, 60 FR 49572 (September 26,1995) (Preliminary Results). We gaveinterested parties an opportunity tocomment on our preliminary results andheld a public hearing on November 29,1995. The following parties submittedcomments: The Timken Company(Petitioner); Shanghai General BearingCompany, Limited (Shanghai); GuizhouMachinery Import and ExportCorporation (Guizhou Machinery),Henan Machinery and EquipmentImport and Export Corporation (Henan),Jilin Province Machinery Import andExport Corporation (Jilin), LiaoningMEC Group Company Limited(Liaoning), China National MachineryImport and Export Corporation (CMC),and Wafangdian Bearing IndustryCorporation (Wafangdian) (collectivelyreferred to as Guizhou Machinery et al.);Premier Bearing and Equipment Limited(Premier); Peer Bearing Company/ChinJun Industrial Limited (Chin Jun);Transcom, Incorporated (Transcom);and L&S Bearing Company/LSBIndustries (L&S).On June 30, 1994, Shanghai submitteda request, in accordance with 19 CFR353.25(b), that the antidumping dutyorder be revoked with respect toShanghai’s sales of this merchandise. Inaccordance with 19 CFR353.25(a)(2)(iii), this request wasaccompanied by certifications from thefirm that it had sold subjectmerchandise at not less than FMV for athree-year period, including this reviewperiod, and would not do so in thefuture. Shanghai also agreed to itsimmediate reinstatement in theantidumping duty order, as long as anyfirm is subject to this order, if theDepartment concludes under 19 CFR353.22(f) that, subsequent to revocation,it sold the subject merchandise at lessthan FMV.On March 13, 1996, we published inthe Federal Register our notice of intentto revoke the order in part. See TaperedRoller Bearings and Parts Thereof,Finished and Unfinished, From thePeople’s Republic of China; Intent toRevoke the Order (In Part), 61 FR 10314(March 13, 1996). We gave interestedparties an opportunity to comment onour intent to revoke in part. Petitionersubmitted comments; Shanghaisubmitted rebuttal comments.We have conducted thisadministrative review in accordancewith section 751(a)(1) of the Tariff Actof 1930, as amended (the Act), and 19CFR 353.22.Scope of ReviewsImports covered by these reviews areshipments of TRBs and parts thereof,finished and unfinished, from the PRC.This merchandise is classifiable underthe Harmonized Tariff Schedule (HTS)item numbers 8482.20.00,8482.91.00.60, 8482.99.30, 8483.20.40,8483.20.80, 8483.30.80, 8483.90.20,8483.90.30 and 8483.90.80. Althoughthe HTS item numbers are provided forconvenience and customs purposes, ourwritten description of the scope of thisproceeding is dispositive.Best Information AvailableIn accordance with section 776(c) ofthe Act, we have determined that theuse of the best information available(BIA) is appropriate for a number offirms. For certain firms, total BIA wasnecessary, while for other firms onlypartial BIA was applied. Ourapplication of BIA is discussed furtherin the Analysis of Comments Receivedsection of this notice.Analysis of Comments ReceivedComment 1Petitioner argues that theDepartment’s preliminary finding thatthere are 11 independent Chinese TRBproducers entitled to separateantidumping duty rates is inconsistentwith the preliminary determination thatthe TRB industry is not sufficientlymarket-oriented to allow for the use ofhome market prices. Petitioner statesthat, where the government retainssignificant control over an entireindustry, there is sufficient direct, orindirect, control to warrant treating allof the producers as ‘‘related’’ forpurposes of section 773(e)(4)(F) of theAct and also to calculate only a singlemargin for these companies. Petitionernotes that, in analyzing de facto statecontrol, the Department considerswhether the plants have independentauthority to set prices and the ability toretain profits. However, Petitionerinsists, where input and factor pricesare established by state control andwhere ownership of the company andthe concept of profits are unclear, thereis no truly independent authority to setprices and retain profits. Petitioner citesthe April 25, 1995 public version ofJilin’s supplemental questionnaire

6190 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesresponse which states, at 3, that Jilin’sprofits may be used, inter alia, ‘‘foremployee bonuses and welfare.’’Petitioner claims that, in marketorientedcompanies, employee bonusesand welfare would be regarded asexpenses, not profits (citing CompactDuctile Iron Waterworks Fittings andAccessories from the People’s Republicof China, 58 FR 37908, 37910 (July 14,1993) (CDIW)).Petitioner contends that, if theDepartment calculates separate rates,there is a strong incentive to channelU.S. exports through exporters with thelowest margins, and that the recordestablishes that various TRB producersnot only market their own bearings butalso perform sales and marketingfunctions with respect to TRB modelsproduced by other companies.Petitioner argues that new importationswill inevitably be channeled throughcompanies with the lowest margins,adding that such behavior is amanifestation of the state control thatpermeates the industry and theeconomy.Petitioner contends further that theDepartment’s de jure and de factoseparate-rates analysis places animpossible burden of proof on domesticinterested parties due to the fact that astate-controlled economy can amend itslaws and regulations without in factrelinquishing control. Petitioner claimsthat the state can simply delete anyevidence of de jure control from laws,regulations, corporate charters and otherdocuments. That being the case,Petitioner argues, the domestic industry,as well as the Department itself, areconfronted with the requirement thatthey prove a negative without havingaccess to information that wouldindicate continuing control overproduction and pricing decisions by thestate. Thus, Petitioner states, claimsmade by plant managers, themselvesinterested in obtaining separate rates,become the basis for the Department’sde facto analysis. Finally, Petitionerargues that domestic interested partiesdo not have access to information thatmight allow them to rebut the claims ofde facto independence, causingirrational results and defeating thepurpose of the statute (citing RhonePoulenc (page cite omitted) and TheTimken Co. v. United States, 11 CIT786, 804, 673 F. Supp. 495, 513 (1987)).Guizhou Machinery et al.acknowledge that in CDIW theDepartment determined that it wouldnot consider a request for separate ratesfor any state-owned company on thebasis that no state-owned companycould be independent enough of statecontrol to be entitled to separate rates.However, Guizhou Machinery et al.note, citing Final Determination of Salesat Less Than Fair Value: Silicon CarbideFrom the People’s Republic of China, 59FR 22585 (May 2, 1994) (SiliconCarbide), that the Departmentsubsequently departed from the CDIWdecision and returned to its formerpractice, with some modifications, andargue that, in the preliminary results,the Department properly employed itsmore recent separate-rates analysismethodology from Silicon Carbide.Guizhou Machinery et al. add that theDepartment has rejected Petitioner’sclaim that separate rates should only beapplied to companies which are alsofound to be part of a market-orientedindustry. Guizhou Machinery et al. notethat the Department has previouslystated that the separate-rates analysisand the market-oriented-industry (MOI)test should not be linked in the mannerPetitioner appears to be suggesting(citing Final Determination of Sales atLess Than Fair Value: Disposable PocketLighters From the People’s Republic ofChina, 60 FR 22359, 22363 (May 5,1995) (Disposable Lighters)).Shanghai concurs with GuizhouMachinery et al. that an MOIdetermination and the separate-ratesmethodology are not synonymous andthat a negative determination withrespect to the former cannot rationallydictate a negative determination withrespect to the latter. Shanghai assertsthat the Department properlydetermined that Shanghai was entitledto a separate rate notwithstanding thedetermination that the TRB industry inthe PRC is not an MOI. Shanghai statesthat the separate-rates analysis involvesan assessment different from thedetermination of whether an MOI existsand that to prove an industry in the PRCis market-oriented would require proofnegating the existence of any stateinfluence over any factor of productionthroughout all segments of an industry,potentially involving hundreds ofbusiness units. Shanghai argues thatsuch a task would be virtuallyimpossible to achieve—even for the U.S.TRB industry.Shanghai claims that this isparticularly true with respect to itself, ajoint-venture company created under alaw guaranteeing that it operates as amarket-oriented producer. Shanghaistates that record evidence shows itoperates according to market influences,with all input-purchase decisions basedon its own assessment of productionand quality requirements and with allprice negotiations conducted at arm’slength. Shanghai states that the PRCgovernment exercises no control overthe prices of inputs, the type or volumeof production, product prices ordistribution of profits. Shanghai addsthat there are no restrictions on its usesof revenues and profits, it has exclusivecontrol over and access to its bankaccounts, and it can earn foreigncurrency and retain as much of theforeign currency as it desires. Therefore,Shanghai asserts that, regardless of theDepartment’s conclusion that the TRBindustry in China is not marketoriented,it is entitled to a separate rate.Department’s PositionWe agree with respondents that MOIdeterminations and separate-ratedeterminations differ with respect toboth the analysis we perform and thepact of the decision. We also agree withGuizhou Machinery et al. that we havedeparted, where appropriate, from theCDIW decision. In CDIW, we took theposition that state ownership (i.e.,‘‘ownership by all the people’’)‘‘provides the central government theopportunity to manipulate theexporter’s prices, whether or not it hastaken advantage of that opportunityduring the period of investigation.’’Thus, we concluded in CDIW that stateownedenterprises would not be eligiblefor separate rates.However, we have modified ourseparate-rates policy as set forth inCDIW. We subsequently determined thatownership ‘‘by all the people’’ in and ofitself cannot be considered asdispositive in establishing whether acompany can receive a separate rate. SeeSilicon Carbide at 22585. It is our policythat a PRC-based respondent is entitledto a separate rate if it demonstrates ona de jure and a de facto basis that thereis an absence of government controlover its export activities.A separate-rate determination doesnot presume to speak to more than anindividual company’s independence inits export activities. The analysis isnarrowly focused and the result, ifindependence is found, is resultinglynarrow—the Department analyzes thatsingle company’s U.S. sales separatelyand calculates a company-specificantidumping rate. Thus, for purposes ofcalculating margins, we analyzewhether specific exporters are free ofgovernment control over their exportactivities, using the criteria set forth inSilicon Carbide at 22585. Thoseexporters who establish theirindependence from government controlare entitled to a separate margincalculation.Thus, a finding that a company isentitled to a separate rate indicates thatthe company has sufficient control overits export activities to prevent themanipulation of such activities by a

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6191government seeking to channel exportsthrough companies with relatively lowdumping rates. See Disposable Lightersat 22363. A market-oriented-industrydetermination, by way of contrast,focusses on overall control of thedomestic industry, rather than simplyon its export activities, and thereforeleads to a decision as to whether homemarket or third-country prices withinthe industry are sufficiently marketdriventhat such prices may be used toestablish FMV.Petitioner’s argument that there issufficient direct or indirect governmentcontrol to treat all exporters as ‘‘related’’is unsupported by the record and is notdispositive, since our separate-ratesinquiry focuses on the extent of arespondent’s independence with respectto export activities. The PRC companiesthat responded to our questionnairesubmitted information indicating a lackof both de jure and de facto control overtheir export activities. Contrary toPetitioner’s claim that the necessaryinformation concerning the de factoportion of the analysis is inaccessible toboth Petitioner and to the Department,such information was in fact subject toverification and was discussed in therelevant verification reports. Based onour analysis of the Silicon Carbidefactors, the verified information on therecord supports our determination thatthese 11 respondents are, both in lawand in fact, free of government controlover their export activities. Thus, itwould be inappropriate to treat thesefirms as a single enterprise and assignthem a single margin. Accordingly, wehave continued to calculate separatemargins for these companies. SeeTapered Roller Bearings and PartsThereof, Finished and Unfinished, Fromthe People’s Republic of China; FinalResults of Antidumping DutyAdministrative Reviews (TRBs IV–VI),61 FR 65527, 65528 (December 13,1996).Comment 2Petitioner argues that the Departmentshould base the values of all factors ofproduction (FOP) on the annual reportof SKF India (SKF). Petitioner notesthat, for the preliminary results, theDepartment used the SKF report tovalue three factors (overhead; selling,general, and administrative expenses(SG&A); and profit), whereas theDepartment derived values for the directlabor and raw material factors from twoother, unrelated sources (Investing,Licensing & Trading Conditions Abroad,India (IL&T India) statistics and Indianimport statistics, respectively).Petitioner argues that the annual reportof SKF is the only record source thatyields values for all five factors and that,as such, the SKF report is a single,coherent source that includes segregatedinformation on each of the principalFOP and other costs necessary toconstruct FMV. Petitioner contends thatthe statute instructs the Department tovalue FOP based on the best informationregarding the values of such factors ina market-economy country or countriesthat are (A) at a level of economicdevelopment comparable to that of thenon-market-economy (NME) country,and (B) significant producers ofcomparable merchandise (citingsections 773(c) (1) and (4) of the Act).Petitioner further claims that theDepartment’s use of other sources tovalue labor and raw materials, whileusing SKF’s labor and raw materialsinformation to derive overhead, SG&Aand profit, is inherently distortive, giventhe ratios the Department calculatedfrom these figures.Petitioner states that the use of theSKF report for all FOP values isconsistent with the importance thecourts attach to internal coherence andthe use of a single source when possible(citing Timken Co. v. United States, 12CIT 955, 962, 963, 699 F. Supp. 300,306, 307 (1988), affirmed 894 F.2d 385(Fed. Cir. 1990) (collectively Timken)).Petitioner suggests that the SKF reportmost nearly approximates a verified,surrogate questionnaire response of thetype the Department formerly soughtfrom producers in potential surrogatecountries.Petitioner further contends that,whereas SKF’s costs and expensesrepresent those of a producer of theclass or kind of merchandise subject toreview, the surrogate data for directlabor and raw materials the Departmentused cover a broad range of industriesand products. Petitioner claims that thedirect labor classification theDepartment used covers, in addition tobearings producers, hundreds ofindustry sectors under broad headingsunrelated to bearings production andargues that there is no rational basis forusing such a non-specific source as asurrogate. Petitioner claims that theIL&T India labor costs cover anaggregate of all Indian industrieswithout distinction and that the IL&TIndia report itself points out (at 45) thatwages and fringe benefits ‘‘varyconsiderably by industry, company sizeand region.’’ Therefore, Petitionerargues, it is not rational to view theIL&T India information asrepresentative of labor costs in bearingproduction in India.Petitioner asserts that the ‘‘other’’alloy steel category from the Indianimport statistics, which the Departmentused to value material costs for thepreliminary results, is similarly broadand may or may not include imports ofthe steel used to produce bearings.However, even if included, Petitionerclaims that bearing steel represents onlya part of steel imports in the basketcategory.Petitioner notes that record evidence(referencing the SKF India report, a1989–1990 report of Asian Bearing, anIndian TRB producer, and the results ofa remand in the original less-than-fairvalue(LTFV) investigation) shows thecosts of raw materials and laborincurred by actual bearings producers inIndia to be consistently higher than thetrade statistics values the Departmentused in the preliminary results, eitherbecause the industries or productcategories covered by the labor and rawmaterials sources are overly broad orbecause domestic prices are differentfrom those of imports.Petitioner argues in the alternativethat, in the event that the Departmentdoes not use the SKF report to value allFOP, the Department must adjust theoverhead and SG&A rates to reflect theuse of lower materials and labor valuesfrom the separate sources. Petitionerclaims it would be distortive to includeSKF’s full materials and labor costs inthe cost of manufacture (COM)denominator of the overhead and SG&Acalculations unless they are also thebasis for valuing the raw materials anddirect labor factors in the constructedvalue (CV) calculation. Petitionerproposes that the Department multiplythe total weight of materials for SKF bythe average value of steel that it uses inthe final results and multiply the totalnumber of hours worked at SKF by theIL&T India labor value used for thematerial and labor figures theDepartment included in the overheadand SG&A calculations.Petitioner states that the most obviousadjustment needed to the materialselement of the overhead and SG&Acalculations is due to the Department’suse of Indian steel values free of duties;specifically, because the Indian importdata the Department applied in thepreliminary results are based on predutyimport values, it is inappropriateto use an SKF materials value thatincludes duties in the overhead andSG&A calculations. Petitioner suggeststhat, if the Department does not applythe proposed adjustment (i.e., total SKFmaterial weight times the Indian valueused), the amount of duties paid by SKFon imported materials, as indicated inthe SKF report, must be segregated fromthe materials total in the overhead andSG&A calculations in order to deriveapples-to-apples ratios.

6192 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesGuizhou Machinery et al. respond byarguing that it is irrelevant whether theSKF report represents a single, coherentsource for valuing all FOP componentsand note that the Departmentconsistently uses multiple sources ofinformation for surrogate data in NMEcases (citing Final Determination ofSales at Less Than Fair Value: SebacicAcid from the People’s Republic ofChina, 59 FR 28053 (May 31, 1994)(Sebacic Acid), and Final Determinationof Sales at Less Than Fair Value:Certain Cased Pencils from the People’sRepublic of China, 59 FR 55625(November 8, 1994)), selecting the bestsource for each element of the FOP.Guizhou Machinery et al. add thatPetitioner’s citation to Timken ismisplaced and state that, in thatinstance, the Department was notcriticized for the use of different sourcesbut for the disparity between the ratiosresulting from the Department’scalculation and other ratios on therecord. Shanghai concurs that, in thepast, the Department has not requiredthe use of a ‘‘single, coherent source’’for all FOP information when thatsource is a single, private company,particularly one engaged in lines ofbusiness other than the manufacture ofsubject merchandise. Shanghai statesthat the Department correctly calculatedsurrogate labor costs and that the IL&TIndia data represent a better choice thanthe SKF report. Shanghai explains thatthe SKF data constitutes unverified datacovering several different product linesof a single producer and that there is amuch greater risk of unacceptabledistortions and aberrations in dataderived from one producer withdisparate products than could exist withaggregate national data.Guizhou Machinery et al. further statethat the fact that the SKF report containscosts and expenses incurred by aproducer of the class or kind ofmerchandise subject to review does notmake the report a better source ofsurrogate data. On the contrary,Guizhou Machinery et al. state, whereasthere is no evidence to indicate that SKFused the same type of steel asrespondents, the Indian import statisticsenable the Department to pinpoint aparticular type of steel.With respect to Petitioner’s argumentthat the overhead and SG&A rates mustbe adjusted to reflect the use of lowermaterials and labor values from separatesources, Guizhou Machinery et al. citeFinal Determination of Sales at LessThan Fair Value: Coumarin From thePeople’s Republic of China, 59 FR 66895(December 28, 1994) (Coumarin), inwhich the Department calculatedmaterials costs from various sources andused the Reserve Bank of India Bulletin(RBI) data to calculate SG&A but did notadjust SG&A and overhead costs simplybecause it did not use the same sourceas material costs. Shanghai adds that, inthe event that the Department rejects theuse of SKF materials, labor and othercosts except overhead, profit and SG&A,the Department should not furtheradjust overhead and SG&A as suggestedby Petitioner’s alternative argument.Shanghai notes that the SKF reportindicates that, in addition to TRBproduction, SKF has other lines ofbusiness, including the manufacture oftextile machine components and othertypes of bearings. Shanghai contendsthat the report does not allow for theallocation of labor or materials to TRBproduction for SKF’s overhead andSG&A and there is insufficientinformation on which to baseadjustments to overhead and SG&Abased on different valuations ofmaterials and labor used for TRBproduction. Guizhou Machinery et al.state that the Department’s use of datacontained in SKF’s annual report toestablish percentages or ratios to beused for determination of surrogatevalue for overhead and SG&A is fullyconsistent with the Department’sstandard surrogate methodology.Guizhou Machinery et al. state thatthe Department’s NME/surrogatecountrymethodology is based upon theapplication of reliable andrepresentative ratios and input valuesselected from multiple sources and thatthe Department does not typically‘‘adjust’’ the component values used toderive SG&A and overhead ratios in themanner proffered by Petitioner.Consequently, Guizhou Machinery et al.argue, the Department should not adjustthe expenses taken from the SKF report,as suggested by Petitioner, indetermining representative ratios for usein determining actual amounts foroverhead and SG&A.Guizhou Machinery et al. arguefurther that Petitioner’s assertion thatthe Department must deduct importduties from the materials elements ofthe overhead and SG&A rate calculationis based on the assumption that steelinputs were imported, but Petitioner hasprovided no evidence regarding whichparticular materials were imported.Guizhou Machinery et al. claim that theannual report itself contradictsPetitioner’s suggestion because it showsthat almost half of the materialspurchased by SKF India were from localsources, which would suggest that theeffect of import duties would not affectthe entire materials component of thecalculation. Additionally, GuizhouMachinery et al. claim that Petitionerhas not accounted for the fact thatIndian producers are entitled to dutydrawback upon exportation of finishedproducts that incorporate importedmaterials, which further reduces theeffect of import duties. Shanghaisuggests that, because the SKF reportcontains no information concerning theproportion of materials represented byTRB steel costs, what portion of SKF’ssteel was imported, or how much waspaid in duties, if the Departmentcontinues to use the SKF report foroverhead and SG&A, it should make nofurther adjustment to the rate it used forthe preliminary results.In response to Petitioner’s argumentthat it is inherently distortive to use theSKF report for overhead, SG&A andprofit but not for materials and labor,Guizhou Machinery et al. and Chin Junargue that the use of the SKF report forthe materials component would be moredistortive than the import statistics usedby the Department due to a lack of detailregarding the types of steel SKF used.Chin Jun notes that the SKF report doesnot provide separate prices for bar, rodor steel sheet but instead provides asingle value for all steel used in thefactory, including steel used in theproduction of non-subject merchandise.Chin Jun submits that the Petitioner, theDepartment, and respondents have noidea what types of steel were includedin SKF’s material-cost calculation.Guizhou Machinery et al. add thatPetitioner has provided no informationdemonstrating that the SKF reportcovers the specific steel inputs relevantto subject merchandise. Chin Junsuggests that the steel referenced in theSKF report could be tube steel (insteadof bar steel), stainless steel (a muchmore expensive product), alreadymachined ‘‘green parts’’ supplied bySKF India’s many related companies, orinnumerable other types of steel.Guizhou Machinery et al. and ChinJun also dismiss Petitioner’s claim thatthe SKF report most nearlyapproximates a verified surrogatequestionnaire response. Respondentsstate that an annual report, thoughperhaps audited, is not verified and notethat the Department has a preference forverifiable, public information (citingSebacic Acid, Final Determination ofSales at Less Than Fair Value:Manganese Sulphate from the People’sRepublic of China, 60 FR 52155(October 5, 1995) (ManganeseSulphate), and Final Determination ofSales at Less Than Fair Value: CertainCarbon Steel Butt-Weld Pipe Fittingsfrom the People’s Republic of China, 58FR 21058 (May 18, 1992)). Chin Junadds that the SKF report has data onlythrough March 1991 and this review

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6193includes 1993–94 transactions.Therefore, Chin Jun reasons, the SKFdata is so stale that the use of it wouldnot be proper. Chin Jun states that theDepartment’s preference is to use datawhich is contemporaneous to the periodof review.Guizhou Machinery et al. respond toPetitioner’s contention that the cost ofdirect materials of actual bearingsproducers in India is shown to beconsistently higher than the tradestatisticvalues used in the preliminaryresults by stating that such a fact doesnot render the trade statistics incorrectand that, furthermore, there is nothingin the law requiring the Department touse the highest value in choosingsurrogate values.Transcom submits that theDepartment should rely on the Indianimport statistics in factor valuation,rather than on the company-specificdata contained in the SKF report,because the Indian data arecontemporaneous with the period ofreview, while the SKF data areoutdated. Transcom agrees with ChinJun and Guizhou Machinery et al. thatthe import data provide a more detaileddescription, and therefore more exactvaluation, of steel used by the Chineseproducers, whereas the SKF report doesnot provide sufficient informationconcerning the type of steel for whichcosts are reported and provides noguidance in determining a surrogatevaluation of the FOP used in producingbearings in China.Petitioner responds to Chin Jun’sargument that the use of SKF data isinappropriate as SKF is typical ofneither China nor India by stating thatthe report is consistent with that ofAsian Bearing, another producer inIndia, which the Department declined touse. Petitioner claims that theDepartment did not use data from SKFSweden or consolidated data from theSKF Group, but data from SKF India,which reflect the operating conditionsof an Indian bearing company.Department’s PositionWe agree with respondents. Section773(c)(1) of the Act states that, forpurposes of determining FMV in a NME,‘‘the valuation of the FOP shall be basedon the best available informationregarding the values of such factors.* * *’’ Our preference is to valuefactors using published information (PI)that is most closely concurrent to thespecific POR. See Final Determinationof Sales at Less Than Fair Value:Certain Partial-Extension Drawer SlidesFrom the People’s Republic of China, 60FR 54472, 54476 (October 24, 1995).Based on the record evidence we havedetermined that surrogate countryimport statistics (Indonesian for valuingsteel used to produce cups and cones,Indian for steel used to produce rollersand cages), exclusive of import duties,comprise the best available informationfor valuing raw material costs. Ourreasons for preferring data for Indonesia,rather than for our primary surrogate,India, for valuing steel used to producecups and cones are set forth in ourresponse to Comment 3.We prefer published surrogate importdata to the SKF data in valuing thematerial FOP for the following reasons.First, we are able to obtain data specificto the POR, which more closely reflectthe costs to producers during the POR.Second, the raw material costs from theSKF report do not specify the types ofsteel purchased by SKF. The recorddoes not indicate whether SKFpurchased bar steel (the type used bythe Chinese manufacturers) or moreexpensive tube steel to produce bearingsparts. Third, although we agree withPetitioner’s point that SKF is a producerof subject merchandise, the report alsoidentifies other products itmanufactures. From the informationcontained in the SKF report, we areunable to allocate direct labor and rawmaterials expenses to the production ofsubject merchandise. For these reasons,we have valued the material FOP usingsurrogate import data.Furthermore, we agree withrespondents that Petitioner’s citation toTimken for the proposition that we mustuse a single surrogate source whenpossible is misplaced. That case, whichcriticized the Department’s failure tojustify its choice between adjustmentfactors, does not state that all factorsmust be valued in the same surrogatecountry. Indeed, the opinion in Timkenexplicitly states that ‘‘Commerce mayavail itself with data from a countryother than the designated conduit,adoption of such an inter-surrogatemethodology [although departing fromthe normal practice at that time]remains within the scope of Commerce’sdiscretionary powers.’’ 12 CIT at 959.The fact that the 1989–90 report ofIndian producer Asian Bearing, like theSKF data, shows higher raw materialscosts than the import data we used inthe preliminary results does not compelthe conclusion that we must use somedomestic Indian data source. In additionto being stale, the Asian Bearing datasuffers from the same defects as the SKFdata. The purpose of the NME factormethodology is not to construct the costof manufacturing the subjectmerchandise in India per se but to usedata from one or more surrogatecountries to construct what the cost ofproduction would have been in China,were China a market-economy country.See Sulfanilic Acid from the People’sRepublic of China; Final Results andPartial Recession of Antidumping DutyAdministrative Review, 61 FR 53702,53710 (Comment 12) (Oct. 15, 1996).We also disagree with Petitioner’scontention that we should adjust theoverhead and SG&A rates if we continueto use the SKF report to value theserates while valuing the material andlabor FOP using other sources. As notedabove, we prefer to base our factorsinformation on industry-wide PI.Because such information is notavailable regarding overhead and SG&Arates for producers of subjectmerchandise during the POR, we usedthe overhead and SG&A rates applicableto SKF India, a company that producessubject and non-subject merchandise.In deriving these rates, we used theSKF India data both with respect to thenumerators (total overhead and SG&Aexpenses, respectively) anddenominator (total cost ofmanufacturing). This methodologyallowed us to derive ratios of SKFIndia’s overhead and SG&A expenses.These ratios, when multiplied by theFOP we used in our analysis, therebyconstitute the best available informationconcerning the overhead and SG&Aexpenses that would be incurred by abearings producer given such FOP.Petitioner’s recommended adjustmentwould affect (reduce) the denominator,but it would leave the overhead andSG&A expenses in the numeratorunchanged. As such, we find that thisadjustment would itself distort theresulting ratio, rather than curing thealleged distortion in our calculations.Finally, with respect to Petitioner’sassertion that the overhead, SG&A, andprofit denominators we used in thepreliminary results improperly includedimport duties paid, we note thatPetitioner has not provided anyinformation regarding the amount ofimport duties that are included nor hasPetitioner provided a means ofidentifying and eliminating such dutiesfrom our calculations. Although wewould not include duties paid on theimportation of merchandise by SKF, wehave no evidence as to the amount ofduties, if any, that are included in SKF’sraw materials costs. Therefore, we didnot subtract any amount for importduties in our calculation of overheadand SG&A percentages. See TRBs IV–VIat 65529–65530.Comment 3Shanghai and Chin Jun submittedcomments regarding the appropriateIndian import classification number(s)

6194 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesto be used in valuing the steel thatcomprises the raw materials factor ofproduction. Chin Jun argues thatcategory 7228.30.19, which theDepartment used to value steel used tomanufacture cups and cones, contains awide variety of steel products and acorrespondingly wide range of prices.Chin Jun points out that the averageprice per metric ton of steel containedin this category ranges from $610 to$3,087. Chin Jun further argues that, asbearing-quality steel is availablethroughout the world at prices less than$800 per metric ton, the Departmentshould, if it uses category 7228.30.19 tovalue hot-rolled alloy steel bar, excludesteel prices in excess of $1,000 permetric ton as being not reflective of theprice of bearing-quality steel.Shanghai states that, although theIndian Trade Classification system isderived from the internationalharmonized schedules, it does notentirely duplicate the harmonizedschedules. Nevertheless, Shanghaicontends, the eight-digit subdivisions ofthe International Trade Commission(ITC) are described with sufficientlyfamiliar terminology to determinewhich subdivisions are likely to includesteel similar to or the same as the steelused in the production of cups andcones. Shanghai asserts that theDepartment should select an eight-digitsubdivision covering imports of types ofsteel which most closely match thequalities of the steel used to produce theproduct at issue, citing Sigma Corp. v.United States, CIT, No. 91–02–00154,Slip Op. 93–230, December 8, 1993 (15ITRD 2500), and Tehnoimportexport v.United States, 16 CIT 13, 783 F. Supp.1401 (1992). Furthermore, given the lackof a specific harmonization of the IndianTrade Classification System at the eightdigitsubdivision level, Chin Jun andShanghai both argue that theDepartment should, as it has previously,test the reliability of whicheversubdivision it chooses by comparing thevalues within that subdivision withworld steel prices from other availableinformation (citing Certain Partial-Extension Steel Drawer Slides withRollers from the People’s Republic ofChina (Drawer Slides), 60 FR 54472,54475 (October 24, 1995), and HeavyForged Hand Tools From the People’sRepublic of China (Hand Tools) 60 FR49251, 49254 (September 22, 1995), asexamples). Shanghai claims that theaberrationally high values of the steelincluded in category 7228.30.19, incomparison with world steel prices onthe record in this review, compel theconclusion that it should not be used.Shanghai submits that categories7227.90.30 and 7228.30.01 moreaccurately reflect the steel used tomanufacture cups and cones than doesthe residual category, 7228.30.19, whichthe Department used. Shanghai statesthat there is a category reported under7227.90, ‘‘Other Hot-Rolled Bars & Rodsof Other Alloy Steel in IrregularlyWound Coils,’’ which is consistent withU.S. HTS 7227.90.30 which containsball-bearing-grade steel.Shanghai suggests that the fact that aneight-digit category comparable to theU.S. HTS listing for ball-bearing-qualitysteel bars does not exist in the Indianimport statistics probably reflects theabsence of imports of that type of steelinto India. Therefore, Shanghai argues,it would be unreasonable and arbitraryto assume ball-bearing-grade steel entersunder the residual category 7228.30.19.Instead, Shanghai says that other eightdigitsubdivisions among the Indianimport statistics do describe types ofsteel closely correlated to the type ofsteel used to produce bearings.Shanghai suggests that theDepartment use category 7227.90.11,speculating that the type of ball-bearingsteel used by Chinese producers mightenter India under this category number.Differences between steel included inthis category and the steel used toproduce TRBs is, Shanghai states,insignificant. Alternatively, Shanghaisuggests use of category 7228.30.01,‘‘Bright Bars of Alloy Tool Steel,’’ notingthat ball bearing steel is a ‘‘tool’’ steelas defined by its carbon content.Shanghai claims that this category andU.S. HTS category 7228.30.20.001,‘‘Other Bars and Rods of Other AlloySteel * * * *, Not Further Workedthan Hot-Rolled * * * of Ball BearingSteel,’’ share the particularcharacteristics of the type of steel usedto manufacture cups and cones.Shanghai adds that, notwithstandinguse of the term ‘‘bright,’’ category7228.30.01 is, by definition, not furtherworked than hot-rolled, hot-drawn orextruded steel and, therefore, is notfurther worked with respect to any of anumber of surface treatments, i.e.,polishing and burnishing, lacquering,enameling, painting, varnishing, etc.Accordingly, Shanghai concludes thatthe ‘‘bright steel’’ cannot be steel witha finish inappropriate for bearingmanufacture. In contrast to these twocategories, Shanghai states, the residualcategory contains unknown types ofsteel.Shanghai states that the values of steelcovered by category 7228.30.19 areaberrationally high and should not beused. Shanghai explains that theDepartment’s use of import statistics assurrogate information has been affirmedin the past only where the importcategories accurately reflect the materialused to produce the product at issueand argues that the clearly greater costof the steel covered by category7228.30.19 indicates that the types ofsteel in this category are notrepresentative of bearing-grade steel.Thus, Shanghai claims, the steel valuesincluded in category 7228.30.19 areclearly aberrational, rendering theDepartment’s surrogate steel costs forcups and cones an inaccuraterepresentation of the actual experienceof Chinese producers. Because of thelack of specific harmonization of theIndian Trade Classification system atthe eight-digit subdivision levels,Shanghai urges the Department to weighthe reliability of whichever subdivisionit proposes to use by comparing thevalues within that subdivision withother available information on worldsteel prices. Citing Drawer Slides,Shanghai claims that in the past theDepartment has tested the reliability ofIndian import values by comparingthem with other record data. In HandTools, Shanghai quotes the Departmentas saying, ‘‘where we have other sourcesof market value such as Indonesianimport statistics or U.S. importstatistics, we have compared the Indianimport statistics to these sources ofmarket value to determine whether theIndian import values are aberrational,i.e., too high or too low’’ (at 49251).Accordingly, Shanghai suggests that theDepartment compare the valuesreported in category 7228.30.19 with thesubstantial evidence of relevant worldsteel prices already in the record of thisadministrative review. The high valuesin category 722.30.19 should not beused, respondent argues, because theyare aberrational; the import valuesreported in either category 7227.90.11 orcategory 7228.30.01 are more consistentwith world steel prices and should beused instead.Chin Jun also claims that theDepartment’s calculation of the value ofcategory 7228.30.19 contains apparentclerical errors, adding that, aside fromthe apparent clerical errors, the price forsaid category far exceeds the value ofsteel used to produce TRBs. With regardto the calculation, Chin Jun argues thatthe Department apparently doublecountedby adding the subtotal forcategory 7228.30.19 with the total of allsteel under heading 7228.30. Regardingits second point, Chin Jun argues thatthe Department has previouslyconcluded that it must comparesurrogate steel prices with world pricesin order to determine if the proposedsurrogate values are aberrational (citingHand Tools). Chin Jun claims that a

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6195comparison of the Indian importstatistics with other sources, e.g., U.S.import data, will confirm that the Indianimport data are aberrational and must beadjusted.Petitioner contends that Shanghai’sdiscussion of the steel category to beused for cups and cones is largely basedon speculation unsupported by recordevidence and is, to a large extent,factually wrong. First, Petitioner notesShanghai’s assertion that the absence inthe Indian import statistics of a specificsubdivision for bearing-quality steelindicates only a lack of imports of thistype of steel during the period coveredby the statistics. Petitioner claims thatthere is no basis for such speculation.Second, with respect to Shanghai’sargument that the exact type of bearingsteel used by PRC-based producerscould enter India under category7227.90.11, Petitioner notes thatcategory 7227.90.11 refers to bars androds of bearing-quality steel in coils.Petitioner argues that Shanghai does notcite any record evidence to suggest thatany respondent uses bar in coil.Petitioner adds that bar steel not in coilcould not be entered into India undercategory 7227.90.11.Petitioner contends that Shanghai’sclaim regarding category 7228.30.01 asthe proper category of Indian steelimports for the type of steel used in theproduction of cups and cones isinappropriate because category7228.30.01 represents bright bars.Petitioner claims that, to the best of itsknowledge, no one has ever beforesuggested in the course of this or anyother proceeding that bright bars areused to manufacture bearings. Petitionerstates that the distinguishing feature of‘‘bright bars’’ is a bright, smooth finishand such bars are not used in themanufacture of TRBs, as the high finishwould be destroyed, given the cuttingand grinding involved in TRBproduction. Furthermore, whereasShanghai argues that the term ‘‘bright’’in Indian subcategory 7228.30.01 doesnot denote bright, high-finish surfaceswhich would indicate the product wasfurther worked so as to fall outside thatcategory, Petitioner claims thatShanghai’s only support for suchargument is to cite a definition in theU.S. HTS. Petitioner argues that such adefinition has no application orrelevance to the Indian schedules.Rather, Petitioner observes, thedefinition is listed among ‘‘AdditionalU.S. Notes’’ as opposed to theinternationally accepted ‘‘Notes’’ toChapter 72.Petitioner also argues that Shanghai’sassertion that category 7228.30.19includes steel other than alloy tool steelis wrong, contending that the ‘‘other’’ incategory 7228.30.19 refers to ‘‘otherthan’’ any other subheading underheading 7228. Petitioner states that, byexcluding not only category 7228.30.01but any other specific eight-digitcategories which are known to notinclude bearing steel, i.e., ‘‘bright bars ofother steel’’ (7228.30.09), ‘‘bars and rodsof spring steel’’ (7228.30.12), and ‘‘barsand rods of tool and die steel’’(7228.30.14), category 7228.30.19remains the only category underheading 7228 that would containbearing steel.Finally, Petitioner responds toShanghai’s argument that the steelvalues included in category 7228.30.19are aberrational and are notrepresentative of the cost of bearinggradesteel. Petitioner claims thatShanghai is arguing, without any factualsupport, that the lowest price in thebasket category is for bearing steel andthat anything else is aberrational.Petitioner further states that Shanghaiattempted to support its argument thatthe value assigned to steel used tomanufacture cups and cones is too highin comparison with relevant world steelprices, without attempting to define‘‘world steel prices’’ or how Shanghaidecided the comparison prices wereappropriate.Petitioner states that Chin Jun’sargument that the value of steel incategory 7228.30.19 used in thepreliminary results far exceeds the valueof steel used to manufacture TRBs isincorrect. Petitioner suggests that theavailable information concerning actualprices of bearing steel in Indiacontradicts Chin Jun’s statement (citingPetitioner’s February 21, 1995submission containing worksheets forthe Results of Remand of FinalDetermination of Sales at Less ThanFair Value: Tapered Roller BearingsFrom the People’s Republic of China(February 15, 1989), as well as data inthe annual reports for SKF and AsianBearing). Based on such data, Petitionerclaims that the surrogate value of thesteel used to manufacture cups andcones is too low to be representative ofbearing-steel prices in India. Petitioneradds that the costs or prices in a marketeconomycountry at a comparable levelof development to the PRC, i.e., India,are at issue—not world prices.Department PositionWe agree that none of the eight-digittariff categories within the 7228.30 steelgroup correspond specifically tobearing-quality steel used tomanufacture cups and cones, but we donot agree with Petitioner that the bestrecourse is to the eight-digit ‘‘others’’category (7228.30.19) within this group.We have determined that the use ofIndian import data is not appropriate tovalue cups and cones in this casebecause, as noted in the argumentsabove and as shown below, we areunable to isolate an Indian import valuefor bearing-quality steel and, for thereasons discussed below, the steelvalues in the Indian import data are notreliable. See Drawer Slides at 54475–76;TRBs IV-VI at 65532.We have examined each of the eightdigitcategories within the Indian7228.30 group and have found that,although bearing-quality steel used tomanufacture cups and cones is mostlikely contained within this basketcategory, there is no eight-digit subcategorythat is reasonably specific tothis type of steel. We eliminated thespecific categories of alloy steel,identified by Petitioner andrespondents, that are clearly notbearing-quality steel as follows. Underthe Indian tariff system, bearing-qualitysteel used to manufacture cups andcones is contained within the broadcategory 7228.30 (Other Bars & Rods,Hot-Rolled, Hot-Drawn & Extruded).However, none of the named subcategoriesof this grouping(7228.30.01—bright bars of alloy toolsteel; 7228.30.09—bright bars of othersteel; 7228.30.12—bars and rods ofspring steel; and 7228.30.14—bars androds of tool and die steel) contains steelused in the production of subjectmerchandise. This leaves an ‘‘others’’category of steel, 7228.30.19. However,we have no information concerningwhat this category contains, and none ofthe parties in this proceeding hassuggested that this category specificallyisolates bearing-quality steel. Further,the value of steel in this eight-digitresidual category is greater than thevalue of the general six-digit basketcategory (7228.30), which in turn isvalued too high to be considered areliable indicator of the price of bearingqualitysteel, as shown below.Where questions have been raisedabout PI with respect to particularmaterial inputs in a chosen surrogatecountry, it is the Department’sresponsibility to examine that PI. SeeDrawer Slides at 54475–76 and CasedPencils, 59 FR 55633, 55629 (1994).Because all parties raised questionsabout the validity of the Indian importdata used to value cups and cones in thepreliminary results, we compared thevalue of Indian imports in category7228.30 with the only record source thatspecifically isolates bearing-quality steelused to manufacture cups and cones:import data regarding U.S. tariff

6196 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticescategory 7228.20.30 (‘‘bearing-qualitysteel’’). We found that, for the timeperiod covered by the POR, the value ofthe Indian basket category 7228.30 wassignificantly higher than the bearingqualitysteel imported into the UnitedStates. It was also significantly higher incomparison with E.U. import statistics. 1The Indian eight-digit ‘‘others’’ categoryrecommended by Petitioner, valuedhigher than the broad six-digit heading,was even more unreliable in comparisonwith the value of bearing-quality steel.In light of these findings, we havedetermined that the Indian import datathat we used to value cups and cones inthe preliminary results are not reliable.For these final results, we are usingimport data from a secondary surrogate,Indonesia, a producer of merchandisecomparable to TRBs, to value steel usedto produce these components. As withthe Indian data, we were unable toisolate the value of bearing-quality steelor identify an eight-digit categorycontaining such steel imported intoIndonesia; however, unlike the Indiandata, the Indonesian six-digit category7228.30 closely approximates the valueof U.S. imports of bearing-quality steel,as well as the comparable six-digitcategory in the United States. Thus, wehave determined that Indonesiancategory 7228.30, which is thenarrowest category we can determinewould contain bearing-quality steel, isthe best available information forvaluing steel used to produce cups andcones. Although Indonesia is not thefirst-choice surrogate country in thisreview, in past cases the Department hasused values from other surrogatecountries for inputs where the value forthe first-choice surrogate country wasdetermined to be unreliable. See DrawerSlides at 54475–76, Cased Pencils at55629, and Lock Washers at 48835.Furthermore, Indonesia has previouslybeen used as a source of surrogate datain cases involving the PRC. Because weare valuing the steel used to producecups and cones using Indonesian importdata, we are valuing the scrap offset tothis steel value using the same source.We also disagree with Shanghairegarding the appropriateness of Indiancategory 7227.90.11 as the steel type forcups and cones. Respondents reportedthat they use hot-rolled steel bar tomanufacture cups and cones. Category1 Although the E.U. import data do not explicitlyidentify ‘‘bearing quality steel,’’ the relevantsubheading (7228.30.40) provides a narrativedescription that closely matches to the chemicalcomposition of the bar steel that the PRCrespondents used to produce cups and cones. SeeMemorandum from Analyst to File: Factors ofProduction for the Final Results of the 1993–94Administrative Review of TRBs from the PRC,February 3, 1997.7227.90.11 is coil steel and isnecessarily produced by a different millthan bar steel. No respondent reportedusing coil steel to manufacture cups andcones. In addition, during factory toursof various PRC-based bearingsproducers we found no evidence thatany producer uses coil steel tomanufacture cups and cones. Finally,we disagree with Shanghai regarding theuse of category 7228.30.01, bright barsof alloy tool steel. No party hassuggested that such steel is used for theproduction of bearings.Although we acknowledge the clericalerrors noted by Chin Jun in ourcalculation of the value of steel used tomanufacture cups and cones, we havechanged our surrogate source for thevalue of this steel as explained above.Therefore, no recalculation is necessary.Comment 4Shanghai argues that the prices itactually pays for steel are sufficientlymarket-driven to be used instead ofsurrogate values. Shanghai states thatthe domestic steel producers fromwhom Shanghai purchased steelcompete against steel producers frommarket-economy countries. Shanghaitakes the position that the Departmentshould not employ surrogatemethodology in NME cases when theproducer is a foreign-invested jointventurecompany, adding that theDepartment’s current methodology doesnot recognize the special statusaccorded such companies under PRClaw. Shanghai also notes that there areno import restrictions limiting its abilityto purchase either domestic or importedsteel based on rational businessdecisions. Shanghai claims that underPRC joint-venture law it has the legalright to purchase steel from anysuppliers in the world and states thatthe prices at which it purchased steelfrom domestic suppliers during thisPOR were consistent with world steelprices for comparable types of steel.Shanghai argues that, where inputprices and production costs ofmerchandise under investigation aresubject to free-market forces sufficientenough to allow their use indetermining FMV, the Departmentshould apply its normal methodology(citing S. Rep. No. 100–71, 100th Cong.,1st Sess., at 108 (1987)). Shanghaiclaims that the Department has statedthat the presumption that no domesticfactor of production is valued on marketprinciples ‘‘can be overcome forindividual factors by individualrespondents with a showing that aparticular NME value is market driven’’(quoting Ceiling Fans).Petitioner counters that there is nobasis for adopting Shanghai’s claim thatits actual domestic steel purchases weremarket-driven, claiming that steelpurchased in the PRC is not free of theeffects of state controls on labor, energy,input and infrastructure prices.Petitioner states that Shanghai hasoffered no basis for concluding thateither the PRC bearings industry or thePRC steel industry meet theDepartment’s criteria for being deemeda MOI. Petitioner adds that theparticipation of a market-economyinvestor will not purge the PRC inputsof the effects of state control.Department’s PositionWe agree with Petitioner. Shanghaihas provided no evidence to support itscontention that either the steel industryor the bearings industry in the PRC is anMOI. To the extent that Shanghai is freeto source its steel either domestically orfrom imports, the fact that it purchasedonly domestic steel confirms only thatdomestic steel was consistently pricedlower than steel available on the worldmarket. This does not support a claimthat PRC steel is provided at marketprices. In Ceiling Fans, as in this case,we considered values of FOP to bemarket-driven when sufficient evidenceexists to demonstrate that such factorswere purchased from a market-economysupplier and paid for with a convertiblecurrency. Absent such evidence fromShanghai, we have valued Shanghai’sPRC-sourced steel inputs usingsurrogate values.Comment 5Petitioner notes that in thepreliminary results the Departmentvalued scrap using the Indian tariffheadings 7204.29 for alloy-steel scrapand 7204.49 for non-alloy-steel scrap.Petitioner contends that both headingsare wrong and that the Departmentshould use subheadings 7204.29.09 and7204.41.00, respectively, as it did in thepreliminary results of the three previousreviews.Petitioner claims that using the entireheading 7204.29 is wrong because itincludes ‘‘waste and scrap of high speedsteel’’ under subheading 7204.29.01 andsuch steel is not used to producebearings. Petitioner states that thecategory of 7204.29.09, ‘‘waste andscrap of other alloy steel,’’ includesbearing steel.Petitioner argues that heading 7204.49is wrong because it excludes ‘‘turnings,shavings, chips, milling waste, sawdust,filings, trimmings and stampings,whether or not in bundles’’ (heading7204.41). Petitioner claims that theseexcluded types of scrap are precisely the

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6197types of scrap generated in bearingproduction. Furthermore, Petitionerstates, the category used by theDepartment in the preliminary results islargely composed of ‘‘defective sheet ofiron and steel’’ (subheading 7204.49.01).Petitioner argues that inclusion of‘‘defective sheet’’ in cage production isinappropriate because scrap generatedduring cage production is in the natureof stampings, trimmings, shavings,chips, milling waste or filings. Finally,Petitioner claims that inclusion ofdefective sheet is incorrect because itleads to the result that the valueobtained by the Department for thisnon-alloy-steel scrap is somewhathigher in value than the value found foralloy-steel scrap.Guizhou Machinery et al. respondthat Petitioner provides no evidence tosupport its arguments. For instance,Guizhou Machinery et al. claim,Petitioner provides no evidence tosupport its assertion that ‘‘high-speed’’steel is not used for bearings. Instead,Guizhou Machinery et al. argue,inclusion of the high-speed steel isreasonable given the fact thatrespondents use high-quality steel in theproduction of bearings, cups and cones.In addition, Guizhou Machinery et al.state that the U.S. HTS does not evensegregate heading 7204.29 betweenhigh-speed and other alloy-steel scrap,suggesting that the differences betweenthe types of scrap are not significant.With respect to category 7204.49,Guizhou Machinery et al. state thatPetitioner provides no evidence of itsargument that this category isinappropriate because it excludesturnings, shavings, chips, milling waste,sawdust, filings, trimmings andstampings, whether or not in bundles,which Petitioner claims are preciselythe kinds of scrap generated in bearingproduction—or that it includesdefective sheet of iron and steel.Guizhou Machinery et al. state thatscrap types such as sawdust, which areunrecoverable, do not enter into thecalculation of scrap credit. Rather,respondents contend the calculation isbased on scrap that was sold or reused.Furthermore, respondents claim that thescrap for which the Department gavecredit did include defective steel, citinga verification report.Department’s PositionWe used Indian import statistics tovalue the steel for cages and rollers and,therefore, we have used Indian importstatistics to value scrap for thesecomponents. In the same manner, weused Indonesian statistics to value boththe steel and scrap for cups and cones.We agree with Petitioner that, in orderto determine the best category by whichto value scrap, it is appropriate to setaside those specific categories that didnot include bearing steel.Consistent with our previous reviews,we agree with Petitioner that, for theIndian scrap values, categories7204.41.00 and 7204.29.09 best capturethe types of residues generated as scrap.Category 7204.41.00 describes the typesof scrap created during production ofcages, i.e., turnings, shavings, chips,trimmings, stampings, etc. Similarly,category 7204.29.09 (Waste and Scrap ofOther Alloy Steel) includes bearing steelwhich is applicable to other bearingcomponents. Therefore, we usedcategory 7204.41.00 from the Indianimport statistics to value scrap for cagesand category 7204.29.09 from the Indianimport statistics to value scrap forrollers.The Indonesian statistics do notprovide a category comparable to Indiancategory 7204.29.09 for which to valuescrap. We have chosen a comparablecategory, 7204.29.00 (Other Waste andScrap), and used the Indonesian importstatistics from this HTS number to valuescrap for cups and cones (see ourresponse to Comment 3).Comment 6Petitioner contends that the steelimport prices the Department used inthe preliminary results do not reflectmarket-economy transactions. (Forcertain steel inputs for certainrespondents, the Department used theactual values at which Chinese tradingcompanies imported the steel into thePRC and paid in convertible currencies.)Petitioner notes that steel is a‘‘controlled commodity’’ in the PRC andthat China Foreign Trade DevelopmentCompanies, Inc., is generally the PRCimporter. Petitioner insists that, giventhis fact pattern involving contracts fora controlled commodity, the purchase ofwhich must be carried out through themandatory intervention of a statetrading company, any such purchasecannot rationally be considered anarm’s-length transaction reflectinguncontrolled market prices. Petitionerclaims that the Department departs fromusing surrogate values only when theactual imports from a market economyreflect market-economy practices andprices, citing Final Determination ofSales at Less Than Fair Value:Oscillating Fans and Ceiling Fans Fromthe People’s Republic of China, 56 FR55271 (October 25, 1991) (Ceiling Fans).Petitioner contends that, under thecircumstances of this case, the statecontrolledtrading company is by lawgiven a leading role in negotiating theterms of sale and that such tradingcompanies, acting as coordinators ofsteel purchases for the entire Chineseeconomy, would enjoy such marketpower as to enable them to obtain betterprices than any individual bearingsproducer in a market economy.Petitioner suggests, in addition, thatsteel supplied by the China ForeignTrade Development Companies to PRCproducers might be part of, or related to,broader deals between those producersand the trading companies which, forreasons unrelated to the factors thatwould govern normal purchases directlyfrom a market-economy company, couldaffect the prices paid by the producersfor reasons unrelated to the factors thatwould govern normal commercialtransactions between market-orientedcompanies.Guizhou Machinery et al. respondthat, consistent with section 773(c) ofthe Act and with 19 CFR 353.52, theDepartment has established a practice ofusing actual import prices if they arefrom market-economy countries.Guizhou Machinery et al. contend thatthe ‘‘Department practice allows for thevaluation of inputs in NME cases basedon market prices paid by themanufacturer for goods obtained from amarket-economy source because theseprices reflect commercial reality’’ (citingCoumarin at 66895). GuizhouMachinery et al. state that Petitioner’sassertion that the contracts do notreflect market-economy transactionsbecause steel is a ‘‘controlledcommodity’’ and because the contractsinvolved a ‘‘state trading company’’ isirrelevant because such arguments donot negate the fact that the sellers, whoestablish the sales prices, are marketeconomycompanies (citing Hand Toolsand Final Determination of Sales at LessThan Fair Value: Saccharin from thePeople’s Republic of China, 59 FR 58818(November 15, 1994) (Saccharin)). Inaddition, Guizhou Machinery et al.contend that Petitioner’s statement thatsteel supplied to PRC-based producersfrom the PRC trading company mighthave been part of related or broaderdeals is merely speculation with nosupport on the administrative record.Guizhou Machinery et al. discussPetitioner’s reference to Timken fromComment 2, stating that the Court ofInternational Trade (CIT) and the Courtof Appeals for the Federal Circuit(CAFC) did not rule that the Departmentcannot use different sources to obtainsurrogate values for the various CVcomponents but, rather, that theDepartment cannot use surrogate-valuedata which yield distortive results andwhich are inconsistent with otherrecord evidence. Guizhou Machinery etal. assert that Petitioner has not shown

6198 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesthat the use of market-oriented importprices combined with the use of Indianimport statistics for scrap yieldsdistortive or inconsistent results; inrespondents’’ view, both represent‘‘market-oriented’’ prices. GuizhouMachinery et al. claim that theDepartment has used different sourcesto obtain surrogate values for inputmaterials in many cases and that theDepartment should not abandon its useof market-oriented import prices or alterits calculations in the final results.Department’s PositionAlthough we agree with respondentsthat we do not need to value all factorsof production in a single surrogatecountry, we agree with Petitioner thatwe should not use purchases of steelfrom PRC trading companies in thisreview. Our established policy allowsfor the valuation of inputs in NME casesbased on market prices paid by themanufacturer for inputs purchased froma market-economy source because thoseprices reflect commercial reality. SeeSaccharin at 58822–23. Therefore,where the manufacturer obtained theinput from the trading company—a PRCsource rather than a market-economysource—and paid for the input in PRCcurrency, we determine that the pricespaid by the producers for these inputsdo not reflect market prices. In suchsituations, the price paid by the tradingcompany is not the relevant inquiry. Wenote that Guizhou Machinery et al.misread Coumarin. In that case, as inthis case, we did not use purchases frommarket-economy suppliers but insteadapplied surrogate values becauseproducers obtained the input from aPRC trading company. See Coumarin at66900. See also TRBs IV–VI at 65533.Comment 7Shanghai argues that the Departmentshould calculate all of Shanghai’srelevant steel costs on the basis of steelpurchases Shanghai made directly frommarket-economy countries during thePOR. For certain components Shanghaiused PRC-sourced steel as well as steelpurchased from market-economycountries during the POR. Shanghaiargues that the Department’s use of aweighted-average of PRC-sourced andimported steel was improper and thatthe Department should have basedShanghai’s constructed steel valuessolely on the verified costs ofShanghai’s market-economy-sourcedsteel imports. Actual market costsincurred during the POR for the exacttype and grade of steel used for theproduction of subject merchandise are,Shanghai contends, the best evidence ofthe market cost of steel. Shanghai citesS. Rep. No. 93–1298, 93d Cong., 2dSess. 174 (1974), in support of its viewthat surrogate values are meant to beapplied only when market-based valuesare unavailable. Shanghai claims thatthe surrogate methodology is meant asa way to ascertain what the prices orcosts of an NME producer would be ifset by the market.Citing Ceiling Fans (at 55274),Shanghai states that its actual cost forthe imported steel are the most reliableand accurate data for determining thevalue of steel inputs. Not using theseverified costs would, Shanghai argues,defeat the statutory intent andundermine the accuracy, fairness andpredictability of the FMV calculations.Petitioner argues that, contrary toShanghai’s assertion, the Departmentshould disregard import prices becausethose prices are subject to statecontrolledinfluences and, therefore, areunreliable. Petitioner suggests that theDepartment should rely on the Indianprices to value all of Shanghai’s steelusage. Petitioner argues that steel is nottraded freely in China and most bearingproducers must purchase their importedinputs through state-controlled tradingcompanies. Petitioner claims theseimports are incorporated directly intothe state-controlled system and, becausethey are indistinguishable from otherChinese domestic prices and areinherently suspect, they must bedisregarded in the final results.Whereas Shanghai argues that importprices should be used for all its steelinputs, Petitioner, citing 19 CFR 353.52,says that such argument disregards thestatutory requirement that, when normalvaluation cannot be used because ofstate-controlled-economy influences,the Department is to base the value onits FOP methodology, deriving valuesfor each factor from prices or costs in asurrogate country. Petitioner contendsthat the Department should use, for thefinal results, prices of imported steelonly for acquisitions that are shown tobe free of state-controlled influences.Petitioner further contends that, in thisreview, no such acquisitions exist and,therefore, the Department should useIndian surrogate values to value all steelinputs in this review.Department’s PositionWe agree with Shanghai with respectto steel sourced directly from marketeconomysuppliers. Accuracy isenhanced when the NME producer’sactual costs can be used. We verifiedthat a portion of Shanghai’s steel inputsduring the POR were sourced frommarket-economy countries and werepaid for in a market-economy currency.Shanghai’s imports were purchaseddirectly from the market-economysupplier and did not involve PRC-basedtrading companies. See VerificationReport at 4. Therefore, we have notcalculated weighted-average steel costsbased on PRC-sourced and importedsteel for Shanghai for these final results.Comment 8Petitioner claims that, if theDepartment uses the value of steelimported into the PRC, there are noavailable scrap values directly related torespondents’ steel-acquisition costs.Petitioner notes that the net cost of rawmaterials inputs is based on the steelcost minus a value for scrap credit andargues that applying a value to the steelfrom one source and scrap credit froma different source is inherentlydistortive. Petitioner claims that thecourts have ruled this practice to beunsupported, citing Timken. Petitionernotes that the Department addressed theissue on remand by using a singlesource to value both materials andscrap, a flat ratio of scrap equal to 20percent of the value of the steel input.Petitioner states that the same principleshould apply to this review, i.e., inorder to avoid inherent distortionswhere the Department values steel andscrap using different sources, the Indianscrap value should be applied as apercentage rather than as an absoluteamount.Guizhou Machinery et al. contendthat, contrary to Petitioner’s argument,the CIT and the CAFC did not rule inTimken that the Department cannot usedifferent sources to obtain surrogatevalues for the various CV componentsbut, rather, that the Department cannotuse surrogate value data which yielddistorted results and which areinconsistent with other record evidence.Guizhou Machinery et al. argue thatPetitioner has not shown that the use ofmarket-oriented import prices for steelwith the use of Indian import statisticsfor scrap credit yields distorted resultsor that it is inconsistent with otherinformation on the administrativerecord for this review. GuizhouMachinery et al also contest Petitioner’sclaim that the use of two differentsources to value steel and scrap is‘‘inherently distorted’’ and point outthat in many cases the Department hasused different sources to value inputmaterials and scrap.Shanghai states that the Departmentmay exercise its discretion to identifythe best available information even ifderived from different sources and thatthe Department’s ‘‘mix-and-match’’methodology is supported by thestatute, citing Lasko Metal Products Inc.v. United States, No. 93–1242 (Fed. Cir.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6199Dec. 29, 1994). Shanghai suggests thatPetitioner objects to the use of steelvalues based on PRC imports and scrapvalues based on Indian imports asanother attack on the use of steel valuesbased on PRC imports.Department’s PositionWe agree with respondents. BecauseShanghai purchased inputs from amarket-economy supplier and paid in aconvertible currency, we valued thoseinputs using respondent’s actual costs.The absence of a direct scrap-offsetvalue should not prohibit us from usingthe actual market-economy price paid inconvertible currency by an NMEmanufacturer.In the Final Determination of Sales atLess Than Fair Value: Circular WeldedNon-Alloy Steel Pipe From Romania, 61FR 24274, 24277 (May 14, 1996), wecalculated a ratio of scrap value to steelvalue as suggested by Petitioner.However, in that instance, we had nopublic information by which to arrive ata scrap/steel ratio for our first-choicesurrogate country. Therefore, wecalculated the ratio using scrap valuesand steel values from the second-choicesurrogate country and applied the ratioto the surrogate steel values from thefirst-choice surrogate country todetermine a value for scrap.In this case, where producers haveused PRC-sourced steel inputs, we havevalued those inputs based onIndonesian import statistics for steelused to manufacture cups and conesand based on Indian import statistics forsteel used to manufacture rollers andcages (see our response to Comment 5).In other words, we have valued saleablescrap for each component using thesame respective source by applyingIndonesian scrap values to cups andcones and Indian scrap values to rollersand cages. Because Shanghai usedimported steel it purchased directlyfrom a market-economy supplier andpaid for with a market-economycurrency, we have valued Shanghai’ssteel inputs using the company’s actualcosts. In the absence of a correspondingscrap price, we valued the volume ofscrap actually produced in Shanghai’sproduction with cups and cones usingIndonesian scrap values and valued thevolume of scrap actually generated inShanghai’s production of rollers andcages using Indian scrap values.Petitioner’s contention that using asteel value from one source and scrapcredit value based on a different sourceis inherently distortive is unfounded.Petitioner has provided no evidence toindicate that the value of scrap is in anyway tied to the cost of raw steel.Furthermore, this approach allows us touse the actual amounts of scrapgenerated by the Chinese productionprocesses rather than the scrap ratiosassociated with Indian factories, whichmay be less accurate. Because we areusing the same source to value scrap forall respondents, we do not agree that weshould change our methodology simplybecause Shanghai’s steel bar was valuedusing Shanghai’s actual costs for itsmarket-economy purchases.Accordingly, where steel inputs werebased on actual costs of steel purchaseddirectly from market-economy sources,we have continued to value scrap usingthe surrogate sources noted above.Comment 9Petitioner states that the Department’sanalysis memoranda for somerespondents show a ‘‘scrap input value’’included in valuing certain materials.Petitioner asserts that, to the extent rawmaterials from which certain TRBs orparts were manufactured were assigneda scrap value, the value of thosematerials was understated. In terms ofacquisition cost, Petitioner contends,new material remains new throughoutthe production process. Petitionercontends that the only time a scrapvalue has any significance is when thereis a demonstration that scrap fromproduction was recovered and sold andnotes that respondents do not deny thatthey paid full price for the raw materialsthey characterize as scrap inputs.Petitioner explains that the per-kilogramvalue of the raw-material input piece isthe same whether the companiesproduce one or two finished pieces fromthe input piece and the only differencewhen two pieces are produced from asingle input piece is that the amount ofscrap at the end of the operation is lessthan if only one of the two pieces hadbeen produced from the input.Petitioner claims that, by increasing theyield from the raw material input andreducing scrap, these producers haveachieved economy of production.Petitioner asserts that the Departmentshould revert to its position in the1989–90 review, in which it did notvalue scrap steel input reused by onerespondent at the cost of steel scrap(citing Tapered Roller Bearings from thePeople’s Republic of China, 56 FR87590, 87596 (December 31, 1991)(TRBs)). At that time, Petitioner argues,the Department noted that therespondent had failed to raise the issueearly enough to permit consideration ofalternatives with which to value thereused steel input. Since then,Petitioner adds, respondents have notpresented alternatives for taking accountof their production of two pieces fromone bar. Petitioner states that the reusedsteel retains its value in the productionprocess fully as much as a new-steel bar.Petitioner claims that the fact that itmay be sold as scrap is irrelevantbecause respondents did not sell it andpaid full price when it was acquired.Guizhou Machinery et al. respondthat, although the above-referencedanalysis memoranda suggest that ‘‘scrapinput’’ was separately and differentlyvalued from ‘‘new’’ steel input, thecalculations show that the Departmentvalued scrap input the same as newsteelinput. Guizhou Machinery et al.assert that the Department should havevalued scrap input at scrap values, notthe same as new steel.Guizhou Machinery et al. state thatsome respondents accumulate scrappieces, store them in their warehouse onsite, and use large scrap pieces tomanufacture smaller bearings. GuizhouMachinery et al. argue that, becausescrap is actually used to manufacturethese bearings, the input materials costsshould appropriately account for thescrap value.Guizhou Machinery et al. claim thatPetitioner’s argument suggests that, eventhough scrap material was actually usedto manufacture certain bearings, theDepartment should ignore this fact andessentially ‘‘impute’’ the material cost ofnew steel instead. Guizhou Machineryet al. state that, as evidenced by therecord in this review, TRBs aremanufactured from different steel inputs(i.e., type, grade, and quality) and thatPetitioner’s argument that new-steelcosts should be used to value scrapinput ignores the fact that differentinputs are used in the manufacturingprocess and would be comparable tosubstituting the value of steel bar forsteel sheet. Guizhou Machinery et al.claim that Petitioner’s argument ignoresthe differences between steel bar andscrap because steel bar is a high-qualitymaterial which can be used as is,whereas scrap consists of leftover pieceswhich have already been ‘‘stressed’’once. Guizhou Machinery et al. claimthat Petitioner’s argument should berejected because its methodology wouldartificially inflate respondent’s materialcosts and because steel scrap has asubstantially lesser value than new steelbar, as evidenced by its sales prices inthe marketplace. To avoid aberrationalresults for the TRB models using scrapinput, Guizhou Machinery et al.recommend that the Department followthe methodology it used in thecalculations for the preliminary resultsof the 1990–93 administrative reviews,which most accurately reflects the valueof the actual inputs used for eachparticular model.

6200 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesDepartment’s PositionWe agree with Petitioner. The scrapinput respondents used to producecertain TRBs was not purchased asscrap. Respondents paid the fullpurchase price for these inputs. Sales ofbearings produced from scrap areindistinguishable from those producedfrom new steel in respondents’ reportedsales listing. Valuation of the input asscrap instead of as new steel wouldresult, therefore, in an undervaluation ofrespondents’’ FOP. Furthermore, for thefinal results in all previous reviews wevalued scrap steel inputs as new steel.See TRBs IV–VI at 65533. Accordingly,we have valued the scrap-steel input asnew steel for the final results.Comment 10Petitioner argues that the direct-laborsurrogate value should be based on theaverage for all industrial workers or,alternatively, on the average of skilledand unskilled labor rates in India.Petitioner notes that, although theDepartment had available wage rates forall industrial workers and for skilled,semi-skilled and unskilled labor inIndia, it only used the average ofunskilled and semi-skilled labor.Petitioner claims this selection isarbitrary and is in direct conflict withthe information provided byrespondents on the record. Petitionerstates that most respondents reportedthat the PRC manufacturers used skilledand unskilled labor as productionworkers, referring to the PublicQuestionnaire Responses of February 7,1995. Petitioner argues that a reasonableuse of the Department’s source would beto select the average ‘‘industrial worker’’wage or the average of the wage rangesfor unskilled and skilled workers.Guizhou Machinery et al. argue that,although some respondents may havereported that they employ some skilledworkers, the record clearly demonstratesthat the manufacture of TRBs largelyinvolves unsophisticated processes andunskilled labor and, thus, theDepartment’s preliminary results arereasonable and should not be revised.Guizhou Machinery et al. claim thatPetitioner’s suggested calculationrevisions are not supported by recordevidence and would artificially inflatethe surrogate-value labor rate.Additionally, Guizhou Machinery et al.argue that use of Petitioner’s suggestionwould value skilled labor to the samedegree as unskilled labor, not takinginto account the low-tech nature of themanufacturing process. GuizhouMachinery et al. state that Petitioner hasnot provided any evidence which showsthat respondents have equal numbers ofskilled and unskilled workers in themanufacturing process.Department’s PositionWe agree with Petitioner in part. Wereject Petitioner’s recommendation,however, that we use an average‘‘industrial worker’’ wage rate, becauseit does not take into account unskilledlabor. During the course of this review,we visited several TRB factories whileverifying various companies andconfirmed that the primary source oflabor consists of unskilled personnel inthe production process. See, e.g.,Memorandum for the File From CaseAnalyst: Verification Report for YantaiCMC Bearing, Ltd. (September 21, 1995)and Memorandum for the File FromCase Analyst: Verification Report forShanghai General Bearing Co., Ltd.(September 21, 1995). The average‘‘industrial worker’’ wage rate does notindicate if, or to what extent, unskilledlabor is included. The lowest wage ratein the average ‘‘industrial worker’’category is at the level of the highestwage rate among the average wage ratesfor unskilled labor. Therefore, use of the‘‘industrial worker’’ wage rate coulddistort significantly the wage-rate factor.We agree with Petitioner’s alternativerecommendation, however, that wecalculate a wage rate between ‘‘skilled’’and ‘‘unskilled’’ labor rates.Respondents reported that during theproduction process they employedcertain amounts of both skilled andunskilled direct labor. Because we haveaverage wage rates for both skilled andunskilled labor, we can more accuratelyvalue direct labor according to eachrespondent’s own experience.Accordingly, we have calculated, forthese final results, an average wage ratefor skilled labor and an average wagerate for unskilled labor. We appliedthese rates to each respondent, weightedaccording to the reported amounts ofskilled labor and unskilled labor.Comment 11Petitioner argues that the Departmentshould make allowance for vacation,sick leave and casual leave whencalculating the number of weeks permonth actually worked. Petitioner statesthat the Department calculated thehourly wage rate on the basis of 4.333working weeks per month, based on afull 52-week year, which assumes thatworkers never get sick, take vacations orhave other days off. Petitioner observesthat IL&T India shows that mandatorybenefits include one day of paidvacation for every 20 days worked, sickleave of seven days a year with full pay,and seven to ten days of casual leave.Petitioner claims that respondents havenot allocated any portion of vacation orsick leave to the labor hours theyreported as their factors of production.Petitioner states that the goal is todetermine the cost to an employer ofeach hour that an employee is on the joband the denominator must include onlytime on the job. Petitioner suggests thatthe number of weeks per month shouldbe recalculated to take into account atleast the minimum benefits and derivesa figure of 3.94 working weeks permonth using this approach. Petitionerfurther suggests that it would be morereasonable to use the usual vacationtime of 30 days as stated in the IL&TIndia data which the Department used,thus deriving a figure of 3.72 workingweeks per month.Guizhou Machinery et al. state thatthe Department should reject thePetitioner’s argument to adjust thecalculated labor rate for vacation, sickleave and casual leave which theDepartment used in the preliminaryresults. Guizhou Machinery et al. claimthat Petitioner provides no support forthe statement that hourly labor costsshould reflect only the expensesaccrued to an employer for the time theemployee is on the job. GuizhouMachinery et al. state that the realhourly cost to the employer reflectsmany factors, including fringe benefitssuch as paid vacation, sick leave, etc.Guizhou Machinery et al. suggest thatthe Department’s calculations shouldinclude the cost of fringe benefits suchas vacation and sick leave in thenumerator and, because the numeratorincludes costs for fringe benefits, thedenominator should likewise reflectthese fringe benefits.Department’s PositionWe disagree with Petitioner. In ourpreliminary results we valued directlabor using rates reported in IL&T India,which states that fringe benefitsnormally add between 40 percent and50 percent to base pay. SeeMemorandum to the file from CaseAnalyst: Factors of Production ValuesUsed for the Seventh Antidumping DutyAdministrative Review (Memorandum),September 1, 1995, attachment 5.Accordingly, we multiplied base pay by1.45 in order to incorporate fringebenefits. Memorandum at 3–4.Whereas petitioner suggests wecalculate a wage rate based only on timespent on the job, we find that paidholidays, vacation, sick leave, etc.,belong in the calculation because theemployer incurs the same expenses as ifthe employee were on the job. Byadjusting the base pay to include suchfringe benefits as vacation, sick leave,casual leave, etc., we calculated a direct-

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6201labor rate which more accuratelyrepresents the actual direct-labor cost tothe manufacturer.Comment 12Petitioner claims that indirect labor isnot reflected in the SG&A and overheadrates used in the preliminary results,notwithstanding the fact that, at 49575,the Preliminary Results state that‘‘indirect labor is reflected in the selling,general and administrative andoverhead rates.’’ Petitioner claims thatno portion of the amount shown as‘‘payments to and provisions foremployees’’ in SKF’s annual report isincluded in either the overhead or theSG&A calculation. Petitioner states that,consistent with the 1989–90administrative review, indirect labormust be added to the CV.Petitioner contends further that theindirect-labor amounts supplied byrespondents, reported as a percentage ofdirect-labor costs, are generallyunsupported by explanation,calculations or documentation, and thatthe Department apparently made noattempt to verify the information.Petitioner suggests that the Departmentshould use, as BIA, respondents’ ownindirect-labor rates—as was done in the1989–90 review—or, alternatively, thehighest indirect-labor rate on the recordin this review.Guizhou Machinery et al. note thatthe Department used the SKF annualreport to calculate the SG&A rate andthat, since that calculated rate wasbelow the statutory minimum, theDepartment applied the statutoryminimum of 10 percent in thecalculation of CV. Guizhou Machineryet al. contend that there is no basis forasserting that the Department must addan amount to the statutory minimum forindirect SG&A labor since this is not theDepartment’s practice.With respect to overhead, GuizhouMachinery et al. point out that the SKFreport includes, under the category‘‘expenses for manufactureadministration and selling,’’ itemsdesignated as ‘‘repairs to buildings’’ and‘‘repairs to machinery.’’ GuizhouMachinery et al. assert that theDepartment can reasonably concludethat the repair expenses indicated areinclusive of the labor associated withsuch activities. Respondents argue that,as such, the Department should not alterthe SG&A and overhead portions of itscalculations for the final results.Department’s PositionWe agree with Petitioner that we didnot include indirect labor attributable tooverhead and labor attributable to SG&Ain the CV calculations in thepreliminary results. For these finalresults, we calculated overhead andSG&A expenses using the line items inthe SKF report which pertained to theseexpenses. The results of thesecalculations from the SKF report (seealso our response to Comment 13)yielded an SG&A rate that exceeded thestatutory minimum; therefore, we didnot use the statutory minimum. We didnot include any item from the SKFreport specifically representing indirectlaborcosts in calculating the overheadand SG&A expenses. We also did notinclude the item ‘‘payments to andprovisions for employees’’ because thisitem does not allocate amounts betweendirect and indirect labor. Further,contrary to the suggestion by GuizhouMachinery et al., there is no evidence inthe SKF report indicating that the lineitems we used to calculate theseexpenses were inclusive of indirectlabor costs.However, we disagree with Petitionerthat the indirect-labor amounts suppliedby respondents are inadequate. Therecord evidence in this case, based onour initial and supplementalquestionnaires as well as informationwe obtained at verification, does notindicate any misreporting of theindirect-labor ratios supplied byrespondents. For these final results, wehave calculated the expenses forindirect labor attributable to overheadand SG&A labor using the ratios of eachas reported in the responses.Comment 13Petitioner states that the Departmentdid not include interest expensesincurred by SKF in the CV calculation.Petitioner contends that interestexpenses and other financing chargesare ordinarily incurred in marketeconomies where companies rely ondebt as well as equity as a source ofcapital. Petitioner states it should beincluded in the CV calculation asinstructed by the Department’sAntidumping Manual, Ch. 8 at 55 (7/93ed.). Petitioner notes that Jilin andHenan identified ‘‘loan interest’’ in theiritemized list of expenses and that, in the1989–90 review, the Departmentincluded interest expense in SG&A forits CV calculations.Guizhou Machinery et al. state thatPetitioner’s argument should be rejectedbecause the Department used the 10-percent statutory minimum SG&A.Guizhou Machinery et al. argue thatPetitioner does not cite to any authorityfor adjusting the statutory 10-percentminimumSG&A. In fact, GuizhouMachinery et al. argue, the statutoryminimum SG&A includes an amount forfinancing charges, and any additionalamount for this charge would result indouble-counting. Respondents contendthat Petitioner only cites legal authorityfor the proposition that SG&A shouldinclude an amount for interest expenses,which is already included within thestatutory minimum for SG&A, such thatPetitioner’s claim as to this point ismoot. Moreover, Guizhou Machinery etal. assert that Petitioner does not specifywhich charges from SKF’s annual reportshould be included in the calculations.Shanghai responds that inventoryfinancing costs are subsumed within thestatutory minimum for SG&A as interestcharges and to add a separate charge toCV would result in unacceptabledouble-counting of these charges.Chin Jun states that, whereasPetitioner argues that finance chargesshould be added, there is no recordevidence regarding SKF’s interestexpenses which pertain exclusively tosales. Chin Jun argues that Petitionerfails to point out what surrogate financecosts should be applied and provides noevidence that SKF India, part of a hugemultinational organization, would havefinancing charges representative of anormal Indian producer. Due to theforegoing, Chin Jun argues, the overheadrate should be reduced, not increased.Department’s PositionWe agree with Petitioner that,consistent with our practice, financingcharges should be treated as ordinarybusiness expenses. Therefore, we haveincluded, in the general expenses forthese final results, interest expenses aslisted in SKF’s report.As noted in our response to Comment12, we calculated the SG&A expenses byadding each line item from the SKFreport that pertained to such expenses.The line items we used in thepreliminary results did not includeinterest expense. The recalculation ofSG&A to include interest and the itemsdiscussed in Comment 12 exceeded thestatutory minimum; therefore, theargument of Guizhou Machinery et al.and Shanghai regarding doublecountingis moot.Concerning the comment by GuizhouMachinery et al. that Petitioner has notsufficiently demonstrated therepresentativeness of SKF’s interestexpense and Chin Jun’s comment thatno document demonstrates that SKF’sinterest expenses pertain exclusively tosales, we note that this sourceconstitutes the best availableinformation and that GuizhouMachinery et al. have provided noalternative source for the valuation ofthis expense. See TRBs IV–VI at 65534.

6202 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesComment 14Petitioner argues that direct andindirect selling expenses incurred in theUnited States must be deducted fromexporter’s-sales-price (ESP) transactions.Petitioner argues that section 772(e)(2)of the Act requires that expensesincurred ‘‘by or on behalf of’’ an‘‘exporter’’ in selling the subjectmerchandise in the United States mustbe deducted from ESP. Petitioner statesthat such expenses may not instead beadded to CV or included in aconsolidated SG&A expense, which isitself reported as an item of the FOP(citing Zenith Electronics Corp. v.United States, 10 CIT 268, 276, 633 F.Supp. 1382, 1389 (1986)). Instead,Petitioner argues, expenses incurredwith respect to the selling activities ofaffiliated importers must be separatelyidentified and deducted from the ESP.Petitioner adds that the Departmentlacks the discretion to create anexception for selling expenses incurredby U.S. subsidiaries of companies inNME countries (citing ZenithElectronics Corp. v. United States, 988F.2d 1573 (Fed. Cir. 1993), and Ad HocComm. v. United States, 13 F.3d 398,401 (Fed. Cir. 1994)), arguing that amajor reason for the creation of the‘‘ESP offset’’ at 19 CFR 353.56(b)(2) wasthe recognition that ESP, unlikepurchase price, required the deductionof all direct and indirect sellingexpenses incurred on U.S. sales (citingSmith-Corona Group, SCM Corp. v.United States, 713 F2d 1568, 1578 (Fed.Cir. 1983)). Petitioner argues thatsection 772 has never been amended todistinguish U.S. prices with respect toNME-produced imports; rather, theadjustments required to calculatedumping margins with respect to NMEcases have been codified in section773(c). Petitioner claims that Congressnever intended that a different formulafor ESP would be applied to relatedpartytransactions in NME cases.Petitioner recognizes that theDepartment has declined to make ESPadjustments on the grounds that ‘‘thereis a lack of information on the record tomake adjustment to both sides of theequation * * * ’’ (citing Ceiling Fans at55276). However, Petitioner claims thatthere are two major distinctions whichrender the precedent set in Ceiling Fansinapposite to this review.First, Petitioner argues that the U.S.importers of TRBs function at a differentlevel of trade from that derived in theDepartment’s CV calculations, i.e., thatthe U.S. importers are resellers thatfunction as distributor, whereas the CVdoes not include any SG&A expenseswhich represent expenses associatedwith reselling. Petitioner adds that, inthe preliminary results, the Departmentrelied on the statutory minimum SG&Aexpenses, in which case the minimumactivities of the manufacturer arerepresented in the CV and, as such,there is no basis to conclude that CVrequires any deduction similar to thestatutory deduction required from ESP.Petitioner further distinguishes thecurrent review from Ceiling Fans byarguing that the SKF report providessufficient evidence to calculate the ESPoffsetadjustment to FMV, if theDepartment chooses to make such anadjustment.With respect to deductions of sellingexpenses from FMV, Petitioner contendsthat, by using the SG&A expenses ofSKF in the final results, the Departmentwould exclude those expensesanalogous to resale activities. Therefore,Petitioner contends, there is no basis toconclude that CV requires anydeduction similar to the statutorydeduction from ESP. Petitioner alsoasserts that the home market or thirdcountryselling expenses of the foreignproducer/U.S. importer are not relevantto the derivation of CV and that theseexpenses cannot therefore be deductedfrom the surrogate or statutoryminimum SG&A expenses used in CV.Finally, Petitioner asserts, if theDepartment does choose to make an ESPoffset, there is no basis on which toassume that an ESP offset would beequal to U.S. selling expenses; rather,the Department should subtract onlythat portion of SG&A attributable toindirect selling expenses.Shanghai states that the Departmentcan make no adjustments to ESPbecause there is no information todistinguish between foreign direct andindirect selling expenses which wouldenable the Department to makecorresponding adjustments to FMV andthat the SKF report does not present anybreakdown of selling expenses such aswould be necessary to make therequired adjustments.Shanghai claims that the Departmenthas recognized that section 772(e) of thestatute does not require, nor does itanticipate, the unfair adjustment of U.S.price (USP) in ESP transactions withouta corresponding adjustment to FMV(citing Ceiling Fans). Rather, Shanghaiargues, the statute requires theDepartment to make fair comparisonsbetween USP and FMV (citing The BuddCompany v. United States, 746 F. Supp.1093, 1098 (CIT 1990)). Shanghai assertsthat such a fair comparison cannot bemade if available information does notpermit the corresponding FMVadjustment.Guizhou Machinery et al. state that anadjustment to ESP without thecompanion ESP offset to FMV wouldlead to distorted results. GuizhouMachinery et al. argue that, whiledeductions for U.S. selling expenses andthe ESP offset can be made in marketeconomycases without problems, thosedeductions cannot be made in NMEcases because there is no equivalentmarket-based value for indirect sellingexpenses on the FMV side of theequation.Guizhou Machinery et al. cite CeilingFans as the Department’s bestexplanation of the calculation problemand of why, traditionally, theDepartment has declined to makeadjustments for U.S. selling expenses toeither USP or FMV in an NME case.Guizhou Machinery et al. state that,while Petitioner acknowledges theDepartment’s decision in Ceiling Fans,Petitioner fails to recognize that there isa direct precedent for the Department’streatment of selling expenses in thiscase (citing TRBs at 67591).Guizhou Machinery et al. take issuewith Petitioner’s argument that this casediffers from Ceiling Fans because in thiscase the U.S. importers are ‘‘resellers’’and operate at a different level of tradefrom that the Department derived forCV. Guizhou Machinery et al. state thatthe U.S. importers in Ceiling Fans, as invirtually every ESP case, were resellersand that this review cannot bedistinguished from Ceiling Fans on thatbasis. In all such cases, GuizhouMachinery et al. argue, the Departmenthas determined that respondents areentitled to an ESP offset; if none can bemade, the Department does not deductselling expenses from USP. GuizhouMachinery et al. note further that, forthe preliminary results, the Departmentused the statutory minimum as asurrogate value. Guizhou Machinery etal. argue that the statutory minimumincludes all selling expenses, includingindirect selling expenses normallydeducted from FMV with an ESP offset,but which cannot be separatelyidentified. Guizhou Machinery et al.claim that Petitioner’s argument doesnot deal with this element of thecalculation.With respect to Petitioner’s argumentthat, if necessary, there is recordevidence that will allow for an ESPoffset to FMV, Guizhou Machinery et al.contend that Petitioner’s suggestion thatthe Department use SKF India’s indirectselling expense as a surrogate ESP offsetdemonstrates the very reason why theDepartment avoids ESP offsets in NMEcases. Guizhou Machinery et al. assertthat the information in the SKF reportdoes not provide a reasonable method

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6203for determining a surrogate ESP-offsetamount. Guizhou Machinery et al.refute Petitioner’s argument as beingincompatible with the Department’s useof the 10-percent statutory minimumSG&A, which includes direct andindirect selling expenses. To adjust the10-percent minimum SG&A expense byusing an unsubstantiated surrogatevalue for an indirect ESP-offset amountwould, Guizhou Machinery et al. claim,result in an apples-to-orangescomparison.Department’s PositionWe agree with Petitioner. We have reevaluatedour practice concerning thededuction of expenses incurred by U.S.affiliates of respondent companies inNME cases and have concluded thatsuch deductions are explicitly requiredby the statute, which states that ESPshall be reduced by the amount of‘‘expenses generally incurred by or forthe account of the exporter in theUnited States in selling identical orsubstantially identical merchandise.’’See Final Determination of Sales at LessThan Fair Value: Bicycles from the PRC,61 FR 19026, 19031 (April 30, 1996)(Bicycles), 2 and TRBs IV-VI at 65535.The statute provides no exceptions forcases involving NME countries.Therefore, we have subtracted directand indirect selling expenses incurredby such U.S. affiliates in deriving theUSP.We have made an ESP offset to FMVwhich, in conformity with section353.56 of our regulations, is in anamount not to exceed indirect sellingexpenses incurred in the United States.We based this offset on the ‘‘otherexpenses’’ item from the SKF report andsubtracted from this item the amount fordebentures as indicated in a footnote to‘‘other expenses’’ in the SKF report. TheSKF report notes that the generalcategory of expenses containing the‘‘other expenses’’ item includes ‘‘sellingexpenses.’’ However, none of the nameditems (e.g., ‘‘power and fuel’’) pertain toselling expenses. We have concludedthat, as suggested by Petitioner, the‘‘other expenses’’ item, minusdebentures, represents these ‘‘sellingexpenses.’’Comment 15Petitioner claims that the Departmentincorrectly calculated freight rates bymultiplying the surrogate freight rate by2 Although the statutory citation in this case isto the law as it existed on December 31, 1994,whereas the relevant citation in Bicycles is to thelaw as it exists subsequent to that date, bothversions of the provision explicitly require thededuction of expenses generally incurred by or forthe account of the exporter in the United States.the net weight of each bearing ratherthan by the gross weight of the bearingas packaged for shipment. Petitionerstates that a reasonable allowance forthe weight of packaging materialsshould be made in calculating bothocean freight and inland freightexpenses, arguing that packaging doesnot travel free of charge. Petitionersuggests that the Department could use,as a PI source on the record for thisreview, a packing list of CMC Guizhou,submitted by DSL Distribution Services,Ltd., on September 27, 1995. Petitionerstates that the packing list shows bothgross and net weights of pallets ofseveral common TRB models and thatthe average weight difference is abouteight percent. Therefore, Petitionerasserts, the Department should multiplythe net weights by 1.08 to reflect theweight of packaging.Guizhou Machinery et al. state thatthe Department’s freight calculationsbased on net weight are entirelyconsistent with the methodology it usedin the prior administrative reviews ofthis case and Petitioner has not provedany legal citation or support for itsclaim that the Department should usegross weight. Guizhou Machinery et al.argue further that there is no evidencein the sources the Department used tovalue ocean freight and inland freightwhich would indicate that the rates arebased on gross weights.Guizhou Machinery et al. also statethat the Department did not instruct therespondents to report freight expenseson a gross-weight basis. GuizhouMachinery et al. argue that theDepartment should not use, asPetitioner suggests, a public packing listof CMC Guizhou submitted onSeptember 27, 1995, because, first, theyare not aware of such a document beingsubmitted on September 27, 1995, andsecond, even if it was submitted, itcannot be considered because it wouldhave been untimely as this date is afterthe publication of the preliminaryresults.Department’s PositionWe agree with Petitioner that a cost isincurred with respect to shipment ofpacking materials. Upon reviewing thepacking list of CMC Guizhou, we havedetermined that the packing documentDSL Distribution Services submitted inthe 1994–95 review is an independentand reliable source for suchinformation. We have therefore addedthis public document to the record ofthis review. Accordingly, for the finalresults, we have calculated ocean-freightexpenses by multiplying the net weightby 1.08 to reflect the gross weight.Comment 16Petitioner states that the Departmentcalculated ocean-freight rates based onfreight rates per ton provided by theFederal Maritime Commission forshipments from Shanghai to Cincinnativia the U.S. West Coast and that, tocalculate the distance, the Departmentadded the distance between Shanghaiand San Francisco in nautical mileswith the overland distance between SanFrancisco and Cincinnati. Petitionerargues that one of the two distancesshould be converted into the other inorder to obtain a consistent basis for thedistance calculation. Petitioner alsonotes that, in the sample calculations inthe Factors of Production Memorandum,the Department states that it obtained afreight rate per kilogram per kilometer,but the sample calculation does notdemonstrate the conversion from milesto kilometers. Petitioner states that theDepartment made the same errors in thecalculation of the insurance rate basedon distance and should correct theseerrors.Guizhou Machinery et al. respondthat, while Petitioner’s argumentappears to be correct, the Departmentshould correct another clerical errorregarding the conversion of miles tokilometers in its ocean-freightcalculation. Guizhou Machinery et al.claim that, although the Department’sFactors of Production Memorandumstates that it obtained a ‘‘per kilogramper kilometer’’ ocean-freight rate, thecalculation reveals that the Departmentobtained a ‘‘kilogram per mile’’ rate butneglected to convert the distance statedin kilometers into miles.Department’s Position:We agree that we made the clericalerrors noted by Petitioner and byGuizhou Machinery et al. However, theissue is moot because we have changedthe methodology for calculating oceanfreight for the final results. We havecalculated ocean-freight rates based onquotes from Maersk Inc., a U.S. shippingcompany. We prefer information fromMaersk because it was able to provideport-specific information regardingshipping rates from the PRC to theUnited States. For these final results, wecalculated average shipping rates forshipments to the east coast of the UnitedStates and west coast of the UnitedStates. We note that the differencesamong the east-coast ports and westcoastports are minimal. Maerskprovided the basic rates for both 20-footand 40-foot containers, destinationsurcharges, FAF fuel surcharge, andregion-specific surcharges. Maerskreported that the maximum payloads

6204 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesallowed for the 20-foot and the 40-footcontainers were 48,000 pounds and60,000 pounds, respectively. Weconverted the pounds to kilograms anddivided the total cost of shipping thefully loaded container by the maximumpayload weight in kilograms to derive aper-kilogram freight rate. We multipliedthat rate by the net bearing weight inorder to value ocean freight expenses.Comment 17Petitioner states that the Departmenterroneously used the Indian wholesalepriceindex (WPI) to adjust for inflationof ocean-freight cost. As the oceanfreightcosts were based on U.S. rates inU.S. dollars, Petitioner contends thatany adjustment for inflation should bebased on dollar inflation. Petitionersuggests that the Department adjustocean-freight costs using the U.S.producer-price index for finished goods,the U.S. equivalent of a WPI, from thesame source used to derive the IndianWPI.Department’s PositionWe agree with Petitioner that weshould adjust ocean-freight costs usingthe U.S. producer-price index becauseocean-freight costs are based on U.S.rates in U.S. dollars. For the finalresults, we deflated the July 1996 oceanfreight-ratequotes from Maersk Inc.using the U.S. producer-price index toreflect the POR costs.Comment 18Petitioner contends that theDepartment has understated the marineinsuranceexpense by applying aninsurance rate per ton applicable tosulfur dyes from India. Petitioner arguesthat, absent any evidence that one tonof sulfur dyes would have a value evenclose to the value of one ton of bearings,there is no rational basis for theDepartment’s approach, i.e., applyinginsurance on the basis of weight ratherthan of value. Petitioner asserts that, ifa container of bearings were lost at sea,there is no basis to suppose thatpayment for the loss of one ton of sulfurdyes would have any relationship to thevalue of the bearings.Petitioner recommends that theDepartment calculate a marineinsurancefactor based on the ratio ofthe insurance charge per ton of sulfurdye divided by the value of sulfur dyeper ton (based on U.S. Customs value)and apply this factor to the price ofTRBs sold in the United States.Petitioner contends further that tocorrect the ocean-freight distance uponwhich it based the marine-insurancerate, the Department should recalculatemarine insurance. However, Petitionernotes that the source the Departmentused deleted the destination in thepublic version and, therefore, the onlyinformation on the record is that theinsurance covered shipments fromsomewhere in China to somewhere inthe United States, which provides nobasis for differentiating amongshipments on the basis of distance.Guizhou Machinery et al. respondthat it is not reasonable to assume thatthe difference in Indian marineinsurancerates applicable to sulfur dyesand TRBs can be measured accuratelysimply by comparing the difference inproduct values. Guizhou Machinery etal. assert further that Petitioner’sargument is based on customs valuesobtained from the Sulfur Dyes petition,information which has not beenpreviously submitted on the record forthe current review (citing 19 CFR353.31). Guizhou Machinery et al. statethat the Department’s approach of usingthe marine-insurance rates from thesulfur-dyes investigation is consistentwith its calculations in other NMEcases, citing Coumarin, Sebacic Acidand Saccharin. Finally, GuizhouMachinery et al. argue that theDepartment did not understate but,rather, overstated the marine-insuranceexpenses due to ministerial errors in theDepartment’s calculation. GuizhouMachinery et al. claim that the errorsmade by the Department include thefailure to convert nautical miles intostatute miles and then to kilometers incalculating per-unit marine-insurancerate and the failure to convert the perunitamounts from rupees into U.S.dollars before deducting the marineinsuranceexpense from USP.Respondents urge the Department toreject Petitioner’s request to make anupward adjustment to the marineinsurancecalculations and to correct theconversion errors.Department’s PositionWe disagree with Petitioner withrespect to our use of the sulfur dyesdata. We have relied on the publicinformation on marine insurance forsulfur dyes that we used for thepreliminary results, and we have usedthe same rate repeatedly for other PRCanalyses. See Final Results ofAdministrative Review: Certain HelicalSpring Lock Washers from the PRC, 61FR 41994 (August 13, 1996) (LockWashers), and TRBs IV–VI at 65537.We agree with Petitioner that there isno basis for differentiating amongshipments based on distance. Thesource we used for valuing marineinsurance provides only a cost per ton.For the final results, we have appliedmarine insurance based on net weight,without making any allowance fordistance shipped. Therefore, we are notcorrecting the clerical error alleged byGuizhou Machinery et al. with respectto the failure to convert nautical milesinto statute miles and then intokilometers. We do agree, however, thatwe failed to convert marine insurancefrom rupees into dollars beforededucting the expense from USP. Forthe final results, we converted themarine insurance into dollars using theexchange rate in effect on the date ofsale.Comment 19Petitioner states that Shanghai’sbearing weights and scrap weights wereunverifiable and that the Departmentshould therefore resort to partial BIA byadjusting the reported amounts to reflectthe highest actual materials or lowestactual scrap costs.Shanghai argues that the Departmentweighed actual bearings and scrapsamples at verification and determinedthat any discrepancies found atverification were insignificant. Shanghaistates that the Department haspreviously found no cause to resort toBIA on the basis of insignificantdiscrepancies (citing Silicon Carbide at19749).Department’s PositionWe disagree with Petitioner. Althoughat verification we did find discrepanciesin the reported weights, we determinedthese discrepancies to be insignificant.Therefore, they did not undermine thevalidity of Shanghai’s responses. Inaddition, we found some discrepanciesto be above reported weights and othersto be below; we found no pattern ofunder-reporting.Comment 20Petitioner argues that the Departmentreported that it was unable to verify thenumber of Shanghai’s employeesassigned to the production of TRBs,citing the verification report for thiscompany. Petitioner claims that, as aresult, the Department could not verifyreported indirect labor nor was it ableto determine the extent to which laborcosts were understated by the omissionof trained-employee hours from thedirect-labor costs reported. Petitionerfurther argues that, given that overheadcosts, SG&A and profit are all derivedon the basis of materials and labor costs,the inability to verify labor hours is fatalto Shanghai’s entire questionnaireresponse.Petitioner argues that, if theDepartment uses the partial informationsubmitted by Shanghai, labor hours

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6205should be adjusted to account fortrained employees.Shanghai claims that Petitioner hasmisinterpreted the verification report.Rather than stating that the number ofemployees assigned to TRB productionwas unverifiable, Shanghai contendsthat the report noted that it was notverifiable from personnel departmentworksheets, which do not contain suchinformation. Shanghai says that it didreport the number of employeesassigned to TRB production and thatsuch information was verifiable througha variety of means. Shanghai furtherclaims that its reported labor hoursaccounted for trained workers. Shanghaicounters Petitioner’s argument for use ofBIA, stating that it did not refuse toprovide information and it was able toproduce, in a timely manner, anyinformation requested by theDepartment.Department’s PositionWe agree with Shanghai’s contentionthat Petitioner misinterpreted ourverification report. In the report, wenoted that there was nothing to whichwe could trace the numbers from aworksheet prepared for thisadministrative review in order to verifythe number of employees assigned tothe production of subject merchandise.However, based on company records weexamined at verification, we determinedthat Shanghai reported the number ofemployees assigned to the production ofTRBs accurately.We were able to verify the direct-laborhours from Shanghai’s internal recordkeepingfrom work tickets. We found atverification that by reporting directlabor from the work tickets Shanghaidid not account for trained workers. Tocalculate direct labor for the preliminaryresults, we adjusted Shanghai’s reportedlabor hours in order to account fortrained workers by adding the directlaborhours for trained workers to thedirect-labor hours for skilled workers.We have applied this same methodologyfor these final results. Because we wereable to verify Shanghai’s direct laborand there was no evidence indicatingthat indirect labor was misreported, wehave used the indirect labor as reported.Comment 21Petitioner asserts that the Departmentshould apply BIA ocean-freight andmarine-insurance rates to all of Henan’sU.S. sales through Central Equimpexbecause the record includes an invoicewhich shows that Henan made a sale ona CIF basis, although it stated in thesubmission that the terms of sale werenot CIF.Henan claims that Petitioner’sassertion is based on amisunderstanding of the transactionwhich was the subject of the invoice.Further, Henan states that the invoicedoes not relate to Henan’s ESP salesthrough Central Equimpex but relates toone of Henan’s direct purchase-pricesales. Thus, Henan asserts, theDepartment can trace the sales quantityand price directly to Henan’s purchasepricesales listing.Department’s PositionWe agree with respondent in part. Thefact that the sale was a purchase-pricetransaction is not relevant to thededuction of ocean-freight expensesfrom USP but, rather, whether oceanfreightexpenses are included in theprice. The record evidence is that oceanfreightexpenses were included in thesale price. Moreover, because the sale inquestion is a purchase-price transactionand, therefore, is not related to salesmade through Central Equimpex, thereis no justification for applying BIA to allsales made through Central Equimpex.Furthermore, there is no evidence tosupport Petitioner’s assertion thatHenan’s ESP sales listing does notreflect its transactions accurately. Wehave examined documentation relatedto the sale in question and havedetermined that ocean freight andmarine insurance were provided byPRC-based companies. Accordingly, wehave applied the surrogate ocean-freightand insurance rates for this transaction.Comment 22Shanghai argues that the Departmentmust recalculate the estimated oceanfreightcharges on its ESP transactions.Shanghai contends that theDepartment’s estimated ocean-freightcharges improperly included charges forU.S. inland freight and brokerage &handling which the Departmentdeducted elsewhere from ESP.Specifically, Shanghai claims thatcharges for ‘‘destination deliverycharge’’ included in the ocean freightrates the Department used werepresumably for the costs of off-loadingand transporting the merchandise fromthe port of entry to the warehouse in theUnited States. Shanghai states that itreported such costs as U.S. inlandfreight and/or brokerage & handlingcharges and the Department deductedthem from ESP accordingly.Petitioner responds that Shanghaimisunderstood the Department’s oceanfreightmethodology. Petitionercontends that, notwithstanding otherproblems, the Department did notinclude expenses twice in itscalculation of ocean freight. Petitionerargues that an examination of thecomponent parts of the ocean-freightcharge shows that the destinationdeliverycharge clearly covered theoverland portion of the shipment, i.e.,from Long Beach to Cincinnati, becauseall other portions of the charge arerelated to the ocean part of the voyage.Department’s PositionBecause we have changed ourmethodology to calculate ocean freight(see our response to Comment 16), thisissue is moot.Comment 23Shanghai argues that the Departmenterroneously added a surrogate-basedinland-freight charge to its purchases ofsteel imported from market-economycountries, improperly inflating theimported-steel values by doublecountingfreight costs. Thus, Shanghaiargues, the Department should deletethe surrogate-based freight charge fromthe costs of the imported steel.Department’s PositionWe agree with Shanghai that wedouble-counted freight costs when weadded surrogate-based freight charges torespondent’s imported-steel values.Because Shanghai incurred no inlandfreightcharges, these should not havebeen added. Furthermore, because wedetermined that it is more accurate tovalue all of Shanghai’s hot-rolled-steelbar using the imported steel value (seeour response to Comment 7), we have,for these final results, not included thesurrogate-based freight cost in valuingShanghai’s hot-rolled-steel-bar materialinputs.Comment 24Shanghai states that the Departmentshould not base the overhead rate oninformation contained in the SKF reportbecause it is excessive andunrepresentative of Chinese producers.Shanghai and Chin Jun argue that, if theDepartment does use the SKF report tovalue overhead for the final results, itmust recalculate the rate in order tocorrect several errors. In addition,Shanghai claims that the overhead ratethe Department used in the preliminaryresults is based on Petitioner’s analysisof the SKF report, an analysis whichShanghai claims contains several errors.Shanghai and Chin Jun argue the ratethe Department used in the preliminaryresults improperly allocates the fullamount of the depreciation expense tooverhead and, as a result, theDepartment did not consider thatcertain depreciation expenses should beallocated instead to SG&A. Shanghainotes that, for the final results of the

6206 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices1989–90 administrative review, theDepartment allocated a portion ofdepreciation to SG&A. Shanghai andChin Jun argue that depreciation onoffice buildings, furniture, fixtures andoffice equipment, and vehicles shouldbe allocated to SG&A. Shanghaicalculates that, according to the SKFreport, 7.3 percent of total depreciationpertains to SG&A assets. Shanghaiargues that total current depreciationshould be decreased by 7.3 percent forSG&A, thereby reducing the amount ofdepreciation allocable to overhead.Second, Shanghai notes that the SKFreport does not identify to which itemsrent and lease expenses were applied.Shanghai points out that the line itemfor lease rental payments was notincluded under the same category as‘‘expenses for manufacture,administration and selling.’’ Shanghainotes references to residential rentalproperties in the SKF report, adding thatoffice space and housing for executivesshould be charged to SG&A and thatthese lease and rental payments,therefore, should be allocated to SG&Aand not to overhead. Chin Jun adds thata portion of insurance should be appliedto SG&A, as there is no evidence thatthese expenses are manufacturingexpenses.Third, Shanghai and Chin Jun arguethat, consistent with the final results ofthe 1989–90 review, the Departmentshould apply the ‘‘rates and taxes’’ lineitem to SG&A. Shanghai states that it isnot reasonable to allocate the totalamount for ‘‘rates and taxes’’ tooverhead, as they are not characterizedas such in the SKF report.Chin Jun argues further that theoverhead rate based on the SKF reportis inappropriate because it is typical ofneither China nor India. Chin Junmaintains that the Department haspreviously held that companies in lessdevelopedcountries, which normallyuse less-sophisticated technology, havelower overhead rates than companieslocated in developed countries (citingthe investigation for this case, 52 FR19748, 19749 (May 27, 1987)). Chin Junand Shanghai both suggest that theDepartment use record evidencecontained in a November 18, 1994,submission by Chin Jun, which containsdata compiled by the Reserve Bank ofIndia (RBI) as a representative surrogateoverheadfigure.Finally, Shanghai argues that, if theDepartment continues to use the SKFreport to value overhead, theDepartment should adjust those rates sothat they are more representative ofoverhead expenses of Chineseproducers. Shanghai proposes that theDepartment adjust the overhead rate toinclude only those items included inShanghai’s overhead cost.Petitioner counters that depreciationis one of the items the statute intendedto be included among factors ofproduction, before non-factor-ofproductionitems, such as SG&A andprofit, were added (citing sections773(e)(1) and (c)(3) of the Act). The onlyalternative, Petitioner claims, would beto add depreciation as a separatepercentage, which would not alter thecalculation. Furthermore, Petitionerargues, even if the Department decidedto allocate a portion of depreciation andother expenses to SG&A, any suchallocation would be arbitrary.Petitioner dismisses Shanghai’s andChin Jun’s proposed alternativesource—the RBI data—as covering anincredibly broad range of industries, ofwhich the bearings industry wouldrepresent only a small part. Petitionerasserts that the SKF report providesinformation for a bearing producer inIndia and to reject it in favor of the RBIdata would be unreasonable. Likewise,Petitioner rebuts Chin Jun’s argumentthat SKF represents a modern companysuch as is found in developed countries,pointing out that the Department didnot use data relevant to SKF Swedennor consolidated data from the SKFGroup but data from SKF India, whichreflects the operating conditions of abearings producer in India.Finally, Petitioner rejects Shanghai’ssuggestion that the SKF report beadjusted to include only those itemsincluded in Shanghai’s overhead. Giventhe non-market nature of PRC-basedcompanies, Petitioner asserts that thosecompanies may not incur, itemize orsegregate all of the expenses recognizedin a market-economy producer’sfinancial statement. Nevertheless,Petitioner insists, expenses of the typegenerally incurred in the production orsale of the merchandise, even if notitemized by the NME company, wouldhave to be added into the CV calculationsomewhere.Department’s ResponseWe disagree with Shanghai and ChinJun that we should use the RBIinformation instead of the SKF reportfor the calculation of the SG&A and theoverhead rates. The information in thiscase published by RBI represents morethan 600 companies in India fromvarious industries. Because the extent towhich companies incur overhead andSG&A expenses can differ so greatlybetween industries, we have based ouroverhead and SG&A surrogate values onthe industry-specific experience closestto that of the merchandise under review,when appropriate industry-specific dataare available. See Final Determination ofSales at Less Than Fair Value; PolyvinylAlcohol From the People’s Republic ofChina (Polyvinyl Alcohol), 61 FR 14057,14059 (March 29, 1996). We haveoverhead and SG&A information fromSKF India, a producer of subjectmerchandise. Accordingly, for the finalresults, we have continued to calculateoverhead and SG&A based on theinformation in the SKF report.We agree with Chin Jun andShanghai, however, that certainadjustments to the calculation ofoverhead and SG&A are appropriate. Forinstance, we agree that it is improper toinclude all of SKF’s depreciation inoverhead because depreciationassociated with office buildings andoffice equipment should be apportionedto SG&A expenses. Therefore, for thefinal results we have allocateddepreciation costs to overhead andSG&A according to the function andvalue of the assets by including inoverhead only the depreciationexpenses allocated to manufacturing.We obtained the information pertainingto the function and value of SKF’s assetsfrom the SKF report.We also agree with Chin Jun andShanghai that we should allocate ‘‘ratesand taxes’’ to SG&A and not tooverhead. This allocation methodologyis consistent with our practice in the1989–90 administrative review of thisproceeding and with other recent PRCcases (see, e.g., TRBs IV–VI at 65540).With respect to lease rental expenses,we agree with Shanghai that the SKFreport does not identify the nature ofthose expenses. However, we do notagree with Shanghai’s contention thatall of the lease rental expenses are forSG&A, as a portion of those expensescould be attributed to overhead as well.Accordingly, we allocated lease rentalexpenses equally to SG&A and overhead(i.e., 50 percent for SG&A and 50percent for overhead).Comment 25Shanghai, assuming that theDepartment disclosed all observationswith calculated margins, requestsclarification as to how the reportedmargin for each observation correlateswith the total margin the Departmentcalculated. Shanghai asserts that,because the value for total dumpingduties due exceeds the sum of thetransaction-specific dumping margins,some error in the Department’scalculations of the total dumping dutiesdue has occurred.Department’s PositionShanghai is incorrect in assuming thatall observations with calculated margins

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6207were in the printouts we released afterthe preliminary results. In this case,where complete printouts are likely tobe voluminous, we generally releaseprintouts with a portion of respondent’stransactions. Because a printoutshowing the margin calculations for allof Shanghai’s sales would have beenvoluminous, we provided Shanghaiwith a printout showing the calculationsfor 50 percent of its sales during thePOR. Upon review, other errors orcorrections noted elsewherenotwithstanding, we have determinedthat our calculation of Shanghai’s totalmargin is correct and reflects ouranalysis of Shanghai’s data.Comment 26Jilin states that the Departmentcalculated a margin for one of Jilin’smodels based on an erroneous netweight which affected the calculation ofocean freight and marine insurance. Theerror appears to be due to a misplaceddecimal point, Jilin explains, whichincorrectly resulted in a reported netweight which is 10 times the actualweight. Jilin states that the error isobvious when compared to otherinformation on the record. Jilin notesthat it included the correct net weightin its FOP data as reported by themanufacturer.Jilin argues, first, that the size of thededuction to its USP for ocean-freightand marine-insurance expenses for thatmodel is inconsistent with that of otherrespondents who sold the same model.Next, Jilin claims that a comparison ofthe net weight reported for that modelby other respondents shows that the netweightfigure in Jilin’s USP calculationis aberrational. Jilin refers to the samemodel number and the associated netweights reported by other respondentsand points out that those net weights areconsistent with each other, as well aswith that reported in Jilin’s FOP data.Jilin requests that the Departmentcorrect its calculations by using the netweight as reported in its sales listing butadjust the location of the decimal pointto reflect the correct net weight.Petitioner points out that Departmentused the exact weights reported andaffirmed by Jilin in its responses.Petitioner further notes that adjustingthe decimal point backward one spacedoes not result in the net weight inJilin’s reported U.S. sales list matchingthat which was in Jilin’s reported FOPdata, which Jilin argues is the correctnet weight. Petitioner contends thatJilin’s claim of an alleged clerical erroris an attempt to submit new informationafter the preliminary results and toamend its response.Department’s PositionIn light of a decision by the CAFC, wehave reevaluated our policy forcorrecting clerical errors of respondents.See NTN Bearing Corp. v. United States,Slip Op. 94–1186 (Fed. Cir. 1995)(NTN). As a result of the NTN decision,we now accept corrections of suchclerical errors under the followingconditions: (1) The error in questionmust be demonstrated to be a clericalerror, not a methodological error, anerror in judgement, or a substantiveerror; (2) we must be satisfied that thecorrective documentation provided insupport of the clerical error allegation isreliable; (3) the respondent must haveavailed itself of the earliest reasonableopportunity to correct the error; (4) theclerical-error allegation, and anycorrective documentation, must besubmitted to the Department no laterthan the due date for the respondent’sadministrative case brief; (5) the clericalerror must not entail a substantialrevision of the response; and (6) therespondent’s corrective documentationmust not contradict informationpreviously determined to be accurate atverification. See Certain Fresh CutFlowers From Colombia; Final Results ofAntidumping Duty AdministrativeReviews, 61 FR 42833, 42834 (August19, 1996) (Colombian Flowers).The error in question, the incorrectplacement of a decimal point, is clearlyclerical in nature. We have analyzedthis error using the criteria set forth asa result of the NTN decision and havedetermined that it meets the conditionsunder which we will accept corrections.We reviewed the responses submittedby other PRC-based bearingmanufacturers, as well as informationfrom Jilin’s FOP data. The net weight forthe same model number reported byother suppliers is about one tenth of theamount in Jilin’s U.S. sales list. We notefurther that the FOP data were providedby the manufacturer, Jilin’s supplier, notby Jilin itself, and that the FOP datawere consistent with informationprovided by other manufacturers of thesame model. Thus, we determined thatthe FOP data provided by Jilin’ssupplier were reliable. Furthermore,Jilin availed itself of the earliestopportunity to correct the error andsubmitted the request for this correctionno later than the time of the case brief.Finally, correction of this clerical errordoes not entail a substantive revision ofthe response. Because we did not verifyJilin’s response in this review, the lastcriterion does not apply.After adjusting the location of thedecimal point, the net weight in Jilin’ssales list is higher than that in its FOPdata, and we have calculatedadjustments to USP based on the higherfigure from the sales list.Comment 27Respondents Liaoning, Wafangdian,Guizhou Machinery, and Henan allegeerrors regarding model comparisons inthe Department’s margin calculations,arguing that in some instances theDepartment compared the price of acomponent to the CV of an assembledset, while in other instances it appliedBIA to U.S. sales for which both salesand FOP data were available.Liaoning states that the Departmentcompared sales of a cone (inner ring) tothe CV of a cone assembly (inner ring,rollers and cage). Liaoning explains thatthe Department reduced the total CV fora complete set—consisting of a coneassembly and a cup (outer ring)—byexcluding the cost for the cup, thencompared the resulting cost of the coneassembly to the sale of a cone. Liaoningnotes that the ‘‘IR’’ attached to themodel number in its U.S. sales listingindicates ‘‘inner ring’’ and argues thatthe Department should, for the finalresults, compare the sale of the modelin question to the CV for the singledesignated component.Similarly, Wafangdian claims that theDepartment compared the U.S. sale of acone assembly to the CV of a completeTRB set. Wafangdian states that the netweight of the model sold in the UnitedStates is consistent with the net weightreported in its February 6, 1994 FOPquestionnaire response for a coneassembly.Guizhou Machinery and Henan claimthat, for sales of certain models, theDepartment was not able to match therelated sales and cost data because themodel codes they reported contained aclerical error in the code prefixes.Guizhou Machinery and Henan explainthat the model codes they reported inthe sales and FOP responses are oftenused interchangeably in the industry,where the numerical codes remain thesame but purchasers sometimes refer tothe numerical code with a slightlydifferent prefix attached. GuizhouMachinery and Henan state that, thedifference in prefixes notwithstanding,the identical numerical codes indicatethat the models are identical and arguethat the sales and cost data of suchmodels should be compared in the finalresults. Guizhou Machinery and Henansuggest that other respondents’ data onthe record indicate that the net weightsare consistent between model numberswith identical numerical codes,supporting their contention that themodels themselves are identical.

6208 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesPetitioner responds that thesearguments are based on new facts notpreviously on the record and that onlyWafangdian’s argument warrantsconsideration by the Department.Petitioner notes that, whereasGuizhou Machinery and Henan arguethat the prefix is meaningless regardingidentification of certain models,Liaoning contends that the ‘‘IR’’ prefixdenotes that the numerical codefollowing it refers only to a cone and isof the utmost importance. Petitionerasserts that the argument that a prefix isunimportant and, therefore, to beignored or, conversely, that a prefix isof utmost importance constitutes factualinformation too late to be considered.Petitioner argues that neither it nor theDepartment has been able to consider orevaluate this information throughreference to other public factual dataplaced on the record. In any event,Petitioner argues the error in the CV theDepartment used is the fault of theindividual respondent and not a clericalerror on the part of the Department.Petitioner states that the same ratesthe Department used in the preliminaryresults should apply for the final results,except that, where BIA is used, it shouldrepresent the highest transaction rate.Department’s PositionWe disagree with Petitioner as to ourability to consider clerical errors ofrespondents after preliminary results.See NTN and Colombian Flowers. Wehave evaluated the respondents’ clericalerrors against the criteria set forth in ourresponse to Comment 26, and we havedetermined that these errors meet theconditions under which we acceptcorrections. We note that, with theexception of Wafangdian, all of therespondents who experienced thesemodel-matching problems wereexporters. In this case, we receivedidentifying model numbers from boththe factory, which reports the FOP data,and the exporter, which reports the U.S.sale. Conceivably, the two attachdifferent prefixes to the commonnumeric code.We compared record evidence amongdifferent companies as well as betweenrespondents’ FOP data and sales lists.We agree with respondents’ contentionthat these data allow us to comparesales of specific models withcorresponding CV figures. For sales ofcomponent parts, we have sufficientdata on the record to apply CV for thecorresponding part, and we have madethe proper adjustments for the finalresults.Comment 28CMC argues that the Departmentassigned the antidumping margincalculated for CMC incorrectly to acompany identified as ‘‘China NationalMachinery & Equipment Import &Export Corporation’’ (CMEC). CMCnotes that, in all documentation itsubmitted, the company referred toitself as CMC. CMC also contends thatthe administrative record shows that the0.13-percent margin the Departmentcalculated in the preliminary resultswas based on the sales and cost dataCMC submitted and that, in itsverification report and analysismemorandum in reference to thisrespondent, the Department identifiedthe company as CMC. Therefore, for thefinal results, CMC requests theDepartment correct its error.Department’s PositionWe agree with CMC. We incorrectlyidentified this respondent in thePreliminary Results due to a clericalerror. We verified data CMC submittedduring this review. The 0.13-percentpreliminary margin we calculatedpertained to sales by CMC. For thesefinal results of review, the final marginfor CMC is 0.00 percent and the noncooperativeBIA rate assigned to CMECand all other non-responding companiesis 25.56 percent.Comment 29Guizhou Machinery et al. note that,for the preliminary results, theDepartment assigned to non-responsivecompanies a margin of 57.86 percent.Respondents contend that such a marginis incorrect because it does not conformto the Department’s two-tiered BIAformula as articulated in the PreliminaryResults. Because the Departmentcalculated a higher rate for Wafangdian,respondents contend, the Departmenteffectively assigned a lower rate to nonresponsivecompanies than it assignedto cooperative respondents,undermining the purpose of the twotieredpolicy. Guizhou Machinery et al.request that, for the final results, theDepartment assign to any uncooperativerespondents the highest margincalculated for any respondent in thisreview or any prior segment of theproceeding.Department’s PositionAs a result of changes to ourcalculations, Wafangdian’s rate is 1.28percent. As noted in our response toComment 28, above, the uncooperativeBIA rate is 25.56 percent, which is thehighest rate ever determined in thisproceeding.Comment 30Premier contends that the Departmentbased its dumping margininappropriately on cooperative BIA forthe period of review. Premier also statesthat the specific rate the Departmentassigned to Premier was 75.87 percent,while the Department assigned 57.86percent to uncooperative respondents.Premier claims that, although theDepartment stated it was applying‘‘cooperative BIA’’ to Premier, thepractical effect of the preliminaryresults is to treat Premier as anuncooperative respondent. Premiernotes that the Department stated tworeasons for resorting to BIA: (1)Premier’s inability to provide FOP data,and (2) errors in Premier’s sales data.Premier claims that the verificationerrors were minor and contends that theDepartment itself did not consider thesereasons supportive of an uncooperativefinding.Premier states that it was unable toprovide certain FOP information to theDepartment because such informationresides with unrelated suppliers thatcompete with Premier. Respondentasserts that the Department’sapplication of BIA under thesecircumstances constitutes an abuse ofdiscretion since it amounts topenalizing a company for failing toprovide information it does not have.Premier notes that in the 1989–90review the Department did not disregardthe entire response, which lackedfactors data, and instead appliedcooperative BIA only to those U.S. salesfor which there was no identicalforeign-market match.Premier states that, while theverification report notes certaindiscrepancies in Premier’s data, thereport does not state that thediscrepancies were so significant towarrant complete rejection of Premier’sdata. Premier adds that some of theissues the Department cited as reasonsfor BIA were the result of Premier’sinability to provide data related to itssuppliers, e.g., that it was unable toidentify the producers of the bearings itsold to the United States. For the samereasons related to its inability to provideFOP data, Premier claims that it shouldnot be penalized. Premier states that itoften does not deal with the factory but,rather, with a PRC trading company.Under these circumstances, Premierargues, the Department’s decision totreat Premier as if it were an‘‘uncooperative’’ respondent isunwarranted. Premier claims that itresponded to every questionnaire andprovided the requested information thatwas available to it.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6209Premier states that, in numerouscases, the courts have held that theDepartment cannot penalize a companyfor failing to provide information it doesnot have, citing Olympic Adhesives v.United States, 899 F.2d 1565 (Fed. Cir.1990) (Olympic Adhesives), and Allied-Signal Aerospace Company v. UnitedStates, 996 F.2d 1185 (Fed. Cir. 1993)(Allied-Signal). Premier notes that inAllied-Signal (page cite omitted) thecourt reversed the Department’sapplication of a punitive BIA to arespondent who had ‘‘supplied as muchof the information as it could.’’ WhilePremier acknowledges that the issuebefore the court in Allied-Signal was theDepartment’s characterization of arespondent as uncooperative, Premierargues that the court’s criticism of theDepartment’s decision to apply punitiveBIA is applicable to the circumstancesin this review, in which Premiercooperated to the extent that it could.Premier contends that subsequent courtdecisions have followed the OlympicAdhesives rationale, ruling that theDepartment cannot apply adverse BIAwhen deficiencies in a respondent’sdata are due to factors outside itscontrol (citing Usinor Sacilor v. UnitedStates, 872 F. Supp. 1000 (CIT 1994)(Usinor Sacilor), Zenith v. UnitedStates, Slip Op. 94–146 (September 19,1994), and Hyster v. United States, 848F. Supp. 178, 188 (CIT 1994)).Premier asserts further that theDepartment’s BIA policy is not bindingin all cases and that the Department hasretreated from its policy when the factswarranted doing so. Premier argues thatthe Department has recognized thatthere are situations in which strictapplication of its BIA policy leads toresults which are inconsistent with thepurpose of the policy, i.e., to treatcooperative respondents less harshlythan uncooperative respondents.Premier notes that the Department hasmodified its standard two-tieredapproach in the past where strictapplication of this methodology wouldresult in aberrational margins (citingCertain Steel Products from Mexico, 58FR 37352 (July 9, 1993), andProfessional Electric Cutting Tools andProfessional Electric Sanding GrindingTools from Japan, 58 FR 30144 (May 26,1993)). Premier notes that, inManifattura Emmepi S.p.A. v. UnitedStates, Slip Op. 93–183 (September 15,1993), the court upheld theDepartment’s decision to apply BIAbased on the highest calculated rate inthe immediately preceding review,when following its traditional twotieredBIA approach would haveresulted in a de minimis margin.Instead, Premier notes that theDepartment selected an alternative ratewhich was ‘‘adverse enough.’’ Premierclaims that selecting a rate for acooperative respondent that is the sameas that for an uncooperative one will notserve the Department’s BIA policy, as itwould discourage cooperation.Premier suggests that, in this case, theDepartment could reasonably usealternatives to its two-tieredmethodology. Premier proposes that,consistent with the Department’spreference to consider a respondent’sown prior rates when selecting BIA fora ‘‘cooperative’’ respondent, theDepartment could apply, as BIA, thehighest rate calculated for Premier inany prior segment of the proceeding,0.97 percent from the 1987–88 and1988–89 reviews, as well as the ratefrom the LTFV investigation. Premiersuggests, alternatively, that theDepartment could select a rate whichdistinguishes properly betweenuncooperative and cooperativerespondents, such that the BIA marginselected for ‘‘cooperative’’ respondentsshould not be the same as that for‘‘uncooperative’’ respondents.Chin Jun states that the Department’sapplication of punitive BIA to some ofits sales is contrary to legal precedent.Chin Jun claims that, in accordancewith section 773(e)(2) of the Act, theDepartment may use an adverseinference if it finds that a party hasfailed to cooperate by not acting to thebest of its ability to comply with arequest for information. Chin Jun arguesthat it has cooperated to the best of itsability and, despite its cooperation, theDepartment has drawn an adverseinference and applied punitive BIA.Chin Jun claims that, while theDepartment’s preliminary results didnot state that the BIA rate imposedagainst Chin Jun was punitive, it clearlywas. Chin Jun states that the courtreaffirmed that, ‘‘ in order for theagency’s application of the bestinformation rule to be properlycharacterized as ‘‘punitive,’’ the agencywould have had to reject low margininformation in favor of high margininformation that was demonstrably lessprobative of current conditions,’’ citingAllied-Signal (page cite omitted). ChinJun claims that this is precisely the casehere, in which the Department rejectedlow-margin information available infavor of high-margin BIA.Chin Jun notes that, while theDepartment has discretion as to thechoice of BIA, this discretion must beexercised reasonably (citing HolmesProducts Corp. v. United States, 795 F.Supp. 1205, 1207 (CIT 1992)) (HolmesProducts). Respondent contends that theDepartment is not permitted to take anoverly sweeping view of the authority itis granted under section 773(e)(2), citingOlympic Adhesives.Chin Jun also claims that theregulations allow the Department toconsider the degree of a particularrespondent’s cooperation in theadministrative review as a factor indetermining what constitutes the bestinformation available. Chin Jun insiststhat it did not refuse to provideinformation nor did it significantlyimpede the review, but that it wassimply unable to obtain certain FOPinformation from all of its unrelatedsuppliers. Chin Jun states that the courthas ruled that, when deficiencies arebeyond a respondent’s control, theapplication of punitive BIA is improper,citing Usinor Sacilor.Chin Jun claims that, in HolmesProducts, the Department improperlyrejected the use of weighted-averageinformation from the respondent andapplied an adverse BIA rate. The courtrequired the Department to use certaindata supplied by the respondent, as thatrespondent had substantially compliedwith the Department’s request andcould not control the conduct of anuncooperative affiliate. Chin Jun addsthat the court pointed out that use ofaveraged data for substantiallycomplying parties has been approvedand applied in other contexts.Chin Jun claims that its circumstancesare even more compelling than thosefound in Usinor Sacilor and in HolmesProducts. Chin Jun states that, in thiscase, the alleged lack of FMV data wasa result of unrelated third parties’’failure to provide a response to thefactors questionnaires. Chin Jun assertsthat, in Usinor Sacilor and HolmesProducts, the courts held that theDepartment cannot punish a respondentwhen a related, yet uncooperative,affiliate did not supply requestedinformation and argues that it is evenmore inexcusable for the Department topunish Chin Jun when unrelated,uncooperative parties failed to providecertain information.Chin Jun states that it is important toview the Department’s actions in thecontext of generally accepted litigationparameters such as those set forth in theFederal Rules of Civil Procedure. ChinJun claims that Federal Rule of CivilProcedure 45 governing subpoenas onlydirects production of ‘‘designated books,documents, or tangible things in thepossession, custody or control of thatperson.’’ While the Department maylack ‘‘subpoena power’’ in anantidumping duty review, Chin Junargues, it is unreasonable for theDepartment to interpret its statutory

6210 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesauthority as extending beyond thebounds of authority granted by theFederal Rules of Civil Procedure. ChinJun asserts that the Department isattempting to do what the courtscannot—punish parties for notproviding information which is beyondtheir ‘‘possession, custody or control.’’Therefore, Chin Jun reasons, theDepartment should not apply punitiveBIA but should opt for a reasonablemethod to determine BIA.Chin Jun states that, for certain of itstransactions, as BIA, the Departmentbased FMV on the highest dumpingmargin found in the entire review. ChinJun asserts that the law is well settled,as set out in its previous arguments, thatthe Department cannot apply an adverseBIA rate against Chin Jun because itcooperated to the best of its ability.Consistent with cited case precedence,Chin Jun states that the Departmentshould apply a less-adverse BIA whenthere is a gap in the data or when themissing data are beyond the control ofthe respondent.Chin Jun suggests several options.Chin Jun recommends that theDepartment (1) apply a weightedaveragemargin based on all calculatedrates for the other companies, (2)calculate margins for those Chin Junsales using FMV based on data suppliedby other respondents, or (3) use theweighted-average margin calculated onChin Jun’s sales for which FMV datawere available. Chin Jun states thatthese alternatives are in accordancewith case-law precedent and that theDepartment must employ amethodology that is reasonable, neutral,and non-adverse.Petitioner responds that the BIA ratethe Department applied to Premier wasnot punitive but was, in fact, acooperative rate under the Department’stwo-tiered methodology. Petitioner alsocontends that the deficiencies inPremier’s response extend beyond a lackof supplier data and include significanterrors in Premier’s U.S. sales database.Petitioner argues that, in the event thatcooperative and non-cooperative BIArates are different for the final results,the Department should apply a punitive,non-cooperative BIA rate to Premierbased on the deficiencies withinPremier’s own submitted data.Petitioner claims that, whereas ChinJun characterizes as ‘‘punitive’’ the useof other respondents’ margins in theperiod as BIA, this is an option in thenon-punitive approach to BIA.Petitioner agrees that changes arenecessary in applying BIA in the finalresults but, contrary to Chin Jun’ssuggestions, Petitioner argues that theDepartment should apply, as partialBIA, the highest margin of anyindividual transaction. Given a failureto respond to the questionnaire or thesubmission of an unusable response,Petitioner asserts that the Departmentshould assume that the dumping marginfor all relevant transactions is at least ashigh as the highest dumping margin onany other transaction. To do otherwise,Petitioner claims, would eliminate orreduce the incentive to comply with theagency’s requests. Petitioner states thatif the highest transaction margin is notapplied as BIA, respondents areencouraged to selectively withholdrelevant data, transaction-bytransaction,whenever doing so couldcause the Department to select a lower‘‘best information’’ margin. Thus,Petitioner states, only when Chin Jun’smargin on any individual transaction isthe highest margin for any companyshould Chin Jun’s own margins be usedas BIA.Department’s PositionWe are using a total BIA rate forPremier due to multiple failures on itspart to supply information, includingthe failure to provide, at verification,certain information which was withinPremier’s control. In addition to itsfailure to provide factors information ona transaction-specific basis, Premier wasunable to identify its suppliersaccurately or provide the quantities ofmerchandise supplied to the companyduring the period of review. SeeMemorandum from Analysts to File:Verification Report for Premier Bearingand Equipment, Ltd. (October 31, 1995).Premier did not supply informationnecessary to connect its transactionspecificU.S. sales reporting with theappropriate FOP data necessary toestablish FMV. However, we considerPremier to be a cooperative respondentin this review. We note that Premierprovided timely responses to our initialand supplemental questionnaires andparticipated in a complete verificationof all data that it submitted in thisreview. Therefore, we applied to all U.S.sales, as cooperative total BIA, thehighest calculated rate in this reviewperiod.The Allied-Signal case Premier citesdoes not support its claim that theDepartment’s choice of a BIA rate forPremier is improperly adverse. TheAllied-Signal court noted in its opinionthat the critical difference between firsttier(uncooperative) and second-tier(cooperative) BIA treatment lay in therange of LTFV margins subject toconsideration for BIA purposes in thedetermination underlying the version ofthe two-tiered approach upheld in thatcase (see 996 F.2d at 1191). Allied-Signal clearly permits a second-tiermargin to be based on the highestmargin for any respondent in thecurrent review, even if a first-tier marginis also based on the same value.As indicated in our response toComment 29, the fact that nonresponsivefirms received a lowermargin than Premier in the PreliminaryResults was due to a clerical error. Nonresponsivefirms have not received alower margin than the second-tiermargin we have assigned to Premier inthese final results.Chin Jun provided most of theinformation we requested but failed toprovide FOP information with respect tocertain models. We did not havepublicly available FOP data which wecould use for the models for which ChinJun failed to supply such data. We donot accept Chin Jun’s argument that, forthese models, we should use factorsdata from a different PRC-basedproducer, as such data constitutebusiness proprietary information.Further, using data from anotherproducer might encourage respondentsto withhold data on less-efficientlyproduced models in the expectation thatthe missing data would be providedbased on the experience of moreefficient producers of the same models.Therefore, we have determined that theit is appropriate to use BIA to establishthe dumping margins for the U.S. salesaffected by the lack of FOP data.Under section 776(c) of the Act, wehave the authority to use BIA‘‘whenever a party or any other personrefuses or is unable to produceinformation requested. * * *’’Therefore, the Department can use BIAnot only when a party ‘‘refuses’’ but alsowhen a party is ‘‘unable’’ to provideinformation.Under our BIA methodology, there aretwo general types of BIA, i.e., ‘‘totalBIA’’ and ‘‘partial BIA.’’ We use ‘‘totalBIA’’ for a respondent whose reportingor verification failure is so extensive asto make its entire response unreliable;in this situation, we determine therespondent’s entire dumping margin onthe basis of BIA. We use partial BIA, aswe have here for Chin Jun, when aparty’s responses are deficient inlimited respects yet they are stillreliable in most other respects. In a‘‘total BIA’’ situation, the choice of aparticular BIA rate is dependent onwhether we consider the respondent tohave been ‘‘cooperative’’ or‘‘uncooperative’’ during the review. In a‘‘partial BIA’’ situation, in contrast, weregard the respondent as beingcooperative and the flaws are not sosignificant or extensive that theresponse as a whole is unusable.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6211Instead, the level of partial BIA dependson the size and nature of the deficiencyand the degree to which the deficiencyaffects the rest of the response.Regardless of the particular type ofBIA we use, we do not apply a neutralfigure as BIA, except where there is aninadvertent gap in the record or wherea minor or insignificant adjustment isinvolved. None of these situationsapplies to Chin Jun in this case. BIA isintended to be adverse, even in a‘‘partial BIA’’ situation, because onepurpose of the BIA provision of thestatute is to induce respondents toprovide timely, complete and accurateinformation. Chin Jun’s claim that wemay use an adverse inference only if wehave found that a party ‘‘has failed tocooperate by not acting to the best of itsability to comply with a request forinformation’’ (citing section 773(e)(2))does not apply to this review becausethis review is being conducted underthe Act as it stood on December 31,1994, which did not contain thisprovision. Chin Jun’s recourse to Allied-Signal is likewise misplaced. Althoughthe Department’s choice of BIA rejectsthe low-margin information Chin Junproposes over higher-margin BIA, ChinJun has not shown that the highermargininformation is ‘‘demonstrablyless probative of current conditions,’’ asrequired by Allied-Signal. Because ChinJun did not provide FOP informationwhich would allow us to calculatemargins for certain models, there are nodata on record showing the actual ratesfor these models to be less than 25.56percent, which is the highest ratedetermined in this review. Therefore, asBIA, we have applied this rate to thoseU.S. sales affected by the missing FOPinformation.Comment 31Chin Jun states that, for thepreliminary results, the dumpingmargins and sales value for Wafangdianand Jilin are aberrational. Chin Junnotes that the number of sales that thesetwo companies had compared to thetotal sales that the Department reviewedfor this administrative review is smalland that the highest rate calculated forany other exporter in the preliminaryresults for this review is 12.06 percentwhile Wafangdian received a rate of75.87 percent and Jilin received a rateof 60.91 percent. Moreover, Chin Junpresumes that it is probable that allcompanies, except Wafangdian andJilin, will have final antidumping ratesof less than 12 percent. As such, ChinJun contends that Wafangdian’s andJilin’s dumping margins are aberrationalin all respects and should not be usedas the basis for BIA for any of Chin Jun’stransactions.Department’s PositionAs a result of corrections and changesnoted elsewhere, we have recalculatedrespondents’ margins for these finalresults. The highest rate for this reviewperiod is 25.56 percent. As weexplained in our response to Comment30, this is an appropriate cooperative-BIA rate for those U.S. sales for whichChin Jun was unable to supply factorsdata.Comment 32Chin Jun claims that the Departmentapplied BIA to certain sales of modelsfor which it had provided FOP data.Therefore, Chin Jun argues, theDepartment should not use BIA toestablish FMV for these models.Department’s PositionWe agree with Chin Jun. As discussedin our response to Comment 26, wehave corrected clerical errors in theidentifying model numbers. This allowsus to compare sales data for the modelsin question with the correspondingfactors data.Comment 33Chin Jun notes that the Departmentused a profit rate of 10.85 percent basedon information contained in the SKFreport. Chin Jun points out that SKFIndia is related to SKF Sweden and,therefore, the transfer prices and otherrelated-party transactions betweenparent and subsidiary could radicallyaffect profit margins. Thus, Chin Junargues, the Department should use thestatutory minimum of eight percent toestablish a surrogate value for profit.Petitioner responds that it is not clearwhat Chin Jun’s comments regardingSKF India’s relationship to SKF Swedenare supposed to mean nor what resultswould obtain if the claim were true. Inany event, Petitioner asserts, Chin Jundid not provide any evidence thatrelated-party transactions occurred or, ifthey did, that they affected SKF India’sprofits or other results in any way.Petitioner argues that the Departmentshould use SKF India’s actual profit inthe final results, recalculated to reflectthe changes to overhead and SG&A asasserted in Comment 2Department’s PositionWe agree with Petitioner. Whilecalculating the profit ratio using thedata provided in the SKF report, wenoted that SKF India is related to SKFSweden. Chin Jun did not provide anyinformation to support its statement thatthe transactions between SKF India andits Swedish parent could radically affectprofit margins. Therefore, for the finalresults, we have applied the calculatedprofit ratio based on the SKF India’sAnnual Report as the surrogate value forprofit.Comment 34Transcom Inc. (Transcom) and L&SBearing Company (L&S), domesticimporters of subject merchandise, arguethat the Department’s decision to applywhat they consider to be punitive BIAappraisement and deposit rates tocompanies that were never part of thereview is unlawful. Transcom and L&Sstate that, for this review, there werevarious companies from which theypurchased subject merchandise, none ofwhich received a questionnaire or wasnamed in the notice of initiation ofreview. Transcom states that entriesfrom each of the unnamed companieswere subject to estimated antidumpingduty deposits at the ‘‘all others’’ rate ineffect at the time of entry and arguesthat the Department is precluded as amatter of law from either assessing finalantidumping duties on the unreviewedcompanies at any rate other than that atwhich estimated antidumping dutydeposits were made or imposing thenew BIA-based deposit rate onshipments from unreviewed companies.In particular, Transcom says that itpurchased bearings from Gold HillInternational Trading and ServicesCompany (Gold Hill), a Hong Kongbasedcompany. Transcom contendsthat Gold Hill did not request a review,was not named in the notice ofinitiation for this review, and did notreceive a questionnaire or any otherrequest for information or participationin this review. Transcom claims that theDepartment appears to have imposedpunitive assessment and deposit rateson Gold Hill by including Gold Hill’sexports under the BIA rates for ‘‘allother’’ PRC exporters and argues thatthe Department is precluded as a matterof law from either assessing finalantidumping duties on the unreviewedcompanies at any rate other than that atwhich estimated antidumping dutydeposits were made or imposing thenew BIA deposit rate on the unreviewedcompanies.Transcom and L&S, citing section751(a) of the Act, state that theDepartment is directed to determine theamount of antidumping duties to beimposed pursuant to periodic reviews.They add that, in accordance with 19CFR 353.22(e), unreviewed companiesare subject to automatic assessment ofantidumping duties and a deposit ofestimated duties at the rate previouslyestablished. Transcom and L&S note

6212 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesthat the CIT has concluded that, insituations where a company’s entries arenot reviewed, the prior cash deposit ratefrom the LTFV investigation becomesthe assessment rate, ‘‘which must inturn become the new cash deposit ratefor that company’’ (citing Federal MogulCorp. v. United States, 822 F. Supp. 782,787–88 (CIT 1993) (Federal Mogul II)).Transcom and L&S claim that the CIThas affirmed this rationale in other,more recent, decisions as well,concluding that the Department’s use ofa new ‘‘all other’’ rate calculated duringa particular administrative review as thenew cash deposit rate for unreviewedcompanies which have previouslyreceived the ‘‘all other’’ rate is not inaccordance with law (citing FederalMogul Corp. v. United States, 862 F.Supp. 384 (CIT 1994), and UCFAmerica, Inc. v. United States, 870 F.Supp. 1120, 1127–28 (CIT 1994) (UCFAmerica)).Based on these CIT decisions,Transcom says that an exporter that isnot under review would have no reasonto anticipate that antidumping dutiesassessed on its merchandise would varyfrom the amount deposited. Transcomnotes that Federal Mogul II (at 788)states that parties rely on the cashdeposit rates in making their decisionwhether to request an administrativereview of certain merchandise. In viewof the Department’s regulations,Transcom claims that the absence of anynotice from the Department thatunnamed companies faced thepossibility of increased antidumpingduty liability is fundamentallyprejudicial to the unnamed companies.Transcom states that previous attemptsby the Department to impose the BIArate on an exporter neither named in thereview request nor in the notice ofinitiation have been overturned, citingSigma Corp. v. United States, 841 F.Supp. 1255 (CIT 1993) (Sigma Corp. I).In that case, Transcom contends, theCIT held that the Department wasrequired to provide the company inquestion adequate notice to defend itsinterests and, because it failed to do so,ordered that the merchandise exportedby that company was to be liquidated atthe entered deposit rate.Transcom argues that theDepartment’s statement that allexporters of subject merchandise are‘‘conditionally covered by this review’’(Initiation of Antidumping DutyAdministrative Reviews and Request forRevocation in Part (Initiation Notice), 59FR 43537, 43539 (August 24, 1994)) isinadequate in that it fails to explainunder what ‘‘conditions’’ exporters arecovered and whether such ‘‘conditions’’were met. If the statement is meant toinclude unconditionally all unnamedexporters, Transcom asserts that it iscontrary to the regulatory requirement at19 CFR 353.22(a)(1) that the reviewcover ‘‘specified individual producersor resellers covered by an order.’’Because Gold Hill was never servednotice that it was subject, conditionallyor otherwise, to review, Transcomclaims that the Department is precludedfrom applying a punitive rate to thecompany’s exports.Transcom contends that, inaccordance with section 776 of the Act,the Department must have requestedand been unable to obtain informationbefore applying punitive BIA. Transcomclaims that the Department may notresort to BIA ‘‘because of an allegedfailure to provide further explanationwhen that additional explanation wasnever requested’’ (quoting OlympicAdhesives at 1574 and citing Mitsui &Co., Ltd. v. United States, 18 CIT 185(March 11, 1994), and Usinor).Transcom states that, if theDepartment assigns the unreviewedexporters the ‘‘all other’’ BIA rate, theDepartment should not apply this rate toexports of TRBs by Gold Hill, a privatetrading company located in Hong Kong.Transcom contends that there is nobasis for assessing it with the punitiveChinese ‘‘all other’’ rate on the premisethat it failed to demonstrateindependence from the central Chinesegovernment; as a Hong Kong company,it necessarily cannot be subject to suchcontrol.L&S requests that the Departmentliquidate the company’s imports whichcame from companies that were notspecifically reviewed at the entered raterather than the punitive ‘‘PRC-wide’’rate. L&S states that the prospectivedeposit rate for these unreviewedcompanies should be 2.96 percent—the‘‘all others’’ rate in the initialinvestigation.Petitioner notes that the PreliminaryResults state at 49576 that, ‘‘for othernon-PRC exporters of subjectmerchandise from the PRC, the cashdeposit rate will be the one applicableto the PRC supplier of that exporter.’’Petitioner claims that this situationclearly includes Gold Hill. Petitioneralso states that it is its intention that allexporters are covered by this review andpoints out that the Department’s noticeof initiation at 43539 specified that all‘‘other exporters . . . are conditionallycovered.’’ Therefore, Petitioner argues,Gold Hill and all other suppliers ofTranscom not entitled to a separate rateshould be expressly listed in the finalresults as among those to which the‘‘PRC rate’’ applies.Department’s PositionWe disagree with Transcom and L&S.It is our policy to treat all exporters ofsubject merchandise in NME countriesas a single government-controlledenterprise and assign that enterprise asingle rate, except for those exporterswhich demonstrate an absence ofgovernment control, both in law and infact, with respect to exports. Wediscussed our guidelines concerning thede jure and de facto separate-ratesanalyses, as well as the companyspecificseparate-rates determinations,in the Preliminary Results at 49572–49573. We have determined thatcompanies in the government-controlledenterprise failed to respond to ourrequests for information and,accordingly, we have established therate applicable to such companies (thePRC rate) using uncooperative BIA. Asdiscussed below, the Act mandatesapplication of BIA for such companiesbecause they were properly included inthe review and did not respond to theDepartment’s requests for information.Pursuant to our NME policy, all PRCexporters or producers that have notdemonstrated that they are separatefrom PRC government control arepresumed to belong to a single, statecontrolledentity (the ‘‘NME entity’’), forwhich we must calculate a single rate(the ‘‘PRC rate’). The CIT has upheld ourpresumption of a single, state-controlledentity in NME cases. See UCF America,Inc. v. United States, 870 F. Supp. 1120,1126 (CIT 1994), Sigma Corp I, andTianjin Machinery Import & ExportCorp. v. United States, 806 F. Supp.1008, 1013–15 (CIT 1992). Section353.22(a) of our regulations allowsinterested parties to request anadministrative review of anantidumping duty order once a yearduring the anniversary month. Thisregulation states specifically thatinterested parties must list the‘‘specified individual producers’’ to becovered by the review (see 19 CFR353.22(a) (1994)). In the context of NMEcases, we interpret this regulation tomean that, if at least one namedproducer or exporter does not qualifyfor a separate rate, all exporters that arepart of the NME entity are part of thereview. On the other hand, if all namedproducers or exporters are entitled toseparate rates, the NME entity is notrepresented in the review and, therefore,the NME rate remains unchanged(accord Federal-Mogul II at 788 (‘‘(i)n asituation where a company’s entries areunreviewed, the prior cash deposit ratefrom the LTFV investigation becomesthe assessment rate, which must in turn

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6213become the new cash deposit rate forthat company’’)).In these reviews, numerouscompanies named in the notice ofinitiation did not respond to ourquestionnaires. On July 26, 1994, wesent a letter to the PRC embassy inWashington and to the Ministry ofForeign Trade and EconomicCooperation (MOFTEC) in Beijing,requesting the identification of TRBproducers and manufacturer, as well asinformation on the production of TRBsin the PRC and the sale of TRBs to theUnited States. MOFTEC informed usthat the China Chamber of Commercefor Machinery and Electronics ProductsImport & Export (CCCME) wasresponsible for coordinating the TRBscase. MOFTEC also said it forwardedour letter and questionnaire to theCCCME. On August 31, 1994 we sent acopy of our letter and the questionnairedirectly to the CCCME, asking that thequestionnaire be transmitted to allcompanies in the PRC that producedTRBs for export to the United States andto all companies that exported TRBs tothe United States during the POR.Because we did not receiveinformation concerning many of thecompanies named in the notice ofinitiation, we have presumed that thesecompanies are under governmentcontrol. In accordance with our NMEpolicy, therefore, the governmentcontrolledenterprise, which iscomprised of all exporters of subjectmerchandise that have notdemonstrated they are separate fromPRC control, is part of this review andwe must assign a ‘‘PRC rate’’ to thatenterprise. As we did not receiveresponses from these exporters, we havebased the PRC rate on BIA, pursuant tosection 776(c) of the Act. This rate willform the basis of assessment for thisreview as well as the cash deposit ratefor future entries.We acknowledge a recent CITdecision cited by Transcom and by L&S,UCF America Inc. v. United States, SlipOp. 96–42 (CIT Feb. 27, 1996), in whichthe Court affirmed the Department’sremand results for reinstatement of therelevant cash deposit rate but expresseddisagreement with the PRC-ratemethodology which formed theunderlying rationale for reinstatement.The Court raised various concerns withthe Department’s application of a PRCrate.The Court suggested that theDepartment lacks authority for applyinga PRC rate in lieu of an ‘‘all others’’ rate.However, despite the concernsexpressed by the Court, it is theDepartment’s view that it has theauthority to use the PRC rate in lieu ofan ‘‘all others’’ rate. See Heavy ForgedHand Tools, Finished or Unfinished,With or Without Handles, from thePeople’s Republic of China; PreliminaryResults of Antidumping DutyAdministrative Review, 61 FR 15218,15221 (April 5, 1996).The PRC rate is consistent with thestatute and regulations. Section 751(a)requires the Department to determineindividual dumping margins for eachknown exporter or producer. Asdiscussed above, in NME cases, allproducers and exporters which have notdemonstrated their independence aredeemed to comprise a single exporter.Thus, we assign the PRC rate to theNME entity just as we assign anindividual rate to a single exporter orproducer, or group of related exportersor producers, operating in a marketeconomy. Because the PRC rate is theequivalent of a company-specific rate, itchanges only when we review the NMEentity. As noted above, all exporters orproducers will either qualify for aseparate company-specific rate or willbe part of the NME enterprise andreceive the PRC rate. Consequently,whenever the NME enterprise has beeninvestigated or reviewed, calculation ofan ‘‘all others’’ rate for PRC exporters isunnecessary.Thus, contrary to the argument byTranscom and L&S, the Department’sautomatic-assessment regulation (19CFR 353.22(e)) does not apply to thisreview except in the case of companiesthat demonstrate that they are separatefrom PRC government control and arenot part of this review, as discussedbelow.We also disagree with the assertion byTranscom and L&S that companies notnamed in the initiation notices did nothave an opportunity to defend theirinterests by demonstrating theirindependence from the PRC entity. Anycompany that believes it is entitled to aseparate rate may place evidence on therecord supporting its claim. Thecompany referenced by Transcom andL&S made no such showing, despite ourefforts to transmit the questionnaire toall PRC companies that produce TRBsfor export to the United States.Furthermore, Transcom’s argumentthat the BIA-based PRC-wide ratecannot be applied to exports by GoldHill because Gold Hill is a Hong Kongcompany rather than a PRC companyare also unfounded. Because Gold Hill’sChinese suppliers did not respond tothe Department’s questionnaire, wewere unable to determine, with respectto sales by Gold Hill, whether Gold Hillor the Chinese suppliers were the firstsellers in the chain of distribution toknow that the merchandise they soldwas destined for the United States. SeeYue Pak, Ltd. v. United States, Slip Op.96–65, at 6 (CIT April 18, 1996)(citingsection 773(f)). When resellers choose touse uncooperative suppliers that areunder a dumping order, they must bearthe consequences. See Yue Pak at 16.Otherwise, uncooperative PRCproducers would be free to hide behindand continue exporting through low-rateHong Kong exporters.Comment 35Petitioner opposes revocation of theorder with respect to Shanghai,claiming: (1) That it is unlikely the finalresults in the three reviews at issuewould demonstrate consecutive periodsof de minimis margins for Shanghai; (2)under the other circumstances of thiscase, it is likely that those persons willin future sell subject merchandise at lessthan FMV; and (3) Shanghai’s threeyears of no dumping would be tooremote in time to serve as a basis forrevocation.Petitioner claims that the preliminaryde minimis margin for Shanghai wasbased on results that contain seriousand obvious errors. Petitioner contendsthat as a result of corrections andchanges made due to such errors, whichhave been noted elsewhere, the finalresults will likely yield increaseddumping margins.Petitioner also argues that, although ajoint-venture company with a producerin a market-economy country, Shanghaiis still mostly owned by the PRC-basedpartner and, thus, all of the people ofthe PRC. Therefore, Petitioner asserts, itwould be irrational to ignore Shanghai’srelationship to other producers andexporters for purposes of revocation.Petitioner notes that, in those instancesin which the Department has revokedorders in NME cases, it has always doneso in toto, citing Titanium Sponge FromGeorgia, Revocation of the AntidumpingFinding, 60 FR 57219 (November 14,1995), and Ceiling Fans From thePeople’s Republic of China: FinalResults of Changed CircumstancesReview and Revocation of AntidumpingDuty Order, 60 FR 14420 (March 17,1995). Petitioner argues that theDepartment has never revoked an orderapplicable to an NME country withrespect to an individual companypreviously found to have dumpedmerchandise in the United States.Furthermore, Petitioner claims, theDepartment cannot reasonably predictthat Shanghai is unlikely to make salesat less than FMV in the future. Becauseof recent legislative changes under theUruguay Round Agreements, Petitionerargues, ESP adjustments (discussed inComment 14 above) will be mandated in

6214 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesreviews subsequent to this review.Petitioner asserts that, even if theDepartment holds to the position takenin the preliminary results and makes nosuch adjustment in this review,mandatory adjustments in subsequentreviews are likely to result in highermargins.Finally, Petitioner insists thatcongressional intent is that theDepartment should always use the mostup-to-date information available (citingFreeport Minerals, 776 F.2d at 1032, AlTech Specialty Steel Corp. v. UnitedStates, 745 F.2d 632, 640, and H.R. Rep.No. 317, 96th Cong., 1st Sess. 77 (1979)).Given that the three reviews in questionare behind schedule, Petitioner arguesthat a decision on revocation should notbe made until after the final results ofthe 1994–95 review are known and havebeen verified.Shanghai replies that the Departmenthas, pursuant to its regulations, thediscretion to revoke the order withrespect to producers in NME countriesand that Petitioner is asking theDepartment to ignore the plain languageof 19 CFR 353.25(a)(2)(i)–(iii). Shanghaiadds that nothing in the Department’sregulations authorizes the exclusion ofNME producers from the scope of therevocation procedures.Shanghai argues that all availableevidence establishes that sales at lessthan FMV are not likely in the future,asserting that, instead, there is a clearpattern of sales at not less than FMV.Shanghai points out that it hassubmitted written certification of itsagreement to immediate reinstatementin the future if the Departmentconcludes that Shanghai is engaged insales at less than FMV. Shanghai alsorefutes Petitioner’s argument that thenature of its ‘‘relationship’’ to all otherPRC producers and exporters makesrevocation of the order with respect toShanghai irrational. Shanghai statesthat, where Petitioner assumes centralplanning and collaboration, theDepartment has found none, hence, itsgranting of separate rates to Shanghaiand others.Finally, Shanghai argues, if theDepartment determines to revoke theorder with respect to Shanghai, thedecision will be based on the results ofthe three most recent reviews. Shanghaistates that there is no more timelyinformation on which to base thisdecision than the current and the twopreceding reviews.Department’s PositionWe agree with Shanghai. Theregulations do not distinguish betweenmarket-economy companies’’ and NMEcompanies’’ eligibility for revocation.We have determined that Shanghai isentitled to a rate separate from otherPRC producers and exporters. Further,Shanghai has complied with sections353.25(b) and 353.25(a)(2)(iii) of theDepartment’s regulations.Finally, although the three reviews inquestion have been delayed, it was notdue to any fault on the part of Shanghai.Additionally, these reviews do representthe most up-to-date information onwhich to base this decision.Final Results of ReviewAs a result of our analysis of thecomments we received, we determinethe following weighted-average marginsto exist:Manufacturer/exporterMargin(percent)Premier Bearing and Equipment,Limited 1 ..................................... 25.56Guizhou Machinery Import andExport Corporation .................... 1.22Henan Machinery and EquipmentImport and Export Corp ............ 0.16Luoyang Bearing Factory ............. 0.00Shanghai General Bearing Company,Ltd ................................... 0.04Jilin Machinery Import and ExportCorporation ................................ 25.56Chin Jun Industrial Ltd .................. 4.28Wafangdian Bearing Factory ........ 1.28Liaoning Machinery Import andExport Corp ............................... 4.01China National Machinery Importand Export Corp ........................ 0.00China Nat’l Automotive IndustryImport and Export Corp ............ 0.46Tianshui Hailin Import and ExportCorp ........................................... 0.00Zhejiang Machinery Import andExport Corp ............................... 4.32PRC Rate 2 .................................... 25.561 As cooperative BIA, we assigned the higherof 1) the highest rate ever applicable to thatcompany in the investigation or any previousreview; or 2) the highest calculated margin forany respondent that supplied an adequate responsein this review.2 Parties that were named in the initiationbut are not listed above did not respond to thequestionnaire or did not respond to the supplementalquestionnaire; therefore, as uncooperativeBIA, we assigned the highest ratecalculated in the investigation or in this or anyother review of sales of subject merchandisefrom the PRC. This does not constitute a separate-ratefinding for the firms that receivedthe PRC rate.We determine that, for the period June1, 1993 through May 31, 1994, Shanghaihad a weighted-average antidumpingduty margin of 0.04 percent. We furtherdetermine that Shanghai has soldsubject merchandise at not less thanFMV for three consecutive reviewperiods, including this review period,and Shanghai has made the appropriatecertification. Therefore, the Departmentis revoking the order with respect tosubject merchandise produced andexported by Shanghai in accordancewith section 751(c) of the Act and 19CFR 353.25.This revocation applies to all entriesof subject merchandise entered, orwithdrawn from warehouse, forconsumption on or after June 1, 1994.The Department will order thesuspension of liquidation ended for allsuch entries and will instruct theCustoms Service to release any cashdeposit or bonds. The Department willfurther instruct the Customs Service torefund, with interest, any cash depositson post-June 1, 1994 Shanghai entries.In addition, the Department willterminate the review covering subjectmerchandise with respect to Shanghai’ssales during the period June 1, 1994through May 31, 1995, which wasinitiated August 16, 1995 (60 FR 42500).The Department will also terminate thereview covering subject merchandisewith respect to Shanghai’s sales duringthe period June 1, 1995 through May 31,1996 which was initiated August 8,1996 (61 FR 41373).The Department shall determine, andthe Customs Service shall assess,antidumping duties on all appropriateentries. Individual differences betweenUSP and FMV may vary from thepercentages stated above. TheDepartment will issue appraisementinstructions directly to the CustomsService.Furthermore, the following cashdeposit requirements will be effectiveupon publication of these final resultsfor all shipments of the subjectmerchandise entered, or withdrawnfrom warehouse, for consumption on orafter the publication date, as providedfor by section 751(a)(1) of the Act: (1) forthe companies named above that haveseparate rates and were reviewed(Premier, Guizhou Machinery, Henan,Jilin, Luoyang, Liaoning, Chin Jun,Tianshui, Zhejiang, CMC, ChinaNational Automotive Industry Importand Export Guizhou, and Wafangdian),the cash deposit rates will be the ratesfor these firms established in these finalresults of review; (2) for XiangfanInternational Trade Corporation, whichwe determine to be entitled to a separaterate, the rate will continue be thatwhich currently applies (8.83 percent);(3) for all remaining PRC exporters, allof which were found not to be entitledto separate rates, the cash deposit willbe 25.56 percent; and (4) for other non-PRC exporters of subject merchandisefrom the PRC, the cash deposit rate willbe the rate applicable to the PRCsupplier of that exporter. These depositrequirements shall remain in effect untilpublication of the final results of thenext administrative review.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6215This notice serves as a reminder toimporters of their responsibility under19 CFR 353.26 to file a certificateregarding the reimbursement ofantidumping duties prior to liquidationof the relevant entries during thisreview period. Failure to comply withthis requirement could result in theSecretary’s presumption thatreimbursement of antidumping dutiesoccurred and the subsequent assessmentof double antidumping duties.This notice also serves as a reminderto parties subject to APOs of theirresponsibility concerning disposition ofproprietary information disclosed underAPO in accordance with 19 CFR353.34(d). Timely written notification ofthe return/destruction of APO materialsor conversion to judicial protectiveorder is hereby requested. Failure tocomply with the regulations and theterms of an APO is a sanctionableviolation.This administrative review,revocation, and notice are in accordancewith section 751(a)(1) of the Act (19U.S.C. 1675(a)(1)) and 19 CFR 353.22and 353.25.Dated: February 3, 1997.Robert S. LaRussa,Acting Assistant Secretary for ImportAdministration.[FR Doc. 97–3356 Filed 2–10–97; 8:45 am]BILLING CODE 3510–DS–PCenters for Disease Control andPrevention, et al.; Notice ofConsolidated Decision on Applicationsfor Duty-Free Entry of ScientificInstrumentsThis is a decision consolidatedpursuant to Section 6(c) of theEducational, Scientific, and CulturalMaterials Importation Act of 1966 (Pub.L. 89–651, 80 Stat. 897; 15 CFR part301). Related records can be viewedbetween 8:30 a.m. and 5:00 p.m. inRoom 4211, U.S. Department ofCommerce, 14th and ConstitutionAvenue, N.W., Washington, D.C.Comments: None received. Decision:Approved. No instrument of equivalentscientific value to the foreigninstruments described below, for suchpurposes as each is intended to be used,is being manufactured in the UnitedStates.Docket Number: 96–114. Applicant:Centers for Disease Control andPrevention, Atlanta, GA 30341–3724.Instrument: ICP Mass Spectrometer,Model MAT ELEMENT. Manufacturer:Finnigan MAT, Germany. Intended Use:See notice at 61 FR 59417, November22, 1996. Reasons: The foreigninstrument provides a magnetic sectormass analyzer with sensitivity to detecttrace amounts (to parts per quadrillion)of radionuclides in liquid samples.Advice received from: NationalInstitutes of Health, November 25, 1996.Docket Number: 96–115. Applicant:Horn Point Environmental Laboratory,Cambridge, MD 21613. Instrument:Fluorometer. Manufacturer: Heinz Walz,GmbH, Germany. Intended Use: Seenotice at 61 FR 59417, November 22,1996. Reasons: The foreign instrumentprovides: (1) an actinic intensity of upto 5000 W/m 2 and (2) detection ofchloroplast or algal suspensions to 1 mgchlorophyll per liter. Advice receivedfrom: National Institutes of Health,November 25, 1996.Docket Number: 96–118. Applicant:The Pennsylvania State University,University Park, PA 16802. Instrument:Accessories for CCD Microscope.Manufacturer: Linkam ScientificInstruments, Ltd., United Kingdom.Intended Use: See notice at 61 FR66018, December 16, 1996. Reasons:The foreign instrument provides: (1)automatic control of temperature with arange of ¥196°C to 600°C and (2)computer-generated sample imagingwith video text overlay on data imagesfor sample identification and recordingof operating parameters. Advicereceived from: U.S. Geological Survey,January 8, 1997.The National Institutes of Health andthe U.S. Geological Survey advise that(1) the capabilities of each of the foreigninstruments described above arepertinent to each applicant’s intendedpurpose and (2) they know of nodomestic instrument or apparatus ofequivalent scientific value for theintended use of each instrument.We know of no other instrument orapparatus being manufactured in theUnited States which is of equivalentscientific value to any of the foreigninstruments.Frank W. Creel,Director, Statutory Import Programs Staff.[FR Doc. 97–3358 Filed 2–10–97; 8:45 am]BILLING CODE 3510–DS–PApplications for Duty-Free Entry ofScientific InstrumentsPursuant to Section 6(c) of theEducational, Scientific and CulturalMaterials Importation Act of 1966 (Pub.L. 89–651; 80 Stat. 897; 15 CFR part301), we invite comments on thequestion of whether instruments ofequivalent scientific value, for thepurposes for which the instrumentsshown below are intended to be used,are being manufactured in the UnitedStates.Comments must comply with 15 CFR301.5(a)(3) and (4) of the regulations andbe filed within 20 days with theStatutory Import Programs Staff, U.S.Department of Commerce, Washington,D.C. 20230. Applications may beexamined between 8:30 A.M. and 5:00P.M. in Room 4211, U.S. Department ofCommerce, 14th Street and ConstitutionAvenue, N.W., Washington, D.C.Docket Number: 96–144. Applicant:Massachusetts Institute of Technology,Department of Chemistry, 77Massachusetts Avenue, Building 18,Room 591, Cambridge, MA 02139.Instrument: Dual Mixing Stopped-FlowSystem, Model SF–61. Manufacturer:Hi-Tech Scientific, United Kingdom.Intended Use: The article is intended tobe used to conduct pre-steady-statekinetic studies of the reactionmechanisms of multicomponentenzymes and inorganic modelcompounds under controlled conditionsof temperature, pH ionic strength,solvent composition and oxygentension. Application accepted byCommissioner of Customs: December27, 1996.Docket Number: 96–145. Applicant:Georgia Institute of Technology, GeorgiaTech Research Institute, 225 NorthAvenue, Atlanta, GA 30322–0834.Instrument: Ion-Assisted DepositionSystem, Model APS 1104.Manufacturer: Leybold AG. IntendedUse: The instrument will be used instudies of luminescent materials(SrS:Ce,F; SiON; Al 2O 3; Indium tinoxide; ZnS:Mn) that will be deposited asvery thin films on substrate materials.The main thrust of the research will bedevelopment of the ion assisteddeposition technique to deposit theabove materials in crystalline form atrelatively low substrate temperatures(200–500°C). In addition, the instrumentwill be used for educational purposes ingraduate level special topic courses inthin film disposition science offered inthe Electrical Engineering, Physics andMaterial Science and EngineeringSchools. Application accepted byCommissioner of Customs: December27, 1996.Docket Number: 96–146. Applicant:University of California, San Diego,Scripps Institute of Oceanography, 7835Trade Street, San Diego, CA 92121.Instrument: (2) Directional WaveriderBuoys. Manufacturer: Datawell, BV, TheNetherlands. Intended Use: Theinstrument will be deployed across thecontinental shelf to monitor and verifywave evolution modeling efforts.Application accepted by Commissionerof Customs: December 30, 1996.Docket Number: 96–147. Applicant:U.S. Geological Survey, Box 25046, MS

6216 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices977, Denver Federal Center, Denver, CO80225. Instrument: Mass Spectrometer,Model Optima. Manufacturer:Micromass, United Kingdom. IntendedUse: The instrument will be used tostudy the stable isotope variations thatresulted during the formation andhistory of rocks, minerals and gasesfrom a variety of geologic sites andcontexts. Application accepted byCommissioner of Customs: December30, 1996.Docket Number: 96–148. Applicant:Woods Hole Oceanographic Institution,Bell House, MS 39, 221 Oyster PondRoad, Woods Hole, MA 02543–1531.Instrument: Mass Spectrometer, ModelMAT ELEMENT. Manufacturer:Finnigan MAT, Germany. Intended Use:The instrument will be used forelemental and isotopic analyses ofseawater, sediments, microfossils,plankton, corals and rocks. Applicationswill range from the study of natural andartificial radionuclides in theenvironment, the marine chemistry oftrace metals, ecotoxicology, petrology ofbasaltic rocks, paleoceanographicstudies, climate change studies, etc. Inaddition, the instrument will be used toinstruct students in its use. Applicationaccepted by Commissioner of Customs:December 31, 1996.Docket Number: 96–149. Applicant:University of Vermont, Department ofPhysical Therapy, 305 Rowell Building,Burlington, VT 05405–0068. Instrument:Motion Analysis System and TelemgSystem, Model Elite Plus. Manufacturer:Bioengineering Technology & Systems,Italy. Intended Use: The instrument willbe used for human movement studiesfocusing on human gait, posture andbalance and upper extremity movement.These studies are aimed at quantifyingand understanding normal anddisordered human movement fromneurological, physiologic,biomechanical and behavioralperspectives. Application accepted byCommissioner of Customs: December31, 1996.Frank W. Creel,Director, Statutory Import Programs Staff.[FR Doc. 97–3360 Filed 2–10–97; 8:45 am]BILLING CODE 3510–DS–PUniversity of Wyoming; Notice ofDecision on Application for Duty-FreeEntry of Scientific InstrumentThis decision is made pursuant toSection 6(c) of the Educational,Scientific, and Cultural MaterialsImportation Act of 1966 (Pub. L. 89–651, 80 Stat. 897; 15 CFR part 301).Related records can be viewed between8:30 a.m. and 5:00 p.m. in Room 4211,U.S. Department of Commerce, 14th andConstitution Avenue, N.W.,Washington, D.C.Docket Number: 96–117. Applicant:University of Wyoming, Laramie, WY82071–3006. Instrument: ElectronMicroprobe, Model JXA–8900/5CH.Manufacturer: JEOL Ltd., Japan.Intended Use: See notice at 61 FR66017, December 16, 1996.Comments: None received. Decision:Approved. No instrument of equivalentscientific value to the foreigninstrument, for such purposes as it isintended to be used, is beingmanufactured in the United States.Reasons: The foreign instrumentprovides high accuracy elementalanalysis of surface microareas with ascanning image magnification of × 40 to300 000 (WD: 11 mm) and a secondaryelectron image resolution to 6 nm. TheNational Institute of Standards andTechnology advises that (1) thesecapabilities are pertinent to theapplicant’s intended purpose and (2) itknows of no domestic instrument orapparatus of equivalent scientific valueto the foreign instrument for theapplicant’s intended use.We know of no other instrument orapparatus of equivalent scientific valueto the foreign instrument which is beingmanufactured in the United States.Frank W. Creel,Director, Statutory Import Programs Staff.[FR Doc. 97–3359 Filed 2–10–97; 8:45 am]BILLING CODE 3510–DS–PNational Oceanic and AtmosphericAdministrationEnvironmental Protection AgencyCoastal Nonpoint Pollution ControlProgram: Proposed FindingsDocuments, EnvironmentalAssessments, and Findings of NoSignificant ImpactAGENCY: National Oceanic andAtmospheric Administration,Department of Commerce, andEnvironmental Protection Agency.ACTION: Notice of Availability ofProposed Findings Documents,Environmental Assessments, andFindings of No Significant Impact onApproval of Coastal Nonpoint PollutionControl Programs for New Hampshire,Mississippi, Alabama and Oregon.SUMMARY: Notice is hereby given of theavailability of the Proposed FindingsDocuments, Environmental Assessments(EA’s), and Findings of No SignificantImpact for New Hampshire, Mississippi,Alabama and Oregon. Coastal states andterritories were required to submit theircoastal nonpoint programs to theNational Oceanic and AtmosphericAdministration (NOAA) and the U.S.Environmental Protection Agency (EPA)for approval in July 1995. The Findingsdocuments were prepared by NOAAand EPA to provide the rationale for theagencies’ decision to approve each stateand territory coastal nonpoint pollutioncontrol program. Section 6217 of theCoastal Zone Act ReauthorizationAmendments (CZARA), 16 U.S.C.section 1455b, requires states andterritories with coastal zonemanagement programs that havereceived approval under section 306 ofthe Coastal Zone Management Act todevelop and implement coastalnonpoint pollution control programs.The EA’s were prepared by NOAA,pursuant to the National EnvironmentalPolicy Act (NEPA), 42 U.S.C. sections4321 et seq., to assess the environmentalimpacts associated with the approval ofthe coastal nonpoint pollution controlprograms submitted to NOAA and EPAby New Hampshire, Mississippi,Alabama and Oregon.NOAA and EPA have proposed toapprove, with conditions, the coastalnonpoint pollution control programssubmitted by New Hampshire,Mississippi, Alabama and Oregon. Therequirements of 40 CFR Parts 1500–1508(Council of Environmental Quality(CEQ) regulations to implement theNational Environmental Policy Act)apply to the preparation of theEnvironmental Assessments.Specifically, 40 CFR section 1506.6requires agencies to provide publicnotice of the availability ofenvironmental documents. This noticeis part of NOAA’s action to comply withthis requirement.Copies of the Proposed FindingsDocuments, EnvironmentalAssessments, and Findings of NoSignificant Impact may be obtainedupon request from: Joseph P. Flanagan,Coastal Programs Division (N/ORM3),Office of Ocean and Coastal ResourceManagement, NOS, NOAA, 1305 East-West Highway, Silver Spring, Maryland,20910, tel. (301) 713–3121, x201.DATES: Individuals or organizationswishing to submit comments on theproposed Findings or EnvironmentalAssessments should do so by March 12,1997.ADDRESSES: Comments should be madeto: Joseph A. Uravitch, Coastal ProgramsDivision (N/ORM3), Office of Ocean andCoastal Resource Management, NOS,NOAA, 1305 East-West Highway, SilverSpring, Maryland, 20910, tel. (301) 713–3155, x195.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6217(Federal Domestic Assistance Catalog 11.419Coast Zone Management ProgramAdministration)Dated: February 6, 1997.David L. Evans,Acting Deputy Assistant, Administrator forOcean Services and Coastal ZoneManagement, National Oceanic andAtmospheric Administration.Robert H. Wayland, III,Director, Office of Wetlands, Oceans andWatersheds, Environmental ProtectionAgency.[FR Doc. 97–3397 Filed 2–10–97; 8:45 am]BILLING CODE 3510–12–M[I.D. 020497B]Gulf of Mexico Fishery ManagementCouncil; Public MeetingAGENCY: National Marine FisheriesService (NMFS), National Oceanic andAtmospheric Administration (NOAA),Commerce.ACTION: Notice of public meeting.SUMMARY: The Gulf of Mexico FisheryManagement Council (Council) willconvene a public meeting of theStanding and Special Reef FishScientific and Statistical Committee(SSC).DATES: The meeting will be held onMarch 3, 1997, from 9:00 a.m. to 4:00p.m.ADDRESSES: The meeting will be held atthe Holiday Inn Crown Plaza, 333Poydras Street, New Orleans, LA;telephone 504–525–9444.Council address: Gulf of MexicoFishery Management Council, 3018 U.S.Highway 301 North, Suite 1000, Tampa,FL 33619.FOR FURTHER INFORMATION CONTACT:Wayne E. Swingle, Executive Director,Gulf of Mexico Fishery ManagementCouncil; telephone: 813–228–2815.SUPPLEMENTARY INFORMATION: The ReefFish SSC will review additionalanalyses of shrimp trawl bycatch of redsnapper prepared by NMFS. Theseanalyses may include revisions to thedata base and to the methodology basedon recommendations developed at theReef Fish Stock Assessment Panel(RFSAP) meeting held February 12–14,1997.The SSC will also considerrecommendations, if any, of the RFSAPfor phasing in over a 3-year periodlevels of total allowable catch, baglimits, and quotas for vermilion snapperin the Gulf of Mexico. The SSC willdevelop their recommendations to theCouncil on these issues.Special AccommodationsThis meeting is physically accessibleto people with disabilities. Requests forsign language interpretation or otherauxiliary aids should be directed toAnne Alford at the Council (seeADDRESSES) by February 24, 1997.Dated: February 5, 1997.Bruce Morehead,Acting Director, Office of SustainableFisheries, National Marine Fisheries Service.[FR Doc. 97–3259 Filed 2–10–97; 8:45 am]BILLING CODE 3510–22–FPatent and Trademark Office[Docket No. 970129014–7014–01]RIN 0651–XX09Interim Guidelines for the Examinationof Claims Directed to Species ofChemical Compositions Based Upon aSingle Prior Art ReferenceAGENCY: Patent and Trademark Office,Commerce.ACTION: Notice.SUMMARY: The Patent and TrademarkOffice (PTO) requests comments fromany interested member of the public oninterim guidelines to be used by officepersonnel in their review of patentapplications which contain claimsdirected to a species or subgenus ofchemical compositions for compliancewith 35 U.S.C. 103 based upon a singleprior art reference which discloses agenus embracing the claimed species orsubgenus but does not expresslydescribe the particular claimed speciesor subgenus.DATES: The interim guidelines areeffective February 11, 1997.Written comments on the interimguidelines will be accepted by the PTOuntil April 14, 1997.ADDRESSES: Written comments shouldbe addressed to the attention of LindaMoncys Isacson, Office of the Solicitor,P.O. Box 15667, Arlington, Virginia22215 or to Linda S. Therkorn, BoxComments, Assistant Commissioner forPatents, Washington, DC. 20231, or byfacsimile transmission to (703) 305–9373 or by electronic mail to bairdcomments@uspto.gov.Written comments will be madeavailable for public inspection at thePatent Search Room, Crystal Plaza 3,2021 South Clark Place, Arlington, VA.In addition, comments provided inmachine-readable format will beavailable through the PTO’s Website athttp://www.uspto.gov.FOR FURTHER INFORMATION CONTACT:Linda Moncys Isacson, Office of theSolicitor, P.O. Box 15667, Arlington,Virginia 22215 or Linda S. Therkorn,Box Comments, Assistant Commissionerfor Patents, Washington, DC. 20231, orby facsimile transmission to (703) 305–9373 or by electronic mail to bairdcomments@uspto.gov.SUPPLEMENTARY INFORMATION: TheCommissioner of Patents andTrademarks issued a Notice in theOfficial Gazette (O.G.) on April 17, 1995(1174 O.G. 68), withdrawing the Office’sMarch 22, 1994 O.G. Notice (1161 O.G.314). Both notices were entitled ‘‘In reBaird.’’ Pursuant to the April 17, 1995O.G. Notice, the following interimexamination guidelines are beingpublished for public comment. Thepurpose of these guidelines is to assistPTO personnel in the examination ofapplications which contain claimsdirected to a species or subgenus ofchemical compositions for compliancewith 35 U.S.C. 103 based upon a singleprior art reference which discloses agenus embracing the claimed species orsubgenus but does not expresslydescribe the particular claimed speciesor subgenus. Thereof, these interimguidelines will be referred to as ‘‘Genus-Species Guidelines.’’It has been determined that theseinterim guidelines are not a significantrule for purposes of Executive Order12866. Because these guidelines governinternal practices, they are exempt fromnotice and comment rulemaking under5 U.S.C. 553(b)(A).Members of the public may presentwritten comments on these guidelines.Written comments should include thefollowing information:—Name and affiliation of the individualresponding;—An indication of whether thecomments offered represent views ofthe respondent’s organization or arethe respondent’s personal views; and—If applicable, information on therespondent’s organization, includingthe type of organization (e.g.,business, trade group, university,nonprofit organization).The PTO is particularly interested incomments relating to the accuracy of theemphasized prior art teachings, andcomments identifying any additionalteachings that should be emphasized indetermining whether a prima facie caseof obviousness exists in the types ofcases covered by these interimguidelines. The PTO is also interested incomments relating to the effect theseguidelines may have on futureapplication submissions.

6218 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesDated: February 5, 1997.Bruce A. Lehman,Assistant Secretary of Commerce andCommissioner of Patents and Trademarks.I. Interim Guidelines for theExamination of Claims Directed toSpecies of Chemical CompositionsBased Upon a Single Prior ArtReferenceThese ‘‘Genus-Species Guidelines’’are to assist Office personnel in theexamination of applications whichcontain claims to species or a subgenusof chemical compositions forcompliance with 35 U.S.C. 103 basedupon a single prior art reference whichdiscloses a genus encompassing theclaimed species or subgenus but doesnot expressly disclose the particularclaimed species or subgenus. Officepersonnel should attempt to findadditional prior art to show that thedifferences between the prior artprimary reference and the claimedinvention as a whole would have beenobvious. Where such additional prior artis not found, Office personnel shouldfollow these guidelines to determinewhether a single reference 35 U.S.C. 103rejection would be appropriate. Theguidelines are based on the Office’scurrent understanding of the law andare believed to be fully consistent withbinding precedent of the SupremeCourt, the Federal Circuit, and theFederal Circuit’s predecessor courts.The analysis of the guidelines beginsat the point during examination after asingle prior art reference is founddisclosing a genus encompassing theclaimed species or subgenus. Beforereaching this point, Office personnelshould follow normal examinationprocedures. Accordingly, Officepersonnel should first analyze theclaims as a whole in light of andconsistent with the written description,considering all claim limitations. 1 Next,Office personnel should conduct athorough search of the prior art andidentify all relevant references. 2 If themost relevant prior art consists of asingle prior art reference disclosing agenus encompassing the claimedspecies or subgenus, Office personnelshould follow the guidelines set forthherein.These guidelines do not constitutesubstantive rulemaking and hence donot have the force and effect of law.Rather, they are to assist Officepersonnel in analyzing claimed subjectmatter for compliance with substantivelaw. Thus, rejections must be basedupon the substantive law, and it is theserejections which are appealable, not anyfailure by Office personnel to followthese guidelines.Office personnel are to rely on theseguidelines in the event of anyinconsistent treatment of issues betweenthese guidelines and any earlierprovided guidance from the Office.II. Determine Whether the ClaimedSpecies or Subgenus Would Have BeenObvious to One of Ordinary Skill in thePertinent Art at the Time the InventionWas MadeThe patentability of a claim to aspecific compound or subgenusembraced by a prior art genus should beanalyzed no differently than any otherclaim for purposes of 35 U.S.C. 103. 3 Adetermination of patentability under 35U.S.C. 103 should be made upon thefacts of the particular case in view of thetotality of the circumstances. 4 Use of perse rules by Office personnel is improperfor determining whether claimed subjectmatter would have been obvious under35 U.S.C. 103. 5 The fact that a claimedspecies or subgenus is encompassed bya prior art genus is not sufficient byitself to establish a prima facie case ofobviousness. 6A proper obviousness analysisinvolves a three-step process. First,Office personnel should establish aprima facie case of unpatentabilityconsidering the factors set out by theSupreme Court in Graham v. JohnDeere. 7 If a prima facie case isestablished, the burden shifts toapplicant to come forward with rebuttalevidence or argument to overcome theprima facie case. 8Finally, Office personnel shouldevaluate the totality of the facts and allof the evidence to determine whetherthey still support a conclusion that theclaimed invention would have beenobvious to one of ordinary skill in theart at the time the invention was made. 9A. Establishing a Prima Facie Case ofObviousnessTo establish a prima facie case ofobviousness in a genus-species chemicalcomposition situation, as in any other35 U.S.C. 103 case, it is essential thatOffice personnel find some motivationor suggestion to make the claimedinvention in light of the prior artteachings. 10 In order to find suchmotivation or suggestion there shouldbe a reasonable likelihood that theclaimed invention would have theproperties disclosed by the prior artteachings. 11 These disclosed findingsshould be made with a completeunderstanding of the first three‘‘Graham factors.’’ 12 Thus, Officepersonnel should (1) determine the‘‘scope and content of the prior art’’; (2)ascertain the ‘‘differences between theprior art and the claims at issue’’; and(3) determine ‘‘the level of ordinary skillin the pertinent art.’’ 131. Determine the Scope and Content ofthe Prior ArtAs an initial matter, Office personnelshould determine the scope and contentof the relevant prior art. Each referencemust qualify as prior art under 35 U.S.C.102, 14 and should be in the field ofapplicant’s endeavor, or be reasonablypertinent to the particular problem withwhich the inventor was concerned. 15In the case of a prior art referencedisclosing a genus, Office personnelshould make findings as to (1) thestructure of the disclosed prior art genusand that of any expressly describedspecies or subgenus within the genus;(2) any physical or chemical propertiesand utilities disclosed for the genus, aswell as any suggested limitations on theusefulness of the genus, and anyproblems alleged to be addressed by thegenus; (3) the predictability of thetechnology; and (4) the number ofspecies encompassed by the genustaking into consideration all of thevariables possible.2. Ascertain the Differences Between thePrior Art Genus and the ClaimedSpecies or SubgenusOnce a relevant prior art genus isidentified, Office personnel shouldcompare it to the claimed species orsubgenus to determine the differences.Through this comparison, the closestdisclosed species or subgenus in theprior art reference should be identifiedand compared to that claimed. Officepersonnel should make explicit findingson the similarities and differencesbetween the closest prior art referenceand the claimed species or subgenusincluding findings relating to similarityof structure, chemical properties andutilities. 163. Determine the Level of Skill in theArtOffice personnel should evaluate theprior art from the standpoint of thehypothetical person having ordinaryskill in the art at the time the claimedinvention was made. 17 In most cases,the only facts of record pertaining to thelevel of skill in the art will be foundwithin the prior art reference. However,any additional evidence presented byapplicant should be evaluated.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices62194. Determine Whether One of OrdinarySkill in the Art Would Have BeenMotivated To Select the ClaimedSpecies or SubgenusIn light of the findings made relatingto the three Graham factors, Officepersonnel should determine whetherone of ordinary skill in the relevant artwould have been motivated to make theclaimed invention as a hole, i.e., toselect the claimed species or subgenusfrom the disclosed prior art genus. 18 Toaddress this key issue, Office personnelshould consider all relevant prior artteachings, focusing on the following,where present.a. Consider the Size of the Genus.Consider the size of the prior art genus,bearing in mind that size alone cannotsupport an obviousness rejection. 19There is no absolute correlation betweenthe size of the prior art genus and aconclusion of obviousness. 20 Thus, themere fact that a prior art genus containsa small number of members does notcreate a per se rule of obviousness.Some motivation to select the claimedspecies or subgenus must be taught bythe prior art. 21 However, a genus may beso small that it would anticipate theclaimed species or subgenus. Forexample, it has been held that a prior artgenus containing only 20 compoundsinherently anticipated a claimed specieswithin the genus because ‘‘one skilledin (the) art would * * * envisage eachmember’’ of the genus. 22b. Consider the Express Teachings. Ifthe prior art reference expressly teachesa particular reason to select the claimedspecies or subgenus, Office personnelshould point out the express disclosurewhich would have motivated one ofordinary skill in the art to select theclaimed invention. 23c. Consider the Teachings ofStructural Similarity. Consider anyteachings of a ‘‘typical,’’ ‘‘preferred,’’ or‘‘optimum’’ species or subgenus withinthe disclosed genus. If such a species orsubgenus is structurally similar to thatclaimed, its disclosure may motivateone of ordinary skill in the art to choosethe claimed species or subgenus fromthe genus, 24 based on the reasonableexpectation that structurally similarspecies usually have similarproperties. 25 The utility of suchproperties will normally provide somemotivation to make the claimed speciesor subgenus. 26In making an obviousnessdetermination, Office personnel shouldconsider the number of variables whichmust be selected or modified, and thenature and significance of thedifferences between the prior art and theclaimed invention. 27 The closer thephysical and chemical similaritiesbetween the claimed species orsubgenus and any exemplary species orsubgenus disclosed in the prior art, thegreater the expectation that the claimedsubject matter will function in anequivalent manner to the genus. 28Similarly, consider any teaching orsuggestion in the reference of apreferred species or subgenus that issignificantly different in structure fromthe claimed species or subgenus. Sucha teaching may weigh against selectingthe claimed species or subgenus andthus against a determination ofobviousness. 29 For example, teachingsof preferred species of a complex naturewithin a disclosed genus may motivatean artisan of ordinary skill to makesimilar complex species and thus teachaway from making simple specieswithin the genus. 30 Concepts used toanalyze the structural similarity ofchemical compounds in other types ofchemical cases are equally useful inanalyzing genus-species cases. 31Generally, some teaching of a structuralsimilarity will be necessary to suggestselection of the claimed species orsubgenus 32d. Consider the Teachings of SimilarProperties or Uses. Consider theproperties and utilities of thestructurally similar prior art species orsubgenus. It is the properties andutilities that provide real worldmotivation for a person of ordinary skillto make species structurally similar tothose in the prior art. 33 Conversely, lackof any known useful properties weighsagainst a finding of motivation to makeor select a species or subgenus. 34However, the prior art need not disclosea newly discovered property in order forthere to be a prima facie case ofobviousness. 35 If the claimed inventionand the structurally similar prior artspecies share a useful property, that willgenerally be sufficient to motivate anartisan of ordinary skill to make theclaimed species. 36 For example, basedon a finding that a tri-orthoester and atetra-orthoester behave similarly incertain chemical reactions, it has beenheld that one of ordinary skill in therelevant art would have been motivatedto select either structure. 37 In fact,similar properties may normally bepresumed when compounds are veryclose in structure. 38 Thus, evidence ofsimilar properties weighs in favor of aconclusion that the claimed inventionwould have been obvious. 39e. Consider the Predictability of theTechnology. Consider the predictabilityof the technology. 40 If the technology isunpredictable, it is less likely thatstructurally similar species will rendera claimed species obvious because itmay not be reasonable to infer that theywould share similar properties. 41However, obviousness does not requireabsolute predictability, only areasonable expectation of success, i.e., areasonable expectation of obtainingsimilar properties. 42f. Consider Any Other Teaching toSupport the Selection of the Species orSubgenus. The categories of relevantteachings enumerated above are thosemost frequently encountered in a genusspeciescase, but they are not exclusive.Office personnel should consider thetotality of the evidence in each case. Inunusual cases, there may be otherrelevant teachings sufficient to supportthe selection of the species or subgenusand, therefore, a conclusion ofobviousness.5. Make Express Fact-Findings andDetermine Whether They Support APrima Facie Case of ObviousnessBased on the evidence as a whole, 43Office personnel should make expressfact-findings relating to the Grahamfactors, focusing primarily on the priorart teachings discussed above. The factfindingsshould specifically articulatewhat teachings or suggestions in theprior art would have motivated one ofordinary skill in the art to select theclaimed species or subgenus. 4Thereafter, it should be determinedwhether these findings, considered as awhole, support a prima facie case thatthe claimed invention would have beenobvious to one of ordinary skill in therelevant art at the time the inventionwas made.B. Determining Whether RebuttalEvidence Is Sufficient To Overcome thePrima Facie Case of ObviousnessIf a prima facie case of obviousness isestablished, the burden shifts to theapplicant to come forward witharguments and/or evidence to rebut theprima facie case. 45 Rebuttal evidenceand arguments can be presented in thespecification, 46 by counsel, 47 or by wayof an affidavit or declaration under 37CFR 1.132. 48 However, arguments ofcounsel cannot take the place offactually supported objectiveevidence. 49Office personnel should consider allrebuttal arguments and evidencepresented by applicants. 50 Rebuttalevidence may include evidence of‘‘secondary consideration,’’ such as‘‘commercial success, long felt butunsolved needs, (and) failure ofothers,’’ 51 evidence that the claimedinvention yields unexpectedlyimproved properties or properties notpresent in the prior art, 52 or evidencethat the claimed invention was copied

6220 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesby others. 53 It may also includeevidence of the state of the art, the levelof skill in the art, and the beliefs ofthose skilled in the art. 54Consideration of rebuttal evidenceand arguments requires Office personnelto weigh the proffered evidence andarguments. Office personnel shouldavoid giving evidence no weight, exceptin rare circumstances. 55 However, to beentitled to substantial weight theapplicant should establish a nexusbetween the rebuttal evidence and theclaimed invention, 56 i.e., objectiveevidence of nonobviousness must beattributable to the claimed invention. 57Additionally, the evidence must bereasonably commensurate in scope withthe claimed invention. 58 However, anexemplary showing may be sufficient toestablish a reasonable correlationbetween the showing and the entirescope of the claim, when viewed by askilled artisan. 59 On the other hand,evidence of an unexpected propertymay not be sufficient regardless of thescope of the showing. 60 Accordingly,each case should be evaluatedindividually based on the totality of thecircumstances.Office personnel should not evaluaterebuttal evidence for its ‘‘knockdown’’value against the prima facie cases 61 orsummarily dismiss it as not compellingor insufficient. If the evidence isdeemed insufficient to rebut the primafacie case of obviousness, Officepersonnel should specifically set forththe facts and reasoning that justify thisconclusion.III. Reconsider All Evidence andClearly Communicate Findings andConclusionsA determination under 35 U.S.C. 103should rest on all the evidence andshould not be influenced by any earlierconclusion. 62 Thus, once the applicanthas presented rebuttal evidence, Officepersonnel should reconsider any initialobviousness determination in view ofthe entire record. 63 All the proposedrejections and their bases should bereviewed to confirm their correctness.Only then should any rejection beimposed in an Office action. The Officeaction should clearly communicate theOffice’s findings and conclusions,articulating how the conclusions aresupported by the findings.Where applicable, the findings shouldclearly articulate which portions of thereference support any rejection. Explicitfindings on motivation or suggestion toselect the claimed invention should alsobe articulated in order to support a 35U.S.C. 103 ground of rejection. 64Conclusory statements of similarity ormotivation, without any articulatedrationale or evidentiary support, do notconstitute sufficient factual findings.VI. Footnotes1. When evaluating the scope of a claim,every limitation in the claim must beconsidered. E.g., In re Ochiai, 71 F.3d 1565,1572, 37 USPQ2d 1127, 1133 (Fed. Cir.1995). However, the claimed invention maynot be dissected into discrete elements to beanalyzed in isolation, but must be consideredas a whole. E.g., W.L. Gore & Assoc., Inc. v.Garlock, Inc., 721 F.2d 1540, 1548, 220 USPQ303, 309 (Fed. Cir. 1983), cert. denied, 469U.S. 851 (1984); Jones v. Hardy, 727 F.2d1524, 1530, 220 USPQ 1021, 1026 (Fed. Cir.1983) (‘‘treating the advantage as theinvention disregards the statutoryrequirement that the invention be viewed ‘asa whole’ ’’).2. Both claimed and unclaimed aspects ofthe invention should be searched if there isa reasonable expectation that the unclaimedaspects may be later claimed.3. ‘‘The section 103 requirement ofunobviousness is no different in chemicalcases than with respect to other categories ofpatentable inventions.’’ In re Papesch, 315F.2d 381, 385, 137 USPQ 43, 47 (CCPA 1963).4. E.g., In re Dillon, 919 F.2d 688, 692–93,16 USPQ2d 1897, 1901 (Fed. Cir. 1990) (inbanc), cert. denied, 500 U.S. 904 (1991).5. E.g., In re Brouwer, 77 F.3d 422, 425, 37USPQ2d 1663, 1666 (Fed. Cir. 1996); In reOchiai, 71 F.3d 1565, 1572, 37 USPQ2d 1127,1133 (Fed. Cir. 1995); In re Baird, 16 F.3d380, 382, 29 USPQ2d 1550, 1552 (Fed. Cir.1994).6. In re Baird, 16 F.3d 380, 382, 29USPQ2d 1550, 1552 (Fed. Cir. 1994) (‘‘Thefact that a claimed compound may beencompassed by a disclosed generic formuladoes not by itself render that compoundobvious.’’); In re Jones, 958 F.2d 347, 350, 21USPQ2d 1941, 1943 (Fed. Cir. 1992) (FederalCircuit has ‘‘decline[d] to extract from Merck(& Co. v. Biocraft Laboratories Inc., 874 F.2d804, 10 USPQ2d 1843 (Fed. Cir. 1989)) therule that * * * regardless of how broad, adisclosure of a chemical genus rendersobvious any species that happens to fallwithin it.’’). See also In re Deuel, 51 F.3d1552, 1559, 34 USPQ2d 1210, 1215 (Fed. Cir.1995).7. E.g., In re Bell, 991 F.2d 781, 783, 26USPQ2d 1529, 1531 (Fed. Cir. 1993) (‘‘ThePTO bears the burden of establishing a caseof prima facie obviousness.’’); In re Rijckaert,9 F.3d 1531, 1532, 28 USPQ2d 1955, 1956(Fed. Cir. 1993); In re Oetiker, 977 F.2d 1443,1445, 24 USPQ2d 1443, 1444 (Fed. Cir.1992).Graham v. John Deere Co., 383 U.S. 1, 17–18 (1966), requires that to make out a caseof obviousness, one must: (1) Determine thescope and contents of the prior art; (2)ascertain the differences between the priorart and the claims in issue; (3) determine thelevel of skill in the pertinent art; and (4)evaluate any evidence of secondaryconsiderations.8. E.g., Bell, 991 F.2d at 783–84, 26USPQ2d at 1531; Rijckaert, 9 F.3d at 1532,28 USPQ2d at 1956; Oetiker, 977 F.2d at1445, 24 USPQ2d at 1444.9. Id.10. E.g., In re Brouwer, 77 F.3d 422, 425,37 USPQ2d 1663, 1666 (Fed. Cir. 1996)(‘‘[T]he mere possibility that one of the estersor the active methylene group-containingcompounds * * * could be modified orreplaced such that its use would lead to thespecific sulfoalkylated resin recited in claim8 does not make the process recited in claim8 obvious ‘unless the prior art suggested thedesirability of [such a] modification’ orreplacement.’’) (quoting In re Gordon, 733F.2d 900, 902, 221 USPQ 1125, 1127 (Fed.Cir. 1984); In re Vaeck, 947 F.2d 488, 493, 20USPQ2d 1438, 1442 (Fed. Cir. 1991) (‘‘[A]proper analysis under section 103 requires,inter alia, consideration of * * * whether theprior art would have suggested to those ofordinary skill in the art that they shouldmake the claimed composition or device, orcarry out the claimed process.’’).11. The prior art disclosure may beexpress, implicit, or inherent. Regardless ofthe type of disclosure, the prior art mustprovide some motivation to one of ordinaryskill in the art to make the claimed inventionin order to support a conclusion ofobviousness. E.g., Vaeck, 947 F.2d at 493, 20USPQ2d at 1442 (A proper obviousnessanalysis requires consideration of ‘‘whetherthe prior art would also have revealed thatin so making or carrying out (the claimedinvention), those of ordinary skill wouldhave a reasonable expectation of success.’’);In re Dow Chemical Co., 837 F.2d 469, 473,5 USPQ2d 1529, 1531 (Fed. Cir. 1988) (‘‘Theconsistent criterion for determination ofobviousness is whether the prior art wouldhave suggested to one of ordinary skill in theart that this process should be carried outand would have a reasonable likelihood ofsuccess, viewed in the light of the priorart.’’); Hodosh v. Block Drug Co., 786 F.2d1136, 1143 n. 5, 229 USPQ 182, 187 n. 5(Fed. Cir.), cert. denied, 479 U.S. 827 (1986).12. When evidence of secondaryconsiderations such as unexpected results isinitially before the Office, for example, in thespecification, that evidence should beconsidered in deciding whether there is aprima facie case of obviousness. Thedetermination as to whether a prima facieexists should be made on the full recordbefore the Office at the time of thedetermination.13. Graham v. John Deere, 383 U.S. 1, 17,148 USPQ 459, 467 (1966). Accord, e.g., Inre Paulsen, 30 F.3d 1475, 1482, 31 USPQ2d1671, 1676 (Fed. Cir. 1994).14. E.g., Panduit Corp. v. Dennison Mfg.Co., 810 F.2d 1561, 1568, 1 USPQ2d 1593,1597 (Fed. Cir.) (‘‘Before answering Graham’s‘content’ inquiry, it must be known whethera patent or publication is in the prior artunder 35 U.S.C. § 102.’’), cert. denied, 481U.S. 1052 (1987).15. In re Oetiker, 977 F.2d 1443, 1447, 24USPQ2d 1443, 1445 (Fed. Cir. 1992). Accord,e.g., In re Clay, 966 F.2d 656, 658–59, 23USPQ2d 1058, 1060 (Fed. Cir. 1992).16. In Stratoflex, Inc. v. Aeroquip Corp.,713 F.2d 1530, 1537, 218 USPQ 871, 877(Fed. Cir. 1983), the Court noted that ‘‘thequestion under 35 U.S.C. 103 is not whetherthe differences [between the claimedinvention and the prior art] would have beenobvious’’ but ‘‘whether the claimed invention

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6221as a whole would have been obvious.’’(emphasis in original).17. See, Ryko Manufacturing Co. v. Nu-StarInc., 950 F.2d 714, 718, 21 USPQ2d 1053,1057 (Fed. Cir. 1991) (‘‘The importance ofresolving the level of ordinary skill in the artlies in the necessity of maintainingobjectivity in the obviousness inquiry.’’);Uniroyal Inc. v. Rudkin-Wiley Corp., 837F.2d 1044, 1050, 5 USPQ2D 1434, 1438 (Fed.Cir.), cert. denied, 488 U.S. 825 (1988)(evidence must be viewed from position ofordinary skill, not of an expert).18. E.g., Ochiai, 71 F.3d at 1569–70, 37USPQ2d at 1131; Deuel, 51 F.3d at 1557, 34USPQ2d at 1214 (‘‘[A] prima facie case ofunpatentability requires that the teachings ofthe prior art suggest the claimed compoundsto a person of ordinary skill in the art.’’(emphasis in original)); Jones, 958 F.2d at351, 21 USPQ2d at 1943–44 (Fed. Cir. 1992);Dillon, 919 F.2d at 692, 16 USPQ2d at 1901;In re Lalu, 747 F.2d 703, 705, 223 USPQ1257, 1258 (Fed. Cir. 1984) (‘‘The prior artmust provide one of ordinary skill in the artthe motivation to make the proposedmolecular modifications needed to arrive atthe claimed compound.’’). See also In reKemps, 97 F.3d 1427, 1430, 40 USPQ2d1309, 1311 (Fed. Cir. 1996) (discussingmotivation to combine).19. See, e.g., Baird, 16 F.3d at 383, 29USPQ2d at 1552 (observing that ‘‘it is not themere number of compounds in this limitedclass which is significant here but, rather, thetotal circumstances involved’’).20. Id.21. See, e.g., Deuel, 51 F.3d at 1558–59, 34USPQ2d at 1215 (‘‘No particular one of theseDNAs can be obvious unless there issomething in the prior art to lead to theparticular DNA and indicate that it should beprepared.’’); Baird, 16 F.3d at 382–83, 29USPQ2d at 1552; Bell, 991 F.2d at 784, 26USPQ2d at 1531 (‘‘Absent anything in thecited prior art suggesting which of the 10 36possible sequences suggested byRinderknecht corresponds to the IGF gene,the PTO has not met its burden ofestablishing that the prior art would havesuggested the claimed sequences.’’).22. In re Petering, 301 F.2d 676, 681, 133USPQ 275, 280 (CCPA 1962) (emphasis inoriginal). Accord In re Schaumann, 572 F.2d312, 316, 197 USPQ 5, 9 (CCPA 1978) (priorart genus encompassing claimed specieswhich disclosed preference for lower alkylsecondary amines and properties possessedby the claimed compound constituteddescription of claimed compound forpurposes of 35 U.S.C. 102(b)). C.f., In reRuschig, 343 F.2d 965, 974, 145 USPQ 274,282 (CCPA 1965) (Rejection of claimedcompound in light of prior art genus basedon Petering is not appropriate where theprior art does not disclose a smallrecognizable class of compounds withcommon properties.).23. An express teaching may be based ona statement in the prior art reference such asan art recognized equivalence. For example,see Merck & Co. v. Biocraft Labs., 874 F.2d804, 807, 10 USPQ2d 1843, 1846 (Fed. Cir.),cert. denied, 493 U.S. 975 (1989) (holdingclaims directed to diuretic compositionscomprising a specific mixture of amilorideand hydrochlorothiazide were obvious over aprior art reference expressly teaching thatamiloride was a pyrazinoylguanidine whichcould be co-administered with potassiumexcreting diuretic agents, includinghydrochlorothiazide which was a namedexample, to produce a diuretic with desirablesodium and potassium eliminatingproperties). See also, In re Kemps, 97 F.3d1427, 1430, 40 USPQ2d 1309, 1312 (Fed. Cir.1996) (holding there is sufficient motivationto combine teachings of prior art to achieveclaimed invention where one referencespecifically refers to the other).24. E.g., Dillon, 919 F.2d at 696, 16USPQ2d at 1904. See also Deuel, 51 F.3d at1558, 34 USPQ2d at 1214 (‘‘Structuralrelationships may provide the requisitemotivation or suggestion to modify knowncompounds to obtain new compounds. Forexample, a prior art compound may suggestits homologs because homologs often havesimilar properties and therefore chemists ofordinary skill would ordinarily contemplatemaking them to try to obtain compoundswith improved properties.’’).25. E.g., Dillion, 919 F.2d at 693, 16USPQ2d at 1901.26. See id.27. E.g., In re Jones, 958 F.2d 347, 350, 21USPQ2d 1941, 1943 (Fed. Cir. 1992)(reversing obviousness rejection of noveldicamba salt with acyclic structure overbroad prior art genus encompassing claimedsalt, where disclosed examples of genus weredissimilar in structure, lacking an etherlinkage or being cyclic); In re Susi, 440 F.2d442, 445, 169 USPQ 423, 425 (CCPA 1971)(the difference from the particularly preferredsubgenus of the prior art was a hydroxylgroup, a difference conceded by applicant ‘‘tobe of little importance.’’).In the area of biotechnology, anexemplified species may differ from aclaimed species by a conservativesubstitution (‘‘the replacement in a protein ofone amino acid by another, chemicallysimilar, amino acid * * * (which) isgenerally expected to lead to either nochange or only a small change in theproperties of the protein.’’ Dictionary ofBiochemistry and Molecular Biology 97 (JohnWiley & Sons, 2d ed. 1989)). The effect of aconservative substitution on protein functiondepends on the nature of the substitution andits location in the chain. Although at somelocations a conservative substitution may bebenign, in some proteins only one amino acidis allowed at a given position. For example,the gain or loss of even one methyl group candestabilize the structure if close packing isrequired in the interior of domains. JamesDarnell et al., Molecular Cell Biology 51 (2ded. 1990).28. E.g., Dillion, 919 F.2d at 696, 16USPQ2d at 1904 (and cases cited therein).C.f. Baird, 16 F.3d at 382–83, 29 USPQ2d at1552 (disclosure of dissimilar species canprovide teaching away).29. Baird, 16 F.3d at 382–83, 29 USPQ2dat 1552 (reversing obviousness rejection ofspecies in view of large size of genus anddisclosed ‘‘optimum’’ species which differedgreatly from and were more complex than theclaimed species); Jones, 958 F.2d at 350, 21USPQ2d at 1943 (reversing obviousnessrejection of novel dicamba salt with acyclicstructure over broad prior art genusencompassing claimed salt, where disclosedexamples of genus were dissimilar instructure, lacking an ether linkage or beingcyclic).30. Baird, 16 F.3d at 382, 29 USPQ2d at1552. See also Jones, 958 F.2d at 350, 21USPQ2d at 1943 (disclosed salts of genusheld not sufficiently similar in structure torender claimed species prima facie obvious).31. For example, a claimed tetra-orthoesterfuel composition was held to be obvious inlight of a prior art tri-orthoester fuelcomposition based on their structural andchemical similarity and similar use as fueladditives. Dillion, 919 F.2d at 692–93, 16USPQ2d at 1900–02.Likewise, claims to amitriptyline used asan antidepressant were held obvious in lightof the structural similarity to imipramine, aknown antidepressant prior art compound,where both compounds were tricyclicdibenzo compounds and differed structurallyonly in the replacement of the unsaturatedcarbon atom in the center ring ofamitriptyline with a nitrogen atom inimipramine. In re Merck & Co., 800 F.2d1091, 1096–97, 231 USPQ 375, 378–79 (Fed.Cir. 1986).Similarly, a claimed protein compoundhaving an amino acid sequence includingMet-Phe-Pro-Leu-(Asp) 4-Lys-Y was held to beobvious in light of structural similarities tothe prior art. One reference providedmotivation to create fusion proteins in theforms X-(Asp) 4-Lys-Y. Other referencestaught positioning Met at the start of theamino acid sequence and that the sequencesPhe-Pro-Ile or Leu-Pro-Leu could serve as Xin the basic formula. The known structuralsimilarity of Ile and Leu meant thatappellants merely substituted one elementknown in the art for a known equivalent.Thus, the substitution was held to beobvious. In re Mayne, No. 95–1522, slip op.at 6–8 (Fed. Cir. Jan. 17, 1997).Other structural similarities have beenfound to support a prima facie case ofobviousness. E.g., In re May, 574 F.2d 1082,1093–95, 197 USPQ 601, 610–11 (CCPA1978) (stereoisomers); In re Wilder, 563 F.2d457, 460, 195 USPQ 426, 429 (CCPA 1977)(adjacent homologs and structural isomers);In re Hoch, 428 F.2d 1341, 1344, 166 USPQ406, 409 (CCPA 1970) (acid and ethyl ester);In re Druey, 319 F.2d 237, 240, 138 USPQ 39,41 (CCPA 1963) (omission of methyl groupfrom pyrazole ring).32. Id.33. Dillion, 919 F.2d at 697, 16 USPQ2d at1905; In re Stemniski, 444 F.2d 581, 586, 170USPQ 343, 348 (CCPA 1971).34. In re Albrecht, 514 F.2d 1389, 1392,1395–96, 185 USPQ 585, 587, 590 (CCPA1975) (The prior art compound so irritatedthe skin that it could not be regarded asuseful for the disclosed anesthetic purpose,and therefore a person skilled in the artwould not have been motivated to makerelated compounds.); Stemniski, 444 F.2d at586, 170 USPQ at 348 (close structuralsimilarity alone is not sufficient to create aprima facie case of obviousness when thereference compounds lack utility, and thusthere is no motivation to make relatedcompounds.).

6222 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices35. Dillion, 919 F.2d at 697, 16 USPQ2d at1904–05 (and cases cited therein).36. E.g., id.37. Id. at 692, 16 USPQ2d at 1900–01.38. Dillion, 919 F.2d at 693, 696, 16USPQ2d at 1901, 1904. See also In reGrabiak, 769 F.2d 729, 731, 226 USPQ 870,871 (Fed. Cir. 1985) (‘‘When chemicalcompounds have ‘very close’ structuralsimilarities and similar utilities, withoutmore a prima facie case may be made.’’).39. Dillion, 919 F.2d at 697–98, 16USPQ2d at 1905; In re Wilder, 563 F.2d 457,461, 195 USPQ 426, 430 (CCPA 1977); In reLinter, 458 F.2d 1013, 1016, 173 USPQ 560,562 (CCPA 1972).40. See, e.g., Dillion, 919 F.2d at 692–97,16 USPQ2d at 1901–05; In re Grabiak, 769F.2d 729, 732–33, 226 USPQ 870, 872 (Fed.Cir. 1985).41. See e.g., In re May, 574 F.2d 1082,1094, 197 USPQ 601, 611 (CCPA 1978)(prima facie obviousness of claimed analgesiccompound based on structurally similar priorart isomer was rebutted with evidencedemonstrating that analgesia and addictionproperties could not be reliably predicted onthe basis of chemical structure); In reSchechter, 205 F.2d 185, 191, 98 USPQ 144,150 (CCPA 1953) (unpredictability in theinsecticide field, with homologs, isomers andanalogs of known effective insecticideshaving proven ineffective as insecticides, wasconsidered as a factor weighing against aconclusion of obviousness of the claimedcompounds).42. See, e.g., In re O’Farrell, 853 F.2d 894,903, 7 USPQ2d 1673, 1681 (Fed. Cir. 1988).43. In re Bell, 991 F.2d 781, 784, 26USPQ2d 1529, 1531 (Fed. Cir. 1993); In reKulling, 897 F.2d 1147, 1149, 14 USPQ2d1056, 1057 (Fed. Cir. 1990).44. Kulling, 897 F.2d at 1149, 14 USPQ2dat 1058; Panduit Corp. v. Dennison Mfg. Co.,810 F.2d 1561, 1579 n.42, 1 USQP2d 1593,1606 n.42 (Fed. Cir.), cert. denied, 481 U.S.1052 (1987).45. E.g., Dillon, 919 F.2d at 692, 16USPQ2d at 1901.46. In re Soni, 54 F. 3d 746, 750, 34USPQ2d 1684, 1687 (Fed. Cir. 1995).47. In re Chu, 66 F.3d 292, 299, 36 USPQ2d1089, 1094–95 (Fed. Cir. 1995).48. E.g., Soni, 54 F.3d at 750, 34 USPQ2d1687; In re Piasecki, 745 F.2d 1468, 1474,223, USPQ 785, 789–90 (Fed. Cir. 1984).49. E.G., In re Huang, 100 F.3d 135, 139–40, 40 USPQ2d 1685, 1689 (Fed. Cir. 1996);In re De Blauwe, 736 F.2d 699, 705, 222USPQ 191, 196 (Fed. Cir. 1984).50. E.G., In re Soni, 54 F.3d 746, 750, 34USPQ2d 1684, 1687 (Fed. Cir. 1995) (errornot to consider evidence presented in thespecification). C.F., In re Alton, 76 F.3d 1168,37 UPSPQ2d 1578 (Fed. Cir. 1996) (error notto consider factual evidence submitted tocounter a section 112 rejection); In re Beattie,974 F.2d 1309, 1313, 24 USPQ2d 1040, 1042–43 (Fed. Cir. 1992) (Office personnel shouldconsider declarations from those skilled inthe art praising the claimed invention andopining that the art teaches away from theintention.); Piasecki, 745 F.2d at 1472, 223USPQ at 788 (‘‘(Rebuttal evidence) may relateto any of the Graham factors including the socalledsecondary considerations.’’).51. Graham v. John Deere Co., 383 U.S. at17, 148 USPQ at 467. See also, e.g., In rePiasecki, 745 F.2d at 1468, 1473, 223 USPQ785, 788 (Fed. Cir. 1984) (commercialsuccess).52. Rebuttal evidence may consist of ashowing that the claimed compoundpossesses unexpected properties. Dillon, 919F.2d at 692–93, 16 USPQ2d at 1901. Ashowing of unexpected results must be basedon evidence, not argument or speculation. Inre Mayne, No. 95–1522, slip op. at 9–10 (Fed.Cir. Jan. 17, 1997) (conclusory statementsthat claimed compound posses unusuallylow immune response or unexpectedbiological activity that is unsupported bycomparative data held insufficient toovercome prima facie case of obviousness).53. E.G., In re GPAC, 57 F.3d 1573, 1580,35 USPQ2d 1116, 1121 (Fed. Cir. 1995);Hybritech Inc. v. Monoclonal Antibodies, 802F.2d 1367, 1380, 231 USPQ 81, 90 (Fed. Cir.1986), cert. denied, 480 U.S. 947 (1987).54. E.G., In re Oelrich, 579 F.2d 86, 91–92,198 USPQ 210, 214 (CCPA 1978) (Expertopinions regarding the level of skill in the artwere probative of the nonobviousness of theclaimed invention.); Piasecki, 745 F.2d at1471, 1473–74, 223 USPQ at 790 (Evidenceof non-technological nature is pertinent tothe conclusion of obviousness. Thedeclarations of those skilled in the artregarding the need for the invention and itsreception by the art were improperlydiscounted by the Board); Beattie, 974 F.2dat 1313, 24 USPQ2d at 1042–43 (Sevendeclarations provided by music teachersopining that the art teaches away from theclaimed invention must be considered, butwere not probative because they did notcontain facts and did not deal with thespecific prior art that was the subject of therejection.).55. Id. See also In re Alton, 76 F.3d 1168,1174–75, 37 USPQ2d 1578, 1582–83 (Fed.Cir. 1996).56. The Federal Circuit has acknowledgedthat applicant bears the burden ofestablishing nexus, stating:In the ex parte process of examining apatent application, however, the PTO lacksthe means or resources to gather evidencewhich supports or refutes the applicant’sassertion that the sales constitute commercialsuccess. C.f. Ex parte Remark, 15 USPQ2d1498, 1503 ([BPAI] 1990) (evidentiary routineof shifting burdens in civil proceedingsinappropriate in ex parte prosecutionproceedings because examiner has noavailable means for adducing evidence).Consequently, the PTO must rely upon theapplicant to provide hard evidence ofcommercial success.In re Huang, 100 F.3d 135, 139–40, 40USPQ2d 1685, 1689 (Fed. Cir. 1996). See alsoGPAC, 57 F.3d at 1580, 35 USPQ2d at 1121;In re Paulsen, 30 F.3d 1475, 1482, 31USPQ2d 1671, 1676 (Fed. Cir. 1994).57. E.G., Paulsen, 30 F.3d at 1482, 31USPQ2d at 1676. (Evidence of commercialsuccess of articles not covered by the claimssubject to the 35 U.S.C. 103 rejection was notprobative of nonobviousness).58. E.g., In re Kulling, 897 F.2d 1147, 1149,14 USPQ2d 1056, 1058 (Fed. Cir. 1990); Inre Grasselli, 713 F.2d 731, 743, 218 USPQ769, 777 (Fed. Cir. 1983). In re Soni, 54 F.3d746, 34 USPQ2d 1684 (Fed. Cir. 1995) doesnot change this analysis. In Soni, the Courtdeclined to consider the Office’s argumentthat the evidence of non-obviousness was notcommensurate in scope with the claimbecause it had not been raised by theExaminer. 54 F.3d at 751, 34 USPQ2d at1688.When considering whether profferedevidence is commensurate in scope with theclaimed invention, Office personnel shouldnot require the applicant to show unexpectedresults over the entire range of propertiespossessed by a chemical compound orcomposition. E.g., In re Chupp, 816 F.2d 643,646, 2 USPQ2d 1437, 1439 (Fed. Cir. 1987).Evidence that the compound or compositionpossesses superior and unexpectedproperties in one of a spectrum of commonproperties can be sufficient to rebut a primafacie case of obviousness. Id.For example, a showing of unexpectedresults for a single member of a claimedsubgenus, or a narrow portion of a claimedrange would be sufficient to rebut a primafacie case of obviousness if a skilled artisan‘‘could ascertain a trend in the exemplifieddata that would allow him to reasonablyextend the probative value thereof.’’ In reClemens, 622 F.2d 1029, 1036, 206 USPQ289, 296 (CCPA 1980) (Evidence of theunobviousness of a broad range can beproven by a narrower range when one skilledin the art could ascertain a trend that wouldallow him to reasonably extend the probativevalue thereof.). But see, Grasselli, 713 F.2d at743, 218 USPQ at 778 (evidence of superiorproperties for sodium containingcomposition insufficient to establish the nonobviousnessof broad claims for a catalystwith ‘‘an alkali metal’’ where it was wellknown in the catalyst art that different alkalimetals were not interchangeable andapplicant had shown unexpected results onlyfor sodium-containing materials); In reGreenfield, 571 F.2d 1185, 1189, 197 USPQ227, 230 (CCPA 1978) (evidence of superiorproperties in one species insufficient toestablish the nonobviousness of a subgenuscontaining hundreds of compounds); In reLindner, 457 F.2d 506, 508, 173 USPQ 356,358 (CCPA 1972) (one test not sufficientwhere there was no adequate basis forconcluding the other claimed compoundswould behave the same way).

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices622359. E.g., Chupp, 816 F.2d at 646, 2 USPQ2dat 1439; Clemens, 622 F.2d at 1036, 206USPQ at 296.60. Where the claims are not limited to aparticular use, and where the prior artprovides other motivation to select aparticular species or subgenus, a showing ofa new use may not be sufficient to conferpatentability. See Dillon, 919 F.2d at 692, 16USPQ2d at 1900–01.61. Piasecki, 745 F.2d at 1473, 223 USPQat 788.62. E.g., Piasecki, 745 F.2d at 1472–73, 223USPQ at 788; In re Eli Lilly & Co., 902 F.2d943, 945, 14 USPQ2d 1741, 1743 (Fed. Cir.1990).63. E.g., Piasecki, 745 F.2d at 1472, 223USPQ at 788; Eli Lilly, 902 F.2d at 945, 14USPQ2d at 1743.64. Dillon, 919 F.2d at 693, 16 USPQ2d at1901; In re Mills, 916 F.2d 680, 683, 16USPQ2d 1430, 1433 (Fed. Cir. 1990).BILLING CODE 3510–16–M

6224 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices[FR Doc. 97–3362 Filed 2–10–97; 8:45 am]BILLING CODE 3510–16–CCOMMODITY FUTURES TRADINGCOMMISSIONApplications of the Chicago Board ofTrade as a Contract Market in LongTerm Inflation-Indexed U.S. TreasuryNote Futures and Options ContractsAGENCY: Commodity Futures TradingCommission.ACTION: Notice of availability of theterms and conditions of proposedcommodity futures and optioncontracts.SUMMARY: The Chicago Board of Trade(CBT or Exchange) has applied fordesignation as a contract market in longterm inflation-indexed U.S. Treasurynote futures and option contracts. TheDirector of the Division of EconomicAnalysis (Division) of the Commission,acting pursuant to the authoritydelegated by Commission Regulation140.96, has determined that publicationof the proposals for comment is in thepublic interest, will assist theCommission in considering the views ofinterested persons, and is consistentwith the purposes of the CommodityExchange Act.DATES: Comments must be received onor before March 13, 1997.ADDRESSES: Interested persons shouldsubmit their views and comments toJean A. Webb, Secretary, CommodityFutures Trading Commission, ThreeLafayette Centre, 21st Street NW,Washington, DC 20581. In addition,comments may be sent by facsimile

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6225transmission to facsimile number (202)418–5521, or by electronic mail tosecretary@cftc.gov. Reference should bemade to the CBT long term inflationindexedU.S. Treasury note futures andoptions.FOR FURTHER INFORMATION CONTACT:Please contact Stephen Sherrod of theDivision of Economic Analysis,Commodity Futures TradingCommission, Three Lafayette Centre,21st Street NW, Washington, DC 20581,telephone 202–418–5277. Facsimilenumber: (202) 418–5527. Electronicmail: ssherrod@cftc.govSUPPLEMENTARY INFORMATION: Copies ofthe terms and conditions will beavailable for inspection at the Office ofthe Secretariat, Commodity FuturesTrading Commission, Three LafayetteCentre, 21st Street NW, Washington,D.C. 20581. Copies of the terms andconditions can be obtained through theOffice of the Secretariat by mail at theabove address or by phone at (202) 418–5100.Other materials submitted by the CBTin support of the applications forcontract market designation may beavailable upon request pursuant to theFreedom of Information Act (5 U.S.C.552) and the Commission’s regulationsthereunder (17 C.F.R. Part 145 (1987)),except to the extent they are entitled toconfidential treatment as set forth in 17C.F.R. 145.5 and 145.9. Requests forcopies of such materials should be madeto the FOI, Privacy and Sunshine ActCompliance Staff of the Office of theSecretariat at the Commission’sheadquarters in accordance with 17C.F.R. 145.7 and 145.8.Any person interested in submittingwritten data, views, or arguments on theproposed terms and conditions, or withrespect to other materials submitted bythe CBT, should send such comments toJean A. Webb, Secretary, CommodityFutures Trading Commission, ThreeLafayette Centre, 21st Street NW,Washington, DC 20581 by the specifieddate.Issued in Washington, DC, on February 5,1997.Blake Imel,Acting Director.[FR Doc. 97–3396 Filed 2–10–97; 8:45 am]BILLING CODE 6351–01–PSunshine Act MeetingAGENCY HOLDING THE MEETING:Commodity Futures TradingCommission.TIME AND DATE: 10:30 a.m., Wednesday,February 26, 1997.PLACE: 1155 21st St., N.W., Washington,D.C. 9th Fl. Conference Room.STATUS: Closed.MATTERS TO BE CONSIDERED:Enforcement Matters.CONTACT PERSON FOR MORE INFORMATION:Jean A. Webb, 202–418–5100.Jean A. Webb,Secretary of the Commission.[FR Doc. 97–3486 Filed 2–7–97; 11:58 am]BILLING CODE 6351–01–MSunshine Act MeetingAGENCY HOLDING THE MEETING:Commodity Futures TradingCommission.TIME AND DATE: 10: 30 a.m., Wednesday,February 12, 1997.PLACE: 1155 21st St., N.W., Washington,D.C. 9th Fl. Conference Room.STATUS: Closed.MATTERS TO BE CONSIDERED: Ruleenforcement review.CONTACT PERSON FOR MORE INFORMATION:Jean A. Webb, 202–418–5100.Jean A. Webb,Secretary of the Commission.[FR Doc. 97–3487 Filed 2–7–97; 11:58 am]BILLING CODE 6351–01–MSunshine Act MeetingAGENCY: HOLDING THE MEETING:Commodity Futures TradingCommission.TIME AND DATE: 10:00 a.m., Thursday,February 27, 1997.PLACE: 1155 21st St., N.W., Washington,D.C. Lobby Level Hearing Room.STATUS: Open.MATTERS TO BE CONSIDERED:Final Rulemaking concerning contractMarket Rule Review ProceduresRevised procedures for Commission reviewand approval of applications for ContractMarket Designation and of Exchange Rulesrelating to Contract terms and conditionsfinalrulesApplication by the Coffee, Sugar and CocoaExchange for contract market designationin Basic Formula Price Milk futures andthe options, including a report on issuesinvolving the National Cheese ExchangeUpdate on Commission activitiesCONTACT PERSON FOR FURTHERINFORMATION: Jean A. Webb, 202–418–5100.Jean A. Webb,Secretary of the Commission.[FR Doc. 97–3488 Filed 2–7–97; 11:58 am]BILLING CODE 6351–01–MDEPARTMENT OF DEFENSEOffice of the SecretaryContinued Health Care BenefitProgram (CHCBP) Premium RateChangeAGENCY: Office of the Secretary, DOD.ACTION: Notice.SUMMARY: Premium rates for theDepartment of Defense’s temporary,transitional health care coverage offeredvia the Continued Health Care BenefitProgram (CHCBP) were initiallyestablished in the Fall of 1994. Rateshave not been adjusted since then. Arevision to the rates is necessary inorder for the rates to keep pace with theincrease in expenses incurred inoperating the program. Publication ofthe new rates will allow the Departmentto change the premium and will alsoprovide interested beneficiaries with thecost information necessary to makeinformed enrollment decisions.Therefore, effective May 1, 1997,CHCBP quarterly premiums will beincreased to the following levels:Individual—$993; Family—$1,996.CHCBP premiums will continue to bereviewed annually by the Office of theAssistant Secretary of Defense andannouncement of any further revisionswill be published accordingly.FOR FURTHER INFORMATION CONTACT: Mr.Gunther J. Zimmerman, Office of theAssistant Secretary of Defense (HealthAffairs), (703) 695–3331.ADDRESSES: TRICARE Support Office(TSO)/Office of the Civilian Health andMedical Program of the UniformedServices (OCHAMPUS), ProgramDevelopment Branch; Aurora, Colorado80045–6900.SUPPLEMENTARY INFORMATION: OnSeptember 30, 1994, a final ruleregarding benefits and operationalissued associated with implementationof the Continued Health Care BenefitProgram was published (59 FR 49817).The CHCBP was established byCongress in section 4408 of the NationalDefense Authorization Act for FiscalYear 1993, Public Law 102–484, whichamended title 10, United States Code,by adding section 1078a. The lawdirected the implementation of aprogram of temporary continued healthbenefits coverage for certain formerbeneficiaries of the Department ofDefense, comparable to the healthbenefits provided for former civilianemployees of the Federal government.The statute directed that the benefitsoffered by the CHCBP be comparable tothose offered to ‘‘similarly situated’’former civilian employees of the Federal

6226 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesgovernment. As is the case for thoseemployees, the costs are borne by thebeneficiary who pays the entirepremium charge. Additionally, theDepartment of Defense is permitted tocharge up to an additional ten percentof the premium to cover administrativeexpenses. The referenced final ruleindicated that the Department wouldannually review the premium rates andadjust these rates as necessary.The CHCBP became effective October1, 1994. Premiums for the CHCBP aredetermined by enrollment category. TheCHCBP features two enrollmentcategories, which are individual andfamily. Initial quarterly premium rateswere established at Individual—$410;and Family $891.Initial CHCBP rates were based on the1994 Mail Handlers Standard rates. TheOffice of Personnel Management (OPM)quarterly premium rates for MailHandlers Standard increased in 1996and $622 and $1,390 for Familycoverage. However, the Departmentelected not to increase initial CHCBPfiscal year 1995 premium rates for fiscalyear 1996 to allow for a full year ofoperational data to be collected toenable a thorough utilization review tobe conducted. Operational experienceduring fiscal years 1995 and 1996revealed that the initial premiums havenot been sufficient to cover expensesincurred in paying CHCBP claims. Assuch, the Department has had tosupplement premium funds withDefense Health Program funding tocover CHCBP expenses in fiscal year1995 and 1996. Therefore, theDepartment proposes to raise thepremiums for the CHCBP in fiscal year1997 to the Blue Cross/Blue Shield—High Option Level (maximum levelallowable under enacting legislation) tokeep pace with the costs incurred andto reflect the similar increase in FEHBPplans.Dated: February 5, 1997.L.M. Bynum,Alternate OSD Federal Register LiaisonOfficer, Department of Defense.[FR Doc. 97–3243 Filed 2–10–97; 8:45 am]BILLING CODE 5000–04–MCorps of Engineers; Department of theArmyIntent To Prepare a DraftEnvironmental Impact Statement(DEIS) for Long-Term Dredged MaterialManagement at Grand Haven Harbor,MichiganAGENCY: U.S. Army Corps of Engineers,DOD.ACTION: Notice of Intent.SUMMARY: The U.S. Army Corps ofEngineers, Detroit District, is evaluatingthe environmental impacts of long-termdredged material managementalternatives for Grand Haven Harbor,Michigan. The Federal navigationproject at Grand Haven includes anentrance protected by parallel piers andrevetments at the mouth of the GrandRiver, a deep draft channel extendingupstream to Spring Lake, a deep-draftturning basin, and a shallow-draft riverchannel extending 14.5 miles furtherupstream. A study has been undertakento identify a suitable disposal plan fordredged material to be removed over thenext 20 years, to maintain the deep-draftchannel. The deep-draft portion of theproject consists of approximately 2 1 ⁄2miles of channel, 300 feet wide, withdepths varying from 23 feet at theentrance to 21 feet in the remainder ofthe channel. Shoaled material dredgedfrom the outer harbor portion of thenavigation channel (Harbor entrance),consisting primarily of sand, hasroutinely been placed along adjacentshoreline reaches. Silty sand dredgedfrom the inner deep-draft harbor wasplaced at the Harbor Island DisposalFacility which is now filled. A Long-Term Dredged Material ManagementPlan is being developed for the harbor,a Draft Environmental Impact Statement(EIS) is being prepared to evaluatedredged material disposal alternativesproposed as part of this plan. Disposalalternatives under consideration includeopen-water placement, uplandplacement, and beneficial use of thematerial. The no Federal actionalternative, which would allow thenavigation channel to shoal in, will alsobe evaluated.FOR FURTHER INFORMATION CONTACT:Questions about the proposed EIS anddredged material management plandevelopment can be directed to Mr. LesE. Weigum, Chief, EnvironmentalAnalysis Branch; Engineering &Planning Division; U.S. Army EngineerDistrict, Detroit; P.O. Box 1027; Detroit,Michigan 48231–1027. Telephone: 313–226–6752.SUPPLEMENTARY INFORMATION: GrandHaven Harbor is located at the mouth ofthe Grand River, on the eastern shore ofLake Michigan, in Ottawa County,Michigan, approximately 30 milesnorthwest of Grand Rapids. The tricitiesof Grand Haven, Spring Lake andFerrysburg cluster around the mouth ofthe Grand River. Project authority forGrand Haven Harbors is from the Riverand Harbor Act of 1866 and subsequentacts.Dredged material management forGrand Haven Harbor historically hasconsisted of two strategies: The outerharbor material, which is primarilysand, has been used to nourish adjacenteroding beaches. Maintenance dredgingof this outer harbor, which includes theentrance canal from Lake Michiganthrough the breakwaters, is projected torequire management of 600,000 cubicyards of dredged material over the next20 years. It is proposed that thismaterial continue to be beneficiallyused for nourishment of erodingbeaches in the harbor vicinity.The inner harbor material, which issand with some silt, has historicallybeen placed at the Harbor Islanddisposal facility located adjacent to theHarbor. Operation practices extendedthe life of the Harbor Island facility butthe facility is not at maximum capacityand is being developed for recreationaluse. Maintenance dredging of this innerharbor portion is projected to requiremanagement of 400,000 cubic yards ofdredged material over the next 20 years.The U.S. Army Corps of Engineers,Detroit District, is currently evaluatingthe environmental impacts of long-termdredged material managementalternatives for dredged material fromthe harbor. An Environmental ImpactStatement will be prepared as acomponent of a 20-year DredgedMaterial Management Plan beingdeveloped for Grand Haven Harbor.Management alternatives for materialremoved form the inner harbor to beevaluated in the EIS include: placementin open water of Lake Michigan, uplandplacement, and beneficial use ofmaterial. The no Federal actionalternative will also be considered. Thefinal 20-year management plan fordredged material may consist of acombination of alternatives andbeneficial use applications.The site identified for open waterplacement of material from the innerharbor is located approximately onemile off shore. The site is an area ofLake Michigan bottomland,approximately 1 ⁄2-mile by 1 ⁄2-mile,located about 3 ⁄4 miles southwest, @225° azimuth from the harbor south pierlight. The site has sufficient water depthto prevent significant disturbance of thedredged material by wind and storminduced wave action in the lake.Dredged material would be transporteddirectly from the dredging operation tothe open water site by floating plant,hydraulic pipeline, or other similarmethods. The suitability of the dredgedmaterial for open-water placement hasbeen determined in accordance with theGreat Lakes Dredged Material Testingand Evaluation Manual (U.S.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6227Environmental Protection Agency andU.S. Army Corps of Engineers 1995),which presents testing and evaluationguidance for proposed discharges ofdredged material into the waters of theUnited States within the Great LakesBasin.Specific upland disposal sites havenot yet been identified for materialplacement but would include at leastone upland disposal site within closevicinity to the channel, as well asupland areas to be used for off loadingor dewatering facilities, for temporaryplacement of material for re-usescenarios.Beneficial use applications to beexplored include, the reconstruction ofan eroded island in the Grand River, useof the material for cover or as needed ina landfill operation, use of material incomposting/soil mixing, forconstruction fill, and other landapplications.The final 20 year Dredged MaterialManagement Plan for removal ofdredged material from Grand HavenHarbor will include the continuedpractice of placement of material fromthe outer harbor to nourish erodingnearby beaches. The plan for 400,000cubic yards of material to be removedover 20 years from the inner harbor islikely to include a combination ofdredged material disposal alternatives.These disposal alternatives will bedependent on a number of factorsincluding, the suitability of the material,the re-use market, economics, andoverall environmental acceptability.Significant issues to be analyzed inthe EIS include potential impacts onwetlands, water quality, fish andwildlife habitat, and cultural resources.Social impacts, including impacts uponrecreation, aesthetics, and the localeconomy, will also be considered.The proposed dredged materialmanagement plan alternatives will bereviewed for compliance with the Fishand Wildlife Act of 1956; the Fish andWildlife Coordination Act of 1958; theNational Historic Preservation Act of1966; the National EnvironmentalPolicy Act (NEPA) of 1969; the CleanAir Act of 1970; the Coastal ZoneManagement Act of 1972; theEndangered Species Act of 1973; theWater Resources Development Act of1976; the Clean Water Act of 1977;Executive Order 11593, Protection andEnhancement of the CulturalEnvironment, May 1971; ExecutiveOrder 11988, Flood Plain Management,May 1977; Executive Order 11990,Wetland Protection, May 1977; andCorps of Engineers, Dept. of the Army,33 CFR Part 230, EnvironmentalQuality: Policy and Procedure forImplementing NEPA.The proposed dredged materialmanagement plan will be coordinatedwith the U.S. Fish and Wildlife Service,the U.S. Environmental ProtectionAgency, the Michigan Department ofEnvironmental Quality, the MichiganDepartment of Natural Resources,Michigan State Historic PreservationOffice, local and regional Indian tribes,as well as other interested individualsand organizations.All are invited to participate in theproposed project scoping and review,including Federal, State, and localagencies, Indian tribes, organizationsand individuals. Questions, concerns,and comments may be directed to theaddress given above. It is anticipatedthat the Draft Environmental ImpactStatement would be made available inlate 1998 for a 45-day public reviewperiod. If necessary, a public meetingwould be held in the Grand HavenHarbor vicinity following release of theDraft EIS.Dated: January 28, 1997.W. Scott Parker,Acting District Engineer.[FR Doc. 97–3305 Filed 2–10–97; 8:45 am]BILLING CODE 3710–GA–MDepartment of the NavyCommunity Redevelopment Authorityand Available Surplus Buildings andLand at Military InstallationsDesignated for Closure: Naval ReserveCenter, Perth Amboy, New JerseySUMMARY: This Notice providesinformation regarding theredevelopment authority that has beenestablished to plan the reuse of theNaval Reserve Center, Perth Amboy,New Jersey, the surplus property that islocated at that base closure site, and thetimely election by the redevelopmentauthority to proceed under newprocedures set forth in the Base ClosureCommunity Redevelopment andHomeless Assistance Act of 1994.ADDRESSES: For further generalinformation, contact John J. Kane,Deputy Division Director, Dept. of Navy,Real Estate Operations, Naval FacilitiesEngineering Command, 200 StovallStreet, Alexandria, VA 22332–2300,telephone (703) 325–0474, or Marian E.Digiamarino, Special Assistant for RealEstate, Base Closure Team, NorthernDivision, Naval Facilities EngineeringCommand, Lester, PA 19113–2090,telephone (610) 595–0762. For moredetailed information regardingparticular properties identified in thisNotice (i.e. acreage, floorplan, sanitaryfacilities, exact street address, etc.),contact Ron Kohri, Activity Manager,Base Closure Team, Northern Division,Naval Facilities Engineering Command,Lester, PA 19113–2090, telephone (610)595–0519.SUPPLEMENTARY INFORMATION: In 1993,the Naval Reserve Center, Perth Amboy,New Jersey, was designated for closurepursuant to the Defense Base Closureand Realignment Act of 1990, PublicLaw 101–510, as amended. Pursuant tothis designation, the land and facilitiesat this installation are declared surplusto the federal government and availablefor use by (a) non-Federal publicagencies pursuant to various statuteswhich authorize conveyance of propertyfor public projects, and (b) homelessprovider groups.Election to Proceed Under NewStatutory ProceduresSubsequently, the Base ClosureCommunity Redevelopment andHomeless Assistance Act of 1994 (Pub.L. 103–421) was signed into law.Section 2 of this statute gives theredevelopment authority at base closuresites the option of proceeding undernew procedures with regard to themanner in which the redevelopmentplan for the base is formulated and howrequests are made for future use of theproperty by homeless assistanceproviders. On December 23, 1994, theGovernor of New Jersey submitted atimely request to proceed under the newprocedures. Accordingly, this noticefulfills the Federal Register publicationrequirement of Section 2(e)(3) of theBase Closure CommunityRedevelopment and HomelessAssistance Act of 1994.Also, pursuant to Section2905(b)(7)(B) of the Defense BaseClosure and Realignment Act of 1990, asamended by the Base ClosureCommunity Redevelopment andHomeless Assistance Act of 1994, thefollowing information regarding theredevelopment authority for and surplusproperty at the Naval Reserve Center,Perth Amboy, NJ is published in theFederal Register.Redevelopment AuthorityThe redevelopment authority for theNaval Reserve Center, Perth Amboy,New Jersey, for purposes ofimplementing the provisions of theDefense Base Closure and RealignmentAct of 1990, as amended, is the City ofPerth Amboy, acting by and through itsMayor, Joseph Vas. For furtherinformation contact the Office of theMayor, City of Perth Amboy, City Hall,Perth Amboy, New Jersey 08861,telephone number is (908) 826–0290.

6228 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesSurplus Property DescriptionsThe following is a listing of the landand facilities at the Naval ReserveCenter, Perth Amboy that are surplus tothe federal government.LandApproximately 2.43 acres of improvedand unimproved fee simple land andapproximately 0.05 acre in easements atthe U.S. Naval Reserve Center, in theCity of Perth Amboy, Middlesex County,New Jersey. In general, all areas arepresently available. The station closedon July 1, 1994.BuildingsThe following is a summary of thefacilities located on the above describedland which are presently available.Property numbers are available onrequest.—Administrative/training facilities; (1structure); Comments: Approx. 29,400square feet.—Garage facilities (1 structure);Comments: Approx. 667 square feet.—Paved areas; Comments: Approx.3,060 square yards. Parking area,roads and sidewalks.—General purpose/berthing wharf (1structure); Comments: Approx. 3,582square feet.—Utility facilities; Comments:Measuring systems vary. Sanitarysewer, water distribution line,(potable), electrical distribution lineand storm sewerExpressions of InterestPursuant to Section 2905(b)(7)(C) ofthe Defense Base Closure andRealignment Act of 1990, as amendedby the Base Closure CommunityRedevelopment and HomelessAssistance Act of 1994, State and localgovernments, representatives of thehomeless, and other interested partieslocated in the vicinity of the NavalReserve Center, Perth Amboy, shallsubmit to said redevelopment authority(City of Perth Amboy) a notice ofinterest, of such governments,representatives and parties in the abovedescribed surplus property, or anyportion thereof. A notice of interestshall describe the need of thegovernment, representative, or partyconcerned for the desired surplusproperty. Pursuant to Section 2905(b)(7)(C) and (D), the redevelopment authorityshall assist interested parties inevaluating the surplus property for theintended use and publish in anewspaper of general circulation inPerth Amboy, New Jersey the date bywhich expressions of interest must besubmitted.Dated: February 5, 1997.D.E. Koenig, Jr.,LCDR, JAGC, USNR, Federal Register LiaisonOfficer.[FR Doc. 97–3344 Filed 2–10–97; 8:45 am]BILLING CODE 3810–FF–PNotice of Announcement of PublicHearing and Notice of Availability ofthe Draft Environmental ImpactStatement (DEIS) for Military Trainingin the Marianas, Territory of Guam andCommonwealth of the NorthernMariana IslandsSUMMARY: The U.S. Pacific Command(USCINCPAC) is announcing the publichearing and availability of the abovereferenced DEIS. The DEIS has beendistributed to various federal, territorial,and commonwealth agencies, electedofficials, individuals and organizationsin the community, public libraries, andthe media. A limited number of singlecopies is available at the address listedat the end of this notice.The DEIS evaluates alternatives fortraining by Navy, Army, Air Force,Marine Corps, National Guard, andArmy Reserve forces on Guam, Rota,Tinian, and Farallon de Medinilla. TheDEIS describes a large number oftraining activities already occurring onthese islands and a small number ofnewly proposed activities or newlyproposed locations for training. Thethree alternatives are: (1) No Action,consisting of all ongoing trainingactivities and all locations in whichsuch training have occurred; (2)Augmented Set of Training Activities,consisting of all requested new trainingactivities and locations, in addition toongoing activities; and (3) Mitigated Setof Training Activities (the preferredalternative), which consists of ongoingand new training activities modified toavoid significant impacts on theenvironment. Therefore, no significantimpacts are expected to result from thepreferred alternative.Introduction of forces existing andproposed training include: aircraftlanding at airfields, paradrops ofpersonnel and cargo, helicopterinsertion/extraction, and amphibiousassaults. Combat training include: Fieldmaneuvers (tactical operations,command post exercises, road andcross-country movement, seizing anairfield, military working dogs), aviationsupport to ground troops (close airsupport, field carrier landing practice,confined area landings, cargo delivery,heliborne water buckets for fire-fighting,medical evacuations, search and rescue,night vision goggle training, and varioustypes of parachute operation), andordnance training at specific locations(air-to-surface gunnery, naval gunnery,live fire at firing ranges and shootinghouses, demolition training atestablished demolition pits andunderwater, and pyrotechnics usedduring field maneuvers). Combat servicesupport training includes: bivouacs andassociated support functions,construction battalion exercises, andlogistics support (shipping, staging,inspecting, and maintaining equipmentand cargo), forward area refueling).The proposed action includes:Construction of several facilities (asniper range and breaching house in theNAVACTS Ordnance Annex; extensionof an existing firing range at NAVACTSWaterfront Annex; a small base supportcamp, firing range, mortar range, andbreaching house on Tinian; andinstallation of various targets on FDM).The training areas on Guam aremilitary sites (Andersen Air Force Base,NAVACTS Guam Waterfront Annex andOrdnance Annex, Naval Computer andTelecommunications Area MasterStation Finegayan and Barrigada), theYlig and Talofofo Rivers, and a nonmilitaryparadrop zone in Dandan.Training areas on Rota consist of theairport, a small area within WestHarbor, and a land area at the highschool. Training on Tinian occurswithin the Military Lease Area, withlimited activities in San Jose Harbor.The entire island of Farallon deMedinilla is used as a live fire range.The public hearings will beconducted by the Navy on behalf of theU.S. Pacific Command. Governmentagencies and interested parties areinvited and urged to be present orrepresented at the hearings. Oralstatements will be heard and transcribedby a stenographer. To assure accuracy ofthe record, statements may also besubmitted in writing. Both oral andwritten statements will become part ofthe public record on this study, withequal weight given to each.In the interest of available time,speakers will be asked to limit theircomments to five minutes. If longerstatements are to be presented, theyshould be summarized at the publichearing and submitted in writing eitherat the hearing or mailed to the addresslisted at the end of this announcement.All written statements must bepostmarked by April 1, 1997 to beincorporated in the official record.DATES: Public hearings to inform thepublic of the DEIS findings and tosolicit comments will be held at thefollowing times and locations in thenorthern Mariana islands and Guam:

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6229• Monday, March 3, 1997, 2:00 PM &7:00 PM at Community Roundhouse,Rota.• Tuesday, March 4, 1997, 2:00 PM &7:00 PM at KBC Bldg., 2nd Floor,Conference Room, Tinian.• Wednesday, March 5, 1997, 2:00PM & 7:00 PM at Garapan Central ParkRoundhouse, Saipan.• Thursday, March 6, 1997, 2:00 PM& 7:00 PM at 155 Hesler Street., PublicHearing Room, Agana, Guam.ADDRESSES: Request for single copies ofthe DEIS and submittal of writtencomments for inclusion into the officialrecord should be forwarded to Mr. FredMinato (Code 231FM), Pacific Division,Naval Facilities Engineering Command,Pearl Harbor, Hawaii 96860–7300.FOR FURTHER INFORMATION CONTACT: Mr.Fred Minato (Code 231FM), by voicetelephone (808) 471–9338 or facsimiletransmission (808) 474–5909.SUPPLEMENTARY INFORMATION: Pursuantto Section 102(2)(c) of the NationalEnvironmental Policy Act (NEPA) of1969, as implemented by the Council onEnvironmental Quality regulations (40CFR Parts 1500–1508), the U.S. PacificCommand has prepared and filed withthe U.S. Environmental ProtectionAgency the above referenced DEIS.Dated: February 5, 1997.D. E. Koenig, Jr.,LCDR, JAGC, USN, Federal Register LiaisonOfficer.[FR Doc. 97–3345 Filed 2–10–97; 8:45 am]BILLING CODE 3810–FF–PNotice of Public Meeting for SubmarineSolid Waste Management Related toCompliance With the Special AreaRequirements of Regulations 5 ofAnnex V to the MARPOL ConventionPursuant to the National DefenseAuthorization Act of 1994SUMMARY: The Department of the Navyis announcing the preparation of a planfor the compliance of all submersiblesowned or operated by the Navy with therequirements of Regulation 5 of AnnexV to the MARPOL Convention. TheNational Defense Authorization Act forFiscal Year 1994 (DAA 94) directed theNavy to allow the public to participatein preparing the plan and to review andcomment on the plan before it issubmitted. In order to obtain andconsider public comments in thedevelopment of the Navy’s plan forcompliance with the DAA 94requirements, the Navy will host publicmeeting.DATES: The meeting will take place onMarch 11, 1997, at 7:00 p.m.ADDRESSES: The meeting will be held inthe Crystal Gateway Marriott, 1700Jefferson Davis Highway, Arlington,Virginia 22202.FOR FURTHER INFORMATION CONTACT:For further information on the publicmeeting or to submit comments, contactMr. David Cartwright NAVSEA 92TE,Assistant for Submarine Environmentaland Occupational Safety Affairs,Department of the Navy, Naval SeaSystems Command, 2531 Jefferson DavisHighway, Arlington, VA 22242–5160[(703) 602–8096 (Ext. 475)]. The meetingwill be conducted in English and willinclude oral presentations and visualdisplays. The meeting will be recordedby a court recorder. Members of thepublic who need additional assistanceto participate should contact Mr.Cartwright as soon as possible to makearrangements.Written comments related to thepublic meeting will be considered in theSubmarine addendum to the Report toCongress if received by Mr. Cartwrightno later than March 25, 1997. Oral orwritten comments will also beconsidered if presented at the publicmeeting to be held on March 11, 1997.SUPPLEMENTARY INFORMATION: Section1003 of the National DefenseAuthorization Act for Fiscal Year 1994Public Law 103–160, 107 Stat. 1745(DAA–94), requires a Report to Congresson a plan for compliance with specialarea provisions of Regulation 5 ofAnnex V to the Convention. The Navysubmitted a Report to Congress on U.S.Navy Ship Solid Waste ManagementPlan for MARPOL Annex V SpecialAreas in November 1996. In preparationfor that Report to Congress, the Navysolicited public comments beginningwith the meeting announcement in theFederal Register of July 21, 1994 (59 FR37223). In addition, the finalEnvironmental Impact Statement onDisposal of U.S. Navy Shipboard SolidWaste was released in August 1996.The Report to Congress of November1996 stated that the Navy wasevaluating several options forsubmarines, and upon completion of theefforts would determine the mostappropriate solid waste managementstrategy. Thus, a Submarine Addendumto the Report to Congress on U.S. NavyShip Solid Waste Management Plan forMARPOL Annex V Special Areas isbeing prepared to address the U.S. NavySubmarine Solid Waste ManagementPlan. Public comments directedspecifically toward the development ofa submarine solid waste managementplan are requested.Submarines are designed to operateundetected beneath the water surface forextended periods. They have verylimited storage space and distinctiverequirements for weight, acousticalcontrol, and atmosphere criteria.Historically, waste source reductionefforts have been employed to minimizethe amount of plastic material andcardboard brought on board. Mostplastic material, cardboard, and paperthat is used for wrapping and protectingsupplies is removed and retained atdockside prior to loading supplies on asubmarine. Plastic disposable items arebeing replaced with non-plastic itemswhere possible. Additional initiativesbeing undertaken include theinvestigation of reusable meatcontainers, the review of procurementdatabases to identify items for improvedpackaging, development of a computerprogram identifying alternatives toaluminum and other metal cans, and thedevelopment of guidelines for supplypersonnel stressing pollution preventionawareness.The particular solid waste challengesunique to submarines are beingaddressed in three principal studies: (1)The impact and fate and effect in themarine environment of dischargingcompacted, negatively buoyant nonplasticsolid waste; (2) the impact onsubmarine operations and crew qualityof life of storing solid waste on board;and (3) the use of a pulper for pulpingpaper and cardboard and a shredder forshredding metal cans and glass.In addition to the above studies, anEnvironmental Assessment, pursuant tothe National Environmental Policy Actand Executive Order 12114, is beingdeveloped to assess the environmentalimpacts of alternatives for themanagement of solid wastes.As indicated above, comments arewelcome at the public meeting and willbe considered in the preparation of adraft Addendum Report if received notlater than March 25, 1997. The draftAddendum Report, which willdocument the Navy’s solid wastemanagement plan for submarines, willbe available for public comment inabout three months. The Navy plans tofinalize the Addendum Report andsubmit it to Congress by September,1997.Dated: February 6, 1997.D.E. Koenig,LCDR, JAGC, USN, Federal Register LiaisonOfficer.[FR Doc. 97–3342 Filed 2–10–97; 8:45 am]BILLING CODE 3810–FF–M

6230 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesDEPARTMENT OF ENERGYOffice of Energy ResearchEnergy Research Financial AssistanceProgram Notice 97–06; IntegratedAssessment of Global Climate ChangeResearch ProgramAGENCY: U.S. Department of Energy.ACTION: Notice inviting research grantapplications.SUMMARY: The Office of Health andEnvironmental Research (OHER) of theOffice of Energy Research (ER), U.S.Department of Energy (DOE), herebyannounces its interest in receivingapplications for the IntegratedAssessment of Global Climate Changeresearch grants Program. This notice isa follow on to three previous noticespublished in the Federal Register(Notice 93–4 published December 9,1992, entitled Economics of GlobalChange Research Program; Notice 95–12published December 29, 1994, entitledGlobal Change Assessment ResearchProgram; and Notice 96–06 publishedJanuary 30, 1996, entitled GlobalChange Integrated AssessmentResearch). The program has a morenarrowly defined scope this year toemphasize specific topics in support ofintegrated assessment. The researchprogram supports the Department’sGlobal Change Research Program, theU.S. Global Change Research Programand the Administration’s goals tounderstand and mitigate the rise ingreenhouse gases.DATES: Applicants are encouraged (butnot required) to submit a briefpreapplication for programmatic review.There is no deadline for thepreapplication, but early submission ofpreapplications is encouraged to allowtime for meaningful dialogue. Apreapplication should consist of two tothree pages of narrative describing theresearch objectives and methods ofaccomplishment together with a briefsummary of the principal investigator’spublication and research background.The deadline for receipt of formalapplications is 4:30 p.m., E.S.T., March27, 1997, to be accepted for merit reviewand to permit timely consideration foraward in fiscal year 1997 or early fiscalyear 1998. An original and seven copiesof the application must be submitted;however, applicants are requested not tosubmit multiple applications usingmore than one delivery or mail service.ADDRESSES: If submitting apreapplication, referencing ProgramNotice 97–06, it should be sent E-mailto john.houghton@oer.doe.gov. Formalapplications referencing Program Notice97–06 on the cover page must beforwarded to: U.S. Department ofEnergy, Office of Energy Research,Grants and Contracts Division, ER–64,19901 Germantown Road, Germantown,MD 20874–1290, ATTN: Program Notice97–06. This address must also be usedwhen submitting applications by U.S.Postal Service Express Mail or any othercommercial overnight delivery service,or when hand-carried by the applicant.FOR FURTHER INFORMATION CONTACT: Dr.John Houghton, Environmental SciencesDivision, ER–74, Office of Health andEnvironmental Research, Office ofEnergy Research, U.S. Department ofEnergy, 19901 Germantown Road,Germantown, MD 20874–1290,telephone: (301) 903–8288, E-mail:john.houghton@oer.doe.gov, fax: (301)903–8519.SUPPLEMENTARY INFORMATION: Thedetermination of energy policy, such asthe administration analysis ofinternational protocols for globalclimate change, is tied to understandingthe benefits and costs of potentialactions with respect to the control ofgreenhouse gases and possible climatechange. The research described in thisnotice supports the analysis of thosebenefits and costs.This research will be judged in parton its potential to improve and/orsupport the analytical basis for policydevelopment. The program is narrowlyfocused and will primarily concentratesupport on three specific topics,described below. Applications thatinvolve development of analyticalmodels and computer codes will bejudged partly on the basis of proposedtasks to prepare documentation andmake the models and codes available toother groups.Integrated Assessment of GlobalClimate ChangeIntegrated assessment of climatechange is defined here as the analysis ofclimate change from the cause, such asgreenhouse gas emissions, throughimpacts, such as changed energyrequirements for space conditioning dueto temperature changes. IntegratedAssessment is sometimes, but notalways, implemented as a computermodel. A description of IntegratedAssessment may be found in Chapter10: ‘‘Integrated Assessment of ClimateChange: An Overview and Comparisonof Approaches and Results’’, in ClimateChange 1995: Economic and SocialDimensions of Climate Change, editedby Bruce, James P.; Lee, Hoesung; andHaites, Erik F., Cambridge UniversityPress, 1996.The following categories are requestedresearch topics:1. Technology innovation anddiffusion. This category has been aprimary focus of the IntegratedAssessment of Global Climate ChangeProgram since its initiation four yearsago.Potential research projects includesuch issues as:• Decomposing the effect oftechnology innovation and diffusion oncarbon emissions into such componentsas changes in GDP, sectoral mix, capitalstock, innovation, and diffusion.Historical records might be used toestimate trends and make projectionsthat vary as a function of price effectsand policy options.• Technology innovation anddiffusion is an important part of severalaspects of integrated assessment models,such as backstop technologies,adaptation, resource depletion, laborproductivity, and substitutionparameters for shifting factor shares.Investigations might include studies tohelp predict changes in theseparameters both for a base case and forvarious policy options, as well asstudies to analyze the internalconsistency among these aspects.• The rate and nature of technologydiffusion from the US to developingcountries. Relevant factors include theprediction of the energy-use path fordeveloping countries, the effects ofchanges in international trade policiesand patterns, and ‘‘carbon leakage’’.• The translation of existing literatureon the economics of technologyinnovation into a representation thatcould be adapted for IA models.• Investment or other policies toencourage research and developmentare options for increasing abatement andimproving adaptation. Research in thistopic would investigate such subjects asevaluating the effectiveness ofalternative modes of implementation,such as direct grants, cooperativeresearch projects, et cetera.2. Representing impacts in integratedassessments. A major challenge beforethe integrated assessment modelingcommunity is to improve and expandthe range of representations inintegrated assessment models of theresponse of ecosystems, socio-economicsystems, and other sectors to potentialclimate changes. Two criteria forselection will be (1) The degree ofcollaboration with scientists working onthe ecological and socio-economicconsequences of climate change, and (2)the utility of the results (output) to theintegrated assessment community, suchas the ability to represent potentialecological or socio-economic

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6231consequences of climate change inintegrated assessment models. Proposedresearch at a regional or more detailedscale will need an explicit descriptionof the potential of the expected resultsto be expanded to a national orcontinental scale for use directly orindirectly by the integrated assessmentcommunity. Academic researchersinterested in regional-scale impactstudies or in developing methods andmodels for conducting regional-scaleassessments of the consequences ofclimate change may also contact Dr.Jerry Elwood, E-mail addressjerry.elwood@oer.doe.gov, forinformation about applying to DOE’sNational Institute for GlobalEnvironmental Change (NIGEC) researchprogram.Topics of high importance include:• For the OECD countries,unmanaged ecosystems (includingmarine) and energy sectors.• For the non-OECD countries,energy, water, unmanaged ecosystems(including marine), and sea level rise.Themes that increase the importanceto the integrated assessment communityinclude:• Explicit analysis and treatment ofadaptation.• Analysis of transient climatechanges rather than static climatescenarios.• Analysis of thresholds.• Analysis of variability and extremes(including low-probability/highconsequenceevents).• The combination of several impactsectors so that cross-sector issues (suchas water or land availability) areexplicitly considered.3. Analysis of EnvironmentalTechnologies. It is difficult to send the‘‘proper price signals’’ (measures of fullenvironmental impacts) to designers,manufacturers, policy makers, andresearch managers so that decisions canreflect the full societal impact by themanufacturing process of resource useand byproduct disposal, includinggreenhouse gases. The followingindustries represent 80 percent of theenergy consumption in themanufacturing sector: chemicals,petroleum refining, forest products,steel, aluminum, glass, and metalcasting. We would welcomeapplications that propose to prepare anintegrated assessment framework ofthese sectors to investigate such issuesas life cycle analysis, ‘‘industrialecology’’ and ‘‘sustainability’’, theexpected improvement in technologiesin response to various policy options,and the value of improved technologies.Applicants responding to this specifictopic are encouraged to developworking collaborations with appropriateand relevant industries; applicationsinvolving industrial collaboration willreceive preference over applications ofequal scientific merit but lacking suchcollaboration.ADMINISTRATIVE INFORMATION: Thepreparation and submission of grantapplications must follow the guidelinesgiven in the Application Guide for theOffice of Energy Research FinancialAssistance Program 10 CFR Part 605.Information about the development,submission of applications, eligibility,limitations, evaluation, the selectionprocess, and other policies andprocedures may be found in 10 CFR Part605, and in the Application Guide forthe Office of Energy Research FinancialAssistance Program. The ApplicationGuide is available from the U.S.Department of Energy, Office of EnergyResearch, ER–74, 19901 GermantownRoad, Germantown, MD 20874–1290.Telephone requests may be made bycalling (301) 903–3338. Electronicaccess to ER’s Financial AssistanceApplication Guide and forms is possiblevia the World Wide Web at: http://www.er.doe.gov/production/grants/grants.html. The research descriptionmust be 15 pages or less, exclusive ofattachments, and must contain anabstract or summary of the proposedresearch. Attachments includecurriculum vitae, a listing of all currentand pending federal support, and lettersof intent when collaborations are part ofthe proposed research.Applications will be subjected toformal merit review (peer review) andwill be evaluated against the followingevaluation criteria which are listed indescending order of importance codifiedat 10 CFR 605.10(d):1. Scientific and/or Technical Merit ofthe Project;2. Appropriateness of the ProposedMethod or Approach;3. Competency of Applicant’sPersonnel and Adequacy of ProposedResources;4. Reasonableness andAppropriateness of the ProposedBudget.The evaluation will include programpolicy factors such as the relevance ofthe proposed research to the terms ofthe announcement and an agency’sprogrammatic needs. Note, external peerreviewers are selected with regard toboth their scientific expertise and theabsence of conflict-of-interest issues.Non-federal reviewers will often beused, and submission of an applicationconstitutes agreement that this isacceptable to the investigator(s) and thesubmitting institution.It is anticipated that up to $1.5million will be available for multipleawards to be made in FY 1997 and earlyFY 1998 in the categories describedabove, contingent on availability ofappropriated funds. Applications mayrequest project support up to threeyears, with out-year support contingenton availability of funds, progress of theresearch, and programmatic needs.Annual budgets are expected to rangefrom $30,000 to $150,000 total costs.Although the required original andseven copies of the application must besubmitted, researchers are asked tosubmit an electronic version of theirabstract of the proposed research inASCII format and their E-mail address toKaren Carlson by E-mail atkaren.carlson@oer.doe.gov. Additionalinformation on the IntegratedAssessment Program is available at thefollowing web site: http://www.er.doe.gov/production/oher/john/iapage.html. For researchers who do nothave access to the world wide web,please contact Karen Carlson;Environmental Sciences Division, ER–74; U.S. Department of Energy; 19901Germantown Road; Germantown, MD20874–1290; telephone: (301) 903–3338;fax: (301) 903–8519; E-mail:karen.carlson@oer.doe.gov; for hardcopies of background materialmentioned in this solicitation.Curriculum vitae should be submittedin a form similar to that of NIH or NSF(two to three pages), see for example:http://www.nsf.gov:80/bfa/cpo/gpg/fkit.htm#forms-9.Related Funding OpportunitiesInvestigators may wish to obtaininformation about the following relatedfunding opportunities.National Science Foundation/Methodsand Models for Integrated AssessmentIn concert with other USGCRPagencies, NSF sponsors high-quality,fundamental and methodologicalresearch in two related categories: (1)Research that advances the developmentof methodologies and models that willintegrate or couple multiple componentsystems; and (2) research that developsand enhances the scientific componentsof the integrated approach. NSFencourages participation andcollaboration of researchers from allappropriate scientific and engineeringdisciplines, including the mathematicalsciences. In FY 1996, NSF awardedapproximately $3.4 million through thespecial MMIA competition. Funding inFY 1997 is anticipated at approximatelythe same level, depending onavailability of funds. Proposalssubmitted for this competition must be

6232 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesreceived by NSF by February 14, 1997.For more information on this program,please contact; Dr. Keith Crank,Directorate for Mathematical andPhysical Sciences, National ScienceFoundation, 4201 Wilson Blvd.,Arlington, VA 22230, telephone: (703)306–1885, fax: (703) 306–0555, Internet:kcrank@nsf.gov. NSF also supportsrelated research in all fields of scienceand engineering. Information on NSFenvironment and global change fundingopportunities is available at: http://www.nsf.gov/stratare/egch/.National Oceanic and AtmosphericAdministrationWithin the context of its Economicsand Human Dimensions of ClimateFluctuations Program, the Office ofGlobal Programs of the National Oceanicand Atmospheric Administration willsupport research that identifies andanalyzes social and economic impactsassociated with seasonal, year-to-year,and intradecadal climate variability;improves our understanding of factorsthat determine human vulnerability tosuch fluctuations; and identifies optionsfor reducing vulnerability. The programis particularly interested in learninghow advanced climate information (e.g.,ENSO-based probabilistic climateforecasts), as well as an improvedunderstanding of current copingmechanisms, could be used for reducingvulnerability and providing for moreefficient adjustment to these variations.Notice of this program is included in theProgram Announcement for NOAA’sClimate and Global Change Program,which is published each spring in theFederal Register. The deadline forproposals to be considered in fiscal year1998 is expected to be in late summer1997. For further information, contact:Caitlin Simpson; Office of GlobalPrograms; National Oceanic andAtmospheric Administration; 1100Wayne Ave., Suite 1225; Silver Spring,MD 20910; telephone: (301) 427–2089,ext. 47; Internet:simpson@ogp.noaa.gov.Environmental Protection AgencyIn 1997 the Environmental ProtectionAgency (EPA) will support research onConsequences of Global Change onEcosystems by joining the interagencyTerrestrial Ecology and Global Change(TECO) Program, administered by theNational Science Foundation (NSF).Related requests for applications thatare currently advertised on the EPAHome Page include ‘‘EcosystemIndicators’’; ‘‘Ecosystem Restoration’’—sponsored jointly with NationalAeronautics and Space Administration;and ‘‘Water/Watersheds’’—sponsoredjointly with the NSF. The EPA offersgrants in global climate change throughits ‘‘National Center for EnvironmentalResearch and Quality Assurance’’.Information is available through website: http://www.epa.gov/ncerqa orhotline 1–800–490–9194. For furtherinformation, contact Barbara M.Levinson, EPA (8723), Washington, DC20460, telephone: (202) 260–5983, fax:(202) 260–4524, E-mail:Levinson.barbara@epamail.epa.gov.The Catalog of Federal DomesticAssistance Number for this program is81.049, and the solicitation control number isERFAP 10 CFR Part 605.Issued in Washington, DC, on February 3,1997.John Rodney Clark,Associate Director for Resource Management,Office of Energy Research.[FR Doc. 97–3383 Filed 2–10–97; 8:45 am]BILLING CODE 6450–01–PFederal Energy RegulatoryCommission[Docket No. RP97–246–000]ANR Pipeline Company; Notice ofProposed Changes in FERC Gas TariffFebruary 5, 1997.Take notice that on January 31, 1997,ANR Pipeline Company (ANR) tenderedfor filing as part of its FERC Gas Tariff,Second Revised Volume No. 1, thefollowing tariff sheets to becomeeffective February 1, 1997:Nineteenth Revised Sheet No. 8Twenty-first Revised Sheet No. 9Twentieth Revised Sheet No. 13Twenty-first Revised Sheet No. 16Twenty-fourth Revised Sheet No. 18ANR states that the above-referencedtariff sheets are being filed to cancel theexpired PD surcharges associated withANR’s first and second PD cost recoveryfilings, and to commence recovery ofapproximately $2.5 million ofadditional pricing differential (PD) andcarrying costs that have been incurredby ANR during the period September 1,1996 through November 30, 1996 as aresult of the implementation of OrderNos. 636, et seq. ANR proposes areservation fee surcharge applicable toits Part 284 firm transportationcustomers to recover ninety percent(90%) of the PD costs, and anadjustment to the maximum base tariffrates applicable to Rate Schedule ITSand overrun service rendered pursuantto Rate Schedule FTS–2, so as to recoverthe remaining ten percent (10%). ANRhas requested that the Commissionaccept the tendered sheets to becomeeffective February 1, 1997. Due to theexpiring surcharges noted above, ANRadvises that its PD surcharge willdecrease from $0.357 to $0.157 as aresult of this filing.Any person desiring to be heard or toprotest this filing should file a motionto intervene or protest with the FederalEnergy Regulatory Commission, 888First Street, NE., Washington, DC 20426,in accordance with Sections 385.214and 385.211 of the Commission’s Rulesand Regulations. All such motions orprotests must be filed as provided inSection 154.210 of the Commission’sregulations. Protests will be consideredby the Commission in determining theappropriate action to be taken, but willnot serve to make protestants parties tothe proceeding. Any person wishing tobecome a party must file a motion tointervene. Copies of this filing are onfile with the Commission and areavailable for public inspection in thePublic Reference Room.Lois D. Cashell,Secretary.[FR Doc. 97–3298 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. RP97–245–000]Colorado Interstate Gas Company;Notice of Proposed Changes in FERCGas TariffFebruary 5, 1997.Take notice that on January 31, 1997,Colorado Interstate Gas Company (CIG),tendered for filing as part of its FERCGas Tariff, First Revised Volume No. 1,Third Revised Sheet No. 368.CIG states that Sheet No. 368 was atariff sheet authorized by CommissionOrder issued December 27, 1991 inDocket No. RP92–44–000. The tariffsheet identified customers’ buyoutbuydownobligation pursuant to OrderNo. 528.CIG states the filing is being made to‘‘clean up’’ Sheet No. 368. One Buyerhad elected to amortize its payment ofits obligation over a 60-month period.The 60-month payment period hasterminated and the Buyer has paid itsobligation; therefore, the filing reflectsall Buyers have now paid theirobligation pursuant to the authorizationin Docket No. RP92–44–000.CIG states that copies of the filinghave been sent to all parties in DocketNo. RP92–44–000. An effective date ofMarch 3, 1997 has been requested.Any person desiring to be heard or tomake any protest with reference to saidapplication should file a motion tointervene or a protest with the FederalEnergy Regulatory Commission, 888First Street, NE., Washington, DC 20426,

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6233in accordance with the requirements ofthe Commission’s Rules of Practice andProcedure (18 CFR 385.214 or 385.211).All such motions or protest must befiled in accordance with Section154.210 of the Commission’sRegulations. Protests filed will beconsidered by the Commission indetermining the appropriate action to betaken, but will not serve to make theprotestants parties to the proceedings.Any person wishing to become a partymust file a motion to intervene. Copiesof this filing are on file with theCommission and are available for publicinspection in the Public ReferenceRoom.Lois D. Cashell,Secretary.[FR Doc. 97–3297 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. CP97–217–000]Florida Gas Transmission Company;Notice of Request Under BlanketAuthorizationFebruary 5, 1997.Take notice that on January 30, 1997,Florida Gas Transmission Company(FGT), 1400 Smith Street, Houston,Texas, 77002, filed in the above docket,a request pursuant to Sections 157.205and 157.212 of the Commission’sRegulations under the Natural Gas Actfor authorization to construct a newdelivery point under FGT’s blanketcertificate issued in Docket No. CP82–553–000 pursuant to Section 7(c), all asmore fully set forth in the request thatis on file with the Commission and opento public inspection.Specifically, FGT proposes toconstruct a new tee, valve, less than 100feet of 8-inch connecting lateral andEFM equipment in Pinellas County,Florida, to accommodate gas deliveriesto FPC’s proposed meter station toreceive interruptible gas volumes. FPChas requested FGT to construct a newdelivery point in Pinellas County,Florida, to connect to the Bartow-BMeter Station that FPC will construct inPinellas County, Florida. FGT states thatFPC would reimburse it for allconstruction costs; estimated to be$80,362. FGT proposes to deliver up to2,600 MMBtu of gas per hour at linepressure. Initial deliveries will beapproximately 1,300 MMBtu per hour.FPC proposes to construct, own andoperate the meter station andapproximately 450 feet of 10-inch; 75feet of 8-inch; and 150 feet of 6-inchpipe of non-jurisdiction pipelineconnecting the meter station to FPCBartow Plant.FGT states that the natural gasvolumes delivered to this delivery pointwill be interruptible volumes andtherefore will not disadvantage FGT’sother existing customers.Any person or the Commission’s staffmay, within 45 days after issuance ofthe instant notice by the Commission,file pursuant to Rule 214 of theCommission’s Rules of Practice andProcedure (18 CFR 385.214) a motion tointervene or notice of intervention andpursuant to Section 157.205 of theRegulations under the Natural Gas Act(18 CFR 157.205) a protest to therequest.If no protest is filed within the timeallowed therefor, the proposed activityis deemed to be authorized effective onthe day after the time allowed for filinga protest. If a protest is filed and notwithdrawn within 30 days after the timeallowed for filing a protest, the instantrequest shall be treated as anapplication for authorization pursuantto Section 7 of the Natural Gas Act.Lois D. Cashell,Secretary.[FR Doc. 97–3290 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. RP97–244–000]Mississippi River TransmissionCorporation; Notice of Request forWaiverFebruary 5, 1997.Take notice that on January 31, 1997,Mississippi River TransmissionCorporation (MRT) submitted for filinga request for waiver of the provisions ofSection 2.5 of Rate Schedule SCT ofMRT’s FERC Gas Tariff, Third RevisedVolume No. 1.MRT states that it is requesting thewaiver because two of its Rate ScheduleSCT customers are seeking to releasepermanently a portion of their capacityutilizing a pre-arranged release to twoRate Schedule FTS customers but thereleasing customers do not want theirremaining Rate Schedule SCT capacityconverted to Rate Schedule FTScapacity. MRT also requests a waiver ofsuch other provisions of its FERC GasTariff, or other Commission regulations,as may be necessary to allow thetransactions contemplated in the filingto become effective as proposed.MRT states that copies of this filinghave been mailed to each of MRT’scustomers and the State Commissions ofArkansas, Illinois, and Missouri.Any person desiring to be heard or toprotest said filing should file a motionto intervene or protest with the FederalEnergy Regulatory Commission, 888First Street, NE., Washington, DC 20426,in accordance with Sections 385.211and 385.214 of the Commission’s Rulesof Practice and Procedure (18 CFR385.211 and 385.214). All such motionsor protests should be filed on or beforeFebruary 12, 1997. Protests will beconsidered by the Commission indetermining the appropriate action to betaken, but will not serve to makeprotestants parties to the proceeding.Any person wishing to become a partymust file a motion to intervene. Copiesof this filing are on file with theCommission and are available for publicinspection.Lois D. Cashell,Secretary.[FR Doc. 97–3296 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. TM97–7–16–000]National Fuel Gas Supply Corporation;Notice of Tariff FilingFebruary 5, 1997.Take notice that on January 31, 1997,National Fuel Gas Supply Corporation(National) tendered for filing as part ofits FERC Gas Tariff, Third RevisedVolume No. 1, Eighteenth Revised SheetNo. 5A, with a proposed effective dateof February 1, 1996.National states that pursuant toArticle II, Section 2, of the approvedsettlement at Docket Nos. RP94–367–000, et al., National is required torecalculate the maximum InterruptibleGathering (IG) rate monthly and tocharge that rate on the first day of thefollowing month if the result is an IGrate more than 2 cents above or belowthe IG rate as calculated under Section1 of Article II. The recalculationproduced an IG rate of 15 cents per dth.National further states that, asrequired by Article II, Section 4,National is filing a revised tariff sheetwithin 30 days of the effective date forthe revised IG rate.Any person desiring to be heard or toprotest said filing should file a motionto intervene or protest with the FederalEnergy Regulatory Commission, 888First Street, NE., Washington, DC 20426,in accordance with Rules 211 or 214 ofthe Commission’s Rules of Practice andProcedure (18 CFR 385.211 or 385.214).All such motions or protests must befiled as provided in Section 154.210 ofthe Commission’s Regulations. Protestswill be considered by the Commissionin determining the appropriate action tobe taken but will not serve to makeprotestants parties to the proceeding.Any person wishing to become a partymust file a motion to intervene. Copies

6234 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesof this filing are on file with theCommission and are available for publicinspection.Lois D. Cashell,Secretary.[FR Doc. 97–3301 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. ER97–1412–000]Niobrara Valley Electric MembershipCorporation; Notice of FilingFebruary 5, 1997.Take notice that on January 28, 1997,Niobrara Valley Electric MembershipCorporation (Niobrara) tendered forfiling as a rate schedule an executedAgreement with Nebraska Public PowerDistrict (NPPD) entitled ‘‘Agreement forJoint Planning and Ownership ofSubtransmission Facilities’’ datedJanuary 22, 1979, as amended. Niobraraexplains that the filing is made pursuantto Ordering Paragraph (F) of theCommission’s Order of October 30, 1996in Central Electric Cooperative, Inc. etal., Docket Nos. OA96–41–000 et al.The filing states that the Agreementwith NPPD is the sole document inNiobrara’s possession or control thatestablishes a basis for the use of itssubtransmission facilities. Niobrarastates that it has, through agreementswith NPPD, turned over responsibilityfor operational control of its facilities toNPPD, the control area operator. Anycharges for the use of Niobrara’sfacilities are said to be developed byNPPD and are part of the overall ratesthat NPPD charges for its sale andtransmission facilities.Niobrara’s filing indicates that, underthe Agreement, each party pays forservice on its facilities on the basis of aformula which compares each party’sproportion of the total investment to itsproportion of the noncoincidental peakload. As of the date of the filing,according to Niobrara, it is deemed thedeficient party and makes a monthlypayment to NPPD. Niobrara states thatit receives no revenues for use of thefacilities, directly or indirectly.Niobrara’s filing also notes that it hasfiled a motion for reconsideration of theCommission’s Order determining that itis performing jurisdictionaltransmission service.Niobrara seeks a waiver of therequirement for filing supporting data,required to accompany a rate schedulefiling, citing its small size and smalladministrative staff. Noting that theAgreement has been in force for 18 yearsand is the basis for continued service toits retail customers, Niobrara has alsosought a waiver of the noticerequirements in the Commission’sRegulations and an immediate effectivedate for the Agreement.Any person desiring to be heard or toprotest said filing should file a motionto intervene or protest with the FederalEnergy Regulatory Commission, 888First Street, N.E., Washington, D.C.20426, in accordance with Rules 211and 214 of the Commission’s Rules ofPractice and Procedure (18 CFR 385.211and 18 CFR 385.214). All such motionsor protests should be filed on or beforeFebruary 14, 1997. Protests will beconsidered by the Commission indetermining the appropriate action to betaken, but will not serve to makeprotestants parties to the proceeding.Any person wishing to become a partymust file a motion to intervene. Copiesof this filing are on file with theCommission and are available for publicinspection.Lois D. Cashell,Secretary.[FR Doc. 97–3291 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. CP97–208–000]Northern Natural Gas Company; Noticeof Request Under BlanketAuthorizationFebruary 5, 1997.Take notice that on January 27, 1997,Northern Natural Gas Company(Northern), 1111 South 103rd Street,Omaha, Nebraska 68124–1000, filed inDocket No. CP97–208–000 a requestpursuant to Sections 157.205, 157.212and 157.216 of the Commission’sRegulations under the Natural Gas Act(18 CFR 157.205, 157.212 and 157.216)for authorization to operate an upgradeto an existing delivery point inWashington County, Minnesota, underNorthern’s blanket certificate issued inDocket No. CP82–401–000 pursuant toSection 7 of the Natural Gas Act, all asmore fully set forth in the request thatis on file with the Commission and opento public inspection.Northern states that due to extremewinter weather conditions and fear offacility failure, the Hasting #1C TBS wasupgraded pursuant to the emergencyprovisions of Part 284 Subpart I of theCommission’s Regulations (emergencyregulations) to accommodate emergencynatural gas deliveries for Minnegasco, aDivision of NorAm Energy Corp.(Minnegasco). This upgrading assuredthe protection of 2,310 residential andcommercial customers served by thisstation. On January 16, 1997,Minnegasco filed its 48-hour report asrequired by Section 284.270(b) of theCommission’s Regulations. Theupgrading included the replacement ofthe existing meter and appurtenantfacilities (e.g., meter run and piping)with larger facilities. The facilitiesconstructed under the emergencyregulations and costing $32,000 will bepaid for by Minnegasco in accordancewith Section 284.264(a)(6)(ii) of theCommission’s Regulations. Northernstates that service is being provided toMinnegasco pursuant to currentlyeffective throughput serviceagreement(s). Northern’s proposedaccounting entries will reflect theretirement of the meter and appurtenantfacilities associated with the upgradefacilities.Northern states that the total volumesto be delivered to Minnegasco after therequest do not exceed the total volumesauthorized prior to the request.Northern states that the proposedactivity is not prohibited by its existingtariff and that it has sufficient capacityto accommodate the upgraded facilitieswithout detriment or disadvantage toNorthern’s other customers.Any person or the Commission’s staffmay, within 45 days after issuance ofthe instant notice by the Commission,file pursuant to Rule 214 of theCommission’s Procedural Rules (18 CFR385.214) a motion to intervene or noticeof intervention and pursuant to Section157.205 of the Regulations under theNatural Gas Act (18 CFR 157.205) aprotest to the request. If no protest isfiled within the time allowed therefor,the proposed activity shall be deemed tobe authorized effective the day after thetime allowed for filing a protest. If aprotest is filed and not withdrawnwithin 30 days after the time allowedfor filing a protest, the instant requestshall be treated as an application forauthorization pursuant to Section 7 ofthe Natural Gas Act.Lois D. Cashell,Secretary.[FR Doc. 97–3288 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. RP97–247–000]Northern Natural Gas Company; Noticeof Proposed Changes in FERC GasTariffFebruary 5, 1997.Take notice that on January 31, 1997,Northern Natural Gas Company(Northern), tendered for filing to becomepart of Northern’s FERC Gas Tariff, FifthRevised Volume No. 1, the followingtariff sheets proposed to becomeeffective on April 1, 1997:Second Revised Sheet No. 257

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6235Second Revised Sheet No. 259Second Revised Sheet No. 260Northern is filing to eliminateacceptance of facsimiles in thenomination process under the April 1,1997 GISB timeline. However, Northernrequests authority to waive theproposed tariff provision eliminatingfacsimile nominations during a fourmonthimplementation period fromApril 1, 1997 through July 31, 1997,provided the nomination is received byNorthern by 10:00 a.m. CCT fortransportation that will occur onNorthern at 9:00 a.m. CCT on thefollowing gas day.Northern states that copies of thefiling were served upon Northern’scustomers and interested StateCommissions.Any person desiring to be heard or toprotest said filing should file a motionto intervene or protest with the FederalEnergy Regulatory Commission, 888First Street, NE., Washington, DC 20426,in accordance with Sections 385.214and 385.211 of the Commission’s Rulesand Regulations. All such petitions orprotests must be filed on or before inaccordance with Section 154.210 of theCommission’s Regulations. Protests willbe considered by the Commission indetermining the appropriate action to betaken but will not serve to makeprotestant a party to the proceeding.Any person wishing to become a partymust file a motion to intervene. Copiesof this filing are on file with theCommission and are available forinspection.Lois D. Cashell,Secretary.[FR Doc. 97–3299 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. RP97–248–000]Northern Natural Gas Company; Noticeof Proposed Changes in FERC GasTariffFebruary 5, 1997.Take notice that on January 31, 1997,Northern Natural Gas Company(Northern), tendered for filing to becomepart of Northern’s F.E.R.C. Gas Tariff,Fifth Revised Volume No. 1 and originalVolume No. 2 the following tariff sheets,proposed to be effective March 1, 1997:Fifth Revised Volume No. 132 Revised Sheet No. 5032 Revised Sheet No. 5113 Revised Sheet No. 5232 Revised Sheet No. 53Original Volume No. 2152 Revised Sheet No. 1C27 Revised Sheet No. 1C.aIn this filing, Northern states that it isseeking to recover costs relating to takeor-pay,pricing or other contractprovisions, and buyout, buydown orreformation costs pursuant to theCommission’s Order No. 528.Northern states that copies of thefiling were served upon the Company’scustomers and interested StateCommissions.Any person desiring to be heard or toprotest said filing should file a motionto intervene or protest with the FederalEnergy Regulatory Commission, 888First Street, N.E., Washington, D.C.,20426, in accordance with Section385.214 and 385.211 of theCommission’s Rules and Regulations.All such motions or protests must befiled in accordance with Section154.210 of the Commission’sRegulations. Protests will be consideredby the Commission in determining theappropriate action to be taken in thisproceeding, but will not serve to makeprotestant a party to the proceeding.Any person wishing to become a partymust file a motion to intervene. Copiesof this filing are on file with theCommission and are available for publicinspection.Lois D. Cashell,Secretary.[FR Doc. 97–3300 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Project No. 1927]Pacificorp; Notice of Authorization forContinued Project OperationFebruary 5, 1997.On January 30, 1995, Pacificorp,licensee for the North Umpqua ProjectNo. 1927, filed an application for a newor subsequent license pursuant to theFederal Power Act (FPA) and theCommission’s regulations thereunder.Project No. 1927 is located on the NorthUmpqua River in Douglas County,Oregon.The license for Project No. 1927 wasissued for a period ending January 29,1997. Section 15(a)(1) of the FPA, 16U.S.C. 808(a)(1), requires theCommission, at the expiration of alicense term, to issue from year to yearan annual license to the then licenseeunder the terms and conditions of theprior license until a new license isissued, or the project is otherwisedisposed of as provided in Section 15 orany other applicable section of the FPA.If the project’s prior license waived theapplicability of Section 15 of the FPA,then, based on Section 9(b) of theAdministrative Procedure Act, 5 U.S.C.558(c), and as set forth at 18 CFR16.21(a), if the licensee of such projecthas filed an application for a subsequentlicense, the licensee may continue tooperate the project in accordance withthe terms and conditions of the licenseafter the minor or minor part licenseexpires, until the Commission acts onits application. If the licensee of such aproject has not filed an application fora subsequent license, then it may berequired, pursuant to 18 CFR 16.21(b),to continue project operations until theCommission issues someone else alicense for the project or otherwiseorders disposition of the project.If the project is subject to Section 15of the FPA, notice is hereby given thatan annual license for Project No. 1927is issued to Pacificorp for a periodeffective January 30, 1997, throughJanuary 29, 1998, or until the issuanceof a new license for the project or otherdisposition under the FPA, whichevercomes first. If issuance of a new license(or other disposition) does not takeplace on or before January 29, 1998,notice is hereby given that, pursuant to18 CFR 16.18(c), an annual licenseunder Section 15(a)(1) of the FPA isrenewed automatically without furtherorder or notice by the Commission,unless the Commission ordersotherwise.If the project is not subject to Section15 of the FPA, notice is hereby giventhat Pacificorp is authorized to continueoperation of the North Umpqua ProjectNo. 1927 until such time as theCommission acts on its application forsubsequent license.Lois D. Cashell,Secretary.[FR Doc. 97–3292 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. CP94–207–003]Southern California Gas Company;Notice of AmendmentFebruary 5, 1997.Take notice that on January 31, 1997,Southern California Gas Company(SoCal), located at 555 West Fifth Street,Los Angeles, California 90013–1011,filed an amendment in Docket No.CP94–207–003, pursuant to Section 3 ofthe Natural Gas Act (NGA) and Part 153of the Commission’s Regulations underthe NGA, seeking to further amend thepreviously amended Section 3authorization and the amendedPresidential Permit, both issued May 22,1995, to reflect a change in the locationof pipeline and metering facilities itproposes to construct at theinternational boundary of the UnitedStates of America and Mexico.

6236 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesSpecifically, SoCal now seeks toamend the previous authorization inorder to site the border-crossingfacilities 1.3 miles west of thepreviously authorized export point. Therevised border-crossing facilities wouldconsist of a meter station and 600 feetof 16-inch diameter pipe running fromthe meter station to the internationalboundary. 1 According to SoCal, theproposed pipeline facilities will havethe capacity to meet the expecteddemand of 40 MMcf of natural gas perday in the year 2000, although only 10MMcf of natural gas per day would beexported initially.SoCal request that such amendmentsbe granted no later than March 1, 1997,to permit the economic, environmentaland safety benefits of natural gas to beenjoyed in Mexicali, Mexico and theUnited States/Mexico border area at theearliest possible date, in order toprovide the proposed service by July 15,1997.0Any person desiring to be heard or tomake any protest with reference to saidpetition should, on or before February26, 1997, file with the Federal EnergyRegulatory Commission, 888 FirstStreet, N.E., Washington, DC 20426, apetition to intervene or protest inaccordance with the requirements of theCommission’s Rules of Practice andProcedure (18 CFR 385.211 or 385.214)and the Regulations under the NGA (18CFR 157.10). All protests filed with theCommission will be considered by it indetermining the appropriate action to betaken but will not serve to make theprotestants parties to the proceeding.Any person wishing to become a partyto a proceeding or to participate as aparty in any hearing therein must file apetition to intervene in accordance withthe Commission’s Rules. Any personwho has heretofore filed need not filedagain.Lois D. Cashell,Secretary.[FR Doc. 97–3286 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. RP97–243–000]Southern Natural Gas Company;Notice of GSR Revised Tariff SheetsFebruary 5, 1997.Take notice that on January 31, 1997,Southern Natural Gas Company(Southern) tendered for filing as part ofits FERC Gas Tariff, Seventh RevisedVolume No. 1, the following tariff sheets1 The location of the new proposed bordercrossing is in Section 14, Township 17 South,Range 15 East, Imperial County, California.with the proposed effective date ofFebruary 1, 1997:Tariff Sheets Applicable to ContestingPartiesTwenty First Revised Sheet No. 14Forty Third Revised Sheet No. 15Twenty First Revised Sheet No. 16Forty Third Revised Sheet No. 17Twenty Eighth Revised Sheet No. 29Southern submits the revised tariffsheets to its FERC Gas Tariff, SeventhRevised Volume No. 1, to reflect achange in its FT/FT–NN GSR Surcharge,due to the removal of a credit forinterim firm transportation providedduring December 1996 and an increasein GSR billing units effective February1, 1997.Southern states that copies of thefiling were served upon all parties listedon the official service list compiled bythe Secretary in these proceedings.Any person desiring to be heard or toprotest said filing should file a motionto intervene or protest with the FederalEnergy Regulatory Commission, 888First Street, N.E., Washington, D.C.20426, in accordance with Sections385.214 and 385.211 of theCommission’s Rules of Practice andProcedure. All such motions or protestsmust be filed in accordance withSection 154.210 of the Commission’sRegulations. Protests will be consideredby the Commission in determining theappropriate action to be taken, but willnot serve to make protestants parties tothe proceeding. Any person wishing tobecome a party must file a motion tointervene. Copies of Southern’s filingare on file with the Commission and areavailable for public inspection.Lois D. Cashell,Secretary.[FR Doc. 97–3295 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. RP96–352–005]Transwestern Pipeline Company;Notice of FilingFebruary 5, 1997.Take notice that on February 3, 1997,Transwestern Pipeline Company(Transwestern) tendered for filing itsreport concerning the Pilot Program.Transwestern states that the purposeof this filing is to comply with theCommission’s December 31, 1996,which stated that by February 1, 1997,Transwestern must make a filing topropose details concerning the reportingof Pilot Program data.Transwestern states that copies of thefiling were served on its gas utilitycustomers, interested statecommissions, and all parties to thisproceeding.Any person desiring to protest saidfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.,20426, in accordance with Rule 211 ofthe Commission’s Rules of Practice andProcedure. All such protests should befiled on or before February 12, 1997.Protests will be considered by theCommission in determining theappropriate action to be taken, but willnot serve to make protestants parties tothe proceeding. Copies of this filing areon file with the Commission and areavailable for public inspection.Lois D. Cashell,Secretary.[FR Doc. 97–3294 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. RP92–122–005]Trunkline LNG Company; Notice ofAnnual Reconciliation ReportFebruary 5, 1997.Take notice that on January 31, 1997Trunkline LNG Company (TLC)tendered for filing working papersreflecting its third annual reconciliationreport.TLC states that the information issubmitted pursuant to Article VIII,Section 4 of the Stipulation andAgreement in the above-captionedproceeding which requires TLC tosubmit, on an annual basis, a report ofthe cost and revenues which result fromthe operation of Rate Schedule PLNG–2 dated June 26, 1987, as amendedDecember 1, 1989.TLC states that copies of this filinghave been served on all participants inthe proceeding and applicable stateregulatory agencies.Any person desiring to protest saidfiling should file a protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Section385.211 of the Commission’s Rules andRegulations. All such protest must befiled on or before February 12, 1997.Protests will be considered by theCommission in determining theappropriate action to be taken, but willnot serve to make protestants parties tothe proceeding. Copies of this filing areon file with the Commission and areavailable for public inspection in thePublic Reference Room.Lois D. Cashell,Secretary.[FR Doc. 97–3293 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6237[Docket No. CP96–288–001]Wyoming Interstate Company, Ltd.;Notice of ApplicationFebruary 5, 1997.Take notice that on January 30, 1997,Wyoming Interstate Company, Ltd.(WIC), P.O. Box 1087, Colorado Springs,Colorado 80944, filed in Docket No.CP96–288–001 a petition to amend itsoriginal certificate application whichwas the subject of the PreliminaryDetermination on Non-EnvironmentalIssues issued September 11, 1996,pursuant to Section 7(c) of the NaturalGas Act, as amended, all as more fullyset forth in the application on file withthe Commission and open to publicinspection.On March 29, 1996, WyomingInterstate Company, Ltd. (WIC) filed anapplication in Docket No. CP96–288–000, to construct and operate facilitiesto increase WIC’s system capacity,which included a new compressorstation planned to consist of two 1,000hp compressor reciprocating units(Rawlins Jumper Station). On September11, 1996, the Commission issued aPreliminary Determination on Non-Environmental Issues and DeclaratoryOrder in this docket.WIC states that in its originalapplication final selection ofcompression had not been selected. WICstates that it made a final determinationon the selection of the Rawlins units inMay 1996, selecting two 1,200 hp unitsinstead of approximately 2,000 hp forthis station as in the originalapplication. It is asserted that all othercompressors selected were the same asfiled in the original application. WICavers that the selected units are superiorbased on: (1) lowest bid received, (2)economy of spare parts by matching theunits for the Baxter station (3) units thatprovide nitrogen emission rates as lowas any of the units offered, and (4)having the best specific fuel rate of theunits offered.WIC further avers that the subjectunits would have no material effect onthe cost estimate or on the Revenue,Expenses and Income as filed in theoriginal application in Docket No.CP96–288–000.Any person desiring to be heard or tomake any protest with reference to saidapplication should on or beforeFebruary 12, 1997, file with the FederalEnergy Regulatory Commission,Washington, D.C. 20426, a motion tointervene or a protest in accordancewith the requirements of theCommission’s Rules of Practice andProcedure (18 CFR 385.214 or 385.211)and the Regulations under the NaturalGas Act (18 CFR 157.10). All protestsfiled with the Commission will beconsidered by it in determining theappropriate action to be taken but willnot serve to make the protestants partiesto the proceeding. Any person wishingto become a party to a proceeding or toparticipate as a party in any hearingtherein must file a motion to intervenein accordance with the Commission’sRules.Take further notice that, pursuant tothe authority contained in and subject tothe jurisdiction conferred upon theFederal Energy Regulatory Commissionby Sections 7 and 15 of the Natural GasAct and the Commission’s Rules ofPractice and Procedure, a hearing willbe held without further notice before theCommission or its designee on thisapplication if no motion to intervene isfiled within the time required herein, ifthe Commission on its own review ofthe matter finds that a grant of thecertificate is required by the publicconvenience and necessity. If a motionfor leave to intervene is timely filed, orif the Commission on its own motionbelieves that a formal hearing isrequired, further notice of such hearingwill be duly given.Under the procedure herein providedfor, unless otherwise advised, it will beunnecessary for WIC to appear or berepresented at the hearing.Lois D. Cashell,Secretary.[FR Doc. 97–3287 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–M[Docket No. ER97–4–000, et al.]Florida Power & Light Company, et al.;Electric Rate and Corporate RegulationFilingsFebruary 5, 1997.Take notice that the following filingshave been made with the Commission:1. Florida Power & Light Company[Docket No. ER97–4–000]Take notice that on January 27, 1997,Florida Power & Light Companytendered for filing an amendment in theabove-referenced docket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.2. American Ref-Fuel Company ofDelaware County, L.P. and DelawareResource Management, Inc.[Docket No. EC97–11–000]Take notice that on January 17, 1997,American Ref-Fuel Company ofDelaware County, L.P. (‘‘ARC’’) andDelaware Resource Management, Inc.(‘‘DRMI’’) (collectively ‘‘Applicants’’)submitted for filing with the FederalEnergy Regulatory Commission(‘‘Commission’’) pursuant to 18 CFR 33,a ‘‘Joint Petition of American Ref-FuelCompany of Delaware County, L.P. andDelaware Resource Management, Inc.for an Order Under Section 203 of theFederal Power Act Approving theTransfer of Jurisdictional Assets.’’Applicants have requested that theCommission by order issued no laterthan March 1, 1997: (1) Authorize DRMIto dispose of its interest as lessee incertain electric facilities located in theCity of Chester, Delaware County,Pennsylvania valued in excess of$50,000 and to assign certain wholesalepower sales contracts subject to thejurisdiction of the Commission, and forARC to acquire each of the same; and (2)grant ARC waivers of certainCommission Regulations.Comment date: February 24, 1997, inaccordance with Standard Paragraph Eat the end of this notice.3. Florida Power & Light Company[Docket No. ER97–524–000]Take notice that on January 27, 1997,Florida Power & Light Companytendered for filing an amendment in theabove-referenced docket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.4. Florida Power & Light Company[Docket No. ER97–531–000]Take notice that on January 27, 1997,Florida Power & Light Companytendered for filing an amendment in theabove-referenced docket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.5. Boston Edison Company[Docket No. ER97–598–000]Take notice that on January 14, 1997,Boston Edison Company tendered forfiling an amendment in the abovereferenceddocket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.6. Murphy Oil USA[Docket No. ER97–610–000]Take notice that on January 23, 1997,Murphy Oil USA tendered for filing anamendment in the above-referenceddocket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.

6238 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices7. Portland General Electric Company[Docket No. ER97–653–000]Take notice that on January 17, 1997,Portland General Electric Company(PGE) tendered for filing amendedService Agreements for thosetransmission customers either receivingor planning to receive Short-Term FirmPoint-to-Point Transmission Serviceunder PGE’s open access transmissionservice tariff, PGE–8 (OA96–137–000).Pursuant to 18 CFR 35.11 and theCommission’s order issued July 30, 1993(Docket No. PL93–2–002), PGErespectfully requests the Commissiongrant a waiver of the noticerequirements of 18 CFR 35.3 to allowthe amended Page 3 of the previouslyexecuted Firm Point-to-Point ServiceAgreements to become effective as ofJanuary 15, 1997.A copy of this filing was caused to beserved upon the entities listed inAttachment 3 to this filing letter.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.8. UtiliCorp United, Inc.[Docket No. ER97–667–000]Take notice that on January 24, 1997,UtiliCorp United, Inc. tendered for filingan amendment in the above-referenceddocket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.9. Cinergy Services, Inc.[Docket No. ER97–721–000]Take notice that on January 27, 1997,Cinergy Services, Inc. tendered for filingan amendment in the above-referenceddocket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.10. Cinergy Services, Inc.[Docket No. ER97–722–000]Take notice that on January 27, 1997,Cinergy Services, Inc. tendered for filingan amendment in the above-referenceddocket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.11. Cinergy Services, Inc.[Docket No. ER97–723–000]Take notice that on January 27, 1997,Cinergy Services, Inc. tendered for filingan amendment in the above-referenceddocket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.12. NIPSCO Energy Services, Inc.[Docket Nos. ER97–763–000, ER97–764–000and ER97–768–000]Take notice that on January 21, 1997,NIPSCO Energy Services, Inc., tenderedfor filing a Notice of Withdrawal in theabove-referenced dockets.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.13. Florida Power & Light Company[Docket No. ER97–815–000]Take notice that on January 27, 1997,Florida Power & Light Companytendered for filing an amendment in theabove-referenced docket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.14. NESI Power Marketing, Inc.[Docket No. ER97–841–000]Take notice that on January 28, 1997,NESI Power Marketing, Inc. (NESI PM)filed an amendment in the abovereferenceddocket.Copies of the filing were served onIndiana Regulatory Commission and theIndiana Office of Utility ConsumerCounselor.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.15. Cinergy Services, Inc.[Docket No. ER97–858–000]Take notice that on January 23, 1997,Cinergy Services, Inc. tendered for filingan amendment in the above-referenceddocket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.16. Cinergy Services, Inc.[Docket No. ER97–930–000]Take notice that on January 27, 1997,Cinergy Services, Inc. tendered for filingan amendment in the above-referenceddocket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.17. Pennsylvania Power & LightCompany[Docket No. ER97–1026–000]Take notice that on January 10, 1997,Pennsylvania Power & Light Companytendered for filing an amendment in theabove-referenced docket.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.18. Boston Edison Company[Docket No. ER97–1376–000]Take notice that on January 23, 1997,Boston Edison Company (BostonEdison), tendered for filing a ServiceAgreement under Original Volume No.8, FERC Order 888 Tariff (Tariff) forBaltimore Gas & Electric Company(Baltimore). Boston Edison requests thatthe Service Agreement become effectiveas of January 1, 1997.Boston Edison states that it has serveda copy of this filing on Baltimore andthe Massachusetts Department of PublicUtilities.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.19. Central Maine Power Company[Docket No. ER97–1377–000]Take notice that on January 23, 1997,Central Maine Power Company (CMP),tendered for filing an executed serviceagreement and a certificate ofconcurrence for sale of capacity and/orenergy entered into with Baltimore Gasand Electric Company. Service will beprovided pursuant to CMP’s PowerSales Tariff, designated rate scheduleCMP—FERC Electric Tariff, OriginalVolume No. 2, as supplemented.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.20. Cinergy Services, Inc.[Docket No. ER97–1378–000]Take notice that on January 27, 1997,Cinergy Services, Inc. (Cinergy),tendered for filing a service agreementunder Cinergy’s Non-Firm Power SalesStandard Tariff (the Tariff) entered intobetween Cinergy and Louisville Gas andElectric Company.Cinergy and Louisville Gas andElectric Company are requesting aneffective date of January 27, 1997.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.21. Kansas City Power & LightCompany[Docket No. ER97–1379–000]Take notice that on January 27, 1997,Kansas City Power & Light Company(KCPL), tendered for filing a ServiceAgreement dated January 7, 1997,between KCPL and Wisconsin ElectricPower Company (Wisconsin). KCPLproposes an effective date of January 7,1997, and requests waiver of theCommission’s notice requirement. ThisAgreement provides for the rates andcharges for Non-Firm TransmissionService between KCPL and Wisconsin.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6239In its filing, KCPL states that the ratesincluded in the above-mentionedService Agreement are KCPL’s rates andcharges in the compliance filing toFERC Order 888 in Docket No. OA96–4–000.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.22. Rochester Gas and ElectricCorporation[Docket No. ER97–1380–000]Take notice that on January 27, 1997,Rochester Gas and Electric Corporation(RG&E) filed a Service Agreementbetween RG&E and UtiliCorp UnitedInc. (Customer). This Service Agreementspecifies that the Customer has agreedto the rates, terms and conditions of theRG&E open access transmission tarifffiled on July 9, 1996 in Docket No.OA96–141–000.RG&E requests waiver of theCommission’s sixty (60) day noticerequirements and an effective date ofJanuary 13, 1997 for UtiliCorp UnitedInc. Service Agreement. RG&E hasserved copies of the filing on the NewYork State Public Service Commissionand on the Customer.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.23. Rochester Gas and ElectricCorporation[Docket No. ER97–1381–000]Take notice that on January 27, 1997,Rochester Gas and Electric Corporation(RG&E) filed a Service Agreementbetween RG&E and the Aquila PowerCorporation (Customer). This ServiceAgreement specifies that the Customerhas agreed to the rates, terms andconditions of the RG&E open accesstransmission tariff filed on July 9, 1996in Docket No. OA96–141–000.RG&E requests waiver of theCommission’s sixty (60) day noticerequirements and an effective date ofJanuary 13, 1997 for the Aquila PowerCorporation Service Agreement. RG&Ehas served copies of the filing on theNew York State Public ServiceCommission and on the Customer.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.24. New York State Electric & GasCorporation[Docket No. ER97–1382–000]Take notice that New York StateElectric & Gas Corporation (‘‘NYSEG’’)on January 28, 1997, tendered for filingpursuant to § 35.13 of the FederalEnergy Regulatory Commission’s Rulesof Practice and Procedure, 18 CFR35.13, a supplement (‘‘Supplement’’) toRate Schedule FERC No. 135 (‘‘RateSchedule’’). The Supplement revises apower sales agreement (‘‘Agreement’’)between NYSEG and Vermont PublicPower Supply Authority (‘‘VPPSA’’) toinclude certain municipalities that maytransact under the Agreement.NYSEG requests that the Supplementbe deemed effective as of February 23,1995, the effective date of theAgreement. To the extent required togive effect to the Supplement, NYSEGrequests waiver of the noticerequirements pursuant to § 35.11 of theCommission’s Regulations, 18 CFR35.11.NYSEG served copies of the filingupon the New York State Public ServiceCommission, VPPSA, the VermontPublic Service Board, Town ofHardwick Electric Department, Villageof Ludlow Electric Light Department,Village of Hyde Park ElectricDepartment, Village of Stowe Water &Light Department, Village of EnosburgFalls Electric Light Department, Villageof Jacksonville Electric Department,Village of Lyndonville ElectricDepartment, Village of Swanton VillageElectric Department, Village ofMorrisville Electric Department.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.25. Delmarva Power & Light Company[Docket No. ER97–1383–000]Take notice that on January 27, 1997,Delmarva Power & Light Company(Delmarva), tendered for filing executedumbrella service agreements withAllegheny Electric Cooperative, Inc.,Coastal Electric Services Company,PanEnergy Trading and Market Services,L.L.C., PECO Energy Company, PublicService Electric and Gas Companyunder Delmarva’s market rate salestariff, FERC Electric Tariff, OriginalVolume No. 14, filed by Delmarva inDocket No. ER96–2571–000.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.26. Potomac Electric Power Company[Docket No. ER97–1384–000]Take notice that on January 24, 1997,Potomac Electric Power Company(Pepco), tendered for filing serviceagreements pursuant to Pepco FERCElectric Tariff, Original Volume No. 4,entered into between Pepco and ThePower Company of America, LP, LG&EPower Marketing Inc., and SouthernEnergy Marketing Inc. An effective dateof January 24, 1997 for these serviceagreements, with waiver of notice, isrequested.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.27. Central Maine Power Company[Docket No. ER97–1385–000]Take notice that on January 27, 1997,Central Maine Power Company (CMP),tendered for filing a service agreementfor Non-Firm Point-to-PointTransmission service entered into withPlum Street Energy Marketing, Inc.Service will be provided pursuant toCMP’s Open Access TransmissionTariff, designated rate schedule CMP—FERC Electric tariff, Original VolumeNo. 3, as supplemented.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.28. Consumers Energy Company[Docket No. ER97–1386–000]Take notice that on January 27, 1997,Consumers Energy Company(Consumers), tendered for filing aNetwork Integration TransmissionService Agreement and a NetworkOperating Agreement in unexecutedform with Edison Sault ElectricCompany. A copy of the filing wasserved upon Edison Sault ElectricCompany and the Michigan PublicService Commission.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.29. PacifiCorp[Docket No. ER97–1387–000]Take notice that on January 27, 1997,PacifiCorp, tendered for filing inaccordance with 18 CFR 35 of theCommission’s Rules and Regulations,Non-Firm Transmission ServiceAgreements with Aquila Power Corp.,Cinergy Services, Inc., Coral Power,L.L.C., Enron Power Marketing, Inc.,Federal Energy Sales, Inc., Pacific Gas &Electric Company, PanEnergy PowerServices, Inc., Public Service Companyof Colorado, Public Service Company ofNew Mexico, UtiliCorp United andWestern Power Services, Inc. underPacifiCorp’s FERC Electric Tariff,Original Volume No. 11.Copies of this filing were supplied tothe Washington Utilities andTransportation Commission and thePublic Utility Commission of Oregon.A copy of this filing may be obtainedfrom PacifiCorp’s RegulatoryAdministration Department’s BulletinBoard System through a personalcomputer by calling (503) 464–6122(9600 baud, 8 bits, no parity, 1 stop bit).

6240 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesComment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.30. Interstate Power Company[Docket No. ER97–1388–000]Take notice that on January 27, 1997,Interstate Power Company (IPW),tendered for filing a TransmissionService Agreement between IPW andDuke/Louis Dreyfus. Under theTransmission Service Agreement, IPWwill provide non-firm point-to-pointtransmission service to Duke/LouisDreyfus.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.31. Interstate Power Company[Docket No. ER97–1389–000]Take notice that on January 27, 1997,Interstate Power Company (IPW),tendered for filing a TransmissionService Agreement between IPW andHeartland Energy Services (Heartland).Under the transmission ServiceAgreement, IPW will provide non-firmpoint-to-point transmission service toHeartland.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.32. Wisconsin Electric Power Company[Docket No. ER97–1390–000]Take notice that on January 27, 1997,Wisconsin Electric Power Company(Wisconsin Electric), tendered for filingthree firm transmission serviceagreements (TSAs) applicable forservice to Oconto Electric Cooperative(OEC). Wisconsin Electric respectfullyrequests waiver of the Commission’snotice requirements to allow aneffective date of May 1, 1996, for thefirst two agreements, and January 1,1997 for the third TSA, which coversservice in January and February 1997.Wisconsin Electric acknowledges thelateness of its filing respecting the firsttwo TSAs and has calculated the timevalue of money penalty associated withsuch tardiness, which will be refundedto its transmission service customer. Acalculation of the distribution servicecharges associated with service at 34.5Kv is also included with WisconsinElectric’s submittal.Copies of the filing have been servedon OEC, Wisconsin Public ServiceCorporation, Wisconsin Power andLight Company, and the Public ServiceCommission of Wisconsin.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.33. Illinois Power Company[Docket No. ER97–1391–000]Take notice that on January 27, 1997,Illinois power Company (IllinoisPower), 500 South 27th Street, Decatur,Illinois 62526, tendered for filing aPower Sales Tariff, Service Agreementunder which Southern Indiana Gas &Electric Company will take serviceunder Illinois Power Company’s PowerSales Tariff. The agreements are basedon the Form of Service Agreement inIllinois Power’s tariff.Illinois Power has requested aneffective date of January 15, 1997.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.34. Florida Keys Electric CooperativeAssociation, Inc.[Docket No. ER97–1392–000]Take notice that on January 27, 1997,Florida Keys Electric CooperativeAssociation, Inc. (FKEC), tendered forfiling the Long Term Joint InvestmentTransmission Agreement (‘‘Agreement’’)between FKEC and the City ElectricSystem, Key West, Florida (‘‘CES’’).The Agreement provides for eitherParty to use the unused capacity of theother Party by paying the other Party anon-firm rate. In the Commission’sfiling in Docket OA96–220–000, FKECwas found to be a public utility underthe jurisdiction of the Federal EnergyRegulatory Commission and wasdirected to file this Agreement.A copy of this filing has been servedon CES and the Florida Public ServiceCommissioner.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.35. Duke Power Company[Docket No. ER97–1393–000]Take notice that on January 27, 1997,Duke Power Company (Duke), tenderedfor filing a Transmission ServiceAgreement (TSA) between Duke, on itsown behalf and acting as agent for itswholly-owned subsidiary, NantahalaPower and Light Company, and FederalEnergy Sales, Inc. (Federal Energy).Duke states that the TSA sets out thetransmission arrangements under whichDuke will provide Federal Energy nonfirmpoint-to-point transmission serviceunder its Pro Forma Open AccessTransmission Tariff.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.36. Non-Replacement EnergyAgreement Between PJM Companiesand Coral Power, L.L.C.[Docket No. ER97–1394–000]Take notice that on January 27, 1997,the Pennsylvania-New Jersey-Maryland(PJM) Interconnection Association filed,on behalf of the signatories to the PJMAgreement, a Non-Replacement EnergyAgreement between Coral Power, L.L.C.and Public Service Electric and GasCompany, PECO Energy Company,Pennsylvania Power & Light Company,Baltimore Gas and Electric Company,Pennsylvania Electric Company,Metropolitan Edison Company, JerseyCentral Power and Light Company,Potomac Electric Power Company,Atlantic City Electric Company, andDelmarva Power & Light Company. ThePJM Companies request an effective dateof February 14, 1997.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.37. Upper Peninsula Power Company[Docket No. ER97–1395–000]Take notice that on January 27, 1997,Upper Peninsula Power Company(UPPCO), tendered for filing a Notice ofCancellation of a Dispatch Agreementdated December 8, 1987 betweenUPPCO and Wisconsin Electric PowerCompany. UPPCO stated that it hasrecently discontinued dispatchoperations at its dispatch center inIshpeming, Michigan, and requests thatthe Commission waive § 35.3 of itsregulations under the Federal Power Actin order to permit the Notice ofCancellation to be made effective as ofOctober 15, 1996.Comment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.38. Charles W. Rainger[Docket No. ID–2355–001]Take notice that on December 23,1996, Charles W. Rainger, Applicanttendered for filing an application underSection 305(b) to hold the followingpositions:Director, Ohio Edison CompanyDirector, National City BankComment date: February 19, 1997, inaccordance with Standard Paragraph Eat the end of this notice.Standard ParagraphE. Any person desiring to be heard orto protest said filing should file amotion to intervene or protest with theFederal Energy Regulatory Commission,888 First Street, N.E., Washington, D.C.20426, in accordance with Rules 211and 214 of the Commission’s Rules of

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6241Practice and Procedure (18 CFR 385.211and 18 CFR 385.214). All such motionsor protests should be filed on or beforethe comment date. Protests will beconsidered by the Commission indetermining the appropriate action to betaken, but will not serve to makeprotestants parties to the proceeding.Any person wishing to become a partymust file a motion to intervene. Copiesof this filing are on file with theCommission and are available for publicinspection.Lois D. Cashell,Secretary.[FR Doc. 97–3337 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–P[Docket No. CP96–517–000]Algonquin LNG, Inc.; Notice ofAvailability of the EnvironmentalAssessment for the Proposed ALNGModifications ProjectFebruary 5, 1997.The staff of the Federal EnergyRegulatory Commission (FERC orCommission) has prepared anenvironmental assessment (EA) on thenatural gas pipeline facilities proposedby Algonquin LNG, Inc. (ALNG) in theabove-referenced docket.The EA was prepared to satisfy therequirements of the NationalEnvironmental Policy Act. The staffconcludes that approval of the proposedproject, with appropriate mitigatingmeasures, would not constitute a majorFederal action significantly affecting thequality of the human environment.The EA assesses the potentialenvironmental effects of the proposedmodification, construction andoperation at an existing liquefiednatural gas (LNG) storage facility andthe construction and operation ofassociated pipeline facilities including:• A liquefaction facility with acapacity of 40,000 million Britishthermal units per day (MMbtu/d);• LNG pumps and vaporizers with acapacity of 375,000 MMbtu/d;• Boil-off gas compressors;• 0.92 mile of 20-inch-diameterpipeline;• 0.25 mile of 10.75-inch-diameterpipeline;• Metering facilities;• Inspection of the existing 600,000-barrel LNG storage tank, and install newinstrumentation; and• Miscellaneous constructionincluding water/glycol system, feed gascompressors, odorant injection, controlsystems, and fire protection systemadditions.The purpose of the proposed facilitiesis to provide natural gas liquefaction,LNG storage, LNG trucking, and LNGvaporization services on a firm andinterruptible, open access, blanket basis.Any person wishing to comment onthe EA may do so. Written commentsmut be received on or before Marcy 7,1997, reference Docket No. CP96–517–000, and be addressed to: Office of theSecretary, Federal Energy RegulatoryCommission, 888 First Street, N.E.,Washington, DC 20426.Comments will be considered by theCommission but will not serve to makethe commentor a party to theproceeding. Any person seeking tobecome a party to the proceeding mustfile a motion to intervene pursuant toRule 214 of the Commission’s Rules ofPractice and Procedure (18 CFR385.214).The date for filing timely motions tointervene in this proceeding has passed.Therefore, parties now seeking to filelate interventions must show goodcause, as required by section385.214(b)(3), why this time limitationshould be waived. Environmental issueshave been viewed as good cause for lateintervention. You do not needintervenor status to have yourcomments considered.The EA has been placed in the publicfiles of the FERC and is available forpublic inspection at: Federal EnergyRegulatory Commission, PublicReference and Files MaintenanceBranch, 888 First Street, N.E., Room2A–1, Washington, DC 20426, (202)208–1371.Copies of the EA have been mailed toFederal, state, and local agencies, publicinterest groups, interested individuals,newspapers, and parties to thisproceeding. For a limited number ofcopies of the EA, contact the PublicReference and Files MaintenanceBranch identified above.Lois D. Cashell,Secretary.[FR Doc. 97–3289 Filed 2–10–97; 8:45 am]BILLING CODE 6717–01–MOffice of Hearings and AppealsNotice of Cases Filed; Week ofDecember 9 Through December 13,1996During the Week of December 9through December 13, 1996, the appeals,applications, petitions or other requestslisted in this Notice were filed with theOffice of Hearings and Appeals of theDepartment of Energy.Any person who will be aggrieved bythe DOE action sought in any of thesecases may file written comments on theapplication within ten days ofpublication of this Notice or the date ofreceipt of actual notice, whicheveroccurs first. All such comments shall befiled with the Office of Hearings andAppeals, Department of Energy,Washington, D.C. 20585–0107.Dated: February 3, 1997.George B. Breznay,Director, Office of Hearings and Appeals.LIST OF CASES RECEIVED BY THE OFFICE OF HEARINGS AND APPEALS[Week of December 9 through December 13, 1996]Date Name and location of applicant Case No. Type of submissionDec. 9, 1996 ... Carlos Blanco, Portland, Oregon .................... VFA–0248 Appeal of an Information Request Denial. If granted: The November5, 1996 Freedom of Information Request Denial issuedby the Bonneville Power Administration would be rescinded,and Carlos Blanco would receive access to certainDOE information.Dec. 9, 1996 ... Personnel Security Hearing ............................ VSO–0127 Request for Hearing Under 10 CFR Part 710. If granted: Anindividual employed by the Department of Energy wouldreceive a hearing under 10 CFR Part 710.Dec. 10, 1996Ellisworth-Williams Coop Co. Hardin, Kentucky.RR272–271Request for Modification/Rescission in the Crude Oil RefundProceeding. If Granted: The October 18, 1996 Decisionand Order, Case No. RG272–260, issued to Ellisworth-WilliamsCoop Co. would be modified regarding the firm’s Applicationfor Refund submitted in the Crude Oil refund proceeding.

6242 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesLIST OF CASES RECEIVED BY THE OFFICE OF HEARINGS AND APPEALS—Continued[Week of December 9 through December 13, 1996]Date Name and location of applicant Case No. Type of submissionDec. 12, 1996 Personnel Security Hearing ............................ VSO–0128 Request for Hearing Under 10 CFR Part 710. If granted: Anindividual employed by the Department of Energy wouldreceive a hearing under 10 CFR Part 710.[FR Doc. 97–3307 Filed 2–10–97; 8:45 am]BILLING CODE 6450–01–PNotice of Cases Filed; Week ofDecember 16 Through December 20,1996During the Week of December 16through December 20, 1996, the appeals,applications, petitions or other requestslisted in this Notice were filed with theOffice of Hearings and Appeals of theDepartment of Energy.Any person who will be aggrieved bythe DOE action sought in any of thesecases may file written comments on theapplication within ten days ofpublication of this Notice or the date ofreceipt of actual notice, whicheveroccurs first. All such comments shall befiled with the Office of Hearings andAppeals, Department of Energy,Washington, DC 20585–0107.Dated: February 3, 1997.George B. Breznay,Director, Office of Hearings and Appeals.LIST OF CASES RECEIVED BY THE OFFICE OF HEARINGS AND APPEALS[Week of December 16 through December 20, 1996]Date Name and location of applicant Case No. Type of submission12/16/96 ..... Gretchen Lee Coles Glen Ellyn, Illinois.12/16/96 ..... International Brotherhood of ElectricalWorkers New Ellenton, South Carolina.12/16/96 ..... Marlene Flor Albuquerque, New Mexico.12/16/96 ..... Personnel Security Review BlueSprings, Missouri.VFA–0251 Appeal of an Information Request Denial. If Granted: The November 7,1996 Freedom of Information Request Denial issued by Oak Ridge OperationsOffice would be rescinded, and Gretchen Lee Coles would receiveaccess to certain DOE information.VFA–0250 Appeal of an Information Request Denial. If Granted: The November 8,1996 Freedom of Information Request Denial issued by Savannah RiverOperations Office would be rescinded, and the International Brotherhoodof Electrical Workers would receive access to certain DOE information.VFA–0249 Appeal of an Information Request Denial. If Granted: The November 9,1996 Freedom of Information Request Denial issued by Albuquerque Operationswould be rescinded, and Marlene Flor would receive access tocertain DOE information.VSO–0102Request for Review of Opinion Under 10 C.F.R. Part 710. If Granted: TheNovember 14, 1996 Opinion of the Office of Hearings and Appeals, CaseNo. VSO–0102, would be reviewed at the request of an individual employedat a contractor of the Department of Energy.12/17/96 ..... Daniel J. Bruno Washington DC ........ VFA–0252 Appeal of an Information Request Denial. If Granted: The December 13,1996 Freedom of Information Request Denial issued by FOIA/Privacy ActDivision, Office of the Executive Secretariat would be rescinded, andDaniel J. Bruno would receive access to certain DOE information.12/18/96 ..... Marlene Flor Albuquerque, New Mexico.12/19/96 ..... Digital City Communications, Inc.Stockton, CA.VFA–0253 Appeal of an Information Request Denial. If Granted: The November 22,1996 Freedom of Information Request Denial issued by the Office of InspectorGeneral would be rescinded, and Marlene Flor would receive accessto certain DOE information.VFA–0254 Appeal of an Information Request Denial. If Granted: The December 6,1996 Freedom of Information Request Denial issued by the Oakland OperationsOffice would be rescinded, and Digital City Communications, Inc.would receive access to certain Department of Energy information.[FR Doc. 97–3308 Filed 2–10–97; 8:45 am]BILLING CODE 6450–01–PNotice of Cases Filed; Week ofDecember 23, 1996 Through December27, 1996During the Week of December 23through December 27, 1996, the appeals,applications, petitions or other requestslisted in this Notice were filed with theOffice of Hearings and Appeals of theDepartment of Energy.Any person who will be aggrieved bythe DOE action sought in any of thesecases may file written comments on theapplication within ten days ofpublication of this Notice or the date ofreceipt of actual notice, whicheveroccurs first. All such comments shall befiled with the Office of Hearings andAppeals, Department of Energy,Washington, D.C. 20585–0107.Dated: February 3, 1997.George B. Breznay,Director, Office of Hearings and Appeals.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6243LIST OF CASES RECEIVED BY THE OFFICE OF HEARINGS AND APPEALS[Week of December 23 through December 27, 1996]Date Name and location of applicant Case No. Type of submission12/23/96 ..... Harold Bibeau Troutdale, Oregon ...... VFA–0255 Appeal of an Information Request Denial. If Granted: The December 4,1996 Freedom of Information Request Denial issued by the ArgonneGroup would be rescinded, and Harold Bibeau would receive access tocertain DOE information.12/24/96 ..... Cascade Scientific, Inc. Redmond,Washington.12/24/96 ..... Crooker & Sons, Inc. Santa Barbara,California.12/24/96 ..... James R. Hutton, Oak Ridge, Tennessee.12/24/96 ..... W. Gordon Smith Co. Eden Prairie,Minnesota.VFA–0257 Appeal of an Information Request Denial. If Granted: The November 21,1996 Freedom of Information Request Denial issued by Richland OperationsOffice would be rescinded, and Cascade Scientific, Inc. would receiveaccess to certain DOE information.RR272–272Request for Modification/Rescission in the Crude Oil Refund Proceeding. IfGranted: The November 15, 1996 Dismissal, Case No. RG272–918, issuedto Crooker & Sons, Inc. would be modified regarding the firm’s applicationfor refund submitted in the crude oil refund proceeding.VFA–0256 Appeal of an Information Request Denial. If Granted: The December 6,1996 Freedom of Information Request Denial issued by Oak Ridge OperationsOffice would be rescinded, and James R. Hutton would receive accessto certain DOE information.VEE–0037Exception to the Reporting Requirements. If Granted: W. Gordon Smith Co.would be granted an extension of time in which to file Form EIA–782BRepeller’s/Retailer’s Monthly Petroleum Product Sales Report.[FR Doc. 97–3309 Filed 2–10–97; 8:45 am]BILLING CODE 6450–01–PNotice of Cases Filed; Week ofDecember 30, 1996 Through January 3,1997During the Week of December 30,1996 through January 3, 1997, theappeals, applications, petitions or otherrequests listed in this Notice were filedwith the Office of Hearings and Appealsof the Department of Energy.Any person who will be aggrieved bythe DOE action sought in any of thesecases may file written comments on theapplication within ten days ofpublication of this Notice or the date ofreceipt of actual notice, whicheveroccurs first. All such comments shall befiled with the Office of Hearings andAppeals, Department of Energy,Washington, DC. 20585–0107.Dated: February 3, 1997.George B. Breznay,Director, Office of Hearings and Appeals.LIST OF CASES RECEIVED BY THE OFFICE OF HEARINGS AND APPEALS[Week of December 30, 1996 through January 3, 1997]DateName and Location of applicantCase No.Type of submission1/2/97 ........ Eugene Maples, Alexandria,Virginia.VFA–0258Appeal of an Information Request Denial. If Granted: The November 25, 1996, Freedomof Information Request Denial issued by the Assistant Inspector General forInvestigations would be rescinded, and Eugene Maples would receive access tocertain portions of an investigative report on the fraudulent use of oil overchargefunds in South Carolina.[FR Doc. 97–3312 Filed 2–10–97; 8:45 am]BILLING CODE 6450–01–PNotice of Issuance of Decisions andOrders; Week of December 23 ThroughDecember 27, 1996During the week of December 23through December 27, 1996, thedecisions and orders summarized belowwere issued with respect to appeals,applications, petitions, or other requestsfiled with the Office of Hearings andAppeals of the Department of Energy.The following summary also contains alist of submissions that were dismissedby the Office of Hearings and Appeals.Copies of the full text of thesedecisions and orders are available in thePublic Reference Room of the Office ofHearings and Appeals, Room 1E–234,Forrestal Building, 1000 IndependenceAvenue, SW, Washington, D.C. 20585–0107, Monday through Friday, betweenthe hours of 1:00 p.m. and 5:00 p.m.,except federal holidays. They are alsoavailable in Energy Management:Federal Energy Guidelines, acommercially published loose leafreporter system. Some decisions andorders are available on the Office ofHearings and Appeals World Wide Website at http://www.oha.doe.gov.Dated: February 3, 1997.George B. Breznay,Director, Office of Hearings and Appeals.Decision List No. 13AppealsMichael A. Grosche, 12/23/96, VFA–0193Michael A. Grosche filed an Appealfrom a determination issued by theOffice of the Inspector General (OIG) ofthe Department of Energy (DOE) inresponse to a Request for Informationsubmitted under the Freedom ofInformation Act. OIG had withheldnames and other information frommemoranda on the outcome of a closedinvestigation into alleged misbilling bysub-contractor employees whichrevealed no pecuniary loss to the

6244 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesgovernment. In considering the Appeal,the DOE determined that all of thedocuments were generated for a lawenforcement purpose and that underthose conditions, review would beunder Exemption 7(C). In applyingExemption 7(C), the DOE found thatOIG properly withheld the names ofpersons interviewed and investigated.However, the DOE remanded to the OIGfor further consideration thewithholding of names of federalemployees who did not appear to bepersons OIG either investigated orinterviewed, but who only seemed to beperforming their official functions. TheDOE also remanded for furtherconsideration all other withheldmaterial such as subcontract numbersand billing accounts because none of thematerial appeared on its face to involveany privacy interest, but did appear toaddress a public interest in whethercertain governmental-funded activitieswere well or poorly managed and howthe Federal Acquisition Regulation mayhave been violated. Accordingly, theAppeal was denied in part, granted inpart and remanded to OIG for furtherconsideration.Glen Milner, 12/23/96, VFA–0238Glen Milner (Appellant) filed anAppeal of two Determinations issued tohim by the Department of Energy (DOE)in response to a request under theFreedom of Information Act. In therequest, the Appellant asked for alldocuments, generated from 1985 to thepresent, concerning the ‘‘White Train’’,which carried nuclear weapons until the1980’s. He also requested a fee waiverfor costs associated with processing theFOIA request. On appeal, the OHAfound that there is no provision in theDOE FOIA regulations permitting aconditional fee waiver, such as thatrequested by the Appellant. However,the OHA also found that disclosure ofsome of the information requested bythe Appellant would be in the publicinterest, because it was likely tocontribute significantly to governmentoperations and activities. Under thesecircumstances the OHA determined thata fee waiver was appropriate withrespect to the limited number ofdocuments meeting those conditions.Accordingly, the DOE granted theAppeal in part.The following submissions were dismissed.DismissalsCase nameJames H. Stebbings ..........................................................................................................................................................................James R. Hutton ...............................................................................................................................................................................L.N. Asphalt Co., Inc .........................................................................................................................................................................Marlene Flor ......................................................................................................................................................................................Merlon Management Corp ................................................................................................................................................................Case No.VFA–0242VFA–0256RG272–981VFA–0253RG272–997[FR Doc. 97–3310 Filed 2–10–97; 8:45 am]BILLING CODE 6450–01–PNotice of Issuance of Decisions andOrders; Week of January 13 throughJanuary 17, 1997During the week of January 13through January 17, 1997, the decisionsand orders summarized below wereissued with respect to appeals,applications, petitions, or other requestsfiled with the Office of Hearings andAppeals of the Department of Energy.The following summary also contains alist of submissions that were dismissedby the Office of Hearings and Appeals.Copies of the full text of thesedecisions and orders are available in thePublic Reference Room of the Office ofHearings and Appeals, Room 1E–234,Forrestal Building, 1000 IndependenceAvenue, S.W., Washington, D.C. 20585–0107, Monday through Friday, betweenthe hours of 1:00 p.m. and 5:00 p.m.,except federal holidays. They are alsoavailable in Energy Management:Federal Energy Guidelines, acommercially published loose leafreporter system. Some decisions andorders are available on the Office ofHearings and Appeals World Wide Website at http://www.oha.doe.gov.Dated: February 3, 1997.George B. Breznay,Director, Office of Hearings and Appeals.Decision List No. 16AppealsDigital City Communications, Inc.,1/14/97, VFA–0254Digital City Communications, Inc.(Digital) filed an Appeal of aDetermination issued to it by theDepartment of Energy (DOE) in responseto a request under the Freedom ofInformation Act (FOIA). In the request,the Appellant asked for NetworkIntrusion Detector software and theaccompanying manual. In itsDetermination, DOE’s OaklandOperations Office (Oakland) found thatthe requested items should be withheldunder Exemption 4 of the FOIA. OnAppeal, the Office of Hearings andAppeals (OHA) found that the caseshould be remanded because Oaklandhad failed to determine whether thesoftware was a ‘‘record’’ under theFOIA. OHA further found thatOakland’s Exemption 4 determinationwas inadequate. Therefore, the DOEgranted the Appeal and remanded thematter to Oakland for further action.Gretchen Lee Coles, 1/15/97, VFA–0251Gretchen Lee Coles filed an Appealfrom determinations issued by the OakRidge Operations Office and theAlbuquerque Operations Officeindicating that they had been unable tolocate records that would reflectwhether the federal government hademployed Lee H. Coles and whether Mr.Coles had been exposed to radiation.The DOE denied the Appeal because itfound that the searches conducted inresponse to the Appellant’s Freedom ofInformation Act (FOIA) request werereasonable. The DOE found that theFOIA Officers contacted people whowould have knowledge of whetherrelevant documents exist, and that theseindividuals used appropriateprocedures to search for the recordsrequested.Harold Bibeau, 1/17/97 VFA–0255The Department of Energy denied anAppeal of a determination that nodocuments responsive to the appellant’srequest could be located. DOE foundthat the search conducted wasreasonably calculated to uncovermaterial responsive to the request.I.B.E.W., 1/15/97, VFA–0250The International Brotherhood ofElectrical Workers (I.B.E.W.) filed anAppeal from a determination, dated

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6245November 8, 1996, by the AuthorizingOfficial of the Savannah RiverOperations Office of the Department ofEnergy. In that determination, theAuthorizing Official denied a request forinformation and fee waiver filed by theI.B.E.W. In considering the Appeal, theDOE denied the request for a fee waiverand remanded the matter to SavannahRiver for a further search of documentsbased on a request clarified on appeal.James L. Hecht, 1/15/97, VFA–0244The Department of Energy (DOE)issued a Decision and Order (D&O)granting a Freedom of Information Act(FOIA) Appeal that was filed by JamesL. Hecht. In his Appeal, Mr. Hechtchallenged the adequacy of the searchfor responsive documents that wasconducted by the DOE’s Office ofEnergy Efficiency and RenewableEnergy (EE) in response to Mr. Hecht’sFOIA request. In the Decision, the OHAfound that the EE interpreted Mr.Hecht’s request in an unreasonablynarrow manner in order to reduce thescope of that request. The OHAremanded the case to the EE so that theEE could confer with Mr. Hecht in anattempt to reformulate the request sothat it would be less burdensome anddisruptive to the operations of thatOffice.J.B. Truher, 1/15/97, VFA–0245J.B. Truher filed an Appeal from adetermination, dated October 23, 1996,by the Deputy Inspector General forInspections of the Office of InspectorGeneral (Deputy IG) of the Departmentof Energy (DOE). In that determination,the Deputy IG partially granted a requestfor information filed by Mr. Truher. Inconsidering the Appeal, the DOEordered that Deputy IG to release titleheadings in four documents.Keci Corporation, 1/14/97, VFA–0246Keci Corporation (Keci) filed anAppeal from a denial by the Departmentof Energy’s (DOE’s) Office of InspectorGeneral (OIG) of a Request forInformation submitted under theFreedom of Information Act and thePrivacy Act. Keci requested informationprovided to DOE by a named individualregarding alleged irregularities in a DOEprocurement, and any other relevantrecords. In considering the Appeal, theDOE found that OIG properly invokedthe Glomar response to protect theindividual’s privacy rights and neitherconfirmed nor denied the existence ofresponsive records. Therefore, theAppeal was denied.Request for ExceptionKalamazoo Oil Co., 1/16/97 VEE–0036Kalamazoo Oil Co. (Kalamazoo) filedan Application for Exception from theEnergy Information Administration(EIA) requirement that it file Form EIA–782B, the ‘‘Resellers’/Retailers’’Monthly Petroleum Product SalesReport.’’ In considering the request, theDOE found that the firm was notsuffering a gross inequity or serioushardship. Therefore, the DOE deniedKalamazoo’s Application for Exception.Personnel Security HearingPersonnel Security Hearing, 1/16/97,VSO–0116Under the provisions of 10 C.F.R. Part710, the Department of Energy (DOE)suspended an individual’s accessauthorization (a ‘‘Q’’ level securityclearance) pending administrativereview, based upon derogatoryinformation received by the DOE whichrevealed illegal drug use on the part ofthe individual. More specifically, DOEfound that pursuant to a random drugscreening performed by the individual’semployer, a DOE contractor, a urinespecimen provided by the individualtested positive for marijuana. Inaddition, the individual signed anAcknowledgement of Positive DrugScreen and during a subsequentPersonnel Security Interview (PSI)concerning this matter, the individualadmitted using marijuana. On this basis,DOE suspended the individual’s accessauthorization under 10 C.F.R. § 710.8(k),finding that the individual ‘‘[t]raffickedin, sold, transferred, possessed, used, orexperimented with a drug or othersubstance listed in the Schedule ofControlled Substance establishedpursuant to section 202 of theControlled Substance Act of 1970 (suchas marijuana, cocaine, amphetamines,barbiturates, narcotics, etc.) except asprescribed or administered by aphysician licensed to dispense drugs inthe practice of medicine, or as otherwiseauthorized by law.’’ Following a hearingconvened at the request of theindividual, the Office of Hearings andAppeals Hearing Officer found in hisOpinion that: (i) the individual’smarijuana use was an isolated, one-timeoccurrence, and (ii) the record of theproceeding contained sufficientsupporting evidence to accept theindividual’s assurance that theindividual would never use marijuanaagain. Accordingly, the Hearing Officerconcluded in the Opinion that theindividual’s access authorization shouldbe restored.Refund ApplicationDixie Hauling Co., Inc., 1/16/97, RF272–97810The DOE issued a Decision and Ordergranting four Applications for Refund inthe crude oil refund proceeding. In twoof the cases, additional claimants signedapplications previously filed in thecrude oil proceeding, but did not do sountil after the crude oil refundproceeding deadline. These claimantswere granted a portion of the refundsbecause they joined applications which:(1) Were submitted prior to the crude oilrefund proceeding deadline; (2)contained accurate informationsupporting the companies’’ rights torefunds; and (3) had yet to be granted bythe DOE prior to their amendment bythe signatures of the additionalclaimants.Refund ApplicationsThe Office of Hearings and Appealsissued the following Decisions andOrders concerning refund applications,which are not summarized. Copies ofthe full texts of the Decisions andOrders are available in the PublicReference Room of the Office ofHearings and Appeals.Brader Hauling Service, Inc ................................................................................................................................ RG272–00928 1/16/97Crude Oil Supple. Refund Dist ........................................................................................................................... RB272–00097 1/16/97Cruce Oil Supple. Refund Dist ............................................................................................................................ RB272–00098 1/16/97Gulf Oil Corporation/Cabot Corporation ............................................................................................................ RF300–16719 1/16/97Indianapolis Baptist Schools ............................................................................................................................... RF272–95103 1/14/97Warren Brothers Road Company, et al ............................................................................................................... RF272–93484 1/16/97The following submissions were dismissed.DismissalsNameA-DEC, Inc ........................................................................................................................................................................................Green Holdings, Inc ..........................................................................................................................................................................Case No.RG272–916RD272–25553

6246 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesNameGreen Holdings, Inc ..........................................................................................................................................................................Personnel Security Review ...............................................................................................................................................................Scappoose Sand & Gravel Co .........................................................................................................................................................Wilkins, Kaiser & Olsen, Inc .............................................................................................................................................................Case No.RF272–25553VSA–0074RG272–984RG272–983[FR Doc. 97–3311 Filed 2–10–97; 8:45 am]BILLING CODE 6450–01–PFEDERAL COMMUNICATIONSCOMMISSIONNotice of Public InformationCollections Being Reviewed by theFederal Communications CommissionFebruary 5, 1997.SUMMARY: The Federal CommunicationsCommission, as part of its continuingeffort to reduce paperwork burdeninvites the general public and otherFederal agencies to take thisopportunity to comment on thefollowing information collection, asrequired by the Paperwork ReductionAct of 1995, Public Law 104–13. Anagency may not conduct or sponsor acollection of information unless itdisplays a currently valid controlnumber. No person shall be subject toany penalty for failing to comply witha collection of information subject to thePaperwork Reduction Act (PRA) thatdoes not display a valid control number.Comments are requested concerning (a)Whether the proposed collection ofinformation is necessary for the properperformance of the functions of theCommission, including whether theinformation shall have practical utility;(b) the accuracy of the Commission’sburden estimate; (c) ways to enhancethe quality, utility, and clarify of theinformation collected; and (d) ways tominimize the burden of the collection ofinformation on the respondents,including the use of automatedcollection techniques or other forms ofinformation technology.DATES: Persons wishing to comment onthis information collection shouldsubmit comments April 14, 1997.ADDRESSES: Direct all comments toDorothy Conway, FederalCommunications Commission, Room234, 1919 M St., NW., Washington, DC20554 or via internet todconway@fcc.gov.FOR FURTHER INFORMATION CONTACT: Foradditional information or copies of theinformation collections contact DorothyConway at 202–418–0217 or via internetat dconway@fcc.gov.SUPPLEMENTARY INFORMATION:OMB Approval Number: 3060–0685.Title: Annual Updating of MaximumPermitted Rates for Regulated CableServices.Form No.: FCC Form 1240.Type of Review: Extension of approvalof a currently approved collection.Respondents: Business or other forprofitentities; state and localgovernments.Number of Respondents: 4,500. (3,000cable operators and 1,500 localfranchise authorities (‘‘LFAs’’).Estimated Time Per Response: 1–15hours.Total Annual Burden: 47,250 hours.We report the burden for all aspects ofthis information collection as follows:The modification of the Form 1240 ratemethodology requirement only pertainsto first-time filings of FCC Form 1240.The modification merely results inpermitting operators to project andrecoup certain costs sooner, rather thanlater; therefore there is no measurableburden revision for this informationcollection. If there were an additionalburden significant enough to bemeasured, any burden added to anoperator’s first Form 1240 filing wouldbe negated by the decreased burden incompleting the operator’s second Form1240 filing. The Commission thereforereports no revised burden to completeForm 1240 on a per filing basis.However, based on latest data available,the Commission adjusts the estimatednumber of Form 1240 filings that areannually filed by operators.The Commission estimates that thereare no more than 3,000 Form 1240s filedannually; roughly 1,500 (50%) with theCommission and roughly 1,500 (50%)with LFAs. Burden for operators: Weestimate that 25% of operators willcontract out the burden of filing andthat it will take 1 hour to coordinateinformation with those contractors. Theremaining 75% of operators areestimated to employ in house staff tocomplete the filing. 750 filings (25%contracted out) × 1 hour = 750 hours.2,250 filings (75% in house) × 15 hours= 33,750 hours. Additionally,76.933(g)(2) states: If an LFA has takenno action within the 90-day reviewperiod, then the proposed rates may gointo effect at the end of the reviewperiod, subject to a prospective ratereduction and refund if the LFAsubsequently issues a written decisiondisapproving any portion of such rates.However, if an operator inquires as towhether the LFA intends to issue a rateorder after the initial review period, theLFA or its designee must notify theoperator of its intent in this regardwithin 15 days of the operator’s inquiry.We estimate this will occur in 25% ofthe instances when Form 1240s are filedby cable operators with their LFAs. 25%of 1,500 = 375 inquiries at an estimated1 burden for each inquiry = 375 hours.Total burden hours to operators = 750+ 33,750 + 375 = 34,875 hours.Burden to LFAs: The Commissionestimates there will be 1,500 FCC Form1240s filed with LFAs, annually.Average LFA reviewing time for eachFCC Form 1240 is estimated to be 8hours. 1,500 × 8 hours = 12,000 burdenhours. Additionally, we estimate 375responses to operator requests pursuantto 76.933(g)(2). 375 notifications at anestimated 1 burden hour for eachnotification = 375 hours.Total burden hours to LFAs = (1,500× 8 hrs.) + (375 × 1 hr.) = 12,375 hrs.Total burden hours for allrespondents = 34,875 + 12,375 = 47,250hours.Total costs for Respondents:$1,139,000. We estimate an annualpurchase of 1,000 diskette versions ofFCC Form 1240 @ $5 per diskette =$5,000. Printing, photocopying andpostage costs incurred by operators andLFAs is estimated to be $2 per entity(4,500 entities × $2) = $9,000. Weestimate that assistance for completingForm 1240 filings will be performed bylegal and accounting contractors at anaverage of $100/hour for 25% of thefilings. $100/hour × 750 filings (25% ofForm 1240 filings) × 15 hours =$1,125,000.Total respondent costs: $5,000 +$9,000 + $1,125,000 = $1,139,000.Needs and Uses: On September 22,1995, the Commission released theThirteenth Order on Reconsideration(‘‘Order’’), FCC 95–397, MM Docket No.92–266, which adopted a new optionalrate adjustment methodology permittingcable operators to make annual ratechanges to their basic service tiers(‘‘BSTs’’) and cable programming

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6247service tiers (‘‘CPSTs’’). Operatorselecting to use this methodology adjusttheir rates once per year to reflectreasonably certain and reasonablyquantifiable changes in external costs,inflation, and the number of regulatedchannels that are projected for the 12months following the rate change. Toenable operators to use this optional rateadjustment methodology theCommission created FCC Form 1240Annual Updating of MaximumPermitted Rates for Regulated CableServices. Subsequent to the availabilityof FCC Form 1240, the Commissionreceived numerous requests for waiverof certain rate adjustment requirementscontained in the Order. Therefore, on,November 1, 1996, the Commissionreleased an Order, DA 96–1804, whichgranted for all cable operators’ initialForm 1240 filing, a waiver of therequirement that only costs that haveactually been incurred may be includedin the true-up period. Specifically, anoperator’s initial Form 1240 filing maynow include projected changes in costs,inflation, channels and subscriberinformation attributable to the periodbetween the last date for whichhistorical cost data is available and theeffective date of the new rates. Theseprojections must be accompanied by aseparate calculation and explanation ofthe basis for the costs (for the periodbetween the last full month for whichactual cost data is available and theeffective date of the new rate).The creation of this blanket waivermodified the Form 1240 informationcollection requirement (though not theactual Form 1240, hence the July 1996edition remains intact) and thereforerequired the approval of the Office ofManagement and Budget (‘‘OMB’’). TheCommission received emergency OMBapproval on December 12, 1996. TheCommission now initiates a 60-daypublic comment period concerning theForm 1240 information collectionrequirement in order to obtain regularOMB approval for the collection.FCC Form 1240 is filed by cableoperators seeking to adjust maximumpermitted rates for regulated services toreflect changes in external costs. Cableoperators submit FCC Form 1240 totheir respective local franchisingauthorities to justify rates for the basicservice tier or with the Commission (insituations where the Commission hasassumed jurisdiction). FCC Form 1240is also filed with the Commission whenresponding to a complaint filed with theCommission about cable programmingservice rates and associated equipment.Information contained in FCC Form1240 filings has been used by theCommission and LFAs to adjudicatepermitted rates for regulated cableservices and equipment, for the additionof new programming tiers, to accountfor the addition and deletion ofchannels, and for the allowance for passthrough of external costs and costs dueto inflation.Federal Communications Commission.William F. Caton,Acting Secretary.[FR Doc. 97–3257 Filed 2–10–97; 8:45 am]BILLING CODE 6712–01–PPublic Information CollectionsApproved by Office of Managementand BudgetFebruary 5, 1997.The Federal CommunicationsCommission (FCC) has received Officeof Management and Budget (OMB)approval for the following publicinformation collections pursuant to thePaperwork Reduction Act of 1995,Public Law 104–13. An agency may notconduct or sponsor and a person is notrequired to respond to a collection ofinformation unless it displays acurrently valid control number. Forfurther information contact Shoko B.Hair, Federal CommunicationsCommission, (202) 418–1379.Federal Communications CommissionOMB Control No.: 3060–0165.Expiration Date: 01/31/2000.Title: Records to be Maintained andReports to be Filed—Part 41 Franks,Section 41.31.Form No.: N/A.Estimated Annual Burden: 408 totalannual hours; 6 hours per respondent(avg.); 68 respondents.Estimated Annual Reporting andRecordkeeping Cost Burden: $0.Description: Section 210 of theCommunications Act of 1934, asamended, 47 U.S.C. 210, requires thatcommon carriers subject to the Actmaintain records to reflect the name,address, etc., of persons holdingtelephone or telegraph franks, so as toenable the Commission and/or carriersto compile, if needed, reports in thisarea. Though the Commission is notcurrently requiring the actual periodicreporting of this data, it is informationwhich should continue to be maintainedin case the need arises to assure that thefranking privileges are being adequatelypoliced by the companies themselves.Section 41.31 of the Commission’s rulesimplements Section 210. Theinformation helps to ensure that franksare being addressed fairly. Failure tohave the information recorded wouldprohibit the Commission from beingable to respond to complaints and fromgenerally being able to police theactivity.OMB Control No.: 3060–0147.Expiration Date: 01/31/2000.Title: Extension of Unsecured Creditfor Interstate and Foreign—Section64.804.Form No.: N/A.Estimated Annual Burden: 104 totalannual hours; 8 hours per respondent;13 respondents.Estimated Annual Reporting andRecordkeeping Cost Burden: $0.Description: Collection of thisinformation is required by statute—Section 401 of the Federal ElectionCampaign Act of 1971, Public Law 92–225. Pursuant to Section 64.804 of FCCRules and Regulations, records of eachaccount, involving the extension by acarrier of unsecured credit to acandidate or person on behalf of suchcandidate for common carriercommunications services shall bemaintained by the carrier as to showseparately, for interstate and foreigncommunications services all charges,credits, adjustments, and security, ifany, and balance receivable. Section64.804 requires communicationscommon carriers with operatingrevenues exceeding $1 million whoextend unsecured credit to a politicalcandidate or person on behalf of suchcandidate for Federal office to report,twice a year, data including due andoutstanding balances. The informationis used by the agency to monitor theextent of credit extended to candidatesfor Federal office.OMB Control No.: 3060–0745.Expiration Date: 08/31/97.Title: Implementation of the LocalExchange Carrier Tariff StreamliningProvisions in the TelecommunicationsAct of 1996, CC Docket No. 96–187.Form No.: N/A.Estimated Annual Burden: 4090 totalannual hours; 37.18 hours perrespondent (avg.); 110 respondents.Estimated Annual Reporting andRecordkeeping Cost Burden: $170,000.Description: In the Report and Orderissued in CC Docket 96–187, theCommission adopted measures toimplement the specific streamliningtariff filing requirements for localexchange carriers (LECs) of theTelecommunications Act of 1996 (1996Act). In order to achieve a streamlinedand deregulatory environment for LECtariff filings, the item will permit LECsto file tariffs electronically. The 1996Act provides that LEC tariffs seekingrate increases shall be effective in fifteendays and LEC tariffs seeking ratedecreases shall be effective in sevendays. The Commission adopted itsproposal that carriers wishing to take

6248 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesadvantage of the seven day noticeperiod must file rate decreases inseparate transmittals. Because of theshort notice periods, the Commissionadopted the requirement that carriersidentify specifically transmittals filedpursuant to Section 204(a)(3), includingwhether the transmittals contain rateincreases, rate decreases or both. TheCommission requires that LECs displayprominently in the upper right handcorner of the tariff transmittal letters astatement indicating that the tariff isbeing filed on a streamlined basis undersection 204(a)(3) of the Act and whetherthe tariff filing contains proposed rateincrease, decrease or both. Underexisting Commission rules, LECs arerequired to submit revisions to theirannual access tariffs on 90 days’ noticeto be effective on July 1. Because theserevisions are eligible for streamlinedtreatment, we will require carrierssubject to price cap regulation to file aTRP prior to the filing of the annualaccess tariff revisions absent anyinformation on the carriers’ proposedrates, and to make it available to thepublic. Early filing of the TRPs willfacilitate review of the annual accessfilings within the streamlined noticeperiods by resolving most of the majorissues currently raised with the annualaccess proceedings. The informationcollected under the program ofelectronic filing will facilitate access totariff and associated documents by thepublic, specially by interested personswho do not have ready access to theCommission’s public reference rooms,and state and federal regulators. All ofthe requirements would be used toensure that LECs comply with theirobligations under the CommunicationsAct and that the Commission be able toensure compliance within thestreamlined timeframes established bythe 1996 Act.Public reporting burden for thecollections of information is as notedabove. Send comments regarding theburden estimate or any other aspect ofthe collections of information, includingsuggestions for reducing the burden tothe Records Management Branch,Washington, DC 20554.Federal Communications Commission.William F. Caton,Acting Secretary.[FR Doc. 97–3256 Filed 2–10–97; 8:45 am]BILLING CODE 6712–01–PFEDERAL EMERGENCYMANAGEMENT AGENCY[FEMA–864–DR]Hawaii; Amendment to Notice of aMajor Disaster DeclarationAGENCY: Federal EmergencyManagement Agency (FEMA).ACTION: Notice.SUMMARY: This notice amends the noticeof a major disaster for the State ofHawaii (FEMA–864–DR), dated May 18,1990, and related determinations.EFFECTIVE DATE: January 27, 1997.FOR FURTHER INFORMATION CONTACT:Magda Ruiz, Response and RecoveryDirectorate, Federal EmergencyManagement Agency, Washington, DC20472, (202) 646–3260.SUPPLEMENTARY INFORMATION: Notice ishereby given that the incident period forthis disaster is closed effective January31, 1997.(Catalog of Federal Domestic Assistance No.83.516, Disaster Assistance)Lacy E. Suiter,Executive Associate Director, Response andRecovery Directorate.[FR Doc. 97–3354 Filed 2–10–97; 8:45 am]BILLING CODE 6718–DR–P[FEMA–1154–DR]Idaho; Amendment to Notice of a MajorDisaster DeclarationAGENCY: Federal EmergencyManagement Agency (FEMA).ACTION: Notice.SUMMARY: This notice amends the noticeof a major disaster for the State of Idaho(FEMA–1154–DR), dated January 4,1997 and related determinations.EFFECTIVE DATE: January 31, 1997.FOR FURTHER INFORMATION CONTACT:Magda Ruiz, Response and RecoveryDirectorate, Federal EmergencyManagement Agency, Washington, DC20472, (202) 646–3260.SUPPLEMENTARY INFORMATION: Notice ishereby given that in a letter datedJanuary 31, 1997, the Presidentamended his declaration of January 4,1997 to define the incident period forthis disaster as November 16, 1996,through and including January 3, 1997.(Catalog of Federal Domestic Assistance No.83.516, Disaster Assistance)Lacy E. Suiter,Executive Associate Director, Response andRecovery Directorate.[FR Doc. 97–3352 Filed 2–10–97; 8:45 am]BILLING CODE 6718–02–P[FEMA–1157–DR]North Dakota; Amendment to Notice ofa Major Disaster DeclarationAGENCY: Federal EmergencyManagement Agency (FEMA).ACTION: Notice.SUMMARY: This notice amends the noticeof a major disaster for the State of NorthDakota (FEMA–1157–DR), dated January12, 1997, and related determinations.EFFECTIVE DATE: January 30, 1997FOR FURTHER INFORMATION CONTACT:Magda Ruiz, Response and RecoveryDirectorate, Federal EmergencyManagement Agency, Washington, DC20472, (202) 646–3260.SUPPLEMENTARY INFORMATION: Notice ishereby given that the incident period forthis disaster is closed effective January31, 1997.(Catalog of Federal Domestic Assistance No.83.516, Disaster Assistance)Catherine H. Light,Deputy Associate Director, Response andRecovery Directorate.[FR Doc. 97–3350 Filed 2–10–97; 8:45 am]BILLING CODE 6718–02–P[FEMA–1138–DR]Pennsylvania; Amendment to Notice ofa Major Disaster DeclarationAGENCY: Federal EmergencyManagement Agency (FEMA).ACTION: Notice.SUMMARY: This notice amends the noticeof a major disaster for theCommonwealth of Pennsylvania(FEMA–1138–DR dated September 13,1996, and related determinations.EFFECTIVE DATE: November 15, 1996FOR FURTHER INFORMATION CONTACT:Pauline C. Campbell, Response andRecovery Directorate, FederalEmergency Management Agency,Washington, DC 20472, (202) 646–3606.SUPPLEMENTARY INFORMATION: The noticeof a major disaster for theCommonwealth of Pennsylvania, ishereby amended to include PublicAssistance in the following areasdetermined to have been adverselyaffected by the catastrophe declared amajor disaster by the President in hisdeclaration of September 13, 1996:The counties of Huntingdon, Juniata,Mifflin, Perry, Cumberland, andMontgomery for Public Assistance(already designated for IndividualAssistance and Hazard MitigationAssistance).

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6249(Catalog of Federal Domestic Assistance No.83.516, Disaster Assistance)Catherine H. Light,Deputy Associate Director, Response andRecovery Directorate.[FR Doc. 97–3353 Filed 2–10–97; 8:45 am]BILLING CODE 6718–02–P[FEMA–3123–EM]Rhode Island; Amendment to Notice ofan Emergency DeclarationAGENCY: Federal EmergencyManagement Agency (FEMA).ACTION: Notice.SUMMARY: This notice amends the noticeof an emergency for the State of RhodeIsland (FEMA–3123-EM), datedNovember 19, 1996, and relateddeterminations.EFFECTIVE DATE: January 28, 1997.FOR FURTHER INFORMATION CONTACT:Magda Ruiz, Response and RecoveryDirectorate, Federal EmergencyManagement Agency, Washington, DC20472, (202) 646–3260.SUPPLEMENTARY INFORMATION: Notice ishereby given that the incident period forthis disaster is closed effectiveNovember 27, 1996.(Catalog of Federal Domestic Assistance No.83.516, Disaster Assistance)Catherine H. Light,Deputy Associate Director, Response andRecovery Directorate.[FR Doc. 97–3348 Filed 2–10–97; 8:45 am]BILLING CODE 6718–02–P[FEMA–3123–EM]Rhode Island; Amendment to Notice ofan Emergency DeclarationAGENCY: Federal EmergencyManagement Agency (FEMA).ACTION: Notice.SUMMARY: This notice amends the noticeof an emergency for the State of RhodeIsland (FEMA–3123-EM), datedNovember 19, 1996, and relateddeterminations.EFFECTIVE DATE: January 28, 1997FOR FURTHER INFORMATION CONTACT:Magda Ruiz, Response and RecoveryDirectorate, Federal EmergencyManagement Agency, Washington, DC20472, (202) 646–3260.SUPPLEMENTARY INFORMATION: Notice ishereby given that in a letter datedJanuary 24, 1997, the Presidentamended his declaration of November19, 1996, to define the incident periodfor this disaster as November 17, 1996and continuing.(Catalog of Federal Domestic Assistance No.83.516, Disaster Assistance)Catherine H. Light,Deputy Associate Director, Response andRecovery Directorate.[FR Doc. 97–3349 Filed 2–10–97; 8:45 am]BILLING CODE 6718–02–P[FEMA–1156–DR]South Dakota; Amendment to Notice ofa Major Disaster DeclarationAGENCY: Federal EmergencyManagement Agency (FEMA).ACTION: Notice.SUMMARY: This notice amends the noticeof a major disaster for the State of SouthDakota (FEMA–1156-DR), dated January10, 1997, and related determinations.EFFECTIVE DATE: January 30, 1997.FOR FURTHER INFORMATION CONTACT:Magda Ruiz, Response and RecoveryDirectorate, Federal EmergencyManagement Agency, Washington, DC20472, (202) 646–3260.SUPPLEMENTARY INFORMATION: Notice ishereby given that the incident period forthis disaster is closed effective January31, 1997.(Catalog of Federal Domestic Assistance No.83.516, Disaster Assistance)Catherine H. Light,Deputy Associate Director, Response andRecovery Directorate.[FR Doc. 97–3351 Filed 2–10–97; 8:45 am]BILLING CODE 6718–02–PFEDERAL MARITIME COMMISSIONOcean Freight Forwarder LicenseApplicantsNotice is hereby given that thefollowing applicants have filed with theFederal Maritime Commissionapplications for licenses as ocean freightforwarders pursuant to section 19 of theShipping Act of 1984 (46 U.S.C. app.1718 and 46 CFR 510).Persons knowing of any reason whyany of the following applicants shouldnot receive a license are requested tocontact the Office of Freight Forwarders,Federal Maritime Commission,Washington, D.C. 20573.Air Sea International Forwarding, Inc., 155W. Chestnut Street, Suite 2B, Union, NJ07083. Officers: Ray Tobia, President,Michael DiPede, Vice PresidentAir Sea Transport Inc., 2450 West MainStreet, Alhambra, CA 91801. Officers: ScottWang, President, Tommy Shing, VicePresidentDated: February 6, 1997.Joseph C. Polking,Secretary.[FR Doc. 97–3346 Filed 2–10–97; 8:45 am]BILLING CODE 6730–01–MFEDERAL RESERVE SYSTEMChange in Bank Control Notices;Acquisitions of Shares of Banks orBank Holding CompaniesThe notificants listed below haveapplied under the Change in BankControl Act (12 U.S.C. 1817(j)) and §225.41 of the Board’s Regulation Y (12CFR 225.41) to acquire a bank or bankholding company. The factors that areconsidered in acting on the notices areset forth in paragraph 7 of the Act (12U.S.C. 1817(j)(7)).The notices are available forimmediate inspection at the FederalReserve Bank indicated. Once thenotices have been accepted forprocessing, they will also be availablefor inspection at the offices of the Boardof Governors. Interested persons mayexpress their views in writing to theReserve Bank indicated for that noticeor to the offices of the Board ofGovernors. Comments must be receivednot later than February 25, 1997.A. Federal Reserve Bank of St. Louis(Randall C. Sumner, Vice President) 411Locust Street, St. Louis, Missouri 63102-2034:1. Gerald L. and Shirley M. Moon,both of Effingham, Illinois; to acquire anadditional 14.63 percent, for a total of23.64 percent, of the voting shares ofOmni Bancorp, Inc., Effingham, Illinois,and thereby indirectly acquireCrossroads Bank, Effingham, Illinois.Board of Governors of the Federal ReserveSystem, February 5, 1997.Jennifer J. Johnson,Deputy Secretary of the Board.[FR Doc. 97–3262 Filed 2-10-97; 8:45 am]BILLING CODE 6210-01-FChange in Bank Control Notices;Formations of, Acquisitions by, andMergers of Bank Holding Companies;CorrectionThis notice corrects a notice (FR Doc.97-2658) published on page 5232 of theissue for Tuesday, February 4, 1997.Under the Federal Reserve Bank ofSan Francisco heading, the entry forRegency Bancorp, Fresno, California, isrevised to read as follows:A. Federal Reserve Bank of SanFrancisco (Kenneth R. Binning,

6250 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesDirector, Bank Holding Company) 101Market Street, San Francisco, California94105-1579:1. Regency Bancorp, Fresno,California; to acquire RegencyInvestment Advisors, Inc., Fresno,California, and thereby engage ininvestment advisory activities, pursuantto § 225.25(b)(4) of the Board’sRegulation Y, and in fiduciary activities,pursuant to § 225.25(b)(3) of the Board’sRegulation Y.Comments on this application mustbe received by February 18, 1997.Board of Governors of the Federal ReserveSystem, February 5, 1997.Jennifer J. Johnson,Deputy Secretary of the Board.[FR Doc. 97–3263 Filed 2-10-97; 8:45 am]BILLING CODE 6210-01-FFormations of, Acquisitions by, andMergers of Bank Holding CompaniesThe companies listed in this noticehave applied to the Board for approval,pursuant to the Bank Holding CompanyAct of 1956 (12 U.S.C. 1841 et seq.)(BHC Act), Regulation Y (12 CFR Part225), and all other applicable statutesand regulations to become a bankholding company and/or to acquire theassets or the ownership of, control of, orthe power to vote shares of a bank orbank holding company and all of thebanks and nonbanking companiesowned by the bank holding company,including the companies listed below.The applications listed below, as wellas other related filings required by theBoard, are available for immediateinspection at the Federal Reserve Bankindicated. Once the application hasbeen accepted for processing, it will alsobe available for inspection at the officesof the Board of Governors. Interestedpersons may express their views inwriting on the standards enumerated inthe BHC Act (12 U.S.C. 1842(c)). If theproposal also involves the acquisition ofa nonbanking company, the review alsoincludes whether the acquisition of thenonbanking company complies with thestandards in section 4 of the BHC Act,including whether the acquisition of thenonbanking company can ‘‘reasonablybe expected to produce benefits to thepublic, such as greater convenience,increased competition, or gains inefficiency, that outweigh possibleadverse effects, such as undueconcentration of resources, decreased orunfair competition, conflicts ofinterests, or unsound banking practices’’(12 U.S.C. 1843). Unlessotherwise noted, nonbanking activitieswill be conducted throughout theUnited States.Unless otherwise noted, commentsregarding each of these applicationsmust be received at the Reserve Bankindicated or the offices of the Board ofGovernors not later than March 7, 1997.A. Federal Reserve Bank of St. Louis(Randall C. Sumner, Vice President) 411Locust Street, St. Louis, Missouri 63102-2034:1. First Commercial Corporation,Little Rock, Arkansas; to merge withSouthwest Bancshares, Inc., Jonesboro,Arkansas, and thereby indirectly acquireFirst Bank of Arkansas, Jonesboro,Arkansas; First Bank of Arkansas,Russellville, Arkansas; First Bank ofArkansas, Searcy, Arkansas; and FirstBank of Arkansas, Wynne, Arkansas.2. Security Bancorp of Tennessee,Inc., Halls, Tennessee; to acquire at least30 percent of the voting shares of TheBank of Jackson, Jackson, Tennessee (inorganization).Board of Governors of the Federal ReserveSystem, February 5, 1997.Jennifer J. Johnson,Deputy Secretary of the Board.[FR Doc. 97–3261 Filed 2-10-97; 8:45 am]BILLING CODE 6210-01-FNotice of Proposals to Engage inPermissible Nonbanking Activities orto Acquire Companies that areEngaged in Permissible NonbankingActivitiesThe companies listed in this noticehave given notice under section 4 of theBank Holding Company Act (12 U.S.C.1843) (BHC Act) and RegulationY, (12 CFR Part 225) to engage de novo,or to acquire or control voting securitiesor assets of a company that engageseither directly or through a subsidiary orother company, in a nonbanking activitythat is listed in § 225.25 of RegulationY (12 CFR 225.25) or that the Board hasdetermined by Order to be closelyrelated to banking and permissible forbank holding companies. Unlessotherwise noted, these activities will beconducted throughout the United States.Each notice is available for inspectionat the Federal Reserve Bank indicated.Once the notice has been accepted forprocessing, it will also be available forinspection at the offices of the Board ofGovernors. Interested persons mayexpress their views in writing on thequestion whether the proposal complieswith the standards of section 4 of theBHC Act, including whetherconsummation of the proposal can‘‘reasonably be expected to producebenefits to the public, such as greaterconvenience, increased competition, orgains in efficiency, that outweighpossible adverse effects, such as undueconcentration of resources, decreased orunfair competition, conflicts ofinterests, or unsound banking practices’’(12 U.S.C. 1843). Any request for ahearing on this question must beaccompanied by a statement of thereasons a written presentation wouldnot suffice in lieu of a hearing,identifying specifically any questions offact that are in dispute, summarizing theevidence that would be presented at ahearing, and indicating how the partycommenting would be aggrieved byapproval of the proposal.Unless otherwise noted, commentsregarding the applications must bereceived at the Reserve Bank indicatedor the offices of the Board of Governorsnot later than February 25, 1997.A. Federal Reserve Bank of Atlanta(Lois Berthaume, Vice President) 104Marietta Street, N.W., Atlanta, Georgia30303-2713:1. Barnett Banks, Inc., Jacksonville,Florida; to acquire Oxford ResourcesCorp., Melville, New York, and therebyengage in consumer finance and leasingpersonal or real property or acting asagent, broker of adviser in leasing suchproperty, pursuant to §§ 225.25(b)(1)(i)and (b)(5) of the Board’s Regulation Y.Board of Governors of the Federal ReserveSystem, February 5, 1997.Jennifer J. Johnson,Deputy Secretary of the Board.[FR Doc. 97–3260 Filed 2-10-97; 8:45 am]BILLING CODE 6210-01-FFEDERAL TRADE COMMISSIONGranting of Request for EarlyTermination of the Waiting PeriodUnder the Premerger NotificationRulesSection 7A of the Clayton Act, 15U.S.C. 18a, as added by Title II of theHart-Scott-Rodino AntitrustImprovements Act of 1976, requirespersons contemplating certain mergersor acquisitions to give the Federal TradeCommission and the Assistant AttorneyGeneral advance notice and to waitdesignated periods beforeconsummation of such plans. Section7A(b)(2) of the Act permits the agencies,in individual cases, to terminate thiswaiting period prior to its expirationand requires that notice of this action bepublished in the Federal Register.The following transactions weregranted early termination of the waitingperiod provided by law and thepremerger notification rules. The grants

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6251were made by the Federal TradeCommission and the Assistant AttorneyGeneral for the Antitrust Division of theDepartment of Justice. Neither agencyintends to take any action with respectto these proposed acquisitions duringthe applicable waiting period.TRANSACTIONS GRANTED EARLY TERMINATION BETWEEN: 122396 and 123196Name of acquiring person; name of acquired person; name of acquired entityPMN No.Date terminatedRailTex, Inc., Canadian National Railway Company, Grand Trunk Western Railway, Inc ..................................... 97–0595 12/23/96The Seagram Company Ltd., Gannett Co., Inc., Multimedia, Inc, Multimedia Entertainment, Inc ......................... 97–0601 12/23/96IMCO Recycling, Inc., James T. Skoch, Rock Creek Aluminum, Inc ..................................................................... 97–0607 12/23/96The Trover Clinic Foundation, Incorporated, Trover Clinic, P.S.C., Trover Clinic, P.S.C ....................................... 97–0627 12/23/96Warburg, Pincus Ventures, L.P., Times Mirror Company, CRC Press, Inc ............................................................ 97–0667 12/23/96Regency Health Services, Inc., Horizon/CMS Healthcare Corporation, San Diego Health Associates LimitedPartnership ........................................................................................................................................................... 97–0690 12/23/96Lynch Corporation, Leslie G. Matthews and Cecile C. Matthews, Upper Peninsula Telephone Company ........... 97–0696 12/23/96Thomas and Mary LaPorte, IMC Mortgage Company, IMC Mortgage Company ................................................... 97–0698 12/23/96Shaw Industries, Inc., Gary R. Schwartz, Carpet Exchange Denver, Inc., G.S. Investment Co., Inc .................... 97–0701 12/23/96Shaw Industries, Michael J. Goldfarb, G.S. Investment Company, Inc., Carpet Exchange Denver ...................... 97–0703 12/23/96Hughes Supply, Inc., Brent W. Scheps, Sunbelt Supply Co ................................................................................... 97–0709 12/23/96Hughes Supply, Inc., Larry A. Feld, Sunbelt Supply Co ......................................................................................... 97–0710 12/23/96W.C. Bradley Co., Nippon Sanso Corporation (a Japanese company), The Thermos Company .......................... 97–0721 12/23/96Norrell Corporation, Michael C. Mullins, Comtex Information Systems, Inc./Comtex Systems, Inc ....................... 97–0723 12/23/96AB Volvo, General Electric Company, Volvo Car Finance, Inc ............................................................................... 97–0729 12/23/96Aon Corporation, Alexander & Alexander Services Inc., Alexander & Alexander Services Inc ............................. 97–0730 12/23/96Aon Corporation, Alexander & Alexander Services Inc., Alexander & Alexander Services Inc ............................. 97–0731 12/23/96Bagel Store Development Funding, L.L.C., Boston Chicken, Inc., Einstein/Noah Bagel Corp .............................. 97–0733 12/23/96Holiday Companies, Burger Bros., Inc., Burger Bros., Inc ...................................................................................... 97–0734 12/23/96Metropolitan Life Insurance Company, The New Cherokee Corporation Employee Stock Ownership, The NewCherokee Corporation .......................................................................................................................................... 97–0735 12/23/96Olin Corporation, E.I. du Pont Nemours & Company, Niachlor .............................................................................. 97–0737 12/23/96Hicking Pentecost PLC, Noel Group, Inc., Belding Heminway Co., Inc. et al ........................................................ 97–0739 12/23/96Michael A. Ashcroft, ISS International Service System A/S, a Danish company, ISS International Service System,Inc ................................................................................................................................................................. 97–0741 12/23/96Patrick M. Egan, Republic Industries, Inc., Republic Industries, Inc ....................................................................... 97–0748 12/23/96Republic Industries, Inc., Patrick M. Egan, Lanscaster Alarm Co., Inc .................................................................. 97–0749 12/23/96Central Parking Corporation, Square Industries, Inc., Square Industries, Inc ........................................................ 97–0751 12/23/96Masayoshi Son, UTStarcom, Inc., UTStarcom, Inc ................................................................................................. 97–0759 12/23/96Moorman Manufacturing Company, Wruble Elevator, Inc., Wruble Elevator, Inc ................................................... 97–0760 12/23/96PacifiCorp, Mr. Steve Gerlicher, OrCom Systems, Inc ........................................................................................... 97–0761 12/23/96KN Energy, Inc., Mr. Steve Gerlicher, OrCom Systems, Inc .................................................................................. 97–0762 12/23/96Viag AG, Johnson Controls, Inc., Hoover Universal, Inc. and Apple Container Corporation ................................. 97–0766 12/23/96Olin Corporation, Olin Corporation, Niachlor ........................................................................................................... 97–0776 12/23/96Belden, Inc., Philip R. Cowen, Alpha Wire Corporation, Alpha Wire Division ........................................................ 97–0781 12/23/96K–III Communications Corporation, Gareth Stevens, Inc., Gareth Stevens, Inc .................................................... 97–0782 12/23/96John Rutledge Partners II, L.P., H&C Purchase Corporation, H&C Purchase Corporation ................................... 97–0724 12/24/96Leggett & Platt, Incorporated, Rodgers Wade Manufacturing Company, Rodgers Wade Manufacturing Company...................................................................................................................................................................... 97–0674 12/26/96C. Dean Metropoulos, Dr. Arend Oetker (a German national), Best Brands, Inc. and subsidiaries ...................... 97–0687 12/26/96Biogen, Inc., Creative BioMolecules, Inc., Creative BioMolecules, Inc ................................................................... 97–0706 12/26/96Bell Atlantic Corporation, Sunrise Trust, North Carolina 4 Cellular LP ................................................................... 97–0736 12/26/96Reynolds & Reynolds Company, American Business Products, Inc., Vanier Graphics Corporation ..................... 97–0589 12/27/96FPA Medical Management, Inc., AHI Healthcare Systems, Inc., AHI Healthcare Systems, Inc ............................ 97–0623 12/27/96Union Bank of Switzerland, Daganeve Foundation, Tetra Laval Convenience Food Inc., Formax, Inc., Cashin .. 97–0652 12/27/96Komatsu Ltd., Emil Evasovic, Pioneer Equipment Company of Nevada ................................................................ 97–0655 12/27/96Christopher Goldsbury, Jr., HOB Entertainment, Inc., HOB Entertainment, Inc ..................................................... 97–0657 12/27/96Intermatic Incorporated, Samuel W. Friedman Charitable Trust dated Nov. 15, 1996, M. Stephens Mfg., Inc ..... 97–0663 12/27/96John C. Malone, Telecommunications, Inc., TCI Satellite Entertainment, Inc ........................................................ 97–0666 12/27/96Estate of Bob Magness, Tele-Communications, Inc., TCI Satellite Entertainment, Inc .......................................... 97–0713 12/27/96The Williams Companies, Inc., Sumner M. Redstone, Viacom MGS Services Inc ................................................ 97–0725 12/27/96Aurora Equity Partners L.P., John Frederick Fulton, Huntington Pennysaver, Inc ................................................. 97–0738 12/27/96Aurora Equity Partners L.P., Ralph Whittier Fulton, Huntington Pennysaver, Inc .................................................. 97–0747 12/27/96Fiat S.p.A., Ford Motor Company, Ford New Holland Credit Company ................................................................. 97–0774 12/27/96Cox Enterprises, Inc., Cox Enterprises, Inc., Cox Communications, Inc ................................................................ 97–0631 12/29/96Gilat Satellite Networks Ltd., Skydata, Inc., Skydata, Inc ....................................................................................... 97–0656 12/30/96Winton M. Blount, Edward L. Benson, Frederick Manufacturing Corporation and Orbex, Inc ............................... 97–0680 12/30/96MBNA Corporation, AMCORE Financial, Inc., AMCORE Financial Inc .................................................................. 97–0811 12/30/96Monsieur Francois Pinault, Rexel Inc., Rexel Inc .................................................................................................... 97–0599 12/31/96Enron Corp, Zond Corporation, Zond Corporation .................................................................................................. 97–0662 12/31/96R. Quintus Anderson, Oneida Ltd., Camden Wire Company .................................................................................. 97–0740 12/31/96CSS Industries, Inc., Andrew Ogren, Color-Clings, Inc ........................................................................................... 97–0754 12/31/96Clark USA, Inc., Silcorp Limited, a Canadian company, Hop-in Michigan, Inc., Gal Corp., Monroe Oil Co. &Wahl ...................................................................................................................................................................... 97–0755 12/31/96O.T. Fulghum, Jr., James River Corporation of Virginia, James River Corporation of Virginia ............................. 97–0771 12/31/96Independence Blue Cross, Highmark Inc., Highmark Inc ....................................................................................... 97–0777 12/31/96

6252 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesTRANSACTIONS GRANTED EARLY TERMINATION BETWEEN: 122396 and 123196—ContinuedName of acquiring person; name of acquired person; name of acquired entityPMN No.Date terminatedColorstrip, Inc., Marshall I. Wais, Pinole Point Steel Company .............................................................................. 97–0779 12/31/96K–III Communications Corporation, Clyde Packer, WEP, Inc ................................................................................. 97–0785 12/31/96Greenwhich Street Capital Partners, L.P., Mark IV Industries, Inc., Gulton Industries, Inc ................................... 97–0789 12/31/96Accor S.A. (a French company), Newco, Newco .................................................................................................... 97–0795 12/31/96Watsco, Inc., United Technologies Corporation, Carrier Corporation ..................................................................... 97–0797 12/31/96Cinram Ltd., Quixote Corporation, Disc Manufacturing, Inc .................................................................................... 97–0800 12/31/96First Data Corporation, Eastman Kodak Company, Eastman Kodak Company ..................................................... 97–0802 12/31/96Health Systems International, Inc., FOHP, Inc., FOHP, Inc .................................................................................... 97–0803 12/31/96Ghaznavi Family Trust, Vitro, Sociedad Anonima, Anchor Glass Container Corporation, debtor-in-possession .. 97–0806 12/31/96Owens-Illinois, Inc., Vitro, Sociedad Anonima, Anchor Glass Container Corporation, debtor-in-possession ........ 97–0807 12/31/96Newbridge Networks Corporation, Tandem Computers Incorporated, Ungermann-Bass Networks, Incorporated 97–0808 12/31/96Welsh, Carson, Anderson & Stowe VII, L.P., Steven and Bonnie Knier, American Research Group, Inc ............ 97–0812 12/31/96Litton Industries, Inc., Science Applications International Corporation, SAI Technology Companies .................... 97–0814 12/31/96Sierra Health Services, Inc., Physicians Corporation of America, Physicians Corporation of America ................. 97–0815 12/31/96Pon Holdings B.V., Jay N. Zidell, Zidell Resources, Inc.; Zidell Explorations, Inc.; Zide ....................................... 97–0816 12/31/96Cott Corporation, Jeffrey Hettinger, Premium Beverage Packers, Inc .................................................................... 97–0818 12/31/96Russel Metals Inc., Sunbelt Trading Company, Inc., Sunbelt Trading Company, Inc ............................................ 97–0819 12/31/96Lloyd Thompson Group, plc, Jardine Matheson Holdings Limited, JIB Group plc ................................................. 97–0820 12/31/96AmeriMark Building Products, Inc., Reynolds Metals Company, Reynolds Company ........................................... 97–0821 12/31/96James M. Moran, Republic Industries, Inc., Republic Industries, Inc ..................................................................... 97–0824 12/31/96George D. Johnson, Jr., Republic Industries, Inc., Republic Industries, Inc ........................................................... 97–0825 12/31/96Steven R. Berrard, Republic Industries, Inc., Republic Industries, Inc ................................................................... 97–0826 12/31/96Republic Industries, Inc., H. Wayne Huizenga, AutoNation Incorporated ............................................................... 97–0827 12/31/96AXA, Compagnie UAP, Compagnie UAP ................................................................................................................ 97–0828 12/31/96Masco Corporation, La Gard, Inc., La Gard, Inc ..................................................................................................... 97–0829 12/31/96Reinhold Wurth (a German natural person), Jeffrey A. Louis and Isabel A. Louis, Louis and Company, Inc ....... 97–0841 12/31/96Centex Corporation, Cavco Industries, Inc., Cavco Industries, Inc ......................................................................... 97–0842 12/31/96Centrex Corporation, MFH Holding Co., MFH Holding Co ..................................................................................... 97–0844 12/31/96MiTAC International Corporation, Merisel, Inc., Merisel FAB, Inc ........................................................................... 97–0845 12/31/96Ripplewood Partners, L.P., Clarence V. Nalley, III, Nalley Chevrolet, Inc., Nalley Asian Autos, Inc ..................... 97–0847 12/31/96Alfred R. and Janet M. Ghelfi, MFH Holding Company, MFH Holding Company .................................................. 97–0848 12/31/96Universal Foods Corporation, Tricon Colors, Incorporated, Tricon Colors, Incorporated ....................................... 97–0855 12/31/96Gamma Holding N.V., Fleet Financial Group, Inc., Chemprene Holdings, Inc ....................................................... 97–0856 12/31/96Reinhold Wurth, Baer Supply Co., Baer Supply Co ................................................................................................ 97–0861 12/31/96FOR FURTHER INFORMATION CONTACT:Sandra M. Peay or Parcellena P.Fielding, Contact Representatives,Federal Trade Commission, PremergerNotification Office, Bureau ofCompetition, Room 303, Washington,D.C. 20580, (202) 326–3100.By Direction of the Commission.Donald S. Clark,Secretary.[FR Doc. 97–3338 Filed 2–10–97; 8:45 am]BILLING CODE 6750–01–MGranting of Request for EarlyTermination of the Waiting PeriodUnder the Premerger NotificationRulesSection 7A of the Clayton Act, 15U.S.C. 18a, as added by Title II of theHart-Scott-Rodino AntitrustImprovements Act of 1976, requirespersons contemplating certain mergersor acquisitions to give the Federal TradeCommission and the Assistant AttorneyGeneral advance notice and to waitdesignated periods beforeconsummation of such plans. Section7A(b)(2) of the Act permits the agencies,in individual cases, to terminate thiswaiting period prior to its expirationand requires that notice of this action bepublished in the Federal Register.The following transactions weregranted early termination of the waitingperiod provided by law and thepremerger notification rules. The grantswere made by the Federal TradeCommission and the Assistant AttorneyGeneral for the Antitrust Division of theDepartment of Justice. Neither agencyintends to take any action with respectto these proposed acquisitions duringthe applicable waiting period.TRANSACTIONS GRANTED EARLY TERMINATION BETWEEN: 010297 AND 011797Name of Acquiring person; name of acquired person; name of acquired entityPMN No.Date terminatedEinhorn Verwaltungsgesellschaft, J.F. Jelenko & Co., J.F. Jelenko & Co .............................................................. 97–0697 01/02/97Everett R. Dobson Irrevocable Family Trust, Horizon Cellular Telephone Company, L.P., Horizon Cellular TelephoneCompany of Hagerstown, L.P ................................................................................................................... 97–0832 01/03/97Tele-Communications. Inc., Tele-Communications. Inc., US Cable of Northern Indiana, L.P ............................... 97–0705 01/07/97A. Jerrold Perenchio, Chester and Naomi Smith, Sainte Limited, LP ..................................................................... 97–0712 01/07/97Century Telephone Enterprises, Inc., Pecoco, Inc., Pecoco, Inc ............................................................................ 97–0783 01/07/97Thomas M. and Linda M. Clarke, Vencor, Inc., Vencor, Inc ................................................................................... 97–0791 01/07/97Iomega Corporation, Qauntum Corporation, Quantum Storage (Malaysia) SDN, BGD ......................................... 97–0793 01/07/97K–III Communications Corporation, Kerry Packer, WEP, Inc. ................................................................................ 97–0796 01/07/97TPG Partners, L.P., David Babiarz, Dae-Julie, Inc ................................................................................................. 97–0836 01/07/97Century Fasteners Acquisition Corporation, Illinois Tool Works Inc., Medalist Industries, Inc., C-Tech Division .. 97–0853 01/07/97

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6253TRANSACTIONS GRANTED EARLY TERMINATION BETWEEN: 010297 AND 011797—ContinuedName of Acquiring person; name of acquired person; name of acquired entityPMN No.Date terminatedSterling Chemicals Holdings, Inc., Cytec Industries, Inc., Cytec Technology Corp., Cytec Acrylic Fibers Inc ...... 97–0859 01/07/97Jupiter Partners LP, Melvin Sosnick Company, Melvin Sosnick Company ............................................................ 97–0867 01/07/97Aurora Equity Partners, L.P., Raymond V. O’Brien, III, Richray Industries ............................................................ 97–0871 01/07/97Ronald O. Perelman, The Cosmetic Center, Inc., The Cosmetic Center, Inc ........................................................ 97–0872 01/07/97ESCO Electronics Corporation, Clarence and Marilyn Schawk, Schawk, Inc., and voting securities of Filtrotec,Inc ......................................................................................................................................................................... 97–0873 01/07/97AAA South Central New England, The American Automobile Association, The American Automobile Association........................................................................................................................................................................ 97–0891 01/07/97Scott K. Ginsburg, Steven Dinetz or Hicks, Muse, Tate & Furst Equity Fund, Shamrock Broadcasting, Inc ........ 97–3050 01/08/97Scott K. Ginsburg, Lane Investment Limited Partnership, Secret Communications Limited Partnership .............. 97–3055 01/08/97Harbour Group Investments III, L.P., Panatech Reserarch and Development Corporation, Panatech Reserarchand Development Corporation ............................................................................................................................. 97–0716 01/08/97Pitt County Memorial Hospital, Inc., Roanoke-Chowan Alliance, Inc., Roanoke-Chowan Hospital, Inc ................ 97–0893 01/08/97Universal Outdoor Holdings, Inc., James P. McAndrew, Matthew Outdoor Advertising Acquisition Co., L.P ....... 97–0764 01/09/97Triathlon Broadcasting Company, American Radio Systems Corporation, KFAB (AM) and KGOR (FM) ............. 97–0770 01/09/97InPhyNet Medical Management Inc., Dr. Jacob Nudel, Nudel & Gluck, M.D., P.A., Gut Management, Inc .......... 97–0849 01/09/97John N. Irwin, III, Kenneth R. Thomson (a resident of Canada), Thomson Newspapers Inc ................................ 97–0858 01/09/97OM Group, Inc., U.S. Industries, Inc., SCM Metal Products, Inc ............................................................................ 97–0866 01/09/97Dana Corporation, Ingersoll-Rand Company, Clark-Hurth Components, et al ....................................................... 97–0876 01/09/97Millipore Corporation, Tylan General, Inc., Tylan General, Inc ............................................................................... 97–0884 01/09/97Holiday Gander Acquiring, L.L.C., Gander Mountain, Inc., Gander Mountain, Inc ................................................. 97–0902 01/09/97World Color Press, Inc., Rand McNally & Company, Rand McNally Book & Media Services Company .............. 97–0773 01/010/97Mr. Alain Merieux, Silliker Laboratories Group, Inc., Silliker Laboratories Group, Inc ............................................ 97–0702 01/13/97Lane Industries, Inc., Quartet Manufacturing Company, Quartet Manufacturing Company ................................... 97–0786 01/13/97James H. Goodnight, Ph.D., Zell/Chilmark Fund, L.P., Midway Airlines Corporation ............................................ 97–0889 01/13/97Aurora Equity Partners, L.P., Richard A. Riddle, Richray Industries ...................................................................... 97–0877 01/14/97Fried. Krupp AG Hoesch-Krupp (a German company), Mexinox S.A. de C.V. (a Mexican company), MexinoxS.A. de C.V ........................................................................................................................................................... 97–0809 01/15/97Jim Jannard, Oakley, Inc., Oakley, Inc .................................................................................................................... 97–0780 01/17/97Cable Systems Holding Company, Raymond A. Kedzior, LoDan Electronics, Inc ................................................. 97–0887 01/17/97Quality Food Centers, Inc., Hughes Markets, Inc., Hughes Markets, Inc ............................................................... 97–0892 01/17/97Dennis R. Washington, Canadian Pacific Limited, Soo Line Railroad Company d/b/a Canadian Pacific Rwy ..... 97–0898 01/17/97Stonington Capital Appreciation 1994 Fund, L.P., Canberra Industries, Canberra Industries ............................... 97–0899 01/17/97Fenway Partners Capital Fund, LP, Iron Age Holdings Corporation, Iron Age Holdings Corporation ................... 97–0901 01/17/97Blackstone Capital Partners II Merchant Banking Fund LP, MLGA Fund II, L.P., Haynes Holdings, Inc .............. 97–0924 01/17/97FOR FURTHER INFORMATION CONTACT:Sandra M. Peay or Parcellena P.Fielding, Contact Representatives,Federal Trade Commission, PremergerNotification Office, Bureau ofCompetition, Room 303, Washington,DC 20580, (202) 326–3100.By Direction of the Commission.Donald S. Clark,Secretary.[FR Doc. 97–3339 Filed 2–10–97; 8:45 am]BILLING CODE 6750–01–MGranting of Request for EarlyTermination of the Waiting PeriodUnder the Premerger NotificationRulesSection 7A of the Clayton Act, 15U.S.C. 18a, as added by Title II of theHart-Scott-Rodino AntitrustImprovements Act of 1976, requirespersons contemplating certain mergersor acquisitions to give the Federal TradeCommission and the Assistant AttorneyGeneral advance notice and to waitdesignated periods beforeconsummation of such plans. Section7A(b)(2) of the Act permits the agencies,in individual cases, to terminate thiswaiting period prior to its expirationand requires that notice of this action bepublished in the Federal Register.The following transactions weregranted early termination of the waitingperiod provided by law and thepremerger notification rules. The grantswere made by the Federal TradeCommission and the Assistant AttorneyGeneral for the Antitrust Division of theDepartment of Justice. Neither agencyintends to take any action with respectto these proposed acquisitions duringthe applicable waiting period.TRANSACTIONS GRANTED EARLY TERMINATION BETWEEN: 012097 AND 013197Name of acquiring person; name of acquired person; name of acquired entityPMN No.Date terminatedWilliams Holdings plc, Herrajes TESA S.A., Herrajes TESA S.A ........................................................................... 97–0830 01/21/97Avon Products, Edwin Nemeth and Lane Nemeth, Discovery Toys, Inc ................................................................ 97–0888 01/21/97The Trust of Fred R. Smith and Ouida M. Smith, Union Pacific Corporation, Union Pacific Motor Freight Company...................................................................................................................................................................... 97–0896 01/21/97John Gray, Union Pacific Corporation, Union Pacific Motor Freight Corporation ................................................... 97–0897 01/21/97Titan Holdings, Inc., E.W. Blanch Holdings, Inc., Elite Premium Service, Inc./Elite Premium Finance, Ltd .......... 97–0900 01/21/97Kotobuki Fudosan Ltd., Joint Venture, Joint Venture .............................................................................................. 97–0905 01/21/97Cerberus Partners, L.P., WEI Holdings, Inc., debtor-in-possession, WEI Holdings, Inc., debtor-in-possession .... 97–0907 01/21/97INVESCO PLC, A I M Management Group Inc., A I M Management Group Inc ................................................... 97–0908 01/21/97Charles T. Bauer, INVESCO PLC, INVESCO PLC ................................................................................................. 97–0909 01/21/97

6254 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesTRANSACTIONS GRANTED EARLY TERMINATION BETWEEN: 012097 AND 013197—ContinuedName of acquiring person; name of acquired person; name of acquired entityPMN No.Date terminatedRobert H. Graham, INVESCO PLC, INVESCO PLC .............................................................................................. 97–0910 01/21/97Gary T. Crum, INVESCO PLC, INVESCO PLC ...................................................................................................... 97–0911 01/21/97Michael J. Cemo, INVESCO PLC, INVESCO PLC ................................................................................................. 97–0912 01/21/97Bank United Corporation, The Royal Bank of Scotland Group plc (a British co), Citizens Mortgage Corporation;Citizens Bank of ................................................................................................................................................... 97–0948 01/21/97U.S. Office Products Company, Robert A. Knoll, Action Wholesale Service, Inc./K&W Enterprises ..................... 97–0952 01/21/97Edward S. Adams, U.S. Office Products Company, U.S. Office Products Company ............................................. 97–0954 01/21/97U.S. Office Products Company, Edward S. Adams, Professional Travel Corporation ........................................... 97–0955 01/21/97Hanson PLC, Concrete Pipe and Products Company, Incorporated, Concrete Pipe and Products Company, Incorporated............................................................................................................................................................. 97–0342 01/22/97Duke Power Company, PanEnergy Corp., PanEnergy Corp .................................................................................. 97–0804 01/22/97John V. Saeman, Orion Newco Services, Inc., Orion Newco Services, Inc ........................................................... 97–0838 01/22/97Rice Partners II, L.P., Southland Holding Company, Southland Holding Company ............................................... 97–0840 01/22/97Robert E. Low and Lawana Low, Palace Casinos, Inc. (a debtor-in-possession), Maritime Group, Ltd ............... 97–0860 01/22/97PennCorp Financial Group, Inc., Washington National Corporation, Washington National Corporation ............... 97–0880 01/22/97Allied Domecq PLC, Michael T. Cobler, MTC Management, Inc ............................................................................ 97–0885 01/22/97Hoechst Aktiengesellschaft, Cookson Group plc, Cookson Pigments, Inc. ............................................................ 97–0915 01/22/97Caribiner International, Inc., Donald D. Blumberg and Carole M. Blumberg, Blumberg Communications, Inc. .... 97–0916 01/22/97Countrywide Credit Industries, Inc., Robert H. Leshner, Lesher Financial Services, Inc. ...................................... 97–0917 01/22/97Healthcare Underwriters Mutual Insurance Company, OHA: The Association for Hospitals and Health Systems,OHIC Insurance Company ................................................................................................................................... 97–0919 01/22/97Frank M. Ward, Valmont Industries, Inc., Valmont Electric, Inc. ............................................................................. 97–0927 01/22/97W. Don Cornwell, Aben E. Johnson, Jr., WXON–TV, Inc. ...................................................................................... 97–0934 01/22/97Jon M. Huntsman, Texaco, Inc., Texaco Chemical Inc. .......................................................................................... 97–0942 01/22/97Joseph D. Fail, Mary M. Beazley and John W. Street (Husband and Wife), TeleConcepts, Inc. .......................... 97–0944 01/22/97Gibraltar Steel Corporation, Southeastern Metals Manufacturing Company, Inc., Southeastern Metals ManufacturingCompany, Inc. ............................................................................................................................................ 97–0945 01/22/97Robert A. Knoll, U.S. Office Products Company, U.S. Office Products Company ................................................. 97–0953 01/22/97Heilig-Meyers Company, Richard B. Levitz Sons, Inc., Richard B. Levitz Sons, Inc. ............................................ 97–0957 01/22/97Allen K. and Johnnie Cordell Breed, BTI Investments, Inc., BTI Investments, Inc. ................................................ 97–0959 01/22/97IWKA Aktiengesellschaft, EX-CELL-O Holding Aktiengesellschaft, EX-CELL-O Holding Aktiengesellschaft ........ 97–0971 01/22/97Jacor Communications, Inc., Nationwide Mutual Insurance Company, Nationwide Communications Inc. ............ 97–0354 01/23/97Nationwide Mutual Insurance Company, Jacor Communications, Inc., Citicasters Co. ......................................... 97–0355 01/23/97Dennis R. Hendrix, Duke Power Company, Dupe Power Company ...................................................................... 97–0875 01/23/97Media/Communcations Partners II Limited Partnership, Thomas S. Bagley, HUEBCORE Communications, Inc. 97–0933 01/23/97Sisters of the Sorrowful Mother Generalate, Inc., Sisters of Charity of Saint Elizabeth, St. Joseph’s HealthCare System, Inc. ................................................................................................................................................. 97–0839 01/24/97Arnold Industries, Inc., Harold R. Tate, Motor Cargo Industries, Inc., Ute Trucking and Leasing ......................... 97–0956 01/27/97Teleport Communications Group Inc., James N. Blue, CERFnet Services, Inc. .................................................... 97–0964 01/27/97American Business Information, Inc., Paul Goldner, DBA Holdings, Inc. ............................................................... 97–0965 01/27/97InaCom Corp., HW Electronics, Inc. Voting Trust, Arynkel, Inc. dba HW Electronics, Inc. .................................... 97–0970 01/27/97American General Corporation, Home Beneficial Corporation, Home Beneficial Corporation ............................... 97–0972 01/27/97Mr. and Mrs. Lucien Flournoy, DI Industries, Inc., DI Industries, Inc ...................................................................... 97–0973 01/27/97DI Industries, Mr. and Mrs. Lucien Flournoy, Flournoy Drilling Company .............................................................. 97–0974 01/27/97Arrow Electronics, Inc., Dennis J. and Sandra L. Logelin, Consan Incorporated ................................................... 97–0991 01/27/97Arrow Electronics, Inc., Dennis L. and Connie F. Maetzoid, Consan Incorporated ................................................ 97–0992 01/27/97Craig O. McCaw, Craig O. McCaw, NEXTLINK Communications, Inc ................................................................... 97–0994 01/27/97First Data Corporation, Charles and Lisa Burtzloff, Cardservice International, Inc ................................................ 97–0999 01/27/97Inland Steel Industries, Inc., Thypin Steel Company, Inc., Thypin Steel Company. Inc ........................................ 97–1003 01/27/97Warburg, Pincus Ventures, L.P., Envirogen, Inc., Envirogen, Inc ........................................................................... 97–1009 01/27/97American Refining Group, Inc., Witco Corporation, Witco Corporation .................................................................. 97–1010 01/27/97Jacor Communications, Inc., Par Broadcasting Company, Inc, Par Broadcasting Company, Inc ......................... 97–0311 01/28/97Monsanto Company, Ethical Holdings, plc, Ethical Holdings, plc ........................................................................... 97–0869 01/28/97John C. Lincoln Hospital & Health Center, Phoenix General Healthcare System Inc., Phoenix GeneralHealthcare System Inc ......................................................................................................................................... 97–0870 01/28/97Allegiance Corporation, Age Wave, Inc., Med Max, Inc .......................................................................................... 97–0903 01/28/97Clear Channel Communications, Inc./Heftel Broadcasting, Orvon Gene Autry, Golden West Broadcasters ........ 97–0906 01/28/97Textron, Inc., MAAG Holding AG (A Swiss Corporation), Maag Pump Systems AG; Maag Pump Systems ofAmerica, Inc .......................................................................................................................................................... 97–0914 01/28/97R.R. Donnelley & Sons Company, NYNEX Corporation, NYNEX International MediaCompany ........................... 97–0928 01/28/97U S West Inc., Booth American Company, Booth Communications SE Michigan, Inc.; Booth ............................. 97–0937 01/28/97James Hardie Industries Limited, Boral Limited, Boral Gypsum, Inc ...................................................................... 97–0938 01/28/97The SK Equity Fund, L.P., PepsiCo, Inc., East Side Mario’s Restaurants, Inc ...................................................... 97–0950 01/28/97SunAmerica Inc., John Alden Financial Corporation, John Alden Life Insurance Co.; John Alden Life ................ 97–0958 01/28/97MSC Industrial Direct Co., Inc., Zalman Usiskin, Executor of Estate of Charles Usiskin, Enco ManufacturingCompany .............................................................................................................................................................. 97–0961 01/28/97Transamerica Corporation, Metropolitan Mortgage Company, Metropolitan Mortgage Company ......................... 97–0967 01/28/97Aurora Health Care, Inc., Friendship Living Centers, Inc., Friendship Living Centers, Inc. ................................... 97–0981 01/28/97William L. Sauder, Guy Cholette, Can-Am Millwork, Ltd. ........................................................................................ 97–0986 01/28/97Mezzanine Lending Associates III, L.P., Newco, Newco ........................................................................................ 97–0988 01/28/97Willis Stein & Partners, Corning Incorporated, Corning Franklin Health, Inc. ......................................................... 97–0993 01/28/97

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6255TRANSACTIONS GRANTED EARLY TERMINATION BETWEEN: 012097 AND 013197—ContinuedName of acquiring person; name of acquired person; name of acquired entityPMN No.Date terminatedMr. Steven P. Jobs, Apple Computer, Inc., Apple Computer, Inc., ......................................................................... 97–1011 01/28/97Apple Computer, Inc., Steven P. Jobs, NeXT Software, Inc. .................................................................................. 97–1012 01/28/97Code, Hennessy & Simmons II, L.P., Rand McNally & Company, DocuSystems Division .................................... 97–1020 01/28/97Leonard Riggio, Barnes & Noble, Inc., Barnes & Noble, Inc. ................................................................................. 97–1029 01/28/97Potomac Electric Power Company, Baltimore Gas and Electric Company, 1Baltimore Gas and Electric Company...................................................................................................................................................................... 96–1879 01/29/97Baltimore Gas and Electric Company, Potomac Electric Power Company, Potomac Electric Power Company ... 96–1880 01/29/97Tenet Healthcare Corporation, OrNda Healthcorp., OrNda Healthcorp. ................................................................. 97–0309 01/29/97Evening Post Publishing Company, Post Publishing Company, Post Publishing Company .................................. 97–0969 01/30/97William L. Sauder, Ronald Cholette, Can-Am Millwork, Ltd. ................................................................................... 97–0987 01/30/97Paul Goldner, American Business Information, Inc., American Business Information, Inc. ................................... 97–1000 01/30/97Broderbund Software, Inc., Advanced Voting Trust, of Samuel I. Newhouse, Living Books ................................. 97–1007 01/30/97BankAmerica Corporation, Homeside, Inc., Honolulu Mortgage Company ............................................................ 97–1017 01/30/97United Auto Group, Inc., Kevin J. Coffey, Crown Jeep Eagle, Inc. ........................................................................ 97–1024 01/30/97Automatic Data Processing, Inc., HealthPlan Services Corporation, HealthPlan Services Corporation ................ 97–1027 01/30/97Payless ShoeSource, Inc., J. Baker, Inc., JBI, Inc., Parade of Shoes Division ...................................................... 97–1042 01/30/97Philip Environmental Inc., Gil Mains, Sr., RMF Global, Inc. .................................................................................... 97–0982 01/31/97Primark Corporation, Information Partners Capital Fund, LP, WEFA Holdings, Inc. .............................................. 97–1008 01/31/97Cable and Wireless plc, Cable and Wireless Communications plc (Joint Venture), Cable and Wireless Communicationsplc (Joint Venture) ................................................................................................................................. 97–1034 01/31/97NYNEX Corporation,.Cable and Wireless Communications plc (Joint Venture), Cable and Wireless Communications plc (Joint Venture)...................................................................................................................................................................... 97–1035 01/31/97Metropolitan Life Insurance Company, Andrew Goldfarb, HCC Industries, Inc. ..................................................... 97–1037 01/31/97Kenneth R. Thomson, Thomas L. Thomas, Creative Solutions, Inc ....................................................................... 97–1043 01/31/97Irish Life plc, GR Holding Company, Inc., Guarantee Reserve Life Insurance Co. ................................................ 97–1061 01/31/97Supervalu Inc., Kerry Smith, Signature Mondial, Inc. .............................................................................................. 97–1062 01/31/97Handy & Harman, Saugatuck Capital Company Limited Partnership III, Olympic Manufacturing Group, Inc. ...... 97–1072 01/31/97AMF Holdings Inc., American Recreation Centers, Inc., American Recreation Centers, Inc. ................................ 97–1077 01/31/97FOR FURTHER INFORMATION CONTACT:Sandra M. Peay or Parcellena P.Fielding, Contact Representatives,Federal Trade Commission, PremergerNotification Office, Bureau ofCompetition, Room 303, Washington,DC 20580, (202) 326–3100.By Direction of the Commission.Donald S. Clark,Secretary.[FR Doc. 97–3340 Filed 2–10–97; 8:45 am]BILLING CODE 6750–01–M[File No. 951–0106]American Cyanamid Company;Analysis To Aid Public CommentAGENCY: Federal Trade Commission.ACTION: Proposed consent agreement.SUMMARY: In settlement of allegedviolations of federal law prohibitingunfair or deceptive acts or practices andunfair methods of competition, thisconsent agreement, accepted subject tofinal Commission approval, wouldprohibit, among other things, theParsipanny, New Jersey-based companyfrom conditioning the payment ofrebates or other incentives on the resaleprices its dealers charge for its products,or from otherwise agreeing with itsdealers to control or maintain resaleprices. The complaint accompanyingthe consent agreement alleges that thecompany violated antitrust laws byfixing the resale prices of its agriculturalchemical products.DATES: Comments must be received onor before April 14, 1997.ADDRESSES: Comments should bedirected to: FTC/Office of the Secretary,Room 159, 6th St. and Pa. Ave., NW.,Washington, DC 20580.FOR FURTHER INFORMATION CONTACT:William J. Baer, Federal TradeCommission, H–374, 6th andPennsylvania Ave, NW., Washington,DC 20580. (202) 326–2932. MarkWhitener, Federal Trade Commission,H–374, 6th and Pennsylvania Ave, NW.,Washington, DC 20580. (202) 326–2845.Michael E. Antalics, Federal TradeCommission, S–2627, 6th andPennsylvania Ave, NW, Washington, DC20580. (202) 326–2821.SUPPLEMENTARY INFORMATION: Pursuantto Section 6(f) of the Federal TradeCommission Act, 38 Stat. 721, 15 U.S.C.46, and Section 2.34 of theCommission’s Rules of Practice (16 CFR2.34), notice is hereby given that theabove-captioned consent agreementcontaining a consent order to cease anddesist, having been filed with andaccepted, subject to final approval, bythe Commission, has been placed on thepublic record for a period of sixty (60)days. The following Analysis to AidPublic Comment describes the terms ofthe consent agreement, and theallegations in the accompanyingcomplaint. An electronic copy of thefull text of the consent agreementpackage can be obtained from theCommission Actions sections of the FTCHome Page (for January 30, 1997), onthe World Wide Web, at ‘‘http://www.ftc.gov/os/actions/htm.’’ A papercopy can be obtained from the FTCPublic Reference Room, Room H–130,Sixth Street and Pennsylvania Avenue,NW., Washington, DC 20580, either inperson or by calling (202) 326–3627.Public comment is invited. Suchcomments or views will be consideredby the Commission and will be availablefor inspection and copying at itsprincipal office in accordance withSection 4.9(b)(6)(ii) of the Commission’sRules of Practice (16 CFR 4.9(b)(6)(ii)).Analysis To Aid Public Comment on theProposed Consent OrderThe Federal Trade Commission (‘‘theCommission’’) has accepted anagreement to a proposed consent orderfrom American Home ProductsCorporation (‘‘AHP’’), through itswholly-owned subsidiary, AmericanCyanamid Company (‘‘AmericanCyanamid’’), located in Parsippany,New Jersey. The agreement would settlecharges by the Commission that

6256 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesAmerican Cyanamid violated Section 5of the Federal Trade Commission Act byengaging in practices that restrictedcompletion in the domestic markets forcrop protection chemicals, which areherbicides and insecticides widely usedin commercial agriculture.The proposed consent order has beenplaced on the public record for sixty(60) days for receipt of comments byinterested persons. Comments receivedduring this period will become part ofthe public record. After sixty (60) days,the Commission will again review theagreement and the comments receivedand will decide whether it shouldwithdraw from the agreement or makefinal the agreement’s proposed order.The purpose of this analysis is toinvite public comment concerning theconsent order and any other aspect ofAmerican Cyanamid’s allegedanticompetitive conduct relating to itsC.R.O.P. and A.P.E.X. rebate programs.This analysis is not intended toconstitute an official interpretation ofthe agreement and order or to modify itsterms in any way.The ComplaintThe complaint prepared for issuanceby the Commission along with theproposed order alleges that AmericanCyanamid has engaged in acts andpractices that have unreasonablyrestrained competition in the sale anddistribution of crop protectionchemicals in the United States. In 1995,the Commission’s proposed complaintalleges, American Cyanamid sold atretail more than $1 billion of its cropprotection chemicals and was themarket share leader in three domesticcrop protection chemical markets:soybean broadleaf herbicides, soybeangrass herbicides, and corn soilinsecticides, as well as being thesecond-largest domestic producer ofcotton grass herbicides.According to the complaint, AmericanCyanamid operated two cash rebateprograms for its retail dealers forapproximately five years. From 1989–1992, the plan was called the ‘‘CashReward on Performance’’ (‘‘C.R.O.P.’’)program, and was renamed the ‘‘Awardfor Performance Excellence’’(‘‘A.P.E.X.’’) program in late 1992through August 1995. The complaintstates that American Cyanamid enteredinto written agreements with its dealersunder these programs, pursuant towhich American Cyanamid offered topay its dealers substantial rebates oneach sale of its crop protectionchemicals that was made at or abovespecified minimum resale prices.According to the complaint, the dealersoverwhelmingly accepted American1 Business Electronics Corp. v. Sharp ElectronicsCorp., 485 U.S. 717 (1988); Monsanto Co. v. Spray-Rite Service Corp., 465 U.S. 752 (1984).Cyanamid’s rebate offer by selling at orabove the specified minimum resaleprices.The complaint further alleges that thewholesale prices in the agreements wereset at a level equal to the specifiedminimum resale prices, and because adealer received no rebate on sales belowthe specified prices, those sales weremade at a loss to the dealer.The complaint further states thatalthough American Cyanamid includedcertain non-price performance criteriain its rebate programs that couldincrease the amount of the rebate, adealer’s compliance with theseperformance criteria was neithernecessary nor, by itself, sufficient toobtain rebates. As examples, thecomplaint alleges that if a dealer met allof American Cyanamid’s performancecriteria, but sold the product for lessthan American Cyanamid’s specifiedminimum resale price, that dealerreceived no rebate on the sale. On theother hand, if the dealer met none of theperformance criteria, but sold theproduct at or above AmericanCyanamid’s specified minimum resaleprice, the dealer nonetheless received arebate on that sale.American Cyanamid’s conditioning offinancial payments on dealers’ charginga specified minimum price amounted tothe quid pro quo of an agreement onresale prices. In cases where this issuehas arisen, both before and after theSupreme Court examined the per se ruleagainst resale price maintenance inMonsanto and Sharp, 1 courts havetreated such agreements as per se illegal.See Lehman v. Gulf Oil Corp., 464 F.2d26, 39, 40 (5th Cir.), cert. denied, 409U.S. 1077 (1972) (stating that ‘‘ * * *adherence to a suggested price schedulewas the quid pro quo for Lehrman’sreceiving Gulf’s TCAs [temporarycompetitive allowances]’’ and ‘‘there isno comparable justification forconditioning wholesale price supportupon adherence to a schedule ofminimum retail prices.’’ (emphasis inoriginal)); Butera v. Sun Oil Co., Inc.496 F.2d 434, 437 (1st Cir. 1974). Byoffering financial inducements in returnfor selling at specified minimum prices,a manufacturer seeks the ‘‘acquiescenceor agreement’’ of its dealers in a resaleprice-fixing scheme. Monsanto, 465 U.S.at 764 n. 9. The dealer, in turn, acceptsthe manufacturer’s offer by selling at orabove the specified minimum prices.See Isaksen v. Vermont Castings, Inc.,825 F.2d 1158, 1164 (7th Cir. 1987)(Posner, J.) (an ‘‘obvious’’ resale pricefixingagreement is found ‘‘ * * * if[the manufacturer] had told [the dealer]that it would reduce its wholesale priceto him if he raised his retail price, and[the dealer] had accepted the offer byraising his price.’’). See also Khan v.State Oil Co., 93 F.3d 1358, 1360–61(7th Cir. 1996) (Posner, J.), petition forcert. pending No. 96–871 (agreement onprice found where dealership agreementon its face allowed dealer to charge anyresale price it wished, but distributortied financial consequences to dealers’not charging the resale prices itsuggested). As a result, incentives toreduce price below the specified levelwere substantially affected by AmericanCyanamid’s rebate scheme.The rebate programs challenged inthis case are unlike situations wheremanufacturers are permitted tocondition a discount or other incentiveon that discount being ‘‘passed through’’to consumers, which prevents a dealerform simply ‘‘pocketing’’ the discount.In these types of cases, the dealer is freeto sell at even lower prices than theamount of the direct ‘‘pass through’’ ofthe discount or other incentive.Discounts cannot be conditioned,therefore, on the dealers’ adherence tospecified minimum price. See AAALiquors, Inc. v. Joseph E. Seagram andSons, Inc., 705 F.2d 1203, 1206 (10thCir. 1982), cert denied, 461 U.S. 919(183) (Seagram’s requirement of passingthrough its discount ‘‘[did] not prohibitthe wholesaler from making greaterreductions in price that the discountprovides.’’) See also Acquaire v. CanadaDry Bottling Co., 24 F.3d 401, 409–10(2d Cir. 1994); Lewis Service Center, Inc.v. Mack Trucks, Inc., 714 F.2d 842, 845–47 (8th Cir. 1983) (because dealers coulddiscount more than Mack’s salesassistance, the court found that ‘‘thepurpose of Mack’s discount program[was] not to force adherence to anyparticular price scheme of Mack’s.’’).The Proposed Consent OrderPart I of the proposed order coversdefinitions. These definitions makeclear that the consent order applies tothe directors, officers, employees, agentsand representatives of AmericanCyanamid. The order also defines theterms product, dealer and resale price.Part II of the order contains two majoroperative provisions: Part II(A) dealswith the specific conduct at issue in thiscase. It prohibits American Cyanamidfrom conditioning the payment ofrebates or other incentives on the resaleprices its dealers charge for its products.Part II(B) prevents American Cyanamidfrom otherwise agreeing with its dealersgenerally to control or maintain resaleprices.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6257Neither of these provisions should beconstrued to prohibit lawful cooperativeadvertising programs or ‘‘pass through’’discount programs that are nototherwise part of an unlawful resaleprice maintenance scheme. TheCommission has previously determinedthat order provisions prohibitingagreements on resale prices do notrestrict a company’s ability toimplement otherwise lawful cooperativeadvertising and ‘‘pass through’’ rebateplans because such programs do not, inthemselves, constitute agreements onresale prices. See, e.g., In Re MagnavoxCo., 113 F.T.C. 255, 263, 269–70 (1990).Part III of the order requires that fora period of three (3) years from the dateon which the order becomes final,American Cyanamid shall include astatement, posted clearly andconspicuously, on any price list,advertising, catalogue or otherpromotional material where it hassuggested a resale price for any productto any dealer. The required statementexplains that while American Cyanamidmay suggest resale prices for itsproducts, dealers remain free todetermine on their own the prices atwhich they will sell AmericanCyanamid’s products.Part IV of the order requires that fora period of three (3) years from the dateon which the order becomes final,American Cyanamid shall mail the letterattached to the order as Exhibit A anda copy of this order to all of its currentdealers, distributors, officers,management employees, and agents orrepresentatives with sale or policyresponsibilities for AmericanCyanamid’s products. AmericanCyanamid also must mail the letter andorder to any new dealer, distributor oremployee in the above positions withinthirty (30) days after the commencementof that person’s affiliation oremployment with American Cyanamid.All of the above dealers, distributorsand employees must sign and return astatement to American Cyanamid withinthirty (30) days of receipt thatacknowledges they have read the orderand that they understand that noncompliancewith the order may subjectAmerican Cyanamid to penalties forviolation of the order.Part V of the order requires thatAmerican Cyanamid file with theCommission an annual verified writtenreport giving the details of the mannerand form in which American Cyanamidis complying and has complied with theorder. In addition, Part V of the orderalso requires American Cyanamid tomaintain and make available to theCommission upon reasonable notice allrecords of communications withdealers, distributors, and agents orrepresentatives relating to sale prices inthe United States, as well as records ofany action taken in connection withactivities covered by the rest of theorder. Finally, American Cyanamidmust inform the Commission at leastthirty (30) days before any proposedchanges in the corporation, such asdissolution or sale.Donald S. Clark,Secretary.Statement of Chairman Robert Pitofskyand Commissioners Janet D. Steiger andChristine A. Varney in the Matter ofAmerican Cyanamid, File No. 951–0106The Commission today accepts aproposed consent agreement withAmerican Cyanamid prohibiting it fromengaging in conduct designed to preventits dealers from making discounted salesbelow the minimum price thatAmerican Cyanamid specified.American Cyanamid entered intowritten agreements with its dealers thatprovided dealers with ‘‘rebates’’ eachtime they sold their product at or abovea certain resale price (the floor transferprice). For dealers who sold at thespecified price, this rebate constitutedtheir entire profit margin. TheCommission believes that this conductamounted to an illegal resale pricemaintenance agreement.Commissioner Starek, in his dissent,criticizes this enforcement action for anumber of reasons. As explained below,we disagree with Commissioner Starek’sreasoning.First, the dissenting statement appearsto conclude that a situation where amanufacturer and a dealer enter into anexpress agreement that the manufacturerwill pay the dealer to adhere to themanufacturer’s specified resale price, isnot an ‘‘agreement on resale prices’’ butrather some form of voluntary behavior.Judge Posner responded to similararguments in Khan v. State Oil. 1In Khan, the court declared amaximum resale price arrangement perse illegal where the manufacturerpermitted dealers to charge above amaximum price, but required them insuch case to provide any resulting profitabove the maximum price to themanufacturer. The ‘‘voluntary’’ natureof the arrangement did not detract fromthe finding that there was an agreement.Judge Posner noted that the arrangementwas indistinguishable from anagreement not to exceed the maximumprice, because the dealer was sanctionedfor violating the agreement by having toremit any resulting profit to themanufacturer. In responding to State1 93 F.3d 1358 (7th Cir. 1996).Oil’s argument that there was no pricefixing agreement, Judge Posnerobserved: ‘‘The purely formal characterof the distinction that it urges can beseen by imagining that the contract hadforbidden Khan to exceed the suggestedresale price and had provided that if heviolated the prohibition the sanctionwould be for him to remit any resultingprofit to State Oil.’’ 2We agree with Judge Posner. In thiscase, the sanction was loss of the rebatefor sales made below the floor transferprice. If an agreement to forego one’sentire profit margin if one departs fromthe specified price does not constitute aprice maintenance agreement, thennothing remains of the per se rule.Second, the dissent seems to suggestthat this case is one where agreement isbeing inferred from unilateral conduct.We cannot concur. American Cyanamidentered into written agreements whichoffered financial incentives foradherence to a minimum priceschedule. Courts, both before and afterSharp, 3 have held such arrangementsunlawful where adherence to asuggested price was the quid pro quo forthe financial inducements. JudgePosner’s decision in Khan is consistentwith this approach. 4Third, the dissenting statement,relying in large part on recent economicliterature, argues that AmericanCyanamid’s program should not becondemned without proof of a suppliercartel, dealer cartel, or market power. 5That view is inconsistent with theSupreme Court’s view that resale pricemaintenance continues to be illegal perse and we reject the idea that theSupreme Court can be overruled byscholarly contributions to economicjournals.Finally, we cannot agree with thesuggestion that this enforcement actionsomehow creates uncertainty about theCommission’s treatment of pass throughrebates or cooperative advertisingprograms. As the analysis to aid publiccomment explains, pass throughprograms have always been permitted,2 Id. at 1361. See also Isaksen v. VermontCastings, Inc., 825 F.2d 1158, 1164 (7th Cir. 1987)(in finding a violation based on economic coercion,Judge Posner noted, ‘‘It is as if Vermont Castingshad told Isaksen that it would reduce its wholesaleprice to him if he raised his retail price, and Isaksenhad accepted the offer by raising his price.’’).3 Business Electronics Corp. v. Sharp ElectronicsCorp., 485 U.S. 717 (1988).4 93 F.3d at 1362.5 Although we do not fully detail ourdisagreement with the description of the facts in thedissent, we believe that a full trial would haveshown that an overwhelming portion of sales weremade at or above the minimum resale price.Moreover, a dealer’s advisory council voted toadvise American Cyanamid to retain the program inorder to protect its margins.

6258 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesas long as the dealer is free to discountto an even greater extent than the passthrough amount. Similarly, both thecourts and the Commission have judgedcooperative advertising cases under therule of reason, as long as thearrangements do not limit the dealer’sright: (1) To discount below theadvertised price, and (2) to advertise atany price when the dealer itself pays forthe advertisement. Unlike thoseprograms, American Cyanamid’s rebateprogram controlled the actual pricescharged and was structured to preventdealers from pricing below the floortransfer price.Concurring Statement of CommissionerMary L. Azcuenaga in AmericanCyanamid Co., File No. 951–0106I concur in the decision to accept theconsent agreement for public commentbut decline to join the separatestatement of the majority. The consentagreement, which includes the consentorder and the complaint on which it isbased, constitutes the decisionaldocument of the Commission. Mysubstantive views on this matter arecontained entirely within the fourcorners of the decisional document. Ifthe majority wants to revise or expandits decision, the proper course is torevise the decisional document. SeeDissenting Statement of CommissionerMary L. Azcuenaga in Dell ComputerCorp. at 21–23 (Docket No. 3658, May20, 1996).Dissenting Statement of CommissionerRoscoe B. Starek III, in the Matter ofAmerican Cyanamid Company, File No.951–0106I respectfully dissent from theCommission’s decision to accept aconsent agreement with the AmericanCyanamid Company (‘‘AmCy’’), aproducer of agricultural chemicals. Theproposed complaint claims that certainaspects of AmCy’s compensationarrangement with its dealers constituteper se illegal resale price maintenance(‘‘RPM’’), in violation of Section 5 of theFederal Trade Commission Act, 15U.S.C. 45. I do not agree that AmCy’sdealer rebate policies constitute thefunctional and legal equivalent of RPMagreements. Consequently, I concludethat the decision to challenge AmCy’sdistribution policies would expandsubstantially the range of activitiescondemned by the Commission asIllegal per se. This policy is ill-advisedand runs contrary to twenty years ofcase law in which the scope of verticalarrangements subject to per secondemnation has been steadilynarrowed. This case is an especiallypoor vehicle for expanding the scope ofthe per se rule, for it would be difficultto find conduct that better exemplifiesthe economic deficiencies of thatstandard.Condemning certain conduct as illegalper se normally is rationalized by thebelief that the conduct in question is sofrequently pernicious that one cannotjustify the cost of attempting to identifythe few instances in which it is not.Whether RPM warrants characterizationas per se illegal conduct hasincreasingly been called into questionby antitrust scholars; 1 indeed, it wouldbe difficult to find an antitrusteconomist who would defend thisenforcement standard. 2 RPM remainsillegal per se, however, and, consistentwith this standard, I have voted tosupport enforcement actions againstRPM agreements when I have beenconvinced that (1) the conduct inquestion plainly constituted an illegalagreement on price (as construed bycontemporary case law), and (2) therelief was appropriately tailored to deterfuture illegal conduct.Notwithstanding the continued per setreatment of RPM—and my willingnessto support RPM cases in the limitedcircumstances identified above—Icannot ignore the persistentaccumulation of economic evidencedemonstrating the potentiallyprocompetitive (or, or worst,1 There is a substantial body of economicliterature demonstrating that RPM frequently can besocially beneficial. See, e.g., Michael L. Katz,‘‘Vertical Contractual Relations,’’ in RichardSchmalensee and Robert D. Willig, 1 Handbook ofIndustrial Organization 655 (1989). The existingempirical literature fails to find evidencesupporting an anticompetitive characterization ofRPM. See e.g., Pauline M. Ippolito & Thomas R.Overstreet, Jr., ‘‘Resale Price Maintenance: AnEconomic Assessment of the Federal TradeCommission’s Case Against the Corning GlassWorks,’’ 39 J.L. & Econ. 285 (1996) (evidenceconvincingly rejects anticompetitive theories andsuggests instead that RPM increase sales ofCorning’s products); Pauline M. Ippolito, ‘‘ResalePrice Maintenance: Empirical Evidence fromLitigation,’’ 34 J.L. & Econ. 263 (1991) (empiricalevidence cannot support a collusive explanation forthe use of RPM).2 I also emphasize that in none of the RPM actionsbrought by the Commission during my tenure couldone have plausibly characterized the condemnedconduct as having an anticompetitive effect(indeed, in several instances, procompetitiverationales for the restrictions were plainly evident).In only one instance, Nintendo of America Inc., 114F.T.C. 702 (1991), could one have plausiblyascribed market power to the manufacturer that wasparty to the agreement. Without manufacturermarket power, RPM agreements between a singlemanufacturer and its dealers cannot harmconsumers. Of course, it cannot be overemphasizedthat market power is only a necessary, but not asufficient, condition for vertical restraints to reduceconsumer welfare; by itself, market power does notestablish that the conduct is anticompetitive. Evenwhen a manufacturer possesses substantial marketpower, all of the procompetitive rationales forvertical restraints remain potentially valid.economically neutral) nature of RPMagreements. At minimum, this evidencecounsels against expanding theboundaries of per se illegal conduct toenvelop activities that (at best) onlyweakly satisfy the legal criteria forfinding the existence of an ‘‘agreement’’and, more important, appear to beprocompetitive in both purpose andeffect. Under these evaluative criteria,the present matter is a poor candidatefor an enforcement action.The Supreme Court set forth the legalstandard for finding an illegal RPM‘‘agreement’’ in Monsanto Co. v. Spray-Rite Service Corporation: 3The correct standard is that there must beevidence that tends to exclude the possibilityof independent action by the manufacturerand distributor. That is, there must be director circumstantial evidence that reasonablytends to provide that the manufacturer andothers had a conscious commitment to acommon scheme designed to achieve anunlawful objective.Monsanto, 465 U.S. at 768. The Courtstated further that the ‘‘concept of ‘ameeting of the minds’ or ‘a commonscheme’ * * * includes more than ashowing that the distributor conformedto the suggested price. It means as wellthat evidence must be presented boththat the distributor communicated itsacquiescence or agreement, and that thiswas sought by the manufacturer.’’ Id. at764 n. 9 (emphasis added).While it is true that AmCy enteredinto contracts with its distributorsproviding for compensation for sales ator above the wholesale purchase price,it is clear that there was no ‘‘meeting ofthe minds’’ or ‘‘common scheme,’’ andthus no illegal agreement, to maintainresale prices. At no time did AmCy tellits distributors that they must sellagricultural chemicals at specific pricesor risk losing supplies; AmCy did notattempt to coerce or intimidate itsdistributors into selling at specific pricelevels; distributors did not communicatean agreement to sell at specific prices;no distributors were ever terminated forselling at prices below the wholesaleprice; and distributors remained free(explicitly provided by contract) toresell products at any price of choosing.That distributors sometimes sold atprices below the wholesale levelwithout loss of supply or termination istestament to the unilateral nature of thedistributors’ pricing decisions and to theabsence of any agreement to maintainresale prices. 4 In this instance, all of the3 465 U.S. 752 (1984).4 Evidence suggests that distributors in fact soldspecific products covered by the AmCy program atretail prices both above and below the wholesaletransfer price. Wide variation in distributor resaleprices runs contrary to usual evidence of a

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6259hallmarks of a per se illegal RPMagreement are lacking.Evidence that dealers did in fact resellAmCy products at or above thewholesale purchase price does notrelieve the Commission of its obligationto demonstrate the existence of anillegal agreement. As made clear byColgate, 5 a unilateral, self-motivateddecision by a distributor to accept amanufacturer’s pricing policies, andthus sell products at a suggested retailprice, does not constitute an illegal RPMagreement. In Monsanto, the SupremeCourt stated: ‘‘Under Colgate, themanufacturer can announce its resaleprices in advance and refuse to dealwith those who fail to comply. And adistributor is free to acquiesce in themanufacturer’s demand in order toavoid termination.’’ 465 U.S. at 761. AsMonsanto and Colgate make clear,something more than mere acquiescenceby a distributor in a manufacturer’spricing policies is necessary to converta unilateral decision by a distributorinto an agreement to maintain resaleprices.I am therefore puzzled why themajority is so quick to infer theexistence of a per se illegal RPMagreement from evidence that manydistributors found it in their self-interestunilaterally to sell at or above thewholesale price and thereby receiverebates from AmCy. To infer theexistence of a per se illegal RPMagreement in this context, when AmCynever announced minimum resaleprices nor sought a commitment fromdistributors to sell at or above certainprice levels, violates the fundamentallegal principle of RPM law announcedin Colgate. How can the majority find aper se illegal agreement here—underarguably weaker factual circumstancesthan existed in Colgate—and believeminimum resale price fixing agreement. AsChairman Pitofsky has stated: ‘‘The one point thatemerges clearly in any debate concerning the per serule is that minimum vertical price agreements leadto higher, and usually uniform, resale prices.’’Robert Pitofsky, ‘‘In Defense of Discounters: TheNo-Frills Case for a Per Se Rule Against VerticalPrice Fixing,’’ 71 Geo. L.J. 1487, 1488 (1983). TheCommission’s proposed compliant does not allege,nor provide supporting evidence, that the rebateprogram resulted in higher retail prices for AmCy’sproducts. Moreover, the wide dispersion in resaleprices demonstrates the absence of the type ofuniformity believed to be an indicator of aminimum resale price agreement. This dispersionin retail prices suggests that distributors wereengaging in loss-leader programs out of a desire toincrease future sales of AmCy products. In additionto encouraging distributors to provide valuable presaleservices, AmCy’s rebate program may haveencouraged distributors to engage in loss-leaderprograms as a means of persuading customers toswitch to AmCy products.5 United States v. Colgate & Co., 250 U.S. 300(1919).that it still seeks to enforce the ruleannounced in Colgate, and reiterated inMonsanto, that mere acquiescence by adistributor in the pricing policies of amanufacturer is insufficient as a matterof law to warrant inference of theexistence of a per se illegal RPMagreement? 6The majority’s finding that AmCyentered into illegal RPM agreementswith its distributors is nothing less thana retreat from the principles of verticalrestraints analysis laid down by theSupreme Court in Colgate, Monsanto,Sylvania, 7 and Sharp. 8 In casesinvolving allegations of concerted pricefixing, ‘‘the antitrust plaintiff mustpresent evidence sufficient to carry itsburden of proving that there was suchan agreement. If an inference of such anagreement may be drawn from highlyambiguous evidence, there is aconsiderable danger that the doctrinesenunciated in Sylvania and Colgate willbe seriously eroded.’’ Monsanto, 465U.S. at 763. I conclude that the standardset forth by Supreme Court for thefinding of a price-fixing agreement hasnot been met. That the majority iswilling to infer the existence of anagreement in this instance on the basisof such ambiguous evidence, and to relyprimarily on pre-Sharp case law andpost-Sharp dicta and one case not onpoint 9 to justify its6 Although the majority’s reply emphasizes‘‘written agreements’’ pursuant to which dealerswere offered compensation for sales at prices abovethe wholesale transfer price (Statement of ChairmanRobert Pitofsky and Commissioners Janet D. Steigerand Christine A Varney in the Matter of AmericanCyanamid, at 2), the proposed complaint in thiscase indicates that the Commission is willing—despite the clear warnings of Colgate and Monsantoto the contrary—to infer the existence of per seillegal RPM ‘‘agreements’’ solely from the dealers’unilateral acceptance of AmCy’s ‘‘offer.’’ ProposedComplaint, at 6 (‘‘The dealers overwhelminglyaccepted AmCy’s offer by selling at or above thespecified minimum prices.’’).7 Continental T.V., Inc. v. GTE Sylvania Inc., 433U.S. 36 (1977).8 Business Electronics Corp. v. Sharp ElectronicsCorp., 485 U.S. 717 (1988).9 The majority relies heavily on Judge Posner’sopinion in Khan v. State Oil Co., 93 F.3d 1358 (7thCir. 1996). Besides the obvious difference that Khandeals with maximum rather than minimum RPM,the facts of Khan are fundamentally different. Thecontract between State Oil (the supplier) and Khan(the dealer) provided that State Oil would announcea suggested retail price for gasoline and sell it toKhan for 3.25 cents per gallon less. The contractfurther required Khan to rebate to State Oil anyprofit received for sales above the suggested retailprice. As Judge Posner noted, the contracteliminated any incentive for Khan to charge abovethe suggested retail price. Since absolutecompliance was thus guaranteed under the facts ofKhan, it is not surprising that a dealer challengedthe program. AmCy, on the other hand, neverannounced suggested retail prices to its dealers,never established an explicit mark-up, and neverrequired dealers to seek permission before loweringtheir price. The fact that AmCy’s dealers frequentlyconclusion, represents an effort tocircumvent the law of RPM (and ofvertical restraints in general) laid downby the Supreme Court over the lasttwenty years. 10The majority’s decision to accept aconsent agreement here also cannot besupported on economic grounds. Theper se treatment of RPM usually isjustified by the assertion that suchagreements almost invariably are usedto support collusion, either amongmanufacturers or among distributors. 11RPM could support manufacturercollusion for two reasons. 12 First, RPMmay make it easier to detect cheating ona cartel agreement, because resale prices(presumably) are easier to observe thanwholesale prices, and successfulmonitoring of prices is necessary for anysuccessful collusive price agreement towork. 13 Second, RPM may reduce theincentive to cheat on a cartel because amanufacturer cutting its wholesale pricewill not increase sales by very much ifthe corresponding resale price cannotfall. 14 If RPM is being used to facilitatemanufacturer collusion, we wouldexpect to see other manufacturersadopting similar price restrictions;collectively, these manufacturers wouldlowered retail prices below the wholesalepurchaseprice indicates that AmCy did notimplement its rebate program in order to eliminatedealers’ incentives to reduce prices (e.g., to developnew customers, to increase business with existingcustomers, or to encourage switching by customersfrom other manufacturers’ agricultural products toAmCy’s products). The majority’s reliance on Khanis therefore of doubtful relevance to this case.10 Today’s action by the Commission has by nomeans established a clearer and more certain legalrule for RPM cases than exists under the rule ofColgate and other Supreme Court decisions.Whereas a supplier before today’s decision mightknow with certainty that mere voluntary adherenceby a distributor to a unilaterally announced resaleprice policy does not constitute illegal RPM, thesame supplier must now worry that theCommission may henceforth use such voluntaryadherence as evidence of a per se illegal agreementto maintain resale prices. Moreover, as a result oftoday’s decision, the business community may beleft wondering how the Commission can—andwhether it will—maintain the functional distinctionit currently draws between, on the one hand, rebatepass-throughprovisions and cooperativeadvertising programs—programs that theCommission generally does not consider to be perse illegal—and, on the other hand, other types ofrebate programs that similarly impose restrictconditions on the buyer.11 Of course, much of the empirical literature onthe actual uses of RPM (see note 1, supra) castsserious doubt upon the validity of this proposition.12 See Lester G. Telser, ‘‘Why ShouldManufacturers Want Fair Trade?,’’ 3 J.L. & Econ. 86(1960).13 See George J. Stigler, ‘‘A Theory of Oligopoly,’’in The Organization of Industry 39, 43 (1968) (‘‘Ingeneral the policing of a price agreement involvesan audit of the transactions prices.’’).14 This argument is subject to the obviouslimitation that a manufacturer wishing to cheat onthe collusive arrangement would have littleincentive to enforce the RPM agreement.

6260 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticeshave to account for sufficient totaloutput to give them power over price. 15As far as I can tell, the ‘‘manufacturercartel’’ theory is not relevant to thepresent case. The Commission’sproposed complaint does not allege, letalone provide supporting evidence, thatAmCy has attempted to collude withother agricultural chemical makers,such as DuPont, Monsanto, Ciba-Geigy,or BASF. There is also no evidence thatthese other firms used RPM, as isrequired for the theory to work. Buteven putting aside the absence of suchevidence, it is difficult to imagine anarrangement less suited to cartelstability than that which existedbetween AmCy and its distributors.Specifically, under the terms of AmCy’sC.R.O.P. TM and A.P.E.X. TM programs, adealer’s compensation was tiedexplicitly to the share of chemical salesaccounted for by AmCy’s products.Given that a crucial element of cartelenforcement is the discovery of somemeans by which each member cancommit credibly to maintaining—butnot increasing—its market share, 16 howcould a program that explicitly rewardsmarket share expansion plausibly becharacterized as a cartel enforcementtool?Furthermore, the available evidencesuggests that the C.R.O.P. TM andA.P.E.X. TM programs wereextraordinarily successful in expandingAmCy’s sales and market share, whichgrew substantially while the programwas in use. Certainly, other factors (e.g.,the successful introduction of severalnew product lines) may have accountedfor a portion of this increase; 17nevertheless, it is difficult (if notimpossible) to reconcile the behavior ofAmCy’s output—or of total marketoutput—during this period with anycoherent theory of competitive harminvolving collusion with other chemicalmakers.In the alternative, per se treatmentsometimes is predicated on thecharacterization of RPM as an aid todealer collusion. Under such a scenario,a group of dealers pressures the supplierto adopt RPM to achieve and maintain15 Of course, all of the standard factors used toanalyze market power and the ability to implementand maintain collusive pricing (e.g., ease of entry,heterogeneity of the products, and so forth) wouldalso be relevant to judging the likelihood ofsuccessful supplier collusion.16 As Stigler (supra note 13, at 42) noted, ‘‘[f]ixingmarket shares is probably the most efficient of allmethods of combating secret price reductions.’’17 The likelihood of successfully maintainingcollusion in the face of product innovation (as wasoccurring in this instance) is, of course, quite small.Collusion is more likely to be successful, the greaterthe degree of similarity (e.g., in terms of cost,demand, and product characteristics) among theparties to the agreement.a collusive resale price arrangementamong the dealers. When RPM is usedfor this purpose, we would expect to seecoordinated pressure on themanufacturer to adopt RPM from agroup of dealers with sufficient marketpower to credibly threaten themanufacturer. Moreover, to be effective,the dealer cartel must enter into similararrangements with enoughmanufacturers to be able to affect marketprice; otherwise, the collusive retailprice of price-maintained productswould be undermined by competitionfrom products not subject to RPMagreements. Under such conditions, wewould expect the manufacturer to be areluctant participant in the scheme,though it would enforce the RPMagreement if the dealer threats werecredible. Finally, it is unlikely that thecolluding dealers would carrycompeting products not subject to RPMagreements, as that would be equivalentto cheating on the collusivelydeterminedresale margin.This second anticompetitive theoryfits the facts of this case no better thanthe first. The Commission’s complaintdoes not allege, let alone providesupporting evidence, that AmCy is thevictim of a dealer cartel. As I alreadyhave noted, it does not appear that othermanufacturers had similar arrangementswith the members of any putative‘‘dealer cartel,’’ or that this ‘‘cartel’’eschewed the products of rivalmanufacturers. 18 Had AmCy been thevictim of a cartel, its attitude toward theCommission and numerous stateinvestigations should have been one ofgrateful acquiescence, because theenforcement agencies would be rescuingit from the clutches of its rapaciousdealers. In fact, of course, AmCyunilaterally terminated the challengedprovisions of the C.R.O.P. TM andA.P.E.X. TM programs several years ago.so much for ‘‘dealer coercion.’’ 1918 This is unsurprising, because over 2500 dealersparticipated in the C.R.O.P. TM and A.P.E.X. TMprograms. It is fanciful to believe that a cartel couldhave been formed from among such a large numberof dealers. If such a cartel exists, one mightreasonably ask why the dealers that belong to it arenot also named in the Commission’s complaint.19 In its reply, the majority appears to suggest thatthe existence of a dealer cartel can be inferred fromthe allegation that ‘‘a dealer’s advisory councilvoted to advise American Cyanamid to retain theprogram in order to protect their margins.’’Statement of Chairman Robert Pitofsky andCommissioners Janet D. Steiger and Christine A.Varney in the Matter of American Cyanamid, atnote 5. Even if an advisory council furnished thisadvice to AmCy, communications of this naturebetween dealers and manufacturers do not establishthat the dealers acted collusively. Moreover, the factthat dealers may have communicated this advancesays nothing about the competitive effects ofAmCy’s rebate program. One would expect dealersto provide this same ‘‘advice’’ if AmCy’s programGiven that neither of the twotraditional anticompetitive theories canbe reconciled with the terms of theAmCy program, could the Commission’saction be justified on some other basis?The Commission might attempt to seekrefuge in some unilateral theory ofmarket power, under which amanufacturer with substantial preexistingmarket power is hypothesizedto use vertical restraints because, forsome reason, it cannot extract the fullvalue of its market power simply byraising its wholesale price. Theeconomics literature certainlyacknowledges such possibilities, butthese theories provide a fragile basis forantitrust enforcement. 20 As such modelsshow, vertical restraints often canimprove consumer welfare even whenadopted by firms with substantialmarket power; 21 the models fail,however, to provide empirical criteriaby which enforcers can distinguishanticompetitive from procompetitiveeffects. 22 Thus, the practical utility ofthese theories is questionable even forconduct judged under the rule of reason;their inability to justify a policy of perse illegality appears self-evident.On several grounds, therefore,acceptance of the consent agreement inthis matter represents a poor policychoice by the Commission. From a legalperspective, AmCy’s conduct does notconstitute an illegal agreement tomaintain resale prices; from aneconomic perspective, the evidencepoints to the conclusion that AmCy’sconduct was procompetitive; and from apolicy perspective, the Commission’sdecision hardly delineates a clearerdistinction (and in fact seriously blursthe line) between conduct likely to besubject to per se condemnation andconduct that is not. Instead of reachingfor ways to expand the application ofthe per se rule to conduct that is plainlyprocompetitive, enforcers shouldwere designed to prevent discounters from freeridingon the pre-sale services provided by otherdealers.20 See, e.g., Remarks of Commissioner Roscoe B.Starek, III, ‘‘Reinventing Antitrust Enforcement?Antitrust at the FTC in 1995 and Beyond,’’ beforea conference on ‘‘A New Age of AntitrustEnforcement: Antitrust in 1995’’ (Marina del Rey,California, Feb. 24, 1995).21 As I noted earlier (supra note 2), market poweris a necessary, but not a sufficient, condition forvertical restraints to reduce consumer welfare.22 As Katz (supra note 1, at 713–14) notes,‘‘[m]uch of the literature on vertical restraints hasbeen conducted with the express aim of derivingpolicy conclusions. But in many, if not most,instances there is no widespread agreement onwhether a particular vertical practice is sociallybeneficial or harmful. This unhappy state of affairsis due, in part, to the fact that all of the practicescan be beneficial in some instances and harmful inothers, and it may be extremely difficult todistinguish between the two cases.’’

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6261reserve their heavy hand for conductthat falls within standards for per seillegality clearly enunciated by theSupreme Court. Accordingly, I cannotsupport the proposed enforcementaction made public today.[FR Doc. 97–3341 Filed 2–10–97; 8:45 am]BILLING CODE 6750–01–MDEPARTMENT OF HEALTH ANDHUMAN SERVICESCenters for Disease Control andPrevention[30DAY–28]Agency Forms Undergoing PaperworkReduction Act ReviewThe Centers for Disease Control andPrevention (CDC) publishes a list ofinformation collection requests underreview by the Office of Management andBudget (OMB) in compliance with thePaperwork Reduction Act (44 U.S.C.Chapter 35). To request a copy of theserequests, call the CDC Reports ClearanceOffice on (404) 639–7090. Send writtencomments to CDC, Desk Officer; HumanResources and Housing Branch, NewExecutive Office Building, Room 10235;Washington, DC 20503. Writtencomments should be received within 30days of this notice.The following request has beensubmitted for review since the lastpublication date on February 4, 1997.Proposed Project1. Biomechanical Stress Control inDrywall Installation—New-Drywallinstallers represented approximately1.42% of the construction workforce in1992. Based on analysis of theSupplementary Data System (BLS) of 21states, the compensable injury/incidence rate (27.5 cases per 100workers for this group) was nearly threetimes the injury rate of 9.5 for all otherconstruction occupations combined, in1987. Data from the 1992 and 1993Annual Survey of Occupational Injuriesand Illnesses (BLS) indicated that therewere an estimated 4,680 traumaticinjuries among drywall installersinvolving days away from work in theconstruction industry in 1992, and4,122 in 1993. In 1993, bodily reactionand exertion (31.8%), falls (28.6%), andcontact with objects (24.6%) were theleading events of injury and illnessinvolving days away from work. As aresult, sprains and strains (40.6%)constituted the most frequent nature ofinjuries and illnesses category in 1994.To gain an understanding of theseinjuries, NIOSH has initiated thisproject to examine different approachesin both field and laboratory settings toidentify and control the high-riskactivities associated with the traumaticinjuries and overexertion hazards ofdrywall installation work. One of thefield study components for this projectis to identify high-risk tasks andactivities for drywall installers, using adrywall installation survey which wasdeveloped at NIOSH. The findings ofthis survey will provide furtherunderstanding and focus laboratoryresearch efforts on the most hazardoustasks/activities of drywall-installationwork. Study populations will includedrywall installers or constructionworkers with drywall installationexperience. Each questionnaire will takeapproximately 20 minutes to complete.The total annual burden is 30.RespondentsNumber ofrespondentsNumber ofresponses/respondentAverageburden/response(in hrs.)Drywall Installers ...................................................................................................................................... 120 1 .25Dated: February 5, 1997.Wilma G. Johnson,Acting Associate Director for Policy Planningand Evaluation, Centers for Disease Controland Prevention (CDC).[FR Doc. 97–3332 Filed 2–10–97; 8:45 am]BILLING CODE 4163–18–PFood and Drug Administration[Docket No. 96E–0388]Determination of Regulatory ReviewPeriod for Purposes of PatentExtension; MERREM® I.V.AGENCY: Food and Drug Administration,HHS.ACTION: Notice.SUMMARY: The Food and DrugAdministration (FDA) has determinedthe regulatory review period forMERREM® I.V. and is publishing thisnotice of that determination as requiredby law. FDA has made thedetermination because of thesubmission of an application to theCommissioner of Patents andTrademarks, Department of Commerce,for the extension of a patent whichclaims that human drug product.ADDRESSES: Written comments andpetitions should be directed to theDockets Management Branch (HFA–305), Food and Drug Administration,12420 Parklawn Dr., rm. 1–23,Rockville, MD 20857.FOR FURTHER INFORMATION CONTACT:Brian J. Malkin, Office of Health Affairs(HFY–20), Food and DrugAdministration, 5600 Fishers Lane,Rockville, MD 20857, 301–443–1382.SUPPLEMENTARY INFORMATION: The DrugPrice Competition and Patent TermRestoration Act of 1984 (Pub. L. 98–417)and the Generic Animal Drug and PatentTerm Restoration Act (Pub. L. 100–670)generally provide that a patent may beextended for a period of up to 5 yearsso long as the patented item (humandrug product, animal drug product,medical device, food additive, or coloradditive) was subject to regulatoryreview by FDA before the item wasmarketed. Under these acts, a product’sregulatory review period forms the basisfor determining the amount of extensionan applicant may receive.A regulatory review period consists oftwo periods of time: A testing phase andan approval phase. For human drugproducts, the testing phase begins whenthe exemption to permit the clinicalinvestigations of the drug becomeseffective and runs until the approvalphase begins. The approval phase startswith the initial submission of anapplication to market the human drugproduct and continues until FDA grantspermission to market the drug product.Although only a portion of a regulatoryreview period may count toward theactual amount of extension that theCommissioner of Patents andTrademarks may award (for example,half the testing phase must besubtracted as well as any time that mayhave occurred before the patent wasissued), FDA’s determination of thelength of a regulatory review period fora human drug product will include allof the testing phase and approval phaseas specified in 35 U.S.C. 156(g)(1)(B).FDA recently approved for marketingthe human drug product MERREM® I.V.(meropenem). MERREM® I.V. isindicated as single agent therapy for thetreatment of the following infections

6262 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticeswhen caused by susceptible strains ofthe following designatedmicroorgranisms: Intra-abdominalInfections: Complicated appendicitisand peritonitis caused by viridans groupstreptococci, Escherichia coli, Klebsiellapneumoniae, Pseudomonas aeruginosa,Bacteroides fragilis, B.thetaiotaomicron, andPeptostreptococcus species. BacterialMeningitis (pediatric patients ≥ 3months only): Bacterial meningitiscaused by Streptococcus pneumoniae,Haemophilus influenzae (β-lactamaseand non-β-lactamase-producing strains),and Neisseria meningitidis. Subsequentto this approval, the Patent andTrademark Office received a patent termrestoration application for MERREM®I.V. (U.S. Patent No. 4,943,569) fromSumitomo Pharmaceutical Co., Ltd., andthe Patent and Trademark Officerequested FDA’s assistance indetermining this patent’s eligibility forpatent term restoration. In a letter datedNovember 4, 1996, FDA advised thePatent and Trademark Office that thishuman drug product had undergone aregulatory review period and that theapproval of MERREM® I.V. representedthe first permitted commercialmarketing or use of the product. Shortlythereafter, the Patent and TrademarkOffice requested that FDA determine theproduct’s regulatory review period.FDA has determined that theapplicable regulatory review period forMERREM® I.V. is 2,608 days. Of thistime, 1,640 days occurred during thetesting phase of the regulatory reviewperiod, while 968 days occurred duringthe approval phase. These periods oftime were derived from the followingdates:1. The date an exemption undersection 505(i) of the Federal Food, Drug,and Cosmetic Act (21 U.S.C. 355(i))became effective: May 3, 1989. FDA hasverified the applicant’s claim that thedate that the investigational new drugapplication became effective was onMay 3, 1989.2. The date the application wasinitially submitted with respect to thehuman drug product under section 507of the Federal Food, Drug, and CosmeticAct (21 U.S.C. 357): October 28, 1993.FDA has verified the applicant’s claimthat the new drug application (NDA) forMERREM® I.V. (NDA 50–706) wasinitially submitted on October 28, 1993.3. The date the application wasapproved: June 21, 1996. FDA hasverified the applicant’s claim that NDA20–506 was approved on June 21, 1996.This determination of the regulatoryreview period establishes the maximumpotential length of a patent extension.However, the U.S. Patent andTrademark Office applies severalstatutory limitations in its calculationsof the actual period for patent extension.In its application for patent extension,this applicant seeks 1,063 days of patentterm extension.Anyone with knowledge that any ofthe dates as published is incorrect may,on or before April 14, 1997, submit tothe Dockets Management Branch(address above) written comments andask for a redetermination. Furthermore,any interested person may petition FDA,on or before August 11, 1997, for adetermination regarding whether theapplicant for extension acted with duediligence during the regulatory reviewperiod. To meet its burden, the petitionmust contain sufficient facts to merit anFDA investigation. (See H. Rept. 857,part 1, 98th Cong., 2d sess., pp. 41–42,1984.) Petitions should be in the formatspecified in 21 CFR 10.30.Comments and petitions should besubmitted to the Dockets ManagementBranch (address above) in three copies(except that individuals may submitsingle copies) and identified with thedocket number found in brackets in theheading of this document. Commentsand petitions may be seen in theDockets Management Branch between 9a.m. and 4 p.m., Monday throughFriday.Dated: January 31, 1997.Stuart L. Nightingale,Associate Commissioner for Health Affairs.[FR Doc. 97–3313 Filed 2–10–97; 8:45 am]BILLING CODE 4160–01–F[Docket No. 96E–0360]Determination of Regulatory ReviewPeriod for Purposes of PatentExtension; DIFFERIN Topical GelAGENCY: Food and Drug Administration,HHS.ACTION: Notice.SUMMARY: The Food and DrugAdministration (FDA) has determinedthe regulatory review period forDIFFERIN Topical Gel and is publishingthis notice of that determination asrequired by law. FDA has made thedetermination because of thesubmission of an application to theCommissioner of Patents andTrademarks, Department of Commerce,for the extension of a patent whichclaims that human drug product.ADDRESSES: Written comments andpetitions should be directed to theDockets Management Branch (HFA–305), Food and Drug Administration,12420 Parklawn Dr., rm. 1–23,Rockville, MD 20857.FOR FURTHER INFORMATION CONTACT:Brian J. Malkin, Office of Health Affairs(HFY–20), Food and DrugAdministration, 5600 Fishers Lane,Rockville, MD 20857, 301–443–1382.SUPPLEMENTARY INFORMATION: The DrugPrice Competition and Patent TermRestoration Act of 1984 (Pub. L. 98–417)and the Generic Animal Drug and PatentTerm Restoration Act (Pub. L. 100–670)generally provide that a patent may beextended for a period of up to 5 yearsso long as the patented item (humandrug product, animal drug product,medical device, food additive, or coloradditive) was subject to regulatoryreview by FDA before the item wasmarketed. Under these acts, a product’sregulatory review period forms the basisfor determining the amount of extensionan applicant may receive.A regulatory review period consists oftwo periods of time: A testing phase andan approval phase. For human drugproducts, the testing phase begins whenthe exemption to permit the clinicalinvestigations of the drug becomeseffective and runs until the approvalphase begins. The approval phase startswith the initial submission of anapplication to market the human drugproduct and continues until FDA grantspermission to market the drug product.Although only a portion of a regulatoryreview period may count toward theactual amount of extension that theCommissioner of Patents andTrademarks may award (for example,half the testing phase must besubtracted as well as any time that mayhave occurred before the patent wasissued), FDA’s determination of thelength of a regulatory review period fora human drug product will include allof the testing phase and approval phaseas specified in 35 U.S.C. 156(g)(1)(B).FDA recently approved for marketingthe human drug product DIFFERINTopical Gel (adapalene). DIFFERINTopical Gel is indicated for the topicaltreatment of acne vulgaris. Subsequentto this approval, the Patent andTrademark Office received a patent termrestoration application for DIFFERINTopical Gel (U.S. Patent No. 4,717,720)from Centre International de RecherchesDermatologiques (CIRD), and the Patentand Trademark Office requested FDA’sassistance in determining this patent’seligibility for patent term restoration. Ina letter dated October 24, 1996, FDAadvised the Patent and TrademarkOffice that this human drug product hadundergone a regulatory review periodand that the approval of DIFFERINTopical Gel represented the firstpermitted commercial marketing or useof the product. Shortly thereafter, the

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6263Patent and Trademark Office requestedthat FDA determine the productsregulatory review period.FDA has determined that theapplicable regulatory review period forDIFFERIN Topical Gel is 2,447 days. Ofthis time, 1,401 days occurred duringthe testing phase of the regulatoryreview period, while 1,046 daysoccurred during the approval phase.These periods of time were derived fromthe following dates:1. The date an exemption undersection 505(i) of the Federal Food, Drug,and Cosmetic Act (21 U.S.C. 355(i))became effective: September 20, 1989.FDA has verified the applicant’s claimthat the date that the investigationalnew drug application became effectivewas on September 20, 1989.2. The date the application wasinitially submitted with respect to thehuman drug product under section505(b) of the Federal Food, Drug, andCosmetic Act: July 21, 1993. Theapplicant claims July 15, 1993, as thedate the new drug application (NDA) forDIFFERIN Topical Gel (NDA 20–380)was initially submitted. However, FDArecords indicate that NDA 20–380 wassubmitted on July 21, 1993.3. The date the application wasapproved: May 31, 1996. FDA hasverified the applicant’s claim that NDA20–380 was approved on May 31, 1996.This determination of the regulatoryreview period establishes the maximumpotential length of a patent extension.However, the U.S. Patent andTrademark Office applies severalstatutory limitations in its calculationsof the actual period for patent extension.In its application for patent extension,this applicant seeks 1,512 days of patentterm extension.Anyone with knowledge that any ofthe dates as published is incorrect may,on or before April 14, 1997, submit tothe Dockets Management Branch(address above) written comments andask for a redetermination. Furthermore,any interested person may petition FDA,on or before August 11, 1997, for adetermination regarding whether theapplicant for extension acted with duediligence during the regulatory reviewperiod. To meet its burden, the petitionmust contain sufficient facts to merit anFDA investigation. (See H. Rept. 857,part 1, 98th Cong., 2d sess., pp. 41–42,1984.) Petitions should be in the formatspecified in 21 CFR 10.30.Comments and petitions should besubmitted to the Dockets ManagementBranch (address above) in three copies(except that individuals may submitsingle copies) and identified with thedocket number found in brackets in theheading of this document. Commentsand petitions may be seen in theDockets Management Branch between 9a.m. and 4 p.m., Monday throughFriday.Dated: January 31, 1997.Stuart L. Nightingale,Associate Commissioner for Health Affairs.[FR Doc. 97–3314 Filed 2–10–97; 8:45 am]BILLING CODE 4160–01–F[Docket No. 96E–0387]Determination of Regulatory ReviewPeriod for Purposes of PatentExtension; DECTOMAXAGENCY: Food and Drug Administration,HHS.ACTION: Notice.SUMMARY: The Food and DrugAdministration (FDA) has determinedthe regulatory review period forDECTOMAX and is publishing thisnotice of that determination as requiredby law. FDA has made thedetermination because of thesubmission of an application to theCommissioner of Patents andTrademarks, Department of Commerce,for the extension of a patent whichclaims that animal drug product.ADDRESSES: Written comments andpetitions should be directed to theDockets Management Branch (HFA–305), Food and Drug Administration,12420 Parklawn Dr., rm. 1–23,Rockville, MD 20857.FOR FURTHER INFORMATION CONTACT:Brian J. Malkin, Office of Health Affairs(HFY–20), Food and DrugAdministration, 5600 Fishers Lane,Rockville, MD 20857, 301–443–1382.SUPPLEMENTARY INFORMATION: The DrugPrice Competition and Patent TermRestoration Act of 1984 (Pub. L. 98–417)and the Generic Animal Drug and PatentTerm Restoration Act (Pub. L. 100–670)generally provide that a patent may beextended for a period of up to 5 yearsso long as the patented item (humandrug product, animal drug product,medical device, food additive, or coloradditive) was subject to regulatoryreview by FDA before the item wasmarketed. Under these acts, a product’sregulatory review period forms the basisfor determining the amount of extensionan applicant may receive.A regulatory review period consists oftwo periods of time: A testing phase andan approval phase. For animal drugproducts, the testing phase begins onthe earlier date when either a majorenvironmental effects test was initiatedfor the drug or when an exemptionunder section 512(j) of the Federal Food,Drug, and Cosmetic Act (21 U.S.C.360b(j)) became effective and runs untilthe approval phase begins. The approvalphase starts with the initial submissionof an application to market the animaldrug product and continues until FDAgrants permission to market the drugproduct. Although only a portion of aregulatory review period may counttoward the actual amount of extensionthat the Commissioner of Patents andTrademarks may award (for example,half the testing phase must besubtracted as well as any time that mayhave occurred before the patent wasissued), FDA’s determination of thelength of a regulatory review period foran animal drug product will include allof the testing phase and approval phaseas specified in 35 U.S.C. 156(g)(4)(B).FDA recently approved for marketingthe animal drug product DECTOMAX(doramectin). DECTOMAX is indicatedfor cattle treatment and control ofgastrointestinal roundworms,lungworms, eyeworms, grubs, lice, andmange mites, and protection againstinfection or reinfection with Ostertaglaostertagia for up to 21 days. Subsequentto this approval, the Patent andTrademark Office received a patent termrestoration application for DECTOMAX(U.S. Patent No. 5,089,480) from Pfizer,Inc., and the Patent and TrademarkOffice requested FDA’s assistance indetermining this patent’s eligibility forpatent term restoration. In a letter datedOctober 25, 1996, FDA advised thePatent and Trademark Office that thisanimal drug product had undergone aregulatory review period and that theapproval of DECTOMAX representedthe first commercial marketing of theproduct. Shortly thereafter, the Patentand Trademark Office requested thatFDA determine the product’s regulatoryreview period.FDA has determined that theapplicable regulatory review period forDECTOMAX is 2,836 days. Of this time,2,695 days occurred during the testingphase of the regulatory review period,while 141 days occurred during theapproval phase. These periods of timewere derived from the following dates:1. The date an exemption undersection 512(j) of the Federal Food, Drug,and Cosmetic Act became effective:October 26, 1988. The applicant claimsDecember 7, 1988, as the date theinvestigational new animal drugapplication (INAD) became effective.However, FDA records indicate that thedate of FDA’s official acknowledgmentletter assigning a number to the INADwas October 26, 1988, which isconsidered to be the effective date forthe INAD.

6264 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices2. The date the application wasinitially submitted with respect to theanimal drug product under section512(b) of the Federal Food, Drug, andCosmetic Act: March 12, 1996. Theapplicant claims March 7, 1996, as thedate the new animal drug application(NADA) for DECTOMAX (NADA 141–061) was initially submitted. However,FDA records indicate that the date ofFDA’s official acknowledgment letterassigning a number to the NADA wasMarch 12, 1996, which is considered tobe the NADA initially submitted date.3. The date the application wasapproved: July 30, 1996. FDA hasverified the applicant’s claim thatNADA 141–061 was approved on July30, 1996.This determination of the regulatoryreview period establishes the maximumpotential length of a patent extension.However, the U.S. Patent andTrademark Office applies severalstatutory limitations in its calculationsof the actual period for patent extension.In its application for patent extension,this applicant seeks 527 days of patentterm extension.Anyone with knowledge that any ofthe dates as published is incorrect may,on or before April 14, 1997, submit tothe Dockets Management Branch(address above) written comments andask for a redetermination. Furthermore,any interested person may petition FDA,on or before August 11, 1997, for adetermination regarding whether theapplicant for extension acted with duediligence during the regulatory reviewperiod. To meet its burden, the petitionmust contain sufficient facts to merit anFDA investigation. (See H. Rept. 857,part 1, 98th Cong., 2d sess., pp. 41–42,1984.) Petitions should be in the formatspecified in 21 CFR 10.30.Comments and petitions should besubmitted to the Dockets ManagementBranch (address above) in three copies(except that individuals may submitsingle copies) and identified with thedocket number found in brackets in theheading of this document. Commentsand petitions may be seen in theDockets Management Branch between 9a.m. and 4 p.m., Monday throughFriday.Dated:January 31, 1997.Stuart L. Nightingale,Associate Commissioner for Health Affairs.[FR Doc. 97–3315 Filed 2–10–97; 8:45 am]BILLING CODE 4160–01–FDEPARTMENT OF THE INTERIOROffice of the Secretary; Glen CanyonDam Adaptive Management WorkGroup; Notice of EstablishmentThis notice is published inaccordance with Section 9(a)(2) of theFederal Advisory Committee Act (Pub.L. 92–463). Following consultation withthe General Services Administration,notice is hereby given that the Secretaryof the Interior (Secretary) is establishingthe Glen Canyon Dam AdaptiveManagement Work Group. The purposeof the Adaptive Management WorkGroup shall be to advise and providerecommendations to the Secretary withrespect to his responsibility to complywith the Grand Canyon Protection Actof October 30, 1992, embodied in PublicLaw 102–575.Further information regarding theadvisory council may be obtained fromthe Bureau of Reclamation, Departmentof the Interior, 1849 C Street, NW,Washington, DC 20240.The certification of establishment ispublished below.CertificationI hereby certify that establishment ofthe Glen Canyon Dam AdaptiveManagement Work Group is in thepublic interest in connection with thepurpose of duties imposed on theDepartment of the Interior by 30 U.S.C.1–8.Dated: January 15, 1997.Bruce Babbitt,Secretary of the Interior.[FR Doc. 97–3318 Filed 2–10–97; 8:45 am]BILLING CODE 4310–94–MFish and Wildlife ServiceEndangered and Threatened SpeciesPermit ApplicationsACTION: Notice of receipt of applications.SUMMARY: The following applicants haveapplied for a permit to conduct certainactivities with endangered species. Thisnotice is provided pursuant to section10(c) of the Endangered Species Act of1973, as amended (16 U.S.C. 1531, etseq.).Permit No. 823110Applicant: Charles W. Cartwright, Jr.,Albuquerque, New MexicoThe applicant requests authorizationfor research and recovery purposes tosurvey for the cactus ferruginous pygmyowl (Glaucidium brasilianum cactorum)and the Yuma clapper rail (Ralluslongirostris yumanensis).Permit No. 813889Applicant: Larry Benallie, Sr., Window Rock,ArizonaThe applicant requests authorizationfor research and recovery purposes tosurvey parts of the Navajo Nation for thepossible occurrence of the Kanabambersnail (Oxyloma haydeni ssp.kanabensis).Permit No. 823253Applicant: John Lloyd-Reilley, Kingsville,TexasThe applicant requests authorizationto perfom an intensive study of slenderrush-pea (Hoffmannseggia tenella) forpossible reintroduction to wildlandsites. Applicant was previously grantedpermission to collect the seeds ofslender rushpea and propagate plantsfor research and recovery purposes.Permit No. 823293Applicant: Joseph B. Gebler, Tucson, ArizonaApplicant requests authorization forresearch and recovery purposes tocollect up to 10 of the followingendangered fish species from variouslocales within Arizona for ecologicaland contaminant assessment. Exceptwhen vouchered, endangered andthreatened species will be releasedunharmed immediately.Chub, bonytail (Gila elegans,)Pupfish, desert (Cyprinodonmacularius)Minnow, loach (Rhinichthys (=Tiaroga)cobitis)Squawfish, Colorado (Ptychocheiluslucius)Spikedace (Meda fulgida)Sucker, razorback (Xyrauchen texanus)Topminnow, Gila (Poeciliopsisoccidentalis)Trout, Apache (Oncorhynchus apache)Trout, Gila (Oncorhynchus gilae)Woundfin (Plagopterus argentissimus)Permit No. 823354Applicant: Dr. Ross Dawkins, San Angelo,TexasApplicant requests authorization tosurvey, map territory distribution,capture (using mist nets) band, measure,and immediately release unharmed nomore than five black-capped vireos(Vireo atricapillus). Work would beconducted in Terrell, Brushy Canyon,and Brewster Counties, Texas.Permit No. 823431Applicant: Nancy London, Wickenburg,ArizonaThe applicant requests authorizationto observe, survey, and monitor forsouthwestern willow flycatchers(Empidonax traillii extimus) todetermine habitat preferences of thespecies.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6265Permit No. 823442Applicant: Richard Long, Houston, TexasThe applicant requests authorizationto collect specimens of prairie dawn(Hymenoxys texana) from populationsites in the wild at Addicks and Barkerreservoirs, southwest Harris County andnortheast Fort Bend County, Texas.They will be preserved for use as aneducational exhibit of the interpretivecenter at the U.S. Army Corps ofEngineers Addick Project Office atBarker reservoir.Permit No. PRT–823964Applicant: Dr. Paul Krausman, Tucson,ArizonaThe applicant requests authorizationto survey for Mexican spotted owls(Strix occidentalis lucida) on U.S. NavyObservatory property in Flagstaff,Arizona for the purpose of makingappropriate management decisionsregarding timber thinning and firecontrol.Permit No. PRT–823956Applicant: Dr. Thomas M. Engels, Austin,TexasThe applicant requests authorizationto conduct surveys of large fruited sandverbena (Abronia macrocarpa),Navasota ladies’-tresses (Spiranthesparksii), and the Houston toad (Bufohoustonensis) at the ALCOA SandowMine and surrounding areas in Milamand Lee Counties, Texas. No individualsof any species will be handled,captured, or removed from the wild atany time.Permit No. PRT–824062Applicant: Joseph Lawrence Kowalski,McAllen, TexasThe applicant requests authorizationto receive deceased sea turtle specimensfrom the Coastal Studies Laboratory inSouth Padre Island, Texas. The directorof the facility, has agreed to sign overany deceased listed, sea turtlespecimens to Mr. Kowalski fortaxonomy and comparative anatomystudies in his classroom.Permit No. PRT–824714Applicant: Barney Wegener, Farmington,New MexicoThe applicant requests authorizationto conduct field surveys, locate, andmap the distribution of Mexican spottedowls (Strix occidentalis lucida) on landsadministered by the Bureau of LandManagement in Rio Arriba, San Juan,and McKinley Counties, New Mexico.DATES: Written comments on thesepermit applications must be received onor before March 13, 1997.ADDRESSES: Written data or commentsshould be submitted to the LegalInstruments Examiner, Division ofEndangered Species/Permits, EcologicalServices, P.O. Box 1306, Albuquerque,New Mexico 87103. Please refer to therespective permit number for eachapplication when submitting comments.All comments received, includingnames and addresses, will become partof the official administrative record andmay be made available to the public.FOR FURTHER INFORMATION CONTACT: U.S.Fish and Wildlife Service, EcologicalServices, Division of EndangeredSpecies/Permits, P.O. Box 1306,Albuquerque, New Mexico 87103.Please refer to the respective permitnumber for each application whenrequesting copies of documents.Documents and other informationsubmitted with these applications areavailable for review, subject to therequirements of the Privacy Act andFreedom of Information Act, by anyparty who submits a written request fora copy of such documents within 30days of the date of publication of thisnotice, to the address above.Lynn B. Starnes,Acting Regional Director, Region 2,Albuquerque, New Mexico.[FR Doc. 97–3333 Filed 2–10–97; 8:45 am]BILLING CODE 4510–55–PBureau of Land Management[ES–930–07–1310–00–241A; LAES 46792]Mississippi: Proposed Reinstatementof Terminated Oil and Gas LeaseUnder the provisions of Public Law97–451, a petition for reinstatement ofoil and gas lease LAES 46792, WayneCounty, Mississippi, was timely filedand accompanied by all required rentalsand royalties accruing from June 1,1996, the date of termination.No valid lease has been issuedaffecting the lands. The lessee hasagreed to new lease terms for rentalsand royalties at rates of $10 per acre and16 2 ⁄3 percent. Payment of $500 inadministrative fees and a $125publication fee has been made.The Bureau of Land Management isproposing to reinstate the lease effectiveJune 1, 1996, subject to the originalterms and conditions of the lease andthe increased rental and royalty ratescited above. This is in accordance withsection 31(d) and (e) of the MineralLeasing Act of 1920, as amended (30U.S.C. 188 (d) and (e)).FOR FURTHER INFORMATION CONTACT: GinaGoodwin at (703) 440–1534.Dated: January 31, 1997.Marilyn H. Johnson,Associate State Director.[FR Doc. 97–3368 Filed 2–10–97; 8:45 am]BILLING CODE 4310–GJ–M[ES–930–07–1310–00–241A; LAES 46793]Mississippi: Proposed Reinstatementof Terminated Oil and Gas LeaseUnder the provisions of Public Law97–451, a petition for reinstatement ofoil and gas lease LAES 46793, WayneCounty, Mississippi, was timely filedand accompanied by all required rentalsand royalties accruing from June 1,1996, the date of termination.No valid lease has been issuedaffecting the lands. The lessee hasagreed to new lease terms for rentalsand royalties at rates of $10 per acre and16 2 ⁄3 percent. Payment of $500 inadministrative fees and a $125publication fee has been made.The Bureau of Land Management isproposing to reinstate the lease effectiveJune 1, 1996, subject to the originalterms and conditions of the lease andthe increased rental and royalty ratescited above. This is in accordance withsection 31 (d) and (e) of the MineralLeasing Act of 1920, as amended (30U.S.C. 188 (d) and (e)).FOR FURTHER INFORMATION CONTACT:Gina Goodwin at (703) 440–1534.Dated: January 30, 1997.Marilyn H. Johnson,Associate State Director.[FR Doc. 97–3369 Filed 2–10–97; 8:45 am]BILLING CODE 4310–GJ–M[OR–036–07–1220–04: GP7–0086]Prohibited Acts in Owyhee NationalWild and Scenic River AreaAGENCY: Vale District, Bureau of LandManagement, Interior.ACTION: Notice of amendment toclosures and restrictions within theboundaries of the Main Owyhee River asestablished in the Main, West Little andNorth Fork Owyhee National Wild andScenic Rivers Management Plan. Referto Federal Register Notice Vol. 59, No.240 dated Thursday, December 15,1994.SUMMARY: The Vale District is amending2 closures or restrictions that wereinitiated as part of the implementationof the 1993 Main, West Little and NorthFork Owyhee National Wild and ScenicRivers Management Plan. One change ismade to incorporate the original intentof requiring all float boaters to carry afirepan, and the other is to allow

6266 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesmotorized watercraft access only in thatportion of the Wild and Scenic Riverthat is the recognized ‘‘slack water’’ ofthe Owyhee Reservoir (approximately 4miles upstream from the existingboundary). The amended closures orrestrictions are the minimum necessaryto protect and enhance ORVs and areconsistent with the approved plan.Pursuant to 43 CFR 8351.2–1, thefollowing acts are prohibited on allpublic lands within the boundaries atthe Owyhee River component of theNational Wild and Scenic River Systemadministered by the Bureau of LandManagement:Violation of these prohibitions ispunishable by a fine of not more than$500 or imprisonment for not more than6 months or both. (Title 16 U.S.C. 1281).1. Fire.a. Failure, on any float trip, to carryand use a firepan or similar device tocontain campfires.4. Boating.a. Operation of any motor-driven(including electric motor-driven)watercraft upstream of T.26S., R.43E.,section 29 NE 1 ⁄4 SW 1 ⁄4 SE 1 ⁄4.FOR FURTHER INFORMATION CONTACT:Cathi Wilbanks, Bureau of LandManagement, Vale District, 100 OregonStreet, Vale, OR 97918, (Telephone 541–473–3144).Lynn P. Findley,Assistant District Manager, Operations.[FR Doc. 97–3303 Filed 2–10–97; 8:45 am]BILLING CODE 4310–33–MNational Park ServicePublic Use Statistics Program Center;Notice of Request for Extension of aCurrently Approved InformationCollectionAGENCY: DOI, National Park Service.ACTION: Notice and request forcomments.SUMMARY: In accordance with thePaperwork Reduction Act of 1995, thisnotice announces the National ParkService (NPS) intention to request anextension for a currently approvedinformation collection in support of thePublic Use Statistics Program.DATES: Comments on this notice must bereceived by April 14, 1997 to be assuredof consideration.ADDITIONAL INFORMATION OR COMMENTS:Contact Albert A. Galipeau, Statisticianor Sandra D. Valdez, ProgramAdministrator, U.S. Department ofInterior, Park Operations and Education,National Park Service, Public UseStatistics Program Center, 12795 W.Alameda Parkway, Denver, CO, 80225–0287, (303) 987–6950.SUPPLEMENTARY INFORMATION: .Title: Public Use Reporting.OMB Number: 1024–0036.Expiration Date of Approval: February28, 1997.Type of Request: Extension of acurrently approved collection.Abstract: The survey is used by NPSfor the purpose of collecting publicinterview data which are used todetermine conversion factors used inconverting electro-mechanical visitorcounts into recreation visits.Estimate of Burden: Public reportingburden for this collection of informationis estimated to average 3 minutes perresponse.Respondents: Individuals visitingparks.Estimated Number of Respondents:18,000.Estimated Number of Responses perRespondent: 7.Estimated Total Annual Burden onRespondents: 900 hours.Copies of this information collectioncan be obtained from Sandra D. Valdez,Program Administer.Send comments regarding theaccuracy of the burden estimate, ways tominimize the burden, including throughthe use of automated collectiontechniques or other forms of informationtechnology, or any other aspect of thiscollection of information to:Sandra D. Valdez, ProgramAdministrator, U.S. Department ofInterior, National Park Service, ParkOperations and Education, Public UseStatistics Program Center, 12795 W.Alameda Parkway, Denver, CO, 80225–0287, (303) 987–6950.All responses to this notice will besummarized and included in the requestfor OMB approval. All comments willalso become a matter of public record.Dated: February 4, 1997.Terry N. Tesar,Information Collection Clearance Officer.[FR Doc. 97–3248 Filed 2–10–97; 8:45 am]BILLING CODE 4310–70–MNotice of Intent To Issue a Prospectusfor Operation of Marina Facilities atLake Roosevelt National RecreationAreaSUMMARY: The National Park Servicewill be releasing a concessionprospectus authorizing continuedoperation of marina services, whichincludes seasonal moorage, rental ofboats and houseboats, sale of marinasupplies and general merchandise,limited grocery and camping supplies,and marina fuel and oil, for the publicat Lake Roosevelt National RecreationArea for a period of ten years from May1, 1997 through April 30, 2007.SUPPLEMENTARY INFORMATION: Theexisting concessioner, Lake RooseveltVacations, Inc., has performed itsobligations to the satisfaction of theSecretary under an existing permitwhich expires by limitation of time onDecember 31, 1997, and thereforepursuant to the provisions of Section 5of the Act of October 9, 1965 (79 Stat.969 U.S.C. 20), is entitled to be givenpreference in the renewal and executionof a new contract providing that theexisting concessioner submits aresponsive offer (a timely offer whichmeets the terms and conditions of theProspectus). This means that thecontract will be awarded to the partysubmitting the best offer, provided thatif the best offer was not submitted bythe existing concessioner, then theexisting concessioner will be affordedthe opportunity to match the best offer.If the existing concessioner agrees tomatch the best offer, then the contractwill be awarded to the existingconcessioner.If the existing concessioner does notsubmit a responsive offer, the right ofpreference in renewal shall beconsidered to have been waived, andthe contract will then be awarded to theparty that has submitted the bestresponsive offer.The Secretary will consider andevaluate all proposals received as aresult of this notice.The cost for purchasing a prospectusis $30.00. Parties interested in obtaininga copy should send a check payable to‘‘National Park Service’’ to the followingaddress: National Park Service, Office ofConcession Program Management,Pacific Great Basin Support Office, 600Harrison St., Suite 600, San Francisco,California 94107–1372. The front of theenvelope should be marked ‘‘Attention:Office of Concession ProgramManagement—Mail Room Do NotOpen’’. Please include a mailing addressindicating where to send the prospectus.Inquiries may be directed to Ms. TeresaJackson, Secretary, Office of ConcessionProgram Management at (415) 744–3981.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6267Dated: January 21, 1997.Patricia L. Neubacher,Acting Field Director, Pacific West Area.[FR Doc. 97–3246 Filed 2–10–97; 8:45 am]BILLING CODE 4310–70–PFinal General Management Plans/Environmental Impact Statements,Manhattan Sites, New York; Notice ofAvailability of Final Plans andEnvironmental Impact StatementsPursuant to Council onEnvironmental Quality regulations andNational Park Service policy, theNational Park Service (NPS) announcesthe release of the Final GeneralManagement Plans/EnvironmentalImpact Statements, Manhattan Sites,New York. The National Park Service,Manhattan Sites, New York, hasprepared the Final General ManagementPlans/Environmental Impact Statementsfor the park unit. These plans providethe analysis necessary to determine thealternatives for future management anduse of each of the sites including CastleClinton National Monument, FederalHall and General Grant NationalMemorials, and Saint Paul’s Church andTheodore Roosevelt Birthplace NationalHistoric Sites, New York andWestchester Counties, New York. Inaccordance with section 102(2)(C) of theNational Environmental Policy Act of1969, the National Park Service isrequired to prepare an environmentalimpact statement to assess the impactsof the proposed action(s). The NationalPark Service is the responsible federalagency.The 45-day no-action periodfollowing the Environmental ProtectionAgency notice of availability of the finalEnvironmental Impact Statement willend March 31, 1997. At that time, aRecord of Decision will be prepared,and released soon thereafter.FOR FURTHER INFORMATION CONTACT:Superintendent, Joseph T. Avery,Manhattan Sites, National Park Service,26 Wall Street, New York, NY 10005(212–825–6990).SUPPLEMENTARY INFORMATION:Alternatives for future management anduse of each of the sites listed (CastleClinton National Monument, FederalHall and General Grant NationalMemorials, and Saint Paul’s Church andTheodore Roosevelt Birthplace NationalHistoric Sites, New York andWestchester Counties, New York) arepresented and analyzed in the finaldocument. Under each site there is a‘‘no-action’’ alternative that presents acontinuation of existing trends andmanagement, meets the minimumrequirements, and provides a basis toevaluate the other alternatives. Threealternatives are proposed for CastleClinton National Monument whichrange from continuing existingconditions, provisions for a new Statueof Liberty/Ellis Island ticketing salesstructure outside of the fort, and onealternative analyzing preservation of theold fort walls while providing for anauditorium and seating for theperforming arts at the site. At FederalHall, three alternatives are proposedwhich range from continuing existingmanagement, to preserving andrestoring the structure and installing avisitor information center, to convertingthe use of Federal Hall exclusively tothe public and for collection storage,with a state-of-the-art visitorinformation center and the relocation ofoffices to another facility. The proposalsfor General Grant National Memorialinclude three alternatives which rangedfrom providing for the rehabilitation,security, and maintenance of thestructure and site, to restoring thestructure and site to the original designintent of the architect and continuinginterpretation through handbooks andoccasional living history programs, topreserving the tomb and site as they areand building a visitor center in thepavilion across Riverside Drive. At SaintPaul’s Church National Historic Site,two alternatives are proposed whichrange from continuing the interpretiveprograms and existing site managementthrough the cooperators, to changingpark management to the National ParkService with assistance from thecooperating association and renting afacility for curatorial storage andpreservation. Three alternatives areproposed for Theodore RooseveltBirthplace National Historic Site whichinclude the continuation of interpretiveand site/resource preservation, toinstalling a central air-conditioningsystem and a closet elevator from thethird to fourth floor.For copies of the Final GeneralManagement Plans/Final EnvironmentalImpact Statements for the ManhattanSites, New York, please contact theSuperintendent at the above address.Dated: February 4, 1997.Joseph T. Avery,Superintendent, Manhattan Sites.[FR Doc. 97–3247 Filed 2–10–97; 8:45 am]BILLING CODE 4310–70–PAvailability of a Plan of Operations andEnvironmental Assessment for a Planof Operations; Williams Field ServicesCompany, North Padre Island LateralNatural Gas Pipeline, Padre IslandNational Seashore, Kenedy County,TexasThe National Park Service hasreceived from Williams Field ServicesCompany, a Plan of Operations for theexisting North Padre Island LateralNatural Gas Pipeline at Padre IslandNational Seashore, Kenedy County,Texas.Pursuant to § 9.52(b) of Title 36 of theCode of Federal Regulations, Part 9,Subpart B (36 CFR 9B); the Plan ofOperations and EnvironmentalAssessment are available for publicreview and comment for a period of 30days from the publication date of thisnotice in the Office of theSuperintendent, Padre Island NationalSeashore, 9405 South Padre IslandDrive, Corpus Christi, Texas. Copies ofthe documents are available from theSuperintendent, Padre Island NationalSeashore, 9405 South Padre IslandDrive, Corpus Christi, Texas 78418, andwill be sent upon request.Dated: February 3, 1997.Patrick C. McCrary,Superintendent, Padre Island NationalSeashore.[FR Doc. 97–3245 Filed 2–10–97; 8:45 am]BILLING CODE 4310–70–PSubsistence Resource CommissionmeetingSUMMARY: The Superintendent of DenaliNational Park and the Chairperson ofthe Subsistence Resource Commissionfor Denali National Park announce aforthcoming meeting of the DenaliNational Park Subsistence ResourceCommission.The following agenda items will bediscussed:(1) Call to order by Chair.(2) Roll call and confirmation ofquorum.(3) Superintendent’s welcome andintroductions.(4) Approval of minutes of last meeting.(5) Additions and corrections to agenda.(6) Old business:a. Wildlife studies.b. NPS Subsistence Issue Paper report.c. Park planning and North Accessupdates.(7) New business:a. Federal subsistence proposals.b. Regional Advisory Council actions.c. Denali subsistence resourcemanagement plan.(8) Public and other agency comments.

6268 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices(9) Determine time and date of nextmeeting.(10) Adjourn.DATES: The meeting will be held Friday,February 28, 1997. The meeting willbegin at 9 a.m. and conclude around 6p.m.LOCATION: The meeting will be held atthe Healy Community Center, Healy,Alaska.FOR FURTHER INFORMATION CONTACT:Steve Martin, Superintendent, DenaliNational Park and Preserve, PO Box 9,Denali Park, Alaska 99755. Phone (907)683–2294.SUPPLEMENTARY INFORMATION: TheSubsistence Resource Commissions areauthorized under Title VIII, Section 808,of the Alaska National Interest LandsConservation Act, Pub. L. 96–487, andoperate in accordance with theprovisions of the Federal AdvisoryCommittees Act.Paul R. Anderson,Acting Field Director.[FR Doc. 97–3249 Filed 2–10–97; 8:45 am]BILLING CODE 4310–70–MSubsistence Resource CommissionMeetingSUMMARY: The Superintendent ofWrangell-St. Elias National Park and theChairperson of the Subsistence ResourceCommission for Wrangell-St. EliasNational Park announce a forthcomingmeeting of the Wrangell-St. EliasNational Park Subsistence ResourceCommission.The following agenda items will bediscussed:(1) Introduction of Commissionmembers and guests.(2) Review of SRC function andpurpose.(3) Review and approval of minutes ofDecember 5–6, 1996 meeting.(4) Superintendent’s report.(5) Commission membership status.(6) Election of officers.(7) Public and other agency comments.(8) Old business:a. Federal Subsistence Programupdate.b. Review 1997–98 subsistencehunting proposals and analysis.c. Review draft rulemaking to addNorthway, Tetlin, Dot Lake andTanacross as resident zonecommunities.d. Review draft SRC Subsistence Plan.e. NPS Subsistence Issue Paperreview.(9) New business.(10) Set time and place of next SRCmeeting.DATES: The meeting will be heldTuesday and Wednesday, February 25–26, 1997. The meeting will begin at 9a.m. and conclude around 5 p.m. eachday.LOCATION: The meeting will be held atthe Caribou Cafe, Glennallen, Alaska.FOR FURTHER INFORMATION CONTACT:Jonathan Jarvis, Superintendent,Wrangell-St. Elias National Park andPreserve, PO Box 439, Copper Center,Alaska 99573. Phone (907) 822–5234.SUPPLEMENTARY INFORMATION: TheSubsistence Resource Commissions areauthorized under Title VIII, Section 888,of the Alaska National Interest LandsConservation Act, Pub. L. 96–487, andoperate in accordance with theprovisions of the Federal AdvisoryCommittees Act.Paul R. Anderson,Acting Field Director.[FR Doc. 97–3250 Filed 2–10–97; 8:45 am]BILLING CODE 4310–70–MNational Register of Historic Places;Notification of Pending NominationsNominations for the followingproperties being considered for listingin the National Register were receivedby the National Park Service beforeFebruary 1, 1997. Pursuant to section60.13 of 36 CFR Part 60 writtencomments concerning the significanceof these properties under the NationalRegister criteria for evaluation may beforwarded to the National Register,National Park Service, P.O. Box 37127,Washington, D.C. 20013–7127. Writtencomments should be submitted byFebruary 26, 1997.Beth Boland,Acting Keeper of the National Register.COLORADOJefferson CountyRio Grande Southern Railroad, Motor No. 7,17155 W. 44th Ave., Golden vicinity,97000161FLORIDALeon CountyVan Brunt House, FL 59, N of jct. withMoccasin Gap Rd., Miccosukee, 97000162KENTUCKYClark CountyOwen—Gay Farm, Gay Rd., jct. withDonaldson Rd. at the Bourbon—Clark Co.line, Winchester vicinity, 97000163NEW YORKSuffolk CountyBig Duck, The, NY 24, NW of jct. withBellows Pond Rd., Town of Southampton,Flanders vicinity, 97000164NORTH CAROLINAMoore CountyLincoln Park School, 1272 S. Currant St.,Pinebluff vicinity, 97000167New Hanover CountyAddress Restricted, Homesite (31Nh95**1),Carolina Beach vicinity, 97000165Address restricted, Newton Homesite andCemetery, Carolina Beach vicinity,97000166Wake CountyBen—Wiley Hotel (Wake County MPS), 331S. Main St., Fuquay-Varina, 97000195NORTH DAKOTAAdams CountyCedar Creek Bridge (Historic RoadwayBridges of North Dakota MPS) AcrossCedar Cr., unnamed co. rd., approximately6 mi. N and 11 mi. E of Haynes, Haynesvicinity, 97000168Barnes CountyRainbow Arch Bridge (Historic RoadwayBridges of North Dakota MPS) Main St., E,across the Sheyenne River, Valley City,97000170West Park Bridge (Historic Roadway Bridgesof North Dakota MPS) 4th St., SW, acrossthe Sheyenne River, Valley City, 97000169Benson CountyWest Antelope Bridge (Historic RoadwayBridges of North Dakota MPS) Across theSheyenne River, unnamed co. rd.,approximately 30 mi. SE of jct. of ND 30and US 2, Flora vicinity, 97000171Burleigh CountyLiberty Memorial Bridge (Historic RoadwayBridges of North Dakota MPS) I–94,Business Loop, across the Missouri River,Bismark, 97000172Foster CountyGrace City Bridge (Historic Roadway Bridgesof North Dakota MPS) Across the JamesRiver, unnamed co. rd., 1 mi. SW of GraceCity, Grace City vicinity, 97000174Grand Forks CountyMidway Bridge (Historic Roadway Bridges ofNorth Dakota MPS) Across an unnamedcreek, unnamed co. rd., approximately 1.5mi. S and 2 mi. W of Johnstown,Johnstown vicinity, 97000176Northwood Bridge (Historic Roadway Bridgesof North Dakota MPS) Across the GooseRiver, unnamed co. rd., 1.5 mi. SW ofNorthwood, Northwood vicinity, 97000175Ost Valle Bridge (Historic Roadway Bridgesof North Dakota MPS) Across an unnamedtributary of the Red River, unnamed co. rd.,approximately 6 mi. E and 1 mi. N ofThompson, Thompson vicinity, 97000178Griggs CountyRomness Bridge (Historic Roadway Bridgesof North Dakota MPS) Across the SheyenneRiver, unnamed co. rd., approximately 8mi. N and 1 mi. E of Cooperstown,Cooperstown vicinity, 97000179

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6269McHenry CountyElliott Bridge (Historic Roadway Bridges ofNorth Dakota MPS) Across the SourisRiver, unnamed co. rd., approximately 4mi. N of Towner, Towner vicinity,97000181Westgaard Bridge (Historic Roadway Bridgesof North Dakota MPS) Across the SheyenneRiver, unnamed co. rd., approximately 6mi. N and 1 mi. E of Voltaire, Voltairevicinity, 97000180Mountrail CountyGreat Northern Railway Underpass (HistoricRoadway Bridges of North Dakota MPS)Burlington Northern Santa Fe Railwaytracks, over ND 8, N end of Stanley,Stanley, 97000182Nelson CountyNesheim Bridge (Historic Roadway Bridges ofNorth Dakota MPS) Across the SheyenneRiver, unnamed co. rd., approximately 2mi. SW of McVille, McVille vicinity,97000185Ransom CountyColton’s Crossing Bridge (Historic RoadwayBridges of North Dakota MPS) Across theSheyenne River, unnamed co. rd.,approximately 2 mi. S and 2 mi. E ofLisbon, Lisbon vicinity, 97000186Lisbon Bridge (Historic Roadway Bridges ofNorth Dakota MPS) Across the SheyenneRiver, ND 32, N end of Lisbon, Lisbon,97000184Steele CountyBeaver Creek Bridge (Historic RoadwayBridges of North Dakota MPS) AcrossBeaver Creek, unnamed co. rd.,approximately 13 mi. E and 4 mi. N ofFinley, Finley vicinity, 97000183Stutsman CountyMidland Continental Overpass (HistoricRoadway Bridges of North Dakota MPS)Over abandoned railroad grade, former US10, approximately 7 mi. E of Jamestown,Jamestown vicinity, 97000194Traill CountyBlanchard Bridge (Historic Roadway Bridgesof North Dakota MPS) Across the ElmRiver, unnamed co. rd., approximately .5mi. S of Blanchard, E of ND 18, Blanchardvicinity, 97000189Caledonia Bridge (Historic Roadway Bridgesof North Dakota MPS) Across the GooseRiver, unnamed co. rd., approximately 1mi. W of the Minnesota state line,Caledonia vicinity, 97000188Goose River Bridge (Historic RoadwayBridges of North Dakota MPS) Across theGoose River, unnamed co. rd.,approximately 6 mi. E and 1 mi. N ofHillsboro, Hillsboro vicinity, 97000187Norway Bridge (Historic Roadway Bridges ofNorth Dakota MPS) Across the GooseRiver, unnamed co. rd., approximately 6mi. E and 3 mi. S of Mayville, Mayvillevicinity, 97000192Porter Elliott Bridge (Historic RoadwayBridges of North Dakota MPS) Across theSheyenne River, unnamed co. rd.,approximately 5 mi. E and 1 mi. N ofHillsboro, Hillsboro vicinity, 97000193Portland Park Bridge (Historic RoadwayBridges of North Dakota MPS) Across theS branch of the Goose River, unnamed co.rd., NE edge of Portland, Portland vicinity,97000191Viking Bridge (Historic Roadway Bridges ofNorth Dakota MPS) Across the GooseRiver, unnamed co. rd., approximately 1mi. NW of Portland, Portland vicinity,97000190OHIOFranklin CountyMasonic Temple, 34 N. 4th St., Columbus,97000201Hocking CountySaint John the Evangelist Catholic ChurchComplex, 351 N. Market St., Logan,97000200Sandusky CountySandusky County Jail and Sheriff’s House,622 Croghan St., Fremont, 97000198Tuscarawas CountyZoarville Bridge, Across the Conotton Cr., Sof jct. of OH 212 and OH 800, Zoarvillevicinity, 97000199OKLAHOMAComanche CountyLawton High School, 809 C Ave., Lawton,97000197Dewey CountyMcAllister House, 311 N. Locust St., Seiling,97000196SOUTH DAKOTAClay CountyNew Rockford Bridge (Historic RoadwayBridges of North Dakota MPS) Across theJames River, unnamed co. rd., jct. with ND15, New Rockford vicinity, 97000173TEXASEl Paso CountySan Elizario Historic District, Roughlybounded by Rio Grande St., Socorro andConvent Rds., and the San Elizario Lateral,San Elizario, 97000205Harris CountyWunderlich, Peter and Sophie, Farm, 18202Theiss Mill Rd., Klein, 97000202VIRGINIANorthumberland CountyVersailles, VA 360, .25 mi. W of jct. with VA200, Burgess vicinity, 97000204Portsmouth Independent City CommodoreTheatre, 421 High St., Portsmouth,97000203[FR Doc. 97–3377 Filed 2–10–97; 8:45 am]BILLING CODE 4310–70–PINTERNATIONAL DEVELOPMENTCOOPERATION AGENCYAgency for International DevelopmentRenewal of the Advisory Committee onVoluntary Foreign AidAGENCY: United States Agency forInternational Development.ACTION: Notice of renewal of advisorycommittee.SUMMARY: Pursuant to the FederalAdvisory Committee Act, theAdministrator has determined thatrenewal of the Advisory Committee onVoluntary Foreign Aid for a two-yearperiod, beginning January 1, 1997, isnecessary and in the public interest.FOR FURTHER INFORMATION CONTACT:Elise Storck, (703) 351–0204.Dated: January 6, 1997.Astrid Jimenez,Special Assistant, Legal Counsel, Office ofthe General Counsel.[FR Doc. 97–3365 Filed 2–10–97; 8:45 am]BILLING CODE 6116–01–MJUDICIAL CONFERENCE OF THEUNITED STATESMeeting of the Judicial ConferenceAdvisory Committee on Rules ofBankruptcy ProcedureAGENCY: Judicial Conference of theUnited States Advisory Committee onRules of Bankruptcy Procedure.ACTION: Notice of open meeting.SUMMARY: The Advisory Committee onRules of Bankruptcy Procedure willhold a two-day meeting. The meetingwill be open to public observation butnot participation and will be held eachday from 8:30 a.m. to 5:00 p.m.DATES: March 13–14, 1997.ADDRESSES: The Mills House Hotel,Meeting and Queen Streets, Charleston,South Carolina.FOR FURTHER INFORMATION CONTACT: JohnK. Rabiej, Chief, Rules CommitteeSupport Office, Administrative Office ofthe United States Courts, Washington,D.C. 20544, telephone (202) 273–1820.Dated: February 4, 1997.John K. Rabiej,Chief, Rules Committee Support Office.[FR Doc. 97–3270 Filed 2–10–97; 8:45 am]BILLING CODE 2210–01–M

6270 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesMeeting of the Judicial ConferenceAdvisory Committee on Rules of CivilProcedureAGENCY: Judicial Conference of theUnited States, Advisory Committee onRules of Civil Procedure.ACTION: Notice of open meeting.SUMMARY: The Advisory Committee onRules of Civil Procedure will hold atwo-day meeting. The meeting will beopen to public observation but notparticipation and will be held each dayfrom 3:30 p.m. to 5:00 p.m.DATES: March 20–21, 1997.ADDRESSES: The University of AlabamaSchool of Law, 101 Paul Bryant Drive,Tuscaloosa, Alabama.FOR FURTHER INFORMATION CONTACT:John K. Rabiej, Chief, Rules CommitteeSupport Office, Administrative Office ofthe United States Courts, Washington,D.C. 20544, telephone (202) 273–1820.Dated: February 4, 1997.John K. Rabiej,Chief, Rules Committee Support Office.[FR Doc. 97–3271 Filed 2–10–97; 8:45 am]BILLING CODE 2210–01–MMeeting of the Judicial ConferenceAdvisory Committee on Rules ofAppellate ProcedureAGENCY: Judicial Conference of theUnited States, Advisory Committee onRules of Appellate Procedure.ACTION: Notice of open meeting.SUMMARY: The Advisory Committee onRules of Appellate Procedure will holda two-day meeting. The meeting will beopen to public observation but notparticipation and will be held each dayfrom 8:30 a.m. to 5:00 p.m.DATES: April 3–4, 1997.ADDRESSES: Thurgood Marshall FederalJudiciary Building, Judicial ConferenceCenter, One Columbus Circle, NE.,Washington, DC.FOR FURTHER INFORMATION CONTACT: JohnK. Rabiej, Chief, Rules CommitteeSupport Office, Administrative Office ofthe United States Courts, Washington,DC 20544, telephone (202) 273–1820.Dated: February 4, 1997.John K. Rabiej,Chief, Rules Committee Support Office.[FR Doc. 97–3272 Filed 2–10–97; 8:45 am]BILLING CODE 2210–01–MMeeting of the Judicial ConferenceAdvisory Committee on Rules ofCriminal ProcedureAGENCY: Judicial Conference of theUnited States, Advisory Committee onRules of Criminal Procedure.ACTION: Notice of open meeting.SUMMARY: The Advisory Committee onRules of Criminal Procedure will hold atwo-day meeting. The meeting will beopen to public observation but notparticipation and will be held each dayfrom 8:30 a.m. to 5:00 p.m.DATES: April 7–8, 1997.ADDRESSES: Thurgood Marshall FederalJudiciary Building, Judicial ConferenceCenter, One Columbus Circle, N.E.,Washington, DC.FOR FURTHER INFORMATION CONTACT: JohnK. Rabiej, Chief, Rules CommitteeSupport Office, Administrative Office ofthe United States Courts, Washington,D.C. 20544, telephone (202) 273–1820.Dated: February 4, 1997.John K. Rabiej,Chief, Rules Committee Support Office.[FR Doc. 97–3273 Filed 2–10–97; 8:45 am]BILLING CODE 2210–01–MMeeting of the Judicial ConferenceAdvisory Committee on Rules ofEvidenceAGENCY: Judicial Conference of theUnited States, Advisory Committee onRules of Evidence.ACTION: Notice of open meeting.SUMMARY: The Advisory Committee onRules of Evidence will hold a two-daymeeting. The meeting will be open topublic observation but not participationand will be held each day from 8:30a.m. to 5:00 p.m.DATES: April 14–15, 1997.ADDRESSES: Thurgood Marshall FederalJudiciary Building, Judicial ConferenceCenter, One Columbus Circle, N.E.,Washington, DC.FOR FURTHER INFORMATION CONTACT: JohnK. Rabiej, Chief, Rules CommitteeSupport Office, Administrative Office ofthe United States Courts, Washington,D.C. 20544, telephone (202) 273–1820.Dated: February 4, 1997.John K. Rabiej,Chief, Rules Committee Support Office.[FR Doc. 97–3274 Filed 2–10–97; 8:45 am]BILLING CODE 2210–01–MMeeting of the Judicial ConferenceAdvisory Committee on Rules of CivilProcedureAGENCY: Judicial Conference of theUnited States, Advisory Committee onRules of Civil Procedure.ACTION: Notice of open meeting.SUMMARY: The Advisory Committee onRules of Civil Procedure will hold atwo-day meeting. The meeting will beopen to public observation but notparticipation and will be held each dayfrom 8:30 a.m. to 5:00 p.m.DATES: May 1–2, 1997.ADDRESSES: La Playa Hotel, 9891 GulfShore Drive, Naples, Florida.FOR FURTHER INFORMATION CONTACT:John K. Rabiej, Chief, Rules CommitteeSupport Office, Administrative Office ofthe United States Courts, Washington,DC 20544, telephone (202) 273–1820.Dated: February 4, 1997.John K. Rabiej,Chief, Rules Committee Support Office.[FR Doc. 97–3275 Filed 2–10–97; 8:45 am]BILLING CODE 2210–01–MDEPARTMENT OF JUSTICEImmigration and Naturalization ServiceAgency Information CollectionActivities: Proposed Collection;Comment RequestACTION: Revision of existing collection;application for asylum and withholdingof removal.The Department of Justice,Immigration and Naturalization Servicehas submitted the following informationcollection request for review andclearance in accordance with thePaperwork Reduction Act of 1995. Theproposed information collection ispublished to obtain comments from thepublic and affected agencies. Commentsare encouraged and will be accepteduntil April 14, 1997.Written comments and suggestionsfrom the public and affected agenciesconcerning the proposed collection ofinformation should address one or moreof the following four points:(1) Evaluate whether the proposedcollection of information is necessaryfor the proper performance of thefunctions of the agency, includingwhether the information will havepractical utility;(2) Evaluate the accuracy of theagencies estimate of the burden of theproposed collection of information,including the validity of themethodology and assumptions used;

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6271(3) Enhance the quality, utility, andclarity of the information to becollected; and(4) Minimize the burden of thecollection of information on those whoare to respond, including through theuse of appropriate automated,electronic, mechnical, or othertechnological collection techniques orother forms of information technology,e.g., permitting electronic submission ofresponses.Overview of this informationcollection:(1) Type of Information Collection:Revision of a currently approvedcollection.(2) Title of the Form/Collection:Application for Asylum andWithholding of Removal.(3) Agency form number, if any, andthe applicable component of theDepartment of Justice sponsoring thecollection: Form I–589. Office ofInternational Affairs, Asylum Division,Immigration and Naturalization Service.(4) Affected public who will be askedor required to respond, as well as a briefabstract: Primary: Individuals orHouseholds. The information collectedis used by the INS and EOIR to accesseligibility of persons applying forasylum and withholding of deportation.(5) An estimate of the total number ofrespondents and the amount of timeestimated for an average respondent torespond: 80,000 responses at three andone half (3.5) hours per response.(6) An estimate of the total publicburden (in hours) associated with thecollection: 280,000 annual burdenhours.If you have additional comments,suggestions, or need a copy of theproposed information collectioninstrument with instructions, oradditional information, please contactRichard A. Sloan 202–616–7600,Director, Policy Directives, andInstructions Branch, Immigrataion andNaturalization Service, U.S. Departmentof Justice, Room 5307, 425 I Street, NW.,Washington, DC 20536. Additionally,comments and/or suggestions regardingthe item(s) contained in this notice,especially regarding the estimatedpublic burden and associated responsetime may also be directed to Mr.Richard A. Sloan.If additional information is requiredcontact: Mr. Robert B. Briggs, ClearanceOfficer, United States Department ofJustice, Information Management andSecurity Staff, Justice ManagementDivision, Suite 850, Washington Center,1001 G Street, NW, Washington, DC20530.Dated: February 6, 1997.Robert B. Briggs,Department Clearance Officer, United StatesDepartment of Justice.[FR Doc. 97–3392 Filed 2–10–97; 8:45 am]BILLING CODE 4410–18–MAgency Information CollectionActivities; Extension of ExistingCollection; Comment RequestACTION: Notice of information collectionunder review; report of complaint.Office of Management and Budget(OMB) approval is being sought for theinformation collection listed below.This proposed information collectionwas previously published in the FederalRegister on November 14, 1996 at 61 FR58425, allowing for a 60-day publiccomment period. No comments werereceived by the Immigration andNaturalization Service. The purpose ofthis notice is to allow an additional 30days for public comments from the datelisted at the top of this page in theFederal Register. This process isconducted in accordance with 5 CFRPart 1320.10.Written comments and/or suggestionsregarding the item(s) contained in thisnotice, especially regarding theestimated public burden and associatedresponse time, should be directed to theOffice of Management and Budget,Office of Regulatory Affairs, Attention:Department of Justice Desk Officer,Washington, DC 20530. Additionally,comments may be submitted to OMB viafacsimile to 202–395–7285. Commentsmay also be submitted to theDepartment of Justice (DOJ), JusticeManagement Division, InformationManagement and Security Staff,Attention: Department ClearanceOfficer, Suite 850, 1001 G Street, NW.,Washington, DC 20530. Additionally,comments may be submitted to DOJ viafacsimile to 202–514–1534.Written comments and suggestionsfrom the public and affected agenciesshould address one or more of thefollowing points:(1) Evaluate whether the proposedcollection of information is necessaryfor the proper performance of thefunctions of the agency/component,including whether the information willhave practical utility;(2) Evaluate the accuracy of theagencies/components estimate of theburden of the proposed collection ofinformation, including the validity ofthe methodology and assumptions used;(3) Enhance the quality, utility, andclarity of the information to becollected; and(4) Minimize the burden of thecollection of information on those whoare to respond, including through theuse of appropriate automated,electronic, mechanical, or othertechnological collection techniques orother forms of information technology,e.g., permitting electronic submission ofresponses.Overview of this InformationCollection:(1) Type of information collection;Extension of a currently approvedcollection.(2) The title of the form/collection:Report of Complaint.(3) The agency form number, if any,and the applicable component of theDepartment sponsoring the collection:Form I–847. Border Patrol Division,Immigration and Naturalization Service.(4) Affected public who will be askedor required to respond, as well as a briefabstract: Primary: Individuals orHouseholds. This information collectionis used by the Immigration andNaturalization Service (INS) to establisha record of complaint and to initiate aninvestigation of misconduct by anofficer of the INS.(5) An estimate of the total number ofrespondents and the amount of timeestimated for an average respondent torespond: 250 responses at 15 minutesper response.(6) An estimate of the total publicburden (in hours) associated with thecollection: 62.5 annual burden hours.If additional information is requiredcontact: Mr. Robert Briggs, ClearanceOfficer, United States Department ofJustice, Information Management andSecurity Staff, Justice ManagementDivision, Suite 850, Washington Center,1001 G Street, NW., Washington, DC20530.Dated February 6, 1997.Robert B. Briggs,Department Clearance Officer, United StatesDepartment of Justice.[FR Doc. 97–3391 Filed 1–10–97; 8:45 am]BILLING CODE 4410–18–MAgency Information CollectionActivities: New Collection; CommentRequestACTION: Request OMB emergencyapproval; Certificate of eligibility fornonimmigrant student (F–1/M–1) statusfor academic, language and vocationstudents (Pilot).The Department of Justice,Immigration and Naturalization Servicehas submitted the following informationcollection request (ICR) utilizingemergency review procedures, to the

6272 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesOffice of Management and Budget(OMB) for review and clearance inaccordance with the PaperworkReduction Act of 1995. OMB approvalhas been requested by February 14,1997. If granted, the emergencyapproval is only valid for 180 days.Comments should be directed to OMB,Office of Information and RegulatoryAffairs, Attention: Ms. Debra Bond,202–395–7316, Department of JusticeDesk Officer, Washington, DC 20503.During the first 60 days of this sameperiod a regular review of thisinformation collection is also beingundertaken. Comments are encouragedand will be accepted until April 14,1997. Written comments andsuggestions from the public and affectedagencies concerning the proposedcollection of information should addressone or more of the following four points:(1) Evaluate whether the proposedcollection of information is necessaryfor the proper performance of thefunctions of the agency, includingwhether the information will havepractical utility.(2) Evaluate the accuracy of theagencies estimate of the burden of theproposed collection of information,including the validity of themethodology and assumptions used;(3) Enhance the quality, utility, andclarity of the information to becollected; and(4) Minimize the burden of thecollection of information on those whoare to respond, including through theuse of appropriate automated,electronic, mechanical, or othertechnological collection techniques orother forms of information technology;e.g., permitting electronic submission ofresponses.If you have additional comments,suggestions, or need a copy of theproposed information collectioninstrument with instructions, oradditional information, please contactRichard A. Sloan 202–616–7600,Director, Policy Directives andInstructions Branch, Immigration andNaturalization Service, U.S. Departmentof Justice, Room 5307, 425 I Street, NW.,Washington, DC 20536. Additionally,comments and/or suggestions regardingthe item(s) contained in this notice,especially regarding the estimatedpublic burden and associated responsetime may also be directed to Mr.Richard A. Sloan.Overview of this informationcollection:(1) Type of Information Collection:New Information Collection.(2) Title of the Form/Collection:Certificate of Eligibility forNonimmigrant Student (F–1/M–1)Status for Academic, Language andVocational Students (Pilot).(3) Agency form number, if any, andthe applicable component of theDepartment of Justice sponsoring thecollection: Form I–20P. AdjudicationsDivision, Immigration andNaturalization Service.(4) Affected public who will be askedor required to respond, as well as a briefabstract: Primary: Not-for-profitinstitutions, Business or other for profit.The information collection is used bythe INS to electronically collect andsubmit information in a limited pilotenvironment, from nonimmigrantstudents attending schools in the U.S. inorder that INS can monitor the students’immigration status and ensure that thestudents maintain the conditionsimposed by their nonimmigrant statuswhile attending school.(5) An estimate of the total number ofrespondents and the amount of timeestimated for an average respondent torespond: 20,000 responses at 30 minutesper response.(6) An estimate of the total publicburden (in hours) associated with thecollection: 10,000.If additional information is requiredcontact: Mr. Robert B. Briggs, ClearanceOfficer, United States Department ofJustice, Information Management andSecurity Staff, Justice ManagementDivision, Suite 850, Washington Center,1001 G Street, NW, Washington, DC20530.Dated: February 6, 1997.Robert B. Briggs,Department Clearance Officer, United StatesDepartment of Justice.[FR Doc. 97–3393 Filed 2–10–97; 8:45 am]BILLING CODE 4410–18–MDEPARTMENT OF LABOREmployment and TrainingAdministrationJob Training Partnership Act: Migrantand Seasonal Farmworker Programs;Application of Waiver Provision, andSolicitation for Grant ApplicationAGENCY: Employment and TrainingAdministration, Labor.ACTION: Notice of the application of thewaiver from the requirement forcompetition of migrant and seasonalfarmworker grants every two years, andnotice of solicitation for grantapplications (SGA) for funding ofmigrant and seasonal farmworkertraining and employment programs infive State service areas.SUMMARY: This action concerns fundingof the Migrant and SeasonalFarmworker grants authorized undersection 402 of the Job TrainingPartnership Act (29 U.S.C. 1672). TheDepartment of Labor (DOL orDepartment) announces that for stateservice areas currently served bygrantees that are performingsatisfactorily, the Department isexercising its option to waivecompetition for the second two-yearfunding period of the current four-yearfunding cycle that began with the 1995Program Year (PY) on July 1, 1995.The State service areas for whichcompetition is not waived areMinnesota, Mississippi, North Dakota,Puerto Rico, and South Dakota. Sincecompetition is not waived for theseareas, this notice solicits proposals forgrant applications from qualifyingorganizations to serve these areas duringProgram Years 1997 and 1998 (July 1,1997 through June 30, 1999). Applicantsselected will be designated as granteesfor these five areas for PYs 1997 and1998 (July 1, 1997 through June 30,1999). For the purpose of thissolicitation, Preapplication for FederalAssistance (SF 424) will be included inthe application package as opposed tobeing submitted as a separate andpreceding document.DATES: Applications for GrantAgreements shall be submitted bycertified or registered mail, returnreceipt requested, and postmarked nolater than April 14, 1997. Applicationssubmitted by hand-delivery will beaccepted daily between the hours of8:15 a.m. and 4:45 p.m., Eastern Time,but no later than 4:45 p.m., EasternTime, on April 14, 1997.No exceptions to the mailing andhand-delivery conditions set forth inthis notice will be granted. Fundingapplications failing to meet theconditions set forth in this notice willnot be accepted.ADDRESSES: Funding applications shallbe mailed or hand-delivered to JamesDeLuca, Grant Officer, ETA, 200Constitution Avenue, NW., Room S–4203, Washington, DC 20210.FOR FURTHER INFORMATION CONTACT:Charles C. Kane, Chief, Division ofSeasonal Farmworker Programs, 200Constitution Avenue, NW., Room N–4641, Washington, DC 20210. Phone:(202) 219–5500 (this is not a toll-freenumber). E-mail:KANEC@DOLETA.GOV.A. Notice of Waiver of CompetitionThe Department announces that it iswaiving the requirement to conduct acompetition for grants to serve migrant

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6273and seasonal farmworkers during the1997 and 1998 Program Years underSection 402 of the Job TrainingPartnership Act for all grantees exceptthose serving Minnesota, Mississippi,North Dakota, Puerto Rico, and SouthDakota.This waiver is exercised inaccordance with JTPA section 402(c)(2)which states as follows:The competition for grants under thissection shall be conducted every 2 years,except that if a recipient of such a grant hasperformed satisfactorily under the terms ofthe existing grant agreement, the Secretarymay waive the requirement for suchcompetition upon receipt from the recipientof a satisfactory 2-year grant period.This waiver applies to the‘‘succeeding 2-year grant’’ period of thefour year funding cycle that began July1, 1995. Grants for the first 2-year grantperiod covering PYs 1995 and 1996(July 1, 1995 through June 30, 1997)were competed through a solicitation forgrant agreements for every State servicearea.The Department has determined thatthere are three grantees that have notperformed satisfactorily during thecurrent Program Year. These granteesoperate Section 402 migrant andseasonal farmworker grant programs inthe five State service areas of Minnesota,Mississippi, North Dakota, Puerto Ricoand South Dakota. Since the waiverdoes not apply to these five areas, theDepartment seeks qualifying grantees foroperating programs in these five areasunder the Solicitation that follows.B. Solicitation for Grant AgreementsThis notice provides instructionsconsisting of: Part I—Introduction; andPart II—Solicitation for GrantApplication (SGA). Part II constitutesinvitations from the Department forpublic agencies, and private nonprofitorganizations authorized by theirCharters or Articles of Incorporation toprovide training and employment andother services described in this notice,to submit funding applications foroperating migrant and seasonalfarmworker programs during PY 1997 inMinnesota, Mississippi, North Dakota,Puerto Rico and South Dakota.Part I—Introduction and BackgroundJTPA, 29 U.S.C. 1501 et seq.,establishes programs to prepare youthand unskilled adults for entry into thelabor force, and to afford job training tothose economically disadvantagedindividuals and others facing seriousbarriers to employment who are inspecial need of such training to obtainproductive employment. Theregulations promulgated by DOL toimplement JTPA are set forth at parts626 through 638 of Title 20, Code ofFederal Regulations (CFR).The purpose of section 402 of JTPA,as set forth at 29 U.S.C. 1672 and 20CFR 633.102, is to provide job training,employment opportunities, and otherservices for those individuals who sufferchronic seasonal unemployment andunderemployment in the agricultureindustry. These conditions have beensubstantially aggravated by continualadvancements in technology andmechanization resulting indisplacement and contributesignificantly to the Nation’s ruralemployment problem. These factorssubstantially affect the entire nationaleconomy. Because of the special natureof farmworker employment and trainingproblems, such programs are centrallyadministered at the national level.Programs and activities supported underthis section shall, in accordance withsection 402(c)(3) of JTPA:(1) Enable farmworkers and theirdependents to obtain or retainemployment;(2) Allow participation in otherprogram activities leading to theireventual placement in unsubsidizedagricultural or nonagriculturalemployment;(3) Allow activities leading tostabilization in agriculturalemployment; and(4) Include related assistance andsupportive services.Regulations promulgated by DOL toimplement the provisions of Title IV,section 402, of JTPA are set forth in 20CFR part 633 and part 636. In addition,State and local governments and NativeAmerican applicants must conform toAdministrative Requirements at 29 CFRpart 97. Non-profit organizations mustconform to Administrative Regulationsat 29 CFR part 95. Migrant and otherseasonally employed farmworkerprograms are also subject to 29 CFRparts 93 (Restrictions on Lobbying), 96(Audit Requirements for Grants,Contracts and other agreements), and 98(Disbarment, Suspension and Drug-freeWorkplace requirements).Pursuant to 20 CFR 633.201, DOL willnot consider any funding applicationwhen fraud or criminal activity has beenproven to exist within the applicantorganization, or when efforts by theDOL to recover debts established byfinal agency action have beenunsuccessful. Prior to the final selectionof an applicant as a potential grantee,DOL will conduct a ResponsibilityReview of the available records toestablish an organization’s overallresponsibility to administer Federalfunds in accordance with 20 CFR633.204. Any applicant which is notconsidered or selected as a potentialgrantee because of these provisions shallbe advised of its appeal rights.Comments From the StatesExecutive Order 12372,‘‘Intergovernmental Review of FederalPrograms,’’ and the implementingregulations at 29 CFR part 17, areapplicable to this program. Pursuant tothese requirements, in States whichhave established a consultation processexpressly covering this program,applications shall be provided to theState for comment. Since States alsomay participate as competitors for thisprogram, applications shall besubmitted to the State upon thedeadline for submission to DOL (20 CFR633.202(d)).To strengthen the implementation ofE.O. 12372, DOL specifies the followingtimeframe for its treatment of commentsfrom the State’s Single Point of Contact(SPOC) on JTPA section 402applications:1. As required by 29 CFR 17, theSPOC must submit comments, if any, toDOL no later than 60 days after thedeadline date for applications;2. DOL will forward those commentsto the applicant within 10 days of theirreceipt from the SPOC; and3. DOL will notify the SPOC of itsdecision regarding the comments andresponse, but, under normalcircumstances, will not implement thatdecision for at least 10 days after theSPOC has been notified.Planning EstimatesPlanning estimates for the fivejurisdictions are provided below. Thestated amounts are solely for thepurpose of developing the fundingapplications and are the same as the PY1996 allocations. Final allocation levelsfor PY 1997 will be published for allState service areas at a later date.Minnesota: $1,243,685Mississippi: $1,413,704North Dakota: $456,939Puerto Rico: $2,867,153South Dakota: $675,971Part II—Solicitation for GrantApplicationsA. Funding ApplicationsProgram Year 1997 section 402 fundsare available for grants to serve all Stateservice areas except Alaska, RhodeIsland and the District of Columbia. Asstated in the preceding portion of thisnotice, funds will be awarded throughcompetition to serve the five Stateservice areas listed above.Applications for Statewide programsare encouraged, but are not necessary.

6274 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesApplicants applying for grants shallsubmit:(1) A Standard From 424 Facesheetfound in OMB Circular No. A–102;(2) An attachment identifying, byState or county, the proposed servicearea; and(3) For a private nonprofitorganization, a recent (within the lastsix months) certification from aCertified Public Accountant that itsfinancial management system is capableof properly accounting for andsafeguarding Federal funds; or, for apublic agency, a recent (within the lastsix months) certification by its ChiefFiscal Officer attesting to the adequacyof the agency’s accounting system toproperly account for and safeguardFederal funds.The Preapplication for FederalAssistance shall be submitted as part ofthe application package and should alsoinclude the following:(1) A statement indicating the legallyconstituted authority under which theorganization functions. An applicantwhich is a nonprofit organization shallsubmit a copy of its Charter or Articlesof Incorporation to satisfy thisrequirement;(2) An employer identificationnumber (EIN) from the Internal RevenueService and, for nonprofit applicants,proof of the organization’s nonprofitstatus.B. Review of Funding ApplicationsApplications will be reviewed andrated by a review panel applying thereview standards cited at 20 CFR633.203. Panel results are advisory innature and are not binding on the GrantOfficer. In addition, prior to the finalselection of an applicant as a potentialgrantee, DOL will conduct aResponsibility Review of availablerecords pursuant to 20 CFR 633.204.This review is intended to establishoverall responsibility to administerFederal funds and is independent of thecompetitive process. Applicants failingto meet the requirements of that or othersections of the regulations will not beselected as potential granteesirrespective of their standing in thecompetition.C. Rating CriteriaThe rating criteria and the weightsassigned to each are described below:(1) An understanding of the problemsof migrant and seasonal farmworkers.Range 0 to 20 points. This factor ratesthe applicant’s analysis of the needs ofthe target group, including socioeconomiccharacteristics of the clientpopulation and the proposed program’spotential to address those needs. Ratingsare based on a clear and concisenarrative demonstrating thisunderstanding; appropriateness of theproposed program mix of training andsupportive services meeting theidentified needs; and responsiveness toJTPA goals of targeting the hard-to-servefor training which leads to skillsacquisition, long-term employabilityand increased earnings.(2) A familiarity with the area to beserved. Range 0 to 15 points. This factorrates the applicant’s knowledge of theresources of the service area, and theproposed linkages, coordination, andpartnerships with different segments ofthe community within a designatedservice delivery area in order to furtherthe training and placement offarmworkers into new and better jobs;i.e., plans for involving appropriate areaagencies and programs in the design anddelivery of training and other servicesproposed to meet the needs ofparticipants. It includes a demonstratedknowledge of approximate size andlocation within the State of the eligibleclient population, current and changingmarket place needs, including areas ofemerging technologies, and how thechanging skill requirements will bereflected in the proposed programactivities. Ratings are based on a clearand concise narrative demonstratingthis familiarity, and documentedprogrammatic ties to appropriate areaagencies and programs.(3) A previously demonstratedcapability to administer effectively adiversified employability developmentprogram, including program outcomes.Range 0 to 30 points. This factor ratesprogram experience, and capability tomeet or exceed planned goals. Ratingsare based on a previously demonstratedcapability to administer effectively adiversified employability developmentprogram for migrant and seasonalfarmworkers; documentation thatplanned performance goals were eithermet or exceeded during the period ofperformance; and satisfactorydescription of the employment andtraining components and proceduresnecessary to undertake the goals of thisgrant solicitation.(4) General administrative andfinancial management capability,including audit outcomes. Range 0 to 25points. This factor rates the applicant’smanagerial experience, and thepotential for efficient and effectiveadministration of the proposed program.In the case of applicants competing fortwo or more States or sub-State areas,the application for each State or sub-State area should contain a statementdescribing the manner in which thegrant recipient will conduct monitoringand provide technical assistance andsupport to each of the State’s operationsfor which it achieves responsibility tothe Department of Labor. Ratings arebased on consideration of theadministrative expertise of present andproposed managerial and decisionmakingstaff, and the extent to whichthe management plan demonstrates theability to capably and economicallyoperate a multi-activity delivery system.Finally, the applicant should expoundon those cost benefits which will accrueto the Department of Labor through amulti-jurisdiction (State) approach overthat offered through the management ofa single venue grant.D. Content and Format of FundingApplication (Statement of Work)Exclusive of letters of support andcommitment, the funding applicationshould not exceed 50 pages of doublespacedunreduced type. Cost issuesshould not be addressed in anapplicant’s submission. Detailedbudgets and program planning estimatesare not to be part of the application.These will be negotiated later withapplicants selected for grant awards.The required application format shallbe followed and contain the sectionslisted below. The sections correspond tothe rating criteria listed in the precedingsubpart of this notice.(1)—Target Populations and ProgramApproachThis section should describe theapplicant’s approach to fulfilling theintent of JTPA section 402. Elements tobe included are:(a) A description of the needs andproblems of migrant and seasonalfarmworkers in the service area,including the socio-economiccharacteristics of the farmworkerpopulation in the State or sub-State areato be served;(Note: For applicants which are current JTPAsection 402 grant recipients, a solerecapitulation of the socio-economiccharacteristics of their past or currentparticipants will not satisfy this requirement);and(b) The rationale for the proposedprogram mix of training for jobplacement, training for employabilityenhancement, and stabilization inagriculture through supportive servicesactivities, including a discussion oftargeting the hard-to-serve for long-termtraining leading to skills acquisition,long-term employment and increasedearnings.(2)—Service EnvironmentThis section should describe theapplicant’s current programmatic ties

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6275within the proposed service area toappropriate State and local agencies,private nonprofit organizations, andother groups—particularly JTPA ServiceDelivery Area grant recipients, JTPATitle II sub-State area grantees, theOffices of Migrant Education andMigrant Health, and FarmworkerHousing Programs—providing resourcesand services to farmworkers such asbasic education, health and child care.Elements to be included are:(a) A description of existing linkagesto agencies, organizations andinstitutions within the service area thatwill result in the coordinated delivery ofservices to the disadvantagedfarmworker population. Further, theapplicant should detail any partnershipsdeveloped within the service deliveryarea and delineate the nature of theseagreements noting the various assetsbrought by each party which in turnwill tend to better serve the farmworkertarget population.(Note: Letters of commitment documentingappropriate programmatic ties should beattached to the application.);(b) A description of the proposeddelivery system, including a list of theapplicant’s field/regional officelocations and any other delivery agents,and the services to be provided by each;(c) A labor market assessment of theState or sub-State areas to be served,with projections for currentemployment needs, projected skillshortages based on new or changingindustry growth as well as those createdby emerging technologies, and specificjob opportunities known to theapplicant which are available in theservice area; and(d) A discussion of the approximatesize and location of the eligible clientpopulation which draws on informationcollected by the applicant and fromother service providers identified at thebeginning of this section.(3)—Program ExperienceThis section should describe theapplicant’s capability and experience inadministering employment and trainingprograms. Elements to be included are:(a) The types of programs operated inthe proposed service area during thepast two years, including the contract,grant, or agreement number, the name ofthe funding agency, the amount offunding, the period of performance andprogram outcomes;(b) The types of programs operatedoutside the service area during the pasttwo years, including the contract, grantor agreement number, the name of thefunding agency, the amount of fundingand the period of performance;(c) The nature of the training,employability development, andsupportive services activities whichwere provided.(Note: Applicants should clearly identifythose activities undertaken within the servicearea.)(d) The actual versus the plannednumber of participants and theirplacement into unsubsidizedemployment for each program activity.(Note: Applicants should clearly identifythose performance standards failed, met andexceeded within the service area.)(e) A detailed description of eachmajor activity and component of theprogram proposed for funding underthis grant solicitation to meet theidentified needs; this description shouldinclude a discussion of:(1) Outreach to and recruitment of thehard-to-serve;(2) The process of eligibilitydetermination and verification;(3) Assessment and the criteria usedfor placement in training or referral toother service providers;(4) The role of grantee staff in theemployment and training process,including efforts to make trainingrelatedplacements;(5) The role of vendors in theemployment and training process; and(6) Participant tracking duringtraining and as a follow-up afterplacement;(f) An analysis of the extent to whichthe proposed employment and trainingprogram, including linkages anddelivery system, is consistent with thelabor market assessment in Section II ofthis notice.(4)—Administration and StaffThis section should describe theapplicant’s organizational and staffingplans. Elements to be included are:(a) Total number of people presentlyinvolved in the administration of theorganization and the number of peoplewho will be directly involved in theadministration and delivery of theproposed JTPA section 402 programservices, including position titles andthe number of persons in each position;abstracts of position descriptions ofmanagerial and decision-makingpositions should be attached;(b) A description of the managementand administration plan including:(1) Organizational structure;(2) Personnel managementprocedures, including but not limitedto, capacity building, in-service trainingand planning;(3) Fiscal accounting system,including a plan for maintaining cashon hand in an amount which comportswith acceptable governmentrequirements; the allowance paymentsystem, if applicable; fiscal reportingprocedures; the process employed toinsure the proper expenditure of Federalfunds; and the process employed toreduce to a minimum carryover ofprogram funds from one Program Yearto the next;(4) Internal monitoring system (forapplicants applying for multiple-Stateor sub-State areas, this includes a planfor monitoring each proposed servicearea);(5) Provisions for hiring members ofthe client population; and(6) In the case of multiple-State orsub-State applicants, a managementplan which delineates the process andmanner in which the applicant willprovide oversight, technical support,management, fiscal procedures andcommunications over several distinctservice areas. This section shoulddemonstrate how these activities will beaccomplished in an efficient mannerand result in reduction of costs to theFederal Government; and(7) A statement describing theapplicant’s experience with audits,including the results of recent audits.E. Submission of Funding ApplicationThree copies of the fundingapplications shall be submitted eitherby mail or hand-delivery. As notedearlier in this announcement, mailingsshall be mailed by registered or certifiedmail, return receipt requested, no laterthan April 14, 1997. All hand-deliveredapplications will be accepted dailybetween the hours of 8:15 a.m. and 4:45p.m., Eastern Time. A receipt will beprovided bearing the time and date ofdelivery. No hand-deliveries will beaccepted after 4:45 p.m., Eastern Time,on April 14, 1997. No exceptions tothese mailing and hand-deliveryconditions will be granted. Applicationsnot meeting these conditions will not beaccepted.Funding applications shall be mailedor hand-delivered to: James DeLuca,Grant Officer, ETA, 200 ConstitutionAvenue, NW., room C–4305,Washington, DC 20210.F. Notification of Selection(a) Respondents to this SGA whichare selected as potential grantees willnotified by DOL in writing. Thenotification will invite each potentialgrantee to negotiate the final terms andconditions of the grant; will establish areasonable time and place for thenegotiation; and will indicate the Stateor sub-State area to be covered by thegrant. Grants will be awarded for theperformance period July 1, 1997 to June

6276 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices30, 1998. Applicants selected will nothave to recompete for funding for PY1998 (July 1, 1998 to June 30, 1999) ifthe grant recipient has met allapplicable regulatory requirements, hasperformed satisfactorily under the termsof its existing grant for PY 1997, submitsan acceptable training plan or PY 1998,and funds are available.(b) In the event that no grantapplications will received for a specificState or sub-State area or those receivedare deemed to be unacceptable, orwhere a grant agreement is notsuccessfully negotiated, DOL may givethe Governor first right to submit anacceptable application pursuant to theprecondition for Grant Application andResponsibility Review tests at 20 CFR633.201 and 633.204, respectively.Should the Governor not accept theoffer within 15 days after being notified,the Department may then: (1) designateanother organization or organizations,(2) reopen the area for competitivebidding, or (3) use the allocated fundsfor national account activities.(c) An applicant whose grantapplication is not selected by DOL toreceive JTPA section 402 funds will benotified in writing.(d) Any applicant whose grantapplication is denied in whole or partby DOL will be advised of its appealrights.Signed at Washington, DC, this 4th day ofFebruary, 1997.James DeLuca,Grant Officer, Division of Acquisition andAssistance.[FR Doc. 97–3347 Filed 2–10–97; 8:45 am]BILLING CODE 4510–30–MNUCLEAR REGULATORYCOMMISSION[Docket Nos. 50–327 AND 50–328]Sequoyah Nuclear Plant, Units 1 and 2;Notice of Consideration of Issuance ofAmendments to Facility OperatingLicenses, Proposed No SignificantHazards Consideration Determination,and Opportunity for a HearingThe U.S. Nuclear RegulatoryCommission (the Commission) isconsidering issuance of amendments toFacility Operating License No. DPR–77and DPR–79 issued to the TennesseeValley Authority (the licensee) foroperation of the Sequoyah NuclearPlant, Units 1 and 2, located in SoddyDaisy, Tennessee.The proposed amendments wouldpermanently incorporate requirementsassociated with steam generator tubeinspections and repair in the SequoyahNuclear Plant, Units 1 and 2 TechnicalSpecifications (TS). The newrequirements establish alternate steamgenerator tube plugging criteria (APC) atthe tube support plate intersections.These revised criteria, based on NRCGeneric Letter 95–05, were incorporatedinto the TS by previous amendments tothe operating licenses but only forOperating Cycle 8. The proposedamendments would remove thereference to Cycle 8, thereby making therequirements applicable to all futureoperating cycles.Before issuance of the proposedlicense amendment, the Commissionwill have made findings required by theAtomic Energy Act of 1954, as amended(the Act) and the Commission’sregulations.The Commission has made aproposed determination that theamendment request involves nosignificant hazards consideration. Underthe Commission’s regulations in 10 CFR50.92, this means that operation of thefacility in accordance with the proposedamendment would not (1) involve asignificant increase in the probability orconsequences of an accident previouslyevaluated; or (2) create the possibility ofa new or different kind of accident fromany accident previously evaluated; or(3) involve a significant reduction in amargin of safety. As required by 10 CFR50.91(a), the licensee has provided itsanalysis of the issue of no significanthazards consideration, which ispresented below:TVA has evaluated the proposed technicalspecification (TS) change and has determinedthat it does not represent a significanthazards consideration based on criteriaestablished in 10 CFR 50.92(c). Operation ofSequoyah Nuclear Plant (SQN) in accordancewith the proposed amendment will not:1. Involve a significant increase in theprobability or consequences of an accidentpreviously evaluated.The proposed TS change revises the SQNsteam generator (S/G) Specification 3/4.4.5 toremove footnotes that limit the application ofthe alternate plugging criteria (APC) to Cycle8 operation only. In addition, SQN TS3.4.6.2, ‘‘Operational Leakage,’’ contains asimilar footnote that limits application of S/G APC to Cycle 8 operation only. Theremoval of these footnotes allows TVA toapply APC to SQN S/Gs beyond Cycle 8operation. TVA’s proposed change is basedon resolution of the industry issuesconcerning [eddy current test] probe wearand probe variability. APC was applied to theSQN S/Gs during the Cycle 7 refuelingoutages for Units 1 and 2.The proposed changes provide TSrequirements that are consistent with theguidance of NRC GL [Generic Letter] 95–05.This change does not involve a physicalmodification to the plant or affect anysetpoints. Accordingly, the proposed changesdo not involve an increase in the probabilityor consequences of an accident previouslyevaluated.2. Create the possibility of a new ordifferent kind of accident from anypreviously analyzed.The proposed changes provide TSrequirements for SQN S/Gs that areconsistent with the guidance provided in GL95–05. No new event initiator has beencreated, nor has any hardware been changed.This change does not involve a physicalchange to SQN S/Gs or any other system.Therefore, the proposed change will notcreate the possibility of a new or differentkind of accident from any previouslyanalyzed.3. Involve a significant reduction in amargin of safety.TVA’s proposed change allows applicationof APC for SQN S/Gs to extend beyond Cycle8 of operation. This change continues toprovide requirements that maintainstructural integrity of SQN S/G tubes duringnormal operating, transient, and postulatedaccident conditions. This change does notinvolve a setpoint change or physicalmodification to the plant. Accordingly, themargin of safety has not been reduced.The NRC staff has reviewed thelicensee’s analysis and, based on thisreview, it appears that the threestandards of 10 CFR 50.92(c) aresatisfied. Therefore, the NRC staffproposes to determine that theamendment request involves nosignificant hazards consideration.The Commission is seeking publiccomments on this proposeddetermination. Any comments receivedwithin 30 days after the date ofpublication of this notice will beconsidered in making any finaldetermination.Normally, the Commission will notissue the amendment until theexpiration of the 30-day notice period.However, should circumstances changeduring the notice period such thatfailure to act in a timely way wouldresult, for example, in derating orshutdown of the facility, theCommission may issue the licenseamendment before the expiration of the30-day notice period, provided that itsfinal determination is that theamendment involves no significanthazards consideration. The finaldetermination will consider all publicand State comments received. Shouldthe Commission take this action, it willpublish in the Federal Register a noticeof issuance and provide for opportunityfor a hearing after issuance. TheCommission expects that the need totake this action will occur veryinfrequently.Written comments may be submittedby mail to the Chief, Rules Review andDirectives Branch, Division of Freedomof Information and Publications

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6277Services, Office of Administration, U.S.Nuclear Regulatory Commission,Washington, DC 20555–0001, andshould cite the publication date andpage number of this Federal Registernotice. Written comments may also bedelivered to Room 6D22, Two WhiteFlint North, 11545 Rockville Pike,Rockville, Maryland, from 7:30 a.m. to4:15 p.m. Federal workdays. Copies ofwritten comments received may beexamined at the NRC Public DocumentRoom, the Gelman Building, 2120 LStreet, NW., Washington, DC.The filing of requests for hearing andpetitions for leave to intervene isdiscussed below.By March 13, 1997, the licensee mayfile a request for a hearing with respectto issuance of the amendment to thesubject facility operating license andany person whose interest may beaffected by this proceeding and whowishes to participate as a party in theproceeding must file a written requestfor a hearing and a petition for leave tointervene. Requests for a hearing and apetition for leave to intervene shall befiled in accordance with theCommission’s ‘‘Rules of Practice forDomestic Licensing Proceedings’’ in 10CFR Part 2. Interested persons shouldconsult a current copy of 10 CFR 2.714which is available at the Commission’sPublic Document Room, the GelmanBuilding, 2120 L Street, NW.,Washington, DC, and at the local publicdocument room located at theChattanooga-Hamilton County Library,1001 Broad Street, Chattanooga,Tennessee 37402. If a request for ahearing or petition for leave to interveneis filed by the above date, theCommission or an Atomic Safety andLicensing Board, designated by theCommission or by the Chairman of theAtomic Safety and Licensing BoardPanel, will rule on the request and/orpetition; and the Secretary or thedesignated Atomic Safety and LicensingBoard will issue a notice of hearing oran appropriate order.As required by 10 CFR 2.714, apetition for leave to intervene shall setforth with particularity the interest ofthe petitioner in the proceeding, andhow that interest may be affected by theresults of the proceeding. The petitionshould specifically explain the reasonswhy intervention should be permittedwith particular reference to thefollowing factors: (1) the nature of thepetitioner’s right under the Act to bemade party to the proceeding; (2) thenature and extent of the petitioner’sproperty, financial, or other interest inthe proceeding; and (3) the possibleeffect of any order which may beentered in the proceeding on thepetitioner’s interest. The petition shouldalso identify the specific aspect(s) of thesubject matter of the proceeding as towhich petitioner wishes to intervene.Any person who has filed a petition forleave to intervene or who has beenadmitted as a party may amend thepetition without requesting leave of theBoard up to 15 days prior to the firstprehearing conference scheduled in theproceeding, but such an amendedpetition must satisfy the specificityrequirements described above.Not later than 15 days prior to the firstprehearing conference scheduled in theproceeding, a petitioner shall file asupplement to the petition to intervenewhich must include a list of thecontentions which are sought to belitigated in the matter. Each contentionmust consist of a specific statement ofthe issue of law or fact to be raised orcontroverted. In addition, the petitionershall provide a brief explanation of thebases of the contention and a concisestatement of the alleged facts or expertopinion which support the contentionand on which the petitioner intends torely in proving the contention at thehearing. The petitioner must alsoprovide references to those specificsources and documents of which thepetitioner is aware and on which thepetitioner intends to rely to establishthose facts or expert opinion. Petitionermust provide sufficient information toshow that a genuine dispute exists withthe applicant on a material issue of lawor fact. Contentions shall be limited tomatters within the scope of theamendment under consideration. Thecontention must be one which, ifproven, would entitle the petitioner torelief. A petitioner who fails to file sucha supplement which satisfies theserequirements with respect to at least onecontention will not be permitted toparticipate as a party.Those permitted to intervene becomeparties to the proceeding, subject to anylimitations in the order granting leave tointervene, and have the opportunity toparticipate fully in the conduct of thehearing, including the opportunity topresent evidence and cross-examinewitnesses.If a hearing is requested, theCommission will make a finaldetermination on the issue of nosignificant hazards consideration. Thefinal determination will serve to decidewhen the hearing is held.If the final determination is that theamendment request involves nosignificant hazards consideration, theCommission may issue the amendmentand make it immediately effective,notwithstanding the request for ahearing. Any hearing held would takeplace after issuance of the amendment.If the final determination is that theamendment request involves asignificant hazards consideration, anyhearing held would take place beforethe issuance of any amendment.A request for a hearing or a petitionfor leave to intervene must be filed withthe Secretary of the Commission, U.S.Nuclear Regulatory Commission,Washington, DC 20555–0001, Attention:Docketing and Services Branch, or maybe delivered to the Commission’s PublicDocument Room, the Gelman Building,2120 L Street, NW., Washington, DC, bythe above date. Where petitions are filedduring the last 10 days of the noticeperiod, it is requested that the petitionerpromptly so inform the Commission bya toll-free telephone call to WesternUnion at 1 (800) 248–5100 (in Missouri1 (800) 342–6700). The Western Unionoperator should be given DatagramIdentification Number N1023 and thefollowing message addressed toFrederick J. Hebdon: Petitioner’s nameand telephone number, date petitionwas mailed, plant name, andpublication date and page number ofthis Federal Register notice. A copy ofthe petition should also be sent to theOffice of the General Counsel, U.S.Nuclear Regulatory Commission,Washington, DC 20555–0001, and toGeneral Counsel, Tennessee ValleyAuthority, ET 11H 400 West SummitHill Drive, Knoxville, Tennessee 37902,attorney for the licensee.Nontimely filings of petitions forleave to intervene, amended petitions,supplemental petitions and/or requestsfor hearing will not be entertainedabsent a determination by theCommission, the presiding officer or thepresiding Atomic Safety and LicensingBoard that the petition and/or requestshould be granted based upon abalancing of the factors specified in 10CFR 2.714(a)(1) (i)–(v) and 2.714(d).For further details with respect to thisaction, see the application foramendment dated October 18, 1996,which is available for public inspectionat the Commission’s Public DocumentRoom, the Gelman Building, 2120 LStreet, NW., Washington, DC, and at thelocal public document room located atthe Chattanooga-Hamilton CountyLibrary, 1001 Broad Street, Chattanooga,Tennessee 37402.

6278 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesDated at Rockville, Maryland, this 5th dayof February 1997.Ronald W. Hernan,Senior Project Manager, Project DirectorateII–3, Division of Reactor Projects—I/II, Officeof Nuclear Reactor Regulation.[FR Doc. 97–3321 Filed 2–10–97; 8:45 am]BILLING CODE 7590–01–P[Docket 70–7002]Notice of Amendment to Certificate ofCompliance GDP–2 for the U.S.Enrichment Corporation, PortsmouthGaseous Diffusion Plant, Portsmouth,OHThe Director, Office of NuclearMaterial Safety and Safeguards, hasmade a determination that the followingamendment request is not significant inaccordance with 10 CFR 76.45. Inmaking that determination, the staffconcluded that: (1) There is no changein the types or significant increase inthe amounts of any effluents that may bereleased offsite; (2) there is nosignificant increase in individual orcumulative occupational radiationexposure; (3) there is no significantconstruction impact; (4) there is nosignificant increase in the potential for,or radiological or chemicalconsequences from, previously analyzedaccidents; (5) the proposed changes donot result in the possibility of a new ordifferent kind of accident; (6) there is nosignificant reduction in any margin ofsafety; and (7) the proposed changeswill not result in an overall decrease inthe effectiveness of the plant’s safety,safeguards, or security programs. Thebasis for this determination for theamendment request is described below.The NRC staff has reviewed thecertificate amendment application andconcluded that it provides reasonableassurance of adequate safety, safeguards,and security and compliance with NRCrequirements. Therefore, the Director,Office of Nuclear MaterialSafety and Safeguards, is prepared toissue an amendment to the Certificate ofCompliance for the Portsmouth GaseousDiffusion Plant (PORTS). The staff hasprepared a Compliance EvaluationReport which provides details of thestaff’s evaluation.The NRC staff has determined thatthis amendment satisfies the criteria fora categorical exclusion in accordancewith 10 CFR 51.22. Therefore, pursuantto 10 CFR 51.22(b), no environmentalimpact statement or environmentalassessment need be prepared for thisamendment.USEC or any person whose interestmay be affected may file a petition, notexceeding 30 pages, requesting reviewof the Director’s Decision. The petitionmust be filed with the Commission notlater than 15 days after publication ofthis Federal Register Notice. A petitionfor review of the Director’s Decisionshall set forth with particularity theinterest of the petitioner and how thatinterest may be affected by the results ofthe decision. The petition shouldspecifically explain the reasons whyreview of the Decision should bepermitted with particular reference tothe following factors: (1) The interest ofthe petitioner; (2) how that interest maybe affected by the Decision, includingthe reasons why the petitioner shouldbe permitted a review of the Decision;and (3) the petitioner’s areas of concernabout the activity that is the subjectmatter of the Decision. Any persondescribed in this paragraph (USEC orany person who filed a petition) mayfile a response to any petition forreview, not to exceed 30 pages, within10 days after filing of the petition. If nopetition is received within thedesignated 15-day period, the Directorwill issue the final amendment to theCertificate of Compliance withoutfurther delay. If a petition for review isreceived, the decision on theamendment application will becomefinal in 60 days, unless the Commissiongrants the petition for review orotherwise acts within 60 days afterpublication of this Federal RegisterNotice.A petition for review must be filedwith the Secretary of the Commission,U.S. Nuclear Regulatory Commission,Washington, DC 20555–0001, Attention:Docketing and Services Branch, or maybe delivered to the Commission’s PublicDocument Room, the Gelman Building,2120 L Street, NW, Washington, DC, bythe above date.For further details with respect to theaction see: (1) The application foramendment and (2) the Commission’sCompliance Evaluation Report. Theseitems are available for public inspectionat the Commission’s Public DocumentRoom, the Gelman Building, 2120 LStreet, NW, Washington, DC, and at theLocal Public Document Room.Date of amendment request:November 8, 1996, as modified by USECresponses dated December 13, 1996, andJanuary 16, 1997, to NRC requests foradditional information dated November29, 1996, and December 31, 1996,respectively.Brief description of amendment: Theamendment changes the TechnicalSafety Requirement (TSR) StandbyOperational Mode definition for the UF6Withdrawal Stations by allowing thecompression loop vent path to thecascade to be open. It should be notedthat venting of the Withdrawal Stationcompression loop to the cascade isroutinely done at PORTS. However,accounting for this procedure wasinadvertently left out of the StandbyOperational Mode definition by USECfrom its proposed TSRs which havebeen approved by the NRC.Basis for finding of no significance:1. The proposed amendment will notresult in a change in the types orsignificant increase in the amounts ofany effluents that may be releasedoffsite.The proposed change to TSR 2.5.1permits evacuating UF6 from thecompression loop in the UF6withdrawal station to the cascade,which acts as a low pressure sink, in theStandby Operational Mode. This changewill not result in significantlyincreasing the potential forunconfinement of UF6 which could leadto an increase in effluents that may bereleased offsite since it only involvesventing of UF6 from one portion ofprocess piping, which confines UF6 inthe Withdrawal Station, to anotherportion of process piping whichconfines UF6 in the enrichmentcascade. Confinement of UF6 within thecascade is primarily provided bymaintaining the cell high-side(compressor discharge) gas pressurebelow 25 psia (TSR 2.2.3.13) and byapplying appropriate quality assurancerequirements to process gas piping andequipment (Safety Analysis ReportSection 3.8.2.2). Therefore, this TSRamendment will not result in significantamounts of effluents that may bereleased offsite.2. The proposed amendment will notresult in a significant increase inindividual or cumulative occupationalradiation exposure.Evacuating UF6 from the compressionloop to the cascade in the StandbyOperational Mode will not significantlyimpart additional occupationalradiation exposure. The cascade or thewithdrawal loops do not result insignificant occupational radiationexposures. Some of the reasons beingthat: (1) The occupancy factor is low, (2)distance from the source is generallyhigh, (3) significant shielding isprovided by piping and equipment, (4)depleted and low enriched uranium haslow specific activities and are alsocomparatively low gamma radiationemitters, (5) most of the uranium is ingaseous form (low density), and (6) UF6is confined within quality controlledequipment and piping. Therefore, anytransfer of confined UF6 from thewithdrawal station to the cascade wouldnot measurably modify individual or

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6279cumulative occupational radiationexposures.3. The proposed amendment will notresult in a significant constructionimpact.Since the proposed changes do notinvolve any construction, therefore,there will be no construction impacts.4. The proposed amendment will notresult in a significant increase in thepotential for, or radiological or chemicalconsequences from, previously analyzedaccidents.The proposed changes which involveevacuating UF6 from the compressionloop to the cascade (low pressure sink)in the Standby Operational Mode willnot result in a significant increase in thepotential for UF6 releases. In fact,venting the compression loop to thecascade may enhance safety byminimizing the potential for overpressurizationof the UF6 withdrawalloop with subsequent confinementrupture. To avoid enrichment losses,UF6 is vented back to the A-suction ofa compressor in the cascade that hasUF6 of similar enrichment. All A-suction pressures in lines that wouldreceive the vented UF6 aresubatmospheric. Therefore, anyconfinement failure would likely resultin inleakage as opposed to outleakage.In addition, cascade units that wouldreceive vented UF6 would likely becomprised of relatively smaller sizedequipment containing relatively smallerquantities of UF6 since they would belocated near the top and at the bottomof the cascade. Therefore, the proposedchange will not result in a significantincrease in the potential for UF6releases.Going from a closed compression loopvent path to an open compression loopvent path will not result in a significantincrease for, or radiologicalconsequences from, previouslyevaluated criticality accidents. Thelikelihood of an accidental criticality inthe cascade due to wet-air (moderator)inleakage would not be increasedsignificantly for the following reasons:a. This amendment involves a valvethat is internal to several valves evenwhen the pigtail is not attached to thewithdrawal manifold. These valveswould be in the closed position.Therefore, several misvalving errorswould be required to permit significantwet-air inleakage into the cascadethrough the compression loop ventvalve.b. To maintain the integrity of theUF6 pressure boundary, USEC iscommitted to applying appropriatequality assurance requirements toprocess gas piping and equipment(including valves) with diameters of 2inches or larger.c. Formation of UO2F2 in the cascadedue to significant inleakage of wet-airwould result in compressor vibrationand would reduce barrier permeabilitythus affecting cascade compressorperformance which would be observedin the control rooms via motor loadindications. Changes in compressor A-suction pressures would also bedetected.d. Introduction of wet-air into thecascade would be detected on the linerecorders that continuously indicatenitrogen and oxygen concentrations.Based on the primary reasonsprovided above, the proposed TSRchange will also not significantly raisethe probability or consequences of acriticality accident.5. The proposed amendment will notresult in the possibility of a new ordifferent kind of accident.For similar reasons provided in theassessment of criterion 4, evacuatingUF6 from the compression loop to thecascade in the Standby OperationalMode will not result in a new potentialaccident involving UF6 releases orcriticality. In fact, venting thecompression loop to the cascade mayenhance safety by minimizing thepotential for over-pressurization of theUF6 withdrawal loop with subsequentconfinement rupture.6. The proposed amendment will notresult in a significant reduction in anymargin of safety.As discussed above, from a UF6release accident standpoint, venting tothe cascade may enhance safety, andfrom a criticality accident standpoint,the safety impact is insignificant. Thisprocedure, which is routine operation atPORTS, will not result in the violationof any limiting condition of operation.Therefore, the opening of the ventpathway in the Standby OperationalMode will not significantly reduce anymargin of safety.7. The proposed amendment will notresult in an overall decrease in theeffectiveness of the plant’s safety,safeguards, or security programs.As discussed above, from a UF6confinement standpoint venting to thecascade may enhance the plant’s safetyprogram and from a criticality safetyprogram standpoint, the safety impact isinsignificant.The staff has not identified anysafeguards or security relatedimplications from the proposedamendment. Therefore, the opening ofthe vent pathway in the StandbyOperational Mode will not result in anoverall decrease in the effectiveness ofthe plant’s safety, safeguards, or securityprograms.Effective date: This amendmentbecomes effective at 12:00 noon on theday following the day issued.Certificate of Compliance No. GDP–2:Amendment will revise the TechnicalSafety Requirements.Local Public Document Roomlocation: Portsmouth Public Library,1220 Gallia Street, Portsmouth, Ohio45662.Dated at Rockville, Maryland, this 4th dayof February 1997.For the Nuclear Regulatory Commission.Carl J. Paperiello,Director, Office of Nuclear Material Safetyand Safeguards.[FR Doc. 97–3322 Filed 2–10–97; 8:45 am]BILLING CODE 7590–01–P[Docket 70–7001]Notice of Amendment to Certificate ofCompliance GDP–1 for the U.S.Enrichment Corporation, PaducahGaseous Diffusion Plant, Paducah, KYThe Director, Office of NuclearMaterial Safety and Safeguards, hasmade a determination that the followingamendment request is not significant inaccordance with 10 CFR 76.45. Inmaking that determination the staffconcluded that (1) there is no change inthe types or significant increase in theamounts of any effluents that may bereleased offsite; (2) there is nosignificant increase in individual orcumulative occupational radiationexposure; (3) there is no significantconstruction impact; (4) there is nosignificant increase in the potential for,or radiological or chemicalconsequences from, previously analyzedaccidents; (5) the proposed changes donot result in the possibility of a new ordifferent kind of accident; (6) there is nosignificant reduction in any margin ofsafety; and (7) the proposed changeswill not result in an overall decrease inthe effectiveness of the plant’s safety,safeguards or security programs. Thebasis for this determination for theamendment request is shown below.The NRC staff has reviewed thecertificate amendment application andconcluded that it provides reasonableassurance of adequate safety, safeguards,and security, and compliance with NRCrequirements. Therefore, the Director,Office of Nuclear Material Safety andSafeguards, is prepared to issue anamendment to the Certificate ofCompliance for the Paducah GaseousDiffusion Plant. The staff has prepareda Compliance Evaluation Report whichprovides details of the staff’s evaluation.

6280 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesThe NRC staff has determined thatthis amendment satisfies the criteria fora categorical exclusion in accordancewith 10 CFR 51.22. Therefore, pursuantto 10 CFR 51.22(b), no environmentalimpact statement or environmentalassessment need be prepared for thisamendment.USEC or any person whose interestmay be affected may file a petition, notexceeding 30 pages, requesting reviewof the Director’s Decision. The petitionmust be filed with the Commission notlater than 15 days after publication ofthis Federal Register Notice. A petitionfor review of the Director’s Decisionshall set forth with particularity theinterest of the petitioner and how thatinterest may be affected by the results ofthe decision. The petition shouldspecifically explain the reasons whyreview of the Decision should bepermitted with particular reference tothe following factors: (1) The interest ofthe petitioner; (2) how that interest maybe affected by the Decision, includingthe reasons why the petitioner shouldbe permitted a review of the Decision;and (3) the petitioner’s areas of concernabout the activity that is the subjectmatter of the Decision. Any persondescribed in this paragraph (USEC orany person who filed a petition) mayfile a response to any petition forreview, not to exceed 30 pages, within10 days after filing of the petition. If nopetition is received within thedesignated 15-day period, the Directorwill issue the final amendment to theCertificate of Compliance withoutfurther delay. If a petition for review isreceived, the decision on theamendment application will becomefinal in 60 days, unless the Commissiongrants the petition for review orotherwise acts within 60 days afterpublication of this Federal RegisterNotice.A petition for review must be filedwith the Secretary of the Commission,U.S. Nuclear Regulatory Commission,Washington, DC 20555–0001, Attention:Docketing and Services Branch, or maybe delivered to the Commission’s PublicDocument Room, the Gelman Building,2120 L Street, NW, Washington, DC, bythe above date.For further details with respect to theaction see (1) the application foramendment and (2) the Commission’sCompliance Evaluation Report. Theseitems are available for public inspectionat the Commission’s Public DocumentRoom, the Gelman Building, 2120 LStreet, NW, Washington, DC, and at thelocal public document room.Date of amendment request:September 30, 1996.Brief description of amendment: Theamendment changes the TechnicalSafety Requirement for the cascade celltrip function and revises limitingspecific values for battery performance.Basis for finding of no significance:1. The proposed amendment will notresult in a change in the types orsignificant increase in the amounts ofany effluents that may be releasedoffsite.The proposed changes to TSR 2.4.4.12and SAR section 3.9.1.3.2 provide limitsfor battery voltage and air circuitbreaker air pressure, improve thesurveillance requirements for measuringbattery cell specific gravity, as well asimproved bases for the limits. Thesechanges provide improved assurancethat the cell trip function will beavailable, if required. As such, thesechanges enhance the ability of thecascade trip function to deenergize theprocess motors (‘‘tripping the cell’’),thus bringing the cell belowatmospheric pressure. By enhancing theability to perform the cell trip function,the ability to mitigate the consequencesof postulated accidents has beenimproved. As such, these changes haveno impact on plant effluents and willnot result in any impact to theenvironment.2. The proposed amendment will notresult in a significant increase inindividual or cumulative occupationalradiation exposure.The proposed changes provideenhanced assurance that the cell tripfunction will be available if necessary.The changes will not increase exposure.3. The proposed amendment will notresult in a significant constructionimpact.The proposed changes will not resultin any construction, therefore, there willbe no construction impacts.4. The proposed amendment will notresult in a significant increase in thepotential for, or radiological or chemicalconsequences from, previously analyzedaccidents.The proposed changes enhance theavailability of the cascade cell tripfunction and affect no other equipmentfunctions. The cascade cell trip functionis not involved in any precursor to anevaluated accident; therefore, thepotential of occurrence of an evaluatedevent is unaffected. The cell tripfunction is involved in the mitigation ofthe consequences of previouslyevaluated accidents by deenergizing theprocess motors, thus bringing the cellbelow atmospheric pressure. Revisingthe limiting specific values for batteryperformance and the air pressurerequirements for the ‘‘000’’ air circuitbreakers enhances the ability of the celltrip function by ensuring that adequateDC voltage and air pressure are availableto effect cell trip. Since the proposedchanges provide enhanced assurancethat the function will be available ifrequired, the consequences ofpreviously evaluated accidents are notincreased.5. The proposed amendment will notresult in the possibility of a new ordifferent kind of accident.The proposed changes establish newoperating limits for plant equipmentthat are within the existing operatingranges of that equipment. The changescreate no new operating conditions ornew plant configuration that could leadto a new or different type of accident.6. The proposed amendment will notresult in a significant reduction in anymargin of safety.The minimum air pressures andbattery voltages established by theseproposed changes are within theexisting operating ranges of theequipment and have been increased toenhance the cell trip function, which isthe only safety function affected bythese parameters. The proposed changescause no reductions in the margins ofsafety.7. The proposed amendment will notresult in an overall decrease in theeffectiveness of the plant’s safety,safeguards or security programs.The proposed changes enhance theavailability of the cascade cell tripfunction and do not affect any otherequipment functions or administrativerequirements. The cell trip function isnot addressed in the safeguards andsecurity programs. The effectiveness ofthe safety, safeguards, and securityprograms is not decreased.Effective date: 60 days after issuance.Certificate of Compliance No. GDP–1:Amendment will revise the TechnicalSafety Requirements.Local Public Document Roomlocation: Paducah Public Library, 555Washington Street, Paducah, Kentucky42003.Dated at Rockville, Maryland, this 4th dayof February 1997.For the Nuclear Regulatory Commission.Carl J. Paperiello,Director, Office of Nuclear Material Safetyand Safeguards.[FR Doc. 97–3323 Filed 2–10–97; 8:45 am]BILLING CODE 7590–01–PSunshine Act MeetingAGENCY HOLDING THE MEETING: NuclearRegulatory Commission.DATE: Weeks of February 10, 17, 24, andMarch 3, 1997.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6281PLACE: Commissioners’ ConferenceRoom, 11555 Rockville Pike, Rockville,Maryland.STATUS: Public and Closed.MATTERS TO BE CONSIDERED:Week of February 10Thursday, February 132:00 p.m.Briefing on Operating Reactor OversightProgram and Status of Improvements inNRC Inspection Program (PublicMeeting)(Contact: Bill Borchardt, 301–415–1257)3:30 p.m.Affirmation Session (Public Meeting)*(Please Note: These items will be affirmedimmediately following the conclusion ofthe preceding meeting.)a: Louisiana Energy Services (ClaiborneEnrichment Center); Atomic Safety andLicensing Board Partial Initial Decision(Resolving Contentions J.4, K, and Q),LBP–96–25.Week of February 17—TentativeTuesday, February 181:00 p.m.Briefing on BPR Project on RedesignedMaterials Licensing Process (PublicMeeting)(Contact: Don Cool, 301–415–7197)2:30 p.m.Briefing on Analysis of Quantifying PlantWatch List Indicators (Public Meeting)(Contact: Rich Barrett, 301–415–7482)Wednesday, February 192:00 p.m.Briefing on Millstone and Maine YankeeLessons Learned (Public Meeting)(Contact: Steve Stein, 301–415–1296)3:30 p.m.Affirmation Session (Public Meeting) (ifneeded)Thursday, February 202:00 p.m.Briefing on EEO Program (Public Meeting)(Contact: Ed Tucker, 301–415–7382)Week of February 24—TentativeWednesday, February 2611:30 a.m.Affirmation Session (Public Meeting) (ifneeded)Week of March 3—TentativeThere are no meetings scheduled for theWeek of March 3.*The schedule for Commission meetings issubject to change on short notice. To verifythe status of meetings call (recording)—(301)415–1292.CONTACT PERSON FOR MORE INFORMATION:Bill Hill, (301) 415–1661.The NRC Commission Meeting Schedulecan be found on the Internet at:http://www.nrc.gov/SECY/smj/schedule. htmThis notice is distributed by mail toseveral hundred subscribers; if you nolonger wish to receive it, or would liketo be added to it, please contact theOffice of the Secretary, Attn: OperationsBranch, Washington, D.C. 20555 (301–415–1661).In addition, distribution of thismeeting notice over the internet systemis available. If you are interested inreceiving this Commission meetingschedule electronically, please send anelectronic message to wmh@nrc.gov ordkw@nrc.gov.Dated: February 7, 1997.William M. Hill, Jr.,SECY Tracking Officer, Office of theSecretary.[FR Doc. 97–3500 Filed 2–7–97; 1:40 p.m.]BILLING CODE 7590–01–MFinal Memorandum of UnderstandingBetween the U.S. Nuclear RegulatoryCommission and the State of VermontAGENCY: Nuclear RegulatoryCommission.ACTION: Notice.SUMMARY: This notice is to advise thepublic of the issuance of a FinalMemorandum of Understanding (MOU)between the U.S. Nuclear RegulatoryCommission (NRC) and the State ofVermont. The MOU provides the basisfor mutually agreeable procedureswhereby the State of Vermont mayutilize the NRC Emergency ResponseData System (ERDS) to receive dataduring an emergency at a commercialnuclear power plant in Vermont. Publiccomments were addressed inconjunction with the MOU with theState of Michigan published in theFederal Register, Vol. 57. No. 28,February 11, 1992.EFFECTIVE DATE: This MOU is effectiveDecember 10, 1996.ADDRESSES: Copies of all NRCdocuments are available for publicinspection and copying for a fee in theNRC Public Document Room, 2120 LStreet, N.W. (Lower Level), Washington,DC.FOR FURTHER INFORMATION CONTACT: JohnR. Jolicoeur or Eric D. Weinstein, Officefor Analysis and Evaluation ofOperational Data, U.S. NuclearRegulatory Commission, Washington,DC 20555. Telephone (301) 415–6402 or(301) 415–7559.SUPPLEMENTARY INFORMATION: Theattached MOU is intended to formalizeand define the manner in which theNRC will cooperate with the State ofVermont to provide data related to plantconditions during emergencies atcommercial nuclear power plants inVermont.Dated at Rockville, Maryland, this 28th dayof January, 1997.For the U.S. Nuclear RegulatoryCommission.Denwood F. Ross, Jr.,Acting Director, Office for Analysis andEvaluation of Operational Data.Agreement Pertaining to the EmergencyResponse Data System Between theState of Vermont and the U.S. NuclearRegulatory CommissionI. AuthorityThe U.S. Nuclear RegulatoryCommission (NRC) and the State ofVermont enter into this Agreementunder the authority of Section 274i ofthe Atomic Energy Act of 1954, asamended.The State of Vermont recognizes theFederal Government, primarily the NRC,as having the exclusive authority andresponsibility to regulate theradiological and national securityaspects of the construction andoperation of nuclear production orutilization facilities, except for certainauthority over air emissions granted toStates by the Clean Air Act.II. BackgroundA. The Atomic Energy Act of 1954, asamended, and the EnergyReorganization Act of 1974, asamended, authorize the NuclearRegulatory Commission (NRC) to licenseand regulate, among other activities, themanufacture, construction, andoperation of utilization facilities(nuclear power plants) in order to assurecommon defense and security and toprotect the public health and safety.Under these statutes, the NRC is theresponsible agency regulating nuclearpower plant safety.B. NRC believes that its mission toprotect the public health and safety canbe served by a policy of cooperationwith the State governments and hasformally adopted a policy statement on‘‘Cooperation with States at CommercialNuclear Power Plants and Other NuclearProduction or Utilization Facilities’’ (54FR 7530, February 22, 1989). The policystatement provides that NRC willconsider State proposals to enter intoinstruments of cooperation for certainprograms when these programs haveprovisions to ensure close cooperationwith NRC. This agreement is intendedto be consistent with, and implementthe provisions of the NRC’s policystatement.C. NRC fulfills its statutory mandateto regulate nuclear power plant safetyby, among other things, responding toemergencies at the licensee’s facilitiesand monitoring the status and adequacy

6282 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesof the licensee’s responses to emergencysituations.D. The State of Vermont fulfills itsstatutory mandate to provide forpreparedness, response, mitigation, andrecovery in the event of an accident ata nuclear power plant through the Stateof Vermont Emergency Management,Radiological Emergency ResponseProgram.III. ScopeA. This Agreement defines the way inwhich NRC and Vermont EmergencyManagement will cooperate in planningand maintaining the capability totransfer reactor plant data via theEmergency Response Data System(ERDS) during emergencies at nuclearpower plants in the State of Vermont.B. It is understood by the NRC and theState of Vermont that ERDS data willonly be transmitted by a licensee duringemergencies classified at the Alert levelor above, during scheduled tests, orduring exercises when available.C. Nothing in this Agreement isintended to restrict or expand thestatutory authority of NRC, the State ofVermont, or to affect or otherwise alterthe terms of any agreement in effectunder the authority Section 274b of theAtomic Energy Act of 1954, as amended;nor is anything in this Agreementintended to restrict or expand theauthority of the State of Vermont onmatters not within the scope of thisAgreement.D. Nothing in this Agreement confersupon the State of Vermont authority to(1) interpret or modify NRC regulationsand NRC requirements imposed on thelicensee; (2) take enforcement actions;(3) issue confirmatory letters; (4) amend,modify, or revoke a license issued byNRC; or (5) direct or recommendnuclear power plant employees to takeor not to take any action. Authority forall such actions is reserved exclusivelyto the NRC.IV. NRC’s General ResponsibilitiesUnder this agreement, NRC isresponsible for maintaining theEmergency Response Data System.ERDS is a system designed to receive,store and retransmit data from in-plantdata systems at nuclear power plantsduring emergencies. The NRC willprovide user access to ERDS data to oneuser terminal for the State of Vermontduring emergencies at nuclear powerplants which have implemented anERDS interface and for which anyportion of the plant’s 10 mileEmergency Planning Zone (EPZ) lieswithin the State of Vermont. The NRCagrees to provide unique softwarealready available to NRC (notcommercially available) that wasdeveloped under NRC contract forconfiguring an ERDS workstation.V. Vermont Emergency Management’sGeneral ResponsibilitiesA. Vermont Emergency managementwill, in cooperation with the NRCestablish a capability to receive ERDSdata. To this end, Vermont EmergencyManagement will provide the necessarycomputer hardware and commerciallylicensed software required for ERDSdata transfer to users.B. Vermont Emergency managementagrees not to use ERDS to access datafrom nuclear power plants for which aportion of the 10 mile EmergencyPlanning Zone does not fall within itsState boundary.C. For the purpose of minimizing theimpact on plant operators, clarificationof ERDS data will be pursued throughthe NRC.VI. ImplementationVermont Emergency Management andthe NRC agree to work in concert toassure that the followingcommunications and informationexchange protocol regarding the NRCERDS are followed.A. Vermont Emergency Managementand the NRC agree in good faith to makeavailable to each other informationwithin the intent and scope of thisAgreement.B. NRC and Vermont EmergencyManagement agree to meet as necessaryto exchange information on matters ofcommon concern pertinent to thisAgreement. Unless otherwise agreed,such meetings will be held in the NRCOperations Center. The affected utilitieswill be kept informed of pertinentinformation covered by this Agreement.C. To preclude the premature publicrelease of sensitive information, NRCand Vermont Emergency Managementwill protect sensitive information to theextent permitted by the FederalFreedom of Information Act, the StateFreedom of Information Act, 10 CFR2.790, and other applicable authority.D. NRC will conduct periodic tests oflicensee ERDS data links. A copy of thetest schedule will be provided toVermont Emergency Management by theNRC. Vermont Emergency Managementmay test its ability to access ERDS dataduring these scheduled tests, or mayschedule independent tests of the Statelink with the NRC.E. NRC will provide access to ERDSfor emergency exercises with reactorunits capable of transmitting exercisedata to ERDS. For exercises in which theNRC is not participating, VermontEmergency Management will coordinatewith NRC in advance to ensure ERDSavailability. NRC reserves the right topreempt ERDS use for any exercise inprogress in the event of an actual eventat any licensed nuclear power plant.VII. ContactsA. The principal senior managementcontacts for this Agreement will be theDirector, Incident Response Division,Office for Analysis and Evaluation ofOperational Data, and the Director,Vermont Emergency Management.These individuals may designateappropriate staff representatives forpurpose of administering thisAgreement.B. Identification of these contacts isnot intended to restrict communicationbetween NRC and Vermont EmergencyManagement staff members on technicaland other day-to-day activities.VIII. Resolution of DisagreementsA. If disagreements arise aboutmatters within the scope of thisAgreement, NRC and VermontEmergency Management will worktogether to resolve these differences.B. Resolution of differences betweenthe State and NRC staff over issuesarising out of this Agreement will be theinitial responsibility of the NRCIncident Response Divisionmanagement.C. Differences which cannot beresolved in accordance with SectionsVIII.A and VIII.B will be reviewed andresolved by the Director, Office ofAnalysis and Evaluation of OperationalData.D. The NRC’s General Counsel has thefinal authority to provide legalinterpretation of the Commission’sregulations.IX. Effective DateThe Agreement will take effect after ithas been signed by both parties.X. DurationA formal review, not less than 1 yearafter the effective date, will beperformed by the NRC to evaluateimplementation of the Agreement andresolve any problems identified. ThisAgreement will be subject to periodicreviews and may be amended ormodified upon written agreement byboth parties, and may be terminatedupon 30 days written notice by eitherparty.XI. SeparabilityIf any provision(s) of this Agreement,or the application of any provision(s) toany person or circumstances is heldinvalid, the remainder of thisAgreement and the application of such

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6283provisions to other persons orcircumstances will not be affected.For the U.S. Nuclear RegulatoryCommission.Dated: December 2, 1996.James M. Taylor,Executive Director for Operations.For the State of Vermont.Dated: December 10, 1996.George L. Lowe,Director, Vermont Emergency Management.[FR Doc. 97–3320 Filed 2–10–97; 8:45 am]BILLING CODE 7590–01–MSECURITIES AND EXCHANGECOMMISSION[Release No. IC–22492; 812–10396]John Nuveen & Co. Incorporated andNuveen Tax-Free Unit Trusts; Notice ofApplicationFebruary 4, 1997.AGENCY: Securities and ExchangeCommission (‘‘SEC’’).ACTION: Notice of Application forExemption under the InvestmentCompany Act of 1940 (the ‘‘Act’’).APPLICANTS: John Nuveen & Co.Incorporated (the ‘‘Sponsor’’), NuveenTax-Free Unit Trusts (the ‘‘NuveenTrust’’), and any future trusts sponsoredby the Sponsor (together with theNuveen Trust, the ‘‘Trusts’’), and theirrespective series (each, a ‘‘Series’’ or a‘‘Trust Series’’).RELEVANT ACT SECTIONS: Order requestedunder section 6(c) for an exemptionfrom sections 2(a)(32), 2(a)(35), 12(d)(3),14(a), 19(b), 22(d), and 26(a)(2) of theAct, and rules 19b–1 and 22c–1thereunder; under section 11(a) for anexemption from section 11(c); andunder sections 6(c) and 17(b) for anexemption from section 17(a).SUMMARY OF APPLICATION: Applicantsrequest an order to permit: (a) the Trustto impose sales charges on a deferredbasis, and to waive the deferred salescharge in certain circumstances; (b)certain offers of exchange involving theTrusts; (c) units of the Trusts to bepublicly offered without requiring theSponsor to take for its own account orplace with others $100,000 worth ofunits in those Trusts; (d) certain Truststo distribute capital gains resulting fromthe sale of portfolio securities within areasonable time after receipt; (e) aterminating Series of a Trust to sellportfolio securities to a new Series ofthe Trust; and (f) certain Trust Series toinvest up to 10.5%, and certain otherTrust Series to invest up to 20.5% oftheir assets in the securities of issuersthat derived more than 15% of theirgross revenues in their most recentfiscal year from securities relatedactivities.FILING DATE: The application was filedon October 15, 1996.HEARING OR NOTIFICATION OF HEARING: Anorder granting the application will beissued unless the SEC orders a hearing.Interested persons may request ahearing by writing to the SEC’sSecretary and serving applicants with acopy of the request, personally or bymail. Hearing requests should bereceived by the SEC by 5:30 p.m. onMarch 3, 1997, and should beaccompanied by proof of service onapplicants, in the form of an affidavit or,for lawyers, a certificate of service.Hearing requests should state the natureof the writer’s request, the reason for therequest, and the issues contested.Persons may request notification of ahearing by writing to the SEC’sSecretary.ADDRESSES: Secretary, SEC, 450 FifthStreet N.W., Washington, D.C. 20549.Applicants: 333 West Wacker Drive,Chicago, IL 60606.FOR FURTHER INFORMATION CONTACT:Christine Y. Greenlees, Senior Counsel,at (202) 942–0581, or Mary Kay Frech,Branch Chief, at (202) 942–0564(Division of Investment Management,Office of Investment CompanyRegulation).SUPPLEMENTARY INFORMATION: Thefollowing is a summary of theapplication. The complete applicationmay be obtained for a fee at the SEC’sPublic Reference Branch.Applicants’ Representations1. Each Trust is or will be a unitinvestment trust registered as aninvestment company under the Act.Each of the Trusts is sponsored by theSponsor, and is made up of one or moreSeries of separate unit investment trustsissuing securities registered or to beregistered under the Securities Act of1933. Each Series is created by a TrustIndenture (the ‘‘Indenture’’) between theSponsor and a banking institution ortrust company as trustee (the‘‘Trustee’’). The Sponsor is a whollyownedsubsidiary of The John NuveenCompany, of which approximately 78%is owned by The St. Paul Companies,Inc.2. The fundamental structures of theTrusts and the various Series are similarin most respects, however, theinvestment objectives may differ. In allcases, the Sponsor will acquire aportfolio of securities which it thendeposits with the Trustee in exchangefor certificates representing units offractional undivided interest (‘‘Units’’)in the deposited portfolio. The Units arethen offered to the public through theSponsor and dealers at a public offeringprice which, during the initial offeringperiod, is based upon the aggregateoffering side evaluation of theunderlying securities plus a front-endsales charge. This sales charge is themaximum amount applicable to anyparticular Series of a Trust andcurrently ranges from 4.9% to 2.5% ofthe public offering price, depending onthe term of the underlying securities.The Sponsor may reduce the salescharge under certain circumstances,which will be disclosed in theprospectus. Any such reduction will bemade in accordance with rule 22d–1.3. The Sponsor maintains a secondarymarket for Units of outstanding Series,and continually offers to purchase theseUnits at prices based upon the bid sideevaluation of the underlying securities.Investors may purchase Units on thesecondary market at the current publicoffering price plus a front-end salescharge. If the Sponsor discontinuesmaintaining such a market at any timefor any Series, holders of Units(‘‘Unitholders’’) of such a Series mayredeem their Units through the Trustee.A. Deferred Sales Charge1. The Sponsor proposes toimplement a program for one or moreTrust Series under which part or all ofthe sales charge would be deferred.Under applicants’ deferred sales charge(‘‘DSC’’) proposal, the Sponsor willdetermine both the maximum amount ofthe sales charge per Unit, and whetherto defer the collection of all or part ofthe sales charge over a period (the‘‘Collection Period’’) subsequent to thesettlement date for the purchase ofUnits. The Sponsor will in no event addto the deferred amount of the salescharge any additional amount forinterest or any similar or related chargeto reflect or adjust for such deferral.2. The Sponsor anticipates collectinga portion of the total sales chargeimmediately upon the purchase of TrustUnits. The balance of the sales chargewill be collected over the CollectionPeriod for the particular Trust Series. Aratable portion of the sales chargeremaining to be collected will bededucted from each Unitholder’sdistributions on the Units (‘‘DistributionDeductions’’) during the CollectionPeriod until the total amount of thesales charge per Unit is collected. Ifdistribution income is insufficient topay a DSC installment, the Trustee,pursuant to the powers granted in theIndenture, will have the ability to sellportfolio securities in an amount

6284 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesnecessary to provide the requisitepayments. If a Unitholder redeems hisor her Units before the total sales chargehas been collected from installmentpayments, the Sponsor intends todeduct any amount of unpaid DSC fromsale or redemption proceeds. Applicantsrepresent that the total of all theseamounts will in no event exceed themaximum sales charge per Unit.3. For purposes of determiningwhether a DSC applies to a particularredemption or sale of Units, the Sponsorwill assume that Units on which thetotal aggregate of DistributionDeductions has been collected areliquidated first. Any Units disposed ofover and above such amounts will besubject to the DSC, which will beapplied on the assumption that Unitsheld for the longest time are redeemedfirst. Therefore, the DSC will be thebalance of the sales charge per Unit,determined as of the date of purchase,which remains owing and uncollected.The Sponsor may in the future chooseto waive the DSC in connection withredemption or sales of Units undercertain circumstances. Any such waiverof the DSC will be disclosed in theprospectus and will be implemented inaccordance with rule 22d–1.4. The Sponsor believes that the DSCprogram will be adequately disclosed topotential investors as well asUnitholders. The prospectus for eachTrust Series will describe the operationof the DSC, including the amount anddate of each Distribution Deduction, andthe duration of the Collection Period.The prospectus also will disclose thatthe Trustee may sell Trust securities inthe event that income generated by theTrust portfolio is insufficient to pay forDSC expenses. Applicants also state thateach annual report will provideUnitholders with information as to theaggregate amount of annual DSCpayments made by the Trust during theprevious fiscal year on both a Series andper Unit basis. Further, the securitiesconfirmation statement for eachUnitholder’s purchase transaction willstate both the front-end sales charge andthe DSC that will be imposed, and thatthe DSC will be withdrawn in regularinstallments from distribution paymentsmade to Unitholders.B. Exchange Option and RolloverOption1. Applicants also seek an exemptionto permit offers of exchange amongSeries of the Trusts (the ‘‘ExchangeOption’’), and offers of exchange madein connection with the termination ofTrust Series (the ‘‘Rollover Option’’).The Exchange Option will extend to allexchanges of Units sold either with afront-end sales charge or with a DSC.The Rollover Option will giveUnitholders the ability to ‘‘roll over’’any or all of their Units in a Series ofa Trust (each, a ‘‘Rollover Trust’’) thatis terminating for Units of a new TrustSeries of the same type (a ‘‘New Trust’’)at a reduced sales charge.2. An investor who purchases Unitsunder either the Exchange Option or theRollover Option will pay a lower salescharge than that which would be paidby a new investor. The reduced salescharge imposed will be reasonablyrelated to the expenses incurred inconnection with the administration ofthe program, which may include anamount that will fairly and adequatelycompensate the Sponsor and theparticipating underwriters and brokersfor their services in providing theprogram.3. The sales charge on Units acquiredpursuant to the Exchange optiongenerally will be reduced frommaximum sales charges ranging from4.9% to 2.5% of the public offeringprice (5.5% to 0% for sales on thesecondary market) to a flat fee (e.g., $25per 100 Units for Units of a Serieswhose initial cost was approximately$10 per Unit, or $25 per 1,000 Units forUnits of a Series whose initial cost wasapproximately $1.00 per Unit) or apercentage of the public offering price.An adjustment will be made if Units ofany Trust Series are exchanged withinfive months of their acquisition forUnits of a Trust Series with a highersales charge (the ‘‘Five MonthsAdjustment’’). An adjustment also willbe made if Units that imposeDistribution Deductions are exchangedfor Units of a Trust Series that imposesa front-end sales charge at any timebefore the Distribution Deductions (plusany portion of the sales charge on theexchanged Units collected up front)have at least equaled the per Unit salescharge then applicable on the acquiredUnits (the ‘‘DSC Front-end ExchangeAdjustment’’). In cases involving eitherthe Five Months or the DSC Front-endExchange Adjustment, the exchange feewill be the greater of: (a) the reducedsales charge, or (b) an amount which,together with the sales charge alreadypaid on the Units being exchanged,equals the normal sales charge on theUnits of the Trust Series being acquiredthrough such exchange (the ‘‘ExchangeTrust’’), determined as of the date of theexchange. The Sponsor may waive, withappropriate disclosures, such exchangefee, and reserves the right to vary thesales charge normally applicable to aSeries, to vary the charge applicable toexchanges, and to modify, suspend, orterminate the Exchange Option as setforth in the conditions to theapplication.4. Under the Exchange Option, if DSCUnits are exchanged for DSC Units ofanother Series, the reduced sales chargewill be collected in connection withsuch an exchange. The DistributionDeductions will continue to be takenfrom the investment income generatedby the newly acquired Units, orproceeds from the sale of Trust portfoliosecurities, as the case may be, until theoriginal balance of the sales chargeowed on the initial investment has beencollected. The DSC due on the initialinvestment will not be collected at thetime of exchange, except in the case ofany exchange to a Series not having aDSC.5. Under the Rollover Option,Unitholders of Rollover Trusts may electby a certain date (the ‘‘RolloverNotification Date’’) to redeem theirUnits in a terminating Rollover Trust,and invest in Units of a New Trust,which is created on or about theRollover Notification Date, at a reducedsales charge. Unitholders making suchan election will be referred to as‘‘Rollover Unitholders.’’ The applicablesales charge upon the initial investmentin a Rollover Trust typically is 2.9% ofthe public offering price, while thereduced sales charge applicable to aRollover Unitholder’s investment in aNew Trust usually will be 1.9% of thepublic offering price.C. Purchase and Sale TransactionsBetween a Rollover Trust and a NewTrust1. Applicants also request anexemption to permit any Rollover Trustto sell their portfolio securities to a NewTrust, and the New Trust to purchasethese securities. Each Rollover Trustwill contain a portfolio of equitysecurities (the ‘‘Equity Securities’’)representing a portion of a specificpublished index (an ‘‘Index’’). TheEquity Securities in each portfolio willbe: (a) Actively traded (i.e., have had anaverage daily trading volume in thepreceding six months of a least 500shares equal in value to at least U.S.$25,000) on (i) an exchange (an‘‘Exchange’’) which is either a nationalsecurities exchange that meets thequalifications of section 6 of theSecurities Exchange Act of 1934, or aforeign securities exchange (‘‘ForeignExchange’’) that meets the qualificationsset forth in a proposed amendment torule 12d3–1(d)(6) under the Act, 1 and1 Investment Company Act Release No. 17096(Aug. 3, 1989) (proposing amendments to rule12d3–1). The proposed amendment defined a‘‘Qualified Foreign Exchange’’ to mean a foreign

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6285which releases daily closing prices, or(ii) the Nasdaq-National Market System(‘‘Nasdaq-NMS’’); and (b) included in anIndex.2. The investment objective of eachRollover Trust is to seek a greater totalreturn than that achieved by the stockscomprising the entire Index over the lifeof the Rollover Trust. To achieve thisobjective, each Rollover Trust willconsist of a specified number of thehighest dividend yielding securities insuch Rollover Trust’s respective Index,or in a specified number of the lowestdollar price per share of the highestdividend yielding securities in suchRollover Trust’s respective Index. Forexample, certain Rollover Trusts (the‘‘Ten Series’’) will invest for a specifiedperiod in approximately equal values inthe ten common stocks contained in theDow Jones Industrial Average (the‘‘DJIA’’), the Financial Times IndustrialOrdinary Share Index (the ‘‘FT Index’’),or the Hang Seng Index, having thehighest yields as of no more than threebusiness days prior to the Ten Series’initial date of deposit. In addition, otherRollover Trusts (the ‘‘Five Series’’) willpursue their objective by investing for aspecified period in approximately equalvalues in the common stocks of the fivecompanies with the lowest dollar priceper share of the ten companies in theDJIA, the FT Index, or the Han SengIndex, having the highest dividendyields as of no more than three businessdays prior to the Five Series’ initial dateof deposit.3. The securities deposited in eachRollover Trust are chosen solelyaccording to the formulas describedabove and set forth in the prospectus forthe Rollover Trust. The Sponsor will nothave any discretion as to whichsecurities are purchased, becausesecurities are initially purchased inaccordance with the formulas describedabove. The Rollover Trust’s portfolioswill not be actively managed and willnot be altered to reflect changes to thosestocks comprising the top dividendyielding stocks (or lowest priced stocksof the top dividend yielding stocks) inan Index on a date after the RolloverTrust’s initial date of deposit. TheSponsor does not have discretion as towhen securities will be sold, except thatthe Sponsor is authorized to sellsecurities in extremely limitedcircumstances, such as a default by theissuer on the payment on any of itsoutstanding obligations, a decline in theprice of an Equity Security, or otherstock exchange meeting certain standards withrespect to trading volume and other matters. Assubsequently amended, however, the rule omittedthat proposed definition.credit factors that, in the opinion of theSponsor, would cause the retention ofthe securities to be detrimental to theRollover Trust.4. Each Rollover Trust will hold itssecurities for a specified period,generally one year. As the RolloverTrust terminates, the Sponsor intends tocreate a New Trust for the next period.With respect to the Rollover Trusts, theNew Trust will be based on the sameIndex, using the same number of currenttop dividend yielding securities (or ofthe lowest price per share securities ofthe highest dividend yielding securities,whichever is applicable) in the Index.5. There normally is some overlapfrom year to year of the highestdividend yielding securities (or thelowest dollar price per share stocks ofthe highest dividend yielding securities)in an Index and, therefore, between theportfolios of each terminating RolloverTrust and the related New Trust. Forexample, of the ten highest dividendyielding securities on the DJIA as ofMay 1995, eight were among the top tendividend yielding securities atapproximately the same time thefollowing year.6. In connection with its termination,each Rollover Trust will sell all of itsportfolio securities on an Exchange orNasdaq-NMS as quickly as practicable,but over a period of time so as tominimize any adverse impact on themarket price. Similarly, a New Trustwill acquire its portfolio securities inpurchase transactions on an exchange ornon Nasdaq-NMS. This procedure willresult in substantial brokeragecommissions on portfolio securities ofthe same issue that are borne by theUnitholders of both the Rollover Trustand the New Trust.7. In light of these costs, applicantsrequest exemptive relief to permit anyRollover Trust having the characteristicsdescribed above to sell Equity Securitiesto a New Trust, and to permit the NewTrust to purchase Equity Securities atthe closing sales price of such securitieson the applicable Exchange or onNasdaq-NMS on the sale date, providedthat applicants comply with rule 17a–7under the Act, except for paragraph (e)thereof, as discussed below.8. In order to minimize overreaching,the Sponsor will certify to the Trustee,within five days of each sale from aRollover Trust to a New Trust: (a) Thatthe transaction is consistent with thepolicy of both the Rollover Trust andthe New Trust, as recited in theirrespective registration statements andreports filed under the Act; (b) the dateof such transaction; and (c) the closingsales price on the Exchange or onNasdaq-NMS for the sale date of thesecurities subject to such sale. TheTrustee will then countersign thecertificate, unless the Trustee disagreeswith the price listed on the certificate,in which event the Trustee willimmediately inform the Sponsor orallyof any such disagreement and returnsthe certificate within five days to theSponsor with corrections duly noted.Upon the Sponsors receipt of acorrected certificate, if the Sponsor canverify the corrected price by reference toan independently published list ofclosing sales prices for the date of thetransactions, the Sponsor will ensurethat the price of Units of the New Trust,and distributions to Unitholders of theRollover Trust with regard toredemption of their Units or terminationof the Rollover Trust, accurately reflectthe corrected price. If the Sponsordisagrees with the Trustee’s correctedprice, the Sponsor and the Trustee willjointly determine the correct sales priceby reference to a mutually agreeable,independently published list of closingsales prices for the date of thetransaction.D. Investments in Securities RelatedIssuers on Certain Indexes1. Applicants also request anexemption to permit the Ten Series toacquire securities of an issuer thatderives more than 15% of its grossrevenues from ‘‘securities relatedactivities’’ (as defined in rule 12d3–1(d)(1)), provided that: (a) Thosesecurities are included in the DJIA, theFT Index, or the Hang Seng Index; (b)they have one of the ten highest yieldsof stocks comprising the DJIA, the FTIndex, or the Hang Seng Index no morethan three business days prior to theinitial date of deposit; and (c) the valueof the securities deposited of eachsecurities related issuer represents nomore than approximately 10%, but inno event more than 10.5%, of the valueof that Ten Series’ total assets as of itsinitial date of deposit. In addition,Applicants request an exemption topermit the Five Series to acquiresecurities of an issuer that derives morethan 15% of its gross revenues from‘‘securities related activities’’ (asdefined in rule 12d3–1(d)(1)), providedthat: (a) those securities are included inthe DJIA, the FT Index, or the HangSeng Index; (b) they are securities of oneof the five companies with the lowestdollar price per share of the ten stocksin the DJIA, the FT Index, or the HangSeng Index having the highest dividendyield as of no more than three businessdays prior to the initial date of deposit;and (c) the value of the securitiesdeposited of each securities relatedissuer represents no more than

6286 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesapproximately 20%, but in no eventmore than 20.5%, of the value of thatFive Series’ total assets as of its initialdate of deposit.2. As noted above, the Ten Series andthe Five Series will contain a portfolioof Equity Securities which represents aportion of the DJIA, the FT Index, or theHang Seng Index. The DJIA comprises30 widely-held common stocks listed onthe New York Stock Exchange that arechosen by the editors of The Wall StreetJournal. The FT Index compriseswidely-held common stocks listed onthe London Stock Exchange that arechosen by the editors of the TheFinancial Times (London). The FTIndex is an unweighted average of 30companies representative of Britishindustry and commerce. The Hang SengIndex is a weighted average of 33companies representative of Hong Kongindustry. The publishers of the DowJones & Company, Inc. (owner of theDJIA), the FT Index, and the Hang SengIndex are unaffiliated with any Series orthe Sponsor and do not participate inany way in the creation of any Series orthe selection of its stocks.3. Certain of the stocks currentlycomprising the DJIA, the FT Index, andthe Hang Seng Index are issued bycompanies with subsidiaries engaged in‘‘securities related activities’’ (asdefined in rule 12d3–1(d)(1)), revenuesof which may from time to timerepresent more than 15% of the issuer’sgross revenues. It also is possible thatadditional companies in the DJIA, theFT Index, and the Hang Seng Index mayacquire companies engaged in or enterinto those business in the future.Applicants’ Legal Analysis1. Applicants request an exemptionunder section 6(c) granting relief fromsections 2(a)(32), 2(a)(35), 22(d),26(a)(2), and rule 22c–1 to permit themto assess a DSC, and to waive the DSCunder certain circumstances. Applicantsalso request an exemption under section11(a) granting relief from section 11(c)to enable them to implement theExchange and Rollover Options. Inaddition, applicants request anexemption under sections 6(c) and 17(b)granting relief from section 17(a) topermit a terminating Series of a Trust tosell portfolio securities to a new Seriesof the Trust. Finally, applicants seek anexemption under section 6(c) grantingrelief from sections 12(d)(3), 14(a),19(b), and rule 19b–1 to the extentdescribed below.2. Section 2(a)(32) of the Act definesa ‘‘redeemable security’’ as a securitythat, upon its presentation to the issuer,entities the holder to receiveapproximately his or her proportionateshare of the issuer’s current net assets.or the cash equivalent of those assets.Because the imposition of a DSC maycause a redeeming Unitholder to receivean amount less than the net asset valueof the redeemed Units, applicantsrequest an exemption from section2(a)(32) so that Units subject to a DSCare considered redeemable securities forpurposes of the Act. 23. Section 2(a)(35) of the Act, inrelevant part, defines the term ‘‘salesload’’ to be the difference between thepublic selling price of a security andthat portion of the sale proceedsinvested or held for investment by thedepositor or trustee. Because a DSC isnot charged at the time of purchase,applicants request an exemption fromsection 2(a)(35).4. Rule 22c–1, in relevant part,prohibits a registered investmentcompany issuing a redeemable securityfrom selling, redeeming, or repurchasingany such security, except at a pricebased on the current net asset value ofsuch security. Because the imposition ofa DSC may cause a redeemingUnitholder to receive an amount lessthan the net asset value of the redeemedUnits, applicants request an exemptionfrom rule 22c–1.5. Section 22(d) of the Act requires aninvestment company and its principalunderwriter and dealers to sellsecurities issued by such investmentcompany only at the current publicoffering price as described in theinvestment company’s prospectus.Because sales charges traditionally havebeen a component of the public offeringprice, section 22(d) historically requiredthat all investors be charged the sameload. Rule 22d–1 was adopted to permitthe sale of redeemable securities withscheduled variations in the sales load.Applicants submit that waivers,deferrals or other scheduled variations,if disclosed in the relevant prospectus,would be consistent with section 22(d),and that rule 22d–1 contemplates andpermits such waivers, deferrals or otherscheduled variations if disclosed in therelevant prospectus. In the interest ofclarity, however, applicants seek relieffrom section 22(d) to permit scheduledvariations or waivers of the DSC undercertain circumstances.6. Section 26(a)(2) of the Act, inrelevant part, prohibits a trustee orcustodian of a unit investment trustfrom collecting from the trust as anexpense any payment to a depositor or2 Without an exemption, a Trust selling Unitssubject to a DSC could not meet the definition ofa unit investment trust under section 4(2) of theAct. As here relevant, section 4(2) defines a unitinvestment trust as an investment company thatissues only ‘‘redeemable securities.’’principal underwriter thereof. Becauseof this prohibition, applicants requestan exemption to permit the trustee tocollect the charge from incomedistributions on the Units and disbursethem to the Sponsor as contemplate bythe DSC program.7. Section 6(c) of the Act provides, inrelevant part, that the SEC, by orderupon application may exempt anyperson or transaction, or any class orclasses of persons or transactions, fromany provision of the Act or any rulethereunder if such exemption isappropriate in the public interest andconsistent with the protection ofinvestors and the purposes fairlyintended by the policy and provisions ofthe Act. Applicants believe that grantingthe requested relief from sections2(a)(32), 2(a)(35), 22(d), 26(a)(2), andrule 22c–1 would meet the requirementsfor an exemption established by section6(c).8. Section 11(c) of the Act prohibitsany offer of exchange of the securities ofa registered unit investment trust for thesecurities of any other investmentcompany, unless the terms of the offerhave been approved by the SEC.Applicants request an exemption undersection 11(a) from the provisions ofsection 11(c) to permit exchanges ofUnits of Trust Series sold with front-endor deferred sales charges at reducedsales charges, and to permit exchangetransactions made in connection withthe termination of a Series at a reducedsales charge. Applicants believe that thereduced sales charge imposed at thetime of exchange is a reasonable andjustifiable expense to be allocated forthe professional assistance andoperational expenses which arecontemplated in connection with theExchange and the Rollover Option.Applicants further believe that therequirement that a person who hasacquired Units at a lower sales chargepay the difference, if greater than thereduced fixed charge, upon exercisingthe Exchange Option when the FiveMonths Adjustment or the DSC FrontendExchange Adjustment applies isappropriate in order to maintain theequitable treatment of various investorsin each Trust Series.9. Section 14(a) of the Act requires insubstance that investment companieshave $100,000 of net worth prior tomaking a public offering. Applicantsbelieve that each Series will complywith this requirement because theSponsor will deposit substantially morethan $100,000 of debt or equitysecurities or a combination thereof,depending on the objective of theparticular Series. Applicants assert,however, that the SEC has interpreted

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6287section 14(a) as requiring that the initialcapital investment in an investmentcompany be made without any intentionto dispose of the investment. Applicantsstate that, under this interpretation, aTrust Series would not satisfy section14(a) because of the Sponsor’s intentionto sell all the Units thereof. Rule 14a–3 exempts unit investment trusts fromthis provision if certain conditions arecomplied with, one of which is that thetrust invest only in ‘‘eligible trustsecurities,’’ as defined in the rule.Applicants intend that certain futureSeries of the Trusts (collectively, the‘‘Equity Trusts’’) will invest all or aportion of their assets in EquitySecurities, and therefore may not relyon this rule because Equity Securitiesare not eligible trust securities.Applicants, therefore, request anexemption under section 6(c) from thenet worth requirement of section 14(a).Applicants will comply in all respectswith rule 14a–3, except that the EquityTrusts will not restrict their portfolioinvestments to ‘‘eligible trustsecurities.’’10. Section 19(b) of the Act and rule19b–1 provide that, except underlimited circumstances, no registeredinvestment company may distributelong-term gains more than once everytwelve months. Rule 19b–1(c), undercertain circumstances, excepts a unitinvestment trust investing in ‘‘eligibletrust securities’’ (as defined in rule 14a–3) from the requirements of rule 19b–1.Because the Equity Trusts do not limittheir investments to ‘‘eligible trustsecurities,’’ such Trusts will not qualifyfor the exemption in paragraph (c) ofrule 19b–1. Therefore, applicantsrequest an exemption under section 6(c)from section 19(b) and rule 19b–1 to theextent necessary to permit capital gainsearned in connection with the sale ofportfolios securities to be distributed toUnitholders along with the EquityTrust’s regular distributions. In all otherrespects, applicants will comply withsection 19(b) and rule 19b–1.11. Applicants believe that thedangers which section 19(b) and rule19b–1 are designed to prevent do notexist in the Equity Trusts. Any gainsfrom the sale of portfolio securitieswould be triggered by the need to meetTrust expenses, DSC installments, or byrequests to redeem Units, events overwhich the Sponsor and the EquityTrusts have no control. Applicantsacknowledge that the Sponsor hascontrol over the actual redemption ofUnits to the extent it makes a market inUnits. Applicants assert, however, thatthe Sponsor has no incentive to redeemor permit the redemption of Units inorder to generate capital gains for thepurpose against which section 19(b) andrule 19b–1 were designed to protect.Moreover, since principal distributionsmust be clearly indicated inaccompanying reports to Unitholders asa return of principal and will berelatively small in comparison tonormal dividend distributions, there islittle danger of confusion from failure todifferentiate among distributions.12. Section 17(a) of the Act makes itunlawful for an affiliated person of aregistered investment company topurchase securities from, or sellsecurities to such registered investmentcompany. Investment companies undercommon control may be consideredaffiliated persons of one another. EachSeries will have an identical or commonSponsor, John Nuveen & Co.Incorporated. As the Sponsor of eachSeries might be considered to controleach Series, it is likely that each Serieswould be considered an affiliatedperson of the others.13. Section 17(b) of the Act providesthat the SEC may exempt a proposedtransaction from section 17(a) ifevidence establishes that: (a) the termsof the proposed transaction arereasonable and fair and do not involveoverreaching; (b) the proposedtransaction is consistent with thepolicies of each registered investmentcompany involved; and (c) the proposedtransaction is consistent with thegeneral purposes of the Act. As notedabove, under section 6(c), the SEC mayexempt classes of transactions if, and tothe extent that, such exemption isnecessary or appropriate in the publicinterest, and consistent with theprotection of investors and the purposesfairly intended by the policy andprovisions of the Act. Because section17(b) applies to a specific proposedtransaction and not to ongoing series offuture transactions, applicants alsorequest relief from section 17(a) undersection 6(c). Applicants believe that theproposed transactions satisfy therequirements of sections 6(c) and 17(b).14. Rule 17a–7 under the Act permitsregistered investment companies thatmight be deemed affiliates solely byreason of common investment advisers,directors, and/or officers, to purchasesecurities from, or sell securities to, oneanother at an independently determinedprice, provided certain conditions aremet. Paragraph (e) of the rule requiresan investment company’s board ofdirectors to adopt and monitor theprocedures for these transactions toassure compliance with the rule. A unitinvestment trust does not have a boardof directors and, therefore, may not relyon the rule. Applicants represent thatthey will comply with all of theprovisions of rule 17a–7, other thanparagraph (e).15. Applicants submit that theproposed transactions will be consistentwith the policy of the Trust, as onlysecurities that otherwise would bebought and sold on the open marketpursuant to the policy of each TrustSeries will be involved in the proposedtransactions. In addition, applicantsstate that such purchases from and/orsales to such affiliated investmentcompanies will take place only upon theoccurrence of a redemption of Units orthe termination of a Rollover Trust andthe creation of a New Trust. Applicantsfurther believe that the current practiceof buying and selling on the openmarket leads to unnecessary brokeragefees, and is therefore contrary to thegeneral purposes of the Act.16. Section 12(d)(3) of the Actprohibits an investment company fromacquiring any security issued by anyperson who is a broker, dealer,underwriter, or investment adviser. Rule12d3–1, in relevant part, exempts fromsection 12(d)(3) purchases by aninvestment company of securities of anissuer that derived more than 15% of itsgross revenues in its most recent fiscalyear from securities related activities,provided that, among other things,immediately after such acquisition, theacquiring company has invested notmore than 5% of the value of its totalassets in securities of the issuer.17. Applicants seek an exemptionunder section 6(c) from the provisionsof section 12(d)(3) to permit each TenSeries to invest up to approximately10%, but in no event more than 10.5%,of the value of any Ten Series’ assets inthe securities of an issuer of any of theten highest dividend yielding stocks inthe DJIA, the FT Index, or the HangSeng Index that derives more than 15%of its gross revenues from securitiesrelated activities. Similarly, applicantsseek an exemption to permit each FiveSeries to invest up to approximately20%, but in no event more than 20.5%,of the value of any Five Series’ assets inthe securities of an issuer of any of thefive stocks having the lowest dollarprice per share of the ten highestyielding stocks in the DJIA, the FTIndex, or the Hang Seng Index, thatderives more than 15% of its grossrevenues from securities relatedactivities. Applicants represent thateach Ten Series and Five Series willcomply with all of the conditions of rule12d3–1, except the conditionprohibiting an investment companyfrom investing more than 5% of thevalue of its total assets in securities ofa securities related issuer.

6288 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices18. Applicants submit that thepurpose of section 12(d)(3) was to: (a)prevent investment companies fromexposing their assets to theentrepreneurial risks of securitiesrelated businesses; (b) prevent potentialconflicts of interest; (c) eliminate certainreciprocal practices between investmentcompanies and securities relatedbusinesses; and (d) ensure thatinvestment companies maintainadequate liquidity in their portfolios.Applicants assert that the proposedtransaction does not give rise to the typeof abuses section 12(d)(3) was designedto address. Applicants also believe thatthe requested relief meets the standardsfor an exemption set forth in section6(c).Applicants’ ConditionsApplicants agree that any ordergranting the requested relief shall besubject to the following conditions:A. Conditions With Request to DSCRelief and Exchange and RolloverOptions1. Whenever the Exchange Option orRollover Option is to be terminated orits terms are to be amended materially,any holder of a security subject to thatprivilege will be given prominent noticeof the impending termination oramendment at least 60 days prior to thedate of termination or the effective dateof the amendment, provided that: (a) nosuch notice need be given if the onlymaterial effect of an amendment is toreduce or eliminate the sales chargepayable at the time of an exchange, toadd one or more new Series eligible forthe Exchange Option or the RolloverOption, or to delete a Series which hasterminated; and (b) no notice need begiven if, under extraordinarycircumstances, either: (i) there is asuspension of the redemption of Unitsof the Trust under section 22(e) of theAct and the rules and regulationspromulgated thereunder, or (ii) a Trusttemporarily delays or ceases the sale ofits Units because it is unable to investamounts effectively in accordance withapplicable investment objectives,policies, and restrictions.2. An investor who purchases Unitsunder the Exchange Option or theRollover Option will pay a lower salescharge than that which would be paidfor the Units by a new investor.3. The prospectus of each Trustoffering exchanges or rollovers and anysales literature or advertising thatmentions the existence of the ExchangeOption or the Rollover Option willdisclose that such Exchange Option orRollover Option is subject tomodification, termination, orsuspension, without notice except incertain limited cases.4. Each Series offering Units subject toa DSC will include in its prospectus thetable required by item 2 of Form N–1A(modified as appropriate to reflect thedifferences between unit investmenttrusts and open-end managementinvestment companies), and a schedulesetting forth the number and date ofeach installment payment.B. Condition for Exemption FromSection 12(d)(3)No company held in the Ten Series’portfolio or the Five Series’ portfolio,nor any affiliate thereof, will act asbroker for any Ten Series or Five Seriesin the purchase or sale of any securityfor such Series’ portfolio.C. Condition for Exemption FromSection 14(a)Applicants will comply in all respectswith the requirements of rule 14a–3,except that the Equity Trusts will notrestrict their portfolio investments to‘‘eligible trust securities.’’D. Conditions for Exemption FromSection 17(a)1. Each sale of Equity Securities by aRollover Trust to a New Trust will beeffected at the closing price of thesecurities sold on the applicableExchange or the Nasdaq-NMS on thesale date, without any brokerage chargesor other remuneration except customarytransfer fees, if any.2. The nature and conditions of suchtransactions will be fully disclosed toinvestors in the appropriate prospectusof each future Rollover Trust and NewTrust.3. The Trustee of each Rollover Trustand New Trust will: (a) review theprocedures discussed in the applicationrelating to the sale of securities from aRollover Trust and the purchase of thosesecurities for deposit in a New Trust,and (b) make such changes to theprocedures as the Trustee deemsnecessary that are reasonably designedto comply with paragraphs (a) through(d) of rule 17a–7.4. A written copy of these proceduresand a written record of each transactionpursuant to any order granting theapplication will be maintained asprovided in rule 17a–7(f).For the SEC, by the Division of InvestmentManagement, under delegated authority.Margaret H. McFarland,Deputy Secretary.[FR Doc. 97–3266 Filed 2–10–97; 8:45 am]BILLING CODE 8010–01–MIssuer Delisting; Notice of ApplicationTo Withdraw From Listing andRegistration; (Mitcham Industries, Inc.,Common Stock, $0.01 Par Value) FileNo. 1–13490February 5, 1997.Mitcham Industries, Inc.(‘‘Company’’) has filed an applicationwith the Securities and ExchangeCommission (‘‘Commission’’), pursuantto Section 12(d) of the SecuritiesExchange 1934 (‘‘Act’’) and Rule 12d2–2(d) promulgated thereunder, towithdraw the above specified security(‘‘Security’’) from listing andregistration on the Pacific StockExchange, Inc. (‘‘PSE’’).The reasons alleged in the applicationfor withdrawing the Security fromlisting and registration include thefollowing:The Company originally listed on thePSE when its Security was listed on theNasdaq SmallCap Market in order toobtain the blue sky secondary markettrading exemptions afforded by the PSElisting. Since April 26, 1996, theCompany’s Security has been listed onthe Nasdaq National Market System,which provides secondary markettrading exemptions for all states. Inaddition, the Company believes thatthere is insignificant trading of itsSecurity on the PSE.Any interested person may, on orbefore February 27, 1997, submit byletter to the Security of the Securitiesand Exchange Commission, 450 FifthStreet, N.W., Washington, D.C. 20549,facts bearing upon whether theapplication has been made inaccordance with the rules of theexchanges and what terms, if any,should be imposed by the Commissionfor the protection of investors. TheCommission, based on the informationsubmitted to it, will issue an ordergranting the application after the datementioned above, unless theCommission determines to order ahearing on the matter.For the Commission, by the Division ofMarket Regulation, pursuant to delegatedauthority.Jonathan G. Katz,Secretary.[FR Doc. 97–3265 Filed 2–10–97; 8:45 am]BILLING CODE 8010–01–MSunshine Act MeetingNotice is hereby given, pursuant tothe provisions of the Government in theSunshine Act, Pub. L. 94–409, that theSecurities and Exchange Commissionwill hold the following meeting duringthe week of February 10, 1997.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6289A closed meeting will be held onFriday, February 14, 1997, at 10:00 a.m.Commissioners, Counsel to theCommissioners, the Secretary to theCommission, and recording secretarieswill attend the closed meeting. Certainstaff members who have an interest inthe matters may also be present.The General Counsel of theCommission, or his designee, hascertified that, in his opinion, one ormore of the exemptions set forth in 5U.S.C. 552b(c)(4), (8), (9)(A) and (10)and 17 CFR 200.402(a)(4), (8), (9)(i) and(10), permit consideration of thescheduled matters at the closed meeting.Commissioner Hunt, as deputyofficer, voted to consider the itemslisted for the closed meeting in a closedsession.The subject matter of the closedmeeting scheduled for Friday, February14, 1997, at 10:00 a.m., will be:Institution and settlement of injunctiveactions.Institution and settlement of administrativeproceedings of an enforcement nature.Regulatory matter bearing enforcementimplications.At times, changes in Commissionpriorities require alterations in thescheduling of meeting items. For furtherinformation and to ascertain what, ifany, matters have been added, deletedor postponed, please contact:The Office of the Secretary at (202) 942–7070.Dated: February 7, 1997.Margaret H. McFarland,Deputy Secretary.[FR Doc. 97–3540 Filed 2–7–97; 3:53 pm]BILLING CODE 8010–01–M[Release No. 34–38242; File No. SR–MBSCC–96–06]Self-Regulatory Organizations; MBSClearing Corporation; Order Approvinga Proposed Rule Change Relating tothe Satisfaction of Participants FundDeposit RequirementsFebruary 5, 1997.On October 7, 1996, MBS ClearingCorporation (‘‘MBSCC’’) filed with theSecurities and Exchange Commission(‘‘Commission’’) a proposed rule change(File No. SR–MBSCC–96–06) pursuantto Section 19(b)(1) of the SecuritiesExchange Act of 1934 (‘‘Act’’) toeliminate the depository receipt as anacceptable form of collateral to satisfyits participants fund depositrequirements. 1 Notice of the proposalwas published in the Federal Registeron December 12, 1996. 2 No commentletters were received. For the reasonsdiscussed below, the Commission isapproving the proposed rule change.I. DescriptionMBSCC presently requires each of itsparticipants to pledge or to providecollateral to MBSCC to satisfy MBSCC’sparticipants fund deposit requirements. 3These deposits form a nonmutualizedpool of collateral that is designed toreflect each participant’s aggregateprojected obligations to itscounterparties and to MBSCC. MBSCCcurrently accepts cash, certainsecurities, and letters of credit issued byan approved issuer as collateral insatisfaction of its participants’ depositobligations. Previously, MBSCC’sparticipants that used securities tosatisfy their deposit requirements wererequired only to provide evidence of thepledge of securities to MBSCC by usinga depository receipt; however,participants were not required to effecta book-entry transfer of such securitiesto an MBSCC account. 4 The rule changeeliminates the use of the depositoryreceipt and instead requires participantsthat choose to use securities to satisfytheir participants deposit requirementsto deliver the securities by book-entry toan MBSCC account at an entityapproved by MBSCC. In connectionwith this rule change, MBSCC also willbe responsible for the payment of anyfees associated with the establishmentof a pledge account at a trust companyapproved by MBSCC’s board of directorsfor use in connection with the bookentrymethod.II. DiscussionSection 17A(b)(3)(F) 5 of the Actrequires that the rules of a clearing1 15 U.S.C. 78s(b)(1).2 Securities Exchange Act Release No. 38021(December 5, 1996), 61 FR 65424.3 For a complete description of the participantsfund, refer to Securities Exchange Act Release Nos.37294 (June 10, 1996), 61 FR 30268 [File No. SR–MBSCC–96–01] (notice of filing of proposed rulechange] and 37512 (August 1, 1996), 61 FR 41437[File No. SR–MBSCC–96–01] (order approvingproposing rule change).4 A depository receipt evidences the pledge ofspecified securities held by a custodian for theaccount of a pledgee. MBSCC advised theCommission that as of October 1996, the year todate average daily dollar value of the securitiespledged to MBSCC through the use of depositoryreceipts was $1.05 billion.5 15 U.S.C. 78q–1(b)(3)(F).agency be designed to assure thesafeguarding of securities and fundswhich are in the custody or control ofthe clearing agency or for which it isresponsible. The Commission believesthat MBSCC’s proposed rule change isconsistent with MBSCC’s obligationsunder Section 17A of the Act. Thereplacement of depository receipts withthe book-entry method should reducethe risks associated with the use ofdepository receipts. 6 The exclusive useof book-entry method as a means forparticipants to pledge securities toMBSCC as participants fund collateralshould enhance MBSCC’s ability toaccess the collateral in the event of aparticipant default. This should enableMBSCC to better fulfill its obligationunder the Act to assure the safeguardingof securities and funds which are in itscustody or control. Furthermore,because MBSCC will be responsible forall fees associated with theestablishment of the pledge account, therule change should help reduce anyburdens on MBSCC’s participants thatresult from the elimination ofdepository receipts as an acceptableform of participants fund deposit.III. ConclusionOn the basis of the foregoing, theCommission finds that the proposal isconsistent with the requirements of theAct and in particular with therequirements of Section 17A of the Actand the rules and regulationsthereunder.It is therefore ordered, pursuant toSection 19(b)(2) of the Act, that theproposed rule change (File No. SR–MBSCC–96–06) be, and hereby is,approved.For the Commission by the Division ofMarket Regulation, pursuant to delegatedauthority. 7Margaret H. McFarland,Deputy Secretary.[FR Doc. 97–3325 Filed 2–10–97; 8:45 am]BILLING CODE 8010–01–M6 MBSCC has stated that the use of the depositoryreceipt presents certain risks to MBSCC, including:(1) Forgery, (2) unauthorized individuals executingon behalf of the participant or the custodian, (3)improper segregation of the pledged securities fromother securities, (4) unauthorized releases of thepledged securities, and (5) the possibility that thecustodian will not release the securities to MBSCCupon MBSCC’s proper demand for such a release.7 17 CFR 200.30–3(a)(12).

6290 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices[Release No. 34–38240; File No. SR–NASD–96–52]Self-Regulatory Organizations;National Association of SecuritiesDealers, Inc.; Order GrantingAccelerated Approval of ProposedRule Change Relating to the Reportingof Short Sale Transactions by MarketMakers Exempt From the NASD’sShort Sale RuleFebruary 5, 1997.I. IntroductionOn December 17, 1996, the NationalAssociation of Securities Dealers, Inc.(‘‘NASD’’ or ‘‘Association’’) filed withthe Securities and ExchangeCommission (‘‘Commission’’ or ‘‘SEC’’)pursuant to Section 19(b)(1) of theSecurities Exchange Act of 1934(‘‘Act’’), 1 and Rule 19b–4 thereunder 2 aproposed rule change to the AutomatedConfirmation Transaction (‘‘ACT’’)Service rules that would require allPrimary Market Makers (‘‘PMM’’) tomark their ACT reports to denote whenthey have relied on the PMM exemptionto NASD’s short sale rule. The proposedrule change was published for commentin Securities Exchange Act Release No.38092 (December 27, 1996), 62 FR 776(January 6, 1997) (‘‘Notice of ProposedRule Change’’). The Commissionreceived no comments on the proposaland is approving the proposed rulechange on an accelerated basis.II. Description of the ProposalOn June 29, 1994, the Commissionapproved the NASD’s short sale rule onan eighteen-month pilot basis throughMarch 5, 1996. 3 The Commissionsubsequently extended the terminationdate through October 1, 1997. 4 TheNASD’s short sale rule prohibitsmember firms from effecting short salesin Nasdaq National Market (‘‘NNM’’)securities at or below the current insidebid as disseminated by Nasdaqwhenever the bid is lower than theprevious bid. 5 The rule provides anexemption from the short sale rule to‘‘qualified’’ Nasdaq market makers whocan use the exemption only inconnection with bona fide marketmaking activity. To be a qualifiedmarket maker, a market maker must1 15 U.S.C. 78s(b)(1).2 17 CFR 240.19b–4.3 See Securities Exchange Act Release No. 34277(June 29, 1994), 59 FR 34885 (July 7, 1994) (‘‘ShortSale Rule Approval Order’’).4 See Securities Exchange Act Release Nos. 36171(August 30, 1995), 60 FR 46651; 36532 (November30, 1995), 60 FR 62519; 37492 (July 29, 1996), 61FR 40693; and 37919 (November 1, 1996), 61 FR57934.5 See NASD Rule 3350.satisfy the Nasdaq PMM standards. 6 If amarket maker is a PMM for a particularstock, there is a ‘‘P’’ indicator next to itsquote in that stock. 7When the Commission approved theNASD’s short-sale rule it also approvedan NASD proposal to require NASDmembers to append a designator to theirACT reports to denote whether theirsale transactions were long sales, shortsales, or exempt short sales. At thattime, however, market makers exemptfrom the short-sale rule were notrequired to append ‘‘sell short’’ or ‘‘sellshort exempt’’ to their ACT reports. 8Accordingly, in order to enhance theNASD’s ability to surveil for potentialabuses of the market maker exemptionand examine and monitor the marketimpacts of the market maker exemption,the NASD’s proposed rule changedeletes the footnote to NASD Rule6130(d)(6), thereby requiring all exemptmarket makers to mark their ACTreports to denote when they have reliedon the market maker exemption.The NASD will establish an effectivedate for the rule change in a Notice-to-Members announcing Commissionapproval of the proposal. The Noticewill be published within thirty days ofCommission approval of the proposaland the effective date of the proposal6 Pursuant to NASD Rule 4612, the PMMstandards require a market maker to satisfy at leasttwo of the following four criteria to be eligible foran exemption from the short sale rule: (1) themarket maker must be at the best bid or best offeras shown on Nasdaq no less than 35 percent of thetime; (2) the market maker must maintain a spreadno greater than 102 percent of the average dealerspread; (3) no more than 50 percent of the marketmaker’s quotation updates may occur without beingaccompanied by a trade execution of at least oneunit of trading; or (4) the market maker executes 1 1 ⁄2times its ‘‘proportionate’’ volume in the stock.Specifically, the proportionate volume test requiresa market maker to account for volume of at least 1 1 ⁄2times its proportionate share of overall volume inthe security for the review period. For example, ifa security has 10 market makers, each marketmaker’s proportionate share volume is 10 percent.Therefore, the proportionate share volume is oneand-a-halftimes 10, or 15 percent of overallvolume. But, see Securities Exchange Act ReleaseNo. 38175 (January 15, 1997) (Commissionapproving NASD rule proposal to waive the PMMqualification standards in conjunction with theadoption of the Commission’s Order ExecutionRules); and File No. SR–NASD–97–07 (January 31,1997) (Proposed rule change to temporarily suspendthe use of the Primary Market Maker qualificationcriteria for all Nasdaq market maker securities forthe remainder of the current pilot period of theNasdaq short sale rule).7 See Securities Exchange Act Release no. 38175(January 15, 1997), stating that the NASD will, uponsuspension of the PMM qualification criteria forNNM securities, deem all registered market makersin such securities PMMs.8 Specifically, the footnote to NASD Rule6130(d)(6) provides that ‘‘[t]he ‘sell short’ and ‘sellshort exempt’ indicators must be entered for allcustomer short sales, including cross transactions,and for short sales effected by members that are notqualified market markers pursuant to Rule 3350.’’will be no longer than three weeks afterthe date of publication of the Notice.III. DiscussionThe Commission believes the NASD’sproposed rule change is consistent withSection 15A(b)(6) of the Act, 9 and thatit will promote efficiency, competition,and capital formation. Section 15A(b)(6)requires that the rules of a nationalsecurities association be designed topromote just and equitable principles oftrade, to foster cooperation andcoordination with person engaged inregulating, clearing, settling, processinginformation with respect to, andfacilitating transactions in securities,and to remove impediments to andperfect the mechanism of a free andopen market. The Commission believesthat requiring exempt market makers tomark their ACT reports to denote whenthey have relied upon the PMMexemption will help to enhance theability of NASD Regulation, Inc. toefficiently monitor whether marketmakers are abusing the exemption. 10Furthermore, the Commission, inapproving the short sale rule on a pilotbasis, requested the NASD to studyvarious aspects of the rule’s effects,including the use of the PMMexemption to the rule. The Commission,therefore, believes that requiring PMMsto append a designator to their ACTreports will assist the NASD inassessing the market impacts of thePMM exemption from the short salerule, as well as facilitate the preparationof a thorough analysis of suchexemption.The NASD requested that theCommission find good cause forapproving the proposed rule changeprior to the thirtieth day after the dateof publication of notice of the filing inthe Federal Register. The Commissionfinds good cause for so approving theproposed rule change becauseaccelerated approval will allow theNASD to begin collecting the necessarydata for a meaningful statistical analysisof the market impact of the PMMexemption from the short sale rule.Furthermore, the Commission believesit is prudent to allow the NASD to beginrequiring PMMs to mark their ACTreports when they have relied on thePMM exemption as soon as possible inorder that the NASD and PMMs willbecome familiar with the use of the ACT9 15 U.S.C. 78o–3(b)(6).10 See footnote 6, supra; and Letter from HowardKramer, Associate Director, Division of MarketRegulation, Commission, to Eugene A. Lopez,Assistant General Counsel, NASD (February 3,1997) (No-action letter regarding suspension of thePrimary Market Maker standards).

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6291denotation, thereby aiding in efficientdata collection.IV. ConclusionFor the foregoing reasons, theCommission finds that the proposedrule change is consistent with the Actand the rules and regulationsthereunder applicable to the NASD, andin particular Section 15A(b)(6).It is therefore ordered, pursuant toSection 19(b)(2) of the Act, 11 that theproposed rule change (File No. SR–NASD–96–52) be and hereby isapproved on an accelerated basis.For the Commission by the Division ofMarket Regulation, pursuant to delegatedauthority. 12Margaret H. McFarland,Deputy Secretary.[FR Doc. 97–3326 Filed 2–10–97; 8:45 am]BILLING CODE 8010–01–MSMALL BUSINESS ADMINISTRATIONData Collection Available for PublicComments and RecommendationsACTION: Notice and request forcomments.SUMMARY: In accordance with thePaperwork Reduction Act of 1995, thisnotice announces the Small BusinessAdministration’s intentions to requestapproval on a new, and/or currentlyapproved information collection.DATES: Comments should be submittedwithin 60 days of this publication in theFederal Register.FOR FURTHER INFORMATION CONTACT:Curtis B. Rich, Management Analyst,Small Business Administration, 409 3rdStreet, S. W., Suite 5000, Washington,D. C. 20416. Phone Number: 202–205–6629.SUPPLEMENTARY INFORMATION:Title: ‘‘Surety Bond GuarantyAgreement, Preferred Lenders Program’’.Type of Request: Extension of aCurrently Approved Collections.Form No’s.: SBA Forms 990, 991, 994,994, 994B, 994C, 994F, 994H.Description of Respondents: SmallBusiness Contractors Applying for theSurety Bond Guarantee Program.Annual Responses: 55,000.Annual Burden: 28,837.Comments: Send all commentsregarding this information collection toWilliam Berry, Deputy AssociateAdministrator, Office of SuretyGuarantees, Small BusinessAdministration, 409 3rd Street, S. W.,Suite 8600 Washington, D.C. 20416.Phone No.: 202–205–6549.11 15 U.S.C. 78s(b)(2) (1988).12 17 CFR 200.30–3(a)(12) (1995).Send comments regarding whetherthis information collection is necessaryfor the proper performance of thefunction of the agency, accuracy ofburden estimate, in addition to ways tominimize this estimate, and ways toenhance the quality.Title: ‘‘Questionnaires for section 503Development Company and Companydoing Business with a Section 503Development Company’’.Type of Request: Extension ofCurrently Approved Collections.Form No’s.: SBA Forms 1301, 1302.Description of Respondents: State andLocal Development Companies.Annual Responses: 90.Annual Burden: 180.Title: ‘‘Statement of PersonalHistory’’.Type of Request: ‘‘Extension ofCurrently Approved Collections’’.Form No. SBA Form 912.Description of Respondents:Applicants for Assistance or TemporaryEmployment in Disaster Office.Annual Responses: 30,000.Annual Burden: 2,500.Comments: Send all commentsregarding these information collectionsto Pat Anderson, Administrative Officer,Office of the Inspector General, SmallBusiness Administration, 409 3rd Street,S.W., Suite 7150 Washington, D.C.20416. Phone No. 202–205–6580.Send comments regarding whetherthese information collections arenecessary for the proper performance ofthe function of the agency, accuracy ofburden estimate, in addition to ways tominimize this estimate, and ways toenhance the quality.Title: ‘‘SBIR Mailing List andConfirmation Request and STTRMailing List and Confirmation’’.Type of Request: Extension ofCurrently Approved Collections.Description of Respondents: SmallBusinesses Interested Participating inthe SBIR/STTR Solicitation Process.Form No’s.: SBA Forms 1386, 1906.Annual Responses: 60,000.Annual Burden: 500.Comments: Send all comments toShirley F. Smith, Program Analyst,Office of Technology, Small BusinessAdministration, 409 3rd Street, S.W.,Suite 8150 Washington, D.C. 20416.Phone No. 202–205–7295.Send comments regarding whetherthis information collection is necessaryfor the proper performance of thefunction of the agency, accuracy ofburden estimate, in addition to ways tominimize this estimate, and ways toenhance the quality.Title: ‘‘Guidelines for Small BusinessAward Nominations’’.Type of Request: Extension ofCurrently Approved Collections.Description of Respondents:Organizations Nominating a SmallBusiness Leader for Small BusinessAdvocacy Awards.Form No. N/A.Annual Responses: 500.Annual Burden: 1,083.Comments: Send all commentsregarding this information collection toJanie Dymond, AdministrativeAssistant, Office PublicCommunications, Marketing andCustomer Service, Small BusinessAdministration, 409 3rd Street, S.W.,Suite 7600 Washington, D.C. 20416.Phone No. 202–205–6740.Title: ‘‘Loan Closing Documents’’.Type of Request: Extension ofCurrently Approved Collections.Description of Respondents: SBALoan Applicants.Form No’s.: SBA Forms 147, 148, 159,160, 160A, 529B, 928, 1059.Annual Responses: 25,451.Annual Burden: 152,706.Comments: Send all commentsregarding this information collection toMichael J. Dowd, Director, Office ofLoan Programs, Small BusinessAdministration, 409 3rd Street, S.W.Suite 8300, Washington, D.C. 20416.Phone No. 202–205–6570.Send comments regarding whetherthis information collection is necessaryfor the proper performance of thefunction of the agency, accuracy ofburden estimate, in addition to ways tominimize this estimate, and ways toenhance the quality.Vanessa K. Smith,Acting Chief, Administrative InformationBranch.[FR Doc. 97–3279 Filed 2–10–97; 8:45 am]BILLING CODE 8025–01–P[Declaration of Disaster Loan Area #2925]California; Declaration of DisasterLoan Area, (Amendment #1)In accordance with a notice from theFederal Emergency ManagementAgency, dated January 24, 1997, theabove-numbered Declaration is herebyamended to include Alameda and SanFrancisco Counties in the State ofCalifornia, as well as the City of MorganHill which was previously omitted as adisaster area due to damages caused bysevere storms, flooding, and mud andland slides beginning on December 28,1996 and continuing.All counties contiguous to the abovenamedcounties have been previouslydeclared.All other information remains thesame, i.e., the termination date for filing

6292 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesapplications for physical damage isMarch 5, 1997, and for loans foreconomic injury the deadline is October6, 1997.(Catalog of Federal Domestic AssistanceProgram Nos. 59002 and 59008.)Dated: January 30, 1997.Bernard Kulik,Associate Administrator for DisasterAssistance.[FR Doc. 97–3277 Filed 2–10–97; 8:45 am]BILLING CODE 8025–01–M[Declaration of Disaster Loan Area #2924Idaho; Declaration of Disaster LoanArea (Amendment #1)In accordance with a notice from theFederal Emergency ManagementAgency, dated January 22, 1997, theabove-numbered Declaration is herebyamended to include Kootenai andBenewah Counties in the State of Idahoas a disaster area due to damages causedby severe storms, flooding, and mud andland slides beginning on December 27,1996 and continuing.All counties contiguous to the abovenamedcounties have been previouslydeclared.All other information remains thesame, i.e., the termination date for filingapplications for physical damage isMarch 5, 1997, and for loans foreconomic injury the deadline is October6, 1997.(Catalog of Federal Domestic AssistanceProgram Nos. 59002 and 59008.)Dated: January 30, 1997.Bernard Kulik,Associate Administrator for DisasterAssistance.[FR Doc. 97–3268 Filed 2–10–97; 8:45 am]BILLING CODE 8025–01–P[Declaration of Disaster Loan Area #2928]Oregon; Declaration of Disaster LoanAreaAs a result of the President’s majordisaster declaration on January 23, 1997,and an amendment thereto on January27, I find that Jackson, Josephine,Klamath, and Wallowa Counties in theState of Oregon constitute a disaster areadue to damages caused by severe winterstorms, land and mud slides, andflooding beginning on December 25,1996 and continuing through January 6,1997. Applications for loans forphysical damages may be filed until theclose of business on March 24, 1997,and for loans for economic injury untilthe close of business on October 23,1997 at the address listed below:U.S. Small Business Administration,Disaster Area 4 Office, P. O. Box13795, Sacramento, CA 95853–4795or other locally announced locations. Inaddition, applications for economicinjury loans from small businesseslocated in the following contiguouscounties may be filed until the specifieddate at the above location: Baker, Curry,Deschutes, Douglas, Lake, Lane,Umatilla, and Union Counties inOregon, and Asotin, Columbia, Garfield,and Walla Walla Counties inWashington.Interest rates are:PercentFor Physical Damage:HOMEOWNERS WITH CREDITAVAILABLE ELSEWHERE .... 8.000HOMEOWNERS WITHOUTCREDIT AVAILABLE ELSE-WHERE ................................. 4.000BUSINESSES WITH CREDITAVAILABLE ELSEWHERE .... 8.000BUSINESSES AND NON-PROFIT ORGANIZATIONSWITHOUT CREDIT AVAIL-ABLE ELSEWHERE .............. 4.000OTHERS (INCLUDING NON-PROFIT ORGANIZATIONS)WITH CREDIT AVAILABLEELSEWHERE ........................ 7.250For Economic Injury:BUSINESSES AND SMALLAGRICULTURAL COOPERA-TIVES WITHOUT CREDITAVAILABLE ELSEWHERE .... 4.000The number assigned to this disasterfor physical damage is 292811 and foreconomic injury the numbers are935500 for Oregon and 935700 forWashington.(Catalog of Federal Domestic AssistanceProgram Nos. 59002 and 59008.)Dated: January 30, 1997.Bernard Kulik,Associate Administrator for DisasterAssistance.[FR Doc. 97–3269 Filed 2–10–97; 8:45 am]BILLING CODE 8025–01–P[Declaration of Disaster Loan Area #2929]Tennessee; Declaration of DisasterLoan AreaRutherford County and the contiguouscounties of Bedford, Cannon, Coffee,Davidson, Marshall, Williamson, andWilson in the State of Tennesseeconstitute a disaster area as a result oftornadoes which occurred on January24, 1997. Applications for loans forphysical damage as a result of thisdisaster may be filed until the close ofbusiness on April 4, 1997 and foreconomic injury until the close ofbusiness on November 3, 1997 at theaddress listed below:U.S. Small Business Administration,Disaster Area 2 Office, One BaltimorePlace, Suite 300, Atlanta, GA 30308or other locally announced locations.The interest rates are:PercentFor Physical Damage:HOMEOWNERS WITH CREDITAVAILABLE ELSEWHERE .... 7.625HOMEOWNERS WITHOUTCREDIT AVAILABLE ELSE-WHERE ................................. 3.875BUSINESSES WITH CREDITAVAILABLE ELSEWHERE .... 8.000BUSINESSES AND NON-PROFIT ORGANIZATIONSWITHOUT CREDIT AVAIL-ABLE ELSEWHERE .............. 4.000OTHERS (INCLUDING NON-PROFIT ORGANIZATIONS)WITH CREDIT AVAILABLEELSEWHERE ........................ 7.250For Economic Injury:BUSINESSES AND SMALLAGRICULTURAL COOPERA-TIVES WITHOUT CREDITAVAILABLE ELSEWHERE .... 4.000The number assigned to this disasterfor physical damage is 292912 and foreconomic injury the number is 937500.Catalog of Federal Domestic AssistanceProgram Nos. 59002 and 59008.)Dated: February 3, 1997.Philip Lader,Administrator.[FR Doc. 97–3278 Filed 2–10–97; 8:45 am]BILLING CODE 8025–01–P[Declaration of Disaster Loan Area #2927]Washington; Declaration of DisasterLoan Area; (Amendment #1)In accordance with a notice from theFederal Emergency ManagementAgency, dated January 27, 1997, theabove-numbered Declaration is herebyamended to include the Counties ofClallam, Grays Harbor, Island, Kitsap,Kittitas, Mason, Pierce, Skagit,Skamania, Spokane, Thurston, andYakima in the State of Washington as adisaster area due to damages caused bywinter storms, land and mud slides, andflooding beginning on December 26,1996 and continuing.In addition, applications for economicinjury loans from small businesseslocated in the following contiguouscounties may be filed until the specifieddate at the previously designatedlocation: Benton, Clark, Cowlitz,Klickitat, Douglas, Grant, Jefferson,Lewis, Lincoln, Okanogan, Pacific, PendOreille, San Juan, Stevens, Whatcom,

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6293and Whitman Counties in Washington,and Multnomah and Hood RiverCounties in Oregon. Any countiescontiguous to the above-named countiesand not listed herein have beenpreviously declared.All other information remains thesame, i.e., the termination date for filingapplications for physical damage isMarch 18, 1997, and for loans foreconomic injury the deadline is October17, 1997. The economic injury numberfor the State of Oregon is 935600.(Catalog of Federal Domestic AssistanceProgram Nos. 59002 and 59008.)Dated: January 30, 1997.Bernard Kulik,Associate Administrator for DisasterAssistance.[FR Doc. 97–3276 Filed 2–10–97; 8:45 am]BILLING CODE 8025–01–PFirst Interstate Equity Corporation(License No. 09/09–0397); Notice ofSurrender of LicenseNotice is hereby given that FirstInterstate Equity Corporation (FirstInterstate), 100 West Washington Street,Phoenix, Arizona 58003, hassurrendered their license to operate as asmall business investment companyunder the Small Business InvestmentAct of 1958, as amended (the Act). FirstInterstate was licensed by the SmallBusiness Administration on February 1,1989.Under the authority vested by the Actand pursuant to the Regulationspromulgated thereunder, the surrenderwas accepted on this date, andaccordingly, all rights, privileges, andfranchises derived therefrom have beenterminated.(Catalog of Federal Domestic AssistanceProgram No. 59.11, Small BusinessInvestment Companies.)Dated: January 28, 1997.Donald A. Christensen,Associate Administrator for Investment.[FR Doc. 97–3281 Filed 2–10–97; 8:45 am]BILLING CODE 8025–01–PDEPARTMENT OF TRANSPORTATIONOffice of the SecretaryReports, Forms and RecordkeepingRequirements Agency InformationCollection Activity Under OMB ReviewAGENCY: Department of Transportation.ACTION: Notice and request forcomments.SUMMARY: In accordance with thePaperwork Reduction Act of 1995 andits implementing regulations, theDepartment of Transportation (DOT)announces in this notice that the 11previously approved informationcollection activities and 5 currentlyapproved information collectionactivities have been forwarded to theOffice of Management and Budget(OMB) for review and approval. Eachsummary of the 16 informationcollection requests (ICRs) identifiedbelow describes the nature of theinformation collection and its expectedburden. The Federal RailroadAdministration (FRA) issued a 60-daynotice that was published in the FederalRegister on December 2, 1996, invitingthe regulated community to commenton these ICRs. 61 FR 63917, Dec. 2,1996. This notice further informs allinterested parties that they have 30 daysto submit comments to these paperworkpackages before OMB renders adecision.DATES: Comments must be submitted nolater than March 13, 1997.ADDRESSES: Submit written commentson any or all of the following proposedactivities by mail to either: Office ofInformation and Regulatory Affairs,Office of Management and Budget, 72517th Street, NW., Washington, DC20503, Attention: Desk Officer for FRA.Please refer to the assigned OMB controlnumber in any correspondencesubmitted. DOT suggests that allinterested respondents submit theirrespective comments to OMB within 30days of publication to best ensure ofhaving their full effect.FOR FURTHER INFORMATION CONTACT: Ms.Gloria Eutsler, Office of Planning andEvaluation Division, RRS–21, FederalRailroad Administration, 400 SeventhStreet, SW., Washington, DC 20590(telephone: (202) 632–3318). (Thistelephone number is not toll-free.)SUPPLEMENTARY INFORMATION: ThePaperwork Reduction Act of 1995(PRA), Pub. L. No. 104–13, Section 2,109 Stat. 163 (1995) (codified as revisedat 44 U.S.C. 3501–3520), and itsimplementing regulations, 5 CFR Part1320, require Federal agencies to issuetwo notices seeking public comment oninformation collection activities beforeOMB may approve paperwork packages.44 U.S.C. 3506, 3507; 5 CFR 1320.5,1320.8(d)(1), 1320.12. On December 2,1996, FRA published a 60-day notice inthe Federal Register soliciting commenton 16 ICRs that the agency was seekingOMB approval for reinstatement orrenewal. 61 FR 63917, Dec. 2, 1996.FRA received no comments after issuingthis notice. Accordingly, DOTannounces that these informationcollection activities have beenreevaluated and certified under 5 CFR1320.5(a) and forwarded to OMB forreview and approval pursuant to 5 CFR1320.12(c).Before OMB decides whether toapprove these proposed collections ofinformation, it must provide 30 days forpublic comment. 44 U.S.C. 3507(b); 5CFR 1320.12(d). Federal law requiresOMB to approve or disapprovepaperwork packages between 30 and 60days after the 30-day notice ispublished. 44 U.S.C. 3507 (b)–(c); 5 CFR1320.12(d); see also 60 FR 44978, 44983,Aug. 29, 1995. OMB believes that the30-day notice informs the regulatedcommunity to file relevant commentsand affords the agency adequate time todigest public comments before itrenders a decision. 60 FR 44983, Aug.29, 1995. Therefore, respondents shouldsubmit their respective comments toOMB within 30 days of publication tobest ensure of having their full effect. 5CFR 1320.12(c); see also 60 FR 44983,Aug. 29, 1995.Specifically, DOT and OMB inviteinterested parties to comment on thefollowing summary of proposedinformation collection activitiesregarding (i) Whether the informationcollection activities are necessary forFRA to properly execute its functions,including whether the activities willhave practical utility; (ii) the accuracy ofFRA’s estimates of the burden of theinformation collection activities,including the validity of themethodology and assumptions used todetermine the estimates; (iii) ways forFRA to enhance the quality, utility, andclarity of the information beingcollected; and (iv) ways for FRA tominimize the burden of informationcollection activities on the public byautomated, electronic, mechanical, orother technological collectiontechniques or other forms of informationtechnology (e.g., permitting electronicsubmission of responses). See 44 U.S.C.3506(c)(2)(A) (i)–(iv). DOT believes thatsoliciting public comment will promoteFRA’s efforts to reduce theadministrative and paperwork burdensassociated with the collection ofinformation mandated by Federalregulations. In summary, DOT reasonsthat comments received will advancethree objectives: (i) Reduce reportingburdens; (ii) ensure that the agencyorganizes information collectionrequirements in a ‘‘user friendly’’ formatto improve the use of such information;and (iii) accurately assess the resourcesexpended to retrieve and produceinformation requested. See 44 U.S.C.3501. Below are brief summaries of 11previously approved informationcollection activities and 5 currently

6294 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticesapproved information collectionactivities submitted for clearance byOMB as required by the PRA. Eachsummary sets out the ICR title,information collection abstract, agency’sneed and use of the collectedinformation, and annual reporting andrecordkeeping burden of theinformation collection activity. See 44U.S.C. 3507(a)(1)(D)(ii); 5 CFR1320.5(a)(1)(iv), 1320.12(c).Title: Bridge Worker Safety Rules.OMB Control Number: 2130–0535.Abstract: Section 20139 of title 49 ofthe United States Code required FRA toissue rules, regulations, orders, andstandards for the safety of maintenanceof-wayemployees on railroad bridges,including standards for ‘‘bridge safetyequipment, [such as] nets, walkways,handrails, and safety lines, andrequirements for the use of vessels whenwork is performed on bridges locatedover bodies of water.’’ FRA has added49 CFR Part 214 to establish minimumworkplace safety standards for railroademployees as they apply to railroadbridges.Specifically, Section 214.105(c)establishes standards and practices forsafety net systems. Safety nets and netinstallations are to be drop-tested at thejob site after initial installation andbefore being used as a fall-protectionsystem, after major repairs, and at sixmonthintervals if left at one site. If adrop-test is not feasible and is notperformed, then a written certificationmust be made by the railroad or railroadcontractor, or a designated certifiedperson, that the net does comply withthe safety standards of this section. FRAand State inspectors use the informationto enforce the Federal regulations. Theinformation that is maintained at the jobsite also promotes safe bridge workerpractices.Form Number(s): N/A.Affected Public: Businesses.Respondent Universe: 575 railroads.Frequency of Submission: Onoccasion.Total Responses: 6 annually.Average Time Per Response: 2minutes.Estimated Total Annual BurdenHours: 12 minutes.Status: Reinstatement of a previouslyapproved collection of informationwhich has expired.Title: Filing of Dedicated Cars.OMB Control Number: 2130–0502.Abstract: Title 49, part 215 of theCode of Federal Regulations prescribescertain conditions to be followed for themovement of freight cars that are not incompliance with this part. These carsmust be identified in a written report toFRA before they are assigned todedicated service, and the words‘‘Dedicated Service’’ must be stenciledon each side of the freight car body.FRA uses the information to determinewhether the equipment is safe to operateand that the operation qualifies fordedicated service. See 49 CFR215.5(c)(2), 215.5(d).Form Number(s): N/A.Affected Public: Businesses.Respondent Universe: 400 railroads.Frequency of Submission: Onoccasion.Total Responses: 6.Average Time Per Response: 1 hour.Estimated Total Annual BurdenHours: 6 hours.Status: Reinstatement of a previouslyapproved collection of informationwhich has expired.Title: Stenciling Reporting Mark onFreight Cars.OMB Control Number: 2130–0520.Abstract: Title 49, section 215.301 ofthe Code of Federal Regulations setsforth certain requirements that must befollowed by railroad carriers and privatecar owners relative to identificationmarks on railroad equipment. FRA,railroads, and the public refer to thestenciling to identify freight cars.Form Number(s): N/A.Affected Public: Businesses.Respondent Universe: 620 railroads.Frequency of Submission: Onoccasion.Total Responses: 31,000 cars.Average Time Per Response: 45minutes per car.Estimated Total Annual BurdenHours: 23,250 hours.Status: Reinstatement of a previouslyapproved collection of informationwhich has expired.Title: Bad Order and Home ShopCard.OMB Control Number: 2130–0519.Abstract: Under 49 CFR Part 215, eachrailroad is required to inspect freightcars placed in service and take thenecessary remedial action when defectsare identified. Part 215 defects arespecific in nature and relate to itemsthat have or could have causedaccidents or incidents. Section 215.9sets forth specific procedures thatrailroads must follow when it isnecessary to move defective cars forrepair purposes. For example, railroadsmust affix a ‘‘bad order’’ tag describingeach defect to each side of the freightcar. It is imperative that a defectivefreight car be tagged ‘‘bad order’’ so thatit may be readily identified and movedto another location for repair purposesonly. At the repair point, the ‘‘badorder’’ tag serves as a repair record.Railroads must retain each tag for 90days to verify that proper repairs weremade at the designated location. FRAand State inspectors review all pertinentrecords to determine whether defectivecars presenting an immediate hazard arebeing moved in transportation.Form Number(s): N/A.Affected Public: Businesses.Respondent Universe: 400 railroads.Frequency of Submission: Onoccasion.Total Responses: 40,000 tags.Average Time Per Response: 10minutes.Estimated Total Annual BurdenHours: 6,667 hours.Status: Reinstatement of a previouslyapproved collection of informationwhich has expired.Title: Disqualification Proceedings.OMB Control Number: 2130–0529.Abstract: Under 49 U.S.C. 20111(c),FRA is authorized to issue ordersdisqualifying railroad employees,including supervisors, managers, andother agents, from performing safetysensitiveservice in the rail industry forviolations of rail safety rules,regulations, standards, orders, or lawsevidencing unfitness. FRA’s regulations,49 CFR Part 209, Subpart D, implementthe statutory provision by requiring (I)a railroad employing or formerlyemploying a disqualified individual todisclose the terms and conditions of adisqualification order to the individual’snew or prospective employing railroad;(ii) a railroad considering employing anindividual in a safety-sensitive positionto ask the individual’s previousemploying railroad whether theindividual is currently serving under adisqualification order; and (iii) adisqualified individual to inform hisnew or prospective employer of thedisqualification order and provide acopy of the same. Additionally, theregulations prohibit a railroad fromemploying a person serving under adisqualification order to work in asafety-sensitive position. Thisinformation serves to inform a railroadwhether an employee or prospectiveemployee is currently disqualified fromperforming safety sensitive servicebased on the issuance of adisqualification order by FRA.Furthermore, it prevents an individualcurrently serving under adisqualification order from retainingand obtaining employment in a safetysensitiveposition in the rail industry.Form Number(s): N/A.Affected Public: Businesses.Frequency of Submission:Recordkeeping requirement.Reporting Burden:

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6295CFRRespondent UniverseTotalResponsesAverage Time Per ResponseTotalBurdenHoursProvide copy of disqualification order to newor prospective employer620 railroads3 orders30 minutes1.5Provide copy of disqualification order toprospective employer1 employee1 notification30 minutes.5Request copy of disqualification order fromprevious employer620railroadsUsual & customary procedureN/AN/ATotal Estimated Burden Hours: 2hours.Status: Reinstatement of a previouslyapproved collection of informationwhich has expired.Title: New Locomotive Certification(Noise Compliance Regulations)OMB Control Number: 2130–0527.Abstract: On January 14, 1976, theEnvironmental Protection Agency (EPA)issued railroad noise emission standardspursuant to the Noise Control Act of1972 (Act). The standards, 40 CFR Part201, establish limits on the noiseemissions generated by railroadlocomotives under both stationary andmoving conditions and railroad carsunder moving conditions. Section 17 ofthe Act also requires the Secretary ofTransportation to enforce theseregulations and promulgate separateregulations to ensure compliance withthe same. On December 23, 1983, FRApublished 49 CFR Part 210 to ensurecompliance with the EPA standards.The certification and testing dataensures that locomotives built afterDecember 31, 1979, have passedprescribed decibel standards for noiseemissions under EPA regulations.Form Number(s): N/AAffected Public: BusinessesFrequency of Submission: Onoccasion; one-timeReporting Burden:CFRRespondent UniverseTotalResponsesAverage Time Per ResponseTotalBurdenHoursRequest for certification information24030 minutes20Apply badge or tag to cab of locomotive24030 minutes20Noise emission measurement2403 hours120Total Estimated Burden Hours: 160hours.Status: Reinstatement of a previouslyapproved collection of informationwhich has expired.Title: Railroad Signal SystemRequirements.OMB Control Number: 2130–0006.Abstract: The regulations pertainingto railroad signal systems are containedin 49 CFR Parts 233 (Signal SystemReporting Requirements), 235(Instructions Governing Applications forApproval of a Discontinuance orMaterial Modification of a SignalSystem), and 236 (Rules, Standards, andInstructions Governing the Installation,Inspection, Maintenance, and Repair ofSystems, Devices and Appliances).Section 233.5 provides that eachrailroad must report to FRA within 24hours after learning of an accident orincident arising from the failure of asignal appliance, device, method, orsystem as required by Part 236 thatresults in a more favorable aspect thanintended or other condition hazardousto the movement of a train. Section233.7 sets forth the specificrequirements for reporting signalfailures within 15 days in accordancewith the instructions printed on FormFRA F 6180.14. Finally, Section 233.9sets forth the specific requirements forthe ‘‘Signal System Five-year Report.’’ Itrequires that on or before April 1, 1997,and every five calender years thereafter,each railroad must file a signal systemsstatus report. 61 FR 33872, July 1, 1996.The report is to be prepared on a formissued by FRA in accordance with theinstructions and definitions provided.Id.Title 49, part 235 of the Code ofFederal Regulations sets forth thespecific conditions under which FRAapproval of modification ordiscontinuance of railroad signalsystems is required and prescribes themethods available to seek suchapproval. The application processprescribed under Part 235 provides avehicle enabling FRA to obtain thenecessary information to make logicaland informed decisions concerningcarrier requests to modify ordiscontinue signaling systems. Section235.5 requires railroads to apply forFRA approval to discontinue ormaterially modify railroad signalingsystems. Section 235.7 defines ‘‘materialmodifications’’ and identifies thosechanges that do not require agencyapproval. Section 235.8 provides thatany railroad may petition FRA to seekrelief from the requirements providedunder 49 CFR Part 236. Sections 235.10,235.12, and 235.13 describe where thepetition must be submitted, whatinformation must be included, theorganizational format, and the officialauthorized to sign the application.Section 235.20 sets forth the process forprotesting the granting of a carrierapplication for signal changes or relieffrom the rules, standards, andinstructions. This section provides theinformation that must be included inthe protest, the address for filing theprotest, the time limit for filing theprotest, and the requirement that aperson requesting a public hearingexplain the need for such a forum.Section 236.110 requires that the testresults of certain signaling apparatus berecorded and specifically identify thetests required under Sections 236.102–236.109; Sections 236.376 to 236.387;Sections 236.576, 236.577, and Sections236.586–2236.589. Section 236.110further provides that the test resultsmust be recorded on preprinted orcomputerized forms provided by thecarrier and that the forms show thename of the railroad, place and date ofthe test conducted, equipment tested,test results, repairs, replacements, andadjustments made, and the condition ofthe apparatus. This section also requiresthe employee making the test must signthe form, and that the record be retainedat the office of a supervisory officialhaving proper authority. Results of testsmade in compliance with Section236.587 must be retained for 92 days,and results of all other tests must beretained until the next record is filed,but in no case less than one year.Additionally, Section 236.587requires each railroad to make adeparture test of cab signal, train stop,or train control devices on locomotivesbefore that locomotive enters theequipped territory. This section furtherrequires that whoever performs the testmust certify in writing that the test wasproperly performed. The certificationand the tests results must be posted inthe locomotive cab with a copy of thecertification and test results retained atthe office of a supervisory officialhaving proper authority. However, if itis impractical to leave a copy of thecertification and test results at the

6296 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticeslocation of the test, the test results mustbe transmitted to either the dispatcheror another designated official at the testlocation, who must keep a writtenrecord of the test results and the nameof the person performing the test. Allrecords prepared under this section arerequired to be retained for at least 92days. Finally, Section 236.590 requiresthe carrier to clean and inspect thepneumatic apparatus of automatic trainstop, train control, or cab signal deviceson locomotives every 736 days, and tostencil, tag, or otherwise mark thepneumatic apparatus indicating the lastcleaning date.Form Number(s): FRA F 6180.14;6180.47.Affected Public: Businesses.Frequency of Submission: Onoccasion; every five years,recordkeeping.Reporting Burden:CFR SectionRespondent UniverseTotalResponsesAverage Time Per ResponseTotalBurdenHours233.5—Reporting of accidents6201030 minutes5233.7—False proceed signal failures report62022415 minutes56233.9—5-year signal system report2605230 minutes26235.5—Block signal applications8211110 hours1,110235.8—Applications for relief82242.5 hours60235.20—Protest letters848430 minutes42236.110—Recordkeeping821,965,464 records.2177 hour427,881236.587—Departure tests18730,000 tests4 minutes48,667236.590—Pneumatic valves186,697 locomotives22.5 minutes2,511Total Estimated Burden Hours:480,358 hours.Status: Reinstatement of a previouslyapproved collection of informationwhich has expired.Title: Remotely Controlled RailroadSwitch Operations Log.OMB Control Number: 2130–0516.Abstract: Title 49, section 218.30 ofthe Code of Federal Regulations ensuresthat remotely controlled switches arelined to protect workers who arevulnerable to being struck by movingcars as they inspect or serviceequipment on a particular track or,alternatively, occupy camp cars. FRAbelieves that production of notificationrequests promotes safety by minimizingmental lapses of workers who aresimultaneously handling several tasks.Sections 218.30 and 218.67 require theoperator of remotely controlled switchesto maintain a record of each notificationrequesting blue signal protection for 15days. Operators of remotely controlledswitches use the information as a recorddocumenting blue signal protection ofworkers or camp cars. This record alsoserves as a valuable resource for railroadsupervisors and FRA inspectorsmonitoring regulatory compliance.Form Number(s): N/A.Affected Public: Businesses.Frequency of Submission: Onoccasion; recordkeeping.Reporting Burden:CFRRespondent UniverseTotalResponsesAverage Time Per ResponseTotalBurdenHoursBlue signal protection400 RRs3,600,000 records4 minutes240,000Camp cars620 RRs4,500 records4 minutes300Total Estimated Burden Hours:240,300 hours.Status: Reinstatement of a previouslyapproved collection of informationwhich has expired.Title: Railroad Power Brakes andDrawbars.OMB Control Number: 2130–0008.Abstract: Title 49, part 232 of theCode of Federal Regulations requiresthat an initial terminal air brake test bemade by a person designated asqualified by the inspecting railroad. Italso requires that a qualified personparticipating in the test or a personhaving knowledge that the test wasconducted notify the road crew of thetrain that the test was satisfactorilyperformed. Under Section 232.12(a)(2),FRA requires that the notice be made inwriting to the road crew if (i) thequalified person goes off duty before theroad crew reports or (ii) the train thathas been inspected is to be moved inexcess of 500 miles without beingsubjected to another test pursuant toeither this section or Section 232.13.The rule also requires that anintermediate train air brake test be madeto determine that the basic integrity ofthe train air line has not been disturbedby an incident encountered en route,such as picking up or setting out cars atwhich time a train’s air line could havebeen disconnected and reconnectedseveral times. To ensure continuity ofthe train brake pipe, railroads mustdetermine that the brakes on the rear carapply and release. For tests required bySection 232.13(b)–(d), FRA now permitsrailroads to employ end-of-traintelemetry devices to determine thestatus of the train brake pipe at the rearof the train and transmit thatinformation to the lead locomotive.Specifically, Section 232.19(h)(3)requires that railroads using this devicemust calibrate it for accuracy at leastevery 92 days and record the date of thelast calibration, identify the locationwhere the calibration was made, andprovide the name of the person doingthe calibration on a tag, sticker, or othermethod of information storage affixed tothe rear unit. The label is necessary todetermine whether the end-of-traindevice has been tested within the timeprescribed. Crew members use theinformation to verify that the initialterminal air brake test was satisfactorilyperformed by a qualified person.Form Number(s): N/A.Affected Public: Businesses.Frequency of Submission: Onoccasion; recordkeeping.Reporting Burden:CFRRespondent UniverseTotalResponsesAverage Time Per ResponseTotalBurdenHoursWritten notification by departing qualifiedpersons30 RRs60,000 notifications15 seconds250

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6297Written notification in excess of 500 milesbefore receiving another test620 RRs380,000 notifications15 seconds1,500Testing and stenciling of telemetry devices620 RRs20,000 tests10 seconds56Total Estimated Burden Hours: 1,806hours.Status: Reinstatement of a previouslyapproved collection of informationwhich has expired.Title: U.S. DOT–AAR CrossingInventory Form.OMB Control Number: 2130–0017.Abstract: The U.S. DOT–AARCrossing Inventory Form (FRA F6180.71) is used to provide data on newhighway-rail grade crossings (gradecrossings) or changes to the Highway-Rail Grade Crossing Inventory(Inventory) form. The form is used forreporting all types of changes, especiallythe establishment of a new gradecrossing, closing of an existing gradecrossing, or changes in thecharacteristics of a grade crossing. Manypublic and private entities use the dataprovided on the Inventory form forprogram assessment and research.Form Number(s): FRA Form 6180.71.Affected Public: Businesses.Frequency of Submission: Onoccasion.Reporting Burden:Voluntary ComplianceRespond. UniverseTotalResponsesAverage Time Per ResponseTotalBurdenHoursU.S. DOT–AAR crossing inventory form(FRA F 6180.71)620 RRs10,213 forms15 minutes2,553Mass update form and inventory computerprintout620 RRs250 lists30 minutes125Magnetic tape620 RRs1630 minutes8GX computer program620 RRs58,680 updates2 minutes1,956Total Estimated Burden Hours: 4,642hours.Status: Reinstatement of a previouslyapproved collection of informationwhich has expired.Title: Railroad Locomotive SafetyStandards.OMB Control Number: 2130–0004.Abstract: Under regulations issuedpursuant to Congressional mandate, 49U.S.C. 20137, trains must be equippedwith event recorders. Event recordersare devices that record train speed, hotbox detection, throttle position, brakeapplication, brake operations, time andsignal indications, and any otherfunction that FRA considers necessaryto monitor the safety of train operations.Event recorders provide FRA withinformation about how trains areoperated and, if a train is involved in anaccident, the devices afford data to FRAand other investigators necessary todetermine the probable causes of theaccident.Under 49 CFR Part 229, railroads arerequired to conduct daily, periodic,annual, and biennial tests oflocomotives to measure the level ofcompliance with the Federalregulations. The collection ofinformation requires railroads toprepare written records indicating therepairs needed, the person making therepairs, and the type of repairs made.This information provides a locomotiveengineer with information that thelocomotive has been inspected and is inproper condition for use in service, andenables FRA to monitor compliancewith the regulatory standards. Otherinformation collection requirements inPart 229 are indicated in the chartbelow.Form Number(s): FRA Form6180.49A.Affected Public: Businesses.Frequency of Submission: Onoccasion; annually, biennially,recordkeeping.Reporting Burden:CFR SectionRespondent UniverseTotalResponsesAverage Time Per ResponseTotalBurdenHours229.9—Movement of noncomplyinglocomotive620 RRs21,000 tags1 minute350229.17—Accident reports620 RRs20 reports15 minutes5229.21—Daily inspection620 RRs5,460,000 inspections3 minutes273,000229.113—Steam generator warning notice1 RR1 notice1 minute1 minuteFRA form F 6180.49A620 RRs21,000 forms2 minutes700210.31—Locomotive noise emission test620 RRS100 tests15 minutes25229.23—Periodic inspection229.27, 229.29—Annual and biennial tests229.31—Main reservoir tests620 RRs84,000 tests10 hours840,000229.33—Out-of-use credit620 RRs2,400 out-of-use credits2 minutes80Written copy of instructions620 RRs200 amendments15 minutes50Data verification readout record620 RRs72,000 tests30 minutes36,000Written record when an event recorder isremoved from service620 RRs6,000 removals1 minute100Record of event recorder data620 RRs100 accidents15 minutes25Total Estimated Burden Hours:1,150,350.Status: Reinstatement of a previouslyapproved collection of informationwhich has expired.Title: Grade Crossing Signal SystemSafety Regulations.OMB Control Number: 2130–0534.Abstract: FRA believes that highwayrailgrade crossing (grade crossing)accidents resulting from warning systemfailures can be reduced. Motorists losefaith in warning systems that constantlywarn of an oncoming train when noneis present. Therefore, the fail-safefeature of a warning system loses itseffectiveness if the system is notrepaired within a reasonable period oftime. A greater risk of an accident ispresent when a warning system fails toactivate as a train approaches a grade

6298 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Noticescrossing. FRA’s regulations requirerailroads to take specific responses inthe event of an activation failure. FRAuses the information to develop bettersolutions to the problems of gradecrossing device malfunctions. With thisinformation, FRA is able to correlateaccident data and equipmentmalfunctions with the types of circuitsand age of equipment. FRA can thenidentify the causes of grade crossingsystem failures and investigate them todetermine whether periodicmaintenance, inspection, and testingstandards are effective. FRA also usesthe information collected to alertrailroad employees and appropriatehighway traffic authorities of warningsystem malfunctions and take necessarymeasures to protect motorists andrailroad employees at the grade crossinguntil repairs have been made.Form Number(s): FRA Form 6180.83.Affected Public: Businesses.Frequency of Submission: Onoccasion; recordkeeping.Reporting Burden:CFR SectionRespondent UniverseTotalResponsesAverage Time Per ResponseTotalBurdenHours234.7—Telephone notification605 RRs415 minutes1234.9—Grade crossing signal system failurereports620 RRS40015 minutes100Notification to train crew and highway trafficcontrol authority620 RRs40015 minutes100Recordkeeping620 RRs40015 minutes100Total Estimated Burden Hours: 301hours.Status: Regular Review.Title: Railroad Police Officers.OMB Control Number: 2130–0537.Abstract: Under 49 CFR Part 207,railroads are required to notify states ofall designated railroad police officerswho are discharging their duties outsideof their respective jurisdictions. Thisrequirement is necessary to verifyproper police authority.Form Number(s): N/A.Affected Public: Businesses.Respondent Universe: 30 railroads.Frequency of Submission:Recordkeeping.Total Responses: 300 annualresponses.Average Time Per Response: 5 hours.Total Annual Burden Hours: 1,500hours.Status: Regular Review.Title: Control of Alcohol and DrugUse in Railroad Operations.OMB Control Number: 2130–0526.Abstract: The information collectionrequirements contained in preemploymentand ‘‘for cause’’ testingregulations are intended to ensure asense of fairness and accuracy forrailroads and their employees. Theprincipal information—evidence ofunauthorized alcohol or drug use—isused to prevent accidents by screeningpersonnel who perform safety-sensitiveservice. FRA uses the information tomeasure the level of compliance withregulations governing the use of alcoholor controlled substances. Elimination ofthis problem is necessary to preventaccidents, injuries, and fatalities of thenature already experienced and furtherreduce the risk of a truly catastrophicaccident. Lastly, FRA analyzes the dataprovided in the ManagementInformation System annual report tomonitor the effectiveness of a railroad’salcohol and drug testing program.Form Number(s): FRA F 6180.73,6180.74, 6180.94A, 6180.94B.Affected Public: Businesses.Frequency of Submission: Onoccasion; annually, recordkeeping.Reporting Burden:CFR SectionRespondent UniverseTotalResponsesAverage Time Per ResponseTotalBurdenHours219.7620 RRs2 waivers2 hours4219.9(b)(2)620 RRs25 times4 hours100219.11(b)(2)200 medical facilities115 minutes.25219.11(g)219.301(c)(2)(ii)620 RRs250 classes3 hours750Notice of educational material available toemployees15 new RRs15 notices1 hour15219.104219.10740.6720 employees20 letters1 hour20219.201(c)200 RRs10 reports30 minutes5219.203/207/209200 RRs104 calls10 minutes17219.205200 RRs400 tests15 minutes100219.205—Form 6180.73200 RRS100 forms10 minutes17219.209(c)200 RRs40 records30 minutes20219.211(b)200 MROs8 reports15 minutes2219.211(e)400 employees1 response1 hour1219.211(h)200 RRs400 records30 minutes200219.211(I)400 employees1 letter1 hour1219.213(b)200 RRs4 notices30 minutes2219.302(f)200 RRs200 records30 minutes100219.401/403/4055 RRs5 policies40 hours200219.405(c)(1)200 RRs

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6299200 reports5 minutes17219.407200 RRs1 policy2 hours21 amend.1 hour1219.403/405200 SAPs2,000 reports10 minutes333219.601(a)5 RRs5 programs80 hours400219.601(a)200 RRs5 amend.5 hours25219.601(b)(4)/601.(d)200 RRs4,000 notices.5 min.335 RRs5 notices10 hours50200 RRs40,000 notices5 minutes3,333219.601(b)(1)200 RRs200 docs.8 hours per month19,200219.603(a)40,000 employees400 docs.15 minutes100219.6075 RRs5 programs80 hours400200 RRs5 amend.5 hours25219.607(b)(1)200 RRs200 documents8 hours per month19,200219.607(c)(1)200 RRs5 RRs4,000 notices5 notices5 minutes10 hours3350219.60920,000 employees200 requests15 minutes50219.703(a)40.23200 RRs52,920 forms15 minutes13,230219.705(c)200 RRs2 requests10 hours20219.707(c)(d)40.33—Positive test200 MROs980 tests2 hours1,960200 RRs980 notifications15 minutes245219.707(c)(d)40.33—Negative test200 MROs48,020 letters20 minutes16,007219.709200 RRs980 employees10 letters30 minutes5219.711(c)40.25(f)(22)(ii)60 employees51,450 employees60 letters12,893 forms5 minutes5 minutes51,072219.71540.57/59/6180,000 employees20,000 tests15 minutes5,00040.59(c)200 RRs500 entries2 minutes1740.65200 BATs20 tests30 minutes10200 RRs200 notices1 hour200200 RRs20 confirm. tests15 minutes540.69200 RRs10 cases12 minutes2200 RRs1 case1 hour11 physician1 response1 hour140.81200 RRs60 letters5 minutes520 employees4 letters30 minutes240.83200 RRs138,100 records5 minutes11,508219.80160 RRs40 forms8 hours32060 RRs20 forms4 hours80219.80360 RRs40 forms65 hours2,60060 RRs20 forms25 hours500219.901200 RRs100,500 records5 minutes8,375200 RRs200 summaries2 hours40040.23(d)(2)(ii)5 RRs5 written instruct.40 hours20040.29(a)(2) & (b)25 lab.58,212 forms15 minutes14,55340.31(c)(1)25 lab.1,176 certifications1 minute2040.29(g)(1) & (5)25 lab.52,920 reports30 minutes26,46040.29(g)(6)25 lab.200 reports2 hours per month4,80040.29(g)(8) & (m)25 lab.25 records240 hours6,000

6300 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices40.31(d)(6)25 lab.2 reports10 hours2040.31(d)(7) & (8)25 lab.1 notification50 hours5025 lab.1 statement50 hours5040.33200 MROs18 letters30 minutes9200 MROs2 letters30 minutes140.3730 employees30 requests30 minutes15Total Estimated Burden Hours:158,554.25 hours.Status: Regular Review.Title: Steam Locomotive Inspection.OMB Control Number: 2130–0505.Abstract: The specific sectionsdescribing the reporting, testing, andrecordkeeping requirements are found at49 CFR Part 230. Railroads use theinformation to ensure that steamlocomotives are safe for use in service.Further, FRA’s Office of SafetyAssurance and Compliance uses theinformation to monitor regulatorycompliance, investigate accidents todetermine possible causes, and considerwaiver petitions.Form Number(s): Form 1, Form 3,Form 4, and Form 19.Affected Public: Businesses.Frequency of Submission: Onoccasion; recordkeeping.Reporting Burden:CFR SectionRespondent UniverseTotalResponsesAverage Time Per ResponseTotalBurdenHours230.104826 waivers1 hour26230.51—Form 148968 reports5 minutes81230.53—Form 348880 reports7 minutes10230.54—Form 4481 report1 hour1230.54—Form 19481 report30 minutes.5230.32—Badge plate481 plate30 minutes.5230.45—Boiler number481 number15 minutes.25230.48—Office record—boiler washing48243 records1 minute4230.52—Posting of copy481,056 forms1 minute18230.104—Locomotive inspection report487,290 reports3 minutes365230.111—Stenciling dates of tests andcleaning48108 tests1 minute2230.127(b)—Pistons and piston rods481 stamp15 minutes.25230.133—Driving, trailing and engine truckaxles481 stamp15 minutes.25230.136—Crank pins481 stamp15 minutes.25230.158—Modification of rules482 requests1 hour2Total Estimated Burden Hours: 511hours.Status: Regular Review.Title: Identification of Cars Moved inAccordance with Order 13528.OMB Control Number: 2130–0506.Abstract: This collection ofinformation identifies a freight car beingmoved within the scope of Order 13528(order). See 49 CFR Part 232, AppendixB. Otherwise, an exception will betaken, and the car will be set out of thetrain and not delivered. The informationthat must be recorded is specified at 49CFR Part 232, Appendix B, requiringthat a car be properly identified by acard attached to each side of the car andsigned stating that such movement isbeing made under the authority of theorder. The order does not requireretaining cards or tags. When a carbearing a tag for movement under theorder arrives at its destination, the tagsare simply removed.Form Number(s): None.Affected Public: Businesses.Frequency of Submission: Onoccasion.Total Responses: 1,320 tags.Average Time Per Response: 5minutes per tag.Estimated Total Annual BurdenHours: 110 hours.Status: Regular Review.Pursuant to 44 U.S.C. 3507(a) and 5CFR 1320.5(b), 1320.12(e)(3), DOTinforms all interested parties that it maynot conduct or sponsor, and arespondent is not required to respondto, a collection of information unless itdisplays a currently valid OMB controlnumber.Issued in Washington, DC on January 30.1997.Phillip A. Leach,Clearance Officer, United States Departmentof Transportation.[FR Doc. 97–3302 Filed 2–10–97; 8:45 am]BILLING CODE 4910–62–PFederal Transit Administration[FTA Docket No. 97–2117]Notice of Request for the Extension ofCurrently Approved InformationCollectionAGENCY: Federal Transit Administration,DOT.ACTION: Notice of request for comments.SUMMARY: In accordance with thePaperwork Reduction Act of 1995, thisnotice announces the intention of theFederal Transit Administration (FTA) torequest the Office of Management andBudget (OMB) to extend the followingcurrently approved informationcollection:Prevention of Prohibited Drug Use inTransit Operations.DATES: Comments must be submittedbefore April 14, 1997.ADDRESSES: All written comments mustrefer to the docket number that appearsat the top of this document and besubmitted to the United States

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6301Department of Transportation, CentralDockets Office, PL–401, 400 SeventhStreet, SW., Washington, DC 20590. Allcomments received will be available forexamination at the above address from10:00 a.m. to 5:00 p.m., e.t., Mondaythrough Friday, except Federal holidays.Those desiring notification of receipt ofcomments must include a selfaddressed,stamped postcard/envelope.FOR FURTHER INFORMATION CONTACT:Prevention of Prohibited Drug Use inTransit Operations—Ms. Judy Meade,Office of Program Management, (202)366–2896.SUPPLEMENTARY INFORMATION: Interestedparties are invited to send commentsregarding any aspect of this informationcollection, including: (1) The necessityand utility of the information collectionfor the proper performance of thefunctions of the FTA; (2) the accuracyof the estimated burden; (3) ways toenhance the quality, utility, and clarityof the collected information; and (4)ways to minimize the collection burdenwithout reducing the quality of thecollected information. Commentssubmitted in response to this notice willbe summarized and/or included in therequest for OMB approval of thisinformation collection.Title: Prevention of Prohibited Drug Usein Transit Operations (OMB Number:2132–0557)Background: The OmnibusTransportation Employee Testing Act of1991 (Pub. L. 102–143, October 28,1991, now codified in relevant part at 49U.S.C. 5331) requires any recipient ofFederal financial assistance under 49U.S.C. Sections 5309, 5307, or 5311 orunder 23 U.S.C. Section 103(e) (4) toestablish a program designed to helpprevent accidents and injuries resultingfrom the misuse of drugs and alcohol byemployees who perform safety-sensitivefunctions. FTA’s regulation, 49 CFR Part653, ‘‘Prevention of Prohibited Drug Usein Transit Operations,’’ effective March17, 1994, requires recipients to submitto FTA annual reports containing datawhich summarize informationconcerning the recipients’ drug testingprogram, such as the number and typeof tests given, number of positive testresults, and the kinds of safety-sensitivefunctions the employees perform. FTAuses these data to ensure compliancewith the rule, to assess the misuse ofdrugs in the transit industry, and to setthe random testing rate. The data willalso be used to assess the effectivenessof the rule in reducing the misuse ofdrugs among safety-sensitive transitemployees and making transit safer forthe public.Respondents: State and localgovernment, business or other for-profitinstitutions, non-profit institutions, andsmall business organizations.Estimated Annual Burden onRespondents: 26.5 hours for each of the1,615 respondents.Estimated Total Annual Burden:42,799 hours.Frequency: Annual.Issued: February 4, 1997.Gordon J. Linton,Administrator.[FR Doc. 97–3304 Filed 2–10–97; 8:45 am]BILLING CODE 4910–57–USurface Transportation Board[STB Docket No. 41987]Western Fuels Service Corporation v.the Burlington Northern and Santa FeRailway CompanyAGENCY: Surface Transportation Board.ACTION: Notice of exemption.SUMMARY: Under 49 U.S.C. 10502, theBoard is granting the request of both thecomplainant and the defendant that thisproceeding be exempted from thestatutory requirement that it becompleted within 180 days. The Boardis extending the time limit to 270 dayspursuant to the request of the parties.DATES: The exemption is effective onFebruary 11, 1997.ADDRESSES: An original and 10 copies ofall pleadings referring to the exemptiongranted in STB Docket No. 41987 mustbe filed with the Surface TransportationBoard, Office of the Secretary, CaseControl Branch, 1201 Constitution Ave.,N.W., Washington DC 20423. Inaddition, a copy of all pleadings must beserved on the parties’ representatives:(1) For Western Fuels ServiceCorporation, Peter Glaser, Doherty,Rumble & Butler, Suite 1100, 1401 NewYork Avenue, NW, Washington, DC20005; and (2) for The BurlingtonNorthern and Santa Fe RailwayCompany, Samuel M. Sipe, Jr., Steptoe& Johnson, 1330 Connecticut Avenue,NW, Washington, DC 20036, andRichard E. Weicher, The BurlingtonNorthern and Santa Fe RailwayCompany, Suite 3800, 777 Main Street,Fort Worth, TX 76102–5384.FOR FURTHER INFORMATION CONTACT:Joseph H. Dettmar, (202) 927–5660.[TDD for the hearing impaired (202)927–5721.]SUPPLEMENTARY INFORMATION: Thisproceeding involves a request for accessto certain terminal facilities andtrackage by Western Fuels ServiceCorporation (complainant) pursuant to49 U.S.C. 11102. Under section11102(d), the Board must complete theproceeding within 180 days after thefiling of the request for relief. Ascomplainant filed its complaint onDecember 9, 1996, the deadline forcompletion of the proceeding is June 7,1997. Complainant has filed a requestfor a 90-day extension of the deadlineuntil September 5, 1997, and TheBurlington Northern and Santa FeRailway Company (defendant) hasjoined in the request. Acting under 49U.S.C. 10502, the Board has granted anexemption from the statutory deadline.The Board will establish a proceduralschedule to govern the processing of theproceeding, if necessary, when it ruleson a pending motion by defendant todismiss the proceeding.Additional information is containedin the Board’s decision. To purchase acopy of the full decision, write to, call,or pick up in person from: DC NEWS &DATA, INC., Room 2229, 1201Constitution Avenue, N.W.,Washington, DC 20423. Telephone:(202) 289–4357/4359. [Assistance forthe hearing impaired is availablethrough TDD services (202) 927–5721.]Decided: February 3, 1997.By the Board, Chairman Morgan and ViceChairman Owen.Vernon A. Williams,Secretary.[FR Doc. 97–3384 Filed 2–10–97; 8:45 am]BILLING CODE 4915–00–PBureau of Transportation StatisticsAgency Information Collection;Activity Under OMB Review; Report ofFinancial and Operating Statistics forSmall Aircraft Operators—Form 298–CAGENCY: Bureau of TransportationStatistics (BTS), DOT.ACTION: Notice.SUMMARY: In compliance with thePaperwork Reduction Act of 1995,Public Law 104–13, the Bureau ofTransportation Statistics (BTS) invitesthe general public, industry and otherFederal Agencies to comment on thecontinuing need and usefulness of BTScollecting financial, traffic andoperating statistics from smallcertificated and commuter air carriers.Small certificated air carriers (operateaircraft with 60 seats or less or with18,000 pounds of payload capacity orless) must file the five quarterlyschedules listed below:A–1 Report of Flight and TrafficStatistics in Scheduled PassengerOperations,

6302 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / NoticesE–1 Report of Nonscheduled PassengerEnplanements by Small CertificatedAir Carriers,F–1 Report of Financial Data,F–2 Report of Aircraft OperatingExpenses and Related Statistics,andT–1 Report of Revenue Traffic by On-Line Origin and Destination.Commuter air carriers must file thethree quarterly schedules listed below:A–1 Report of Flight and TrafficStatistics in Scheduled PassengerOperations,F–1 Report of Financial Data, andT–1 Report of Revenue Traffic by On-Line Origin and Destination.Commenters should address whetherBTS accurately estimated the reportingburden and if there are other ways toenhance the quality, utility and clarityof the information collected.DATES: Written comments should besubmitted by April 14, 1997.ADDRESSES: Comments should bedirected to: Office of AirlineInformation, K–25, Room 4125, Bureauof Transportation Statistics, Departmentof Transportation, 400 Seventh Street,S.W., Washington, DC 20590–0001.COMMENTS: Comments should identifythe OMB # 2138–0009 and submit aduplicate copy to the address listedabove. Commenters wishing theDepartment to acknowledge receipt oftheir comments must submit with thosecomments a self-addressed stampedpostcard on which the followingstatement is made: Comments on OMB# 2138–0009. The postcard will be date/time stamped and returned to thecommenter.FOR FURTHER INFORMATION CONTACT:Bernie Stankus, Office of AirlineInformation, K–25, Bureau ofTransportation Statistics, 400 SeventhStreet, S.W., Washington, DC 20590–0001, (202) 366–4387.SUPPLEMENTARY INFORMATION:OMB Approval No. 2138–0009.Title: Report of Financial andOperating Statistics for Small AircraftOperators—Form 298–C.Form No.: 298–C.Type of Review: Extension of acurrently approved collection.Respondents: Small certificated andcommuter air carriers.Number of Respondents: 100Estimated Time Per Response: 16hours for small certificated 7 hours forcommuters.Total Annual Burden: 5,000 hours.Needs and Uses: Program Uses ofForm 298–C Data.Mail RatesThe Department of Transportation(DOT) sets and updates the Intra-AlaskaBush mail rates based on carrierexpense, traffic, and operational data.Form 298–C cost data, especially fuelcosts, terminal expenses, and line haulexpenses are used in arriving at ratelevels. DOT revises the established ratesbased on the percentage of unit costchanges in the carriers’ operations.These updating procedures haveresulted in the carriers receiving rates ofcompensation that more closely paralleltheir costs of providing mail service andcontribute to the carriers’ economicwell-being.Essential Air ServiceDOT also must determine acommunity’s eligibility as an essentialair service (EAS) point. If thecommunity qualifies as an EAS point, adetermination is made as to what levelof service the community is entitled andhow much, if any, compensation mustbe paid to air carriers that provide theservice.After DOT has determined that acommunity is eligible to receive EAS,DOT often has to select a carrier toprovide the service. Some of the carrierselection criteria are historic presence inthe community, reliability of carrierservice, financial stability of the carrier,and carrier cost structure.Carrier FitnessFitness determinations are made forboth new entrants and established U.S.domestic carriers proposing asubstantial change in operations. Aportion of these applications consists ofan operating plan for the first year (14CFR Part 204) and an associatedprojection of revenues and expenses.The carrier’s operating cost, included inthese projections, are compared againstthe cost data in the Form 298–C file fora carrier or carriers with the sameaircraft type and similar operatingcharacteristics. Such a review validatesthe reasonableness of the carrier’soperating plan.The quarterly financial submissionsby commuter air carriers are used indetermining each carrier’s continuingfitness to operate. Section 41738 of Title49 of the United States Code requiresDOT to find all commuters fit, willingand able to conduct passenger service asa prerequisite to providing such serviceto an eligible essential air service point.In making a fitness determination, DOTreviews three areas of a carrier’soperation: (1) The qualifications of itsmanagement team, (2) its disposition tocomply with laws and regulations, and(3) its financial posture. DOT mustdetermine whether or not a carrier hassufficient financial resources to conductits operations without imposing unduerisk on the traveling public. Moreover,once a carrier is operating as acommuter, DOT is required to monitorits continuing fitness.Industry AnalysisThe Secretary, Deputy Secretary andother senior DOT officials must be keptfully informed and advised of allcurrent and developing economic issuesaffecting the airline industry. This isaccomplished through the preparationof testimony given before Congressionalcommittees, briefing and status papers,speech preparation, and memorandarecommending decisions or listingavailable options.The program methodologies underthis program are as varied as the natureof the particular aviation policy issuesthat confront senior DOT officials. Inpreparing financial condition reports orstatus reports on a particular airline,financial and traffic data are analyzed.Briefing papers may use the sameinformation as well as airport activitydata and market data. In summary, thenature of a particular aviation issuedetermines the particular methodologyused to prepare the analysis.Safety AnalysisThe FAA evaluates the adequacy ofaviation safety regulations, standards,policies and procedures. Problem areasare identified and recommendations aredeveloped for appropriate solutions.Enplanement data are used inevaluating the safety status of carriers.Passenger-miles are used to calculatefatality and injury rates, while aircraftmilesare used in performing riskanalysis and comparative analyses withother traffic modes. Departure data areused to calculate accident/incidentrates, developing rates of near misses,and assessing the significance of theincident of operational errors.ForecastingTraffic schedules are used to deriveair carrier operations at non-towerairports. Historical aircraft departuredata are used to supplement andvalidate other sources of Terminal AreaForecasts (TAF). The aircraft operationsdata in the TAF are needed by theNational Plan of Integrated AirportsSystem (NPIAS) to prepare airportmaster plans. In addition, aircraftoperations forecast data in TAF are usedin developing benefit/cost ratios fortower establishment and towerdiscontinuance criteria, for supportingdecisions on the purchase of safety-

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6303related avionics equipment, and for theallocation of scarce resources for theconstruction or expansion of runwaysand other airport facilities.Historical enplanement data arerequired to produce short, medium, andlong range passenger demand forecastsfor all airports with passenger service.These forecasts are presented in theTAF data base, which containsapproximately 4,000 airports, includingall airports in the NPIAS. TAFenplanement data are used in thepreparation of various airport masterplans and in response to requests forspecific airport information fromCongress, states, and the general public.Historical passenger enplanementdata, aircraft departure data, and freightand mail tons enplaned by airport areall used to project air carrier traffic andcargo activity levels for hub airports.Cost/Benefit AnalysisSafety rules proposed by the FAAoperating units are submitted foreconomic analysis. Under establishedcosting methodologies, which usevarious cost and traffic data, accidentdata, and risk analysis, the proposedrules are evaluated on (1) a cost/benefitbasis, (2) regulatory flexibility basis and,(3) an international trade impact basis.Allocation of Airport and AirwaysImprovement FundsA revenue passenger enplanementformula prescribed in the Airport andAirway Improvement Act of 1982 isused to determine the amount of fundsto be allocated to each airport. Form298–C schedules that identify revenuepassengers enplaned at individualairports in the United States and TrustTerritories, are used for the formula.Since several airports in the nationalsystem are heavily involved in airfreight, all-cargo data, such as revenuetons enplaned and aircraft departures,are used to plan for future needs ofthose airports. Scheduled aircraftdepartures by aircraft type by airport areused in determining the practicalannual capacity (PANCAP) at airports,as prescribed in FAA Advisory Circular‘‘Airport Capacity Criteria Used inPreparing the National Airport Plan.’’PANCAP is a safety-related benchmarkmeasure which indicates when airportmanagement should be concerned aboutcapacity problems, delays and possibleneeded airport expansion or runwayconstruction.Noise AbatementAir carrier traffic data by airport areused in assessing the level andfrequency of service at individualairports in order to determine theenvironmental noise impact of carrieroperations. Also, aircraft operating dataare used to assess carrier compliancewith noise abatement agreements.Timothy E. Carmody,Director, Office of Airline Information,Bureau of Transportation Statistics.[FR Doc. 97–3331 Filed 2–10–97; 8:45 am]BILLING CODE 4910–FE–PDEPARTMENT OF THE TREASURYInternal Revenue Service[CO–62–89]Proposed Collection; CommentRequest For Regulation ProjectAGENCY: Internal Revenue Service (IRS),Treasury.ACTION: Notice and request forcomments.SUMMARY: The Department of theTreasury, as part of its continuing effortto reduce paperwork and respondentburden, invites the general public andother Federal agencies to take thisopportunity to comment on proposedand/or continuing informationcollections, as required by thePaperwork Reduction Act of 1995,Public Law 104–13 (44 U.S.C.3506(c)(2)(A)). Currently, the IRS issoliciting comments concerning anexisting final regulation, CO–62–89 (TD8407), Final Regulations Under Section382 of the Internal Revenue Code of1986; Limitations on Corporate NetOperating Loss Carryforwards (§ 1.382–3).DATES: Written comments should bereceived on or before April 14, 1997 tobe assured of consideration.ADDRESSES: Direct all written commentsto Garrick R. Shear, Internal RevenueService, room 5571, 1111 ConstitutionAvenue NW., Washington, DC 20224.FOR FURTHER INFORMATION CONTACT:Requests for additional information orcopies of the information collectionshould be directed to Carol Savage,(202) 622–3945, Internal RevenueService, room 5569, 1111 ConstitutionAvenue NW., Washington, DC 20224.SUPPLEMENTARY INFORMATION:Title: Final Regulations Under Section382 of the Internal Revenue Code of1986; Limitations on Corporate NetOperating Loss Carryforwards.OMB Number: 1545–1260.Regulation Project Number: CO–62–89.Abstract: Internal Revenue Codesection 382(l)(5) provides relief from theapplication of the section 382 limitationfor bankruptcy reorganizations in whichthe pre-change shareholders andqualified creditors maintain asubstantial continuing interest in theloss corporation. These regulationsconcern the election a taxpayer maymake to treat as the change date theeffective date of a plan of reorganizationin a title 11 or similar case rather thanthe confirmation date of a plan.Current Actions: There is no change tothis existing regulation.Type of Review: Extension of OMBapproval.Affected Public: Business or other forprofitorganizations.Estimated Number of Respondents:10.Estimated Time Per Respondent: 5minutes.Estimated Total Annual BurdenHours: 1.The following paragraph applies to allof the collections of information coveredby this notice:An agency may not conduct orsponsor, and a person is not required torespond to, a collection of informationunless the collection of informationdisplays a valid OMB control number.Books or records relating to a collectionof information must be retained as longas their contents may become materialin the administration of any internalrevenue law. Generally, tax returns andtax return information are confidential,as required by 26 U.S.C. 6103.Request for CommentsComments submitted in response tothis notice will be summarized and/orincluded in the request for OMBapproval. All comments will become amatter of public record. Comments areinvited on: (a) Whether the collection ofinformation is necessary for the properperformance of the functions of theagency, including whether theinformation shall have practical utility;(b) the accuracy of the agency’s estimateof the burden of the collection ofinformation; (c) ways to enhance thequality, utility, and clarity of theinformation to be collected; (d) ways tominimize the burden of the collection ofinformation on respondents, includingthrough the use of automated collectiontechniques or other forms of informationtechnology; and (e) estimates of capitalor start-up costs and costs of operation,maintenance, and purchase of servicesto provide information.Approved: February 5, 1997.Garrick R. Shear,IRS Reports Clearance Officer.[FR Doc. 97–3400 Filed 1–10–97; 8:45 am]BILLING CODE 4830–01–U

6304 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices[INTL–15–91]Proposed Collection; CommentRequest for Regulation ProjectAGENCY: Internal Revenue Service (IRS),Treasury.ACTION: Notice and request forcomments.SUMMARY: The Department of theTreasury, as part of its continuing effortto reduce paperwork and respondentburden, invites the general public andother Federal agencies to take thisopportunity to comment on proposedand/or continuing informationcollections, as required by thePaperwork Reduction Act of 1995,Public Law 104–13 (44 U.S.C.3506(c)(2)(A)). Currently, the IRS issoliciting comments concerning anexisting notice of proposed rulemaking,INTL–15–91, Taxation of Gain or Lossfrom Certain Nonfunctional CurrencyTransactions (Section 988 Transactions)(§ 1.988–5).DATES: Written comments should bereceived on or before April 14, 1997 tobe assured of consideration.ADDRESSES: Direct all written commentsto Garrick R. Shear, Internal RevenueService, room 5571, 1111 ConstitutionAvenue NW., Washington, DC 20224.FOR FURTHER INFORMATION CONTACT:Requests for additional information orcopies of the information collectionshould be directed to Carol Savage,(202) 622–3945, Internal RevenueService, room 5569, 1111 ConstitutionAvenue NW., Washington, DC 20224.SUPPLEMENTARY INFORMATION:Title: Taxation of Gain or Loss fromCertain Nonfunctional CurrencyTransactions (Section 988 Transactions).OMB Number: 1545–1312.Regulation Project Number: INTL–15–91.Abstract: This regulation providesthat if a taxpayer identifies a hedge anda dividend, rent, or royalty payment asa hedged qualified payment, then thetaxpayer may integrate suchtransactions. The regulation also allowstaxpayers to elect a mark to marketmethod of accounting for foreigncurrency gains and losses.Current Actions: There is no change tothis existing regulation.Type of Review: Extension of OMBapproval.Affected Public: Individuals orhouseholds, and business or other forprofitorganizations.Estimated Number of Respondents:1,500.Estimated Time Per Respondent: 40minutes.Estimated Total Annual BurdenHours: 1,000.The following paragraph applies to allof the collections of information coveredby this notice:An agency may not conduct orsponsor, and a person is not required torespond to, a collection of informationunless the collection of informationdisplays a valid OMB control number.Books or records relating to acollection of information must beretained as long as their contents maybecome material in the administrationof any internal revenue law. Generally,tax returns and tax return informationare confidential, as required by 26U.S.C. 6103.Request for CommentsComments submitted in response tothis notice will be summarized and/orincluded in the request for OMBapproval. All comments will become amatter of public record. Comments areinvited on: (a) Whether the collection ofinformation is necessary for the properperformance of the functions of theagency, including whether theinformation shall have practical utility;(b) the accuracy of the agency’s estimateof the burden of the collection ofinformation; (c) ways to enhance thequality, utility, and clarity of theinformation to be collected; (d) ways tominimize the burden of the collection ofinformation on respondents, includingthrough the use of automated collectiontechniques or other forms of informationtechnology; and (e) estimates of capitalor start-up costs and costs of operation,maintenance, and purchase of servicesto provide information.Approved: February 5, 1997.Garrick R. Shear,IRS Reports Clearance Officer.[FR Doc. 97–3401 Filed 2–10–97; 8:45 am]BILLING CODE 4830–01–U[LR–27–83; LR–54–85]Proposed Collection; CommentRequest for Regulation ProjectAGENCY: Internal Revenue Service (IRS),Treasury.ACTION: Notice and request forcomments.SUMMARY: The Department of theTreasury, as part of its continuing effortto reduce paperwork and respondentburden, invites the general public andother Federal agencies to take thisopportunity to comment on proposedand/or continuing informationcollections, as required by thePaperwork Reduction Act of 1995,Public Law 104–13 (44 U.S.C.3506(c)(2)(A)). Currently, the IRS issoliciting comments concerning existingtemporary regulations, LR–27–83 (TD7882), Floor Stocks Credits or Refundsand Consumer Credits or Refunds WithRespect to Certain Tax-RepealedArticles; Excise Tax on Heavy Trucks(§ 145.4051–1) and LR–54–85 (TD 8050),Excise Tax on Heavy Trucks, TruckTrailers and Semitrailers, and Tractors;Reporting and RecordkeepingRequirements (§ 145.4052–1).DATES: Written comments should bereceived on or before April 14, 1997 tobe assured of consideration.ADDRESSES: Direct all written commentsto Garrick R. Shear, Internal RevenueService, room 5571, 1111 ConstitutionAvenue NW., Washington, DC 20224.FOR FURTHER INFORMATION CONTACT:Requests for additional information orcopies of the information collectionshould be directed to Carol Savage,(202) 622–3945, Internal RevenueService, room 5569, 1111 ConstitutionAvenue NW., Washington, DC 20224.SUPPLEMENTARY INFORMATION:Title: (LR–27–83) Floor Stocks Creditsor Refunds and Consumer Credits orRefunds With Respect to Certain Tax-Repealed Articles; Excise Tax on HeavyTrucks, and (LR–54–85) Excise Tax onHeavy Trucks, Truck Trailers andSemitrailers, and Tractors; Reportingand Recordkeeping Requirements.OMB Number: 1545–0745.Regulation Project Number: LR–27–83; LR–54–85.Abstract: LR–27–83 requires sellers oftrucks, trailers and semitrailers, andtractors to maintain records of the grossvehicle weights of articles sold to verifytaxability. LR–54–85 requires that if thesale is to be treated as exempt, the sellerand the purchaser must be registeredand the purchaser must give the sellera resale certificate.Current Actions: There is no change tothese existing regulations.Type of Review: Extension of OMBapproval.Affected Public: Business or other forprofitorganizations.Estimated Number of Respondents:4,100.Estimated Time Per Respondent: 1hour, 1 minute.Estimated Total Annual BurdenHours: 4,140.The following paragraph applies to allof the collections of information coveredby this notice:An agency may not conduct orsponsor, and a person is not required torespond to, a collection of informationunless the collection of information

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Notices6305displays a valid OMB control number.Books or records relating to a collectionof information must be retained as longas their contents may become materialin the administration of any internalrevenue law. Generally, tax returns andtax return information are confidential,as required by 26 U.S.C. 6103.Request for CommentsComments submitted in response tothis notice will be summarized and/orincluded in the request for OMBapproval. All comments will become amatter of public record. Comments areinvited on: (a) Whether the collection ofinformation is necessary for the properperformance of the functions of theagency, including whether theinformation shall have practical utility;(b) the accuracy of the agency’s estimateof the burden of the collection ofinformation; (c) ways to enhance thequality, utility, and clarity of theinformation to be collected; (d) ways tominimize the burden of the collection ofinformation on respondents, includingthrough the use of automated collectiontechniques or other forms of informationtechnology; and (e) estimates of capitalor start-up costs and costs of operation,maintenance, and purchase of servicesto provide information.Approved: February 5, 1997.Garrick R. Shear,IRS Reports Clearance Officer.[FR Doc. 97–3402 Filed 2–10–97; 8:45 am]BILLING CODE 4830–01–UDEPARTMENT OF VETERANSAFFAIRSAdvisory Committee on theReadjustment of Veterans, Notice ofMeetingThe Department of Veterans Affairs(VA) gives notice under Public Law 92–463 that a meeting of the AdvisoryCommittee on the Readjustment ofVeterans will be held February 20 and21, 1997. This is a regularly scheduledmeeting for the purpose of reviewingVA and other relevant services forveterans, to review Committee work inprogress and to formulate Committeerecommendations and objectives. Themeeting on both days will be held atThe American Legion, WashingtonOffice, 1608 K Street, NW, Washington,DC. The agenda on both days willcommence at 8:30 a.m. and adjourn at4:30 p.m.The agenda for February 20 will beginwith a review of Committee specialprojects and pending reports. Theagenda will also cover a review of theReadjustment Counseling Service VetCenters, a discussion of VA specialemphasis programs in relation tomanaged health care principles and areview of Persian Gulf veterans’ healthcare problems.On February 21, the Committee willreview the programs and activities ofVA’s Center for Women Veterans,review available data regarding the levelof post-traumatic stress disorder inPersian Gulf and Somalia veterans, anddiscuss access to care problems forCanadian and Mexican Nationalveterans of the U.S. military. Theagenda will also consist of a planningmeeting to formulate specific objectivesfor the remainder of the year.The meeting will be open to thepublic. Those who plan to attend orwho have questions concerning themeeting should contact Alfonso R.Batres, Ph.D., M.S.S.W., Director,Readjustment Counseling Service,Department of Veterans Affairs(telephone number: 202–273–8967).Dated: February 4, 1997.By Direction of the Secretary:Heyward Bannister,Committee Management Officer.[FR Doc. 97–3282 Filed 2–10–97; 8:45 am]BILLING CODE 8320–01–M

federal registerTuesdayFebruary 11, 1997Part IIDepartment ofEducation34 CFR Part 361 et al.The State Vocational RehabilitationServices Program; Final Rule6307

6308 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsDEPARTMENT OF EDUCATION34 CFR Parts 361, 363, 376, and 380RIN 1820–AB12The State Vocational RehabilitationServices ProgramAGENCY: Department of Education.ACTION: Final regulations.SUMMARY: The Secretary amends theregulations governing The StateVocational Rehabilitation ServicesProgram. These amendments are neededto implement changes to theRehabilitation Act of 1973 (Act) madeby the Rehabilitation Act Amendmentsof 1992, enacted on October 29, 1992, asamended by the 1993 technicalamendments (hereinafter collectivelyreferred to as the 1992 Amendments).EFFECTIVE DATE: These regulations takeeffect March 13, 1997.FOR FURTHER INFORMATION CONTACT:Beverlee Stafford, U.S. Department ofEducation, 600 Independence Avenue,SW., Room 3014, Mary E. SwitzerBuilding, Washington, DC. 20202–2531.Telephone (202) 205–8831. Individualswho use a telecommunications devicefor the deaf (TDD) may call (202) 205–5538.SUPPLEMENTARY INFORMATION: The StateVocational Rehabilitation ServicesProgram (program) is authorized byTitle I of the Act (29 U.S.C. 701–744).This program provides support to eachState to assist it in operating acomprehensive, coordinated, effective,efficient, and accountable State programto assess, plan, develop, and providevocational rehabilitation (VR) servicesto individuals with disabilities so thatthose individuals may prepare for andengage in gainful employment,consistent with their strengths,resources, priorities, concerns, abilities,capabilities, and informed choice.On December 15, 1995, the Secretarypublished a notice of proposedrulemaking (NPRM) for this program inthe Federal Register (60 FR 64476).Additionally, pursuant to ExecutiveOrder 12866, which encourages Federalagencies to facilitate meaningfulparticipation in the regulatorydevelopment process, the RehabilitationServices Administration (RSA) madeavailable draft proposed regulations(draft regulations) in accessible formats,including an electronic format, to abroad spectrum of parties for informalreview and comment prior to publishingthe December 15, 1995 NPRM. RSA alsogathered public input on the draftregulations through public meetings andfocus groups and analyzed over 600letters of comments on the draftregulations.These final regulations implementchanges made to the program by the1992 Amendments with the exceptionof the evaluation standards andperformance indicator requirements insection 106 of the Act, which are beingimplemented in a separate rulemakingdocument, and incorporate some of theburden-reducing changes previouslyproposed in an NPRM for this programthat was published on July 3, 1991 (56FR 30620) (1991 NPRM). The 1991NPRM was not finalized at the requestof Congress. These regulations alsoimplement changes that the Secretarybelieves are important to update,consolidate, clarify, and in other waysimprove the regulations for thisprogram.The Supplementary Informationsection to the NPRM includes adiscussion of the major changes to TitleI of the Act made by the 1992Amendments. These changes have farreachingimplications for the program.Individuals are encouraged to refer tothe NPRM (60 FR 64476–64477) for adiscussion of the major themesassociated with the 1992 Amendments.These final regulations contain alimited number of significant changes tothe proposed regulations based onpublic comment and interdepartmentalreview. A detailed description of thesechanges follows. In addition, the finalregulations have been reviewed andrevised in accordance with theDepartment’s Principles for Regulating,which were developed as part of theAdministration’s regulatory reinventioninitiative under the NationalPerformance Review II. The principlesare designed to ensure that theDepartment regulates in the mostflexible, most equitable, and leastburdensome way possible.The Secretary also notes that thechanges to supported employmentdefinitions included in these finalregulations affect those definitions in 34CFR parts 363, 376, and 380.Corresponding regulatory changes tothose parts follow the final regulationsamending 34 CFR part 361.Goals 2000: Educate America ActThe Goals 2000: Educate America Act(Goals 2000) focuses the Nation’seducation reform efforts on the eightNational Education Goals and providesa framework for meeting them. Goals2000 promotes new partnerships tostrengthen schools and expands theDepartment’s capacities for helpingcommunities to exchange ideas andobtain information needed to achievethe goals.These regulations address theNational Education Goal that everyadult American, including individualswith disabilities, will possess theknowledge and skills necessary tocompete in a global economy andexercise the rights and responsibilitiesof citizenship.Executive Order 12866These final regulations have beenreviewed in accordance with ExecutiveOrder 12866. Under the terms of theorder the Secretary has assessed thepotential costs and benefits of thisregulatory action.The potential costs associated withthe final regulations are those resultingfrom statutory requirements and thosedetermined by the Secretary asnecessary for administering thisprogram effectively and efficiently.In assessing the potential costs andbenefits—both quantitative andqualitative—of these final regulations,the Secretary has determined that thebenefits of the final regulations justifythe costs.The Secretary has also determinedthat this regulatory action does notunduly interfere with State, local, andtribal governments in the exercise oftheir governmental functions.Summary of potential costs and benefitsThe potential costs and benefits ofthese final regulations were summarizedin the preamble to the NPRM under thefollowing headings: ImprovedOrganization of Regulations; Notes andExamples; Reduction of Grantee Burden;Enhanced Protections for Individualswith Disabilities (60 FR 64495);Increased Flexibility of Grantees toSatisfy Statutory Requirements; andAdditional Benefits (60 FR 64496).Additional discussion of potential costsand benefits is included in the followingAnalysis of Comments and Changessection of this preamble.Analysis of Comments and ChangesIn response to the Secretary’sinvitation in the NPRM, more than 400parties submitted comments on theproposed regulations. RSA gatheredadditional public input on the NPRMthrough a series of public meetings. Ananalysis of the comments and of thechanges in the regulations sincepublication of the NPRM follows.Major issues are grouped according tosubject under appropriate sections ofthe regulations. Other substantive issuesare discussed under the section of theregulations to which they pertain.Technical and other minor changes—and suggested changes the Secretary isnot legally authorized to make under the

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6309applicable statutory authority—generally are not addressed. However,some suggested changes that theSecretary is not authorized to make alsoraise important policy issues and,therefore, are discussed under theappropriate section of the analysis.References in the analysis ofcomments to the ‘‘proposed regulations’’refer to the regulatory provisions in theDecember 15, 1995 NPRM, whereasreferences to the ‘‘draft regulations’’refer to provisions in the draft proposedregulations that were circulated forinformal comment prior to publishingthe NPRM.Section 361.5(b)definitionsApplicable• Administrative Costs Under the StatePlanComments: Some commentersrequested that this definition be revisedto specifically limit administrative coststo expenditures incurred by theDesignated State Unit (DSU) inadministering the VR program. Onecommenter recommended that thedefinition identify indirect costs as atype of administrative cost. Finally, onecommenter sought to exclude costsincurred by DSUs in providing technicalassistance to businesses and industriesfrom the definition on the basis thatthose costs represent expenditures forthe provision of services under§ 361.49(a) of the proposed regulations.Discussion: The Secretary agrees thatadministrative costs under the VR Stateplan are those costs that the DSU incursin administering the VR program. Whilemost indirect costs (those costs thatcannot be allocated to a single costobjective and that benefit more than oneprogram) are generally types ofadministrative expenditures, they neednot be limited to administrativeexpenditures. The Secretary does notbelieve it is necessary to classifyindirect costs in order to ensure theirallowability under the program. Allindirect costs that are approved underan indirect cost agreement or costallocation plan are allowable. TheSecretary emphasizes that indirect costsrelated to multiple State programs (e.g.,operating expenses for State buildingsoccupied by DSU staff and staff fromother State-administered programs) canbe charged to the VR program only tothe extent that the costs are attributableto the VR program.In addition, the Secretary agrees thatalthough technical assistance tobusinesses, in some cases, is consideredan administrative cost, any technicalassistance provided by a DSU to abusiness or industry that seeks toemploy individuals with disabilitiesand that is not subject to the Americanswith Disabilities Act (ADA) does notconstitute an administrative cost.Technical assistance provided underthese circumstances is authorized bysection 103(b)(5) of the Act and§ 361.49(a)(4) of the regulations as aservice for groups of individuals withdisabilities.Changes: The Secretary has revised§ 361.5(b)(2) to clarify thatadministrative costs are expendituresthat are incurred by the DSU inperforming administrative functionsrelated to the VR program. Thedefinition also has been amended toexclude technical assistance provided tobusinesses and industries as a serviceunder the conditions in § 361.49(a)(4).• Appropriate Modes ofCommunicationComments: One commenter opposeddefining ‘‘appropriate modes ofcommunication’’ as specialized mediasystems and devices that facilitatecommunication on the basis that not allmodes of communication used bypersons with disabilities are ‘‘mediasystems and devices.’’ Severalcommenters requested that thedefinition identify graphicpresentations, simple language, andother modes of communication used byindividuals with cognitive impairments.Discussion: The Secretary agrees that‘‘appropriate modes of communication’’are not limited to specific systems,devices, or equipment, as indicated bythe proposed definition, and includeany type of aid or support needed by anindividual with a disability tocommunicate with others effectively.For example, the use of an interpreter bya person who is deaf is an appropriatemode of communication, but is nottypically viewed as a system or device.The Secretary believes it would beuseful for the definition of appropriatemodes of communication to includeexamples of communication methodsused by individuals with cognitiveimpairments. However, the Secretaryemphasizes that the examples ofcommunication services and materialslisted in the definition in the finalregulations are not all-inclusive and thatother appropriate modes ofcommunication not specified in thedefinition are also available to addressthe particular communication needs ofan individual with a disability.Changes: The Secretary has amended§ 361.5(b)(5) to clarify that appropriatemodes of communication include anyaid or support that enables anindividual with a disability tocomprehend and respond to informationbeing communicated. In addition, thedefinition has been amended to includegraphic presentations and simplelanguage materials as examples ofmodes of communication that may beappropriate for individuals withcognitive impairments.• Assistive Technology ServiceComments: Some commenters askedthat particular services be identified inthis definition as examples ofpermissible assistive technologyservices. For instance, one commentersuggested that the definition specificallyidentify modifications to vehicles usedby individuals with disabilities as anassistive technology service.Discussion: The definition of the term‘‘assistive technology service’’ in boththe proposed and final regulationstracks the definition of that term in theTechnology-Related Assistance forIndividuals with Disabilities Act of 1988(Tech Act), as required by section 7(24)of the Act. The Tech Act definesassistive technology services generallyto include any service that directlyassists an individual with a disability inthe selection, acquisition, or use of anassistive technology device. Thedefinition in the regulations, therefore,is intended to address the scope ofservice-related needs of individuals whouse assistive technology devices (e.g.,the need to acquire a particular deviceor the need to receive training on theoperation of a device) rather than toidentify actual services that anindividual might receive. Nevertheless,the Secretary recognizes that anymodification to a vehicle that isnecessary to enable an individual witha disability to use that vehicle isconsidered an adaptation or acustomization of an assistive technologydevice under § 361.5(b)(7)(iii) and,therefore, constitutes an assistivetechnology service. This position isconsistent with current RSA policy.Changes: None.• Community Rehabilitation ProgramComments: Some commentersrequested that the definition of‘‘community rehabilitation program’’specify additional services, such asrehabilitation teaching services, thatcould be provided under a communityrehabilitation program for individualswith disabilities.Discussion: The definition of‘‘community rehabilitation program’’ inboth the proposed and final regulationsis based on the statutory definition insection 7(25) of the Act. However,paragraph (i)(Q) of this definition, likesection 7(25)(Q) of the Act, authorizescommunity rehabilitation programs that

6310 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsprovide services similar to the servicesspecified in the definition. Thus, theSecretary believes that a communityrehabilitation program could providerehabilitation teaching services forindividuals who are blind because thoseservices are similar to orientation andmobility services for individuals whoare blind, which are expresslyauthorized under paragraph (i)(K) of thedefinition.Changes: None.• Comparable Services and BenefitsComments: Several commentersrequested clarification of therequirement in the proposed regulationsthat comparable services and benefits beavailable to the individual within areasonable period of time. Somecommenters requested that theregulations allow DSUs to usecomparable services and benefits only ifthey are currently available at the timethe individual’s Individualized WrittenRehabilitation Program (IWRP) isdeveloped. Other commenters suggestedthat comparable services and benefitsshould be available when necessary tomeet the rehabilitation objectivesidentified in the individual’s IWRP.Discussion: The definition of‘‘comparable services and benefits’’ isintended to support the statutorypurpose of conserving rehabilitationfunds, while ensuring the provision ofappropriate and timely services. Theproposed requirement in the NPRM thatcomparable services and benefits beavailable within a reasonable period oftime was intended to enable DSUs toconserve VR funds by searching foralternative sources of funds withoutjeopardizing the timely provision of VRservices to eligible individuals. TheSecretary agrees that additionalclarification in the regulations isrequired to ensure that VR services areprovided to eligible individuals at thetime they are needed.Changes: The Secretary has revised§ 361.5(b)(9)(ii) of the proposedregulations to require that comparableservices and benefits be available to theindividual at the time that the relevantservice is needed to achieve therehabilitation objectives in theindividual’s IWRP. This change isconsistent with revisions made to§ 361.53 of the proposed regulations,which are discussed in the analysis ofcomments to that section.• Competitive Employment andIntegrated SettingComments: Some commentersopposed the definition of ‘‘competitiveemployment’’ in the proposedregulations on the basis that it limitedcompetitive employment outcomes tothose in which an individual with adisability earns at least the minimumwage. Because the proposed definitionapplied to supported employmentplacements, these commenters believedthat the minimum wage requirementwould restrict employmentopportunities for individuals with themost severe disabilities who needsupported employment services in orderto work. These commenters stated thatsome individuals with the most severedisabilities would be unable to obtaincompetitive employment unless thedefinition permitted employers tocompensate employees in accordancewith section 14(c) of the Fair LaborStandards Act (FLSA) (i.e., wages basedon individual productivity that wouldbe less than the minimum wage). Othercommenters supported the proposeddefinition and the requirement thatindividuals in competitive employmentearn at least the minimum wage.Several commenters opposed therequirement in the proposed regulationsthat individuals in competitiveemployment earn at least the prevailingwage for the same or similar work in thelocal community performed by nondisabledindividuals. The commentersbelieved that it would be undulyburdensome for DSUs to ascertain therelevant prevailing wage given thepotential differences in wages providedby employers within the samecommunity. In addition, thesecommenters stated that the prevailingwage standard would dissuade someemployers from hiring individuals withdisabilities when the wage to beprovided, although at least theminimum wage, would have to beincreased to be consistent with higherwages provided by other employers inthe community for the same or similarwork.Several commenters on the proposedregulations opposed the requirementthat competitive employment beperformed in an integrated setting.Several other commenters questioned orrequested clarification of the proposeddefinition of integrated setting withrespect to the provision of services orthe achievement of an employmentoutcome. In light of theinterrelationship between the terms‘‘competitive employment’’ and‘‘integrated setting’’ and the fact that theSecretary considers integration to be anessential component of competitiveemployment, comments on both theproposed definition of ‘‘integratedsetting’’ and the use of the term‘‘integrated setting’’ as an element ofcompetitive employment are addressedin the following paragraphs.Commenters who opposed limitingcompetitive employment to placementsin integrated settings believed thatrequiring individuals with disabilities tointeract with non-disabled persons atthe work site would preclude certainkinds of employment outcomes from thescope of competitive employment.Specifically, the commenters identifiedself-employment, home-basedemployment, and various forms oftelecommuting as examples ofemployment outcomes that arecompetitive but are not located inintegrated settings. The commentersstated that these placement optionsshould be available to individuals withdisabilities to same extent that they areavailable to non-disabled persons.Some commenters believed that thedefinition of ‘‘integrated setting’’ in theproposed regulations was too weak.These commenters recommended thatthe proposed definition, which definedintegrated setting as ‘‘. . . a settingtypically found in the community inwhich an applicant or eligibleindividual has an opportunity tointeract regularly with non-disabledpersons . . .,’’ be amended to requireactual interaction between the applicantor eligible individual and non-disabledindividuals. Other commenters statedthat individuals in competitiveemployment should be required tointeract with non-disabled persons onlyto the extent that non-disabledindividuals in similar positions interactwith others. Finally, some commenterssuggested that the definition clarify thatsheltered workshops and otheremployment settings that areestablished specifically for the purposeof employing individuals withdisabilities do not constitute integratedsettings.Discussion: The Secretary agrees withthe commenters who believe thatcompetitive employment outcomesshould be limited to those in whichindividuals earn at least the minimumwage. Consequently, the Secretary doesnot consider placements in supportedemployment settings in whichindividuals receive wages below theminimum wage under section 14(c) ofthe FLSA to be competitiveemployment. This position, whichwould modify longstanding RSAregulatory policy, is consistent with therequirement in the 1992 Amendments(section 101(a)(16) of the Act) that DSUsannually review and reevaluate thestatus of each individual in anemployment setting under section 14(c)of the FLSA in order to determine theindividual’s readiness for competitiveemployment. This statutory requirementindicates that supported employment

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6311settings in which individuals arecompensated below the minimum wagein accordance with the FLSA do notconstitute competitive employment. TheSecretary wishes to clarify that theminimum wage requirement forindividuals placed in supportedemployment applies at the time oftransition to extended services. If anindividual is unable to obtain theminimum wage at this time, theindividual would still be considered tohave achieved an employment outcomebut it would not be considered asupported employment outcome.The Secretary agrees that requiringindividuals in competitive employmentto earn at least the prevailing wage forthe same or similar work in the localcommunity performed by non-disabledindividuals is unduly restrictive andthat requiring individuals withdisabilities who achieve competitiveemployment outcomes to becompensated at the wage level typicallypaid to non-disabled individuals whoperform the same or similar work for thesame employer is a more reasonablestandard. This standard requires thatcompetitively employed individualswith disabilities receive the customarywage and level of benefits (e.g.,insurance premiums, retirementcontributions) received by non-disabledworkers performing comparable jobs forthe same employer. Clarification in thefinal regulations that comparablecompensation includes both the wageand benefit level typically paid by theemployer is necessary, the Secretarybelieves, in order to ensure thatcompetitive employment outcomes forindividuals with disabilities are truly‘‘competitive.’A key purpose of the 1992Amendments is to ensure thatindividuals with disabilities achieveemployment outcomes in the mostintegrated settings possible, consistentwith the individual’s informed choice.Consequently, the Secretary believesthat placement in an integrated settingis an essential component of‘‘competitive employment.’The Secretary agrees with thosecommenters who believe that thedefinition of integrated setting in theproposed regulations did notsufficiently ensure actual interactionbetween individuals with disabilitiesand non-disabled persons. TheSecretary also agrees with thosecommenters who contend that the bestmeasure of integration in anemployment setting for individuals withdisabilities is to require parity with theintegration experienced by non-disabledworkers in similar positions.Consequently, the final regulationsestablish a standard of integration withrespect to employment outcomes that isbased on ensuring the same level ofinteraction by disabled individuals withnon-disabled persons as thatexperienced by a non-disabled workerin the same or similar job. An integratedsetting for purposes of a job placementis one in which an applicant or eligibleindividual interacts with non-disabledpersons, excluding service providers, tothe same extent that a non-disabledworker in a comparable positioninteracts with others.The Secretary believes, however, thatinteraction between individuals withdisabilities and non-disabled personsneed not be face-to-face in order to meetthis standard. Persons with disabilitieswho are self-employed or telecommutemay interact regularly with nondisabledpersons through a number ofmediums (e.g., telephone, facsimile, orcomputer). Self-employment, homebasedemployment, and other forms ofemployment in which individualscommunicate regularly from separatelocations, therefore, would satisfy theintegration requirement of competitiveemployment as long as the eligibleindividual interacts with non-disabledpersons other than service providers tothe same extent as a non-disabledperson in a comparable job.The Secretary, like many of thecommenters, also believes that settingsthat are established specifically for thepurpose of employing individuals withdisabilities (e.g., sheltered workshops)do not constitute integrated settingssince there are no comparable settingsfor non-disabled individuals.Changes: The Secretary has amended§ 361.5(b)(10) to define ‘‘competitiveemployment,’’ in part, as work forwhich an individual earns at least theminimum wage but not less than thecustomary wage and level of benefitsprovided by the same employer to nondisabledworkers who perform the sameor similar work. The Secretary also hasamended § 361.5(b)(30) to define‘‘integrated setting’’ with respect to anemployment outcome as a settingtypically found in the community inwhich applicants or eligible individualsinteract with non-disabled individualsto the same extent that non-disabledindividuals in comparable positionsinteract with other persons. Thedefinition of ‘‘integrated setting’’ withrespect to the provision of services hasbeen similarly strengthened to requireactual interaction between individualswith disabilities receiving services andnon-disabled individuals.• Designated State UnitComments: Some commentersrequested that the regulatory definitionof ‘‘designated State unit’’ prohibitDSUs from administering vocationaland other rehabilitation programs otherthan those programs authorized orfunded under the Act.Discussion: Sections 101(a)(1) and(a)(2) of the Act require that the StateVR Services Program be administered bya State entity that is primarilyconcerned with vocationalrehabilitation or vocational and otherrehabilitation of individuals withdisabilities, but does not restrict thisrehabilitation focus to only programsauthorized or funded under the Act. TheSecretary wishes to give States as muchorganizational flexibility as is permittedby statute.Changes: None.• Employment OutcomeComments: Several commentersopposed the definition of ‘‘employmentoutcome’’ in the proposed regulationson the basis that it failed to excludeoutcomes other than competitiveemployment (e.g., homemaker, selfemployment).Other commentersdisagreed with the emphasis in thedefinition on competitive employment.Discussion: The definition of‘‘employment outcome’’ in the finalregulations, like the proposeddefinition, elaborates on the definitionin section 7(5) of the Act byincorporating into the definition thestatutory concept that an employmentoutcome must be consistent with anindividual’s strengths, resources,priorities, concerns, abilities,capabilities, interests, and informedchoice. Although the definition does notcontain a full list of permissibleemployment outcomes, it does notexclude any employment outcomes thathave been permitted in the past. Thus,for example, homemaker, extendedemployment, and self-employmentremain acceptable employmentoutcomes even though they are notspecifically identified in the definition.The Secretary also believes, however,that competitive employment, which isthe optimal employment outcome underthe program, should be considered foreach individual who receives servicesunder the program and should,therefore, be highlighted in thedefinition.Changes: None.• Establishment, Development, orImprovement of a Public or NonprofitCommunity Rehabilitation ProgramComments: Some commentersopposed that part of the proposed

6312 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsdefinition of the term ‘‘establishment,development, or improvement of apublic or nonprofit communityrehabilitation program’’ that wouldreduce over a four-year period Federalfinancial support of staffing costsassociated with operating a communityrehabilitation program. Some of thesecommenters also opposed theprohibition in the definition of Federalsupport for ongoing operating expensesof a community rehabilitation program.The commenters were concerned thatthese provisions would make it difficultor impossible to develop newcommunity rehabilitation programs.Discussion: The definition elaborateson the statutory definition of the term‘‘establishment of a communityrehabilitation program’’ under section7(6) of the Act by incorporating all ofthe types of expenditures for which aDSU can receive Federal financialsupport. The limitations on staffingcosts in the proposed definition arebased on the authorization in section7(6) of the Act for the Secretary toinclude as part of the costs ofestablishment any additional staffingcosts that the Secretary considersappropriate. The limitations are similarto those previously proposed in the1991 NPRM. Specifically, the proposedregulations established a limitation onstaffing costs by providing, after the first12 months of staffing assistance, for anannual decrease in the percentage ofstaffing costs (from 100 percent to 45percent) for which Federal financialparticipation (FFP) is available. Thislimitation, like the staffing costrequirements proposed in the 1991NPRM, is influenced by and in partbased on the conclusions of a 1979General Accounting Office (GAO) report(HRD–79–84). The GAO Report toCongress recommended amending theAct to provide for a gradual reductionof Federal funding for staffing costs inthe establishment authority. Legislativechange is unnecessary to accomplishthis purpose because section 7(6) of theAct vests the Secretary with theauthority to determine what staffingcosts are appropriate for Federalfinancial participation. The Secretarybelieves that the GAO recommendationis still relevant and needs to beimplemented. The limitation on staffingcosts is intended, in part, to ensure thatfacilities bear an increasing share of theresponsibility for running communityrehabilitation programs, whilepreserving VR funds needed to supportnecessary development or expansion ofcommunity rehabilitation facilities.More generally, the limitation onstaffing costs is intended to preserve theamount of funds available to the DSUfor providing VR services to eligibleindividuals.The final regulations also authorizeFederal support for other costs neededto establish, develop, or improve acommunity rehabilitation program aslong as these costs are not ongoingoperational expenses of the program.The Secretary believes that thisprohibition is consistent with the Act,which limits Federal financial supportto costs associated with setting up,renovating, converting, or otherwiseimproving community rehabilitationprograms.The Secretary also notes that recentaudits of State agencies have indicated,in some cases, that VR funds have beenused under the authority forestablishing community rehabilitationprograms for purposes other thanproviding services under the VRprogram. In response, the Secretarybelieves the proposed definition shouldbe amended to ensure that Federalsupport for the establishment,development, or improvement of apublic or nonprofit communityrehabilitation program is provided onlyif the purpose of the expenditures is toprovide services to applicants andeligible individuals under the VRprogram.Changes: The Secretary has amended§ 361.5(b)(16) to ensure that costsassociated with the establishment,development, or improvement of apublic or nonprofit communityrehabilitation program must benecessary to the provision of VRservices to applicants and eligibleindividuals. Changes to this definitionand to the State plan requirements in§ 361.33(b) of the regulations areintended to address the violationsidentified in recent audits of Stateagencies.• Extended EmploymentComments: Several commentersrequested that the definition of‘‘extended employment’’ in theproposed regulations be broadened toinclude placements in integratedsettings. Other commenters sought toexpand the proposed definition toinclude employment with profitmakingorganizations. Finally, somecommenters requested that theregulations exclude extendedemployment from the scope of potentialemployment outcomes under theprogram.Discussion: Section 101(a)(16) of theAct requires DSUs to annually reviewand reevaluate the status of eachindividual in extended employment todetermine the individual’s readiness forcompetitive employment in anintegrated setting. This statutoryrequirement indicates that extendedemployment is limited to placements innon-integrated settings. The lack ofintegration in extended employmentplacements is a key factor indifferentiating between extendedemployment and competitiveemployment outcomes.The Secretary does not believe thatextended employment includes workperformed on behalf of profitmakingorganizations. Extended employment,according to section 101(a)(16) of theAct, means work performed incommunity rehabilitation programs,including workshops, or in other nonintegratedemployment settings inwhich individuals are compensatedpursuant to the FLSA. The Secretarybelieves that employment in private,profitmaking organizations should beviewed as competitive employment inwhich individuals shall earn at least theminimum wage and work in integratedsettings. Incorporating placements inprofitmaking organizations into thedefinition of extended employmentwould expand the scope of potentialextended employment placements andwould be contrary to the statutorypolicy that promotes movement fromextended employment to competitiveemployment, the optimal employmentoutcome under the program.Nevertheless, the final regulations willcontinue to recognize extendedemployment as a possible employmentoutcome under the program consistentwith 101(a)(16) of the Act.Changes: None.• Impartial Hearing OfficerComments: One commenter requestedthat the regulations prohibit a memberof a State Rehabilitation AdvisoryCouncil from serving as an impartialhearing officer for any DSU within thatState.Discussion: The definition of‘‘impartial hearing officer’’ in theproposed regulations specified that amember of a DSU’s State RehabilitationAdvisory Council (Council) could notserve as an impartial hearing officer forthat same DSU. The proposeddefinition, however, did allow amember of a DSU’s Council to serve asan impartial hearing officer in casesinvolving another DSU within the sameState. For example, a member of theCouncil for a State unit servingindividuals who are blind was notprecluded under the proposedregulations, solely on the basis of thatmembership, from serving as animpartial hearing officer in casesinvolving the State unit that serves

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6313individuals with disabilities other thanindividuals with visual disabilities. TheSecretary believes that prohibitingmembers of a Council from serving asimpartial hearing officers in casesinvolving any DSU within the Statewould be unduly restrictive. TheSecretary also believes that otherimpartiality requirements in thedefinition that apply to all impartialhearing officers, including those whoare members of Councils for other DSUs(e.g., the individual has no personal,professional, or financial conflict ofinterest) will sufficiently ensure theabsence of potential conflicts betweenthe hearing officer and the parties to thedispute.Changes: None.• MaintenanceComments: Some commentersrequested that the definition of‘‘maintenance’’ in the proposedregulations be expanded to includeexpenses other than living expenses(e.g., food, shelter, and clothing). As anexample, the commenters stated thatmaintenance should be authorized tosupport costs incurred by eligibleindividuals who take part in enrichmentactivities as part of a training programin a higher education institution.Several other commentersrecommended deletion of the fourthexample in the note following theproposed definition, which stated thatmaintenance could be used to pay forfood, shelter, and clothing for homelessor recently deinstitutionalizedindividuals until other financialassistance is secured. These commentersasserted that these costs should besupported by welfare or other publicassistance agencies rather than DSUs.Discussion: The Secretary agrees thatmaintenance may include costs otherthan standard living expenses (i.e., food,shelter, and clothing) as long as theexpenses are in excess of the normalexpenses incurred by an eligibleindividual or an individual receivingextended evaluation services. Limitingmaintenance to additional costsincurred by individuals receivingservices under an IWRP or under awritten plan for providing extendedevaluation services is consistent withsection 103(a)(5) of the Act, whichrestricts the provision of maintenance to‘‘additional costs while participating inrehabilitation.’The Secretary also agrees that thefourth example of permissiblemaintenance expenses in the proposedregulations was inadvisable. PermittingDSUs to support the full costs of ahomeless or deinstitutionalizedindividual’s subsistence under themaintenance authority, until otherfinancial assistance becomes available,is inconsistent with the policy oflimiting maintenance costs to those inexcess of the individual’s normalexpenses. In addition, the Secretaryagrees that welfare and other socialservice agencies are better equipped tosupport the everyday living expenses ofthe homeless or deinstitutionalized.However, a DSU could choose toprovide short-term emergency financialassistance to those individuals under§ 361.48(a)(20) as ‘‘other’’ services thatthe DSU determines are necessary forthe individual to achieve anemployment outcome.Changes: The Secretary has deletedthe term ‘‘living’’ from § 361.5(b)(31) ofthe proposed regulations to clarify thatmaintenance may include expensesother than living expenses. In addition,the Secretary has deleted the fourthexample in the note following theproposed definition of maintenance andreplaced it with an example of apermissible maintenance cost thatwould not constitute a living expense.• Ongoing Support ServicesComments: Some commentersrecommended that the Secretary place atime limit on the provision of ongoingsupport services furnished by extendedservices providers. The commentersstated that the regulations should permitongoing support services to ‘‘fade’’ oncethey are no longer needed to maintainan individual in supportedemployment.Discussion: It is RSA’s longstandingpolicy that individuals with the mostsevere disabilities who are placed insupported employment should requireongoing support services throughout thecourse of their placement. The need forongoing support services provides acritical distinction (i.e., the provision ofongoing supports) between supportedemployment and other kinds ofemployment outcomes. The Secretarybelieves that if an individual insupported employment no longerrequires ongoing support services thatindividual is no longer an appropriatecandidate for supported employment.Changes: None.• Personal Assistance ServicesComments: Some commentersrequested that the definition of‘‘personal assistance services’’ in theproposed regulations be amended tomore closely track the statutorydefinition of that term in section 7(11)of the Act. The commenters stated thatrevision to the proposed definition isneeded to clarify that personalassistance services need not be providedon the job site.Discussion: The Secretary agrees thatpersonal assistance services may beprovided off the job site as long as theyare necessary to assist an individualwith a disability to perform daily livingfunctions and achieve an employmentoutcome and are provided while theindividual is participating in a programof VR services. The Secretary believesthe proposed definition clearlyauthorized personal assistance servicesneeded by an individual to performeveryday activities off the job but,nevertheless, agrees that furtherclarification may be helpful.Changes: The Secretary has amended§ 361.5(b)(34) of the proposedregulations to track the language insection 7(11) of the Act authorizingpersonal assistance services needed toincrease the individual’s control in lifeand ability to perform everydayactivities on or off the job.• Physical and Mental RestorationServicesComments: Some commentersrequested that the regulatory definitionof ‘‘physical and mental restorationservices’’ specifically includepsychological services provided byqualified personnel under Statelicensure laws.Discussion: The Secretary agrees thatpsychological services are a form ofmental restoration services.Psychological services, however, aresubsumed within the broader term‘‘mental health services’’ in paragraph(xiii) of the definition and need not beidentified separately. Moreover, section103(a)(4) of the Act authorizes services,including psychological services, thatare needed to diagnose and treat mentalor emotional disorders only if thoseservices are provided by qualifiedpersonnel in accordance with Statelicensure laws. This requirement, whichwas included in the proposeddefinition, is reflected in paragraph (ii)of the definition in the final regulations.Changes: None.• Physical or Mental ImpairmentComments: Some commentersrequested clarification of therequirement in the proposed regulationsthat a physical or mental impairmentwill probably result in materiallylimiting mental or physical functioningif it is not treated. One commenterstated that the definition should belimited to conditions that cause presentfunctional limitations so as not tounnecessarily expand the pool ofeligible individuals.

6314 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsDiscussion: The Secretary agrees thatclarification is needed. The proposedregulations defined ‘‘physical or mentalimpairment’’ as an injury, disease, orother condition that materially limits, orif not treated will probably result inmaterially limiting, mental or physicalfunctioning. The existence of a physicalor mental impairment is the firstcriterion for determining eligibilityunder the program (see § 361.42(a) ofthe final regulations). The proposeddefinition was designed to includeprogressive conditions that may causefunctional limitations in the future eventhough current functional limitationsmay not be evident. Although a DSUmay not always know with certaintywhether a certain condition will limitan individual’s functional abilities, theSecretary believes that the definitionmust account for situations in whichthere is a strong likelihood thatfunctional limitations will result iftreatment is not provided. On the otherhand, the Secretary does not believe thataccounting for progressive conditionswill result in an unwarranted increasein eligible individuals since all eligibleindividuals, including those who do notcurrently experience a limitation infunctioning, must meet each of theeligibility criteria in § 361.42(a).Changes: The Secretary has amended§ 361.5(b)(36) of the proposedregulations to clarify that a physical ormental impairment must materiallylimit, or if untreated must be expectedto materially limit, physical or mentalfunctioning.• Post-Employment ServicesComments: Some commentersrequested that the regulations specify atime limit for providing postemploymentservices following theachievement of an employmentoutcome. Other commenters opposedthe availability of post-employmentservices for purposes of assisting anindividual to advance in employment.Finally, several commentersrecommended that the definition enableindividuals to receive post-employmentservices in order to maintain, regain, oradvance in employment that isconsistent with the individual’sinformed choice.Discussion: The Secretary believesthat it would be inappropriate toestablish an absolute time limit afterwhich post-employment services wouldbe unavailable. DSUs are responsible fordetermining on a case-by-case basiswhether an eligible individual who hasachieved an employment outcomerequires post-employment services inaccordance with the definition in theregulations. As stated in the notefollowing the proposed definition, postemploymentservices are available tomeet rehabilitation needs that do notrequire a complex and comprehensiveprovision of services and, therefore,should be limited in scope andduration. If the DSU determines that anindividual requires extensive services orrequires services over an extendedperiod of time, then the DSU shouldconsider beginning a new rehabilitationeffort for the individual, starting with aredetermination of whether, undercurrent circumstances, the individual iseligible under the VR program.The Secretary emphasizes that postemploymentservices are available if theDSU determines that the services arenecessary to enable an individual toadvance in employment consistent withthe individual’s strengths, resources,priorities, concerns, abilities,capabilities, and interests. Section103(a)(2) of the Act specificallyauthorizes the provision of postemploymentservices for purposes ofassisting an individual to maintain,regain, or advance in employment.The Secretary agrees that theprovision of post-employment servicesmust be consistent with the individual’sinformed choice. However, theSecretary believes that it is unnecessaryto add informed choice as an element inthe definition of ‘‘post-employmentservices’’ because informed choice isspecifically identified as a conditionthat applies to the provision of any VRservice, including post-employmentservices, under § 361.48(a).Changes: None.• Substantial Impediment ToEmploymentComments: The majority ofcommenters supported the definition of‘‘substantial impediment toemployment’’ in the proposedregulations. However, some commentersopposed the proposed definition on thebasis that it requires only that animpairment hinder the individual frompreparing for, entering into, engaging in,or retaining employment. Thesecommenters recommended that theSecretary reinstate the standard from thedraft regulations that an impairmentmust prevent the individual fromemployment in order for it to constitutea substantial impediment toemployment.Discussion: An individual’s disabilitymust result in a substantial impedimentto employment for the individual to befound eligible under the VR program(see § 361.42(a)). The Secretary believesthat the proposed definition establishesthe appropriate standard fordetermining whether the individual’simpairment causes a substantialimpediment to employment when readin conjunction with the remainingeligibility requirements in § 361.42(a).This standard does not extend eligibilityunder the program to individuals withdisabilities who do not experiencematerial functional limitation or who donot need VR services to obtainappropriate employment since theseindividuals would not meet the criteriain § 361.42(a). On the other hand, theSecretary believes that requiring that animpairment prevent the individual fromemployment is too stringent and wouldexclude from the program thoseindividuals who are underemployedand who need VR services to obtain newemployment that is consistent with theirabilities and capabilities.Changes: None.• Supported EmploymentComments: One commenter suggestedthat, given the requirement in theproposed regulations that limitscompetitive employment outcomes tothose in which individuals earn at leastthe minimum wage, competitiveemployment should not be a requiredelement of supported employment.Another commenter stated that anindividual in a supported employmentsetting should be viewed ascompetitively employed as long as theindividual earns at least the minimumwage at the time of transition to anextended services provider rather thanat the time of initial placement insupported employment.Discussion: Section 7(18) of the Actdefines supported employment ascompetitive employment in anintegrated setting with ongoing supportservices. Thus, individuals in supportedemployment shall earn at least theminimum wage consistent with thedefinition of competitive employmentin the final regulations. The Secretaryagrees, however, that the minimumwage requirement applies to individualsin supported employment at the timethe individual has made the transitionfrom support provided by the DSU toextended services provided by anappropriate State or private entity.Changes: None.• Transitioning StudentComments: Some commenters wereconcerned that omitting the termapplicant from the definition of‘‘transitioning student’’ would meanthat students with disabilities whoapply for VR services might not beevaluated for program eligibility. Inaddition, some commenters stated thatthe term ‘‘transitioning student’’ isconfusing and is inappropriately used in

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6315other sections of the proposedregulations, specifically § 361.22(Cooperation with agencies responsiblefor transitioning students).Discussion: The proposed regulationsdefined ‘‘transitioning student’’ as astudent who is eligible under the VRprogram and is receiving transitionservices. The Secretary believes thattransition services, which areauthorized under section 103(a)(14) ofthe Act and defined in § 361.5(b)(47) ofthe final regulations, are limited to thoseservices identified in an eligiblestudent’s IWRP that promote orfacilitate the accomplishment of longtermrehabilitation goals andintermediate rehabilitation objectives.Because assessment services areprovided prior to the development of anIWRP and, therefore, are not transitionservices, student applicants under theprogram were not included within theproposed definition of ‘‘transitioningstudent.’’ Nevertheless, thisinterpretation does not alter theresponsibility of DSUs to evaluatestudent applicants for eligibility for VRservices. As with any individual with adisability, DSUs shall promptly handlea referral of a student for VR services,evaluate the student followingapplication for services, and determinethe student’s eligibility under theprogram within 60 days after theapplication is submitted.The Secretary agrees that thedefinition of the term ‘‘transitioningstudent’’ in the proposed regulations isconfusing, as evidenced by the previouscomments questioning the DSU’sresponsibility with regard to studentapplicants. Other commenters wereconfused by § 361.22(b) of the proposedregulations, which referred to studentswith disabilities who are not receivingspecial education services as‘‘transitioning students.’Changes: The Secretary haseliminated the definition of the term‘‘transitioning student’’, which is notdefined in the Act, from the finalregulations and has replaced that termin the regulations with the term‘‘student with a disability,’’ whichincludes students who are receivingspecial education services and studentswho are not.• TransportationComments: One commenter requestedthat the regulations clarify thattransportation is a support service.Other commenters opposed the examplefollowing the definition that identifiedthe purchase and repair of vehicles as apossible transportation expense. Thesecommenters stated that adherence tothis example would severely depleteDSU resources.Discussion: ‘‘Transportation’’ isdefined in both the proposed and finalregulations as travel and relatedexpenses that are necessary to enable anapplicant or eligible individual toparticipate in a VR service. TheSecretary believes that it is clear fromthis definition that transportation is nota stand-alone service but must be tied tothe provision of other services identifiedin an IWRP.The Secretary emphasizes that theexamples provided under thisdefinition, like all examples throughoutthe regulations, are provided solely forpurposes of illustration and guidanceand are not intended to substitute forDSU determinations in individual cases.Accordingly, the example opposed bysome commenters neither requires norencourages DSUs to purchase or repairvehicles. The example states only thatthe purchase or repair of vehicles isauthorized as a transportation expensein those limited circumstances in whichthe DSU determines that provision ofthis service is necessary for anindividual to participate in a VR serviceand is consistent with DSU policies thatgovern the provision of services.Appropriately developed DSU policiescovering the nature and scope ofservices dictate the extent to which anyservice, including transportation, can beprovided.Changes: None.§ 361.10 Submission, approval, anddisapproval of the State plan.Comments: None.Discussion: The Secretary has revisedthe requirements governing the durationof State plans to reflect recentamendments to section 436 of theGeneral Education Provisions Act(GEPA). Section 436 of GEPA, whichapplies to Rehabilitation Act programs,authorizes the Secretary to establish aState plan period that is longer than thestandard three-year period specified insection 101(a) of the Rehabilitation Actand § 361.10(e) of the proposedregulations. Although RSA willcontinue to require the submission of anew State plan every three years, theregulations now permit RSA to establisha State plan period other than theregular three-year period ifcircumstances warrant. For example,RSA used this statutory authority in FY1996 to extend for a fourth year theState plan covering FYs 1994 through1996 in order to allow these finalregulations to become effective beforerequiring submission of a new Stateplan. The flexibility afforded RSAthrough this regulatory change alsoobviates the need for § 361.10(h) of theproposed regulations, which wouldhave permitted the Secretary to requirean interim State plan covering less thanthree years following a reauthorizationof the Act and prior to the publicationof final regulations.Changes: The Secretary has amended§ 361.10(e) to state that the State planmust cover a multi-year period asdetermined by the Secretary. Inaddition, § 361.10(h) of the proposedregulations has been deleted from thefinal regulations.§ 361.13 State agency foradministrationComments: Some commentersopposed the elimination of therequirement from the draft proposedregulations that the State plan describethe organizational structure of the Stateagency and its organizational units.These commenters stated that theabsence of this description in the Stateplan would make it impossible for RSAto determine whether each DSUoperates at a level comparable to that ofother organizational units within theState agency. Other commentersrecommended, consistent withrequirements in the draft proposedregulations, that the final regulationsauthorize the designated State agency todefine the scope of the program anddirect its administration withoutexternal administrative controls.Additionally, in response to theSecretary’s request in the NPRM, somecommenters identified additionalprogram functions that were notincluded in the proposed regulations forwhich the DSU shall be responsible inorder to meet the statutory requirementin section 101(a)(2)(A) that it beresponsible for the VR program. Theadditional functions identified by thecommenters (determinations of whetheran individual has achieved anemployment outcome; policydevelopment; and administrativecontrol of VR funds) were specified inthe draft proposed regulations. Finally,some commenters stated that therequirement in the proposed regulationsthat at least 90 percent of DSU staff shallbe employed full time on rehabilitationwork was unduly restrictive.Discussion: This section of theproposed regulations was significantlyrevised under the Department’sPrinciples for Regulating in an effort toreduce the paperwork requirementsimposed on State agencies. For example,the Secretary proposed to remove fromcurrent regulations the requirement thatthe State plan describe theorganizational structure of the Stateagency and its organizational units

6316 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsbecause the Secretary considered therequirement unduly burdensome. TheSecretary intended to reduce thepaperwork burden on State agencies indeveloping their State plans and toemphasize the underlyingadministrative responsibility of Statesby relying on an assurance, required bystatute, that if the State agency isrequired to have a vocationalrehabilitation unit, the unit is located atan organizational level comparable toother organizational units within theState agency. The Secretary does notbelieve that continuing to require byregulations that an organizationaldescription be included in the Stateplan would necessarily ensure that aDSU actually operates at a levelcomparable to that of other units withinthe State agency. Moreover, theSecretary believes that determinationsas to whether a State agency meets theorganizational requirements in thissection, including whether the Stateunit operates at a comparable level tothat of other State entities, can be betteraddressed by RSA through itsmonitoring process.In an effort to reduce regulatoryburden and increase State flexibility inaccordance with the Department’sPrinciples for Regulating, the Secretaryalso proposed to remove from currentregulations the requirement that adesignated State agency that has as itsmajor function vocational rehabilitationor vocational and other rehabilitation ofindividuals with disabilities shall ‘‘havethe authority, subject to the supervisionof the Governor, if appropriate, to definethe scope of the program within theprovisions of State and Federal law andto direct its administration withoutexternal administrative controls.’’ Thisnon-statutory requirement applies undercurrent regulations to only one of thethree designated State agency options.The Secretary believes, however, that aState should have the same authority toreview or oversee the administration ofits VR program regardless of the optionunder which it chooses to organize itsagency. Elimination of this requirementwill enable a State to locate andadminister its vocational rehabilitationprogram within the limits permitted bystatute without being influenced by theexistence or non-existence of varyinglevels of control outside of the DSU.In the preamble to the proposedregulations, the Secretary solicitedpublic comment on whether theregulations should expand or otherwiseclarify essential program functions forwhich the DSU shall be responsible inorder to meet the statutory requirementin section 101(a)(2)(A) of the Act that itbe responsible for the VR program.Consistent with current regulations, theproposed regulations specified that theDSU shall be responsible fordeterminations of eligibility,development of IWRPs, and decisionsregarding the provision of services. TheSecretary interprets this non-delegationprovision to mean that the DSU shallcarry out these functions or activitiesusing its own staff. While somecommenters believed that States shouldhave the flexibility to delegateresponsibility for other programmaticfunctions to State entities other than theDSU, the overwhelming majority ofcommenters stated that the additionalfunctions that were identified in thedraft regulations (determinations thatservice recipients have achievedappropriate employment outcomes, theformulation and implementation ofprogram policy, and the allocation andexpenditure of program funds) must becarried out by the DSU to ensure thatthe program is administered properly. Inlight of the public comment received,the Secretary agrees that responsibilityfor these additional functions must beretained by the DSU to ensure that Stateagencies that consolidate staff toadminister multiple State and federallyfunded programs do not entrust thesekey VR programmatic decisions toindividuals who lack experience inmeeting the needs of individuals withdisabilities. Moreover, the Secretarybelieves that the benefits derived fromDSU retention of these functions—enhanced program efficiency andeffectiveness—outweigh any costs thatmay be associated with the nondelegationrequirements in the finalregulations.The Secretary does not believe thatthe proposed requirement that at least90 percent of the designated State unitstaff shall work full time on therehabilitation work of the organizationalunit is unduly restrictive. Thisprovision means that if theorganizational unit provides otherrehabilitation services, in addition tovocational rehabilitation, the 90 percentstaffing requirement applies to all unitstaff providing rehabilitation services,not to just the vocational rehabilitationstaff. ‘‘Other rehabilitation’’ includes,but is not limited to, other programs thatprovide medical, psychological,educational, or social services toindividuals with disabilities. Althoughsome commenters believed the 90percent staffing requirement sets toorestrictive a standard, the Secretarybelieves that this requirement isconsistent with the statutoryrequirement in section 101(a)(2)(A)(iii)of the Act that ‘‘substantially all’’ of theDSU’s staff shall work on rehabilitationand with RSA’s longstandinginterpretation of ‘‘substantially all’’ tomean 90 percent.Changes: The Secretary has revised§ 361.13(c) by adding three functions—determination that an individual hasachieved an employment outcome,formulation and implementation ofprogram policy, and allocation andexpenditure of program funds—thatmust be carried out by the DSU.§ 361.15 Local administrationComments: One commenter requestedclarification of the requirement thateach local agency administering theprogram be ‘‘under the supervision ofthe DSU.’’Discussion: Section 7(9) of the Actdefines the term ‘‘local agency’’ as alocal governmental unit that has anagreement with the designated Stateagency to conduct the VR program inaccordance with the State plan.Accordingly, the requirement in thissection that each local agency is subjectto the supervision of the DSU meansthat the DSU is responsible for ensuringthat the program is administered inaccordance with the State plan. Thisprovision does not require the DSU tosupervise the day-to-day operations ofeach local agency’s program staff.Changes: For purposes ofclarification, the Secretary has revised§ 361.15 to add a cross-reference to theregulatory definition of ‘‘sole localagency.’’ The Secretary has also madetechnical changes to the citations ofauthority for this section.§ 361.16 Establishment of anindependent commission or a StateRehabilitation Advisory CouncilComments: One commenter requestedclarification of the scope of theproposed requirement that the Stateplan summarize annually the adviceprovided by the Council.Discussion: Section 101(a)(36)(A)(iii)of the Act requires the DSU to includein its State plan or amendment to theplan a summary of advice provided bythe Council. Accordingly,§ 361.16(a)(2)(iv) of the regulationsrequires that the State plan ‘‘annuallysummarize the advice provided by theCouncil.’’ This ‘‘annual’’ requirementmeans that any State plan submission,whether a new three-year plan or anannual amendment to an existing plan,must include, as appropriate, asummary of the advice provided by theCouncil on the new plan or the planamendment. Thus, a summary of theadvice provided by the Council on theentire plan must be submitted onceevery three years in conjunction with

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6317the DSU’s new, three-year State plan.During the interim between new plans,the DSU shall summarize the adviceprovided by the Council on theamendments to the existing plan andsubmit that summary in conjunctionwith its annual submission ofamendments to the plan. Annualamendments to the plan include anyamendment generated by a change to aState policy or practice that is reflectedin the current State plan, as well asthose amendments that are required bythe Act or these regulations. Consistentwith the general requirement in section101(a)(36)(A)(iii), this section alsorequires the DSU to annually summarizethe advice provided by the Council onmatters other than those addressed inthe State plan. A summary of the adviceprovided by the Council on these issuesshould be included also in the annualsummaries.Changes: None.§ 361.18 Comprehensive system ofpersonnel developmentComments: Some commentersquestioned the authority for requiringthe involvement of the StateRehabilitation Advisory Council in thedevelopment of the State agency’spersonnel standards, whereas othercommenters supported a role for theCouncil in this area. Some commenterssought clarification of what it means forthe Council to be ‘‘involved’’ in thedevelopment of personnel standards.Additional commenters sought anexpanded role for the Council thatwould involve it in the formulation ofother aspects of the State agency’scomprehensive system of personneldevelopment in addition to the Stateagency’s personnel standards.Some commenters stated that the datacollection requirements in paragraph (a)of this section are unduly burdensomeand should be eliminated.A number of commenters opposed theauthorization of State personnelrequirements as comparablerequirements upon which a State agencycould develop its personnel standardsunder paragraph (c) of this section.These commenters stated that a Stateagency’s personnel standards should bebased solely on the licensing andcertification requirements applicable tothe profession in which DSU employeesprovide VR services in order to ensurethat DSU personnel are ‘‘qualified’’within the meaning of the Act.Similarly, several commenters opposedthe use of ‘‘equivalent experience’’ as asubstitute for academic degrees in thedefinition of ‘‘highest requirements inthe State* * *’’ under paragraph (c) ofthis section. One commenter stated thatthe personnel standards developed byState agencies under this section shouldbe prospective only and that agenciesshould be permitted to retain currentDSU personnel who do not meet the‘‘highest requirements in the State.’’ Inaddition, some commentersrecommended that the regulationsspecifically provide for DSUemployment for individuals who, due tothe existence of their disability, areunable to satisfy certification orlicensure standards applicable to aparticular profession. As an example,these commenters stated that,historically, individuals who are blindhave been excluded on the basis of theirdisability from obtaining necessarycertification to teach orientation andmobility to other blind individuals eventhough they are fully qualified to workin that profession.Some commenters believed that theregulations should require that DSUstaff receive mandatory training in all ofthe areas identified in paragraph (d)(2)of this section. Paragraph (d)(2) listedexamples of training areas (e.g., theAmericans with Disabilities Act and theIndividuals with Disabilities EducationAct (IDEA)) that State agencies, at theirdiscretion, may incorporate into theirstaff development systems.Several commenters opposed thestatement in the preamble to theproposed regulations that supported aDSU’s use of family members andcommunity volunteers for purposes ofcommunicating in an applicant’s oreligible individual’s native language.The commenters believed that theavailability of family members orvolunteers should not relieve the Stateagency of its responsibility to hirequalified personnel who are able tomeet the communication needs ofindividuals with disabilities. Onecommenter asked whether the Stateagency’s responsibility to employpersons who can address thecommunication needs of applicants andeligible individuals means that the Stateagency shall include sign-languageinterpreters among its personnel.Finally, one commenter stated thatthe number of individuals that arehabilitation counselor assists inachieving an employment outcomeshould not be considered as a factor inthe evaluation of the rehabilitationcounselor’s performance underparagraph (f) of this section.Discussion: The Act requires that theCouncil generally advise the State unitin connection with the carrying out ofits responsibilities. In addition, theCouncil is required to advise the Stateagency on issues affecting thedevelopment of the State plan. Becausean effective system of personneldevelopment is an essential part of theState plan and a critical element to thesuccess of The State VocationalRehabilitation Services Program, theSecretary believes it is necessary for theCouncil to be involved in thedevelopment of key aspects of the Stateagency’s personnel developmentsystem. Specifically, the Secretaryagrees with the commenters who statedthat the Council should provide adviceto the State agency in connection withthe development of the recruitment,preparation, and retention plan underparagraph (b) of this section; staffdevelopment policies and proceduresunder paragraph (d) of this section; andthe performance evaluation systemunder paragraph (f) of this section; aswell as in the development of personnelstandards under paragraph (c) of thissection, as was stated in the proposedregulations.The Secretary emphasizes that thissection of the regulations is notintended to expand or alter the role ofthe Council beyond the advisory rolecontemplated by the Act, but only toidentify those areas of personneldevelopment in which the Council mustbe involved in an advisory capacity. TheSecretary believes that to fulfill itsadvisory role, the Council, at aminimum, must be afforded anopportunity to review and comment onrelevant plans, policies, and proceduresprior to their implementation. This‘‘opportunity for review and comment’’is necessary to ensure that the Councilplays a meaningful, although advisory,role in the development of a system thatensures an adequate supply of qualifiedDSU personnel.The data system and data collectionrequirements specified in paragraph (a)of this section are statutorily required.However, the Secretary emphasizes thatthe regulations require only that theState plan include a description of thesystem used to collect the data onpersonnel needs and personneldevelopment and do not require theState to submit the actual data to theSecretary.The Secretary agrees with thosecommenters who stated that the Stateagency’s personnel standards must bebased solely on existing licensing orcertification requirements applicable tothe profession in which DSU employeesprovide VR services. The Secretaryinterprets section 101(a)(7)(B) of the Actto permit DSUs to base their personnelstandards on other ‘‘comparable’’requirements only if certification orlicensing requirements applicable to aparticular profession do not exist. Thisinterpretation is consistent with the

6318 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsstatute’s emphasis on qualifiedpersonnel and with the requirement inthe Act that State agencies developpersonnel standards that are based onthe ‘‘highest requirements in the State.’’State personnel requirements may beused as ‘‘comparable requirements’’ bythe State agency only in those verylimited instances in which there is nonational or statewide certification orlicense that applies to the professionalor paraprofessional providing VRservices (e.g., case aides). Under thosecircumstances, State personnelrequirements may, in fact, represent thehighest requirements in the State for theparticular profession.The proposed regulations authorizedStates to base the highest personnelstandards in the State on equivalentexperience, as well as on academicdegrees, in an effort to stress thesignificance of relevant work experienceand to expand the pool from whichqualified personnel can be selected. Theoverwhelming majority of commenterson this issue, however, asserted that theuse of ‘‘equivalent experience’’ as asubstitute for academic degrees forpurposes of meeting the ‘‘highestrequirements in the State * * *’’significantly weakened the Act’s focuson qualified personnel. In light of thesecomments, the Secretary agrees that the‘‘highest requirements in the State’’should be limited to the highest entrylevelacademic degree needed for anational or State license or certificationin order to ensure that the DSU employsthose professionals who are mostcapable of assessing the specializedneeds of individuals with disabilitiesand addressing those needs through anappropriate provision of VR services.The Secretary recognizes the extent towhich the qualified personnel standardin the Act would be undermined ifStates chose to ignore widelyrecognized, nationally approved orState-approved licensing standards andto employ less qualified individuals onthe basis of ‘‘equivalent experience.’’The Secretary interprets the Act andregulations to permit State agencies toretain current DSU personnel who donot meet the ‘‘highest requirements inthe State.’’ This position is consistentwith paragraph (c)(1)(ii) of this section,which requires the State agency todescribe the steps it plans to take toretrain or hire personnel to meetstandards that are based on the highestrequirements in the State if the State’scurrent standards are not based on thehighest requirements in the State.The Secretary recognizes the concernsof those commenters who sought tosafeguard DSU employmentopportunities for individuals who,because of their disability, areprohibited from obtaining the license orcertification applicable to theirparticular profession. To the extent thatcertification and licensing requirementsare discriminatory on the basis ofdisability, these issues should beaddressed as compliance issues undersection 504 of the Act and the ADA.Nevertheless, the Secretary is cognizantof the particular difficulty experiencedby blind individuals who, historically,have been excluded on the basis of theirdisability from becoming certified asorientation and mobility instructors.The Secretary emphasizes that theseregulations do not inhibit DSUs or otherVR service providers from hiring blindindividuals as orientation and mobilityteachers even though those individualsmay not meet current certificationrequirements. To the extent that a DSUemploys blind individuals who do notmeet the ‘‘highest requirements in theState’’ applicable to the orientation andmobility profession, the State agency’splan under paragraph (c)(1)(ii) of thissection must identify the steps theagency plans to take to assist employeesin meeting those requirements. In thisregard, the Secretary is supporting anational project to develop alternativecertification standards for orientationand mobility instructors in order toensure that individuals who are blindcan meet necessary certificationstandards within the timeframe outlinedin the DSU’s plan under paragraph(c)(1)(ii) of this section.The Secretary does not believe it isprudent to make the training areasidentified in paragraph (d) of thissection mandatory for all staff employedby each DSU. The Secretary believesthat the specific training areas for staffdevelopment adopted by a State unitmust be based on the particular needsof that State unit. Thus, the finalregulations, like the proposedregulations, identify specific trainingareas as examples that State agenciesmay incorporate into their staffdevelopment systems in light of theDSU’s needs.Paragraph (e) of this section requiresthe State unit to describe in the Stateplan how it includes among itspersonnel or obtains the services of—(1)Individuals able to communicate in thenative languages of applicants andeligible individuals who have limitedEnglish speaking ability; and (2)Individuals able to communicate withapplicants or eligible individuals inappropriate modes of communication.Personnel under the first requirementmay include State agency staff, familymembers of an applicant or eligibleindividual, community volunteers, andother individuals able to communicatein the appropriate native language.However, the Secretary agrees that aDSU cannot institute an across-theboardpolicy of using family members orvolunteers as a substitute for addressingthe communication needs of individualswith limited English proficiencythrough the use of DSU staff or contractpersonnel. DSUs shall be prepared toaddress the individual communicationneeds of each applicant or eligibleindividual it serves. In addition, theSecretary believes that the DSU isresponsible for employing or obtainingthe services of sign-languageinterpreters, which fall within thedefinition of ‘‘appropriate modes ofcommunication’’ in § 361.5(b)(5), to theextent necessary to meet thecommunication needs of individualswho are deaf.The Secretary believes that inevaluating a rehabilitation counselor’sperformance, States should not focusprimarily on the number of individualsthat the counselor has assisted inachieving an employment outcome. Atmost, the number of employmentoutcomes for which the counselor isresponsible should be considered as oneof many factors in the assessment of thecounselor’s performance. The Actrequires that the State’s performanceevaluation system facilitate theaccomplishment of the policies andprocedures outlined in the statute,including the policy of serving, amongothers, individuals with the most severedisabilities. Thus, counselors should beevaluated on the basis of their efforts inadvancing the purposes of the programand, more precisely, on the basis of theirperformance in serving the mostseverely disabled. The Secretary notesthe following passage from the report ofthe Senate Committee on Labor andHuman Resources, which was alsoreferenced in the preamble to theproposed regulations, to further supportthis position: ‘‘The Committee isconcerned that in some States,procedures used for evaluatingperformance of counselors may have theunintended consequence of providing adisincentive to serve individuals withthe most severe disabilities and thoseclients requiring complex services.’’ Theperformance evaluation system requiredunder the Act and included in theregulations is designed to address thesedisincentives.Changes: The Secretary has amended§ 361.18 to require that the StateRehabilitation Advisory Council mustbe afforded an opportunity to reviewand comment on the following aspectsof the State agency’s comprehensivesystem of personnel development: The

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6319plan for recruitment, preparation, andretention of qualified personnel.Personnel standards. Staff development.The performance evaluation system. Inaddition, the Secretary has clarifiedparagraph (c) of this section to permitDSUs to base their personnel standardson comparable requirements (includingState personnel requirements) only ifnational or State-approved or-recognized certification, licensing, orregistration requirements applicable to aparticular profession do not exist.Finally, the term ‘‘equivalentexperience’’ has been deleted from thedefinition of ‘‘highest requirements inthe State’’ under paragraph (c) of thissection.§ 361.22 Cooperation with agenciesresponsible for students with disabilitiesComments: Some commentersquestioned whether this section requiresDSUs to develop policies that enabletransitioning students to liveindependently before leaving school.The commenters stated that theproposed regulations appeared torequire DSUs to assist students in livingindependently while the studentcontinues to receive special educationservices from an educational agency.Other commenters recommended thatthe regulations be revised to require thedevelopment and completion of theIWRP for a special education studentwho is eligible for VR services beforethe student leaves the school system.Several commenters believed that theelements of formal interagencyagreements between State units andeducational agencies identified in theproposed regulations should bemandatory for all interagencyagreements developed under thissection. Another commenter askedwhether the regulations require DSUs toenter into formal interagencyagreements with each local educationalagency within the State.One commenter opposed thedistinction in the proposed regulationsbetween those students who receivespecial education services and thosewho do not receive special educationservices and argued that therequirements governing coordinationbetween educational agencies and Stateunits should apply for both groups ofstudents. Finally, some commentersrecommended that the term‘‘transitioning student’’ be replaced bythe term ‘‘student with a disability’’ forpurposes of referring to students who donot receive special education servicesfrom an educational agency.Discussion: The proposed regulationsrequired the DSU to develop plans,policies, and procedures designed tofacilitate the transition of specialeducation students from the schoolsetting to the VR program. Specifically,the regulations stated these policiesmust be designed to facilitate thedevelopment and accomplishment oflong-term rehabilitation goals,intermediate rehabilitation objectives,and goals and objectives related toenabling a transitioning student to liveindependently before leaving school.Although these regulatory requirementslargely track the statutory requirementsin section 101(a)(24) of the Act, theSecretary agrees that clarification isneeded.The Secretary does not believe thatthe Act places on the DSU theresponsibility for assisting a studentwith a disability to become independentprior to leaving school. However, theSecretary interprets the Act to requirethat, before a student with a disabilitywho is in a special education programleaves school, the DSU shall plan forthat student’s transition to the VRprogram in order to ensure that there isno delay in the provision of VR servicesonce special education services end.This means that the IWRP for eachstudent determined to be eligible underthe VR program or, if the designatedState unit is operating under an order ofselection, the IWRP for each eligiblestudent able to be served under theorder, must be completed before thestudent leaves school and must, at aminimum, be consistent with therehabilitation goals and objectives,including goals and objectives related toenabling the student to liveindependently, that were previouslyidentified in the student’sindividualized education program. TheSecretary believes that this position isfurther supported by the legislativehistory to the Act, particularly theReport of the Senate Committee onLabor and Human Resources, portionsof which are restated in the notefollowing this section of the regulations.Furthermore, the Secretary believes thatrequiring the development of the IWRPbefore a VR-eligible student leavesschool does not impose any additionalcosts on the DSU since DSUs are alreadyrequired to develop IWRPs for eligibleindividuals, including students withdisabilities, if those individuals can beserved. More importantly, the Secretarybelieves that this requirement willimprove coordination between theState’s special education and VRprograms and will ensure that servicesare not interrupted after an eligiblestudent leaves school.In the proposed regulations, theSecretary attempted to lessen thepaperwork burden on State units byreducing the mandatory contentrequirements that the draft regulationsmade applicable to all formalinteragency agreements between Stateunits and educational agencies.Accordingly, the proposed regulationsrequired only that interagencyagreements identify provisions fordetermining State lead agencies andqualified personnel responsible fortransition services and identify policiesand practices that can be coordinatedbetween the agencies. The remainingelements under the draft regulations(identification of available resources,financial responsibilities of each agency,dispute resolution procedures, andother necessary cooperative policies)were discretionary under the proposedregulations. However, most commenterson this section opposed the reduction inrequired elements and stated that eachcomponent is essential for ensuring theappropriate transition of specialeducation students from the schoolsetting to the VR program. Withoutdetailed agreements, the commentersargue, resources may be wasted and keyprocesses may not be delineated,resulting in delays in services once thespecial education student leaves school.Consequently, each identified elementof formal interagency agreements ismandatory for all agreements developedunder this section of the finalregulations. The Secretary believes thisposition is consistent with the statutoryrequirements governing formalinteragency agreements in section 101(a)(11) and (a)(24) of the Act.In reviewing the regulations sincepublication of the NPRM, the Secretaryidentified an additional mandatoryelement of formal interagencyagreements that was inadvertentlyomitted from the proposed regulations.This additional element implements therequirement in section 101(a)(11)(B) ofthe Act, which specifies thatinteragency cooperation between theDSU and other agencies, includingeducational agencies, must includetraining for staff of the agencies as to theavailability, benefits of, and eligibilitystandards for vocational rehabilitationservices, to the extent practicable.The Secretary notes that, although theregulations require the DSU to enter intoa formal agreement with the Stateeducational agency, it is within thediscretion of each State to determinewhich local educational agencies shouldbe parties to agreements with the DSU.The Secretary agrees that classifyingstudents who do not receive specialeducation services as ‘‘transitioningstudents’’ is confusing. As statedpreviously in the preamble analysis ofcomments on § 361.5(b)(49), the

6320 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsSecretary believes that replacing allreferences to ‘‘transitioning students’’ inthe final regulations with the term‘‘students with disabilities’’ andeliminating the definition of‘‘transitioning student’’ from the finalregulations will enable DSUs andeducational agencies to more easily referto, and differentiate between, studentswith disabilities who are receivingspecial education services and studentswith disabilities who are not receivingspecial education services. Moreover,these changes are consistent with thereference to ‘‘students who areindividuals with disabilities’’ in section101 (a)(24) and (a)(30) of the Act.The Secretary also notes that section101(a)(30) of the Act warrants theseparate treatment that is affordedstudents with disabilities who are not inspecial education programs as opposedto those who receive special educationservices. Paragraph (b) of this sectionimplements this statutory provision byrequiring DSUs to develop andimplement policies for providing VRservices to students with disabilitieswho do not receive special educationservices.Changes: The Secretary has revised§ 361.22 to clarify that DSU policiesmust provide for the development andcompletion of the IWRP for each studentwith a disability determined to beeligible for vocational rehabilitationservices before the student leaves theschool setting. This section has beenrevised further to expand the number ofmandatory elements, including stafftraining to the extent practicable, thatmust be included in formal interagencyagreements between DSUs andeducational agencies. The Secretary alsohas revised this section by replacing theterm ‘‘transitioning student’’ with theterm ‘‘student with a disability.’’Finally, the Secretary has expanded thenote following this section in order tohighlight the emphasis in the Act on thetimely provision of VR services tospecial education students.§ 361.23 Cooperation with other publicagenciesComments: None.Discussion: The Secretary wishes toclarify the requirements governinginteragency cooperation between Stateunits and other public agencies thatprovide rehabilitation services toindividuals with disabilities. Section361.23(b)(3) of the proposed regulationswould have required that all types ofinteragency cooperative initiativesdeveloped pursuant to this section meetcertain requirements. However,consistent with section 101(a)(11) of theAct, the Secretary wishes to clarify thatthe requirements specified in paragraph(b)(3) of this section (e.g., identificationof policies that can be coordinatedbetween agencies, description offinancial responsibility of each agency,and procedures for resolving disputes)apply only if the State unit chooses toenter into formal interagencycooperative agreements with otheragencies. It is within the discretion ofthe State to determine how the Stateunit will cooperate with agencies otherthan agencies responsible for studentswith disabilities and to determinewhether the requirements identified inparagraph (b)(3) of this section shouldbe addressed if the State adoptscooperative methods other than formalinteragency agreements (e.g.,interagency working groups).Changes: The Secretary has revised§ 361.23 to clarify that the mandatorypolicies, practices, and proceduresspecified in paragraph (b)(3) apply onlyto formal interagency cooperativeagreements developed under thissection.§ 361.27 Shared funding andadministration of joint programsComments: One commentersupported the proposal to no longerrequire written agreements for jointprograms. The majority of commenters,however, stated that written agreementsare necessary to ensure that jointprograms are administered consistentwith the purposes of the VR program.Discussion: The proposed regulationsremoved the current regulatoryrequirements relating to writtenagreements for programs involvingshared funding and administrativeresponsibility as part of the effort toreduce paperwork burden on State unitsand increase State flexibility. TheSecretary maintains that it is within thediscretion of the State to determinewhether the public agenciesadministering a joint program forproviding services to individuals withdisabilities shall enter into a formalwritten agreement. However, theSecretary agrees with the commenterswho indicated that DSUs should beaccountable for the properadministration of joint rehabilitationprograms authorized under section101(a)(1)(A) of the Act. Accountabilitywill be based on the extent to whichjoint programs are carried out consistentwith the State plan description requiredby the final regulations. This limiteddescription is much less extensive, andtherefore less burdensome to DSUs, thanthe State plan requirements in thecurrent regulations related to jointprograms.Changes: The Secretary has amended§ 361.27 to require that the State plandescribe the nature and scope of anyjoint program to be entered into by theDSU, including the services to beprovided, the respective roles of eachparticipating agency in the provision ofservices and in the administration of theservices, and the share of the costs to beassumed by each agency.§ 361.29 Statewide studies andevaluationsComments: One commenter requestedthat DSUs be required to conduct acomprehensive assessment of therehabilitation needs of individuals withsevere disabilities every five years ratherthan every three years as was specifiedin the proposed regulations. Anothercommenter asked whether the review ofoutreach procedures to identify andserve underserved populations and thereview of the provision of VR servicesto individuals with the most severedisabilities required under paragraph (a)of this section are to be conducted onan annual or triennial basis. In addition,one commenter questioned the statutorybasis for requiring the DSU to analyzethe characteristics of individualsdetermined to be ineligible for VRservices and the reasons for theineligibility determinations.One commenter stated that requiringthe DSU to analyze, as part of its annualevaluation under paragraph (b) of thissection, the extent to which the Statehas achieved the objectives of thestrategic plan is unnecessary andduplicative of the requirements in§ 361.72. Other commenters stated thatit is unduly burdensome to require thesubmission of summaries or copies ofthe statewide studies and annualevaluations as attachments to the Stateplan. Finally, one commenter askedwhether the DSU must provide copies ofthe statewide studies and annualevaluations to the State RehabilitationAdvisory Council.Discussion: The Secretary believes itis appropriate and necessary that acomprehensive assessment of therehabilitation needs of individuals withsevere disabilities be conducted everythree years. This time period is intendedto ensure that the DSU conducts theassessment and reviews its results inconnection with the development of anew State plan which, in mostinstances, must be submitted everythree years. Moreover, the Secretarybelieves that each review or assessmentidentified in the regulations as aminimum component of the DSU’scontinuing statewide studies must beconducted on a triennial basis in

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6321conjunction with the development ofthe State plan.Section 101(a)(9)(D) of the Actrequires that the State agency annuallyprovide to the Secretary an analysis ofthe characteristics of those individualsdetermined to be ineligible for VRservices and the reasons for theineligibility determinations. Thisrequirement, however, wasmischaracterized in the proposedregulations as a statewide studycomponent and should have beenidentified as an annual reportingrequirement to be submitted in the Stateplan.The Secretary agrees that theproposed annual evaluationrequirement related to the State’sachievement of the objectives in itsstrategic plan is duplicative of therequirements in § 361.72(e) and that therequirement should be deleted fromparagraph (b) of this section.In recognition of the paperworkburden associated with includingsummaries or copies of the statewidestudies and annual evaluations asattachments to the State plan, theSecretary intends to require only thatDSUs maintain copies of the studies andevaluations and provide copies to theSecretary upon request. Copies of thestudies and evaluations, however,should be provided to the StateRehabilitation Advisory Council so thatthe Council can meaningfully fulfill itsadvisory role in connection with thedevelopment of those documents as isrequired under section 105(c) of the Act.Additionally, although this programreporting requirement has been revised,the Secretary notes that, pursuant tosection 635 of the Act, State agenciesshall submit as part of the supportedemployment supplement to their Stateplan a summary of the results of thecomprehensive, statewide assessmenton the rehabilitation and career needs ofindividuals with severe disabilities andthe need for supported employmentservices.Changes: The Secretary has amended§ 361.29 to clarify that each mandatoryassessment and review identified inparagraph (a) as part of the DSU’scontinuing statewide studies must beconducted triennially in conjunctionwith the development of the State plan.In addition, paragraph (a)(3) of thissection of the proposed regulations(annual analysis of ineligibleindividuals and ineligibilitydeterminations) has been changed to areporting requirement in the State planand relocated to paragraph (c)(3) in thefinal regulations. The Secretary also hasdeleted the analysis of the State’sprogress in achieving the objectives inthe strategic plan from the annualevaluation requirements in paragraph(b) of this section. Finally, the Secretaryhas revised paragraph (c)(3) of thissection to require that the DSU maintaincopies of its statewide studies andannual evaluations and make thosecopies available upon the request of theSecretary. This provision has beenrelocated to paragraph (c)(4) in the finalregulations.§ 361.33 Use, assessment, and supportof community rehabilitation programsComments: Some commentersopposed the requirement that vocationalrehabilitation services received throughcommunity rehabilitation programsmust be provided in the most integratedsettings possible. Other commentersrequested that this section be revised torequire the development of a plan forimproving existing communityrehabilitation programs.Discussion: Section 102(b)(1)(B) of theAct requires that vocationalrehabilitation services, including thoseprovided by community rehabilitationprograms, be provided in the mostintegrated settings possible. Thus, thestandard of integration specified in thissection is consistent with the Act andwith other sections of the regulationsgoverning the provision of services.The Secretary recognizes that theproposed regulations did not adequatelyaddress each statutory requirement insection 101(a) of the Act related tocommunity rehabilitation programs.Consequently, the Secretary believesthat this section of the final regulationsshould be reorganized, revised, andretitled in an effort to more accuratelyreflect all of these statutoryrequirements, including the requirementthat DSUs develop plans for improvingexisting programs.In addition, the Secretary believesthat DSUs should be required todescribe in the State plan the need touse Federal funds in support of new orexisting community rehabilitationprograms in light of recent programaudit findings indicating that someStates have used Federal funds receivedunder the authority for establishing,developing, or improving communityrehabilitation programs for purposesother than providing VR services toapplicants and eligible individuals. Anypaperwork burden or cost associatedwith this description, the Secretarybelieves, is significantly outweighed bythe need to ensure that program fundsused to support communityrehabilitation programs are properlyexpended.Changes: The Secretary has revised§ 361.33 to require that the State plancontain plans for improving existingcommunity rehabilitation programs. Inaddition, the Secretary has revised thissection to require States to describe inthe State plan the need to establish,develop, or improve, as appropriate, acommunity rehabilitation program toprovide VR services to applicants andeligible individuals. This requirement isconsistent with revisions made to thedefinition of ‘‘establishment,development, or improvement of apublic or nonprofit communityrehabilitation program’’ in § 361.5(b)(16)to clarify that Federal support ofcommunity rehabilitation programs islimited to the provision of services toapplicants and eligible individualsunder the VR program. Finally, thissection has been retitled ‘‘use,assessment, and support of communityrehabilitation programs’’ and has beenreorganized to reflect these three typesof requirements.§ 361.34 Supported employment planComments: One commenter opposedthe requirement in the proposedregulations that the DSU submit annualrevisions to its supported employmentplan as a supplement to its State plan.Discussion: The Secretary does notintend to require DSUs to annuallyrevise each provision of its supportedemployment plan and submit thoserevisions to RSA every year. Section635(a) of the Act requires that each Statesubmit a State plan supplement forproviding supported employmentservices and ‘‘annual revisions [to] theplan supplement as may be necessary.’’Pursuant to section 635(b)(3) of the Act,however, RSA requires that each yearthe DSU explain how it will expend itsannual allotment of supportedemployment funds received undersection 632 of the Act. Thus, at aminimum, the DSU is required tosubmit an annual revision to its Stateplan attachment that describes its plansfor distributing section 632 funds forpurposes of providing supportedemployment services to individualswith the most severe disabilities. Inaddition, the State unit shall provide, onan annual basis, any revisions to itssupported employment plan that arenecessary to reflect correspondingchanges in State policies or practicesregarding the provision of supportedemployment services.Changes: The Secretary has revised§ 361.34(b) to clarify that the DSU isrequired to submit ‘‘any needed’’ annualrevisions to its supported employmentplan.

6322 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations§ 361.35 Strategic planComments: Two commenters opposedthe requirement that the strategic planbe submitted as a supplement to theState plan.Discussion: Section 120 of the Actrequires that each State develop astrategic plan for developing,expanding, and improving VR servicesand submit the plan to RSA. In addition,section 101(a)(34)(A) of the Act requiresthat the State plan include an assurancethat the State has developed andimplemented a strategic plan. Thestatute, however, does not authorize theSecretary to approve or disapprove thestrategic plan. Consistent with theserequirements, the Secretary does notconsider the strategic plan to be part ofthe State plan that is subject to theapproval of the Secretary, but isrequiring the DSU to submit thestrategic plan and the State plan at thesame time for purposes ofadministrative efficiency.Changes: The Secretary has amended§ 361.35(b) to require that the DSUsubmit the strategic plan at the sametime that it submits the State plan.§ 361.37 Establishment andmaintenance of information and referralprogramsComments: The majority ofcommenters on this section of theproposed regulations supported the newprovision that would authorize Stateunits operating under an order ofselection to establish an expandedinformation and referral program foreligible individuals who do not meet theorder of selection criteria for receivingVR services. Some commenters did seekadditional clarification as to whethercounseling and guidance services areauthorized or whether an IWRP is to bedeveloped for individuals served underthe expanded program. One commenterrequested that the Secretary define theterm ‘‘referral for job placement.’’ Othercommenters requested that DSUs bepermitted to count as successfuloutcomes those individuals who obtainemployment following a referral by theDSU. A limited number of commentersbelieved the expanded program to beinconsistent with the order of selectionrequirements in the Act.Discussion: The expandedinformation and referral programauthorized in this section is intended toaddress the concerns of some State unitsoperating under an order of selection.These State units believe they should bepermitted to provide limited nonpurchasedservices to eligibleindividuals who do not qualify forservices under the State unit’s prioritycategories. An order of selection isrequired under section 101(a)(5)(A) ofthe Act if a State unit determines thatit is unable to provide services to alleligible individuals. Authorization of anexpanded information and referralprogram under this section is consistentwith the Act as long as the DSU, incarrying out the expanded program,does not use funds needed to provideVR services to eligible individuals whoare able to be served under the Stateunit’s order of selection. An assuranceto this effect is a key condition tooperating an expanded program. Inaddition, the Secretary expects a DSU toexpend a limited level of resources (e.g.,staff time and equipment) in support ofits referral program. For example, a DSUstaff member can administer theexpanded program only to extent thatthe staff person is not needed to provideVR services to eligible individuals whoqualify for services. This limitedcommitment of resources must bereflected in the DSU’s description of itsprogram under paragraph (c)(2) of thissection.The Secretary agrees that it isappropriate to provide counseling andguidance services under the expandedreferral program. Authorization of theseservices further distinguishes theexpanded program from the generalinformation and referral functionsperformed by the DSU for anyindividual with a disability. However,DSUs are not expected to developIWRPs for eligible individuals receivingexpanded information and referralservices since these individuals do notmeet the DSU’s criteria for receivingservices under its order of selection and,therefore, cannot receive the full rangeof services under section 103(a) of theAct to address their rehabilitationneeds.The Secretary believes that the term‘‘referral for job placement’’ is selfexplanatory.The expanded programauthorizes DSUs to refer individuals tovarious public and private placementagencies in the community that may beable to assist the individual in obtainingemployment.Although the proposed regulationshad required DSUs to track the resultsof its expanded information and referralprogram, the final regulations make thisa State option. For those DSUs thatchoose to track and report onindividuals who obtain employmentfollowing their participation in theexpanded information and referralprogram, the final regulations requirethat the DSU report to RSA the numberof individuals served and the numberwho obtain employment. However, theSecretary emphasizes that the number ofindividuals who are assisted, in part,under the expanded information andreferral program and who subsequentlyobtain employment must be identifiedseparately from those individuals whoreceive full services under an IWRP andachieve an employment outcome underthe VR program. Individuals who obtainemployment following their receipt oflimited counseling, guidance, andreferral services through the expandedprogram are not considered to haveachieved an employment outcomeunder § 361.56 of the regulations.Changes: The Secretary has revised§ 361.37(c) to authorize counseling andguidance services under the DSU’sexpanded information and referralprogram. In addition, paragraph (c) ofthis section has been amended to givethe DSU the discretion to determinewhether to track the results of itsexpanded information and referralprogram.§ 361.38 Protection, use, and release ofpersonal informationComments: One commenterquestioned whether the regulationsauthorize the release of personalinformation to the State RehabilitationAdvisory Council for purposes ofevaluating program effectiveness andconsumer satisfaction. Othercommenters stated that this sectionshould permit applicants or eligibleindividuals to examine, as well asreceive copies of, the information intheir record of services.Some commenters argued thatdeterminations as to whetherinformation is harmful under paragraph(c)(2) of this section should be made byobjective third parties rather than DSUs.These commenters were concerned thata conservative interpretation of the term‘‘harmful’’ by a State unit would resultin limited access to importantinformation.Additional commenters requested thatapplicants and eligible individuals begiven unrestricted access to personalinformation obtained by the DSU fromother agencies and organizations. Othercommenters sought authorization in thissection for the removal of inaccurate ormisleading information from the recordof services. Finally, some commentersrequested clarification of the term‘‘judicial officer’’ in paragraph (e)(4) ofthis section, which is used inconnection with the release ofinformation in response to a judicialorder.Discussion: Paragraph (d) of thissection authorizes the release ofpersonal information to entities thatevaluate the VR program as long as theevaluation is directly related to the

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6323administration of the program or to theimprovement of the quality of life forapplicants and eligible individuals.State Rehabilitation Advisory Councilsare responsible for evaluating theeffectiveness of, and consumersatisfaction with, the State agency andVR services. Because the Council’sevaluations are designed to facilitateimprovement in the administration ofthe VR program and in the provision ofVR services, personal information maybe released to the Council for purposesof carrying out its evaluative functions,provided that the Council safeguards theconfidentiality of the informationconsistent with the requirements inparagraph (d).The Secretary recognizes that, in someinstances, an applicant or eligibleindividual may need ready access to theinformation in his or her case record, inaddition to copies of the information.The proposed regulations were notintended to foreclose the currentregulatory option that permitsapplicants and eligible individuals toexamine the information in their recordof services.The Secretary believes it would beunduly burdensome to require that anobjective third party rather than theDSU determine whether informationrequested by an applicant or eligibleindividual is ‘‘harmful’’ to thatindividual. Moreover, the Secretaryregards any inconvenience resultingfrom the individual’s inability todirectly receive ‘‘harmful’’ informationas minimal since the relevantinformation must still be provided tothe individual, except that it shall beprovided through a third party chosenby the applicant or eligible individual.The Secretary also notes that theindividual’s right under paragraph (c)(2)of this section to choose the person towhom harmful information is releasedsupersedes any conflicting Stateconfidentiality policy developed underparagraph (a)(1) that designates aspecific individual to receive harmfulinformation (e.g., medical professional).Nevertheless, if a representative hasbeen assigned by a court to represent theapplicant or eligible individual, theharmful information must be released tothe individual through the courtappointedrepresentative. Thisexception is particularly applicable ifthe applicant or eligible individual is aminor or has limited cognitive capacity.The Secretary does not believe thatthere is a basis for requiring thatapplicants and eligible individuals begiven unrestricted access to personalinformation obtained by the DSU fromother agencies and organizations.Release of information developed orcompiled by another agency ororganization is subject to the conditionsestablished by that entity in accordancewith paragraph (c)(3) of this section.The Secretary recognizes that anyapplicant or eligible individual wouldprefer that inaccurate or misleadinginformation be removed from theindividual’s record of services. On theother hand, the Secretary also believesit would be unduly burdensome toimpose, through these regulations,costly and time-consuming due processprocedures that would enable anindividual to legally challenge theaccuracy of the information in his or herfile. It is within the discretion of theDSU to determine the extent to whichan individual may challenge theinformation in that individual’s recordof services. However, the Secretarybelieves, at a minimum, that applicantsand eligible individuals should be givenan opportunity to question the accuracyof the information in the individual’srecord of services and, if unsuccessfulin having the information removed,should be permitted to include astatement in the record that identifiesthe information that the individualconsiders to be inaccurate.The Secretary emphasizes that DSUsare not authorized to release personalinformation in response to a subpoenaor other document issued by a party toa dispute or an attorney. Release isauthorized only if a judge or otherjudicial officer orders the State unit torelease the information. The term‘‘judicial officer’’ in the proposedregulations was intended to mean anyjudge, magistrate, or other official whois authorized to decide the merits of,and issue, a court order. The Secretaryhas clarified this intention in the finalregulations.Changes: The Secretary has expandedparagraph (c)(1) of § 361.38 to requirethat the DSU make the information inthe record of services available forinspection by the applicant or eligibleindividual. In addition, paragraph (c)(2)has been amended to clarify that if acourt has appointed a representative torepresent an applicant or eligibleindividual, then any requestedinformation that is considered harmfulto the individual shall be provided tothe individual through the courtappointedrepresentative. The Secretaryalso has expanded paragraph (c) toauthorize applicants and eligibleindividuals to request that misleading orinaccurate information in theindividual’s record of services beamended and to have the requestdocumented in the individual’s file.Finally, paragraph (e)(4) has beenclarified to require the release ofinformation in response to an orderissued by a judge, magistrate, or otherauthorized judicial officer.§ 361.41 Processing referrals andapplicationsComments: Some commentersopposed the proposed requirement thatthe DSU develop timelines forinforming individuals referred to theDSU for VR services of its applicationrequirements and for gatheringinformation necessary to assess theindividual’s eligibility and priority forservices. While these commentersviewed the timeline requirements asunduly burdensome, other commenterssupported the provision andemphasized the need for DSUs torespond timely to individuals duringthe pre-application stage.One commenter stated that authorizedextensions of the 60-day time period fordetermining eligibility should belimited in duration. Other commentersstated that all individuals should berequired to complete the DSU’s formalapplication form before the 60-day timeperiod begins to run. Finally, onecommenter requested clarification as towhether all individuals must provideinformation necessary to conduct anassessment for determining eligibilityand priority for services before beingconsidered ‘‘to have submitted anapplication.’’Discussion: The Secretary believesthat it is important to retain in the finalregulations the requirement that DSUsdevelop timelines for making good faithefforts to inform individuals referred tothe VR program of the DSU’sapplication requirements and to obtaininformation needed to assess theindividual’s eligibility and priority forservices. The Secretary agrees withthose commenters who indicated thatthese timelines are necessary to ensurethat there is no unreasonable delaybetween the individual’s referral andapplication for VR services. Moreover,this requirement is unlikely to causeDSUs undue burden since many Statesalready have in place timelines forhandling referrals. However, theSecretary believes that the developmentof an appropriate, good faith timelinefor processing referrals is a matter ofState discretion and that it would beinappropriate to impose in the finalregulations a specific Federal timeperiod for this purpose.Section 102(a)(5)(A) authorizesextensions of the 60-day time period fordetermining eligibility if (1) exceptionalor unforeseen circumstances arise or (2)an extended evaluation of theindividual is necessary, which may notexceed 18 months. The Secretary agrees,

6324 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationshowever, that extensions due toexceptional or unforeseencircumstances cannot be open-endedbut must be limited to a specific timeperiod that is mutually agreed upon bythe individual and the DSU.The Secretary believes it would beunduly restrictive to require in allinstances that an individual with adisability complete the DSU’sapplication form before the DSUinitiates an assessment for determiningeligibility and priority for services. Thislimitation would be particularlyburdensome for individuals in ruralareas who may not have ready access toa DSU application form. Although theregulations require the DSU to make itsapplication form widely availablethroughout the State, the Secretaryconsiders it inappropriate to penalizeindividuals who are unable to secure anapplication. Thus, the Secretarymaintains that the 60-day time periodfor determining eligibility begins oncethe individual (1) has either completedand signed an agency application formor has otherwise requested services and(2) has provided information necessaryfor the DSU to initiate the assessment.Once an individual or the individual’srepresentative, as appropriate, requestsservices, it is expected that State unitswill make good faith efforts to obtain theassessment information as quickly aspossible. The Secretary also notes thatinformation needed to initiate theassessment must be provided before the60-day timeline begins to run, whetherthe individual has completed an agencyapplication form or has otherwiserequested services. Of course, it isessential that the individual remainavailable during this period to completethe assessment process.Changes: The Secretary has amended§ 361.41 to require that extensions of the60-day time period for determiningeligibility due to exceptional orunforeseen circumstances be limited induration and that a specific time periodbe agreed to by the individual and theDSU. In addition, the Secretary hasrevised this section to clarify that allindividuals who have requested VRservices, whether through thecompletion of an agency application orotherwise, shall be available to completethe assessment before the individual isconsidered to have submitted anapplication for VR services.§ 361.42 Assessment for determiningeligibility and priority for servicesComments: With respect to the firsteligibility criterion, several commentersopposed the standard in the proposedregulations that required qualifiedpersonnel ‘‘licensed or certified inaccordance with State law andregulation’’ to determine the existenceof a physical or mental impairment. Thecommenters further recommended thatthe regulations permit DSU employeeswho meet requirements that are‘‘comparable’’ to licensing orcertification requirements to determinethe existence of obvious physicalimpairments.Some commenters sought clarificationunder the second eligibility criterionthat an impairment that hinders anindividual from maintaining a jobplacement constitutes a ‘‘substantialimpediment to employment.’’ Thesecommenters were concerned that theproposed regulations appeared to limit‘‘substantial impediments toemployment’’ to impairments thatprevent unemployed individuals fromobtaining jobs.Other commenters recommended thatthe term ‘‘determine’’ be replaced by thestatutory term ‘‘demonstrate’’ inparagraph (a)(2) of this section, inconnection with rebutting thepresumption that an individual who hasa substantial impediment toemployment can benefit in terms of anemployment outcome from VR services.Finally, one commenter requestedclarification as to whether individualswho qualify for Social Security benefitsare presumed eligible for VR services.Several commenters recommendedspecific clarifying changes to some ofthe examples following this section,whereas other commenters opposed theuse of examples under this sectionaltogether.Discussion: The Secretary believesthat the personnel standard proposed inconnection with the first eligibilitycriterion is consistent with the Act. Theproposed standard was based on therequirement in section 103(a)(1) of theAct, which states that the assessment fordetermining an individual’s eligibilityand VR needs must be conducted byqualified personnel. The Secretaryinterprets the term ‘‘qualifiedpersonnel’’ under section 103(a)(1) ofthe Act to refer to personnel who meetthe DSU’s personnel standards under§ 361.18(c) of these final regulations(i.e., national or State-approvedcertification, licensing, or registrationrequirements or, if none of theserequirements exist, other ‘‘comparablerequirements’’ that apply to theprofession in which the individualprovides VR services). Thus, adetermination that an individual has aphysical or mental impairment, or meetsany of the other eligibility criteria in§ 361.42(a), must be made by personnelwho meet existing licensure,certification, or registrationrequirements applicable to theirprofession. Moreover, because DSUs arerequired under § 361.18(c) to developpersonnel standards based on existingcertification or licensure requirements,it is expected that DSU personnel whodetermine the existence of impairments,including obvious physicalimpairments, will be qualified withinthe meaning of the Act.The Secretary agrees that anindividual does not have to beunemployed to have a ‘‘substantialimpediment to employment.’’ A‘‘substantial impediment toemployment,’’ as defined in§ 361.5(b)(44), includes any impairmentthat hinders the individual fromentering into, engaging in, or retainingemployment consistent with theindividual’s abilities and capabilities.Given that the regulatory definition ofthe term ‘‘substantial impediment toemployment’’ clearly recognizes thatcurrently employed individuals mayqualify for VR services for purposes of‘‘retaining’’ their employment, theSecretary does not believe it isnecessary to revise the second eligibilitycriterion in paragraph (a)(1)(ii) as thecommenters recommended.Section 102(a)(4)(A) of the Actrequires the DSU to presume that anindividual can benefit in terms of anemployment outcome, unless the DSUcan ‘‘demonstrate,’’ based on clear andconvincing evidence, that the individualis incapable of benefitting in terms of anemployment outcome from VR services.The Secretary did not intend to weakenthis statutory presumption by using theterm ‘‘determine’’ in place of the term‘‘demonstrate’’ in the proposedregulations and agrees that theregulations should be changed to trackthe stronger statutory language.In addition, the Secretary emphasizesthat Social Security beneficiaries are notautomatically eligible to receive VRservices, but are presumed undersection 102(a)(2) of the Act to meet onlythe first two eligibility criteria underparagraph (a)(1) of this section (i.e., theindividual has a physical or mentalimpairment that constitutes or results ina substantial impediment toemployment). Eligibility for servicesunder the Social Security Act alsomeans that the individual is presumedto meet the first element in thedefinition of ‘‘individual with a severedisability’’ under § 361.5(b)(28). TheSecretary believes that these limitedpresumptions were clearly reflected inthe proposed regulations.Although the Secretary believes thatmost of the examples in the regulationsrepresent useful guidance material, theSecretary agrees that the examples

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6325following this section of the proposedregulations, which had identified sixpotential applications of the fourtheligibility criterion (an individualrequires VR services), should beremoved from the final regulations inlight of the confusion expressed bycommenters and in recognition of thefact that eligibility determinations arehighly individualized. The commenters’confusion, the Secretary believes, stemsfrom the possibility that the applicationof the fourth eligibility criterion mayresult in different outcomes forindividuals with disabilities who faceapparently similar circumstances. Byremoving these examples, the Secretaryseeks to avoid causing similar confusionon the part of individual counselorscharged with making individualeligibility determinations. Because theexamples used elsewhere in theregulations (e.g., permissible expensesunder the definitions of ‘‘maintenance’’and ‘‘transportation’’) arestraightforward applications of clearissues and do not create similarconfusion among commenters, theSecretary believes that those examplesshould be retained in the finalregulations.Changes: The Secretary has amended§ 361.42(a)(2) of this section to requirea ‘‘demonstration,’’ based on clear andconvincing evidence, that an individualis incapable of benefitting from VRservices in order for the DSU toovercome the presumption that anindividual can benefit from VR services.A technical change also has been madeto paragraph (a)(1)(iii) to identify moreaccurately the third eligibility criterionas a ‘‘presumption’’ of benefit, not a‘‘determination’’ of benefit. In addition,the Secretary has removed from the finalregulations the examples that hadfollowed this section in the proposedregulations of how an individual may ormay not meet the final eligibilitycriterion.§ 361.43 Procedures for ineligibilitydeterminationComments: Several commentersstated that DSUs should be required, inall instances, to inform individuals inwriting of the DSU’s ineligibilitydetermination. These commenters wereconcerned that the proposed regulationsauthorized DSUs to inform individualsof ineligibility determinations throughan appropriate mode of communicationwithout a written record.In addition, several commentersindicated that it is unduly burdensometo require DSUs to review allineligibility determinations within 12months. These commenters stated thatthe review of ineligibilitydeterminations should be limited tothose determinations that are based ona finding that the individual isincapable of achieving an employmentoutcome. Other commenters asked thatthe regulations specify additional basesfor not reviewing ineligibilitydeterminations (e.g., that theindividual’s disability is rapidlyprogressive or terminal).Discussion: The proposed regulationsincorrectly indicated that DSUs have theoption of providing ineligibility noticesin writing or through an appropriatemode of communication. The Secretaryagrees that, at a minimum, notice of anineligibility determination and otherrequired information should beprovided to the individual in writingand supplemented, as necessary, byother appropriate modes ofcommunication in accordance with theindividual’s informed choice.The Secretary agrees with thesuggestion to modify the requirementsin paragraph (d) of this sectiongoverning the review of ineligibilitydeterminations in light of the viewsexpressed by public commenters. Theproposed regulations required DSUs toreview all ineligibility determinations atleast once within 12 months and toreview annually thereafter if requestedby the individual determinations basedon a finding that the individual cannotachieve an employment outcome. Inorder to reduce the process burden andassociated costs on DSUs, however, theSecretary believes that DSUs should berequired to review within 12 months,and annually thereafter if requested bythe individual, only those ineligibilitydeterminations that are based on afinding that the individual is incapableof achieving an employment outcome.Moreover, an additional exception tothis review requirement, which isauthorized under the currentregulations, should be permitted forsituations in which the individual’smedical condition is rapidly progressiveor terminal. The Secretary believes thisnarrower interpretation of the reviewrequirements is supported by sections101(a)(9)(D) and 102(c) of the Act andnotes that this position is consistentwith the current regulations in 34 CFR361.35(d). The Secretary also notes thatthe requirements of this section applyboth to ineligibility determinationsfollowing an extended evaluation and toineligibility determinations made afteran individual has begun to receiveservices under an IWRP.Changes: The Secretary has revised§ 361.43 to specify that notice ofineligibility determinations must beprovided in writing and must besupplemented, as necessary, by otherappropriate modes of communicationconsistent with the individual’sinformed choice. For example, a DSUcould meet these requirements byproviding an ineligibility notice inbraille or large print form to anapplicant who has a visual impairment.In addition, the Secretary has revisedthis section to require DSUs to reviewonly ineligibility determinations that arebased on a finding that the individual isincapable of achieving an employmentoutcome. The final regulations alsoclarify that this review of ineligibilitydeterminations need not be conducted ifthe individual’s medical condition israpidly progressive or terminal.§ 361.44 Closure without eligibilitydeterminationComments: One commenter requestedthat this section be amended to statethat a DSU ‘‘shall not close’’ (rather than‘‘may not close’’) an applicant’s caseprior to making an eligibilitydetermination in order to clarify that theprohibition under this section ismandatory.Discussion: The Secretary emphasizesthat State units are prohibited fromclosing an applicant’s record of servicesprior to making an eligibilitydetermination unless certaincircumstances are evident (e.g., theapplicant declines to participate in theassessment, and the DSU has made areasonable number of attempts toencourage the applicant’s participation).The Secretary interprets the phrase‘‘may not close’’ to signify a mandatoryprohibition.Changes: None.§ 361.45 Development of theindividualized written rehabilitationprogramComments: Several commentersstated that the regulations should bestrengthened to ensure that the eligibleindividual’s employment goal isconsistent with that individual’sinformed choice. In addition, somecommenters opposed requiring DSUs todevelop timelines for the promptdevelopment of IWRPs, whereas othercommenters supported the timelinerequirement as a necessary protectionfor eligible individuals. Commentersalso stated that the DSU should not berequired to revise an individual’s IWRPto reflect minor changes to services thatare already identified in the IWRP.Discussion: The Secretary agrees thatthe informed choice of the individual,as well as the individual’s strengths,priorities, concerns, abilities,capabilities, and interests, should beconsidered in determining theindividual’s employment goal. Addition

6326 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsof the term ‘‘informed choice’’ to the listof factors to be considered underparagraph (a) of this section is alsoconsistent with the consideration ofinformed choice in connection with theprovision of services under § 361.48 andin connection with the achievement ofan employment outcome under§ 361.56.The Secretary believes that theproposed requirement that DSUsestablish and implement timelines forthe prompt development of IWRPsshould be retained in the finalregulations. The Secretary agrees withthose commenters who indicated thatthese timelines are necessary to guardagainst unreasonable delays in thedevelopment of the IWRP once anindividual is determined eligible for VRservices. It should also be noted thatthis section does not require DSUs toapply an arbitrary time limit to thedevelopment of all IWRPs, as somecommenters had questioned. Instead,DSUs are required to develop generalstandards that ensure the timelydevelopment of IWRPs as long as thestandards include timelines that takeinto account the specific needs of theindividual.Changes in an individual’s vocationalgoal, intermediate objectives, or VRservices must be documented through arevision in the IWRP after obtaining theagreement and signature of theindividual. The Secretary believes thatchanging the reference from ‘‘VR needs’’to ‘‘VR services’’ will help clarify thisprovision.In addition, the Secretary agrees thatminor changes to an individual’sprogram of services do not have to berecorded in a revision to the IWRP. Thismeans, for example, that a slight changein the cost of a previously authorizedVR service would not warrant a revisionto the IWRP. On the other hand, asubstantive change to an existing service(e.g., a change in service provider) or theaddition of a new service must bedocumented by a revision. Regardless ofwhether a particular change to anindividual’s program necessitates arevision to the IWRP, however, theSecretary expects that the DSU willobtain the agreement of the individualbefore the change is implemented.Changes: The Secretary has revised§ 361.45 to clarify that the informedchoice of the individual must beconsidered in the development of theIWRP and the identification of avocational goal. The Secretary also hasamended this section to require the DSUto incorporate into the IWRP anyrevisions necessary to reflect changes tothe individual’s goal, objectives, or VRservices and to obtain the individual’sagreement and signature to therevisions.§ 361.46 Content of the IWRPComments: Some commenters on theproposed regulations questioned certainrequired elements of the IWRP,contending they were inconsistent withthe Act and unnecessarily burdensome.Specifically, several commentersquestioned the basis for requiring thatthe long-term vocational goal identifiedin the IWRP be ‘‘specific.’’ Similarly,other commenters stated thatintermediate rehabilitation objectivesneed not be ‘‘measurable.’’ Additionalcommenters opposed requiring aprojected date for the achievement ofthe vocational goal. Several commentersrecommended that the record of theDSU’s evaluations of individualprogress be removed from the IWRP andadded to the record of services under§ 361.47. Finally, some commentersopposed the requirement that theindividual be provided withinformation concerning the availabilityand qualifications of alternative serviceproviders.Discussion: The Secretary believesthat the long-term vocational goal mustbe stated with some specificity in theIWRP in order for it to be meaningful.The Secretary does not intend that theIWRP identify the exact job that theindividual intends to obtain, butexpects, at a minimum, that thevocational goal be described in terms ofa particular type of profession oroccupation. For example, ‘‘clericalwork’’ is a sufficiently detailedvocational goal under this requirement,whereas a vocational goal of ‘‘supportedemployment’’ or ‘‘self-employment’’would be impermissibly vague.The requirement in the proposedregulations that the intermediaterehabilitation objectives must be‘‘measurable’’ was misplaced and hasbeen eliminated from the finalregulations. The use of this term wasbased on the requirement in section102(b)(1)(B)(vii) of the Act that the DSUshall develop procedures for evaluatingthe individual’s progress towardmeeting the intermediate rehabilitationobjectives. The final regulations alsoclarify that the progress of theindividual in satisfying the objectivesmust be measured periodically by theDSU, but a record of the reviews andevaluations need not be included in theIWRP. These reviews and evaluations,the Secretary agrees, should bemaintained as part of the individual’srecord of services under § 361.47, assome commenters suggested.The Secretary does not expect DSUsto specify a date certain on which anemployment outcome shall be achieved.Thus, the term ‘‘projected date’’ for theachievement of the individual’svocational goal in paragraph (a)(4) ofthis section in the proposed regulationshas been replaced by the term‘‘projected timeframe’’ in the finalregulations. This provision is intendedto ensure that the individualunderstands how long the rehabilitationprocess is expected to take.The Secretary believes that therequirement in this section concerningthe individual’s description of howinformation was provided about theavailability and qualification ofalternative service providers should beremoved from the final regulations sinceit is duplicative of the choicerequirements in § 361.52. Section361.52(b) specifies that the DSU shallprovide the individual, or assist theindividual in acquiring, informationnecessary to make an informed choiceabout VR services and service providers,including information about thequalifications of potential serviceproviders.Changes: The Secretary has revised§ 361.46 by removing the term‘‘measurable’’ from paragraph (a)(2). TheSecretary also has replaced the term‘‘projected date’’ in paragraph (a)(4) ofthis section with the term ‘‘projectedtimeframe’’ in connection with theachievement of the individual’svocational goal. Additionally, the recordof reviews and evaluations of individualprogress has been removed fromparagraph (a)(5) of this section as anIWRP requirement and relocated to§ 361.47(h) as a record of servicesrequirement. Finally, the reference inthe individual’s statement to theavailability and qualifications ofalternative service providers has beenremoved from paragraph (a)(6).§ 361.47 Record of servicesComments: None.Discussion: In the proposedregulations, the Secretary proposed todelete from the record of services anumber of requirements that wereconsidered burdensome or wereadequately addressed in otherregulatory provisions. In particular,several requirements that wereduplicative of IWRP contentrequirements in § 361.46 were proposedfor removal from this section. For thesame reason, the Secretary believes thatproposed § 361.47(h) should be deletedfrom the final regulations. Thisprovision would have requireddocumentation in the record of servicesof the DSU’s reasons for terminatingservices to an individual and, ifappropriate, documentation of the

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6327DSU’s basis for determining that theindividual has achieved an employmentoutcome under § 361.56. The Secretarybelieves that further reducing thepaperwork burden on DSUs byremoving proposed § 361.47(h) isappropriate given that this requirementis adequately addressed by§ 361.46(a)(10).However, in order to ensure thatindividuals in competitive employmentare compensated in accordance with thedefinition of ‘‘competitive employment’’in § 361.5(b)(10), the Secretary believesthat the record of services for thoseindividuals must includedocumentation that the individual iscompensated at or above the minimumwage and receives at least the customarywage and benefit level paid to nondisabledpersons performing similarwork for the same employer.Changes: The Secretary has removedfrom § 361.47 the documentationrequirements relating to the terminationof services and the achievement of anemployment outcome and has added across-reference in § 361.46(a)(10) to§ 361.56 for additional clarification. Inaddition, this section has been amendedto require that the DSU verify in therecord of services that an individualwith a disability in competitiveemployment is compensated at or abovethe minimum wage and that theindividual’s wage and level of benefitsare not less than that paid by theemployer for the same or similar workperformed by non-disabled individuals.This new requirement is located inparagraph (i) of this section.§ 361.48 Scope of vocationalrehabilitation services for individualswith disabilitiesComments: Some commentersrecommended that this section of thefinal regulations identify assessmentservices, counseling and guidance, andrehabilitation technology as mandatoryservices that the DSU shall provide toall individuals in need of these services.Other commenters opposed limitingcounseling and guidance servicesauthorized under this section to‘‘vocational counseling and guidance.’’Two commenters requested that thefinal regulations clarify that it is thejoint responsibility of the DSU and theindividual to secure grant assistancefrom sources other than VR programfunds to pay for training in institutionsof higher education. Other commentersrecommended that language be added toparagraph (a)(13) of this section toensure that job search and placementservices are not discontinued before anindividual achieves the employmentoutcome specified in the individual’sIWRP. One commenter opposed therequirement in paragraph (b) that theState plan descriptions related to theprovision of rehabilitation technologyand personal assistance services beprovided on an annual basis. Anothercommenter stated that the description ofthe DSU’s strategies for expanding theavailability of personal assistanceservices under § 361.48(b)(3) of theproposed regulations is undulyburdensome and is not required by theAct. Finally, several commentersrecommended that the final regulationsrequire, consistent with the Act, adescription in the State plan of howassistive technology devices areprovided or worksite assessments aremade as part of the assessment fordetermining eligibility and VR needs ofthe individual.Discussion: Section 361.48, whichimplements section 103(a) of the Act,authorizes specific vocationalrehabilitation services necessary toaddress the rehabilitation needs ofindividuals with disabilities. Theseservices must be included in each DSU’sprogram of VR services and, consistentwith § 361.45(a) and § 361.46(a), mustbe provided to an eligible individual ifthe service is needed to achieve theintermediate rehabilitation objectives orvocational goal included in theindividual’s IWRP. In addition, § 361.42requires DSUs to conduct an assessmentfor determining eligibility and priorityfor services for each applicant and toprovide rehabilitation technologydevices and services during theassessment if needed to determineeligibility. In light of theserequirements, the Secretary does notbelieve it is necessary to identifyassessment services, counseling andguidance, and rehabilitation technologyas mandatory services under this sectionof the regulations, as some commentershad recommended. The commenterscorrectly noted that section 101(a)(8) ofthe Act exempts these services from therequired search for comparable serviceand benefits. Regardless of whether aparticular service is subject to thecomparable service and benefitsrequirements, however, the regulationsclearly require DSUs to conduct anassessment for determining eligibilityand priority for services for eachapplicant and to ensure that eacheligible individual receives needed VRservices in accordance with theindividual’s IWRP.Those commenters who opposedchanging the term ‘‘counseling andguidance’’ to ‘‘vocational counselingand guidance’’ in the proposedregulations were concerned that thechange would limit the scope ofcounseling and guidance currentlyprovided under the program.Specifically, the commenters wereconcerned that this term would prohibitthe provision of personal adjustmentcounseling and other related counselingservices currently provided byvocational rehabilitation counselors—services that are necessary to addressissues confronted by individuals withdisabilities seeking employment,including issues associated withadjusting to environmental barriers,medical issues, family and social issues,and other related issues that are notconsidered ‘‘vocational.’’ However, theuse of the term ‘‘vocational counselingand guidance’’ in the proposedregulations was not intended to limitthe scope of the counseling andguidance that an individual may need inorder to achieve a vocational goal.Rather, the term ‘‘vocational counselingand guidance’’ was intended merely asa means of distinguishing discrete,therapeutic counseling and guidanceservices that are necessary for anindividual to achieve an employmentoutcome from the general supportiverole that the VR counselor performsthroughout the rehabilitation process inconnection with any service. Discrete,therapeutic counseling and guidanceservices include personal adjustmentcounseling, counseling that addressesmedical, family, or social issues,vocational counseling, and any otherform of counseling and guidance that isnecessary for an individual with adisability to achieve an employmentoutcome. The Secretary agrees thatchanging the term ‘‘vocationalcounseling and guidance’’ to‘‘vocational rehabilitation counselingand guidance’’ in the final regulations,as some commenters suggested, betterreflects this broad interpretation. Likethe term used in the proposedregulations, this change does not affectthe general counseling and guidancerelationship that exists between thecounselor and the individual during theentire rehabilitation process.The Secretary agrees that the DSU andthe individual share a jointresponsibility to secure grant assistancefrom sources other than VR programfunds in order to pay for training ininstitutions of higher education. Thisposition is consistent with RSA’slongstanding policy relating to therequirement that available comparableservices and benefits be located andused before a DSU expends programfunds to pay for VR services. Under thispolicy, DSUs are responsible foridentifying providers of comparableservices and benefits and for assisting

6328 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationseligible individuals in obtaining thoseresources. The individual, on the otherhand, is responsible for applying forappropriate comparable services andbenefits identified by the DSU. TheSecretary believes that this policy isequally applicable to the requirement insection 103(a)(3) of the Act thatmaximum efforts be made to securealternative sources to pay for training ininstitutions of higher education.Accordingly, it is expected that DSUswill locate alternative funding sourcesto support the cost of training incolleges and universities and, to theextent necessary, assist eligibleindividuals in obtaining this assistance.It is further expected that an individualin need of training in a higher educationinstitution will pursue and apply foralternative funding sources identified bythe DSU.Commenters on § 361.48(a)(13) of theproposed regulations were concernedthat DSUs could terminate jobplacement services anytime an eligibleindividual obtains a job even if the jobis inconsistent with the vocational goalidentified in the individual’s IWRP. Asa result, these commentersrecommended that this sectionspecifically authorize job search andplacement assistance until theindividual achieves an employmentoutcome that is consistent with his orher abilities, capabilities, interests, andinformed choice. The Secretary believes,however, that the commenters’ concernsare fully addressed by § 361.56 of theregulations. That section contains therequirements for determining whetheran individual has achieved anemployment outcome, including therequirement in § 361.56(b) that theemployment outcome be consistent withthe individual’s abilities, capabilities,interests, and informed choice. Thus,termination of services on the basis thatthe individual has achieved anemployment outcome is dependent, inpart, upon whether the job placement isappropriate for the individual inaccordance with § 361.56(b). If aneligible individual receiving VR servicesis underemployed (i.e., placed in a jobthat is not consistent with theindividual’s abilities, capabilities,interests, and informed choice), the DSUmay not discontinue services, includingjob search and placement assistance,that the individual needs in order toachieve the vocational goal specified inthe individual’s IWRP.In an effort to further reduce thepaperwork burden and associated costson DSUs, the Secretary has made tworegulatory changes to paragraph (b) ofthis section that were recommended bycommenters on the proposedregulations. First, the final regulationsrequire the DSU to submit descriptionsrelated to the provision of rehabilitationtechnology and personal assistanceservices triennially as part of its newState plan. The proposed regulationswould have required submission ofthese descriptions annually as revisionsto the State plan. Second, the proposedState plan description of the DSU’sstrategies for expanding the availabilityof personal assistance services has beenremoved from the final regulationsbecause it is not required by statute andcould be more appropriately addressedin a DSU’s strategic plan. Additionally,the Secretary has added to § 361.48(b) ofthe final regulations a requirement thatthe State plan describe how assistivetechnology devices are provided orworksite assessments are made as partof the assessment for determiningeligibility and VR needs of theindividual. This State plan component,which is required under section101(a)(31) of the Act, was inadvertentlyomitted from the proposed regulations.Changes: The Secretary has revised§ 361.48 of the proposed regulations bychanging the term ‘‘vocationalcounseling and guidance’’ underparagraph (a)(3) of this section to‘‘vocational rehabilitation counselingand guidance.’’ The Secretary also hasrevised this section by clarifying underparagraph (a)(6) that it is the jointresponsibility of the DSU and theindividual to secure grant assistancefrom other sources before using VRfunds to pay for training in institutionsof higher education. In addition, theterm ‘‘annually’’ has been removed fromparagraph (b) of this section. Thedescription in the State plan regardingthe DSU’s strategies for expanding theavailability of personal assistanceservices that would have been requiredunder § 361.48(b)(3) of the proposedregulations also has been removed fromthe final regulations. Finally, theSecretary has added to this section therequirement that the State plan describethe manner in which assistivetechnology devices are provided orworksite assessments are made as partof the assessment for determiningeligibility and VR needs of theindividual.§ 361.49 Scope of VocationalRehabilitation Services for Groups ofIndividuals With DisabilitiesComments: None.Discussion: Because the finalregulations limit § 361.50 to writtenpolicies that cover the nature and scopeof services provided to individualsunder § 361.48, the Secretary believesthat the requirement regarding writtenpolicies for services to groups properlybelongs in § 361.49(b)(2) of the finalregulations. This provision is intendedto ensure that if a DSU chooses toprovide services to groups under§ 361.49, then the DSU develops andmaintains written policies covering eachservice and the criteria under whicheach service is provided.Changes: The Secretary has revised§ 361.49 by relocating the requirementregarding written policies for services togroups from § 361.50 of the proposedregulations to § 361.49(b)(2).§ 361.50 Written Policies Governingthe Provision of Services for IndividualsWith DisabilitiesComments: One commenter statedthat it is inappropriate for this sectionto require DSUs to develop writtenpolicies governing the provision of VRservices to groups since these servicesare not included in the individual’sIWRP. Several commentersrecommended requiring that the writtenpolicies developed under this sectionmust ensure that the provision ofservices to each individual is consistentwith the individual’s informed choice.Finally, one commenter questionedwhether DSUs can prohibit verbalauthorization for services in allinstances.Discussion: The Secretary recognizesthe inconsistency in requiring the DSUto develop written policies that coverthe scope of VR services for groupsunder § 361.49 and, at the same time,ensure that the provision of services isbased on the needs of the individual asidentified in the individual’s IWRP. Thecommenter on the proposed regulationswho raised this issue correctly notedthat group services under § 361.49 arenot necessarily included in the IWRP toaddress a rehabilitation need of theindividual. The Secretary intends thatthe policies developed under § 361.50will ensure that the provision ofservices to any eligible individual willbe based on that individual’s needs andthat no arbitrary limits, including limitspertaining to the location, cost, orduration of a particular service, will beplaced on an individual’s receipt of VRservices.The Secretary agrees that theprovision of VR services must beconsistent with the informed choice ofthe individual. This position is clearlyreflected in § 361.48 of the regulations.Consequently, the final regulationsspecify that the DSU’s written policiesdeveloped under § 361.50 must ensurethat the provision of VR services isbased on the individual’s rehabilitationneeds and is consistent with theindividual’s informed choice.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6329Consistent with the proposedregulations, § 361.50(d) of the finalregulations requires DSUs to establishpolicies related to the timelyauthorization of services, including anyconditions under which it allows verbalauthorization. Although the Secretaryexpects that, in most instances, the DSUwill provide written authorization ofservices before or at the same time thatthe services are provided, the Secretaryagrees that DSUs should have theflexibility to determine thecircumstances under which verbalauthorization for services is permitted.The Secretary recognizes, however, thatsome States prohibit verbalauthorization under all circumstances.This provision is not intended toinfringe on this State prerogative andrequires only that the DSU specify theconditions, if any, under which verbalauthorization can be given.Changes: The Secretary has amended§ 361.50 by clarifying that this sectionapplies only to the provision of servicesto individuals with disabilities under§ 361.48. This section also has beenretitled to reflect this change. Acorresponding requirement regardingwritten policies for services to groupshas been added to § 361.49(b) of thefinal regulations. In addition, theSecretary has revised § 361.50 to specifythat the DSU’s written policies mustensure that the provision of services isconsistent with the individual’sinformed choice. Finally, paragraph (d)of this section has been clarified torequire that the DSU’s policies regardingthe timely authorization of servicesidentify any conditions under whichverbal authorization can be given.§ 361.51 Written Standards forFacilities and Providers of ServicesComments: None.Discussion: The Secretary believes itis necessary to revise the requirementsrelating to qualified personnel inparagraph (b)(1) of this section to reflectcorresponding changes to the personnelstandards included in the State agency’scomprehensive system of personneldevelopment under § 361.18(c) of theseregulations. A change is necessary toclarify that individuals who provide VRservices shall meet existing national orState-approved certification, licensing,or registration requirements that applyto the discipline in which thatrehabilitation professional provides VRservices. Individuals who meet‘‘comparable requirements,’’ such asState personnel requirements,developed by the DSU under § 361.18(c)would be authorized to provide VRservices only if there are no existinglicensing, certification, or registrationrequirements applicable to theirparticular profession. As stated in theanalysis of comments on § 361.18(c), theSecretary believes that the Actprecludes the use of less rigorous‘‘comparable requirements’’ in place ofexisting national or statewidecertification, licensing, or registrationrequirements that apply to thediscipline in which a rehabilitationprofessional provides VR services.Changes: The Secretary has revised§ 361.51(b) consistent with § 361.18(c)to clarify that individuals who provideVR services shall meet applicablecertification, licensing, or registrationrequirements or, if none exist, other‘‘comparable requirements’’ developedby the DSU under its comprehensivesystem of personnel development.§ 361.52 Opportunity To MakeInformed ChoicesComments: Some commentersrequested clarification of the meaning ofthe term ‘‘informed choice.’’ Othercommenters stated that the DSUs shouldbe required to inform individuals oftheir right to make informed choicesand to explain how informed choicemay be exercised. Additionalcommenters recommended requiringDSUs to provide through appropriatemodes of communication informationthat is necessary for an individual tomake an informed choice and to assistindividuals with cognitive disabilitiesin exercising choice.Some commenters opposed therequirement that DSUs provide, or assistindividuals in obtaining, informationrelated to the level of consumersatisfaction with each service. Thesecommenters stated that informationpertaining to consumer satisfaction maynot be available to the DSU in allinstances. In addition, severalcommenters questioned whether thesources of information specified inparagraph (c) of this section must beused by DSUs to ensure that individualshave sufficient information to makeinformed choices.Discussion: ‘‘Informed choice’’ is adecisionmaking process in which theindividual analyzes relevantinformation and selects, with theassistance of the rehabilitationcounselor or coordinator, a vocationalgoal, intermediate rehabilitationobjectives, VR services, and VR serviceproviders. Accordingly, this section ofthe regulations requires each DSU, inconsultation with its Council if it hasone, to develop its own policies andprocedures that enable individuals withdisabilities to make informed choicesthroughout their participation in the VRprogram. In addition, the regulationsidentify minimum types of informationthat must be provided to the individualby the DSU or through the DSU’sassistance in connection with thedevelopment of the IWRP (e.g.,information pertaining to cost,accessibility, and duration of services,qualifications of service providers, anddegree of integration associated with aservice). Beyond these limitedinformational requirements, theSecretary believes it would beinappropriate to impose, through theseregulations, an across-the-boarddefinition of ‘‘informed choice,’’ assome commenters suggested. It is withinthe discretion of the DSU to developappropriate policies that facilitateaccess to, at a minimum, the types ofinformation specified in the regulationsand that enable each individual to makeinformed choices.However, the Secretary agrees thatindividuals must be appropriatelyinformed of their opportunity to makeinformed choices throughout therehabilitation process and thatrequirements should be added to thefinal regulations that are designed toensure that individuals are aware oftheir right to make an informed choiceabout their vocational goal,rehabilitation objectives, services, andservice providers and that theyunderstand how to exercise that right. Inaddition, the Secretary believes thatrequiring DSUs to apprise eligibleindividuals of their statutory right toinformed choice is an essentialprotection for individuals withdisabilities that significantly outweighsany additional burden associated withthe information requirements in thissection.The Secretary recognizes that, in someinstances, DSUs may not have access toinformation regarding the level ofconsumer satisfaction with a particularservice and that DSUs should berequired to provide, or assist theindividual in acquiring, this informationto the extent that it is available.In addition, the Secretary emphasizesthat the information sources andmethods of obtaining informationidentified in paragraph (c) of thissection are intended to serve only asexamples. A DSU can assist individualsin making informed choices by usingthe identified methods (e.g., referringindividuals to local consumer groups ordisability advisory councils), byproviding the listed sources ofinformation (e.g., State or regional listsof services and services providers), or byusing other methods or informationsources that it considers appropriate.Changes: The Secretary has revised§ 361.52(a) to require DSUs to develop

6330 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationspolicies that ensure that each individualreceives, through appropriate modes ofcommunication, information concerningthe availability and scope of informedchoice, the manner in which informedchoice may be exercised, and, consistentwith section 12(e)(2)(F) of the Act, theavailability of support services forindividuals with cognitive or otherdisabilities who require assistance inexercising informed choice. In addition,the Secretary has clarified in paragraph(b) that the DSU shall provide theindividual, or assist the individual inacquiring, information regardingconsumer satisfaction with relevantservices to the extent that thatinformation is available.§ 361.53 Availability of ComparableServices and BenefitsComments: Several commentersrequested clarification of the proposedrequirement that comparable servicesand benefits must be available within areasonable period of time. Othercommenters sought clarification ofproposed paragraph (b) of this section,which identifies those services forwhich a DSU is not required todetermine whether comparable servicesand benefits are available. Somecommenters recommended that theregulations direct DSUs to provide theservices specified in paragraph (b) in allinstances. Other commenters askedwhether a DSU, although not required,has the discretion to search for and usecomparable services and benefits inconnection with the provision of theservices identified in paragraph (b).Discussion: The proposed regulationsrequired DSUs to use comparableservices and benefits for all non-exemptservices if available to the eligibleindividual within a reasonable period oftime so that the intermediaterehabilitation objectives in theindividual’s IWRP can be met. Theproposed regulations were intended torequire DSUs to determine whatconstitutes a reasonable period of timeon a case-by-case basis according to theservices and rehabilitation objectivesidentified in each individual’s IWRP.However, in light of the confusionexpressed by commenters about boththis section of the regulations and theproposed definition of ‘‘comparableservices and benefits, the Secretarybelieves that requiring comparableservices and benefits to be available atthe time that the service is needed toaccomplish the rehabilitation objectivesin the individual’s IWRP represents aclearer standard for DSUs to follow.The proposed regulations also wereintended to exempt specific servicesfrom the comparable services andbenefits requirement consistent withsection 101(a)(8) of the Act. The statuterequires DSUs to provide certainservices (e.g., rehabilitation technology)as mandatory services withoutdetermining the availability ofcomparable services and benefits as isrequired for the remaining VR services.The Secretary agrees that the statementin proposed paragraph (b) of this sectionthat a comparable services and benefitsdetermination ‘‘is not required’’ prior tothe provision of the services identifiedin section 101(a)(8) of the statute isunclear and that the final regulationsshould clarify that the exemptedservices are not subject to a priorcomparable services and benefitsdetermination, i.e., the DSU has theaffirmative responsibility to providethese services without determining theavailability of alternative fundingsources. Nevertheless, the Secretaryagrees that, if an exempted service suchas an assistive technology device isknown to be readily available from analternative source at the time the serviceis needed to accomplish a rehabilitationobjective in the individual’s IWRP, it isprudent for the DSU to use thosesources in order to conserve fundsprovided under this program. TheSecretary notes, however, that projectssupported by the Technology-RelatedAssistance for Individuals withDisabilities Act of 1988 (Tech Act) arenot alternative sources to the VRprogram for purposes of providingrehabilitation technology. Tech Actprojects are designed to assist States indeveloping and implementing effectivesystems for securing from otherprograms technology-related assistancefor individuals with disabilities. Theseprojects do not provide actual assistivetechnology devices or services toindividuals.Changes: The Secretary has revisedparagraph (a)(2) of § 361.53 to requireDSUs to use comparable services andbenefits that are available to theindividual at the time the services areneeded to achieve the rehabilitationobjectives in the individual’s IWRP.This change is consistent with thechanges made to the proposeddefinition of ‘‘comparable services andbenefits’’ discussed previously in thepreamble analysis of comments under§ 361.5(b). In addition, the Secretary hasrevised this section to clarify that theservices listed in paragraph (b) areexempt from a determination of theavailability of comparable services andbenefits.§ 361.54 Participation of Individuals inCost of Services Based on FinancialNeedComments: None.Discussion: The Secretary believes itis necessary to clarify that State policiesgoverning individual participationlevels in the cost of VR services musttake into consideration the disabilityrelatedexpenses born by an individualwhen determining the individual’sfinancial need. Although the Secretarypresumes that DSUs already considerthe individual’s disability-relatedexpenses when determining financialneed, the Secretary seeks to emphasizethe importance of disability-relatedexpenses given the significant impactthat they may have on an individual’sability to contribute to the cost of VRservices.Changes: The Secretary has revised§ 361.54 by requiring in paragraph(b)(2)(v)(C) that an individual’sdisability-related expenses beconsidered in determining the extent towhich an individual shall contributetoward the cost of VR services.§ 361.55 Review of extendedemployment in communityrehabilitation programs or otheremployment under section 14(c) of theFair Labor Standards ActComments: Some commentersrequested that DSUs be permitted tolimit the number of annual reviews ofindividuals in extended employmentthat DSUs are required to conduct. Inaddition, some commenters requestedthat the regulations specify that theannual review requirement in thissection applies to individuals insupported employment who earn lessthan the minimum wage.Discussion: Section 101(a)(16) of theAct requires DSUs to review annuallythe status of each eligible individual inextended employment in order todetermine the individual’s needs andinterests related to competitiveemployment. The Act does not providefor any exceptions to this annual reviewrequirement. Thus, the Secretaryinterprets section 101(a)(16) of the Actto prohibit DSUs from discontinuingannual reviews of individuals whoremain in extended employment forextensive periods. This positionrepresents a modification to the policyin the RSA Manual, which hadpermitted States to place limitations onthe number of annual reviews of thosein extended employment. Given theexpanded scope of competitiveemployment, supported employment,and other integrated employmentopportunities that may become available

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6331to individuals in extended employmentin future years, the Secretary believesthat discontinuing annual reviewswould be inconsistent with theemphasis that the statute places oncompetitive and integrated employment.In addition to conducting reviews ofindividuals in extended employment,section 101(a)(16) of the Act requiresDSUs to review annually the job statusof individuals employed in ‘‘otheremployment settings’’ in which theindividual is compensated undersection 14(c) of the FLSA. This reviewrequirement applies to any eligibleindividual employed in an integratedsetting who earns below the minimumwage, including individuals insupported employment settings who areunable to earn the minimum wage at thetime of transition to extended services.In each case, the DSU is required toreview the individual’s employmentstatus and determine his or her needsand interests in becoming competitivelyemployed.Changes: None.§ 361.56 Individuals determined tohave achieved an employment outcomeComments: Several commentersresponded to the Secretary’s request inthe NPRM for comments on thepotential effect of the proposed timestandard for maintaining a jobplacement in order to achieve anemployment outcome. Many of thecommenters questioned the proposedstandard—the duration of theemployers’s probationary period or 90days if the employer does not have anestablished probationary period—bystating that reliance on employerprobationary periods would be tooburdensome for DSUs to administer orwould not ensure job stability ininstances in which the probationaryperiod is very short (e.g., two weeks).Some commenters supported theproposed standard, while otherssuggested that the regulatory timeperiod be 90 days or the employer’sprobationary period, whichever islonger. However, a large majority of thecommenters recommended that theregulations establish a uniform timeperiod applicable to all job placements.Some commenters suggested retainingthe 60-day time period required underthe current regulations, whereas othercommenters recommended that thecurrent standard be increased to 90 or180 days.Discussion: The requirement in theproposed regulations that an individualmaintain a job placement for theemployer’s probationary period or, if theemployer does not have a probationaryperiod, for at least 90 days was intendedto better reflect whether an individualhas successfully achieved anemployment outcome. Like many of thecommenters on the proposedregulations, the Secretary believes thatthe 60-day standard under the currentregulations is too short a period todetermine whether the individual willbe able to successfully maintain the jobplacement over time. The proposedregulations were designed both tostrengthen the existing standard and tobase the decision that an individual hasachieved an employment outcome, inpart, on the individual’s ability tosatisfy the requirements imposed by theemployer on any employee. If theemployer did not have a probationaryperiod in place, the 90-day period wasconsidered an adequate safeguard toensure that the individual is performingwell and is likely to maintain theemployment outcome.Nevertheless, the Secretaryunderstands the concerns of manycommenters that the proposed standardmay cause DSUs to avoid placingindividuals with employers who havelengthy probationary periods, therebyshrinking the pool of potential jobplacements, or may be inconsistent withthe informed choice of an individualwho seeks to cease contact with theDSU prior to the end of the relevantprobationary period. In addition, it isclear that most commenters prefer afixed time period that applies equally toeach individual who receives VRservices. At the same time, however, theSecretary recognizes that in someinstances 90 days may be too short aperiod to ensure job stability. For thesereasons, the final regulations contain auniform, minimum 90-day standard thatapplies to all individuals who obtainemployment under the VR program.This uniform standard, the Secretaryexpects, enables DSU staff to conservetime and work more efficiently thanwould be possible under an individualemployer-based standard and alsoaffords DSUs the flexibility to increasethe 90-day minimum time periodwhenever circumstances warrant. Forexample, a DSU may decide to extendthe period to conform to an employer’slonger probationary period if at the endof 90 days it is uncertain whether theindividual will be able to successfullysatisfy the probationary period withoutDSU support. Similarly, a DSU shouldextend the job-retention period ifrequested by the individual. TheSecretary also emphasizes thatparagraph (e) precludes DSUs fromceasing contact with an individual whoobtains employment unless at the end ofthe appropriate retention period (90days or longer), the individual and therehabilitation counselor or coordinatorconsider the employment outcomesatisfactory and agree that theindividual is performing well on the job.Additional safeguards that werespecified in the proposed regulationsalso are retained in the final regulations,including the requirement that theemployment outcome be consistent withthe strengths, resources, priorities,concerns, abilities, capabilities,interests, and informed choice of theindividual and that the employmentoutcome be located in the mostintegrated setting possible.Changes: The Secretary has revised§ 361.56 to require in all instances thatan individual shall maintainemployment for a period of at least 90days in order to be considered to haveachieved an employment outcome.§ 361.57 Review of rehabilitationcounselor and coordinatordeterminationsComments: One commenter requestedthat the prohibition in paragraph (b)(2)of this section against suspendingservices being provided under an IWRPpending resolution of a dispute bebroadened to cover assessment services.Another commenter stated that thisprohibition should apply to any serviceidentified in an IWRP, including thoseservices that the individual has yet toreceive.Two commenters stated that Statepolicies used as a basis for an impartialhearing officer’s decision underparagraph (b)(4) of this section, or for aDSU director’s decision underparagraph (b)(9) of this section, must beconsistent with Federal requirements.Other commenters recommended thatparagraph (b)(7) of this section identifyspecific Federal standards of review fordetermining whether a DSU can reviewthe decision of a hearing officer. Inaddition, one commenter stated that,anytime the DSU director reverses thedecision of an impartial hearing officer,the director should be required toinform the individual of the statutory,regulatory, or policy basis for thereversal.Several commenters opposed theremoval of the current regulatorytimelines governing key stages of thereview process. These commentersasserted that the timelines in the currentregulations represent essentialprotections for individuals withdisabilities and are critical to thetimeliness of appeal procedures. Thesecommenters also stated that the currenttimelines are reasonable, do not posesignificant difficulties for DSUs, and arenecessary to ensure that issues related to

6332 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsthe provision of VR services areresolved in a timely fashion.Finally, some commentersrecommended that the regulationsrequire DSUs to inform individuals ateach stage of the rehabilitation processof their right to appeal a counselor’sdetermination.Discussion: The Secretary believesthat it is necessary to clarify in the finalregulations that time extensions forinformally resolving an individual’sappeal of a counselor’s determinationunder paragraph (a) of this section mustbe agreed to by both parties and mustbe specific in length. This change isnecessary to ensure the timelyresolution of disputes through formalreview procedures.Section 102(d)(5) of the Act, which isimplemented by paragraph (b)(2) of thissection, states that the DSU may notinstitute a suspension, reduction, ortermination of services being providedunder the individual’s IWRP pendingfinal resolution of an individual’schallenge to a determination of arehabilitation counselor unless theindividual so requests or the serviceshave been obtained throughmisrepresentation, fraud, collusion, orcriminal conduct on the part of theindividual. This statutory prohibitiondoes not apply to assessment or otherservices that are not included in theIWRP. Similarly, the statutory referenceto services ‘‘being provided under theIWRP’’ means that the DSU isprohibited from suspending only thoseservices in the IWRP that the individualhas begun to receive prior to requestinga review of a counselor’s determination.However, the Secretary notes that theDSU cannot discontinue a serviceduring a regular interruption in thatservice (e.g., between semesters at aninstitution of higher education in whichtraining is provided) as long as theservice is included in the IWRP and hasbeen initiated.The Secretary agrees that any Statepolicy used as a basis for an impartialhearing officer’s decision underparagraph (b)(4) of this section or for amodification of that decision by thedirector of the DSU under paragraph(b)(9) of this section must be consistentwith Federal statutory and regulatoryrequirements.Section 361.57(b)(7) of the proposedand final regulations requires that anydecision by a DSU director to review thedecision of an impartial hearing officermust be based on standards of reviewestablished under written State policy.Although DSUs have the discretion toestablish appropriate standards ofreview, the Secretary intends thatstandards developed under paragraph(b)(7) of this section be consistent withRSA policy, specifically Chapter 0545 ofthe Rehabilitation Services Manual(Clients’’ Rights to Appeal Decisions),which specifies a number offundamental issues that should beaddressed in connection withdetermining whether to review ahearing officer’s decision (e.g., Is theinitial decision arbitrary, capricious, anabuse of discretion or otherwiseunreasonable? Is the initial decisionconsistent with the facts of the case andapplicable Federal and State policies?).Section 361.57(b)(10) of the proposedregulations provided that if the DSUdirector decided to review the decisionof an impartial hearing officer, thedirector would provide to the individuala full report of the director’s finaldecision and of the findings andgrounds for the decision. The Secretaryintended the term ‘‘grounds’’ to includeany applicable law or policy on whichthe decision was based and believes thatchanging that term in the finalregulations to ‘‘statutory, regulatory, andpolicy grounds’’ will clarify thisintention. As stated previously, anyState policy that is used to support thedirector’s decision must be consistentwith Federal statutory and regulatoryrequirements.The proposed regulations would haveafforded DSUs the discretion to developtimelines for the prompt handling ofappeals instead of specifying Federaltimelines for certain stages of theappeals process. However, there wasnear-unanimity among commenters inopposing this change from currentregulations. The commenters stressedthe importance of protecting individualsfrom delays in the resolution of issuesaffecting an individual’s receipt of VRservices and vigorously asserted thatFederal timelines are the best means ofensuring that State appeal proceduresare conducted in a timely fashion.For the reasons stated by thecommenters, the Secretary agrees thatthe current regulatory timelines shouldbe retained in the final regulations. Stateunits have not indicated that the Federaltimelines are unreasonable orunnecessarily burdensome. Moreover,commenters on the proposedregulations indicated that a number ofDSUs have failed to meet the currenttimelines in the past. In light of thesecomments, the Secretary believes that atthis time affording DSUs the additionalflexibility to develop their owntimelines for handling appeals is neitherwarranted nor appropriate and thatretaining the current timelines does notimpose additional costs on DSUs.Finally, the Secretary agrees thatindividuals must be informed of theirappeal rights during key stages of therehabilitation process. Section 361.46(a)(8) and (a)(9) requires that theserights, as well as the availability ofrepresentation through the ClientAssistance Program (CAP) under 34 CFRpart 370, be clearly delineated in theIWRP. Moreover, § 361.43(c) requiresDSUs to provide individuals withinformation concerning the CAPwhenever an individual is foundineligible to receive VR services. TheSecretary believes that these provisionssufficiently ensure that individuals areapprised of their right to challenge anydetermination made by a counselorregarding the provision or denial ofservices.Changes: The Secretary has revised§ 361.57 to clarify that time extensionsfor informally resolving an individual’srequest for review of a counselor’sdetermination under paragraph (a) mustbe specific and agreed upon by bothparties. In addition, paragraphs (b)(4)and (b)(9) of this section have beenrevised to clarify that any State policyon which the decision of an impartialhearing officer or DSU director is basedmust be consistent with applicableFederal requirements. Paragraph (b)(10)of this section also has been amended toclarify that the director’s decision andcorresponding report must specify thestatutory, regulatory, or policy groundsfor the decision. Finally, the Secretaryalso has revised this section by applyingspecific timelines to certain stages of theappeals process. Like the currentregulations, the final regulations requirethat an impartial hearing officer conducta formal hearing within 45 days of anindividual’s request for review; that thehearing officer render a decision within30 days of the completion of thehearing; and that the DSU director issuea final decision within 30 days ofnotifying the individual of the director’sintent to review the initial decision. Therequirement that the individual benotified of the director’s intent to reviewthe initial decision within 20 days of itsissuance is specified in the Act and isimplemented by § 361.57(b)(5) of theregulations. Because the currentregulatory timelines have beenreinserted into this section of the finalregulations, the Secretary has removedfrom the final regulations therequirement under paragraph (c) of theproposed regulations that the DSUdevelop timelines applicable to thesestages of the review process.§ 361.60 Matching RequirementsComments: Two commenters opposedthe prohibition in this section againstusing third party in-kind contributionsto meet the non-Federal share under the

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6333VR program. Another commenterexpressed concern about the impact ofthis prohibition on the use, as non-Federal match, of funds provided byother public agencies under third-partycooperative arrangements.Discussion: ‘‘Third party in-kindcontributions,’’ which are a permissiblesource of State matching funds underthe Education Department GeneralAdministrative Regulations (EDGAR),are defined in 34 CFR 80.3 as ‘‘propertyor services which benefit a federallyassisted project or program and whichare contributed by non-Federal thirdparties without charge to the grantee.* * *’’ However, it is RSA’s policy tonot allow the use of third-party in-kindcontributions to meet the State matchingrequirement under the VR program inthe absence of specific statutoryauthority. Where the Act permits theuse of in-kind expenditures as match forcertain programs, that authority isexpressed (e.g., the State IndependentLiving Program under section 712(b)(2)of the Act). Thus, § 361.60(b)(2)specifies that these contributions maynot be used as part of the DSU’s non-Federal share under the program. Thisprovision is consistent with thedefinition of ‘‘State and local funds’’under § 361.76 of the current regulationsand with the current regulatoryprohibition on the use of in-kindcontributions as match in § 361.24(c).Nevertheless, this prohibition has noeffect on a DSU’s ability to enter intothird-party cooperative arrangementsunder § 361.28 of the regulations forproviding VR services with anotherpublic agency that is furnishing part orall of the non-Federal share under theprogram. As long as the third party iscontributing funds to support VRservices, those dollars may be used aspart of the DSU’s non-Federal share(e.g., staff salaries paid by the thirdparty that are allowable matchingexpenditures). If, on the other hand, theDSU enters into an arrangement underwhich a third party provides equipmentor property used in the administrationof the VR program, the costs associatedwith those items cannot be used as non-Federal matching funds.Changes: None.§ 361.62 Maintenance of EffortRequirementsComments: One commenter suggestedthat recoveries of State maintenance ofeffort deficits should always bededucted from the State’s allotment ina future fiscal year.Discussion: Section 111(a)(2)(B)(ii) ofthe Act, which is implemented by§ 361.62(a)(1) of the regulations,requires the Department to recovermaintenance of effort deficits through adeduction in the State’s allotment forthe following Federal fiscal year.However, there is no statutory authorityto deduct an allotment other than in theyear immediately following amaintenance of effort shortfall. Thus,§ 361.62(a)(2) of the regulationsspecifies that when a maintenance ofeffort deficit is discovered too late toadjust the allotment for the followingyear, then the deficit will be recoveredthrough an audit disallowance.Changes: None.§ 361.71 Procedures for Developing theStrategic PlanComments: Two commentersrecommended that the DSU be requiredto consult the State Client AssistanceProgram prior to developing its strategicplan. Other commenters recommendedthat DSUs be required only to reviewrather than to revise the strategic planon an annual basis under paragraph (c)of this section.Discussion: Section 122(b) of the Actspecifies that, prior to developing thestrategic plan, the DSU shall hold publicforums and solicit recommendationsspecifically from the StateRehabilitation Advisory Council and theStatewide Independent Living Council.The Secretary agrees that the views ofthe CAP also should be considered inconnection with the development of thestrategic plan. The public participationrequirements in § 361.71(a) afford theCAP and other interested parties theopportunity to provide the DSU with itscomments and recommendations. Theannual revision requirement underparagraph (c) of this section is based onsection 122(a) of the Act, which statesthat the strategic plan must be updatedon an annual basis to reflect actualexperience over the previous year andinput from the Council and otherinterested parties. The Secretarybelieves that merely requiring an annualreview would be inconsistent with thisstatutory requirement.Changes: None.Paperwork Reduction Act of 1995Under the Paperwork Reduction Actof 1995, no persons are required torespond to a collection of informationunless it displays a valid OMB controlnumber. The valid OMB control numberassigned to the collections ofinformation in these final regulations isdisplayed at the end of the affectedsections of the regulations.Intergovernmental ReviewThis program is subject to therequirements of Executive Order 12372and the regulations in 34 CFR part 79.The objective of the Executive order isto foster an intergovernmentalpartnership and a strengthenedfederalism by relying on processesdeveloped by State and localgovernments for coordination andreview of proposed Federal financialassistance.In accordance with the order, thisdocument is intended to provide earlynotification of the Department’s specificplans and actions for this program.Assessment of Educational ImpactIn the notice of proposed rulemaking,the Secretary requested comments onwhether the proposed regulations wouldrequire transmission of information thatis being gathered by or is available fromany other agency or authority of theUnited States.Based on the response to the proposedregulations and on its own review, theDepartment has determined that theregulations in this document do notrequire transmission of information thatis being gathered by or is available fromany other agency or authority of theUnited States.List of Subjects34 CFR Part 361Reporting and recordkeepingrequirements, State-administered grantprogram—education, Vocationalrehabilitation.34 CFR Part 363State-administered grant program—education, Supported employment.34 CFR Part 376Special projects and demonstrations,Transitional rehabilitation services.34 CFR Part 380Special projects and demonstrations,Supported employment, Technicalassistance.Dated: December 1, 1996.Richard W. Riley,Secretary of Education.(Catalog of Federal Domestic AssistanceNumbers: 84.126 The State VocationalRehabilitation Services Program; 84.187 TheState Supported Employment ServicesProgram; 84.235 Special Projects andDemonstrations for Providing TransitionalRehabilitation Services to Youth withDisabilities; 84.128 Special Projects andDemonstrations for Providing SupportedEmployment Services to Individuals with theMost Severe Disabilities and TechnicalAssistance Projects)The Secretary amends Title 34,Chapter III, of the Code of FederalRegulations as follows:1. Part 361 is revised to read asfollows:

6334 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsPART 361—THE STATE VOCATIONALREHABILITATION SERVICESPROGRAMSubpart A—GeneralSec.361.1 Purpose.361.2 Eligibility for a grant.361.3 Authorized activities.361.4 Applicable regulations.361.5 Applicable definitions.Subpart B—State Plan for VocationalRehabilitation Services361.10 Submission, approval, anddisapproval of the State plan.361.11 Withholding of funds.State Plan Content: Administration361.12 Methods of administration.361.13 State agency for administration.361.14 Substitute State agency.361.15 Local administration.361.16 Establishment of an independentcommission or a State RehabilitationAdvisory Council.361.17 Requirements for a StateRehabilitation Advisory Council.361.18 Comprehensive system of personneldevelopment.361.19 Affirmative action for individualswith disabilities.361.20 State plan development.361.21 Consultations regarding theadministration of the State plan.361.22 Cooperation with agenciesresponsible for students with disabilities.361.23 Cooperation with other publicagencies.361.24 Coordination with the StatewideIndependent Living Council.361.25 Statewideness.361.26 Waiver of statewideness.361.27 Shared funding and administrationof joint programs.361.28 Third-party cooperativearrangements involving funds from otherpublic agencies.361.29 Statewide studies and evaluations361.30 Services to special groups ofindividuals with disabilities.361.31 Utilization of community resources.361.32 Utilization of profitmakingorganizations for on-the-job training inconnection with selected projects.361.33 Use, assessment, and support ofcommunity rehabilitation programs.361.34 Supported employment plan.361.35 Strategic plan.361.36 Ability to serve all eligibleindividuals; order of selection forservices361.37 Establishment and maintenance ofinformation and referral programs.361.38 Protection, use, and release ofpersonal information.361.39 State-imposed requirements.361.40 Reports.State Plan Content: Provision and Scope ofServices361.41 Processing referrals andapplications.361.42 Assessment for determiningeligibility and priority for services.361.43 Procedures for ineligibilitydetermination.361.44 Closure without eligibilitydetermination.361.45 Development of the individualizedwritten rehabilitation program.361.46 Content of the individualizedwritten rehabilitation program.361.47 Record of services.361.48 Scope of vocational rehabilitationservices for individuals with disabilities.361.49 Scope of vocational rehabilitationservices for groups of individuals withdisabilities.361.50 Written policies governing theprovision of services for individuals withdisabilities.361.51 Written standards for facilities andproviders of services.361.52 Opportunity to make informedchoices.361.53 Availability of comparable servicesand benefits.361.54 Participation of individuals in costof services based on financial need.361.55 Review of extended employment incommunity rehabilitation programs orother employment under section 14(c) ofthe Fair Labor Standards Act.361.56 Individuals determined to haveachieved an employment outcome.361.57 Review of rehabilitation counseloror coordinator determinations.Subpart C—Financing of State VocationalRehabilitation Programs361.60 Matching requirements.361.61 Limitation on use of funds forconstruction expenditures.361.62 Maintenance of effort requirements.361.63 Program income.361.64 Obligation of Federal funds andprogram income.361.65 Allotment and payment of Federalfunds for vocational rehabilitationservices.Subpart D—Strategic Plan for Innovationand Expansion of Vocational RehabilitationServices361.70 Purpose of the strategic plan.361.71 Procedures for developing thestrategic plan.361.72 Content of the strategic plan.361.73 Use of funds.361.74 Allotment of Federal funds.Authority: 29 U.S.C. 711(c), unlessotherwise noted.Subpart A—General§ 361.1 Purpose.Under the State VocationalRehabilitation Services Program(program), the Secretary provides grantsto assist States in operating acomprehensive, coordinated, effective,efficient, and accountable program thatis designed to assess, plan, develop, andprovide vocational rehabilitationservices for individuals withdisabilities, consistent with theirstrengths, resources, priorities,concerns, abilities, capabilities, andinformed choice, so that they mayprepare for and engage in gainfulemployment.(Authority: Sec. 12(c) and 100(a)(2) of theAct; 29 U.S.C. 711(c) and 720(a)(2))§ 361.2 Eligibility for a grant.Any State that submits to theSecretary a State plan that meets therequirements of section 101(a) of the Actand this part is eligible for a grant underthis program.(Authority: Sec. 101(a) of the Act; 29 U.S.C.721(a))§ 361.3 Authorized activities.The Secretary makes payments to aState to assist in—(a) The costs of providing vocationalrehabilitation services under the Stateplan;(b) Administrative costs under theState plan; and(c) The costs of developing andimplementing the strategic plan.(Authority: Sec. 111(a)(1) of the Act; 29U.S.C. 731(a)(1))§ 361.4 Applicable regulations.The following regulations apply tothis program:(a) The Education Department GeneralAdministrative Regulations (EDGAR) asfollows:(1) 34 CFR part 74 (Administration ofGrants to Institutions of HigherEducation, Hospitals, and NonprofitOrganizations), with respect tosubgrants to entities that are not State orlocal governments or Indian tribalorganizations.(2) 34 CFR part 76 (State-Administered Programs).(3) 34 CFR part 77 (Definitions thatApply to Department Regulations).(4) 34 CFR part 79 (IntergovernmentalReview of Department of EducationPrograms and Activities).(5) 34 CFR part 80 (UniformAdministrative Requirements for Grantsand Cooperative Agreements to Stateand Local Governments), except for§ 80.24(a)(2).(6) 34 CFR part 81 (General EducationProvisions Act-Enforcement).(7) 34 CFR part 82 (New Restrictionson Lobbying).(8) 34 CFR part 85 (GovernmentwideDebarment and Suspension(Nonprocurement) andGovernmentwide Requirements forDrug-Free Workplace (Grants)).(9) 34 CFR part 86 (Drug-Free Schoolsand Campuses).(b) The regulations in this part 361.(Authority: Sec. 12(c) of the Act; 29 U.S.C.711(c))

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6335§ 361.5 Applicable definitions.(a) Definitions in EDGAR. Thefollowing terms used in this part aredefined in 34 CFR 77.1:DepartmentEDGARFiscal yearNonprofitPrivatePublicSecretary(b) Other definitions. The followingdefinitions also apply to this part:(1) Act means the Rehabilitation Actof 1973 (29 U.S.C. 701 et seq.), asamended.(Authority: Sec. 12(c) of the Act; 29 U.S.C.711(c))(2) Administrative costs under theState plan means expenditures incurredin the performance of administrativefunctions under the vocationalrehabilitation program. Administrativecosts include expenses related toprogram planning, development,monitoring, and evaluation, including,but not limited to, quality assurance;budgeting, accounting, financialmanagement, information systems, andrelated data processing; providinginformation about the program to thepublic; technical assistance to otherState agencies, private nonprofitorganizations, and businesses andindustries, except for technicalassistance and support servicesdescribed in § 361.49(a)(4); the StateRehabilitation Advisory Council andother advisory committees; professionalorganization membership dues for Stateunit employees; the removal ofarchitectural barriers in State vocationalrehabilitation agency offices and Stateoperatedrehabilitation facilities;operating and maintaining State unitfacilities, equipment, and grounds;supplies; administration of thecomprehensive system of personneldevelopment, including personneladministration, administration ofaffirmative action plans, and trainingand staff development; administrativesalaries, including clerical and othersupport staff salaries, in support of thesefunctions; travel costs related tocarrying out the program, other thantravel costs related to the provision ofservices; costs incurred in conductingreviews of rehabilitation counselor orcoordinator determinations under§ 361.57; and legal expenses required inthe administration of the program.(Authority: Sec. 12(c) of the Act; 29 U.S.C.711(c))(3) American Indian means anindividual who is a member of anIndian tribe.(Authority: Sec. 7(20) of the Act; 29 U.S.C.706(20))(4) Applicant means an individualwho submits an application forvocational rehabilitation services inaccordance with § 361.41(b)(2).(Authority: Sec. 12(c) of the Act; 29 U.S.C.711(c))(5) Appropriate modes ofcommunication means specialized aidsand supports that enable an individualwith a disability to comprehend andrespond to information that is beingcommunicated. Appropriate modes ofcommunication include, but are notlimited to, the use of interpreters, openand closed captioned videos,specialized telecommunicationsservices and audio recordings, Brailledand large print materials, materials inelectronic formats, augmentativecommunication devices, graphicpresentations, and simple languagematerials.(Authority: Sec. 12(c) of the Act; 29 U.S.C.711(c))(6) Assistive technology device meansany item, piece of equipment, orproduct system, whether acquiredcommercially off the shelf, modified, orcustomized, that is used to increase,maintain, or improve the functionalcapabilities of an individual with adisability.(Authority: Sec. 7(23) of the Act; 29 U.S.C.706(23))(7) Assistive technology service meansany service that directly assists anindividual with a disability in theselection, acquisition, or use of anassistive technology device, including—(i) The evaluation of the needs of anindividual with a disability, including afunctional evaluation of the individualin his or her customary environment;(ii) Purchasing, leasing, or otherwiseproviding for the acquisition by anindividual with a disability of anassistive technology device;(iii) Selecting, designing, fitting,customizing, adapting, applying,maintaining, repairing, or replacingassistive technology devices;(iv) Coordinating and using othertherapies, interventions, or serviceswith assistive technology devices, suchas those associated with existingeducation and rehabilitation plans andprograms;(v) Training or technical assistance foran individual with a disability or, ifappropriate, the family members,guardians, advocates, or authorizedrepresentatives of the individual; and(vi) Training or technical assistancefor professionals (including individualsproviding education and rehabilitationservices), employers, or others whoprovide services to, employ, or areotherwise substantially involved in themajor life functions of individuals withdisabilities, to the extent that training ortechnical assistance is necessary to theachievement of an employment outcomeby an individual with a disability.(Authority: Sec. 7(24) and 12(c) of the Act;29 U.S.C. 706(24) and 711(c))(8) Community rehabilitationprogram.(i) Community rehabilitation programmeans a program that provides directlyor facilitates the provision of one ormore of the following vocationalrehabilitation services to individualswith disabilities to enable thoseindividuals to maximize theiropportunities for employment,including career advancement:(A) Medical, psychiatric,psychological, social, and vocationalservices that are provided under onemanagement.(B) Testing, fitting, or training in theuse of prosthetic and orthotic devices.(C) Recreational therapy.(D) Physical and occupationaltherapy.(E) Speech, language, and hearingtherapy.(F) Psychiatric, psychological, andsocial services, including positivebehavior management.(G) Assessment for determiningeligibility and vocational rehabilitationneeds.(H) Rehabilitation technology.(I) Job development, placement, andretention services.(J) Evaluation or control of specificdisabilities.(K) Orientation and mobility servicesfor individuals who are blind.(L) Extended employment.(M) Psychosocial rehabilitationservices.(N) Supported employment servicesand extended services.(O) Services to family members ifnecessary to enable the applicant oreligible individual to achieve anemployment outcome.(P) Personal assistance services.(Q) Services similar to the servicesdescribed in paragraphs (A) through (P)of this definition.(ii) For the purposes of this definition,the word program means an agency,organization, or institution, or unit of anagency, organization, or institution, thatprovides directly or facilitates theprovision of vocational rehabilitationservices as one of its major functions.(Authority: Sec. 7(25) and 12(c) of the Act;29 U.S.C. 706(25) and 711(c))(9) Comparable services and benefitsmeans services and benefits that are—

6336 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations(i) Provided or paid for, in whole orin part, by other Federal, State, or localpublic agencies, by health insurance, orby employee benefits;(ii) Available to the individual at thetime needed to achieve the intermediaterehabilitation objectives in theindividual’s Individualized WrittenRehabilitation Program (IWRP) inaccordance with § 361.53; and(iii) Commensurate to the servicesthat the individual would otherwisereceive from the vocationalrehabilitation agency.(Authority: Sec. 12(c) and 101(a)(8) of theAct; 29 U.S.C. 711(c) and 721(a)(8))(10) Competitive employment meanswork(i) In the competitive labor marketthat is performed on a full-time or parttimebasis in an integrated setting; and(ii) For which an individual iscompensated at or above the minimumwage, but not less than the customarywage and level of benefits paid by theemployer for the same or similar workperformed by individuals who are notdisabled.(Authority: Sec. 7(5), 7(18), and 12(c) of theAct; 29 U.S.C. 706(5), 706(18), and 711(c))(11) Construction of a facility for apublic or nonprofit communityrehabilitation program means—(i) The acquisition of land inconnection with the construction of anew building for a communityrehabilitation program;(ii) The acquisition of existingbuildings;(iii) The remodeling, alteration, orrenovation of existing buildings;(iv) The construction of new buildingsand expansion of existing buildings;(v) Architect’s fees, site surveys, andsoil investigation, if necessary, inconnection with the constructionproject;(vi) The acquisition of initial fixed ormovable equipment of any new, newlyacquired, newly expanded, newlyremodeled, newly altered, or newlyrenovated buildings that are to be usedfor community rehabilitation programpurposes; and(vii) Other direct expendituresappropriate to the construction project,except costs of off-site improvements.(Authority: Sec. 7(1) and 12(c) of the Act; 29U.S.C. 706(1) and 711(c))(12) Designated State agency or Stateagency means the sole State agency,designated in accordance with§ 361.13(a), to administer, or superviselocal administration of, the State planfor vocational rehabilitation services.The term includes the State agency forindividuals who are blind, if designatedas the sole State agency with respect tothat part of the plan relating to thevocational rehabilitation of individualswho are blind.(Authority: Sec. 7(3)(A) and 101(a)(1)(A) ofthe Act; 29 U.S.C. 706(3)(A) and 721(a)(1)(A))(13) Designated State unit or Stateunit means either—(i) The State agency vocationalrehabilitation bureau, division, or otherorganizational unit that is primarilyconcerned with vocationalrehabilitation or vocational and otherrehabilitation of individuals withdisabilities and that is responsible forthe administration of the vocationalrehabilitation program of the Stateagency, as required under § 361.13(b); or(ii) The independent Statecommission, board, or other agency thathas vocational rehabilitation, orvocational and other rehabilitation, asits primary function.(Authority: Sec. 7(3)(B) and 101(a)(2)(A) ofthe Act; 29 U.S.C. 706(3)(B) and 721(a)(2)(A))(14) Eligible individual means anapplicant for vocational rehabilitationservices who meets the eligibilityrequirements of § 361.42(a).(Authority: Sec. 7(8)(a) and 102(a)(1) of theAct; 29 U.S.C. 706(8) and 722(a)(1))(15) Employment outcome means,with respect to an individual, enteringor retaining full-time or, if appropriate,part-time competitive employment inthe integrated labor market to thegreatest extent practicable; supportedemployment; or any other type ofemployment that is consistent with anindividual’s strengths, resources,priorities, concerns, abilities,capabilities, interests, and informedchoice.(Authority: Sec. 7(5), 12(c), 100(a)(2), and102(b)(1)(B)(i) of the Act; 29 U.S.C. 706(5),711(c), 720(a)(2), and 722(b)(1)(B)(i))(16) Establishment, development, orimprovement of a public or nonprofitcommunity rehabilitation programmeans—(i) The establishment of a facility fora public or nonprofit communityrehabilitation program as defined inparagraph (b)(17) of this section toprovide vocational rehabilitationservices to applicants or eligibleindividuals;(ii) Staffing, if necessary to establish,develop, or improve a communityrehabilitation program for the purposeof providing vocational rehabilitationservices to applicants or eligibleindividuals, for a maximum period offour years, with Federal financialparticipation available at the applicablematching rate for the following levels ofstaffing costs:(A) 100 percent of staffing costs forthe first year.(B) 75 percent of staffing costs for thesecond year.(C) 60 percent of staffing costs for thethird year.(D) 45 percent of staffing costs for thefourth year; and(iii) Other expenditures related to theestablishment, development, orimprovement of a communityrehabilitation program that arenecessary to make the programfunctional or increase its effectivenessin providing vocational rehabilitationservices to applicants or eligibleindividuals, but are not ongoingoperating expenses of the program.(Authority: Secs. 7(6) and 12(c) of the Act; 29U.S.C. 706(6) and 711(c))(17) Establishment of a facility for apublic or nonprofit communityrehabilitation program means—(i) The acquisition of an existingbuilding, and if necessary the land inconnection with the acquisition, if thebuilding has been completed in allrespects for at least one year prior to thedate of acquisition and the Federal shareof the cost of the acquisition is not morethan $300,000;(ii) The remodeling or alteration of anexisting building, provided theestimated cost of remodeling oralteration does not exceed the appraisedvalue of the existing building;(iii) The expansion of an existingbuilding, provided that—(A) The existing building is completein all respects;(B) The total size in square footage ofthe expanded building, notwithstandingthe number of expansions, is not greaterthan twice the size of the existingbuilding;(C) The expansion is joinedstructurally to the existing building anddoes not constitute a separate building;and(D) The costs of the expansion do notexceed the appraised value of theexisting building;(iv) Architect’s fees, site survey, andsoil investigation, if necessary inconnection with the acquisition,remodeling, alteration, or expansion ofan existing building; and(v) The acquisition of fixed ormovable equipment, including the costsof installation of the equipment, ifnecessary to establish, develop, orimprove a community rehabilitationprogram;(Authority: Sec. 12(c) of the Act; 29 U.S.C.711(c))(18) Extended employment meanswork in a non-integrated or shelteredsetting for a public or private nonprofit

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6337agency or organization that providescompensation in accordance with theFair Labor Standards Act and anyneeded support services to anindividual with a disability to enablethe individual to continue to train orotherwise prepare for competitiveemployment, unless the individualthrough informed choice chooses toremain in extended employment.(Authority: Sec. 12(c) of the Act; 29 U.S.C.711(c))(19) Extended services, as used in thedefinition of ‘‘Supported employment,’’means ongoing support services andother appropriate services that areneeded to support and maintain anindividual with a most severe disabilityin supported employment and that areprovided by a State agency, a privatenonprofit organization, employer, or anyother appropriate resource, from fundsother than funds received under thispart, 34 CFR part 363, 34 CFR part 376,or 34 CFR part 380, after an individualwith a most severe disability has madethe transition from support provided bythe designated State unit.(Authority: Sec. 7(27) of the Act; 29 U.S.C.706(27))(20) Extreme medical risk means aprobability of substantially increasingfunctional impairment or death ifmedical services, including mentalhealth services, are not providedexpeditiously.(Authority: Secs. 12(c) and 101(a)(8) of theAct; 29 U.S.C. 711(c) and 721(a)(8))(21) Family member, for purposes ofreceiving vocational rehabilitationservices in accordance with§ 361.48(a)(9), means an individual—(i) Who either—(A) Is a relative or guardian of anapplicant or eligible individual; or(B) Lives in the same household as anapplicant or eligible individual;(ii) Who has a substantial interest inthe well-being of that individual; and(iii) Whose receipt of vocationalrehabilitation services is necessary toenable the applicant or eligibleindividual to achieve an employmentoutcome.(Authority: Secs. 12(c) and 103(a)(3) of theAct; 29 U.S.C. 711(c) and 723(a)(3))(22) Impartial hearing officer.(i) Impartial hearing officer means anindividual who—(A) Is not an employee of a publicagency (other than an administrativelaw judge, hearing examiner, oremployee of an institution of highereducation);(B) Is not a member of the StateRehabilitation Advisory Council for thedesignated State unit;(C) Has not been involved in previousdecisions regarding the vocationalrehabilitation of the applicant or eligibleindividual;(D) Has knowledge of the delivery ofvocational rehabilitation services, theState plan, and the Federal and Stateregulations governing the provision ofservices;(E) Has received training with respectto the performance of official duties;and(F) Has no personal, professional, orfinancial interest that would be inconflict with the objectivity of theindividual.(ii) An individual may not beconsidered to be an employee of apublic agency for the purposes of thisdefinition solely because the individualis paid by the agency to serve as ahearing officer.(Authority: Sec. 7(28) of the Act; 29 U.S.C.706(28))(23) Indian tribe means any Federal orState Indian tribe, band, rancheria,pueblo, colony, or community,including any Alaskan native village orregional village corporation (as definedin or established pursuant to the AlaskaNative Claims Settlement Act).(Authority: Sec. 7(21) of the Act; 29 U.S.C.706(21))(24) Individual who is blind means aperson who is blind within the meaningof the applicable State law.(Authority: Sec. 12(c) of the Act; 29 U.S.C.711(c))(25) Individual with a disability,except in §§ 361.17 (a), (b), (c), and (j),361.19, 361.20, and 361.51(b)(2), meansan individual—(i) Who has a physical or mentalimpairment;(ii) Whose impairment constitutes orresults in a substantial impediment toemployment; and(iii) Who can benefit in terms of anemployment outcome from theprovision of vocational rehabilitationservices.(Authority: Sec. 7(8)(A) of the Act; 29 U.S.C.706(8)(A))(26) Individual with a disability, forpurposes of §§ 361.17 (a), (b), (c), and (j),361.19, 361.20, and 361.51(b)(2), meansan individual—(i) Who has a physical or mentalimpairment that substantially limits oneor more major life activities;(ii) Who has a record of such animpairment; or(iii) Who is regarded as having suchan impairment.(Authority: Sec. 7(8)(B) of the Act; 29 U.S.C.706(8)(B))(27) Individual with a most severedisability means an individual with asevere disability who meets thedesignated State unit’s criteria for anindividual with a most severe disability.These criteria must be consistent withthe requirements in § 361.36(c)(3).(Authority: Sec. 101(a)(5) of the Act; 29U.S.C. 721(a)(5))(28) Individual with a severe disabilitymeans an individual with a disability—(i) Who has a severe physical ormental impairment that seriously limitsone or more functional capacities (suchas mobility, communication, self-care,self-direction, interpersonal skills, worktolerance, or work skills) in terms of anemployment outcome;(ii) Whose vocational rehabilitationcan be expected to require multiplevocational rehabilitation services overan extended period of time; and(iii) Who has one or more physical ormental disabilities resulting fromamputation, arthritis, autism, blindness,burn injury, cancer, cerebral palsy,cystic fibrosis, deafness, head injury,heart disease, hemiplegia, hemophilia,respiratory or pulmonary dysfunction,mental retardation, mental illness,multiple sclerosis, muscular dystrophy,musculo-skeletal disorders, neurologicaldisorders (including stroke andepilepsy), spinal cord conditions(including paraplegia and quadriplegia),sickle cell anemia, specific learningdisability, end-stage renal disease, oranother disability or combination ofdisabilities determined on the basis ofan assessment for determining eligibilityand vocational rehabilitation needs tocause comparable substantial functionallimitation.(Authority: Sec. 7(15)(A) of the Act; 29 U.S.C.708(15)(A))(29) Individual’s representative meansany representative chosen by anapplicant or eligible individual,including a parent, guardian, otherfamily member, or advocate, unless arepresentative has been appointed by acourt to represent the individual, inwhich case the court-appointedrepresentative is the individual’srepresentative.(Authority: Sec. 12(c) of the Act; 29 U.S.C.711(c))(30) Integrated setting,—(i) With respect to the provision ofservices, means a setting typically foundin the community in which applicantsor eligible individuals interact withnon-disabled individuals other thannon-disabled individuals who areproviding services to those applicants oreligible individuals;

6338 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations(ii) With respect to an employmentoutcome, means a setting typicallyfound in the community in whichapplicants or eligible individualsinteract with non-disabled individuals,other than non-disabled individualswho are providing services to thoseapplicants or eligible individuals, to thesame extent that non-disabledindividuals in comparable positionsinteract with other persons.(Authority: Sec. 12(c) of the Act; 29 U.S.C.711(c))(31) Maintenance means monetarysupport provided to an eligibleindividual or an individual receivingextended evaluation services for thoseexpenses, such as food, shelter, andclothing, that are in excess of the normalexpenses of the individual and that arenecessitated by the individual’sparticipation in a program of vocationalrehabilitation services.(Authority: Secs. 12(c) and 103(a)(5) of theAct; 29 U.S.C. 711(c) and 723(a)(5))Note: The following are examples ofexpenses that would meet the definition ofmaintenance. The examples are purelyillustrative, do not address all possiblecircumstances, and are not intended tosubstitute for individual counselorjudgement.Example: The cost of a uniform or othersuitable clothing that is required for anindividual’s job placement or job seekingactivities.Example: The cost of short-term shelterthat is required in order for an individual toparticipate in vocational training at a site thatis not within commuting distance of anindividual’s home.Example: The initial one-time costs, suchas a security deposit or charges for theinitiation of utilities, that are required inorder for an individual to relocate for a jobplacement.Example: The costs of an individual’sparticipation in enrichment activities relatedto that individual’s training program.(32) Nonprofit, with respect to acommunity rehabilitation program,means a community rehabilitationprogram carried out by a corporation orassociation, no part of the net earningsof which inures, or may lawfully inure,to the benefit of any private shareholderor individual and the income of whichis exempt from taxation under section501(c)(3) of the Internal Revenue Codeof 1954.(Authority: Sec. 7(10) of the Act; 29 U.S.C.706(10))(33) Ongoing support services, as usedin the definition of ‘‘Supportedemployment’’—(i) Means services that are—(A) Needed to support and maintainan individual with a most severedisability in supported employment;(B) Identified based on adetermination by the designated Stateunit of the individual’s needs asspecified in an individualized writtenrehabilitation program; and(C) Furnished by the designated Stateunit from the time of job placementuntil transition to extended services,unless post-employment services areprovided following transition, andthereafter by one or more extendedservices providers throughout theindividual’s term of employment in aparticular job placement or multipleplacements if those placements arebeing provided under a program oftransitional employment;(ii) Must include an assessment ofemployment stability and provision ofspecific services or the coordination ofservices at or away from the worksitethat are needed to maintain stabilitybased on—(A) At a minimum, twice-monthlymonitoring at the worksite of eachindividual in supported employment; or(B) If under special circumstances,especially at the request of theindividual, the individualized writtenrehabilitation program provides for offsitemonitoring, twice-monthly meetingswith the individual;(iii) Consist of—(A) Any particularized assessmentsupplementary to the comprehensiveassessment of rehabilitation needsdescribed in this part;(B) The provision of skilled jobtrainers who accompany the individualfor intensive job skill training at thework site;(C) Job development and placement;(D) Social skills training;(E) Regular observation or supervisionof the individual;(F) Follow-up services includingregular contact with the employers, theindividuals, the parents, familymembers, guardians, advocates orauthorized representatives of theindividuals, and other suitableprofessional and informed advisors, inorder to reinforce and stabilize the jobplacement;(G) Facilitation of natural supports atthe worksite;(H) Any other service identified in thescope of vocational rehabilitationservices for individuals, described in§ 361.48; or(I) Any service similar to the foregoingservices.(Authority: Sec. 7(33) and 12(c) of the Act;29 U.S.C. 706(33) and 711(c))(34) Personal assistance servicesmeans a range of services provided byone or more persons designed to assistan individual with a disability toperform daily living activities on or offthe job that the individual wouldtypically perform without assistance ifthe individual did not have a disability.The services must be designed toincrease the individual’s control in lifeand ability to perform everydayactivities on or off the job. The servicesmust be necessary to the achievement ofan employment outcome and may beprovided only while the individual isreceiving other vocational rehabilitationservices. The services may includetraining in managing, supervising, anddirecting personal assistance services.(Authority: Sec. 7(11) and 103(a)(15) of theAct; 29 U.S.C. 706(11) and 29 U.S.C. 723)(35) Physical and mental restorationservices means—(i) Corrective surgery or therapeutictreatment that is likely, within areasonable period of time, to correct ormodify substantially a stable or slowlyprogressive physical or mentalimpairment that constitutes asubstantial impediment to employment;(ii) Diagnosis of and treatment formental or emotional disorders byqualified personnel in accordance withState licensure laws;(iii) Dentistry;(iv) Nursing services;(v) Necessary hospitalization (eitherinpatient or outpatient care) inconnection with surgery or treatmentand clinic services;(vi) Drugs and supplies;(vii) Prosthetic, orthotic, or otherassistive devices, including hearingaids;(viii) Eyeglasses and visual services,including visual training, and theexamination and services necessary forthe prescription and provision ofeyeglasses, contact lenses, microscopiclenses, telescopic lenses, and otherspecial visual aids prescribed bypersonnel that are qualified inaccordance with State licensure laws;(ix) Podiatry;(x) Physical therapy;(xi) Occupational therapy;(xii) Speech or hearing therapy;(xiii) Mental health services;(xiv) Treatment of either acute orchronic medical complications andemergencies that are associated with orarise out of the provision of physicaland mental restoration services, or thatare inherent in the condition undertreatment;(xv) Special services for the treatmentof individuals with end-stage renaldisease, including transplantation,dialysis, artificial kidneys, and supplies;and(xvi) Other medical or medicallyrelated rehabilitation services.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6339(Authority: Sec. 12(c) and 103(a)(4) of theAct; 29 U.S.C. 711(c) and 723(a)(4))(36) Physical or mental impairmentmeans an injury, disease, or othercondition that materially limits, or if nottreated is expected to materially limit,mental or physical functioning.(Authority: Sec. 7(8)(A) and 12(c) of the Act;29 U.S.C. 706(8)(A) and 711(c))(37) Post-employment services meansone or more of the services identified in§ 361.48 that are provided subsequent tothe achievement of an employmentoutcome and that are necessary for anindividual to maintain, regain, oradvance in employment, consistent withthe individual’s strengths, resources,priorities, concerns, abilities,capabilities, and interests.(Authority: Sec. 12(c) of the Act; 29 U.S.C.711(c))Note: Post-employment services areintended to ensure that the employmentoutcome remains consistent with theindividual’s strengths, resources, priorities,concerns, abilities, capabilities, and interests.These services are available to meetrehabilitation needs that do not require acomplex and comprehensive provision ofservices and, thus, should be limited in scopeand duration. If more comprehensive servicesare required, then a new rehabilitation effortshould be considered. Post-employmentservices are to be provided under anamended individualized writtenrehabilitation program; thus, a redeterminationof eligibility is not required.The provision of post-employment services issubject to the same requirements in this partas the provision of any other vocationalrehabilitation service. Post-employmentservices are available to assist an individualto maintain employment, e.g., theindividual’s employment is jeopardizedbecause of conflicts with supervisors or coworkersand the individual needs mentalhealth services and counseling to maintainthe employment; to regain employment, e.g.,the individual’s job is eliminated throughreorganization and new placement servicesare needed; and to advance in employment,e.g., the employment is no longer consistentwith the individual’s strengths, resources,priorities, concerns, abilities, capabilities,and interests.(38) Rehabilitation engineering meansthe systematic application ofengineering sciences to design, develop,adapt, test, evaluate, apply, anddistribute technological solutions toproblems confronted by individualswith disabilities in functional areas,such as mobility, communications,hearing, vision, and cognition, and inactivities associated with employment,independent living, education, andintegration into the community.(Authority: Secs. 7(13) and 12(c) of the Act;29 U.S.C. 706(13) and 711(c))(39) Rehabilitation technology meansthe systematic application oftechnologies, engineeringmethodologies, or scientific principlesto meet the needs of, and address thebarriers confronted by, individuals withdisabilities in areas that includeeducation, rehabilitation, employment,transportation, independent living, andrecreation. The term includesrehabilitation engineering, assistivetechnology devices, and assistivetechnology services.(Authority: Sec. 7(13) of the Act; 29 U.S.C.706(13))(40) Reservation means a Federal orState Indian reservation, public domainIndian allotment, former Indianreservation in Oklahoma, and land heldby incorporated Native groups, regionalcorporations, and village corporationsunder the provisions of the AlaskaNative Claims Settlement Act.(Authority: Sec. 130(c) of the Act; 29 U.S.C.750(c))(41) Sole local agency means a unit orcombination of units of general localgovernment or one or more Indian tribesthat has the sole responsibility under anagreement with, and the supervision of,the State agency to conduct a local ortribal vocational rehabilitation program,in accordance with the State plan.(Authority: Sec. 7(9) of the Act; 29 U.S.C.706(9))(42) State means any of the 50 States,the District of Columbia, theCommonwealth of Puerto Rico, theUnited States Virgin Islands, Guam,American Samoa, and theCommonwealth of the Northern MarianaIslands.(Authority: Sec. 7(16) of the Act; 29 U.S.C.706(16))(43) State plan means the State planfor vocational rehabilitation services orthe vocational rehabilitation servicespart of a consolidated rehabilitationplan under § 361.10(c).(Authority: Secs. 12(c) and 101 of the Act; 29U.S.C. 711(c) and 721)(44) Substantial impediment toemployment means that a physical ormental impairment (in light of attendantmedical, psychological, vocational,educational, and other related factors)hinders an individual from preparingfor, entering into, engaging in, orretaining employment consistent withthe individual’s abilities andcapabilities.(Authority: Secs. 7(8)(A) and 12(c) of the Act;29 U.S.C. 706(8)(A) and 711(c))(45) Supported employment means—(i) Competitive employment in anintegrated setting with ongoing supportservices for individuals with the mostsevere disabilities—(A) For whom competitiveemployment has not traditionallyoccurred or for whom competitiveemployment has been interrupted orintermittent as a result of a severedisability; and(B) Who, because of the nature andseverity of their disabilities, needintensive supported employmentservices from the designated State unitand extended services after transition inorder to perform this work; or(ii) Transitional employment forindividuals with the most severedisabilities due to mental illness.(Authority: Sec. 7(18) of the Act; 29 U.S.C.706(18)(A))(46) Supported employment servicesmeans ongoing support services andother appropriate services needed tosupport and maintain an individualwith a most severe disability insupported employment that areprovided by the designated State unit—(i) For a period of time not to exceed18 months, unless under specialcircumstances the eligible individualand the rehabilitation counselor orcoordinator jointly agree to extend thetime in order to achieve therehabilitation objectives identified inthe individualized written rehabilitationprogram; and(ii) Following transition, as postemploymentservices that areunavailable from an extended servicesprovider and that are necessary tomaintain or regain the job placement oradvance in employment.(Authority: Sec. 7(34) and 12(c) of the Act;29 U.S.C. 706(34) and 711(c))(47) Transition services means acoordinated set of activities for astudent designed within an outcomeorientedprocess that promotesmovement from school to post-schoolactivities, including postsecondaryeducation, vocational training,integrated employment (includingsupported employment), continuing andadult education, adult services,independent living, or communityparticipation. The coordinated set ofactivities must be based upon theindividual student’s needs, taking intoaccount the student’s preferences andinterests, and must include instruction,community experiences, thedevelopment of employment and otherpost-school adult living objectives, and,if appropriate, acquisition of daily livingskills and functional vocationalevaluation. Transition services must

6340 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationspromote or facilitate theaccomplishment of long-termrehabilitation goals and intermediaterehabilitation objectives identified inthe student’s IWRP.(Authority: Section 7(35) and 103(a)(14) ofthe Act; 29 U.S.C. 706(35) and 723(a)(14))(48) Transitional employment, as usedin the definition of ‘‘Supportedemployment,’’ means a series oftemporary job placements incompetitive work in integrated settingswith ongoing support services forindividuals with the most severedisabilities due to mental illness. Intransitional employment, the provisionof ongoing support services mustinclude continuing sequential jobplacements until job permanency isachieved.(Authority: Secs. 7(18) and 12(c) of the Act;29 U.S.C. 706(18) and 711(c))(49) Transportation means travel andrelated expenses that are necessary toenable an applicant or eligibleindividual to participate in a vocationalrehabilitation service.(Authority: Secs. 12(c) and 103(a)(10) of theAct; 29 U.S.C. 711(c) and 723(a)(10))Note: The following are examples ofexpenses that would meet the definition oftransportation. The examples are purelyillustrative, do not address all possiblecircumstances, and are not intended tosubstitute for individual counselorjudgement.Example: Travel and related expenses fora personal care attendant or aide if theservices of that person are necessary toenable the applicant or eligible individual totravel to participate in any vocationalrehabilitation service.Example: Short-term travel-relatedexpenses, such as food and shelter, incurredby an applicant participating in evaluation orassessment services that necessitates travel.Example: Relocation expenses incurred byan eligible individual in connection with ajob placement that is a significant distancefrom the eligible individual’s currentresidence.Example: The purchase and repair ofvehicles, including vans, but not themodification of these vehicles, asmodification would be considered arehabilitation technology service.(50) Vocational rehabilitationservices—(i) If provided to an individual, meansthose services listed in § 361.48; and(ii) If provided for the benefit ofgroups of individuals, also means thoseservices listed in § 361.49.(Authority: Sec. 103 (a) and (b) of the Act; 29U.S.C. 723 (a) and (b))Subpart B—State Plan for VocationalRehabilitation Services§ 361.10 Submission, approval, anddisapproval of the State plan.(a) Purpose. In order for a State toreceive a grant under this part, thedesignated State agency shall submit tothe Secretary, and obtain approval of, aState plan that contains a description ofthe State’s vocational rehabilitationservices program, the plans and policiesto be followed in carrying out theprogram, and other informationrequested by the Secretary, inaccordance with the requirements ofthis part.(b) Separate part relating torehabilitation of individuals who areblind. If a separate State agencyadministers or supervises theadministration of a separate part of theState plan relating to the rehabilitationof individuals who are blind, that partof the State plan must separatelyconform to all requirements under thispart that are applicable to a State plan.(c) Consolidated rehabilitation plan.The State may choose to submit aconsolidated rehabilitation plan thatincludes the State plan for vocationalrehabilitation services and the State’splan for its program for persons withdevelopmental disabilities. The Stateplanning and advisory council fordevelopmental disabilities and theagency administering the State’sprogram for persons withdevelopmental disabilities must concurin the submission of a consolidatedrehabilitation plan. A consolidatedrehabilitation plan must comply with,and be administered in accordancewith, the Act and the DevelopmentalDisabilities Assistance and Bill of RightsAct, as amended.(d) Public participation. The Stateshall develop the State plan with inputfrom the public, through publicmeetings, in accordance with therequirements of § 361.20.(e) Duration. The State plan mustcover a multi-year period to bedetermined by the Secretary.(f) Submission of the State plan. TheState shall submit the State plan to theSecretary for approval—(1) No later than July 1 of the yearpreceding the first fiscal year for whichthe State plan is submitted; or(2) With the prior approval of theSecretary, no later than the date onwhich the State is required to submit aState plan under another Federal law.(g) Revisions to the State plan. TheState shall submit to the Secretary forapproval revisions to the State plan inaccordance with the requirements ofthis part and 34 CFR 76.140.(h) Approval. The Secretary approvesa State plan and revisions to the Stateplan that conform to the requirements ofthis part and section 101(a) of the Act.(i) Disapproval. The Secretarydisapproves a State plan that does notconform to the requirements of this partand section 101(a) of the Act, inaccordance with the followingprocedures:(1) Informal resolution. Prior todisapproving a State plan, the Secretaryattempts to resolve disputes informallywith State officials.(2) Notice. If, after reasonable efforthas been made to resolve the dispute, noresolution has been reached, theSecretary provides notice to the Stateagency of the intention to disapprovethe State plan and of the opportunity fora hearing.(3) State plan hearing. If the Stateagency requests a hearing, the Secretarydesignates one or more individuals,either from the Department orelsewhere, not responsible for orconnected with the administration ofthis program, to conduct a hearing inaccordance with the provisions of 34CFR Part 81, Subpart A.(4) Initial decision. The hearing officerissues an initial decision in accordancewith 34 CFR 81.41.(5) Petition for review of an initialdecision. The State agency may seek theSecretary’s review of the initial decisionin accordance with 34 CFR part 81.(6) Review by the Secretary. TheSecretary reviews the initial decision inaccordance with 34 CFR 81.43.(7) Final decision of the Department.The final decision of the Department ismade in accordance with 34 CFR 81.44.(8) Judicial review. A State mayappeal the Secretary’s decision todisapprove the State plan by filing apetition for review with the UnitedStates Court of Appeals for the circuit inwhich the State is located, inaccordance with section 107(d) of theAct.(Approved by the Office of Management andBudget under control number 1820–0500.(Authority: Sec. 6, 101 (a) and (b), and 107(d)of the Act; 20 U.S.C. 1231g(a); and 29 U.S.C.705, 721 (a) and (b), and 727(d))§ 361.11 Withholding of funds.(a) Basis for withholding. TheSecretary may withhold or limitpayments under sections 111, 124, or632(a) of the Act, as provided by section107 (c) and (d) of the Act, if theSecretary determines that—(1) The State plan, including thesupported employment supplement, hasbeen so changed that it no longerconforms with the requirements of thispart or 34 CFR part 363; or

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6341(2) In the administration of the Stateplan, there has been a failure to complysubstantially with any provision of thatplan or a program improvement planestablished in accordance with section106 of the Act.(b) Informal resolution. Prior towithholding or limiting payments inaccordance with this section, theSecretary attempts to resolve disputedissues informally with State officials.(c) Notice. If, after reasonable efforthas been made to resolve the dispute, noresolution has been reached, theSecretary provides notice to the Stateagency of the intention to withhold orlimit payments and of the opportunityfor a hearing.(d) Withholding hearing. If the Stateagency requests a hearing, the Secretarydesignates one or more individuals,either from the Department orelsewhere, not responsible for orconnected with the administration ofthis program, to conduct a hearing inaccordance with the provisions of 34CFR part 81, Subpart A.(e) Initial decision. The hearing officerissues an initial decision in accordancewith 34 CFR 81.41.(f) Petition for review of an initialdecision. The State agency may seek theSecretary’s review of the initial decisionin accordance with 34 CFR 81.42.(g) Review by the Secretary. TheSecretary reviews the initial decision inaccordance with 34 CFR 81.43.(h) Final decision of the Department.The final decision of the Department ismade in accordance with 34 CFR 81.44(i) Judicial review. A State may appealthe Secretary’s decision to withhold orlimit payments by filing a petition forreview with the U.S. Court of Appealsfor the circuit in which the State islocated, in accordance with section107(d) of the Act.(Authority: Secs. 101(b), 107(c), and 107(d) ofthe Act; 29 U.S.C. 721(b), 727(c)(1) and (2),and 727(d))State Plan Content: Administration§ 361.12 Methods of administration.The State plan must assure that theState agency, and the designated Stateunit if applicable, employs methods ofadministration found necessary by theSecretary for the proper and efficientadministration of the plan and forcarrying out all functions for which theState is responsible under the plan andthis part. These methods must includeprocedures to ensure accurate datacollection and financial accountability.(Authority: Sec. 101(a)(6) of the Act; 29U.S.C. 721(a)(6))§ 361.13 State agency for administration.(a) Designation of State agency. TheState plan must designate a State agencyas the sole State agency to administerthe State plan, or to supervise itsadministration in a political subdivisionof the State by a sole local agency, inaccordance with the followingrequirements:(1) General. Except as provided inparagraphs (a) (2) and (3) of this section,the State plan must provide that thedesignated State agency is one of thefollowing types of agencies:(i) A State agency that is anindependent State commission, board,or other agency that has as its majorfunction vocational rehabilitation orvocational and other rehabilitation ofindividuals with disabilities.(ii) The State agency administering orsupervising the administration ofeducation or vocational education in theState, provided that it includes avocational rehabilitation unit asprovided in paragraph (b) of thissection.(iii) A State agency that includes avocational rehabilitation unit, asprovided in paragraph (b) of thissection, and at least two other majororganizational units, each of whichadministers one or more of the State’smajor programs of public education,public health, public welfare, or labor.(2) American Samoa. In the case ofAmerican Samoa, the State plan mustdesignate the Governor.(3) Designated State agency forindividuals who are blind. If a Statecommission or other agency thatprovides assistance or services toindividuals who are blind is authorizedunder State law to provide vocationalrehabilitation services to individualswho are blind, and this commission oragency is primarily concerned withvocational rehabilitation or includes avocational rehabilitation unit asprovided in paragraph (b) of thissection, the State plan may designatethat agency as the sole State agency toadminister the part of the plan underwhich vocational rehabilitation servicesare provided for individuals who areblind or to supervise its administrationin a political subdivision of the State bya sole local agency.(b) Designation of State unit. (1) If thedesignated State agency is of the typespecified in paragraph (a)(1)(ii) or(a)(1)(iii) of this section, or if thedesignated State agency specified inparagraph (a)(3) of this section does nothave as its major function vocationalrehabilitation or vocational and otherrehabilitation of individuals withdisabilities, the State plan must assurethat the agency (or each agency if twoagencies are designated) includes avocational rehabilitation bureau,division, or unit that—(i) Is primarily concerned withvocational rehabilitation or vocationaland other rehabilitation of individualswith disabilities and is responsible forthe administration of the State agency’svocational rehabilitation program underthe State plan, including thoseresponsibilities specified in paragraph(c) of this section;(ii) Has a full-time director;(iii) Has a staff, at least 90 percent ofwhom are employed full time on therehabilitation work of the organizationalunit; and(iv) Is located at an organizationallevel and has an organizational statuswithin the State agency comparable tothat of other major organizational unitsof the agency or, in the case of anagency described in paragraph (a)(1)(ii)of this section, is so located and has thatstatus or has a director who is theexecutive officer of the State agency.(2) In the case of a State that has notdesignated a separate State agency forindividuals who are blind, as providedfor in paragraph (a)(3) of this section,the State may assign responsibility forthe part of the plan under whichvocational rehabilitation services areprovided to individuals who are blindto one organizational unit of thedesignated State agency and may assignresponsibility for the rest of the plan toanother organizational unit of thedesignated State agency, with theprovisions of paragraph (b)(1) of thissection applying separately to each ofthese units.(c) Responsibility for administration.(1) The State plan must assure that, ata minimum, the following activities arethe responsibility of the designatedState unit or the sole local agency underthe supervision of the State unit:(i) All decisions affecting eligibilityfor vocational rehabilitation services,the nature and scope of availableservices, and the provision of theseservices.(ii) The determination that anindividual has achieved an employmentoutcome under § 361.56.(iii) Policy formulation andimplementation.(iv) The allocation and expenditure ofvocational rehabilitation funds.(2) This responsibility may not bedelegated to any other agency orindividual.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 101(a)(1) and 101(a)(2) of theAct; 29 U.S.C. 721(a)(1) and 721(a)(2))

6342 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations§ 361.14 Substitute State agency.(a) General provisions. (1) If theSecretary has withheld all funding froma State under § 361.11, the State maydesignate another agency to substitutefor the designated State agency incarrying out the State’s program ofvocational rehabilitation services.(2) Any public or nonprofit privateorganization or agency within the Stateor any political subdivision of the Stateis eligible to be a substitute agency.(3) The substitute agency shall submita State plan that meets the requirementsof this part.(4) The Secretary makes no grant to asubstitute agency until the Secretaryapproves its plan.(b) Substitute agency matching share.The Secretary does not make anypayment to a substitute agency unless ithas provided assurances that it willcontribute the same matching share asthe State would have been required tocontribute if the State agency werecarrying out the vocationalrehabilitation program.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 107(c)(3) of the Act; 29U.S.C. 727(c)(3))§ 361.15 Local administration.(a) If the State plan provides for localadministration, it must—(1) Identify each local agency;(2) Assure that each local agency isunder the supervision of the designatedState unit and is the sole local agencyas defined in § 361.5(b)(41) that isresponsible for the administration of theprogram within the political subdivisionthat it serves; and(3) Describe the methods each localagency will use to administer thevocational rehabilitation program, inaccordance with the State plan.(b) A separate local agency servingindividuals who are blind mayadminister that part of the plan relatingto vocational rehabilitation ofindividuals who are blind, under thesupervision of the designated State unitfor individuals who are blind.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 7(9) and 101(a)(1)(A) of theAct; 29 U.S.C. 706(9) and 721(a)(1)(A))§ 361.16 Establishment of an independentcommission or a State RehabilitationAdvisory Council.(a) General requirement. Except asprovided in paragraph (b) of thissection, the State plan must contain oneof the following two assurances:(1) An assurance that the State agencyis an independent State commissionthat—(i) Is primarily concerned withvocational rehabilitation or vocationaland other rehabilitation services, inaccordance with § 361.13(a)(1)(i);(ii) Is consumer-controlled by personswho—(A) Are individuals with physical ormental impairments that substantiallylimit major life activities; and(B) Represent individuals with abroad range of disabilities;(iii) Includes individuals representingfamily members, advocates, andauthorized representatives ofindividuals with mental impairments;and(iv) Conducts a review and analysis ofthe effectiveness of and consumersatisfaction with vocationalrehabilitation services and providers inthe State, in accordance with theprovisions in § 361.17(h)(3).(2) An assurance that—(i) The State has established a StateRehabilitation Advisory Council(Council) that meets the requirements of§ 361.17;(ii) The designated State unit seeksand seriously considers, on a regularand ongoing basis, advice from theCouncil regarding the development,implementation, and amendment of theState plan, the strategic plan, and otherpolicies and procedures of generalapplicability pertaining to the provisionof vocational rehabilitation services inthe State;(iii) The designated State unittransmits to the Council—(A) All plans, reports, and otherinformation required under the Act tobe submitted to the Secretary;(B) Copies of all written policies,practices, and procedures of generalapplicability provided to or used byrehabilitation personnel; and(C) Copies of due process hearingdecisions in a manner that preserves theconfidentiality of the participants in thehearings; and(iv) The State plan summarizesannually the advice provided by theCouncil, including recommendationsfrom the annual report of the Council,the survey of consumer satisfaction, andother reports prepared by the Council,and the State agency’s response to theadvice and recommendations, includingthe manner in which the State willmodify its policies and proceduresbased on the survey of consumersatisfaction and explanations of reasonsfor rejecting any advice orrecommendations of the Council.(b) Exception for separate Stateagency for individuals who are blind. Inthe ase of a State that designates aseparate State agency, under§ 361.13(a)(3), to administer the part ofthe State plan under which vocationalrehabilitation services are provided toindividuals who are blind, the Stateplan must contain one of the followingfour assurances:(1) An assurance that an independentcommission in accordance withparagraph (a)(1) of this section isresponsible under State law foroperating or overseeing the operation ofthe vocational rehabilitation program ofboth the State agency that administersthe part of the State plan under whichvocational rehabilitation services areprovided to individuals who are blindand the State agency that administersthe remainder of the State plan.(2) An assurance that—(i) An independent commission thatis consumer-controlled by, andrepresents the interests of, individualswho are blind and conducts a reviewand analysis of the effectiveness of andconsumer satisfaction with vocationalrehabilitation services and providers, inaccordance with the provisions of§ 361.17(h)(3), is responsible underState law for operating, or overseeingthe operation of, the vocationalrehabilitation program in the State forindividuals who are blind; and(ii) An independent commission thatis consumer-controlled in accordancewith paragraph (a)(1)(i) of this sectionand conducts a review and analysis ofthe effectiveness of and consumersatisfaction with vocationalrehabilitation services and providers, inaccordance with § 361.17(h)(3), isresponsible under State law foroperating, or overseeing the operationof, the vocational rehabilitation programin the State for all individuals withdisabilities, except individuals who areblind.(3) An assurance that—(i) An independent commission thatis consumer-controlled by, andrepresents the interests of, individualswho are blind and that conducts areview and analysis of the effectivenessof and consumer satisfaction withvocational rehabilitation services andproviders, in accordance with§ 361.17(h)(3), is responsible underState law for operating, or overseeingthe operation of, the vocationalrehabilitation program in the State forindividuals who are blind; and(ii) The State has established a StateRehabilitation Advisory Council thatmeets the criteria in § 361.17 and carriesout the duties of a Council with respectto functions for, and services providedto, individuals with disabilities, exceptfor individuals who are blind.(4) An assurance that—(i) An independent commission thatis consumer-controlled in accordance

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6343with paragraph (a)(1)(i) of this sectionand conducts a review and analysis ofthe effectiveness of and consumersatisfaction with vocationalrehabilitation services and providers, inaccordance with the provisions of§ 361.17(h)(3), is responsible underState law for operating or overseeing theoperation of the vocationalrehabilitation services for allindividuals in the State, exceptindividuals who are blind; and(ii) The State has established a StateRehabilitation Advisory Council thatmeets the criteria in § 361.17 and carriesout the duties of a Council with respectto functions for, and services providedto, individuals who are blind.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 101(a)(32) and 101(a)(36) ofthe Act; 29 U.S.C. 721(a)(32) and 721(a)(36))§ 361.17 Requirements for a StateRehabilitation Advisory Council.If the State plan contains an assurancethat the State has established a Councilunder § 361.16(a)(2), (b)(3)(ii), or(b)(4)(ii), the State plan must alsocontain an assurance that the Councilmeets the following requirements:(a) Appointment. (1) The members ofthe Council shall be—(i) Appointed by the Governor; or(ii) If State law vests appointmentauthority in an entity other than, or inconjunction with, the Governor (such asone or more houses of the Statelegislature or an independent board thathas general appointment authority),appointed by that entity or entities.(2) The appointing authority shallselect members of the Council aftersoliciting recommendations fromrepresentatives of organizationsrepresenting a broad range ofindividuals with disabilities andorganizations interested in individualswith disabilities.(b) Composition.—(1) General. Exceptas provided in paragraph (b)(3) of thissection, the Council shall be composedof at least 13 members, including—(i) At least one representative of theStatewide Independent Living Council,who shall be the chairperson of, or otherindividual recommended by, theStatewide Independent Living Council;(ii) At least one representative of aparent training and information centerestablished pursuant to section 631(e)(1)of IDEA;(iii) At least one representative of theClient Assistance Program (CAP),established under 34 CFR Part 370, whoshall be the director of, or otherindividual recommended by, the CAP;(iv) At least one vocationalrehabilitation counselor with knowledgeof and experience with vocationalrehabilitation programs who serves asan ex officio, nonvoting member ifemployed by the designated Stateagency;(v) At least one representative ofcommunity rehabilitation programservice providers;(vi) Four representatives of business,industry, and labor;(vii) Representatives of disabilitygroups that include a cross section of—(A) Individuals with physical,cognitive, sensory, and mentaldisabilities; and(B) Parents, family members,guardians, advocates, or authorizedrepresentatives of individuals withdisabilities who have difficultyrepresenting themselves due to theirdisabilities;(viii) Current or former applicants for,or recipients of, vocationalrehabilitation services; and(ix) The director of the designatedState unit as an ex officio, nonvotingmember.(2) Employees of the designated Stateagency. Employees of the designatedState agency may serve only asnonvoting members of the Council.(3) Composition of a separate Councilfor a separate State agency forindividuals who are blind. Except asprovided in paragraph (b)(4) of thissection, if the State establishes aseparate Council for a separate Stateagency for individuals who are blind,that Council shall—(i) Conform with all of thecomposition requirements for a Councilunder paragraph (b)(1) of this section,except the requirements in paragraph(b)(1)(vii), unless the exception inparagraph (b)(4) of this section applies;and(ii) Include—(A) At least one representative of adisability advocacy group representingindividuals who are blind; and(B) At least one parent, familymember, guardian, advocate, orauthorized representative of anindividual who is blind, has multipledisabilities, and has difficultyrepresenting himself or herself due todisabilities.(4) Exception. If State law in effect onOctober 29, 1992 requires a separateCouncil under paragraph (b)(3) of thissection to have fewer than 13 members,the separate Council is deemed to be incompliance with the compositionrequirements in paragraphs (b)(1)(vi)and (b)(1)(viii) of this section if itincludes at least one representative whomeets the requirements for each of thoseparagraphs.(c) Majority. A majority of the Councilmembers shall be individuals withdisabilities who are not employed bythe designated State unit.(d) Chairperson. The chairpersonshall be—(1) Selected by the members of theCouncil from among the votingmembers of the Council, subject to theveto power of the Governor; or(2) If the Governor does not have vetopower pursuant to State law, selected bythe Governor, or by the Council ifrequired by the Governor, from amongthe voting members of the Council.(e) Terms of appointment. (1) Eachmember of the Council shall beappointed for a term of no more thanthree years and may serve for no morethan two consecutive full terms.(2) A member appointed to fill avacancy occurring prior to the end ofthe term for which the predecessor wasappointed shall be appointed for theremainder of the predecessor’s term.(3) The terms of service of themembers initially appointed must be forvaried numbers of years to ensure thatterms expire on a staggered basis.(f) Vacancies. (1) A vacancy in themembership of the Council must befilled in the same manner as the originalappointment.(2) No vacancy affects the power ofthe remaining members to execute theduties of the Council.(g) Conflict of interest. No member ofthe Council shall cast a vote on anymatter that would provide directfinancial benefit to the member or themember’s organization or otherwise givethe appearance of a conflict of interestunder State law.(h) Functions. The Council shall—(1) Review, analyze, and advise thedesignated State unit regarding theperformance of the State unit’sresponsibilities under this part,particularly responsibilities related to—(i) Eligibility, including order ofselection;(ii) The extent, scope, andeffectiveness of services provided; and(iii) Functions performed by Stateagencies that affect or potentially affectthe ability of individuals withdisabilities to achieve rehabilitationgoals and objectives under this part;(2) Advise, and at the discretion of theState agency assist, the State unit in thepreparation of applications, the Stateplan, the strategic plan, andamendments to the plans, reports, needsassessments, and evaluations requiredby this part;(3) To the extent feasible, conduct areview and analysis of the effectivenessof, and consumer satisfaction with—(i) The functions performed by Stateagencies and other public and private

6344 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsentities responsible for servingindividuals with disabilities; and(ii) The vocational rehabilitationservices provided by State agencies andother public and private entitiesresponsible for providing vocationalrehabilitation services to individualswith disabilities from funds madeavailable under the Act or through otherpublic or private sources;(4) Prepare and submit to theGovernor, or appropriate State entity,and to the Secretary no later than 90days after the end of the Federal fiscalyear an annual report on the status ofvocational rehabilitation programsoperated within the State and make thereport available to the public throughappropriate modes of communication;(5) Coordinate with other councilswithin the State, including theStatewide Independent Living Councilestablished under 34 CFR part 364, theadvisory panel established undersection 613(a)(12) of IDEA, the StatePlanning Council described in section124 of the Developmental DisabilitiesAssistance and Bill of Rights Act, andthe State mental health planningcouncil established under section1916(e) of the Public Health Service Act;(6) Advise the designated State agencyand provide for coordination and theestablishment of working relationshipsbetween the designated State agencyand the Statewide Independent LivingCouncil and centers for independentliving within the State; and(7) Perform other comparablefunctions, consistent with the purposeof this part, that the Council determinesto be appropriate.(i) Resources. (1) The Council, inconjunction with the designated Stateunit, shall prepare a plan for theprovision of resources, including staffand other personnel, that may benecessary for the Council to carry out itsfunctions under this part.(2) In implementing the resourcesplan, the Council shall rely on existingresources to the maximum extentpossible.(3) Any disagreements between thedesignated State unit and the Councilregarding the amount of resourcesnecessary must be resolved by theGovernor or other appointing entity,consistent with paragraphs (i)(1) and (2)of this section.(4) The Council shall, consistent withState law, supervise and evaluate thestaff and personnel that are necessary tocarry out its functions.(5) Those staff and personnel that areassisting the Council in carrying out itsfunctions may not be assigned duties bythe designated State unit or any otheragency or office of the State that wouldcreate a conflict of interest.(j) Meetings. The Council shall—(1) Convene at least four meetings ayear to conduct Council business thatare publicly announced, open andaccessible to the public, includingindividuals with disabilities, unlessthere is a valid reason for an executivesession; and(2) Conduct forums or hearings, asappropriate, that are publiclyannounced, open and accessible to thepublic, including individuals withdisabilities.(k) Compensation. Fundsappropriated under Title I of the Act,except funds to carry out sections 112and 130 of the Act, may be used tocompensate and reimburse the expensesof Council members in accordance withsection 105(g) of the Act.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 105 of the Act; 29 U.S.C.725)§ 361.18 Comprehensive system ofpersonnel development.The State plan must describe theprocedures and activities the Stateagency will undertake to establish andmaintain a comprehensive system ofpersonnel development designed toensure an adequate supply of qualifiedrehabilitation personnel, includingprofessionals and paraprofessionals, forthe designated State unit. If the Stateagency has a State RehabilitationAdvisory Council, this descriptionmust, at a minimum, specify that theCouncil has an opportunity to reviewand comment on the development ofplans, policies, and proceduresnecessary to meet the requirements ofparagraphs (b) through (d) andparagraph (f) of this section. Thisdescription must also conform with thefollowing requirements:(a) Data system on personnel andpersonnel development. The State planmust describe the development andmaintenance of a system by the Stateagency for collecting and analyzing onan annual basis data on qualifiedpersonnel needs and personneldevelopment, in accordance with thefollowing requirements:(1) Data on qualified personnel needsmust include—(i) The number of personnel who areemployed by the State agency in theprovision of vocational rehabilitationservices in relation to the number ofindividuals served, broken down bypersonnel category;(ii) The number of personnelcurrently needed by the State agency toprovide vocational rehabilitationservices, broken down by personnelcategory; and(iii) Projections of the number ofpersonnel, broken down by personnelcategory, who will be needed by theState agency to provide vocationalrehabilitation services in the State infive years based on projections of thenumber of individuals to be served,including individuals with severedisabilities, the number of personnelexpected to retire or leave the field, andother relevant factors.(2) Data on personnel developmentmust include—(i) A list of the institutions of highereducation in the State that are preparingvocational rehabilitation professionals,by type of program;(ii) The number of students enrolledat each of those institutions, brokendown by type of program; and(iii) The number of students whograduated during the prior year fromeach of those institutions withcertification or licensure, or with thecredentials for certification or licensure,broken down by the personnel categoryfor which they have received, or havethe credentials to receive, certificationor licensure.(b) Plan for recruitment, preparation,and retention of qualified personnel.The State plan must describe thedevelopment, updating, andimplementation of a plan to address thecurrent and projected needs forpersonnel who are qualified inaccordance with paragraph (c) of thissection. The plan must identify thepersonnel needs based on the datacollection and analysis systemdescribed in paragraph (a) of thissection and must provide for thecoordination and facilitation of effortsbetween the designated State unit andinstitutions of higher education andprofessional associations to recruit,prepare, and retain personnel who arequalified in accordance with paragraph(c) of this section, including personnelfrom minority backgrounds andpersonnel who are individuals withdisabilities.(c) Personnel standards. (1) The Stateplan must include the State agency’spolicies and describe the procedures theState agency will undertake to establishand maintain standards to ensure thatprofessional and paraprofessionalpersonnel needed within the State unitto carry out this part are appropriatelyand adequately prepared and trained,including—(i) Standards that are consistent withany national or State-approved or-recognized certification, licensing, orregistration requirements, or, in theabsence of these requirements, other

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6345comparable requirements (includingState personnel requirements), thatapply to the profession or discipline inwhich that category of personnel isproviding vocational rehabilitationservices; and(ii) To the extent that existingstandards are not based on the highestrequirements in the State, the steps theState is currently taking and the stepsthe State plans to take to retrain or hirepersonnel to meet standards that arebased on the highest requirements in theState, including measures to notify Stateunit personnel, the institutions of highereducation identified under paragraph(a)(2)(i) of this section, and other publicagencies of these steps and the timelinesfor taking each step.(2) As used in this section—(i) Highest requirements in the Stateapplicable to that profession ordiscipline means the highest entry-levelacademic degree needed for anynational or State-approved or-recognized certification, licensing,registration, or other comparablerequirements that apply to thatprofession or discipline. The currentrequirements of all State statutes andregulations of other agencies in the Stateapplicable to that profession ordiscipline must be considered and mustbe kept on file by the designated Stateunit and available to the public.(ii) Profession or discipline means aspecific occupational category,including any paraprofessionaloccupational category, that—(A) Provides rehabilitation services toindividuals with disabilities;(B) Has been established or designatedby the State; and(C) Has a specified scope ofresponsibility.(d) Staff development. (1) The Stateplan must include the State agency’spolicies and describe the proceduresand activities the State agency willundertake to ensure that all personnelemployed by the State unit receiveappropriate and adequate training,including a description of—(i) A system of staff development forrehabilitation professionals andparaprofessionals within the State unit,particularly with respect torehabilitation technology; and(ii) Procedures for acquiring anddisseminating to rehabilitationprofessionals and paraprofessionalswithin the designated State unitsignificant knowledge from research andother sources, including procedures forproviding training regarding theamendments to the Rehabilitation Act of1973 made by the Rehabilitation ActAmendments of 1992.(2) The specific training areas for staffdevelopment must be based on theneeds of each State unit and mayinclude, but are not limited to, trainingwith respect to the requirements of theAmericans with Disabilities Act, IDEA,and Social Security work incentiveprograms, training to facilitate informedchoice under this program, and trainingto improve the provision of services toculturally diverse populations.(e) Personnel to address individualcommunication needs. The State planmust describe how the State unit—(1) Includes among its personnel, orobtains the services of, individuals ableto communicate in the native languagesof applicants and eligible individualswho have limited English speakingability; and(2) Includes among its personnel, orobtains the services of, individuals ableto communicate with applicants andeligible individuals in appropriatemodes of communication.(f) Performance evaluation system.The State plan must describe how thesystem for evaluating the performanceof rehabilitation counselors,coordinators, and other personnel usedin the State unit facilitates, and in noway impedes, the accomplishment ofthe purpose and policy of the programas described in sections 100(a)(2) and100(a)(3) of the Act, including thepolicy of serving, among others,individuals with the most severedisabilities.(g) Coordination with personneldevelopment under IDEA. The Stateplan must describe the procedures andactivities the State agency willundertake to coordinate itscomprehensive system of personneldevelopment under the Act withpersonnel development under IDEA.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 101 (a)(7) and (a)(35) of theAct; 29 U.S.C. 721(a) (7) and (35))Note: Under the Act and the regulations inthis part, the State agency is required tocollect and analyze data regarding personnelneeds by type or category of personnel. Thepersonnel data must be collected andanalyzed according to personnel categorybreakdowns that are based on the majorcategories of staff in the State unit. Similarly,the data from institutions of higher educationmust be broken down by type of program tocorrespond as closely as possible with thepersonnel categories of the State unit.§ 361.19 Affirmative action for individualswith disabilities.The State plan must assure that theState agency takes affirmative action toemploy and advance in employmentqualified individuals with disabilities.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 101(a)(6)(A) of the Act; 29U.S.C. 721(a)(6)(A))§ 361.20 State plan development.(a) Public participationrequirements.—(1) Plan developmentand revisions. The State plan mustassure that the State unit conductspublic meetings throughout the State toprovide all segments of the public,including interested groups,organizations, and individuals, anopportunity to comment on the Stateplan prior to its development and tocomment on any revisions to the Stateplan.(2) Notice requirements. The Stateplan must assure that the State unit,prior to conducting public meetings,provides appropriate and sufficientnotice throughout the State of themeetings in accordance with—(i) State law governing publicmeetings; or(ii) In the absence of State lawgoverning public meetings, proceduresdeveloped by the State unit inconsultation with the StateRehabilitation Advisory Council.(3) Revisions based on consumersatisfaction surveys. The State planmust describe the manner in which theState’s policies and procedures will berevised based on the results of consumersatisfaction surveys conducted by theState Rehabilitation Advisory Councilunder § 361.17(h)(3) or by the Stateagency if it is an independentcommission in accordance with therequirements of § 361.16.(b) Special consultation requirements.The State plan must assure that, asappropriate, the State unit activelyconsults in the development andrevision of the State plan with the CAPdirector, the State RehabilitationAdvisory Council, and, as appropriate,those Indian tribes, tribal organizations,and native Hawaiian organizations thatrepresent significant numbers ofindividuals with disabilities within theState.(c) Summary of public comments. TheState plan must include a summary ofthe public comments on the State plan,including comments on revisions to theState plan and the State unit’s responseto those comments.(d) Appropriate modes ofcommunication. The State unit shallprovide, through appropriate modes ofcommunication, the notices of thepublic meetings, any materialsfurnished prior to or during the publicmeetings, and the approved State plan.(Approved by the Office of Management andBudget under control number 1820–0500.)

6346 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations(Authority: Sec. 101(a)(20), 101(a)(23),101(a)(32), and 105(c)(2) of the Act; 29 U.S.C.721(a)(20), (23), and (32) and 725(c)(2))§ 361.21 Consultations regarding theadministration of the State plan.(a) The State plan must assure that, inconnection with matters of generalpolicy development andimplementation arising in theadministration of the State plan, theState unit seeks and takes into accountthe views of—(1) Individuals who receive vocationalrehabilitation services or, asappropriate, the individuals’representatives;(2) Personnel working in the field ofvocational rehabilitation;(3) Providers of vocationalrehabilitation services;(4) The CAP director; and(5) The State Rehabilitation AdvisoryCouncil, if the State has a Council.(b) The State plan must specificallydescribe the manner in which the Stateunit will take into account the viewsregarding State policy andadministration of the State plan that areexpressed in the consumer satisfactionsurveys conducted by the StateRehabilitation Advisory Council under§ 361.17(h)(3) or by the State agency ifit is an independent commission inaccordance with the requirements of§ 361.16(a)(1).(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Secs. 101(a)(18), 101(a)(32), and105(c)(2) of the Act; 29 U.S.C. 721(a)(18),721(a)(32), and 725(c)(2))§ 361.22 Cooperation with agenciesresponsible for students with disabilities.(a) Students with disabilities who arereceiving special education services.—(1) General. The State plan must containplans, policies, and procedures that aredesigned to facilitate the transition ofstudents who are receiving specialeducation services from the provision ofa free appropriate public educationunder the responsibility of aneducational agency to the provision ofvocational rehabilitation services underthe responsibility of the designatedState unit. These plans, policies, andprocedures must provide for thedevelopment and completion of theIWRP before the student leaves theschool setting for each studentdetermined to be eligible for vocationalrehabilitation services or, if thedesignated State unit is operating underan order of selection, for each eligiblestudent able to be served under theorder. The IWRP must, at a minimum,identify the long-term rehabilitationgoals, intermediate rehabilitationobjectives, and goals and objectivesrelated to enabling the student to liveindependently, to the extent these goalsand objectives are included in thestudent’s individualized educationprogram.(2) Formal interagency agreement.The State plan must assure that theState unit enters into formal interagencyagreements with the State educationalagency and, as appropriate, with localeducational agencies, that areresponsible for the free appropriatepublic education of students withdisabilities who are receiving specialeducation services. Formal interagencyagreements must, at a minimum,identify—(i) Policies, practices, and proceduresthat can be coordinated between theagencies, including definitions,standards for eligibility, policies andprocedures for making referrals,procedures for outreach to andidentification of youth who arereceiving special education services andare in need of transition services, andprocedures and timeframes forevaluation and follow-up of thosestudents;(ii) The roles of each agency,including provisions for determiningState lead agencies and qualifiedpersonnel responsible for transitionservices;(iii) Procedures for providing trainingfor staff of State and local educationalagencies as to the availability, benefitsof, and eligibility standards forvocational rehabilitation services, to theextent practicable;(iv) Available resources, includingsources of funds for the developmentand expansion of services;(v) The financial responsibility ofeach agency in providing services tostudents with disabilities who arereceiving special education services,consistent with State law;(vi) Procedures for resolving disputesbetween the agencies that are parties tothe agreement; and(vii) All other components necessaryto ensure meaningful cooperationamong agencies, including proceduresto facilitate the development of localteams to coordinate the provision ofservices to individuals, sharing data,and coordinating joint training of staffin the provision of transition services.(b) Students with disabilities who arenot receiving special education services.The State plan must contain plans,policies, and procedures, includingcooperation with appropriate agencies,designed to ensure that students withdisabilities who are not receivingspecial education services have accessto and can receive vocationalrehabilitation services, if appropriate,and to ensure outreach to andidentification of those students.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Secs. 101(a)(11)(C), 101(a)(24)and 101(a)(30) of the Act; 29 U.S.C. 721(a)(11), (a)(24), and (a)(30))Note: The following excerpt from page 33of Senate Report No. 102–357 further clarifiesthe provision of transition services by theState vocational rehabilitation agency:The overall purpose of this provision is toensure that all students who requirevocational rehabilitation services receivethose services in a timely manner. Thereshould be no gap in services between theeducation system and the vocationalrehabilitation system * * *. The committeeintends that students with disabilities whoare eligible for, and who need, vocationalrehabilitation services will receive thoseservices as soon as possible, consistent withFederal and State law. These provisions arenot intended in any way to shift theresponsibility of service delivery fromeducation to rehabilitation during thetransition years. School officials willcontinue to be responsible for providing afree and appropriate public education asdefined by the IEP. The role of therehabilitation system is primarily one ofplanning for the student’s years after leavingschool. (S. Rep. No. 357, 102d Cong., 2d.Sess. 33 (1992))§ 361.23 Cooperation with other publicagencies.(a) Coordination of services withvocational education and Javits-Wagner-O’Day programs. The State plan mustassure that specific arrangements oragreements are made for thecoordination of services for anyindividual who is eligible for vocationalrehabilitation services and is alsoeligible for services under the Carl D.Perkins Vocational and AppliedTechnology Education Act or the Javits-Wagner-O’Day Act.(b) Cooperation with other Federal,State, and local public agenciesproviding services related to therehabilitation of individuals withdisabilities. (1) The State plan mustassure that the State unit cooperateswith other Federal, State, and localpublic agencies providing servicesrelated to the rehabilitation ofindividuals with disabilities, including,as appropriate, establishing interagencyworking groups or entering into formalinteragency cooperative agreementswith, and using the services andfacilities of—(i) Federal agencies providing servicesrelated to the rehabilitation ofindividuals with disabilities, includingthe Social Security Administration, theOffice of Workers’ CompensationPrograms of the Department of Labor,

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6347and the Department of Veterans Affairs;and(ii) State and local public agenciesproviding services related to therehabilitation of individuals withdisabilities, including State and localpublic agencies administering theState’s social services and financialassistance programs and other Stateprograms for individuals withdisabilities, such as the State’sdevelopmental disabilities program,veterans programs, health and mentalhealth programs, education programs(including adult education, highereducation, and vocational educationprograms), workers’ compensationprograms, job training and placementprograms, and public employmentoffices.(2) Interagency cooperation underparagraph (b)(1) of this section, to theextent practicable, must provide fortraining for staff of the agencies as to theavailability, benefits of, and eligibilitystandards for vocational rehabilitationservices.(3) If the State unit chooses to enterinto formal interagency cooperativeagreements developed under paragraph(b)(1) of this section, the agreementsmust—(i) Identify policies, practices, andprocedures that can be coordinatedamong the agencies (particularlydefinitions, standards for eligibility, thejoint sharing and use of evaluations andassessments, and procedures for makingreferrals);(ii) Identify available resources anddefine the financial responsibility ofeach agency for paying for necessaryservices (consistent with State law) andprocedures for resolving disputesbetween agencies; and(iii) Include all additionalcomponents necessary to ensuremeaningful cooperation andcoordination.(c) Reciprocal referral services with aseparate agency for individuals who areblind. If there is a separate State unit forindividuals who are blind, the Stateplan must assure that the two Stateunits establish reciprocal referralservices, use each other’s services andfacilities to the extent feasible, jointlyplan activities to improve services in theState for individuals with multipleimpairments, including visualimpairments, and otherwise cooperateto provide more effective services,including, if appropriate, entering into awritten cooperative agreement.(Authority: Secs. 101(a)(11) and 101(a)(22) ofthe Act; 29 U.S.C. 721(a)(11) and 721(a)(22))§ 361.24 Coordination with the StatewideIndependent Living Council.The State plan must assure that theState unit will coordinate and establishworking relationships with theStatewide Independent Living Councilestablished under 34 CFR Part 364 andwith independent living centers withinthe State.(Authority: Sec. 101(a)(33) of the Act; 29U.S.C. 721(a)(33))§ 361.25 Statewideness.The State plan must assure thatservices provided under the State planwill be available in all politicalsubdivisions of the State, unless awaiver of statewideness is requestedand approved in accordance with§ 361.26.(Authority: Section 101(a)(4) of the Act; 29U.S.C. 721(a)(4))§ 361.26 Waiver of statewideness.(a) Availability. The State unit mayprovide services in one or more politicalsubdivisions of the State that increaseservices or expand the scope of servicesthat are available statewide under theState plan if—(1) The non-Federal share of the costof these services is met from fundsprovided by a local public agency,including funds contributed to a localpublic agency by a private agency,organization, or individual;(2) The services are likely to promotethe vocational rehabilitation ofsubstantially larger numbers ofindividuals with disabilities or ofindividuals with disabilities withparticular types of impairments; and(3) The State includes in its Stateplan, and the Secretary approves, arequest for a waiver of the statewidenessrequirement, in accordance with therequirements of paragraph (b) of thissection.(b) Request for waiver. The request fora waiver of statewideness must—(1) Identify the types of services to beprovided;(2) Contain a written assurance fromthe local public agency that it will makeavailable to the State unit the non-Federal share of funds;(3) Contain a written assurance thatState unit approval will be obtained foreach proposed service before it is putinto effect; and(4) Contain a written assurance thatall other State plan requirements,including a State’s order of selectionrequirements, will apply to all servicesapproved under the waiver.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 101(a)(4) of the Act; 29U.S.C. 721(a)(4))§ 361.27 Shared funding andadministration of joint programs.(a) If the State plan provides for ajoint program involving shared fundingand administrative responsibility withanother State agency or a local publicagency to provide services toindividuals with disabilities, the planmust include a description of the natureand scope of the joint program, theservices to be provided, the respectiveroles of each participating agency in theprovision of services and in theiradministration, and the share of thecosts to be assumed by each agency.(b) If a proposed joint program doesnot comply with the statewidenessrequirement in § 361.25, the State unitshall obtain a waiver of statewideness,in accordance with § 361.26.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Section 101(a)(1)(A) of the Act;29 U.S.C. 721(a)(1)(A))§ 361.28 Third-party cooperativearrangements involving funds from otherpublic agencies.(a) If the designated State unit entersinto a third-party cooperativearrangement for providing oradministering vocational rehabilitationservices with another State agency or alocal public agency that is furnishingpart or all of the non-Federal share, theState plan must assure that—(1) The services provided by thecooperating agency are not thecustomary or typical services providedby that agency but are new services thathave a vocational rehabilitation focus orexisting services that have beenmodified, adapted, expanded, orreconfigured to have a vocationalrehabilitation focus;(2) The services provided by thecooperating agency are only available toapplicants for, or recipients of, servicesfrom the designated State unit;(3) Program expenditures and staffproviding services under thecooperative arrangement are under theadministrative supervision of thedesignated State unit; and(4) All State plan requirements,including a State’s order of selection,will apply to all services providedunder the cooperative program.(b) If a third party cooperativeagreement does not comply with thestatewideness requirement in § 361.25,the State unit shall obtain a waiver ofstatewideness, in accordance with§ 361.26.(Authority: Sec. 101(a)(1)(A) of the Act; 29U.S.C. 721(a)(1)(A))

6348 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations§ 361.29 Statewide studies andevaluations.(a) Statewide studies. The State planmust assure that the State unit conductscontinuing statewide studies todetermine the current needs ofindividuals with disabilities within theState and the best methods to meetthose needs. As part of the developmentof the State plan, the continuingstatewide studies, at a minimum, mustinclude—(1) A triennial comprehensiveassessment of the rehabilitation needs ofindividuals with severe disabilities whoreside in the State;(2) A triennial review of theeffectiveness of outreach proceduresused to identify and serve individualswith disabilities who are minorities andindividuals with disabilities who areunserved and underserved by thevocational rehabilitation system; and(3) A triennial review of a broadvariety of methods to provide, expand,and improve vocational rehabilitationservices to individuals with the mostsevere disabilities, includingindividuals receiving supportedemployment services under 34 CFR part363.(b) Annual evaluation. The State planmust assure that the State unit conductsan annual evaluation of theeffectiveness of the State’s vocationalrehabilitation program in providingvocational rehabilitation and supportedemployment services, especially toindividuals with the most severedisabilities. The annual evaluation mustanalyze the extent to which—(1) The State has achieved the goalsand priorities established in the Stateplan and annual amendments to theplan; and(2) The State is in compliance withthe evaluation standards andperformance indicators established bythe Secretary pursuant to section 106 ofthe Act.(c) Reporting requirements. (1) TheState plan must describe annually thosechanges that have been adopted inpolicy, in the State plan and itsamendments, and in the strategic planand its amendments as a result of thestatewide studies and the annualprogram evaluation.(2) The State plan must contain anannual description of the methods usedto expand and improve vocationalrehabilitation services to individualswith the most severe disabilities,including the State unit’s criteria fordetermining which individuals areindividuals with the most severedisabilities.(3) The State plan must contain anannual analysis of the characteristics ofindividuals determined to be ineligiblefor services and the reasons for theineligibility determinations.(4) The State unit shall maintaincopies of the statewide studies and theannual evaluations and shall make thecopies available to the Secretary uponrequest.(d) Role of the State RehabilitationAdvisory Council. The State plan mustassure that the State unit seeks theadvice of the State RehabilitationAdvisory Council, if the State has aCouncil, regarding the continuingstatewide studies and the annualevaluation and, at the discretion of theState agency, seeks assistance from theCouncil in the preparation and analysisof the studies and evaluation.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sections 101(a)(5) (A) and (B),101(a)(9)(D), 101(a)(15) (A), (C), and (D),101(a)(19), and 105(c)(2) of the Act; 29 U.S.C.721(a) (5), (9), (15), and (19) and 725(c)(2))§ 361.30 Services to special groups ofindividuals with disabilities.(a) Civil employees of the UnitedStates. The State plan must assure thatvocational rehabilitation services areavailable to civil employees of the U.S.Government who are disabled in theline of duty, under the same terms andconditions applied to other individualswith disabilities.(b) Public safety officers. (1) The Stateplan must assure that specialconsideration will be given to thoseindividuals with disabilities whosedisability arose from an impairmentsustained in the line of duty whileperforming as a public safety officer andthe immediate cause of that impairmentwas a criminal act, apparent criminalact, or a hazardous condition resultingdirectly from the officer’s performanceof duties in direct connection with theenforcement, execution, andadministration of law or fire prevention,firefighting, or related public safetyactivities.(2) For the purposes of paragraph (b)of this section, special consideration forStates under an order of selection meansthat those public safety officers whomeet the requirements of paragraph(b)(1) of this section must receivepriority for services over other eligibleindividuals in the same prioritycategory of the order of selection.(3) For the purposes of paragraph (b)of this section, criminal act means anycrime, including an act, omission, orpossession under the laws of the UnitedStates, a State, or a unit of general localgovernment that poses a substantialthreat of personal injury,notwithstanding that by reason of age,insanity, intoxication, or otherwise, theperson engaging in the act, omission, orpossession was legally incapable ofcommitting a crime.(4) For the purposes of paragraph (b)of this section, public safety officermeans a person serving the UnitedStates or a State or unit of localgovernment, with or withoutcompensation, in any activity pertainingto—(i) The enforcement of the criminallaws, including highway patrol, or themaintenance of civil peace by theNational Guard or the Armed Forces;(ii) A correctional program, facility, orinstitution if the activity is potentiallydangerous because of contact withcriminal suspects, defendants,prisoners, probationers, or parolees;(iii) A court having criminal orjuvenile delinquent jurisdiction if theactivity is potentially dangerous becauseof contact with criminal suspects,defendants, prisoners, probationers, orparolees; or(iv) Firefighting, fire prevention, oremergency rescue missions.(c) American Indians. (1) The Stateplan must assure that vocationalrehabilitation services are provided toAmerican Indians with disabilitiesresiding in the State to the same extentthat these services are provided to othersignificant groups of individuals withdisabilities residing in the State.(2) The State plan also must assurethat the designated State unit continuesto provide vocational rehabilitationservices, including, as appropriate,services traditionally used by Indiantribes, to American Indians withdisabilities who reside on reservationsand are eligible for services by a specialtribal program under 34 CFR part 371.(Authority: Secs. 7, 101(a)(13), 101(a)(20),and 130(b)(3) of the Act; 29 U.S.C. 706,721(a)(13), 721(a)(20), and 750(b)(3))§ 361.31 Utilization of communityresources.The State plan must assure that, inproviding vocational rehabilitationservices, public or other vocational ortechnical training programs or otherappropriate community resources areused to the maximum extent feasible.(Authority: Sec. 101(a)(12)(A) of the Act; 29U.S.C. 721(a)(12)(A))§ 361.32 Utilization of profitmakingorganizations for on-the-job training inconnection with selected projects.The State plan must assure that theState unit has the authority to enter intocontracts with profitmakingorganizations for the purpose ofproviding on-the-job training andrelated programs for individuals with

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6349disabilities under the Projects WithIndustry program, 34 CFR part 379, if ithas been determined that they are betterqualified to provide needed servicesthan nonprofit agencies, organizations,or programs in the State.(Authority: Sec. 101(a)(21) of the Act; 29U.S.C. 721(a)(21))§ 361.33 Use, assessment, and support ofcommunity rehabilitation programs.(a) The State plan must contain adescription of how the designated Stateunit uses community rehabilitationprograms to the maximum extentfeasible to provide vocationalrehabilitation services in the mostintegrated settings possible, consistentwith the informed choices of theindividuals. This description must—(1) Include the methods thedesignated State unit uses to ensure theappropriate use of communityrehabilitation programs;(2) Provide, as appropriate, forentering into agreements with theoperators of those communityrehabilitation programs;(3) Specify the manner in which thedesignated State unit will establishcooperative agreements with privatenonprofit vocational rehabilitationservice providers;(4) Contain the findings resulting froman assessment of the capacity andeffectiveness of communityrehabilitation programs, includingprograms under the Javits-Wagner-O’Day Act, based on the use of thoseprograms; and(5) Contain plans for improvingcommunity rehabilitation programsbased on the assessment in paragraph(a)(4) of this section.(b) If the State plan provides for theestablishment, development, orimprovement of a public or nonprofitcommunity rehabilitation program, theState plan must contain a description ofthe need to establish, develop, orimprove, as appropriate, the communityrehabilitation program to providevocational rehabilitation services toapplicants and eligible individuals,based on the assessment andimprovement plans required inparagraphs (a)(4) and (a)(5) of thissection.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Secs. 101(a)(5)(A), 101(a)(12)(B),101(a)(15)(B), 101(a)(27), 101(a)(28), and103(b)(2) of the Act; 29 U.S.C. 721(a)(5), (12),(15), (27), and (28) and 723(b)(2))§ 361.34 Supported employment plan.(a) The State plan must assure that theState has an acceptable plan under 34CFR part 363 that provides for the useof funds under that part to supplementfunds under this part for the cost ofservices leading to supportedemployment.(b) The supported employment plan,including any needed annual revisions,must be submitted as a supplement tothe State plan.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Secs. 101(a)(25) and 635(a) of theAct; 29 U.S.C. 721(a)(25))§ 361.35 Strategic plan.(a) The State plan must assure that theState—(1) Has developed and implemented astrategic plan for expanding andimproving vocational rehabilitationservices for individuals with disabilitieson a statewide basis in accordance withsubpart D of this part; and(2) Will use at least 1.5 percent of itsallotment under this program forexpansion and improvement activitiesin accordance with § 361.73(b).(b) The strategic plan must besubmitted at the same time as the Stateplan.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Secs. 101(a)(34) and 120 of theAct; 29 U.S.C. 721(a)(34) and 740)§ 361.36 Ability to serve all eligibleindividuals; order of selection for services.(a) General provisions. (1) The Stateplan must contain—(i) An assurance that the designatedState unit is able to provide the fullrange of services listed in section 103(a)of the Act, as appropriate, to all eligibleindividuals. The assurance must besupported by an explanation thatsatisfies the requirements of paragraph(a)(2) or (a)(3) of this section anddescribes how, on the basis of thedesignated State unit’s projected fiscaland personnel resources and itsassessment of the rehabilitation needs ofindividuals with severe disabilitieswithin the State, it will—(A) Continue to provide services to allindividuals currently receiving services;(B) Provide assessment services to allindividuals expected to apply forservices in the next fiscal year;(C) Provide services to all individualswho are expected to be determinedeligible in the next fiscal year; and(D) Meet all program requirements; or(ii) The order to be followed inselecting eligible individuals to beprovided services, a justification of thatorder of selection, and a description ofthe outcome and service goals andservice costs to be achieved forindividuals with disabilities in eachcategory within the order and the timewithin which these goals may beachieved.(2) For those designated State unitsthat provided assurances in their Stateplans for the current fiscal year and thepreceding fiscal year that they are ableto provide the full range of services, asappropriate, to all eligible individuals,the explanation required by paragraph(a)(1)(i) of this section must include astatement that, during the current fiscalyear and the preceding fiscal year, theDSU has in fact—(i) Provided assessment services to allapplicants and the full range of services,as appropriate, to all eligibleindividuals;(ii) Made referral forms widelyavailable throughout the State;(iii) Conducted outreach efforts toidentify and serve individuals withdisabilities who have been unserved orunderserved by the vocationalrehabilitation system; and(iv) Not delayed, through waiting listsor other means, determinations ofeligibility, the development ofindividualized written rehabilitationprograms (IWRPs) for individualsdetermined eligible, or the provision ofservices for eligible individuals forwhom IWRPs have been developed.(3) For those designated State unitsunable to provide the full range ofservices to all eligible individualsduring the current or preceding fiscalyear, or unable to provide the statementrequired in paragraph (a)(2) of thissection, the explanation required byparagraph (a)(1)(i) of this section mustinclude—(i) A description of the circumstancesthat have changed that will allow theDSU to meet the requirements ofparagraph (a)(1)(i) of this section in thenext fiscal year, including a descriptionof—(A) The estimated number of andprojected costs of serving, in the nextfiscal year, individuals with existingIWRPs;(B) The projected number ofindividuals with disabilities who willapply for services and will bedetermined eligible in the next fiscalyear and the projected costs of servingthose individuals;(C) The projected costs ofadministering the program in the nextfiscal year, including, but not limited to,costs of staff salaries and benefits,outreach activities, and requiredstatewide studies; and(D) The projected revenues andprojected number of qualified personnelfor the program in the next fiscal year;(ii) Comparable data, as relevant, forthe current or preceding fiscal year, orfor both years, of the costs listed in

6350 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsparagraphs (a)(3)(i) (A) through (C) ofthis section and the resources identifiedin paragraph (a)(3)(i)(D) of this sectionand an explanation of any projectedincreases or decreases in these costs andresources; and(iii) A demonstration that theprojected revenues and the projectednumber of qualified personnel for theprogram in the next fiscal year areadequate to cover the costs identified inparagraphs (a)(3)(i) (A) through (C) ofthis section so as to ensure the provisionof the full range of services, asappropriate, to all eligible individuals.(b) Time for determining need for anorder of selection. (1) The designatedState unit shall determine, prior to thebeginning of each fiscal year, whether toestablish and implement an order ofselection.(2) If the designated State unitdetermines that it does not need toestablish an order of selection, it shallreevaluate this determination wheneverchanged circumstances during thecourse of a fiscal year, such as adecrease in its fiscal or personnelresources or an increase in its programcosts, indicate that it may no longer beable to provide the full range of services,as appropriate, to all eligibleindividuals.(c) Establishing an order ofselection—(1) Basis for order ofselection. An order of selection must bebased on a refinement of the threecriteria in the definition of ‘‘individualwith a severe disability’’ in section7(15)(A) of the Act.(2) Factors that cannot be used indetermining order of selection of eligibleindividuals. An order of selection maynot be based on any other factors,including—(i) Any duration of residencyrequirement, provided the individual ispresent in the State;(ii) Type of disability;(iii) Age, gender, race, color, creed, ornational origin;(iv) Source of referral;(v) Type of expected employmentoutcome;(vi) The need for specific services oranticipated cost of services required byan individual; or(vii) The income level of anindividual or an individual’s family.(3) Priority for individuals with themost severe disabilities. The State planmust assure that those individuals withthe most severe disabilities are selectedfor service before other individuals withdisabilities. The designated State unitshall establish criteria for determiningwhich individuals are individuals withthe most severe disabilities. The criteriamust be consistent with the definition of‘‘individual with a severe disability’’ insection 7(15)(A) of the Act and therequirements in paragraphs (c) (1) and(2) of this section.(d) Administrative requirements. Inadministering the order of selection, thedesignated State unit shall—(1) Implement the order of selectionon a statewide basis;(2) Notify all eligible individuals ofthe priority categories in a State’s orderof selection, their assignment to aparticular category, and their right toappeal their category assignment;(3) Continue to provide all neededservices to any eligible individual whohas begun to receive services under anIWRP prior to the effective date of theorder of selection, irrespective of theseverity of the individual’s disability;(4) Ensure that its fundingarrangements for providing servicesunder the State plan, including thirdpartyarrangements and awards underthe establishment authority, areconsistent with the order of selection. Ifany funding arrangements areinconsistent with the order of selection,the designated State unit shallrenegotiate these funding arrangementsso that they are consistent with theorder of selection.(e) State Rehabilitation AdvisoryCouncil. The designated State unit shallconsult with and seriously consider theadvice of the State RehabilitationAdvisory Council regarding the—(1) Need to establish an order ofselection, including any reevaluation ofthe need under paragraph (b)(2) of thissection;(2) Priority categories of the particularorder of selection;(3) Criteria for determiningindividuals with the most severedisabilities; and(4) Administration of the order ofselection.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 7(15)(A); 12(d); 17; 101(a)(4);101(a)(5)(A); 101(a)(7); 101(a)(11)(A);101(a)(15)(D); 101(a)(24); 101(a)(30);101(a)(36)(A)(ii); 107(a)(4)(B); and 504(a) ofthe Act; 29 U.S.C. 706(15)(A), 711(d), 716,721(a)(4), 721(a)(5)(A), 721(a)(7),721(a)(11)(A), 721(a)(15)(D), 721(a)(24),721(a)(30), 721(a)(36)(A)(ii), 727(a)(4)(B), and794(a))§ 361.37 Establishment and maintenanceof information and referral programs.(a) General provisions. The State planmust assure that—(1) The designated State unit willestablish and maintain information andreferral programs adequate to ensurethat individuals with disabilities withinthe State are given accurate informationabout State vocational rehabilitationservices, independent living services,vocational rehabilitation servicesavailable from other agencies,organizations, and communityrehabilitation programs, and, to theextent possible, other Federal and Stateservices and programs that assistindividuals with disabilities, includingclient assistance and other protectionand advocacy programs;(2) The State unit will referindividuals with disabilities to otherappropriate Federal and State programsthat might be of benefit to them; and(3) The State unit will use existinginformation and referral systems in theState to the greatest extent possible.(b) Appropriate modes ofcommunication. The State plan furthermust assure that information andreferral programs use appropriate modesof communication.(c) Special circumstances. If the Stateunit is operating under an order ofselection for services, the State unit mayelect to establish an expandedinformation and referral program thatincludes counseling, guidance, andreferral for job placements for thoseeligible individuals who are not in thepriority category or categories to receivevocational rehabilitation services underthe State’s order of selection.(1) If a State unit elects to establish anexpanded information and referralprogram under paragraph (c) of thissection, the State plan must include—(i) A description of how the expandedinformation and referral program will beestablished and how it will function,including the level of commitment ofState unit staff and resources; and(ii) An assurance that, in carrying outthis program, the State unit will not usefunds that are needed to providevocational rehabilitation services underIWRPs for eligible individuals in thepriority category or categories receivingservices under the State unit’s order ofselection or for other eligibleindividuals who have begun to receiveservices prior to the effective date of theorder of selection.(2) If the designated State unitchooses to track the individuals whoobtain employment throughparticipation in an expandedinformation and referral programestablished under paragraph (c) of thissection, the State plan must include areport of the number of individualsserved and the number of individualswho obtain employment through thisprogram.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 101(a)(22) of the Act; 29U.S.C. 721(a)(22))

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6351§ 361.38 Protection, use, and release ofpersonal information.(a) General provisions. (1) The Stateplan must assure that the State agencyand the State unit will adopt andimplement policies and procedures tosafeguard the confidentiality of allpersonal information, includingphotographs and lists of names. Thesepolicies and procedures must assurethat—(i) Specific safeguards protect currentand stored personal information;(ii) All applicants and eligibleindividuals and, as appropriate, thoseindividuals’ representatives, serviceproviders, cooperating agencies, andinterested persons are informed throughappropriate modes of communication ofthe confidentiality of personalinformation and the conditions foraccessing and releasing thisinformation;(iii) All applicants or theirrepresentatives are informed about theState unit need to collect personalinformation and the policies governingits use, including—(A) Identification of the authorityunder which information is collected;(B) Explanation of the principalpurposes for which the State unitintends to use or release theinformation;(C) Explanation of whether providingrequested information to the State unitis mandatory or voluntary and theeffects of not providing requestedinformation;(D) Identification of those situationsin which the State unit requires or doesnot require informed written consent ofthe individual before information maybe released; and(E) Identification of other agencies towhich information is routinely released;(iv) An explanation of State policiesand procedures affecting personalinformation will be provided to eachindividual in that individual’s nativelanguage or through the appropriatemode of communication; and(v) These policies and proceduresprovide no fewer protections forindividuals than State laws andregulations.(2) The State unit may establishreasonable fees to cover extraordinarycosts of duplicating records or makingextensive searches and shall establishpolicies and procedures governingaccess to records.(b) State program use. All personalinformation in the possession of theState agency or the designated State unitmust be used only for the purposesdirectly connected with theadministration of the vocationalrehabilitation program. Informationcontaining identifiable personalinformation may not be shared withadvisory or other bodies that do nothave official responsibility foradministration of the program. In theadministration of the program, the Stateunit may obtain personal informationfrom service providers and cooperatingagencies under assurances that theinformation may not be furtherdivulged, except as provided underparagraphs (c), (d), and (e) of thissection.(c) Release to applicants and eligibleindividuals. (1) Except as provided inparagraphs (c)(2) and (c)(3) of thissection, if requested in writing by anapplicant or eligible individual, theState unit shall make all requestedinformation in that individual’s recordof services accessible to and shallrelease the information to the individualor the individual’s representative in atimely manner.(2) Medical, psychological, or otherinformation that the State unitdetermines may be harmful to theindividual may not be released directlyto the individual, but must be providedto the individual through a third partychosen by the individual, which mayinclude, among others, an advocate, afamily member, or a qualified medicalor mental health professional, unless arepresentative has been appointed by acourt to represent the individual, inwhich case the information must bereleased to the court-appointedrepresentative.(3) If personal information has beenobtained from another agency ororganization, it may be released only by,or under the conditions established by,the other agency or organization.(4) An applicant or eligible individualwho believes that information in theindividual’s record of services isinaccurate or misleading may requestthat the designated State unit amend theinformation. If the information is notamended, the request for an amendmentmust be documented in the record ofservices.(d) Release for audit, evaluation, andresearch. Personal information may bereleased to an organization, agency, orindividual engaged in audit, evaluation,or research only for purposes directlyconnected with the administration ofthe vocational rehabilitation program, orfor purposes that would significantlyimprove the quality of life for applicantsand eligible individuals and only if theorganization, agency, or individualassures that—(1) The information will be used onlyfor the purposes for which it is beingprovided;(2) The information will be releasedonly to persons officially connectedwith the audit, evaluation, or research;(3) The information will not bereleased to the involved individual;(4) The information will be managedin a manner to safeguard confidentiality;and(5) The final product will not revealany personal identifying informationwithout the informed written consent ofthe involved individual or theindividual’s representative.(e) Release to other programs orauthorities. (1) Upon receiving theinformed written consent of theindividual or, if appropriate, theindividual’s representative, the Stateunit may release personal information toanother agency or organization for itsprogram purposes only to the extent thatthe information may be released to theinvolved individual or the individual’srepresentative and only to the extentthat the other agency or organizationdemonstrates that the informationrequested is necessary for its program.(2) Medical or psychologicalinformation that the State unitdetermines may be harmful to theindividual may be released if the otheragency or organization assures the Stateunit that the information will be usedonly for the purpose for which it isbeing provided and will not be furtherreleased to the individual.(3) The State unit shall releasepersonal information if required byFederal law or regulations.(4) The State unit shall releasepersonal information in response toinvestigations in connection with lawenforcement, fraud, or abuse, unlessexpressly prohibited by Federal or Statelaws or regulations, and in response toan order issued by a judge, magistrate,or other authorized judicial officer.(5) The State unit also may releasepersonal information in order to protectthe individual or others if the individualposes a threat to his or her safety or tothe safety of others.(Authority: Secs. 12(c) and 101(a)(6)(A) of theAct; 29 U.S.C. 711(c) and 721(a)(6)(A))§ 361.39 State-imposed requirements.The State plan must assure that thedesignated State unit identifies uponrequest those regulations and policiesrelating to the administration oroperation of its vocational rehabilitationprogram that are State-imposed,including any regulations or policybased on State interpretation of anyFederal law, regulations, or guideline.(Authority: Sect. 17 of the Act; 29 U.S.C. 716)

6352 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations§ 361.40 Reports.The State plan must assure that theState unit—(a) Will submit reports in the formand detail and at the time required bythe Secretary, including reports requiredunder sections 13, 14, and 101(a)(10) ofthe Act; and(b) Will comply with anyrequirements necessary to ensure thecorrectness and verification of thosereports.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 101(a)(10) of the Act; 29U.S.C. 721(a)(10))State Plan Content: Provision andScope of Services§ 361.41 Processing referrals andapplications.(a) Referrals. The State plan mustassure that the designated State unit hasestablished and implemented standardsfor the prompt and equitable handlingof referrals of individuals for vocationalrehabilitation services. The standardsmust include timelines for making goodfaith efforts to inform these individualsof application requirements and togather information necessary to initiatean assessment for determining eligibilityand priority for services.(b) Applications. (1) The State planmust assure that once an individual hassubmitted an application for vocationalrehabilitation services, an eligibilitydetermination will be made within 60days, unless—(i) Exceptional and unforeseencircumstances beyond the control of theagency preclude a determination within60 days and the agency and theindividual agree to a specific extensionof time; or(ii) An extended evaluation isnecessary, in accordance with§ 361.42(d).(2) An individual is considered tohave submitted an application when theindividual or the individual’srepresentative, as appropriate,—(i) Has completed and signed anagency application form or hasotherwise requested services;(ii) Has provided informationnecessary to initiate an assessment todetermine eligibility and priority forservices; and(iii) Is available to complete theassessment process.(3) The designated State unit shallensure that its application forms arewidely available throughout the State.(Authority: Sec. 101(a)(6)(A) and 102(a)(5)(A)of the Act; 29 U.S.C. 721(a)(6)(A) and722(a)(5)(A))§ 361.42 Assessment for determiningeligibility and priority for services.The State plan must assure that, inorder to determine whether anindividual is eligible for vocationalrehabilitation services and theindividual’s priority under an order ofselection for services (if the State isoperating under an order of selection),the designated State unit will conductan assessment for determining eligibilityand priority for services. Theassessment must be conducted in themost integrated setting possible,consistent with the individual’s needsand informed choice, and in accordancewith the following provisions:(a) Eligibility requirements.—(1) Basicrequirements. The State plan mustassure that the State unit’sdetermination of an applicant’seligibility for vocational rehabilitationservices is based only on the followingrequirements:(i) A determination that the applicanthas a physical or mental impairment.(ii) A determination that theapplicant’s physical or mentalimpairment constitutes or results in asubstantial impediment to employmentfor the applicant.(iii) A presumption, in accordancewith paragraph (a)(2) of this section,that the applicant can benefit in termsof an employment outcome from theprovision of vocational rehabilitationservices.(iv) A determination that theapplicant requires vocationalrehabilitation services to prepare for,enter into, engage in, or retain gainfulemployment consistent with theapplicant’s strengths, resources,priorities, concerns, abilities,capabilities, and informed choice.(2) Presumption of benefit. The Stateplan must assure that the designatedState unit will presume that anapplicant who meets the eligibilityrequirements in paragraphs (a)(1) (i) and(ii) of this section can benefit in termsof an employment outcome unless itdemonstrates, based on clear andconvincing evidence, that the applicantis incapable of benefitting in terms of anemployment outcome from vocationalrehabilitation services.(3) Limited presumption for SocialSecurity beneficiaries. The State planmust assure that, if an applicant hasappropriate evidence, such as an awardletter, that establishes the applicant’seligibility for Social Security benefitsunder Title II or Title XVI of the SocialSecurity Act, the designated State unitwill presume that the applicant—(i) Meets the eligibility requirementsin paragraphs (a)(1) (i) and (ii) of thissection; and(ii) Has a severe physical or mentalimpairment that seriously limits one ormore functional capacities in terms ofan employment outcome.(b) Prohibited factors. The State planmust assure that— (1) No duration ofresidence requirement is imposed thatexcludes from services any applicantwho is present in the State;(2) No applicant or group ofapplicants is excluded or foundineligible solely on the basis of the typeof disability;(3) The eligibility requirements areapplied without regard to the age,gender, race, color, creed, or nationalorigin of the applicant; and(4) The eligibility requirements areapplied without regard to the particularservice needs or anticipated cost ofservices required by an applicant or theincome level of an applicant orapplicant’s family.(c) Review and assessment of data foreligibility determination. Except asprovided in paragraph (d) of thissection, the designated State unit shallbase its determination of each of thebasic eligibility requirements inparagraph (a) of this section on—(1) A review and assessment ofexisting data, including counselorobservations, education records,information provided by the individualor the individual’s family, informationused by the Social SecurityAdministration, and determinationsmade by officials of other agencies; and(2) To the extent existing data do notdescribe the current functioning of theindividual or are unavailable,insufficient, or inappropriate to make aneligibility determination, an assessmentof additional data resulting from theprovision of vocational rehabilitationservices, including assistive technologydevices and services and worksiteassessments, that are necessary todetermine whether an individual iseligible.(d) Extended evaluation forindividuals with severe disabilities. (1)Prior to any determination that anindividual with a severe disability isincapable of benefitting from vocationalrehabilitation services in terms of anemployment outcome because of theseverity of that individual’s disability,the State unit shall conduct an extendedevaluation to determine whether or notthere is clear and convincing evidenceto support such a determination.(2) During the extended evaluationperiod, which may not exceed 18months, vocational rehabilitationservices must be provided in the mostintegrated setting possible, consistentwith the informed choice of theindividual.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6353(3) During the extended evaluationperiod, the State unit shall develop awritten plan for determining eligibilityand for determining the nature andscope of services required to achieve anemployment outcome. The State unitmay provide during this period onlythose services that are necessary tomake these two determinations.(4) The State unit shall assess theindividual’s progress as frequently asnecessary, but at least once every 90days, during the extended evaluationperiod.(5) The State unit shall terminateextended evaluation services at anypoint during the 18-month extendedevaluation period if the State unitdetermines that—(i) There is sufficient evidence toconclude that the individual can benefitfrom the provision of vocationalrehabilitation services in terms of anemployment outcome; or(ii) There is clear and convincingevidence that the individual isincapable of benefiting from vocationalrehabilitation services in terms of anemployment outcome.(e) Data for determination of priorityfor services under an order of selection.If the State unit is operating under anorder of selection for services, asprovided in § 361.36, the State unit shallbase its priority assignments on—(1) A review of the data that wasdeveloped under paragraphs (c) and (d)of this section to make the eligibilitydetermination; and(2) An assessment of additional data,to the extent necessary.(Authority: Secs. 7(22)(A)(ii), 7(22)(C)(iii),101(a)(9)(A), 101(a)(14), 101(a)(31), 102(a)(1),102(a)(2), 102(a)(3), 102(a)(4), 103(a)(4), and103(a)(6) of the Act; 29 U.S.C. 706(22)(A)(ii),706(22)(C)(iii), 721(a)(9)(a), 721(a)(14),721(a)(31), 722(a)(1), 722(a)(2), 722(a)(3),722(a)(4), 723(a)(4), and 723(a)(6))Note: Clear and convincing evidencemeans that the designated State unit shallhave a high degree of certainty before it canconclude that an individual is incapable ofbenefiting from services in terms of anemployment outcome. The ‘‘clear andconvincing’’ standard constitutes the higheststandard used in our civil system of law andis to be individually applied on a case-bycasebasis. The term clear meansunequivocal. Given these requirements, areview of existing information generallywould not provide clear and convincingevidence. For example, the use of anintelligence test result alone would notconstitute clear and convincing evidence.Clear and convincing evidence might includea description of assessments, includingsituational assessments and supportedemployment assessments, from serviceproviders who have concluded that theywould be unable to meet the individual’sneeds due to the severity of the individual’sdisability. The demonstration of ‘‘clear andconvincing evidence’’ must include, ifappropriate, a functional assessment of skilldevelopment activities, with any necessarysupports (including assistive technology), inreal life settings. (S. Rep. No. 357, 102dCong., 2d. Sess. 37–38 (1992))§ 361.43 Procedures for ineligibilitydetermination.The State plan must assure that if theState unit determines that an applicantis ineligible for vocational rehabilitationservices or determines that anindividual receiving services under anindividualized written rehabilitationprogram is no longer eligible forservices, the State unit shall—(a) Make the determination only afterproviding an opportunity for fullconsultation with the individual or, asappropriate, with the individual’srepresentative;(b) Inform the individual in writing,supplemented as necessary by otherappropriate modes of communicationconsistent with the informed choice ofthe individual, of the ineligibilitydetermination, including the reasons forthat determination, the requirementsunder this section, and the means bywhich the individual may express andseek remedy for any dissatisfaction,including the procedures for review ofa determination by the rehabilitationcounselor or coordinator in accordancewith § 361.57;(c) Provide the individual with adescription of services available from aclient assistance program establishedunder 34 CFR part 370 and informationon how to contact that program; and(d) Review within 12 months andannually thereafter if requested by theindividual or, if appropriate, by theindividual’s representative anyineligibility determination that is basedon a finding that the individual isincapable of achieving an employmentoutcome. This review need not beconducted in situations in which theindividual has refused it, the individualis no longer present in the State, theindividual’s whereabouts are unknown,or the individual’s medical condition israpidly progressive or terminal.(Authority: Secs. 101(a)(9)(D), 102(a)(6), and102(c) of the Act; 29 U.S.C. 721(a)(9),722(a)(6), and 722(c))§ 361.44 Closure without eligibilitydetermination.The State plan must assure that theState unit may not close an applicant’srecord of services prior to making aneligibility determination unless theapplicant declines to participate in, or isunavailable to complete an assessmentfor determining eligibility and priorityfor services, and the State unit has madea reasonable number of attempts tocontact the applicant or, if appropriate,the applicant’s representative toencourage the applicant’s participation.(Authority: Secs. 12(c) and 101(a)(6)(A) of theAct; 29 U.S.C. 711(c) and 721(a)(6))§ 361.45 Development of the individualizedwritten rehabilitation program.(a) Purpose. The State plan mustassure that the State unit conducts anassessment for determining vocationalrehabilitation needs for each eligibleindividual or, if the State is operatingunder an order of selection, for eacheligible individual to whom the State isable to provide services. The purpose ofthis assessment is to determine the longtermvocational goal, intermediaterehabilitation objectives, and the natureand scope of vocational rehabilitationservices to be included in the IWRP,which must be designed to achieve anemployment outcome that is consistentwith the individual’s unique strengths,priorities, concerns, abilities,capabilities, career interests, andinformed choice.(b) Procedural requirements. TheState plan must assure that—(1) The IWRP is developed jointly,agreed to, and signed by the vocationalrehabilitation counselor or coordinatorand the individual or, as appropriate,the individual’s representative withinthe framework of a counseling andguidance relationship;(2) The State unit has established andimplemented standards for the promptdevelopment of IWRPs for theindividuals identified under paragraph(a) of this section, including timelinesthat take into consideration the needs ofthe individual;(3) The State unit advises eachindividual or, as appropriate, theindividual’s representative of all Stateunit procedures and requirementsaffecting the development and review ofan IWRP, including the availability ofappropriate modes of communication;(4) In developing an IWRP for astudent with a disability who isreceiving special education services, theState unit considers the student’sindividualized education program;(5) The State unit reviews the IWRPwith the individual or, as appropriate,the individual’s representative as oftenas necessary, but at least once each yearto assess the individual’s progress inmeeting the objectives identified in theIWRP;(6) The State unit incorporates intothe IWRP any revisions that arenecessary to reflect changes in theindividual’s vocational goal,intermediate objectives, or vocationalrehabilitation services, and obtains the

6354 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsagreement and signature of theindividual or, as appropriate, of theindividual’s representative to therevisions; and(7) The State unit promptly provideseach individual or, as appropriate, theindividual’s representative, a copy ofthe IWRP and its amendments in thenative language, or appropriate mode ofcommunication, of the individual or, asappropriate, of the individual’srepresentative.(c) Data for preparing the IWRP.—(1)Preparation without comprehensiveassessment. To the extent possible, thevocational goal, intermediate objectives,and the nature and scope ofrehabilitation services to be included inthe individual’s IWRP must bedetermined based on the data used forthe assessment of eligibility and priorityfor services under section § 361.42.(2) Preparation based oncomprehensive assessment. (i) Ifadditional data are necessary to preparethe IWRP, the designated State unitshall conduct a comprehensiveassessment of the unique strengths,resources, priorities, concerns, abilities,capabilities, interests, and needs,including the need for supportedemployment services, of an eligibleindividual, in the most integratedsetting possible, consistent with theinformed choice of the individual.(ii) The comprehensive assessmentmust be limited to information that isnecessary to identify the rehabilitationneeds of the individual and develop theIWRP and may, to the extent needed,include—(A) An analysis of pertinent medical,psychiatric, psychological,neuropsychological, and other pertinentvocational, educational, cultural, social,recreational, and environmental factors,and related functional limitations, thataffect the employment andrehabilitation needs of the individual;(B) An analysis of the individual’spersonality, career interests,interpersonal skills, intelligence andrelated functional capacities,educational achievements, workexperience, vocational aptitudes,personal and social adjustments, andemployment opportunities;(C) An appraisal of the individual’spatterns of work behavior and servicesneeded to acquire occupational skillsand to develop work attitudes, workhabits, work tolerance, and social andbehavior patterns suitable for successfuljob performance; and(D) An assessment, through provisionof rehabilitation technology services, ofthe individual’s capacities to perform ina work environment, including in anintegrated setting, to the maximumextent feasible and consistent with theindividual’s informed choice.(iii) In preparing a comprehensiveassessment, the State unit shall use, tothe maximum extent possible andappropriate and in accordance withconfidentiality requirements, existinginformation, including information thatis provided by the individual, the familyof the individual, and educationagencies.(Authority: Secs. 7(22)(B), 102(b)(1)(A), and102(b)(2); 29 U.S.C. 706(5), 721(a)(9), 722,and 723(a)(1))§ 361.46 Content of the individualizedwritten rehabilitation program.(a) General requirements. The Stateplan must assure that each IWRPincludes, as appropriate, statementsconcerning—(1) The specific long-term vocationalgoal, which must be based on theassessment for determining vocationalrehabilitation needs, including theindividual’s career interests, and mustbe, to the extent appropriate andconsistent with the informed choice ofthe individual, in an integrated setting;(2) The specific intermediaterehabilitation objectives related to theattainment of the long-term vocationalgoal, based on the assessment fordetermining vocational rehabilitationneeds and consistent with the informedchoice of the individual;(3) The specific rehabilitation servicesunder § 361.48 to be provided to achievethe established intermediaterehabilitation objectives, including, ifappropriate, rehabilitation technologyservices and on-the-job and relatedpersonal assistance services;(4) The projected dates for theinitiation of each vocationalrehabilitation service, the anticipatedduration of each service, and theprojected timeframe for the achievementof the individual’s vocational goal;(5) A procedure and schedule forperiodic review and evaluation ofprogress toward achieving intermediaterehabilitation objectives based uponobjective criteria;(6) How, in the words of theindividual or, as appropriate, in thewords of the individual’s representative,the individual was informed about andinvolved in choosing among alternativegoals, objectives, services, providers,and methods used to procure or provideservices;(7) The terms and conditions for theprovision of vocational rehabilitationservices, including—(i) The responsibilities of theindividual in implementing the IWRP;(ii) The extent of the individual’sparticipation in the cost of services;(iii) The extent to which goods andservices will be provided in the mostintegrated settings possible, consistentwith the informed choices of theindividual;(iv) The extent to which comparableservices and benefits are available to theindividual under any other program;and(v) The entity or entities that willprovide the services and the processused to provide or procure the services;(8) The rights of the individual underthis part and the means by which theindividual may express and seekremedy for any dissatisfaction,including the opportunity for a reviewof rehabilitation counselor orcoordinator determinations under§ 361.57;(9) The availability of a clientassistance program established under 34CFR part 370; and(10) The basis on which theindividual has been determined to haveachieved an employment outcome inaccordance with § 361.56.(b) Supported employmentrequirements. The State plan mustassure that the IWRP for individualswith the most severe disabilities forwhom a vocational goal in a supportedemployment setting has beendetermined to be appropriate will alsocontain—(1) A description of the supportedemployment services to be provided bythe State unit; and(2) A description of the extendedservices needed and identification of thesource of extended services or, in theevent that identification of the source isnot possible at the time the IWRP isdeveloped, a statement explaining thebasis for concluding that there is areasonable expectation that services willbecome available.(c) Post-employment services. TheState plan must assure that the IWRP foreach individual contains statementsconcerning—(1) The expected need for postemploymentservices, based on anassessment during the development ofthe IWRP;(2) A reassessment of the need forpost-employment services prior to thedetermination that the individual hasachieved an employment outcome;(3) A description of the terms andconditions for the provision of any postemploymentservices, including theanticipated duration of those services,subsequent to the achievement of anemployment outcome by the individual;and(4) If appropriate, a statement of howpost-employment services will beprovided or arranged through

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6355cooperative agreements with otherservice providers.(d) Coordination of services forstudents with disabilities who arereceiving special education services.The State plan must assure that theIWRP for a student with a disabilitywho is receiving special educationservices is coordinated with theindividualized education program (IEP)for that individual in terms of the goals,objectives, and services identified in theIEP.(e) Ineligibility. The State plan mustassure that the decision that anindividual is not capable of achievingan employment outcome and is nolonger eligible to receive services underan IWRP is made in accordance with therequirements in § 361.43. The decision,and the reasons on which the decisionwas based, must be included as anamendment to the IWRP.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Secs. 101(a)(9), 102(b)(1), 102(c),and 635(b)(6) of the Act; 29 U.S.C. 721(a)(9),722, and 795n)§ 361.47 Record of services.The State plan must assure that thedesignated State unit maintains for eachapplicant or eligible individual a recordof services that includes, to the extentpertinent, the following documentation:(a) If an applicant has beendetermined to be an eligible individual,documentation supporting thatdetermination in accordance with therequirements in § 361.42.(b) If an applicant has beendetermined to be ineligible,documentation supporting thatdetermination in accordance with therequirements of § 361.43.(c) Documentation supporting thedetermination that an individual has asevere disability or a most severedisability.(d) If an individual with a severedisability requires an extendedevaluation in order to determinewhether the individual is an eligibleindividual, documentation supportingthe need for an extended evaluation,documentation supporting the periodicassessments conducted during theextended evaluation, and the writtenplan developed during the extendedevaluation, in accordance with therequirements in § 361.42(d).(e) The IWRP, and any amendments tothe IWRP, containing the informationrequired under § 361.46.(f) In accordance with § 361.45(a),documentation supporting thedevelopment of the long-term vocationalgoal, intermediate rehabilitationobjectives, and nature and scope ofservices included in the individual’sIWRP and, for students with disabilitieswho are receiving special educationservices, in the student’s IEP.(g) In the event that an individual’sIWRP provides for services or a jobplacement in a non-integrated setting, ajustification for that non-integratedsetting.(h) Documentation of the periodicreviews and evaluations of progresstoward achieving intermediaterehabilitation objectives conductedunder § 361.46(a)(5).(i) In the event that an individualobtains competitive employment,verification that the individual iscompensated at or above the minimumwage and that the individual’s wage andlevel of benefits are not less than thatcustomarily paid by the employer forthe same or similar work performed bynon-disabled individuals in accordancewith § 361.5(b)(10)(ii).(j) Documentation concerning anyaction and decision resulting from arequest by an individual for review of arehabilitation counselor or coordinatordetermination under § 361.57.(Authority: Secs. 101(a)(6) and 101(a)(9) ofthe Act; 29 U.S.C. 721(a)(6) and 721(a)(9))§ 361.48 Scope of vocational rehabilitationservices for individuals with disabilities.(a) The State plan must assure that, asappropriate to the vocationalrehabilitation needs of each individualand consistent with each individual’sinformed choice, the followingvocational rehabilitation services areavailable:(1) Assessment for determiningeligibility and priority for services inaccordance with § 361.42.(2) Assessment for determiningvocational rehabilitation needs inaccordance with § 361.45.(3) Vocational rehabilitationcounseling and guidance.(4) Referral and other servicesnecessary to help applicants and eligibleindividuals secure needed services fromother agencies and to advise thoseindividuals about client assistanceprograms established under 34 CFR part370.(5) Physical and mental restorationservices in accordance with thedefinition of that term in § 361.5(b)(35).(6) Vocational and other trainingservices, including personal andvocational adjustment training, books,tools, and other training materials,except that no training or trainingservices in an institution of highereducation (universities, colleges,community or junior colleges,vocational schools, technical institutes,or hospital schools of nursing) may bepaid for with funds under this partunless maximum efforts have beenmade by the State unit and theindividual to secure grant assistance inwhole or in part from other sources topay for that training.(7) Maintenance, in accordance withthe definition of that term in§ 361.5(b)(31).(8) Transportation in connection withthe rendering of any vocationalrehabilitation service and in accordancewith the definition of that term in§ 361.5(b)(49).(9) Vocational rehabilitation servicesto family members of an applicant oreligible individual if necessary to enablethe applicant or eligible individual toachieve an employment outcome.(10) Interpreter services forindividuals who are deaf and tactileinterpreting services for individualswho are deaf-blind.(11) Reader services, rehabilitationteaching services, and orientation andmobility services for individuals whoare blind.(12) Recruitment and training servicesto provide new employmentopportunities in the fields ofrehabilitation, health, welfare, publicsafety, law enforcement, and otherappropriate public service employment.(13) Job search and placementassistance and job retention services.(14) Supported employment servicesin accordance with the definition of thatterm in § 361.5(b)(46).(15) Personal assistance services inaccordance with the definition of thatterm in § 361.5(b)(34).(16) Post-employment services inaccordance with the definition of thatterm in § 361.5(b)(37).(17) Occupational licenses, tools,equipment, initial stocks, and supplies.(18) Rehabilitation technology inaccordance with the definition of thatterm in § 361.5(b)(39), includingvehicular modification,telecommunications, sensory, and othertechnological aids and devices.(19) Transition services in accordancewith the definition of that term in§ 361.5(b)(47).(20) Other goods and servicesdetermined necessary for the individualwith a disability to achieve anemployment outcome.(b) The State plan also mustdescribe—(1) The manner in which a broadrange of rehabilitation technologyservices will be provided at each stageof the rehabilitation process and on astatewide basis;(2) The training that will be providedto vocational rehabilitation counselors,client assistance personnel, and other

6356 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsrelated services personnel on theprovision of rehabilitation technologyservices;(3) The manner in which assistivetechnology devices and services will beprovided or worksite assessments willbe made as part of the assessment fordetermining eligibility and vocationalrehabilitation needs of an individual;and(4) The manner in which on-the-joband other related personal assistanceservices will be provided to assistindividuals while they are receivingvocational rehabilitation services.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Secs. 101(a)(5)(C), 101(a)(26),101(a)(31), and 103(a) of the Act; 29 U.S.C.721(a)(5)(C), 721(a)(26), 721(a)(31), and723(a))§ 361.49 Scope of vocational rehabilitationservices for groups of individuals withdisabilities.(a) The State plan may also providefor the following vocationalrehabilitation services for the benefit ofgroups of individuals with disabilities:(1) The establishment, development,or improvement of a public or othernonprofit community rehabilitationprogram that is used to provide servicesthat promote integration andcompetitive employment, includingunder special circumstances, theconstruction of a facility for a public ornonprofit community rehabilitationprogram. Examples of ‘‘specialcircumstances’’ include the destructionby natural disaster of the only availablecenter serving an area or a Statedetermination that construction isnecessary in a rural area because noother public agencies or privatenonprofit organizations are currentlyable to provide services to individuals.(2) Telecommunications systems thathave the potential for substantiallyimproving vocational rehabilitationservice delivery methods anddeveloping appropriate programming tomeet the particular needs of individualswith disabilities, including telephone,television, video description services,satellite, tactile-vibratory devices, andsimilar systems, as appropriate.(3) Special services to providerecorded material or video descriptionservices for individuals who are blind,captioned television, films, or videocassettes for individuals who are deaf,tactile materials for individuals who aredeaf-blind, and other special servicesthat provide information through tactile,vibratory, auditory, and visual media.(4) Technical assistance and supportservices, such as job site modificationand other reasonable accommodations,to businesses that are not subject to TitleI of the Americans with Disabilities Actof 1990 and that are seeking to employindividuals with disabilities.(5) In the case of small businessenterprises operated by individuals withthe most severe disabilities under thesupervision of the State unit, includingenterprises established under theRandolph-Sheppard program,management services and supervision,acquisition of equipment, initial stocksand supplies, and initial operatingexpenses, in accordance with thefollowing requirements:(i) ‘‘Management services andsupervision’’ includes inspection,quality control, consultation,accounting, regulating, in-servicetraining, and related services providedon a systematic basis to support andimprove small business enterprisesoperated by individuals with the mostsevere disabilities. ‘‘Managementservices and supervision’’ may beprovided throughout the operation ofthe small business enterprise.(ii) ‘‘Initial stocks and supplies’’includes those items necessary to theestablishment of a new businessenterprise during the initialestablishment period, which may notexceed six months.(iii) Costs of establishing a smallbusiness enterprise may includeoperational costs during the initialestablishment period, which may notexceed six months.(iv) If the State plan provides for theseservices, it must contain an assurancethat only individuals with the mostsevere disabilities will be selected toparticipate in this supervised program.(v) If the State plan provides for theseservices and the State unit chooses toset aside funds from the proceeds of theoperation of the small businessenterprises, the State plan also mustassure that the State unit maintains adescription of the methods used insetting aside funds and the purposes forwhich funds are set aside. Funds may beused only for small business enterprisespurposes, and benefits that are providedto operators from set-aside funds mustbe provided on an equitable basis.(6) Other services that promise tocontribute substantially to therehabilitation of a group of individualsbut that are not related directly to theIWRP of any one individual. Examplesof those other services might include thepurchase or lease of a bus to providetransportation to a group of applicantsor eligible individuals or the purchaseof equipment or instructional materialsthat would benefit a group of applicantsor eligible individuals.(b) If the State plan provides forvocational rehabilitation services forgroups of individuals, the State planmust assure that the designated Stateunit—(1) Develops and maintains writtenpolicies covering the nature and scopeof each of the vocational rehabilitationservices it provides and the criteriaunder which each service is provided;and(2) Maintains information to ensurethe proper and efficient administrationof those services in the form and detailand at the time required by theSecretary, including the types ofservices provided, the costs of thoseservices, and, to the extent feasible,estimates of the numbers of individualsbenefitting from those services.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Secs. 12(c), 101(a)(6), and 103(b)of the Act; 29 U.S.C. 711(c), 721(a)(6), and723(b))§ 361.50 Written policies governing theprovision of services for individuals withdisabilities.The State plan must assure that theState unit develops and maintainswritten policies covering the nature andscope of each of the vocationalrehabilitation services specified in§ 361.48 and the criteria under whicheach service is provided. The policiesmust ensure that the provision ofservices is based on the rehabilitationneeds of each individual as identified inthat individual’s IWRP and is consistentwith the individual’s informed choice.The written policies may not establishany arbitrary limits on the nature andscope of vocational rehabilitationservices to be provided to the individualto achieve an employment outcome. Thepolicies must be developed inaccordance with the followingprovisions:(a) Out-of-State services. (1) The Stateunit may establish a preference for in-State services, provided that thepreference does not effectively deny anindividual a necessary service. If theindividual chooses an out-of-Stateservice at a higher cost than an in-Stateservice, if either service would meet theindividual’s rehabilitation needs, thedesignated State unit is not responsiblefor those costs in excess of the cost ofthe in-State service.(2) The State unit may not establishpolicies that effectively prohibit theprovision of out-of-State services.(b) Payment for services. (1) The Stateunit shall establish and maintainwritten policies to govern the rates ofpayment for all purchased vocationalrehabilitation services.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6357(2) The State unit may establish a feeschedule designed to ensure areasonable cost to the program for eachservice, provided that the schedule is—(i) Not so low as to effectively denyan individual a necessary service; and(ii) Not absolute and permitsexceptions so that individual needs canbe addressed.(3) The State unit may not placeabsolute dollar limits on specific servicecategories or on the total servicesprovided to an individual.(c) Duration of services. (1) The Stateunit may establish reasonable timeperiods for the provision of servicesprovided that the time periods are—(i) Not so short as to effectively denyan individual a necessary service; and(ii) Not absolute and permitexceptions so that individual needs canbe addressed.(2) The State unit may not establishabsolute time limits on the provision ofspecific services or on the provision ofservices to an individual. The durationof each service needed by an individualmust be determined on an individualbasis and reflected in that individual’sIWRP.(d) Authorization of services. TheState unit shall establish policies relatedto the timely authorization of services,including any conditions under whichverbal authorization can be given.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Secs. 12(c), 12(e)(2)(A), and101(a)(6) of the Act and 29 U.S.C. 711(c),711(e)(2)(A), and 721(a)(6))§ 361.51 Written standards for facilitiesand providers of services.The State plan must assure that thedesignated State unit establishes,maintains, makes available to thepublic, and implements writtenminimum standards for the varioustypes of facilities and providers ofservices used by the State unit inproviding vocational rehabilitationservices, in accordance with thefollowing requirements:(a) Accessibility of facilities. Anyfacility in which vocationalrehabilitation services are providedmust be accessible to individualsreceiving services and must complywith the requirements of theArchitectural Barriers Act of 1968, theUniform Accessibility Standards andtheir implementing regulations in 41CFR part 101, subpart 101–19.6, theAmericans with Disabilities Act of 1990,and section 504 of the Act.(b) Personnel standards. (1) Qualifiedpersonnel. Providers of vocationalrehabilitation services shall usequalified personnel, in accordance withany applicable national or Stateapprovedor -recognized certification,licensing, or registration requirements,or, in the absence of these requirements,other comparable requirements(including State personnelrequirements), that apply to theprofession or discipline in which thatcategory of personnel is providingvocational rehabilitation services.(2) Affirmative action. Providers ofvocational rehabilitation services shalltake affirmative action to employ andadvance in employment qualifiedindividuals with disabilities.(3) Special communication needspersonnel. Providers of vocationalrehabilitation services shall—(i) Include among their personnel, orobtain the services of, individuals ableto communicate in the native languagesof applicants and eligible individualswho have limited English speakingability; and(ii) Ensure that appropriate modes ofcommunication for all applicants andeligible individuals are used.(c) Fraud, waste, and abuse. Providersof vocational rehabilitation servicesshall have adequate and appropriatepolicies and procedures to preventfraud, waste, and abuse.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Secs. 12(e)(2) (B), (D), and (E) and101(a)(6)(B) of the Act; 29 U.S.C. 711(e) and721(a)(6)(B))§ 361.52 Opportunity to make informedchoices.The State plan must describe themanner in which the State unit willprovide each applicant, includingindividuals who are receiving servicesduring an extended evaluation, andeach eligible individual the opportunityto make informed choices throughoutthe vocational rehabilitation process inaccordance with the followingrequirements:(a) Each State unit, in consultationwith its State Rehabilitation AdvisoryCouncil, if it has one, shall develop andimplement written policies andprocedures that enable each individualto make an informed choice with regardto the selection of a long-termvocational goal, intermediaterehabilitation objectives, vocationalrehabilitation services, includingassessment services, and serviceproviders. These policies andprocedures must ensure that eachindividual receives, through appropriatemodes of communication, informationconcerning the availability and scope ofinformed choice, the manner in whichinformed choice may be exercised, andthe availability of support services forindividuals with cognitive or otherdisabilities who require assistance inexercising informed choice.(b) In developing an individual’sIWRP, the State unit shall provide theindividual, or assist the individual inacquiring, information necessary tomake an informed choice about thespecific services, including theproviders of those services, that areneeded to achieve the individual’svocational goal. This information mustinclude, at a minimum, informationrelating to the cost, accessibility, andduration of potential services, theconsumer satisfaction with thoseservices to the extent that informationrelating to consumer satisfaction isavailable, the qualifications of potentialservice providers, the types of servicesoffered by those providers, and thedegree to which services are provided inintegrated settings.(c) In providing, or assisting theindividual in acquiring, the informationrequired under paragraph (b) of thissection, the State unit may use, but isnot limited to, the following methods orsources of information:(1) State or regional lists of servicesand service providers.(2) Periodic consumer satisfactionsurveys and reports.(3) Referrals to other consumers, localconsumer groups, or disability advisorycouncils qualified to discuss theservices or service providers.(4) Relevant accreditation,certification, or other informationrelating to the qualifications of serviceproviders.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Secs. 12(e)(1), 12(e)(2) (C) and (F),and 101(a)(29) of the Act; 29 U.S.C. 711(e)and 721(a)(29))§ 361.53 Availability of comparableservices and benefits.(a) The State plan must assure that—(1) Prior to providing any vocationalrehabilitation services to an eligibleindividual, or to members of theindividual’s family, except thoseservices listed in paragraph (b) of thissection, the State unit shall determinewhether comparable services andbenefits exist under any other programand whether those services and benefitsare available to the individual;(2) If comparable services or benefitsexist under any other program and areavailable to the eligible individual at thetime needed to achieve therehabilitation objectives in theindividual’s IWRP, the State unit shalluse those comparable services orbenefits to meet, in whole or in part, the

6358 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationscost of vocational rehabilitationservices; and(3) If comparable services or benefitsexist under any other program, but arenot available to the individual at thetime needed to satisfy the rehabilitationobjectives in the individual’s IWRP, theState unit shall provide vocationalrehabilitation services until thosecomparable services and benefitsbecome available.(b) The following services are exemptfrom a determination of the availabilityof comparable services and benefitsunder paragraph (a) of this section:(1) Assessment for determiningeligibility and priority for services.(2) Assessment for determiningvocational rehabilitation needs.(3) Vocational rehabilitationcounseling, guidance, and referralservices.(4) Vocational and other trainingservices, such as personal andvocational adjustment training, books(including alternative format booksaccessible by computer and tapedbooks), tools, and other trainingmaterials in accordance with§ 361.48(a)(6).(5) Placement services.(6) Rehabilitation technology.(7) Post-employment servicesconsisting of the services listed underparagraphs (b) (1) through (6) of thissection.(c) The requirements of paragraph (a)of this section also do not apply if—(1) The determination of theavailability of comparable services andbenefits under any other program woulddelay the provision of vocationalrehabilitation services to any individualwho is determined to be at extrememedical risk, based on medical evidenceprovided by an appropriate qualifiedmedical professional; or(2) An immediate job placementwould be lost due to a delay in theprovision of comparable services andbenefits.(Authority: Sec. 101(a)(8) of the Act; 29U.S.C. 721(a)(8))§ 361.54 Participation of individuals incost of services based on financial need.(a) No Federal requirement. There isno Federal requirement that thefinancial need of individuals beconsidered in the provision ofvocational rehabilitation services.(b) State unit requirements. (1) TheState unit may choose to consider thefinancial need of eligible individuals orindividuals who are receiving servicesduring an extended evaluation forpurposes of determining the extent oftheir participation in the costs ofvocational rehabilitation services, otherthan those services identified inparagraph (b)(3) of this section.(2) If the State unit chooses toconsider financial need—(i) It shall maintain written policiescovering the determination of financialneed;(ii) The State plan must specify thetypes of vocational rehabilitationservices for which the unit hasestablished a financial needs test;(iii) The policies must be applieduniformly to all individuals in similarcircumstances;(iv) The policies may require differentlevels of need for different geographicregions in the State, but must be applieduniformly to all individuals within eachgeographic region; and(v) The policies must ensure that thelevel of an individual’s participation inthe cost of vocational rehabilitationservices is—(A) Reasonable;(B) Based on the individual’s financialneed, including consideration of anydisability-related expenses paid by theindividual; and(C) Not so high as to effectively denythe individual a necessary service.(3) The State plan must assure that nofinancial needs test is applied and nofinancial participation is required as acondition for furnishing the followingvocational rehabilitation services:(i) Assessment for determiningeligibility and priority for services,except those non-assessment servicesthat are provided during an extendedevaluation for an individual with asevere disability under § 361.42(d).(ii) Assessment for determiningvocational rehabilitation needs.(iii) Vocational rehabilitationcounseling, guidance, and referralservices.(iv) Placement services.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 12(c) of the Act; 29 U.S.C.711(c))§ 361.55 Review of extended employmentin community rehabilitation programs orother employment under section 14(c) ofthe Fair Labor Standards Act.The State plan must assure that theState unit—(a) Reviews and re-evaluates at leastannually the status of each individualdetermined by the State unit to haveachieved an employment outcome in anextended employment setting in acommunity rehabilitation program orother employment setting in which theindividual is compensated inaccordance with section 14(c) of the FairLabor Standards Act. This review or reevaluationmust include input from theindividual or, in an appropriate case,the individual’s representative todetermine the interests, priorities, andneeds of the individual for employmentin, or training for, competitiveemployment in an integrated setting inthe labor market;(b) Makes maximum effort, includingthe identification of vocationalrehabilitation services, reasonableaccommodations, and other supportservices, to enable the eligibleindividual to benefit from training in, orto be placed in employment in, anintegrated setting; and(c) Provides services designed topromote movement from extendedemployment to integrated employment,including supported employment,independent living, and communityparticipation.(Authority: Sec. 101(a)(16) of the Act; 29U.S.C. 721(a)(16))§ 361.56 Individuals determined to haveachieved an employment outcome.The State plan must assure that anindividual is determined to haveachieved an employment outcome onlyif the following requirements are met:(a) The provision of services underthe individual’s IWRP has contributedto the achievement of the employmentoutcome.(b) The employment outcome isconsistent with the individual’sstrengths, resources, priorities,concerns, abilities, capabilities,interests, and informed choice.(c) The employment outcome is in themost integrated setting possible,consistent with the individual’sinformed choice.(d) The individual has maintained theemployment outcome for a period of atleast 90 days.(e) At the end of the appropriateperiod under paragraph (d) of thissection, the individual and therehabilitation counselor or coordinatorconsider the employment outcome to besatisfactory and agree that theindividual is performing well on the job.(Authority: Secs. 12(c), 101(a)(6), and106(a)(2) of the Act; 29 U.S.C. 711(c),721(a)(6), and 726(a)(2))§ 361.57 Review of rehabilitationcounselor or coordinator determinations.The State plan must containprocedures, including standards ofreview under paragraph (b)(7) of thissection, established by the director ofthe designated State unit to ensure thatany applicant or eligible individual whois dissatisfied with any determinationsmade by a rehabilitation counselor orcoordinator concerning the furnishingor denial of services may request, or, if

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6359appropriate, may request through theindividual’s representative, a timelyreview of those determinations. Theprocedures established by the directorof the State unit must be in accordancewith the following provisions:(a) Informal resolution. The State unitmay establish an informal process toresolve a request for review withoutconducting a formal hearing. However,a State’s informal process must beconducted and concluded within thetime period established under paragraph(b)(1) of this section for holding a formalhearing. If informal resolution is notsuccessful, a formal hearing must beconducted by the end of this sameperiod, unless the parties agree to aspecific extension of time.(b) Formal hearing procedures. Exceptas provided in paragraph (d) of thissection, the State unit shall establishformal review procedures that providethat—(1) A hearing by an impartial hearingofficer, selected in accordance withparagraph (c) of this section, must beheld within 45 days of an individual’srequest for review, unless informalresolution is achieved prior to the 45thday or the parties agree to a specificextension of time;(2) The State unit may not institute asuspension, reduction, or termination ofservices being provided under an IWRPpending a final determination of theformal hearing under this paragraph orinformal resolution under paragraph (a)of this section, unless the individual or,in an appropriate case, the individual’srepresentative so requests or the agencyhas evidence that the services have beenobtained through misrepresentation,fraud, collusion, or criminal conduct onthe part of the individual;(3) The individual or, if appropriate,the individual’s representative must beafforded an opportunity to presentadditional evidence, information, andwitnesses to the impartial hearingofficer, to be represented by counsel orother appropriate advocate, and toexamine all witnesses and otherrelevant sources of information andevidence;(4) The impartial hearing officer shallmake a decision based on the provisionsof the approved State plan, the Act,Federal vocational rehabilitationregulations, and State regulations andpolicies that are consistent with Federalrequirements and shall provide to theindividual or, if appropriate, theindividual’s representative and to thedirector of the designated State unit afull written report of the findings andgrounds for the decision within 30 daysof the completion of the hearing;(5) If the director of the designatedState unit decides to review the decisionof the impartial hearing officer, thedirector shall notify in writing theindividual or, if appropriate, theindividual’s representative of that intentwithin 20 days of the mailing of theimpartial hearing officer’s decision;(6) If the director of the designatedState unit fails to provide the noticerequired by paragraph (b)(5) of thissection, the impartial hearing officer’sdecision becomes a final decision;(7) The decision of the director of thedesignated State unit to review anyimpartial hearing officer’s decision mustbe based on standards of reviewcontained in written State unit policy;(8) If the director of the designatedState unit decides to review the decisionof the impartial hearing officer, thedirector shall provide the individual or,if appropriate, the individual’srepresentative an opportunity to submitadditional evidence and informationrelevant to the final decision;(9) The director may not overturn ormodify a decision, or part of a decision,of an impartial hearing officer thatsupports the position of the individualunless the director concludes, based onclear and convincing evidence, that thedecision of the impartial hearing officeris clearly erroneous because it iscontrary to the approved State plan, theAct, Federal vocational rehabilitationregulations, or State regulations orpolicies that are consistent with Federalrequirements;(10) Within 30 days of providingnotice of intent to review the impartialhearing officer’s decision, the director ofthe designated State unit shall make afinal decision and provide a full reportin writing of the decision, including thefindings and the statutory, regulatory, orpolicy grounds for the decision, to theindividual or, if appropriate, theindividual’s representative;(11) The director of the designatedState unit may not delegateresponsibility to make any finaldecision to any other officer oremployee of the designated State unit;and(12) Except for the time limitationsestablished in paragraphs (b)(1) and(b)(5) of this section, each State’s reviewprocedures may provide for reasonabletime extensions for good cause shown atthe request of a party or at the requestof both parties.(c) Selection of impartial hearingofficers. Except as provided inparagraph (d) of this section, theimpartial hearing officer for a particularcase must be selected—(1) From among the pool of personsqualified to be an impartial hearingofficer, as defined in § 361.5(b)(22), whoare identified by the State unit, if theState unit is an independentcommission, or jointly by the designatedState unit and those members of theState Rehabilitation Advisory Councildesignated in section 102(d)(2)(C) of theAct, if the State has a Council; and(2)(i) On a random basis; or(ii) By agreement between the directorof the designated State unit and theindividual or, if appropriate, theindividual’s representative.(d) State fair hearing board. Theprovisions of paragraphs (b) and (c) ofthis section are not applicable if theState has a fair hearing board that wasestablished before January 1, 1985, thatis authorized under State law to reviewrehabilitation counselor or coordinatordeterminations and to carry out theresponsibilities of the director of thedesignated State unit under this section.(e) Informing affected individuals.The State unit shall inform, throughappropriate modes of communication,all applicants and eligible individualsof—(1) Their right to review under thissection, including the names andaddresses of individuals with whomappeals may be filed; and(2) The manner in which an impartialhearing officer will be selectedconsistent with the requirements ofparagraph (c) of this section.(f) Data collection. The director of thedesignated State unit shall collect andsubmit, at a minimum, the followingdata to the Secretary for inclusion eachyear in the annual report to Congressunder section 13 of the Act:(1) The number of appeals toimpartial hearing officers and the Statedirector, including the type ofcomplaints and the issues involved.(2) The number of decisions by theState director reversing in whole or inpart a decision of the impartial hearingofficer.(3) The number of decisions affirmingthe position of the dissatisfiedindividual assisted through the clientassistance program, when thatassistance is known to the State unit.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Secs. 102(b) and 102(d) of theAct; 29 U.S.C. 722(b) and 722(d))Subpart C—Financing of StateVocational Rehabilitation Programs§ 361.60 Matching requirements.(a) Federal share—(1) General. Exceptas provided in paragraphs (a)(2) and(a)(3) of this section, the Federal sharefor expenditures made by the State unitunder the State plan, including

6360 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsexpenditures for the provision ofvocational rehabilitation services,administration of the State plan, and thedevelopment and implementation of thestrategic plan, is 78.7 percent.(2) Construction projects. The Federalshare for expenditures made for theconstruction of a facility for communityrehabilitation program purposes maynot be more than 50 percent of the totalcost of the project.(3) Innovation and expansion grantactivities. The Federal share for the costof innovation and expansion grantactivities funded by appropriationsunder Part C of Title I of the Act is 90percent.(b) Non-Federal share—(1) General.Except as provided in paragraphs (b)(2)and (b)(3) of this section, expendituresmade under the State plan to meet thenon-Federal share under this sectionmust be consistent with the provisionsof 34 CFR 80.24.(2) Third party in-kind contributions.Third party in-kind contributionsspecified in 34 CFR 80.24(a)(2) may notbe used to meet the non-Federal shareunder this section.(3) Contributions by private entities.Expenditures made from contributionsby private organizations, agencies, orindividuals that are deposited in theaccount of the State agency or sole localagency in accordance with State lawand that are earmarked, under acondition imposed by the contributor,may be used as part of the non-Federalshare under this section if the followingrequirements are met:(i) The funds are earmarked formeeting in whole or in part the State’sshare for establishing a communityrehabilitation program or constructing aparticular facility for communityrehabilitation program purposes.(ii) If the funds are earmarked for anyother purpose under the State plan, theexpenditures do not benefit in any waythe donor, an individual to whom thedonor is related by blood or marriage orwith whom the donor has a closepersonal relationship, or an individual,entity, or organization with whom thedonor shares a financial interest. TheSecretary does not consider a donor’sreceipt from the State unit of a grant,subgrant, or contract with funds allottedunder this part to be a benefit for thepurposes of this paragraph if the grant,subgrant, or contract is awarded underthe State’s regular competitiveprocedures.(Authority: Secs. 7(7), 101(a)(3), and 104 ofthe Act; 29 U.S.C. 706(7), 721(a)(3) and 724)Note: The Secretary notes thatcontributions may be earmarked inaccordance with paragraph (b)(3)(ii) of thissection for providing particular services (e.g.,rehabilitation technology services); servingindividuals with certain types of disabilities(e.g., individuals who are blind), consistentwith the State’s order of selection, ifapplicable; providing services to specialgroups that State or Federal law permits tobe targeted for services (e.g., students withdisabilities who are receiving specialeducation services), consistent with theState’s order of selection, if applicable; orcarrying out particular types ofadministrative activities permissible underState law. Contributions also may berestricted to particular geographic areas toincrease services or expand the scope ofservices that are available statewide underthe State plan. However, if a contribution isearmarked for a restricted geographic area,expenditures from that contribution may beused to meet the non-Federal sharerequirement only if the State unit requestsand the Secretary approves a waiver ofstatewideness, in accordance with § 361.26.§ 361.61 Limitation on use of funds forconstruction expenditures.No more than 10 percent of a State’sallotment for any fiscal year undersection 110 of the Act may be spent onthe construction of facilities forcommunity rehabilitation programpurposes.(Authority: Sec. 101(a)(17)(A) of the Act; 29U.S.C. 721(a)(17)(A))§ 361.62 Maintenance of effortrequirements.(a) General requirements. (1) TheSecretary reduces the amount otherwisepayable to a State for a fiscal year by theamount by which the total expendituresfrom non-Federal sources under theState plan for the previous fiscal yearwere less than the total of thoseexpenditures for the fiscal year twoyears prior to the previous fiscal year.For example, for fiscal year 1996, aState’s maintenance of effort level isbased on the amount of its expendituresfrom non-Federal sources for fiscal year1994. Thus, if the State’s non-Federalexpenditures in 1996 are less than theywere in 1994, the State has amaintenance of effort deficit, and theSecretary reduces the State’s allotmentin 1997 by the amount of that deficit.(2) If, at the time the Secretary makesa determination that a State has failedto meet its maintenance of effortrequirements, it is too late for theSecretary to make a reduction inaccordance with paragraph (a)(1) of thissection, then the Secretary recovers theamount of the maintenance of effortdeficit through audit disallowance.(b) Specific requirements forconstruction of facilities. If the Stateplan provides for the construction of afacility for community rehabilitationprogram purposes, the amount of theState’s share of expenditures forvocational rehabilitation services underthe plan, other than for the constructionof a facility for communityrehabilitation program purposes or theestablishment of a facility forcommunity rehabilitation purposes,must be at least equal to theexpenditures for those services for thesecond prior fiscal year. If a State failsto meet the requirements of thisparagraph, the Secretary recovers theamount of the maintenance of effortdeficit through audit disallowance.(c) Separate State agency forvocational rehabilitation services forindividuals who are blind. If there is aseparate part of the State planadministered by a separate State agencyto provide vocational rehabilitationservices for individuals who are blind—(1) Satisfaction of the maintenance ofeffort requirements under paragraphs (a)and (b) of this section are determinedbased on the total amount of a State’snon-Federal expenditures under bothparts of the State plan; and(2) If a State fails to meet anymaintenance of effort requirement, theSecretary reduces the amount otherwisepayable to the State for that fiscal yearunder each part of the plan in directrelation to the amount by whichexpenditures from non-Federal sourcesunder each part of the plan in theprevious fiscal year were less than theywere for that part of the plan for thefiscal year two years prior to theprevious fiscal year.(d) Waiver or modification. (1) TheSecretary may waive or modify themaintenance of effort requirement inparagraph (a)(1) of this section if theSecretary determines that a waiver ormodification is necessary to permit theState to respond to exceptional oruncontrollable circumstances, such as amajor natural disaster or a seriouseconomic downturn, that—(i) Cause significant unanticipatedexpenditures or reductions in revenue;and(ii) Result in—(A) A general reduction of programswithin the State; or(B) The State making substantialexpenditures in the vocationalrehabilitation program for long-termpurposes due to the one-time costsassociated with the construction of afacility for community rehabilitationprogram purposes, the establishment ofa facility for community rehabilitationprogram purposes, or the acquisition ofequipment.(2) The Secretary may waive ormodify the maintenance of effortrequirement in paragraph (b) of thissection or the 10 percent allotmentlimitation in § 361.61 if the Secretary

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6361determines that a waiver ormodification is necessary to permit theState to respond to exceptional oruncontrollable circumstances, such as amajor natural disaster, that result insignificant destruction of existingfacilities and require the State to makesubstantial expenditures for theconstruction of a facility for communityrehabilitation program purposes or theestablishment of a facility forcommunity rehabilitation programpurposes in order to provide vocationalrehabilitation services.(3) A written request for waiver ormodification, including supportingjustification, must be submitted to theSecretary as soon as the Statedetermines that an exceptional oruncontrollable circumstance willprevent it from making its requiredexpenditures from non-Federal sources.(Authority: Secs. 101(a)(17) and 111(a)(2) ofthe Act; 29 U.S.C. 721(a)(17) and 731(a)(2))§ 361.63 Program income.(a) Definition. Program income meansgross income received by the State thatis directly generated by an activitysupported under this part.(b) Sources. Sources of programincome include, but are not limited to,payments from the Social SecurityAdministration for rehabilitating SocialSecurity beneficiaries, paymentsreceived from workers’ compensationfunds, fees for services to defray part orall of the costs of services provided toparticular individuals, and incomegenerated by a State-operatedcommunity rehabilitation program.(c) Use of program income. (1) Exceptas provided in paragraph (c)(2) of thissection, program income, wheneverearned, must be used for the provisionof vocational rehabilitation services, theadministration of the State plan, anddeveloping and implementing thestrategic plan. Program income isconsidered earned when it is received.(2) Payments provided to a State fromthe Social Security Administration forrehabilitating Social Securitybeneficiaries may also be used to carryout programs under Part B of Title I ofthe Act (client assistance), Part C ofTitle I of the Act (innovation andexpansion), Part C of Title VI of the Act(supported employment) and Title VII ofthe Act (independent living).(3) The State is authorized to treatprogram income as—(i) An addition to the grant funds tobe used for additional allowableprogram expenditures, in accordancewith 34 CFR 80.25(g)(2); or(ii) A deduction from total allowablecosts, in accordance with 34 CFR80.25(g)(1).(4) Program income may not be usedto meet the non-Federal sharerequirement under § 361.60.(Authority: Sec. 108 of the Act; 29 U.S.C.728; 34 CFR 80.25)§ 361.64 Obligation of Federal funds andprogram income.(a) Except as provided in paragraph(b) of this section, any Federal funds,including reallotted funds, that areappropriated for a fiscal year to carryout a program under this part that arenot obligated by the State unit by thebeginning of the succeeding fiscal yearand any program income receivedduring a fiscal year that is not obligatedby the State unit by the beginning of thesucceeding fiscal year must remainavailable for obligation by the State unitduring that succeeding fiscal year.(b) Federal funds appropriated for afiscal year remain available forobligation in the succeeding fiscal yearonly to the extent that the State unit metthe matching requirement for thoseFederal funds by obligating, inaccordance with 34 CFR 76.707, thenon-Federal share in the fiscal year forwhich the funds were appropriated.(Authority: Sec. 19 of the Act; 29 U.S.C. 718)§ 361.65 Allotment and payment of Federalfunds for vocational rehabilitation services.(a) Allotment. (1) The allotment ofFederal funds for vocationalrehabilitation services for each State iscomputed in accordance with therequirements of section 110 of the Act,and payments are made to the State ona quarterly basis, unless some otherperiod is established by the Secretary.(2) If the State plan designates oneState agency to administer, or supervisethe administration of, the part of theplan under which vocationalrehabilitation services are provided forindividuals who are blind and anotherState agency to administer the rest of theplan, the division of the State’sallotment is a matter for Statedetermination.(b) Reallotment. (1) The Secretarydetermines not later than 45 days beforethe end of a fiscal year which States, ifany, will not use their full allotment.(2) As soon as possible, but not laterthan the end of the fiscal year, theSecretary reallots these funds to otherStates that can use those additionalfunds during the current or subsequentfiscal year, provided the State can meetthe matching requirement by obligatingthe non-Federal share of any reallottedfunds in the fiscal year for which thefunds were appropriated.(3) Funds reallotted to another Stateare considered to be an increase in therecipient State’s allotment for the fiscalyear for which the funds wereappropriated.(Authority: Secs. 110 and 111 of the Act; 29U.S.C. 730 and 731)Subpart D—Strategic Plan forInnovation and Expansion ofVocational Rehabilitation Services§ 361.70 Purpose of the strategic plan.The State shall prepare a statewidestrategic plan, in accordance with§ 361.71, to develop and use innovativeapproaches for achieving long-termsuccess in expanding and improvingvocational rehabilitation services,including supported employmentservices, provided under the State plan,including the supported employmentsupplement to the State plan requiredunder 34 CFR part 363.(Authority: Sec. 120 of the Act; 29 U.S.C.740)§ 361.71 Procedures for developing thestrategic plan.(a) Public input. (1) The State unitshall meet with and receiverecommendations from members of theState Rehabilitation Advisory Council, ifthe State has a Council, and theStatewide Independent Living Councilprior to developing the strategic plan.(2) The State unit shall solicit publicinput on the strategic plan prior to or atthe public meetings on the State plan,in accordance with the requirements of§ 361.20.(3) The State unit shall consider therecommendations received underparagraphs (a)(1) and (a)(2) of thissection and, if the State rejects anyrecommendations, shall include awritten explanation of the reasons forthose rejections in the strategic plan.(4) The State unit shall develop aprocedure to ensure ongoing commentfrom the Council or Councils, ifapplicable, as the plan is beingimplemented.(b) Duration. The strategic plan mustcover a three-year period.(c) Revisions. The State unit shallrevise the strategic plan on an annualbasis to reflect the unit’s actualexperience over the previous year andinput from the State RehabilitationAdvisory Council, if the State has aCouncil, individuals with disabilities,and other interested parties.(d) Dissemination. The State unitshall disseminate widely the strategicplan to individuals with disabilities,disability organizations, rehabilitationprofessionals, and other interestedpersons and shall make the strategicplan available in accessible formats andappropriate modes of communication.

6362 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 122 of the Act; 29 U.S.C.742)§ 361.72 Content of the strategic plan.The strategic plan must include—(a) A statement of the mission,philosophy, values, and principles ofthe vocational rehabilitation program inthe State;(b) Specific goals and objectives forexpanding and improving the system forproviding vocational rehabilitationservices;(c) Specific multi-faceted andsystemic approaches for accomplishingthe objectives, including interagencycoordination and cooperation, that buildupon state-of-the-art practices andresearch findings and that implementthe State plan and the supplement to theState plan submitted under 34 CFR Part363;(d) A description of the specificprograms, projects, and activitiesfunded under this subpart, includinghow the programs, projects, andactivities accomplish the objectives ofthe subpart, and the resource allocationand budget for the programs, projects,and activities; and(e) Specific criteria for determiningwhether the objectives have beenachieved, including an assurance thatthe State will conduct an annualevaluation to determine the extent towhich the objectives have beenachieved and, if specific objectives havenot been achieved, the reasons that theobjectives have not been achieved anda description of alternative approachesthat will be taken.(Approved by the Office of Management andBudget under control number 1820–0500.)(Authority: Sec. 121 of the Act; 29 U.S.C.741)§ 361.73 Use of funds.(a) A State unit shall use all grantfunds received under Title I, Part C ofthe Act to carry out programs andactivities that are identified under theState’s strategic plan, including but notlimited to those programs and activitiesthat are identified in paragraph (b) ofthis section.(b) A State unit shall use at least 1.5percent of the funds received undersection 111 of the Act to carry out oneor more of the following types ofprograms and activities that areidentified in the State’s strategic plan:(1) Programs to initiate or expandemployment opportunities forindividuals with severe disabilities inintegrated settings that allow for the useof on-the-job training to promote theobjectives of Title I of the Americanswith Disabilities Act of 1990.(2) Programs or activities to improveor expand the provision of employmentservices in integrated settings toindividuals with sensory, cognitive,physical, and mental impairments whotraditionally have not been served bythe State vocational rehabilitationagency.(3) Programs or activities to maximizethe ability of individuals withdisabilities to use rehabilitationtechnology in employment settings.(4) Programs or activities that assistemployers in accommodating,evaluating, training, or placingindividuals with disabilities in theworkplace of the employer consistentwith the provisions of the Act and TitleI of the Americans with Disabilities Actof 1990. These programs or activitiesmay include short-term technicalassistance or other effective strategies.(5) Programs or activities that expandand improve the extent and type of anindividual’s involvement in the reviewand selection of his or her training andemployment goals.(6) Programs or activities that expandand improve opportunities for careeradvancement for individuals withsevere disabilities.(7) Programs, projects, or activitiesdesigned to initiate, expand, or improveworking relationships betweenvocational rehabilitation servicesprovided under Title I of the Act andindependent living services providedunder Title VII of the Act.(8) Programs, projects, or activitiesdesigned to improve functioning of thesystem for delivering vocationalrehabilitation services and to improvecoordination and working relationshipswith other State agencies and localpublic agencies, business, industry,labor, community rehabilitationprograms, and centers for independentliving, including projects designed to—(i) Increase the ease of access to,timeliness of, and quality of vocationalrehabilitation services through thedevelopment and implementation ofpolicies, procedures, systems, andinteragency mechanisms for providingvocational rehabilitation services;(ii) Improve the working relationshipsbetween State vocational rehabilitationagencies and other State agencies,centers for independent living,community rehabilitation programs,educational agencies involved in highereducation, adult basic education, andcontinuing education, and businesses,industry, and labor organizations, inorder to create and facilitate cooperationin—(A) Planning and implementingservices; and(B) Developing an integrated systemof community-based vocationalrehabilitation services that includesappropriate transitions between servicesystems; and(iii) Improve the ability ofprofessionals, advocates, business,industry, labor, and individuals withdisabilities to work in cooperativepartnerships to improve the quality ofvocational rehabilitation services andjob and career opportunities forindividuals with disabilities.(9) Projects or activities that ensurethat the annual evaluation of theeffectiveness of the program in meetingthe goals and objectives in the Stateplan, including the system forevaluating the performance ofrehabilitation counselors, coordinators,and other personnel used in the State,facilitates and does not impede theaccomplishment of the purpose of thispart, including serving individuals withthe most severe disabilities.(10) Projects or activities to supportthe initiation, expansion, andimprovement of a comprehensivesystem of personnel development.(11) Programs, projects, or activities tosupport the provision of training andtechnical assistance to individuals withdisabilities, business, industry, labor,community rehabilitation programs, andothers regarding the implementation ofthe Rehabilitation Act Amendments of1992, of Title V of the Act, and of theAmericans with Disabilities Act of 1990.(12) Projects or activities to supportthe funding of the State RehabilitationAdvisory Council and the StatewideIndependent Living Council.(Authority: Secs. 101(a)(34)(B) and 123 of theAct; 29 U.S.C. 721(a)(34)(B) and 743)§ 361.74 Allotment of Federal funds.(a) The allotment and any reallotmentof Federal funds under Title I, Part C ofthe Act are computed in accordancewith the requirements of section 124 ofthe Act.(b) If at any time the Secretarydetermines that any amount will not beexpended by a State in carrying out thepurpose of this subpart, the Secretarymakes that amount available to one ormore other States that the Secretarydetermines will be able to useadditional amounts during the fiscalyear. Any amount made available to anyState under this paragraph of thissection is regarded as an increase in theState’s allotment for that fiscal year.(Authority: Sec. 124 of the Act; 29 U.S.C.744)

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6363PART 363—THE STATE SUPPORTEDEMPLOYMENT SERVICES PROGRAM2. The authority citation for part 363continues to read as follows:Authority: 29 U.S.C. 795j–q, unlessotherwise noted.3. In § 363.6, paragraphs (c)(1),(c)(2)(i), (c)(2)(ii), and the authoritycitation are revised to read as follows:§ 363.6 What definitions apply?* * * * *(c) * * *(1) Supported employment means—(i) Competitive employment in anintegrated setting with ongoing supportservices for individuals with the mostsevere disabilities—(A) For whom competitiveemployment has not traditionallyoccurred or for whom competitiveemployment has been interrupted orintermittent as a result of a severedisability; and(B) Who, because of the nature andseverity of their disabilities, needintensive supported employmentservices from the designated State unitand extended services after transition inorder to perform this work; or(ii) Transitional employment forindividuals with the most severedisabilities due to mental illness.(2) As used in the definition of‘‘Supported employment’’—(i) Competitive employment meanswork—(A) In the competitive labor marketthat is performed on a full-time or parttimebasis in an integrated setting; and(B) For which an individual iscompensated at or above the minimumwage, but not less than the customary orusual wage paid by the employer for thesame or similar work performed byindividuals who are not disabled.(ii) Integrated setting means a settingtypically found in the community inwhich an individual with the mostsevere disabilities interacts with nondisabledindividuals, other than nondisabledindividuals who are providingservices to that individual, to the sameextent that non-disabled individuals incomparable positions interact with otherpersons.* * * * *(Authority: 29 U.S.C. 706(18), 711(c), and795j)PART 376—SPECIAL PROJECTS ANDDEMONSTRATIONS FOR PROVIDINGTRANSITIONAL REHABILITATIONSERVICES TO YOUTH WITHDISABILITIES4. The authority citation for part 376continues to read as follows:Authority: 29 U.S.C. 777a(b), unlessotherwise noted.5. In § 376.4, paragraph (c) and theauthority citation are revised to read asfollows:§ 376.4 What definitions apply to thisprogram?* * * * *(c) The definitions of ‘‘Competitiveemployment’’, ‘‘Integrated setting’’,‘‘On-going support services’’,‘‘Transitional employment’’, and ‘‘Timelimitedservices’’ in 34 CFR part 380.* * * * *(Authority: 29 U.S.C. 711(c) and 777a(b))PART 380—SPECIAL PROJECTS ANDDEMONSTRATIONS FOR PROVIDINGSUPPORTED EMPLOYMENTSERVICES TO INDIVIDUALS WITH THEMOST SEVERE DISABILITIES ANDTECHNICAL ASSISTANCE PROJECTS6. The authority citation for part 380continues to read as follows:Authority: 29 U.S.C. 711(c) and 777a(c),unless otherwise noted.7. In § 380.9, paragraphs (c)(1)(i) and(c)(1)(ii) are revised to read as follows:§ 380.9 What definitions apply?* * * * *(c) * * *(1) * * *(i) Competitive employment meanswork—(A) In the competitive labor marketthat is performed on a full-time or parttimebasis in an integrated setting; and(B) For which an individual iscompensated at or above the minimumwage, but not less than the customary orusual wage paid by the employer for thesame or similar work performed byindividuals who are not disabled.(ii) Integrated setting means a settingtypically found in the community inwhich an individual with the mostsevere disabilities interacts with nondisabledindividuals, other than nondisabledindividuals who are providingservices to that individual, to the sameextent that non-disabled individuals incomparable positions interact with otherpersons.* * * * *[FR Doc. 97–3159 Filed 2–10– 97; 8:45 am]BILLING CODE 4000–01–P

federal registerTuesdayFebruary 11, 1997Part IIIEnvironmentalProtection Agency40 CFR Parts 85, 89 and 92Emission Standards for Locomotives andLocomotive Engines; Proposed Rule6365

6366 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed RulesENVIRONMENTAL PROTECTIONAGENCY40 CFR Parts 85, 89 and 92[FRL–5686–1]RIN 2060–AD33Emission Standards for Locomotivesand Locomotive EnginesAGENCY: Environmental ProtectionAgency (EPA).ACTION: Notice of Proposed Rulemaking(NPRM).SUMMARY: EPA is proposing regulatoryrequirements for the control ofemissions from locomotives and enginesused in locomotives as required byClean Air Act section 213(a)(5). Theprimary focus of this proposal isreduction of the emissions of oxides ofnitrogen (NO X). The proposed standardswill result in more than a 60 percentreduction in NO X from freshlymanufactured locomotives beginning in2005, with lesser reductions fromlocomotives originally manufacturedfrom 1973 through 2004. NO X is aprecursor to the formation of groundlevel ozone, which causes healthproblems such as damage to lung tissue,reduction of lung function, andsensitization of lungs to other irritants,as well as damage to terrestrial andaquatic ecosystems. EPA is alsoproposing standards for emissions ofhydrocarbons (HC), carbon monoxide(CO), particulate matter (PM), andsmoke. The cost effectiveness of today’sproposed emissions standards is 173dollars per ton of NO X and PM reduced.Three separate sets of standards areproposed, with applicability of thestandards dependent on the date alocomotive is first manufactured. Thefirst set of standards (Tier 0) areproposed to apply to locomotives andlocomotive engines originallymanufactured from 1973 through 1999,any time they are remanufactured incalendar year 2000 or later. The secondset of standards (Tier I) apply tolocomotives and locomotive enginesoriginally manufactured from 2000through 2004. Such locomotives andlocomotive engines would be requiredto meet the Tier I standards at the timeof original manufacture and at eachsubsequent remanufacture. The final setof standards (Tier II) are proposed toapply to locomotives and locomotiveengines originally manufactured in 2005and later. Such locomotives andlocomotive engines would be requiredto meet the Tier II standards at the timeof original manufacture and at eachsubsequent remanufacture.Today’s proposal includes a variety ofprovisions to implement the standardsand to ensure that the standards are metin-use. These provisions includecertification test procedures, andassembly line and in-use compliancetesting programs. Also included intoday’s proposal is an emissionsaveraging, banking and trading programto provide flexibility in achievingcompliance with the proposedstandards. Finally, EPA is proposingregulations that would preempt certainstate and local requirements relating tothe control of emissions from newlocomotives and new locomotiveengines, pursuant to Clean Air Actsection 209(e).DATES: Comments must be received onor before April 14, 1997. A publichearing will be held on March 13, 1997,starting at 9:30 a.m. Persons wishing topresent oral testimony are requested tonotify EPA on or before March 6, 1997,to allow for an orderly scheduling oforal testimony.ADDRESSES:Written comments: Interested partiesmay submit written comments (intriplicate if possible) for EPAconsideration. The comments are to beaddressed to: EPA Air and RadiationDocket, Attention: Docket No. A–94–31,Room M–1500, Mail Code 6102, U.S.EPA, 401 M Street, S.W., WashingtonDC 20460. The docket is open for publicinspection from 8 a.m. until 5:30 p.m.Monday through Friday, except ongovernment holidays. As provided in 40CFR part 2, a reasonable fee may becharged for copying docket materials.Should a commenter wish to provideconfidential business information (CBI)to EPA, such CBI should NOT beincluded with the information sent tothe docket. Materials sent to the docketshould, however, indicate that CBI wasprovided to EPA. One copy of CBI,along with the remainder of the writtencomments, should be sent to CharlesMoulis at the address provided in FORFURTHER INFORMATION CONTACT below.Public hearing: The public hearingwill be held at: (Holiday Inn—NorthCampus, 3600 Plymouth Rd, Ann Arbor,MI 48105, (313) 769–9800).FOR FURTHER INFORMATION CONTACT: Forinformation on this rulemaking contact:Charles Moulis, U.S. EPA, EnginePrograms and Compliance Division,2565 Plymouth Road, Ann Arbor, MI48105; Telephone: (313) 741–7826, Fax:(313) 741–7816. Requests for hardcopies of the preamble, regulation textand regulatory support document (RSD)should be directed to Carol Connell at(313) 668–4349.SUPPLEMENTARY INFORMATION:I. Regulated EntitiesII. Statutory AuthorityIII. BackgroundIV. Emissions from Present LocomotivesV. Description of the ProposalVI. Emission Reduction TechnologyVII. BenefitsVIII. CostsIX. Cost-EffectivenessX. Public ParticipationXI. Administrative Designation andRegulatory Assessment RequirementsXII. Copies of Rulemaking DocumentsI. Regulated EntitiesEntities potentially regulated by thisproposed action are those whichmanufacture and/or remanufacturelocomotives and locomotive engines;those which own and operate railroads;and state and local governments.Regulated categories and entitiesinclude:CategoryExamples of regulated entitiesIndustry ........ Manufacturers and remanufacturersof locomotivesand locomotive engines,railroad owners and operators.Government State and local governments. 11 It should be noted that the proposed provisionsdo not impose any requirements thatstate and local governments (other than thosethat own or operate local and regional railroads)must meet, but rather implement theClean Air Act preemption provisions for locomotives.It should also be noted that somestate and local governments also own or operatelocal and regional railroads.This table is not intended to beexhaustive, but rather provides a guidefor readers regarding entities likely to beregulated by this proposal. This tablelists the types of entities that EPA isnow aware could potentially beregulated by this proposal. Other typesof entities not listed in the table couldalso be regulated. To determine whetheryour company is regulated by thisproposal, you should carefully examinethe applicability criteria in §§ 92.001and 92.901 of the proposed regulatorytext. If you have questions regarding theapplicability of this proposal to aparticular entity, consult the personlisted in the preceding FOR FURTHERINFORMATION CONTACT section.II. Statutory AuthorityAuthority for the actions proposed inthis notice is granted to theEnvironmental Protection Agency (EPA)by sections 114, 203, 204, 205, 206, 207,208, 209, 213, 215, 216 and 301(a) of theClean Air Act as amended in 1990 (CAAor ‘‘the Act’’) (42 U.S.C. 7414, 7522,7523, 7524, 7525, 7541, 7542, 7543,7547, 7549, 7550 and 7601(a)).

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6367EPA is proposing emissions standardsfor new locomotives and new enginesused in locomotives pursuant to itsauthority under section 213 of the CleanAir Act. Section 213(a)(5) directs EPA toadopt emissions standards for newlocomotives and new engines used inlocomotives that achieve the greatestdegree of emissions reductionsachievable through the use oftechnology that the Administratordetermines will be available for suchvehicles and engines, taking intoaccount the cost of applying suchtechnology within the available timeperiod, and noise, energy, and safetyfactors associated with the applicationof such technology. As described in thisnotice and in the regulatory supportdocument, EPA has evaluated theavailable information to determine thetechnology that will be available forlocomotives and engines proposed to besubject to EPA standards.EPA is also acting under its authorityto implement and enforce thelocomotive emission standards. Section213(d) provides that the standards EPAadopts for new locomotives and newengines used in locomotives ‘‘shall besubject to sections 206, 207, 208, and209’’ of the Clean Air Act, with suchmodifications that the Administratordeems appropriate to the regulationsimplementing these sections. 1 Inaddition, the locomotive standards‘‘shall be enforced in the same manneras [motor vehicle] standards prescribedunder section 202’’ of the Act. Section213(d) also grants EPA authority topromulgate or revise regulations asnecessary to determine compliancewith, and enforce, standards adoptedunder section 213. Pursuant to thisauthority, EPA is proposing thatmanufacturers (includingremanufacturers) of new locomotivesand new engines used in locomotivesmust obtain a certificate of compliancewith EPA’s emissions standards andrequirements, and must subject thelocomotives and engines to assemblyline and in-use testing. The language ofsection 213(d) directs EPA to generallyenforce the locomotive emissionsstandards in the same manner as itenforces motor vehicle emissionsstandards. Pursuant to this authority,EPA is proposing regulations similar tothose adopted for motor vehicles andengines under section 203 of the Act,which prescribes certain enforcementrelatedprohibitions, including aprohibition against introducing a new1 Sections 206, 207, 208, and 209 of the Act covercompliance testing and certification, in-usecompliance, information collection, and statestandards, respectively.vehicle or engine that is not covered bya valid certificate of conformity intocommerce, a prohibition againsttampering, and a prohibition onimporting a vehicle or engine into theUnited States without a valid,applicable certificate of conformity. Inaddition, EPA is proposing emissiondefect regulations that requiremanufacturers to report to EPAemissions-related defects that affect agiven class or category of engines.EPA is also proposing regulations toclarify the scope of preemption of stateregulation. Section 209(e) prohibitsstates from adopting and enforcingstandards and other requirementsrelating to the control of emissions fromnew locomotives and new engines usedin locomotives. This provision alsogrants EPA authority to adoptregulations to implement section 209(e).Pursuant to this authority, EPA isproposing to adopt regulations toimplement the express preemption ofstate emissions standards for newlocomotives and new engines used inlocomotives, for the purpose ofclarifying the scope of preemption forstates and industry.III. BackgroundA. LocomotivesLocomotives generally fall into threebroad categories based on their intendeduse. Switch locomotives, typically 1500kilowatts (kW) or less, (2000horsepower (hp)), are the least powerfullocomotives, and are used in freightyards to assemble and disassembletrains, or for short hauls of small trains.Passenger locomotives are powered byengines of approximately 2200 kW(3000 hp), and may be equipped with anauxiliary engine to provide hotel powerfor the train, although they may alsogenerate hotel power (i.e., electricalpower used for lighting, heating, etc. inthe passenger cars) with the mainengine. Freight or line-haul locomotivesare the most powerful locomotives andare used to power freight trainoperations over long distances. Olderline-haul locomotives are typicallypowered by engines of approximately2,200 kW (3,000 hp), while newer linehaullocomotives are powered byengines of approximately 3,000 kW(4,000 hp). In some cases, older linehaullocomotives (especially lowerpowered ones) are used in switchapplications. The industry expects thatthe next generation of freshlymanufactured line-haul locomotiveswill be powered by 4,500 kW (6,000 hp)engines.One unique feature of locomotivesthat makes them different than other,currently regulated mobile sources isthe way that power is transferred fromthe engine to the wheels. Most mobilesources utilize mechanical means (i.e., atransmission) to transfer energy from theengine to the wheels (or other site ofuse). This results in engine operationwhich is very transient in nature, withrespect to changes in both speed andload. In contrast, locomotive engines aretypically connected to an electricalgenerator to convert the mechanicalenergy to electricity. This electricity isthen used to power traction motorswhich turn the wheels. This lack of adirect, mechanical connection betweenthe engine and the wheels allows theengine to operate in an essentiallysteady state mode in a number ofdiscrete power settings, or notches.Current locomotives typically have eightpower notches, as well as one or twoidle settings.A second unique feature oflocomotives setting them apart fromother mobile sources is their brakingsystem. In this braking system, calledthe dynamic brake, the traction motorsact as generators, with the generatedpower being dissipated as heat throughan electric resistance grid. While theengine is not generating motive power(i.e., power to propel the locomotive,also known as tractive power) in thedynamic brake mode, it is generatingpower to operate the resistance gridcooling fans. As such, the engine isoperating in a power mode that isdifferent than the power notches or idlesettings just discussed. While mostdiesel electric locomotives havedynamic brakes, some do not (generallyswitch locomotives).B. RailroadsIn the United States, freight railroadsare subdivided into three classes by theFederal Surface Transportation Board(STB), based on annual revenue. In 1994a railroad was classified as a Class Irailroad if annual revenue was $255.9million or greater, as a Class II railroadwith annual revenue of between $20.5and 255.8 million, and as a Class IIIrailroad with revenues of under $20.5million. In 1994, there were 12 Class Irailroads and 519 Class II and IIIrailroads operating in the U.S. Due to arecent merger of two railroads, there arecurrently 11 Class I railroads operatingin the U.S. Class I railroads presentlyoperate approximately 18,500locomotives in the U.S., while Class IIand III railroads operate approximately2,650 locomotives. 22 Railroad Facts, 1995 Edition, Association ofAmerican Railroads, September, 1995.

6368 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed RulesC. Locomotive UsageMovement of freight by Class Irailroads totaled approximately 910billion ton-miles in 1981, increasing toapproximately 1,201 billion ton-miles in1994; an increase of approximately 32percent. At present, more than 1 ⁄3 oftotal intercity revenue freight ton-milesmoved in the U.S. by all transportationmeans are moved by train. 3D. Locomotive Sales and RebuildPracticesFrom 1985 through 1994, annual salesof freshly manufactured locomotivesfluctuated somewhat, but averagedapproximately 450 units. Class Irailroads typically purchase all of thesefreshly manufactured locomotives.Older locomotives owned by Class Irailroads are either sold to smallerrailroads, scrapped, or purchased by anindependent entity for remanufactureand resale. The total life of a locomotiveis approximately 40 years, during whichperiod the engine and the locomotiveundergo several extensiveremanufacturing operations. Theseremanufacturing operations generallyconsist of, at a minimum, thereplacement of the power assemblies(i.e., pistons, piston rings, cylinderliners, cylinder heads, fuel injectors,valves, etc.) with new components (orcomponents that are in new condition)to bring the locomotive back to thecondition it was in when originallymanufactured with respect toperformance, durability and emissions.E. Locomotive and Locomotive EngineManufacturers and RemanufacturersLocomotives used in the United Statesare primarily produced by twomanufacturers: the ElectromotiveDivision of General Motors (EMD) andGeneral Electric Transportation Systems(GE). These manufacturers produce boththe locomotive chassis and thepropulsion engines, and alsoremanufacture engines. MotivePowerIndustries (formerly MK RailCorporation) recently entered themarket and has manufactured somelocomotives using enginesmanufactured by Caterpillar, Inc. DetroitDiesel Corporation and CumminsEngine Company, Inc. also produceengines which may be used inlocomotives. U.S. railroads do not tendto purchase locomotives or locomotiveengines from manufacturers outside ofthe U.S.The two primary manufacturers offreshly manufactured locomotives also3 Id. A revenue freight ton-mile is the commercialmovement (i.e., for revenue) of one ton of freightone mile.provide remanufacturing services totheir customers. Several additionalentities also remanufacture locomotives.Many Class I railroads remanufacturelocomotive engines for their own unitsand on a contract basis for otherrailroads. Additionally, there are a smallnumber of independentremanufacturing operations inexistence.F. Interstate CommerceCurrent railroad networks (rail lines)are geographically widespread acrossthe United States, serving every majorcity in the country. Today,approximately one-third of the freighthauled in the United States is hauled bytrain. There are very few industries orcitizens in the U.S. who are not ultimateconsumers of the services provided bythe American railroad companies.Efficient train transportation is a vitalfactor in the strength of the U.S.economy.Class I railroads operate regionally.This is why railroad companies and theFederal Railroad Administration (FRA),have stressed the importance ofunhindered rail access across all stateboundaries. If states regulatedlocomotives differently, a railroad couldconceivably be forced to changelocomotives at state boundaries, and/orhave state-specific locomotive fleets.Currently, facilities for such changes donot exist, and even if switching areaswere available at state boundaries, itwould be a costly and time consumingdisruption of interstate commerce. Anydisruption in the efficient interstatemovement of trains throughout the U.S.would have an impact on the health andwell-being of not only the rail industrybut the entire U.S. economy as well.G. Modal ShiftAnother important point requiringconsideration in the regulation oflocomotives is the potential for modalshift. A modal shift is a change from oneform of transportation, such as trains, toanother form, such as trucks. Modalshift can have negative or positiveeffects on national and local emissionsinventories. Negative modal shift occurswhen there is a shift to a more pollutingform of transportation.Information currently available toEPA shows that truck-based freightmovement generates more pollutantsper ton-mile of freight hauled thancurrent, unregulated rail-based forms offreight movement. Estimates quantifyingthe difference indicate that locomotivesare on the order of three times cleanerthan trucks on an emissions per tonmilebasis. 4 Thus, overly stringentregulation of the rail industry or adisruption in interstate rail movementcould cause rail prices to increase andthus cause a negative modal shift.Regulations that were overly stringentcould raise equipment and/or operatingcosts to the point that it might be a wisereconomic choice to move current railfreight by truck. Additionally, delayscaused by changing locomotives at stateboundaries due to separate statelocomotive regulations could be costlyto railroad companies. These increasedcosts would be reflected in the price ofhauling freight by rail and may eveneliminate some rail carriers from themarket. In both of these cases customerscould switch to trucks for the movementof their freight. Any freight normallycarried by rail that is hauled by trucksinstead of by rail would increase overallemissions, even at current emissionslevels.H. Health and Environmental Impacts ofAmbient NO X and PMOxides of nitrogen (NO X) are a familyof reactive gaseous compounds thatcontribute to air pollution in both urbanand rural environments. NO X emissionsare produced during the combustion offuels at high temperatures. The primarysources of atmospheric NO X includehighway sources (such as light-duty andheavy-duty vehicles), nonroad sources(such as construction and agriculturalequipment, and locomotives) andstationary sources (such as power plantsand industrial boilers). Ambient levelsof NO X can be directly harmful tohuman health and the environment.More importantly, from an overallhealth and welfare perspective, NO Xcontributes to the production ofsecondary chemical products that inturn cause additional health and welfareeffects. Prominent among these areozone and nitrate particulate.The component of NO X that is of mostconcern from a health standpoint isnitrogen dioxide, NO 2. EPA has set aprimary (health-related) NAAQS forNO 2 of 100 micrograms per cubic meter,or 0.053 parts per million. Directexposure to NO 2 can reduce breathingefficiency and increase lung and airwayirritation in healthy people, as well asin the elderly and in people with preexistingpulmonary conditions.Exposure to NO 2 at or near the level ofthe ambient standard appears toincrease symptoms of respiratoryillness, lung congestion, wheeze, and4 Note from F. Peter Hutchins to Joanne I.Goldhand, dated 2/14/94, and entitled ‘‘Estimate ofRelative NO X Emissions Resulting from Movementof Freight by Truck and by Train.’’

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6369increased bronchitis in children. Inaddition to the direct effects of NO X, thechemical transformation products ofNO X also contribute to adverse healthand environmental impacts. Thesesecondary impacts of NO X includeground-level ozone, nitrate particulatematter, acid deposition, eutrophication(plant overgrowth) of coastal waters,and transformation of other pollutantsinto more dangerous chemical forms.Ozone is a highly reactive chemicalcompound that can affect bothbiological tissues and man-madematerials. Ozone exposure causes arange of human pulmonary andrespiratory health effects. While ozone’seffects on the pulmonary function ofsensitive individuals or populations(e.g., asthmatics) are of primary concern,evidence indicates that high ambientlevels of ozone can cause respiratorysymptoms in healthy adults andchildren as well. For example, exposureto ozone for several hours at moderateconcentrations, especially duringoutdoor work and exercise, has beenfound to decrease lung function,increase airway inflammation, increasesensitivity to other irritants, and impairlung defenses against infections inotherwise healthy adults and children.Other symptoms include chest pain,coughing, and shortness of breath.In recent years, significant effortshave been made on both a national andstate level to reduce air qualityproblems associated with ground-levelozone, with a focus on its mainprecursors, oxides of nitrogen (NO X)and volatile organic compounds(VOCs). 5 The precursors to ozone andozone itself are transported longdistances under some commonlyoccurring meteorological conditions.Specifically, concentrations of ozoneand its precursors in a region and thetransport of ozone and precursorpollutants into, out of, and within aregion are very significant factors in theaccumulation of ozone in any givenarea. Regional-scale transport may occurwithin a state or across one or morestate boundaries. Local source NO X andVOC controls are key parts of the overallattainment strategy for nonattainmentareas. However, the ability of an area toachieve ozone attainment and therebyreduce ozone-related health andenvironmental effects is often heavilyinfluenced by the ozone and precursoremission levels of upwind areas. Thus,for many of these areas, EPA believesthat attainment of the ozone NAAQSwill require control programs muchbroader than strictly locally focusedcontrols to take into account the effectof emissions and ozone far beyond theboundaries of any individualnonattainment area.EPA therefore believes that effectiveozone control requires an integratedstrategy that combines cost-effectivereductions in emissions from bothmobile and stationary sources. EPA’scurrent initiatives, including thenational locomotive emissionsstandards proposed in this action, arecomponents of the Agency’s integratedozone reduction strategy.In addition to ozone, airborneparticulate matter (PM) has been a majorair quality concern in many regions.Ozone and PM have both been linked toa range of serious respiratory healthproblems and a variety of adverseenvironmental effects. As waspreviously discussed, ozone causesharmful respiratory effects includingchest pain, coughing, and shortness ofbreath. Similarly, PM exposure isassociated with health effects includingshortness of breath, aggravation ofexisting respiratory disease, cancer, andpremature death.Beyond their effects on human health,other negative environmental effects arealso associated with ozone, NO X, andPM. Ozone has been shown to injureplants and materials; NO X contributes tothe secondary formation of PM(nitrates), acid deposition, and theovergrowth of algae in coastal estuaries.PM can damage materials and impairvisibility. These effects are extensivelydiscussed in EPA’s ‘‘air quality criteria’’documents for NO X, ozone, and PM. 6 7 8EPA recently proposed revisions to thenational ambient air quality standards(NAAQS) for ozone and PM. 9IV. Emissions from Present LocomotivesA. National InventoriesContributions by locomotives to thenational emissions inventories forvolatile organic compounds (VOC),carbon monoxide (CO), oxides ofnitrogen (NO X) and particulate matter(as PM–10) are summarized in Table IV–1. The values shown in Table IV–1 arethe total national inventories from allsources, from mobile sources, and fromlocomotives for 1990. The railroadinventories, expressed as the percentagecontributions by commercial railroadsto the total national inventories and tothe transportation sources inventories,are shown in Table IV–2. The Agencyrecognizes that not all of thelocomotives in service are owned andoperated by commercial (includingpublic) railroads. The locomotives notoperated by the commercial railroadsare generally used to transportequipment and materials within anindustrial facility. However, in light ofthe small percentage of in-uselocomotives that are not operated bycommercial railroads, EPA believes thatthe emissions from these locomotivesare an extremely small percentage of thetotal emissions from all locomotives inservice. Thus, for the purposes of thisdiscussion it is assumed that locomotiveand railroad emission inventories areequivalent.TABLE IV–1 1 .—1990 NATIONAL EMISSION INVENTORIES: ALL SOURCES, MOBILE SOURCES, AND LOCOMOTIVES[millions of metric tons]EmissionTotal from allsourcesMobilesourcesLocomotivesNO X .............................................................................................................................................. 20.90 9.37 0.98PM–10 .......................................................................................................................................... 39.31 0.66 .024VOC .............................................................................................................................................. 21.41 8.14 .0385 VOCs consist mostly of hydrocarbons (HC).6 Air Quality Criteria Document for Oxides ofNitrogen, EPA–600/8–91/049aF–cF, August 1993(NTIS #: PB92–17–6361/REB,– 6379/REB, –6387/REB).7 Air Quality Criteria Document for Ozone andRelated Photochemical Oxidants (External ReviewDraft), EPA/600/P–93/004aF–cF, 1996.8 Air Quality Criteria for Particulate Matter(External Review Draft), EPA–600/AP–95/001a–a,April 1995.9 61 FR 65638 (PM) and 61 FR 65716 (ozone),December 13, 1996.

6370 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed RulesTABLE IV–1 1 .—1990 NATIONAL EMISSION INVENTORIES: ALL SOURCES, MOBILE SOURCES, AND LOCOMOTIVES—Continued[millions of metric tons]EmissionTotal from allsourcesMobilesourcesLocomotivesCO ................................................................................................................................................ 91.31 70.31 .111 Data for all pollutants from all sources and mobile sources is taken from ‘‘National Air Pollutant Emission Trends, 1900–1994’’, U.S. EnvironmentalProtection Agency, EPA–454/R–95–011, October 1995. Locomotive pollutant estimates are derived from emission factors (contained inTable IV–3), along with fuel consumption data and a bhp–hr/gallon conversion factor. The trends report, based on older locomotive emission factors,reports locomotive PM–10 at 0.04 million metric tons. The trends report mobile source inventories were not updated to reflect the revisedrailroad inventories, but nonetheless provide an idea of the magnitude of locomotive emissions. The trends report mobile source inventory forVOC does not specify the emissions contribution of locomotives.TABLE IV–2.—LOCOMOTIVE CONTRIBUTIONS TO NATIONAL INVENTORY IN 1990 AS A PERCENTAGE OF ALL SOURCES ANDOF MOBILE SOURCESEmissionPercent of allsources contributedby locomotivesPercent of mobilesourcescontributed bylocomotivesNO X .......................................................................................................................................................................... 4.67 10.4PM–10 ...................................................................................................................................................................... 0.061 3.65VOC .......................................................................................................................................................................... .18 0.47CO ............................................................................................................................................................................ .12 0.16B. Locomotive Emission RatesEPA received information from EMD,GE and the Association of AmericanRailroads (AAR) regarding emissions ofHC, CO, NO X and PM from locomotives.This information is summarized in theRegulatory Support Document (RSD) forthis rulemaking. Based on thisinformation, EPA calculated estimatesof average emissions rates for line-hauland switch locomotives. Table IV–3shows estimated nationwide averageemissions for each category, expressedin grams per brake horsepower-hour (g/bhp–hr). It should be noted that,although line-haul locomotives appearto be much cleaner than switchlocomotives, this is merely an artifact ofthe fact that g/bhp–hr emission rates aremuch higher at low power modes, andswitch locomotives operate in lowpower modes a greater percentage oftime than do line-haul locomotives. Adescription of the methodology used byEPA in determining these emission ratesis included in the RSD in the docket.EPA requests comment on theseestimated emissions rates. Commentersare encouraged to include additionalemissions data where possible.TABLE IV–3.—CURRENT ESTIMATED LINE-HAUL AND SWITCH LOCOMOTIVE EMISSIONS RATES (G/BHP–HR)HC CO NO X PM Smoke (percent opacity)Line-hau ........................................................................... 0.5 1.5 13.5 0.34 Equivalent to HDDE 1Switch .............................................................................. 1.1 2.4 19.8 0.41 Equivalent to HDDE.1 Heavy-duty diesel motor vehicle engine.V. Description of the ProposalThis section contains a description oftoday’s proposed emissions controlprogram for new locomotives andlocomotive engines. The subjectsdiscussed are applicability, emissionstandards, test procedures, certificationand testing requirements, enforcement,railroad requirements, preemption, andother miscellaneous topics. This sectionalso includes a discussion of the variousoptions EPA considered in developingthe proposal. The Agency requestscomments on these other options, aswell as on the actual proposal. Theinterested reader is referred to theproposed regulatory text and the RSDfor a more detailed discussion of manyof these issues.A. ApplicabilitySection 213(a)(5) of the Act specifiesthat EPA shall establish emissionstandards for ‘‘new locomotives andnew engines used in locomotives.’’Thus, the general applicability of thisaction is determined by the definition of‘‘new locomotive’’ and ‘‘new locomotiveengine’’. The Act, however, does notdefine ‘‘new locomotive’’ or ‘‘newlocomotive engine,’’ which gives theAgency some discretion in defining thecategory of locomotives and locomotivesengines that should be considered‘‘new’’. EPA proposes to define ‘‘newlocomotive’’ and ‘‘new locomotiveengine’’ to mean a locomotive orlocomotive engine the equitable or legaltitle to which has never been transferredto an ultimate purchaser; and alocomotive or locomotive engine thathas been remanufactured, until it isplaced back into service. Where theequitable or legal title to a locomotive orlocomotive engine is not transferredbefore the engine or vehicle is placedinto service, then the locomotive orlocomotive engine will be new until itis placed into service. EPA alsoproposes to define importedlocomotives and locomotive engines tobe new unless they are covered by acertificate of conformity at the time ofimportation. Finally, EPA proposes tolimit the applicability of the definitionof new locomotive and new locomotiveengine to locomotives and locomotiveengines originally manufactured after1972. As is described in the RSD, theapplicability would be limited in thismanner to eliminate the unwarranted

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6371burden of bringing very old locomotivesinto compliance.EPA is aware of a practice in thelocomotive industry known asupgrading. During an upgrade, alocomotive remanufacturer willtypically take an older engine modeland remanufacture it in such a mannerthat it is in essentially all respects amore recent model, both in terms of itsperformance and the expectedremaining service life following theupgrade. EPA is proposing a definitionof remanufacture that includes thisprocess of upgrading. EPA proposes thatany pre-1973 locomotives which areupgraded to post-1972 specifications berequired to meet the same emissionsstandards as locomotives originallymanufactured after 1972. Also, for thepurposes of the various complianceprograms discussed later (certification,production line testing, in-use testing),upgraders will be treated asremanufacturers. 10 The Agency requestscomment on its definition of upgrade, ascontained in the proposed regulatorytext, and whether it should be writtento optionally (the remanufacturer’soption) include any remanufacturedpre-1973 locomotive that complies withthe Tier 0 emission standards.The proposed definition of ‘‘newlocomotive’’ and ‘‘new locomotiveengine’’ would be consistent with, butnot identical to, the definition of ‘‘newnonroad engine’’ and ‘‘new nonroadvehicle’’ that EPA promulgated on July20, 1994 (59 FR 36969), and revised onOctober 4, 1996 (61 FR 52102). Thedefinition of ‘‘new nonroad engine’’includes only ‘‘freshly manufactured’’engines, while the proposed definitionof ‘‘new locomotive’’ and ‘‘newlocomotive engine’’ includes bothfreshly manufactured andremanufactured locomotives andengines. EPA believes it is appropriateto regulate remanufactured locomotiveengines as new engines because of thenature of the remanufacturing processfor such engines. Remanufacturinglocomotives typically involvesinspecting the relevant components andreplacing most or all of them asnecessary with components that arefunctionally equivalent to freshlymanufactured components. The relevantcomponents include those that controlthe delivery of fuel to the combustionprocess, those that control the conditionand delivery of air to the combustionprocess, and those that are directlyinvolved in the combustion process, (at10 Unless specified otherwise, all provisionsdiscussed in this preamble applicable toremanufacturers shall also be considered to beapplicable to upgraders.a minimum, the fuel injectors,turbocharger, charge air cooler, pistonsand piston rings, cylinders, valves,valve springs, camshaft, and cylinderhead). This process is a more completeoverhaul than the typical rebuilding ofan on-highway diesel engine. Since aremanufactured locomotive engine is inall material ways like a freshlymanufactured engine, bothmechanically and in terms of how it isused, EPA proposes to define ‘‘newlocomotive engine’’ to includeremanufactured engines. As with freshlymanufactured locomotives, suchengines would be new until sold orplaced into service.This approach is further supported bythe role remanufactured engines play inthe locomotive industry. Locomotiveengines are typically remanufacturedperiodically, as many as ten timesduring their total service lifetimes, andmay be used in different locomotivesfollowing a remanufacture. Manysmaller railroad operators do notpurchase freshly manufacturedlocomotives, relying solely on thepurchase of used locomotives fromother railroad operators and thesubsequent remanufacturing of theseengines. Because of theseremanufacturing practices, a locomotiveengine will generally be used for manyyears, resulting in an extremely slowindustry-wide fleet turnover rate. As aresult, a narrow definition of newlocomotive engines, limited to freshlymanufactured engines, wouldeffectively undercut the ability of theAgency to reduce emissionscontribution from this segment of thenonroad inventory. EPA notes that thepractices related to the use ofremanufactured locomotive enginesdistinguishes this situation from otherkinds of rebuilding, such as for othernonroad engines, and motor vehicleengines, or aircraft engines. Evenaircraft engines do not typically remainin active service for 40 years moreover,there are fewer events that could beconsidered remanufacturing asdescribed here for locomotives, because,among other things, the maintenancepractices in the airline industrytypically are more continuous than inthe railroad industry. In addition,because the engines have fundamentallydifferent designs (jet engine ascompared to diesel engine), theoverhaul of our aircraft engine is notcomparable to the remanufacturing of adiesel locomotive. EPA is requestingcomments on the inclusion ofremanufactured locomotives in thedefinition of ‘‘new’’ for this rulemaking.The Agency is proposing to define‘‘remanufacture’’ of a locomotive engineas a process in which all of the powerassemblies of an engine are replaced(with freshly manufactured (containingno previously used parts) or refurbishedpower assemblies) or inspected andqualified. Inspecting and qualifyingpreviously used parts can be done inseveral ways, including such things ascleaning, measuring physicaldimensions for proper size andtolerance, and running performancetests to assure that the parts arefunctioning properly and according tospecifications. The refurbished powerassemblies would include somecombination of freshly manufacturedparts, reconditioned parts from otherpreviously used power assemblies, andreconditioned parts from the powerassemblies that were replaced. In caseswhere all of the ower assemblies are notreplaced at a single time, the enginewould be considered to be‘‘remanufactured’’ (and therefore‘‘new’’) if all of the power assembliesfrom the previously new engine hadbeen replaced within a five year period.EPA requests comment on thisdefinition in general, and specificallywhether it should include somedifferent time limit for engines notremanufactured during a single event.Commenters are requested to addressboth the legal, economic, andenvironmental implications ofconsidering an engine which does nothave all of its power assembliesreplaced in a single event to be ‘‘new’’.EPA is proposing to include in itsdefinition of ‘‘remanufacture’’ theconversion of a locomotive orlocomotive engine to operate on a fuelother than the fuel it was originallydesigned and manufactured to operateon. Such conversions typically involve,at a minimum, the replacement ormodification of the fuel delivery system,and often involve the replacement ormodification of other emissions-criticalcomponents, as well as the recalibrationof some engine operating parameters.For these reasons EPA is proposing toinclude alternative fuel conversions inits definition of remanufacture. Suchconversions would thus be considered‘‘new’’ and subject to today’s proposedregulations.EPA also requests comment onpossible alternative definitions of theseterms, including two suggestedalternatives raised by the affectedindustries. Railroad operators andlocomotive manufacturers haveindicated to EPA that it should considera definition of ‘‘new’’ that wouldinclude any locomotive or locomotiveengine manufactured or remanufacturedafter the effective date of the 1990amendments to the Clean Air Act

6372 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules(November 15, 1990). Under thisalternative approach, EPA would defineas ‘‘new’’ any locomotive or engine thatis first manufactured after November 15,1990, and any locomotive or engine,including those manufactured beforeNovember 15, 1990, that isremanufactured after that date. Since alocomotive would be new based solelyon when it was manufactured orremanufactured, once it is new it wouldcontinue as new from then on. It wouldalways be a new locomotive.EPA also solicits comment on asecond alternative definition of ‘‘new’’for locomotives and locomotive engines,a variation of the first alternative.Locomotives and engines would becategorized as new from the time of firstmanufacture, or upon remanufacture,but only for the full extent of theiruseful life as defined by EPAregulations, and as long thereafter asthey were shown to be in compliancewith the applicable federal emissionsstandards and requirements.EPA invites comment on these twoalternatives, including the expectedemissions impacts, the impacts onstates, and whether the Agency wouldhave the discretion under the Act toadopt such alternatives. On the lastissue, EPA specifically invites commenton whether it has the authority andwhether it would be appropriate toadopt a definition of new for locomotiveand locomotive engine that differs sosignificantly from the definition of‘‘new’’ adopted for all other nonroadvehicles and engines, and the Act’sdefinition of new motor vehicle andnew motor vehicle engine under section216.B. Emission StandardsAs is described in the followingsections, EPA is proposing threedifferent sets of locomotive emissionsstandards, with the applicability of eachdependent on the date a locomotive isfirst manufactured (i.e., 1973–1999,2000–2004, or 2005 and later). Everylocomotive covered by this proposalwould be required to meet emissionstandards when operated over dutycyclesEPA believes are representativeof average line-haul and switchoperation. Also, any covered locomotivewould be required to meet the standardsover its full useful life, as defined byEPA regulations. The following sectionsdiscuss the proposed standards indetail, as well as presenting the otheroptions EPA considered in theirdevelopment.B.1. Duty-CyclesA duty-cycle describes a usage patternfor any class of equipment, using thepercent of time at defined loads, speedsor other readily identifiable andmeasurable parameters. EPA’s emissionstandards for mobile sources aretypically numerical standards foremissions performance measured duringa test procedure that embodies a specificduty-cycle for that kind of equipment.For example, the federal test procedurefor passenger cars and light trucks is aprocedure that specifies, second bysecond, the speed of the test vehicle,with simultaneous loading on theengine equivalent to loading whichoccurs on the road. Since the emissionsof a particular type of equipment aredependent upon the way the equipmentis operated, the duty-cycle used foremission testing directly affects the kindof design changes required to meet thestandards. In this notice, the Agency isproposing a series of steady-state testmodes, with the duty-cycles being usedto weight the different test modes,resulting in an average emission rate forthe duty-cycles. A brief overview of theduty-cycles EPA proposes to use forcertification and compliance will bepresented here, rather than in the testprocedures section.The Agency used a variety ofavailable information to arrive at theproposed duty-cycles for locomotivetesting, including several duty-cycleshistorically used by railroads andlocomotive manufacturers to assess fueland equipment usage. These duty-cycleswere evaluated by EPA in light of actualin-use data on recent locomotiveoperations. Based on this analysis, EPAdeveloped separate duty-cycles for linehaul,passenger and switch locomotivesthat account for the fundamentallydifferent types of service these threecategories of locomotives experience inuse. These duty-cycles are presented inTable V–1. Since these duty-cyclesmerely represent the percent of timelocomotives typically spend in eachthrottle notch and are not used duringactual emissions testing, they are termedthrottle notch weighting factors for thepurposes of this proposal. A completediscussion of the historical cycles, inusedata, EPA’s analysis of the relevantinformation, and development of theseweighting factors is contained in theRSD.TABLE V–1.—PROPOSED THROTTLENOTCH WEIGHTING FACTORS FORLOCOMOTIVES AND LOCOMOTIVE EN-GINESThrottle notch[Percent weighting per notch]LinehaulPassengerSwitchIdle ............... 38.0 47.4 59.8DynamicBrake ....... 12.5 6.2 0.01 .................. 6.5 7.0 12.42 .................. 6.5 5.1 12.33 .................. 5.2 5.7 5.84 .................. 4.4 4.7 3.65 .................. 3.8 4.0 3.66 .................. 3.9 2.9 1.57 .................. 3.0 1.4 0.28 .................. 16.2 15.6 0.8B.2. Emission StandardsTables V–2 through V–6 contain theemissions standards EPA is proposing toadopt for locomotives and locomotiveengines. Standards are proposed forthree categories of locomotives based ondate of original manufacture (i.e., theTier 0, Tier I and Tier II standards). Thedate of original manufacture is anappropriate factor to use in categorizinglocomotives for emissions controlpurposes because it affects the emissionreduction technologies that can eitherbe retrofitted (for remanufacturing ofexisting locomotives) or are projected tobe available in 2000 or 2005 for freshlymanufactured locomotives.EPA requests comments on theappropriateness of the levels of thestandards, including the Tier IIstandards for NO X and PM. Theproposed Tier II standards wouldrequire more than a 60 percentreduction in NO X and a 50 percentreduction on PM from uncontrolledlevels. However, given the fact thatlocomotives contribute a substantialportion of the national NO X inventorywhile their contribution to the PMinventory is much less substantial, EPArequests comment on whether it shouldset Tier II emissions standards that aremore stringent for NO X than the levelsnoted above and less stringent for PM.For example, EPA requests comment onTier II standards which would achievea 70 to 75 percent reduction in NO X butsmaller (e.g., 30 percent, rather than the50 percent reduction of the proposedTier II PM standards) or even noreductions in PM compared touncontrolled levels. EPA believes that,given the inherent tradeoff betweenNO X and PM emissions control in dieselengines, such a tradeoff of NO X and PMreductions in this option compared tothe proposed Tier II standards may notchange costs substantially compared to

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6373the proposed Tier II standards, but mayrequire a somewhat different technologymix. An analysis of the cost andtechnology implications of this optionare contained in the public docket. EPArequests comment on all aspects of thisoption, including its technology andcost implications. EPA also requestscomment on the cost and technologyimplications of requiring additionalNO X reductions, including theimplications for control of PM. Finally,EPA requests comment on whether itshould consider more stringent Tier IIPM standards than those proposed, andwhat the implications of such standardsmight be for NO X control, as well astheir cost and technology implications.Should the Agency considertightening the particulate standards forTier 0 and Tier I locomotives to ensurethat particulate emissions do not exceedthe current baseline level (0.34 g/bhp-hrfor line-haul locomotives); and wouldmore stringent particulate standardsrequire relaxation of the NO X standards?For example, EPA could set theparticulate standard for Tier 0locomotives at 0.40 g/bhp-hr toeffectively prevent any Tier 0locomotives from emitting above thecurrent baseline; and set the particulatestandard for Tier I locomotives at 0.3 g/bhp-hr to achieve a 25 percent reductionin emissions from the current baselinelevel. If the Agency were to adopt morestringent particulate standards for Tier 0locomotives should they be phased-in toprovide more leadtime toremanufacturers? The Agency requestscomment on whether it should considergiving some form of credit forlocomotives that are designed to shutdown at idle, given that suchlocomotives would not be generatingidle emissions in use, but would haveidle emissions measured duringemissions testing. Finally, the Agencyrequests comment on the stringency andform of the smoke standards.Auxiliary engines used only toprovide hotel power for the passengercars of a train are currently subject tothe applicable emissions standardspreviously adopted for nonroadcompression ignition (CI) engines over37 kW 11 . These standards, shown inTable V–6, will apply regardless ofwhich of the duty-cycle optionsdiscussed is adopted.In addition to proposing separateemissions standards for the threecategories of locomotives based on dateof original manufacture, the Agencyconsidered three options for separateemissions standards for each of the11 59 FR 31335, June 17, 1994, and 40 CFR part89.three distinct types of locomotiveoperation described above (switch,passenger and line-haul). Of the threeoptions considered, EPA is proposingthe ‘‘dual-cycle’’ option, where alllocomotives, regardless of theirintended usage, would be required tomeet both switch and line-haul dutycyclestandards. Details of this option,as well as the other two duty-cyclebased options EPA considered (i.e., the‘‘class-specific’’ and the ‘‘single-cycle’’options) are discussed in the followingparagraphs.The standards being proposed aredesigned to achieve very significantreductions in NO X emissions from thebeginning of the program, whilesignificant reductions in the emissionsof other pollutants would only beachieved under the Tier II standards,effective in 2005. This is because NO Xis the only pollutant for whichlocomotive emissions contribute morethan one percent of the estimatednational inventories (see Table IV–2).EPA believes that the Tier 0 and Tier Iemission standards for NO X might notbe achievable if significant reductions inHC, CO, and PM were also required.Thus, the standards being proposed areintended to achieve the greatestenvironmental benefits as early aspossible.Class-Specific OptionGiven the three distinct types oflocomotive operation discussed above(i.e., switch, passenger and line-haul),the first option the Agency consideredwas separate emission standards andduty-cycle weightings for each type (i.e.,the class specific option). Separate dutycyclestandards were intended toaddress the wide disparity in usagepatterns for the different groups, and theeffect of such use on emissions.Although duty-cycles were developedfor average locomotive operation, widevariations in actual operations do occurwithin the three basic types of operation(i.e., switch, passenger and line-haul).To prevent substantial disparitybetween the in-use emissions rate andthe emissions rate during the test cycle,EPA considered notch-by-notchemissions standards for all notches (i.e.,notch caps) for all pollutants. It shouldbe noted that if a locomotive wereoperating at the levels of the notch capsfor all notches, its duty-cycle-weightedemissions would be much higher thanthe duty-cycle standards. Thus, theproposed duty-cycle standards wouldprevent any locomotive from emitting atlevels of the notch caps for all (or evenmost) notches. These notch-by-notchvalues were chosen to allowmanufacturers and remanufacturerssome degree of flexibility in meeting theduty-cycle standards, while at the sametime insuring that differences in theutilization of locomotives whichnormally occur will not causesignificant divergence from the dutycycleemission standard. To provideadditional flexibility to manufacturersand remanufacturers, EPA alsoconsidered a provision allowing alimited number of notch standards to beexceeded by a specified small amountprovided there is compliance with theduty-cycle standards. The duty-cycleweightedemissions standards and NO Xand PM notch caps considered underthis option are shown in Tables V–2through V–5 for line-haul, switch andpassenger locomotives equipped with asingle engine. Notch caps for HC andCO which are 25 percent above theapplicable line-haul duty-cyclestandards were also considered underthis option.Dual Cycle OptionThe manufacturers indicated to EPAthat it would be burdensome to complywith three sets of emission standardswhen essentially the same engine(differing only, for example, in thenumber of cylinders) could be used forall three types of locomotives (switch,passenger and line-haul). Themanufacturers’ concern is not based ontesting burden since, as discussed in thetest procedures section, the same testresults on a notch-by-notch basis aresimply weighted differently todetermine compliance with the differentstandards. Rather, the issue is one ofhaving to design three different versionsof a single engine to meet three differentsets of emission standards.The Agency believes that the linehaul/switchdual cycle approach hassome merit due to its ability to controlidle emissions from switch locomotivesas well as high notch emissions fromline-haul and passenger locomotives.However, EPA is concerned that thelack of notch caps creates a situationwhere, with the use of electroniccontrols, the duty-cycle standards canbe met during testing according to theproposed test procedure, but in-useemissions reductions are not fullyrealized. One way that this couldhappen would be if the average in-useduty-cycle changed to include greaterpercentages of time in notches whichhave disproportionately high emissions.Notch caps in individual modes wouldreduce this concern since it wouldrequire emissions control in all notches.A locomotive could also be designedsuch that the emissions duringoperation at notch eight (which areheavily weighted in the line-haul duty-

6374 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulescycle) are low, while notch seven iscalibrated for low fuel consumption(and possibly high emissions, due to theinherent tradeoffs between performance,fuel economy and emissions control)but at a power level near the notch eightpower level. A locomotive operatorcould then use notch seven where notcheight would normally be employed,resulting in a savings in fuel consumed,and minimal impact in train schedules,at the expense of emissionsperformance. Notch caps on the higherpower notches would be useful inpreventing such situations. However,the manufacturers have indicated toEPA their concern that any notch capswould constrain their flexibility inmeeting the emissions standards,especially at low power notches whereemissions are more difficult to controlthan at the high power notches. EPAagrees that low power notch caps couldbe an unreasonable burden onmanufacturers under this option,especially given the ability of the switchcycle to control those emissions. Thus,under this option, EPA is proposingnotch caps only for notches fourthrough eight. EPA requests commenton the need for notch caps under thisoption. The Agency recognizes that thecompliance burden associated withsuch notch caps could be greater forremanufacturers of existing locomotives,and therefore requests comment onwhether notch caps should be limited toTier I and Tier II locomotives.EPA believes that the dual cycleapproach proposed in this noticeprovides the same emission reductionsas the three duty-cycle approachpreviously discussed, but with amaximum of flexibility. Under the dualcycle approach, the line-haul duty-cyclestandards will ensure control ofemissions at high power notches, whichaccount for the vast majority of inserviceoperations, while the switchduty-cycle standards will ensure controlof emissions at the idle and low powernotches characteristic of switchlocomotive operations. Thus, theAgency is proposing to require all newlocomotives and new engines used inlocomotives to meet both the switch andline-haul duty-cycle standards. EPA isalso proposing to require newlocomotives equipped with hotel powerto comply with both the switch andline-haul duty-cycle standards in bothtractive power only and tractive plushotel power mode in order to accountfor passenger locomotive emissions.EPA requests comment on whether itshould require such locomotives tocomply only with the line-haul dutycyclestandards when operating intractive plus hotel power mode, ratherthan requiring compliance with both theswitch and line-haul duty-cyclestandards in this mode.Single Cycle OptionThe Agency considered a secondapproach suggested by themanufacturers under which a singleduty-cycle would apply to all categoriesof locomotives, regardless of use. EPA isconcerned about the ability of a singleduty-cycle to effectively controlemissions of all locomotives because ofthe emission effects of the differinguses. Switch locomotives tend to havevery high percentages of idle time. Linehauland passenger locomotives tend tospend less time at idle than switchlocomotives, but more time in the highpower notches. Using a single dutycyclefor all three classes would likelyresult in higher emissions in caseswhere the locomotive’s operation doesnot resemble the duty cycle throttlenotch weightings used for emissionstesting. For this reason, the single cycleapproach would not achieve emissionsreductions equivalent to the proposedapproach unless accompanied by verystringent individual notch caps, with noprovisions for some small exceedance ofthe notch caps. EPA requests commenton the appropriateness of such a singleduty-cycle and set of standards thatwould be based on the line-haul dutycycle,but with stringent caps on idleand low power notch emissions in orderto assure that switch locomotivescertified to these standards achieve thesame levels of emission reductions asswitch locomotives certified to theswitch locomotive standards describedearlier.EPA also requests comment on theproposed dual-cycle approach toapplying the proposed standards, aswell as the alternative options describedin this notice, and other duty-cyclestandard approaches. The Agencybelieves that all three options describedcould provide similar emissionreductions. EPA requests comment onwhether more than one option shouldbe adopted, with the manufacturer givena choice of which option to complywith. In such a scenario, should amanufacturer be allowed to certify someengine families to the single or dualcycle and others to the class-specificcycle, or should a manufacturer berequired to certify all of its productionin compliance with only one of theoptions? The Agency also requestscomment on how passenger locomotivehotel power should be handled underany of these approaches.High Baseline LocomotivesEPA believes the proposed standardsto be appropriate under section 213 ofthe Act. The proposed standards wouldachieve the greatest degree of reductionin emissions achievable through the useof technology that will be available, inlight of cost, leadtime and other factors.However, in the course of thisproposal’s development the locomotivemanufacturers expressed some concernabout the ability of all 1973–1999locomotives to meet the Tier 0standards. This concern relates to someengine families produced during thisperiod which, due to their design, havehigher emissions than other locomotivesproduced during the same period, andfor which the cost-effective technologieswhich are projected to be used tocomply with the Tier 0 standards willnot reduce emissions from theselocomotives to the levels of theproposed Tier 0 standards.Additionally, the manufacturers believethat it would be difficult to certify theseengines under the proposed averagingbanking and trading program (ABT,discussed later in this notice), due toconcerns about the availability ofcredits. They are concerned thatindependent remanufacturers wouldcertify systems for those Tier 0locomotive engine families that are easyto bring into compliance withoutputting in the extra effort that wouldallow them to generate emissions creditsfrom those engine families. Theseremanufacturers may not developemission control systems for thoseengine families that are more difficult tobring into compliance. This would leavethe manufacturers to develop them,without the benefit of being able to usecredits that could be generated from theengine families that are easy to bringinto compliance. Thus, assuring that allTier 0 engine families are certifiedunder the ABT program would requiremuch cooperation and coordinationamong railroads and the various entitiescertifying remanufactured locomotives.Because of the reasons just discussed,the Agency is proposing, and requestingcomment on, a provision by whichmanufacturers and remanufacturers canpetition EPA to allow certification ofTier 0 locomotives based on ademonstration of a 33 percent NO Xreduction from pre-control levels forthat specific engine family, rather thanmeeting the proposed Tier 0 NO Xstandards. Under this option the Tier 0standards for all pollutants other thanNO X would still apply. A 33 percentreduction for NO X was chosen becausethis is the approximate averagereduction the Tier 0 NO X standards

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6375would achieve from fleet averagebaseline levels (when factoring in theexpected NO X compliance margin of 5percent). Such a petition would begranted based on the certifier’sdemonstration of infeasibility orexcessive cost, as determined by theAdministrator. The numerical NO Xemissions standard applicable to a givenengine family certified under this optionwould be established by emissionstesting five well-maintainedlocomotives in the engine family. Theaverage of the results of these five testswould then be used as the baselineemissions level and the applicable NO Xstandard would be set at a level 33percent below baseline. Once theapplicable NO X standard is determinedthrough this procedure, the certificationprocess would be the same as for otherTier 0 locomotives, as discussed later inthis notice. The Agency requestscomment on the appropriateness of andneed for this option, and whether Tier0 locomotives and locomotive enginesshould be excluded from the ABTprogram if this certification option isadopted. EPA specifically requestscomment on the need for this option inthe event that the railroad-based Tier 0certification provisions discussed in theengine family certification section ofthis notice are finalized. EPA believesthat a railroad-based certificationprogram would eliminate or reduce theconcerns expressed about the ability ofthe ABT program to allow theselocomotives to be certified because arailroad would have control over thelocomotives it operated and could betterplan for their remanufacture in a givenyear whereas a remanufacturer wouldhave to estimate the engine family mixthat it would remanufacture in a givenyear in order to plan its ABT strategy forthat year. EPA requests comment onother alternative plans for addressingthe issue of Tier 0 locomotives whichhave trouble meeting the Tier 0standards (either for reasons ofexcessive cost or infeasibility),including such options as allowing Tier0 locomotives under 2000 hp to certifyto the switch duty-cycle standards (andapplicable caps) only, and not requiringsuch locomotives to comply with theline-haul duty-cycle standards.Other Nonroad EnginesA second issue raised by themanufacturers is the replacement of anexisting tractive power locomotiveengine (i.e., repowering) with an enginegenerally used in equipment other thanlocomotives. Such engines are subject toEPA’s standards for nonroad enginesover 37 kW, and only a small percentageof the total production of such engineswould be used in locomotives. Thesmallest of these engines (under 1000hp) are likely to be used in locomotiveswhich are in captive use movingmaterials and equipment withinindustrial sites, rather than being usedby railroads. Thus, their use is morelikely to resemble that of industrialequipment than locomotives. Therefore,EPA is proposing that such vehicles notbe defined as locomotives, and thereforewould not be subject to today’sproposed regulations. Engines in suchvehicles must be certified as meeting theover 37 kW regulations.Slightly larger engines (between 1000and 2000 hp) used for repowering aremore typically sold for use inlocomotives for railroad switchingoperations. EPA is concerned that itmight be overly burdensome to requiresuch engines to be certified to twodifferent sets of federal standards (i.e.,the over 37 kW nonroad enginestandards and the locomotivestandards), especially given the smallnumber used in locomotives. Further,the over 37 kW nonroad engineregulations provide emission reductionsthat are roughly comparable to theproposed Tier I standards forlocomotives. Thus, the Agency isproposing to allow manufacturers to sella limited number of these nonroadengines a year for use in locomotiveswithout specifically certifying to thelocomotive standards. Such enginesmust be certified as meeting the over 37kW regulations.In determining what an appropriatenumber of engines the Agency shouldallow to be sold for use in locomotivesunder this provision the Agencyconsidered an exemption that isincluded in the aircraft regulations. 12Aircraft, like locomotives, have anextremely low annual sales volumecompared to other mobile sourcecategories. In the aircraft regulations anexemption from the emissions standardsis provided for engine families of 20 orfewer annual sales, in a market withtotal annual sales of approximately1400. Using a similar ratio, the Agencyconsidered a range for this locomotiveprovision from 10 per year (whencompared to annual sales of freshlymanufactured locomotives) to 40 peryear (when compared to annualremanufactures). The Agency is thusproposing the midpoint of this range, or25 a year, to be the number of engines(between 1000 and 2000 hp) certified tothe over 37 kW regulations that can besold for use in locomotives.While EPA believes that the over 37kW regulations provide similar12 See 40 CFR 87.7(b)(1).environmental benefits as do theproposed Tier I locomotive regulations,based on the percent emissionsreductions from uncontrolled baselines,the Agency is nonetheless concernedabout the differences between the testprocedures proposed for locomotivesand those that currently apply to othernonroad engines (resulting fromdifferent duty-cycles) and the potentialenvironmental impacts of thosedifferences. Since the over 37 kWregulations do not apply to engines inthe 1000 to 2000 hp range until 2000,EPA currently has no way of evaluatingthose impacts because there are noengines meeting the over 37 kWregulations which can be used tocompare the results over the two testprocedures. Thus, as a condition ofbeing allowed to sell such engines foruse in locomotives, the Agency wouldretain the authority to require thattesting done for certification to the over37 kW standards also include testingdone at the locomotive power notchpoints. EPA will use this data todetermine the validity of this provision(i.e., allowing engines certified to theover 37 kW standards to be used inlocomotives) from an environmentalperspective, and may choose throughfuture rulemaking action to eliminate,limit or expand the availability of thisprovision on the basis of the data.The Agency believes that theprovisions for allowing some enginescertified to the over 37 kW standards tobe used in locomotives, as justdescribed, are reasonable for severalreasons. First, such engines are expectedto have emissions levels similar to TierI locomotive engines, but would mostlikely replace older locomotive engineswhich would otherwise remainuncontrolled (i.e., those in pre-1973locomotives) or be remanufactured tothe Tier 0 standards (i.e., 1973–1999locomotives). Thus, an emissionsbenefit is expected from these enginesrelative to the engines they replace.Second, this provision is limited toengines under 2000 hp which, due totheir lower power, tend to have lowermass emissions than higher poweredline-haul locomotives (which make upthe vast majority of both locomotives inservice and locomotive emissions).Finally, these engines are not expectedto have useful lives as long as otherlocomotive engines, nor are theyexpected to be remanufactured as manytimes throughout their service lives.These last two points would serve tominimize any unanticipated adverseeffects of this provision.The Agency requests comment onseveral aspects of this proposedprovision for repowering. Should the

6376 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed RulesAgency require, rather than just havethe option of requiring, that theseengines be tested at locomotive powernotches, in addition to the testingrequired for the over 37 kW nonroadengine certification for all enginescovered by these provisions? Howshould such engines be treated withrespect to preemption? Should thisallowance be limited to engines of lessthan 2000 hp, as proposed, or shouldthere be separate restrictions for higherhorsepower, or no restrictions at all onhorsepower? Is 25 an appropriatenumber of engines to allow under thisprovision, or would a higher or lowernumber be more appropriate?Commenters on the proposedhorsepower and sales restrictions arerequested to provide economic andenvironmental data in support of theircomments. Should this option beeliminated when the Tier II standardstake effect, given that the current over37 kW standards are not as stringent asthe Tier II standards for locomotives?Commenters on this last point arerequested to take into account the factthat EPA is currently in the process ofdeveloping a phase II regulation fornonroad engines over 37 kW. TheAgency requests comment on whether itshould consider a separate provision forengines used in repowers which are notcertified according to the over 37 kWregulations which would allowmanufacturers to pre-select fromproduction those engines which will beused for in-use testing. Such a provisionwould make it easier for those enginemanufacturers to keep track of theirengines for the in-use test program.Finally, EPA developed this repowerprovision based on the current state ofthe locomotive market, wheremanufacturers of engines that are usedin locomotives do not sell them tolocomotive manufacturers to be used inlocomotives with freshly manufacturedchassis. EPA requests comment onwhether it should extend this provision,or a similar one, to enginemanufacturers for engines to be used inlocomotives with freshly manufacturedchassis.As discussed later in the enginefamily certification section, EPA isproposing that certificates of conformitybe issued for locomotives, notlocomotive engines. However, EPA isproposing that engines used forrepowering of existing locomotives thatare not eligible to use the provisions justdiscussed, because they exceed eitherthe sales or horsepower limits, becertified as locomotive engines, notlocomotives. This is because suchengines go into existing locomotives,which the engine manufacturer cannotcontrol (in terms of their operatingparameters such as percent of enginepower in notches, engine coolinghardware, etc.). However, due to thelogistical problems associated withpulling a locomotive engine from alocomotive to test it during in-usetesting (discussed later), EPA isproposing that in-use testing for theseengines be done on locomotives. Theengine manufacturer could choose, inthe event of a failure of locomotivescontaining its engines during the in-usetesting program, to either accept theresults of the locomotive tests, or to testthe actual engines.TABLE V–2.—TIER 0 EXHAUST EMISSION STANDARDS—LOCOMOTIVES AND LOCOMOTIVE ENGINES MANUFACTUREDFROM 1973 THROUGH 1999Duty-cycle or notchGaseous and particulate emissions (g/bhp-hr)THC 1 NMHC 2 CO NO X PMLine-haul and passenger duty-cycle ....................................................... 1.0 1.0 5.0 9.5 0.60Switch duty-cycle .................................................................................... 2.1 2.1 8.0 14.0 0.72Low and normal idle ............................................................................... .................... .................... .................... 140.0 13.7Hotel idle and notch 1 ............................................................................ .................... .................... .................... 20.5 1.7Notches 2 and 3 ..................................................................................... .................... .................... .................... 12.0 1.1Notches 4 through 8 ............................................................................... .................... .................... .................... 11.9 0.75Dynamic brake ........................................................................................ .................... .................... .................... 57.0 13.71 Applicable to any fuel except natural gas (or any combination of fuels where natural gas is the primary fuel).2 Only applicable to natural gas, or any combination of fuels where natural gas is the primary fuel.TABLE V–3.—TIER I EXHAUST EMISSION STANDARDS LOCOMOTIVES AND LOCOMOTIVE ENGINES MANUFACTURED 2000AND LATERDuty-cycle or notchGaseous and particulate emissions (g/bhp-hr)THC 1 NMHC 2 THCE 3 Aldhyd 3 CO NO X PMLine-haul and Passenger Duty-cycle .................................. 0.55 0.55 0.55 0.035 2.2 7.4 0.45Switch duty-cycle ................................................................ 1.2 1.2 1.2 0.076 2.5 11.0 0.54Low and normal idle ............................................................ .................. .................. .................. .................. ............ 50.0 6.8Hotel idle and notch 1 ......................................................... .................. .................. .................. .................. ............ 10.8 0.75Notches 2 and 3 .................................................................. .................. .................. .................. .................. ............ 9.7 0.5Notches 4 through 8 ........................................................... .................. .................. .................. .................. ............ 9.3 0.57Dynamic brake .................................................................... .................. .................. .................. .................. ............ 31.4 6.81 Applicable to diesel, bio-diesel, or any combination of fuels with diesel as the primary fuel.2 Only applicable to natural gas, or any combination of fuels where natural gas is the primary fuel.3 Applicable to alcohol(s), or any combination of fuels where alcohol is the primary fuel.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6377TABLE V–4.—TIER II EXHAUST EMISSION STANDARDS LOCOMOTIVES AND LOCOMOTIVE ENGINES MANUFACTURED 2005AND LATERDuty-cycle or notchGaseous and particulate emissions (g/bhp-hr)THC 1 NMHC 2 THCE 3 Aldhyd 3 CO NO X PMLine-haul and passenger duty-cycle ....... 0.3 0.3 0.3 0.018 1.5 5.5 0.20Switch duty-cycle .................................... 0.6 0.6 0.6 0.036 2.4 8.1 0.24Low and normal idle ................................ —— —— —— —— —— 20.0 0.35Hotel idle ................................................. —— —— —— —— —— 10.8 0.25Notches 1 through 8 ............................... —— —— —— —— —— 6.9 0.25Dynamic brake ........................................ —— —— —— —— —— 15.0 0.351 Applicable to diesel, bio-diesel, or any combination fuels where diesel is the primary fuel.2 Only applicable to natural gas, or any combination of fuels where natural gas is the primary fuel.3 Applicable to alcohol(s), or any combination of fuels where alcohol is the primary fuel.TABLE V–5.—SMOKE (PERCENT OPACITY) STANDARDS 1Number of stacksExhaustdiameterExamined plume sectionSteadystate30-secpeak3-secpeakSingle exhaust stack ......... 12′′ or less .......................................... Total .................................................... 20 35 50More than 12′′ ..................................... Each 6′′ Segment, or .......................... 10 15 20Total 2 .................................................. 30 40 5512′′ or less .......................................... Any one ............................................... 20 35 50Sum of stacks ..................................... 30 40 55Each 6′′ segment, or .......................... 10 15 20Multiple exhaust stacks ..... More than 12′′ ..................................... Total for any one ................................ 30 40 55Sum of stacks ..................................... 40 50 601 Measurement performed continuously during testing.2 Sum of each 6′′ segment or the total, whichever is lower.TABLE V–6.—EXHAUST EMISSION STANDARDS FOR NONROAD ENGINES ABOVE 37 KW 1Gaseous and particulate emissions (g/bhp-hr)Smoke (Percent opacity)HC CO NO X PM Accel Lug Peak0.97 8.5 6.86 0.4 20 15 501 59 FR 31335, June 17, 1994, and 40 CFR 89.112–96 and 89.113–96.Alternate StandardsEPA is proposing an alternate set ofCO and particulate standards that areintended primarily to addresslocomotives which operate onalternative fuels such as natural gas.Such locomotives are expected to havehigher (and more difficult to control) COemissions than diesel-fueledlocomotives, but lower PM emissions.These differences are due to thedifferent molecular structure ofalternative fuels compared to diesel fuelwhich result in the need to operateunder different conditions (e.g.,different air/fuel ratios, spark ignitionvs. compression ignition). The proposedalternate standards would allow higherCO emissions, but would also requirelower particulate emissions. Althoughthese alternate standards are primarilyintended to address issues associatedwith alternative fuels, EPA is proposingthat they be available for application toany locomotive. The Agency believesthis is appropriate since the primaryfocus of today’s proposal is NO X andPM reductions, and the alternatestandards would result in further PMTABLE V–7.—ALTERNATE CO AND PM STANDARDS (G/BHP-HR)reductions than the standards containedin Tables V–2 through V–4, with thesame NO X reductions. Manufacturersand remanufacturers could choose tocomply with these alternate standards,shown in Table V–7, instead of the COand particulate standards listed inTables V–2 through V–4. They wouldnot be allowed to mix the alternate COstandards with the primary particulatestandards for a single engine family.Also, the particulate notch caps wouldapply in the same manner as under theprimary option.Line-haul cycleSwitch CycleCO PM CO PMTier 0 ................................................................................................................ 10.0 0.30 12.0 0.36Tier I ................................................................................................................. 10.0 0.22 12.0 0.27Tier II ................................................................................................................ 5.0 0.10 6.0 0.12

6378 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed RulesB.3. LeadtimeThe Agency is proposing an effectivedate of January 1, 2000 for the Tier 0emission standards for existinglocomotives (i.e., locomotivesmanufactured from 1973 through 1999)upon remanufacture, and for the Tier Istandards for freshly manufacturedlocomotives. The Tier II standards forfreshly manufactured locomotives areproposed to take effect January 1, 2005.See Tables V–2 through V–4. EPAbelieves that these implementationdates allow sufficient leadtime for thedevelopment and application of theneeded emission control technology. Inthe case of the Tier 0 and Tier Istandards, discussions with thelocomotive manufacturers have led theAgency to believe that the technologyrequired is well understood as it isessentially technology currently used(or being developed for application inthe 1998 model year) for on-highwaydiesel engines, and that the applicationof this technology is feasible in thetimeframe proposed. EPA does notbelieve that it is feasible to begin theapplicability of the Tier 0 and Tier Istandards sooner than 2000 since thisrulemaking is not expected to becompleted until late 1997. While thetechnology required to meet thesestandards is currently well understood,EPA believes that the manufacturerswill need two years leadtime to developand finalize production plans for modelyear 2000 production. The 2005implementation date proposed for theTier II standards allows severaladditional years for the developmentand application of the technologyneeded in addition to that used tocomply with the Tier I standards. TheAgency believes that seven years totalleadtime is appropriate for the Tier IIstandards since the locomotive industryis currently unregulated, and EPAbelieves that the industry needs someexperience under the less stringent Tier0 and Tier I standards before assumingliability for emissions performanceunder the more stringent Tier IIstandards. Finally, industry has knownfor some time the approximate levelsthat the Agency is proposing, and hasalready begun working towardcompliance. The levels of the standardsthe Agency is proposing have beendiscussed in numerous meetings withthe manufacturers, and were includedin the development of a federalimplementation plan (FIP) for ozonenonattainment areas in California. 1313 The California FIP, signed by the Administrator2/14/95, is located in EPA Air Docket A–94–09,item number V-A–1. The FIP was vacated by an actof Congress before it became effective.The Agency requests comment onwhether the leadtime proposed isappropriate to allow compliance withthe standards. Any commentssuggesting that either more or lessleadtime is required should includetechnical justification of the need aswell as an estimate of the appropriateleadtime. Also, the Agency requests thatcomments favoring more leadtimeaddress the impacts that a delay of theproposed implementation schedulewould have on the ability of severe andextreme ozone nonattainment areas toattain the national ambient air qualitystandard for ozone by the applicabledate (2005 or 2007 for severe areas, and2010 for the South Coast nonattainmentarea in California, currently the onlyextreme ozone nonattainment area), andon the ability of attainment areas tomaintain that status. Finally, EPArequests that comments favoring moreleadtime address the possibility of otherapproaches to resolving the issue, suchas a phase-in of the Tier 0 and/or TierI standards, or less stringent standardsfor Tier I.B.4. Useful LifeEPA proposes that a locomotive orlocomotive engine covered by today’sstandards be required to comply withthe standards throughout its useful life.The useful life would be defined usingthe typical period that a locomotiveengine is expected to be properlyfunctioning. A locomotive engine’semissions-critical components shouldbe built to be at least as durable as therest of the engine. That is to say, for thetime period that the engine is expectedto be functioning properly, with respectto reliability and power output, it mustcomply with the proposed emissionstandards. This time period is one thatEPA sets based on general practice, notan engine by engine time period thatends if the locomotive engine is poorlymanufactured and stops functioningproperly earlier than expected. It shouldbe noted that greatest practicalsignificance of the useful life period isthat it defines where in-use compliancetesting will be conducted (i.e., in-usetesting is conducted at 75 percent ofuseful life), as is discussed later in thisnotice.Given the above description, theAgency has decided to base itsnumerical definition of a locomotiveengine family’s useful life on theaverage period between remanufactures(or from remanufacture to scrappage) forthat family. EPA believes that thisperiod is most closely linked to theperiod during which a locomotive isdesigned to be properly functioning.However, because the average periodbetween remanufactures varies fromrailroad to railroad for any givenlocomotive model, EPA has decided topropose minimum (or default) usefullife numbers for each Tier of standards.EPA believes that the best indicator ofthe interval between remanufactures iswork done (expressed as MW-hr), whichis dependent on the horsepower (hp) ofa locomotive. Thus, the proposeddefinition of useful life is based on MWhr.However, mileage betweenremanufactures is also meaningful, andmany existing locomotives are notequipped with MW-hr meters.Therefore, the proposed definition forminimum locomotive useful life for Tier0 locomotives is expressed both as milesand MW-hr, with the MW-hr levelsbeing a function of the rated power ofa locomotive. Tier 0 locomotive usefullife is proposed to be defined as mileagefor locomotives not equipped with aMW-hr meter, and mileage or MW-hr,whichever occurs first, for Tier 0locomotives equipped with MW-hrmeters. The proposed values are shownin Table V–8. The Agency is notproposing that mileage values beincluded in the minimum useful lifedefinitions for Tier I and Tier IIlocomotives, but is presenting them forcomment in Table V–8. Similarly, EPAis not proposing that the number ofyears be included in the minimumuseful life definitions, but has includedyear values in Table V–8 for comment.If EPA were to adopt more than onecriteria for useful life in its definition(e.g., miles and MW-hr), the end of alocomotive’s useful life would occur atthe point when the first of thosemultiple criteria is met (e.g., useful lifeis defined as miles or MW-hr,whichever occurs first).The Agency expects that locomotivemanufacturers will continue work ondeveloping locomotives which willoperate longer between remanufacturesthan current locomotives. For thisreason, EPA is proposing thatlocomotive and locomotive enginemanufacturers be required to specify alonger useful life than the minimum ifa longer period between remanufacturesis intended for the locomotive than theminimum useful life interval. EPAwould determine if a longer useful lifeis needed based on information such asa manufacturer’s recommended time toremanufacture, or on in-use datashowing that a locomotive engine familyis consistently operating properly wellpast its useful life period. The Agencywill also allow manufacturers topetition for shorter useful lives inunusual circumstances where an

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6379individual engine family does notachieve the minimum useful life in-use.The remanufacture data provided bythe railroad industry showed thataverage remanufacture intervals fordifferent models of locomotivesoperated by different railroads variedfrom about 300,000 to 1,400,000 miles,or about 9,300 to 35,000 MW-hr. Thisvariation made the task of establishinga minimum useful life period verydifficult, especially for Tier 0locomotives. The proposed minimumvalues fall in middle of these ranges,which means that some currentlocomotives are being remanufacturedlong before they reach the proposedminimum useful life values. However,EPA believes that the proposed valuesare appropriate for several reasons.First, future locomotives are expected tolast longer between remanufactures thanthe existing fleet. The Tier 0 minimumuseful life values will not only apply tolocomotives remanufactured in 2000,but also to locomotives remanufacturedwell into the next century. Second, theproposed regulations include flexibilityto allow manufacturers to request ashorter useful life for any engine familythat is typically remanufactured beforereaching the minimum useful life.Finally, EPA believes that there is asignificant environmental riskassociated with a useful life that is tooshort. It is possible that significantnoncompliance could occur if mostlocomotives continue to operatesignificantly beyond the point at whichthey are tested for compliance in-use. Along useful life ensures that the periodof operation after testing will beminimized.The Agency requests comment on allaspects of the proposed useful lifedefinition. Specifically, comment isrequested on whether MW-hrs andmiles are the most appropriate measureof a locomotive’s useful life, or whetherother measures (e.g., fuel usage, years)should be considered and, if so, howthey should be measured. The Agency isalso considering a separate useful lifedefinition of 12 years for Tier 0locomotives dedicated to switchingoperation. This is because it is oftendifficult to quantify mileageaccumulation for switch locomotives.EPA requests comment on this possibleapproach to Tier 0 switch locomotiveuseful life definition, and whetherperiods higher or lower than 12 yearswould be more appropriate. The Agencyalso requests comment on whether itshould consider allowing differentuseful lives within a given enginefamily for locomotives which will beused in substantially differentapplications than other locomotives inthe same engine family. Finally, theAgency recognizes that the useful lifedefinition just presented is based on alimited amount of remanufacture data,and encourages the inclusion ofadditional remanufacture data withcomments. The Agency will fullyconsider any new data on the averageperiod between remanufactures.TABLE V–8.—MINIMUM USEFUL LIFE VALUESMilesYearsMegawatthoursMegawatthoursfor4000 HPLocomotiveTier 0 .................................................................................................................................. 750,000 10 7.5 X hp 30,000Tier I ................................................................................................................................... 800,000 10 8.0 X hp 32,000Tier II .................................................................................................................................. 900,000 10 9.0 X hp 36,000B.5. Averaging, Banking and TradingConsistent with the Act’s requirementthat EPA set emissions standards fornew locomotives and new locomotiveengines which achieve the greatestdegree of emissions reductionsachievable while considering cost andother factors, EPA is proposing acertification averaging, banking andtrading (ABT) program formanufacturers and remanufacturers oflocomotives and locomotive engines.Such a program would allow themanufacturers and remanufacturers theflexibility to meet overall emissionsgoals at the lowest cost, while allowingEPA to set emissions standards at levelsmore stringent than they would be ifeach and every engine family had tocomply with the same numericalstandards. This program would allowcertification of one or more enginefamilies within a given manufacturer’sor remanufacturer’s product line atlevels above the emission standard,provided the increased emissions areoffset by one or more families certifiedbelow the emission standard, such thatthe average of all considered emissionsfor a particular manufacturer’s productline (weighted by horsepower,production volume and useful life) is ator below the level of the emissionstandard. Within the engine family,each engine must comply with thestandard set for that family (the familyemission limit, or FEL). The proposedbanking program would also allowmanufacturers and remanufacturers togenerate emission ‘‘credits’’ and bankthem for future use in averaging ortrading. This proposed ABT program ismodeled after similar programs alreadyin place for on-highway and nonroadengines. While the practical effect of theproposed ABT program is that amanufacturer’s or remanufacturer’sproduction must, on average, meet theapplicable emissions standards,compliance with the program iscalculated on a total mass basis. This isto account for differences in thehorsepower and useful life of differentengine families (i.e., the credits for anengine family are weighted according tohorsepower, production volume anduseful life).When a manufacturer or aremanufacturer uses ABT, it would berequired to certify each participatingengine family to a family emission limit(FEL) which is determined by themanufacturer or remanufacturer duringcertification testing. A discussion of theproposed engine family definition iscontained in the section on complianceissues. A separate FEL would bedetermined for each pollutant which themanufacturer or remanufacturer isincluding in the ABT program. EPA isproposing an FEL ceiling of 1.25 timesthe applicable standard, so that noengine family could be certified at anemissions level higher than 1.25 timesthe applicable standard.As was previously discussed, theAgency is proposing to require that alllocomotives meet both the line-haul andswitch duty-cycle standards, so thatmore than one standard (andaccompanying duty cycle) applies to asingle pollutant. This presents a uniquesituation for the proposed locomotiveABT program in comparison to othermobile source ABT programs where theparticipating vehicles or engines onlyhave to meet one standard for aparticular pollutant. The Agency isproposing separate switch and line-haulABT programs in order to address the

6380 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesissues that multiple standards for thesame pollutant raise. Each engine familywould be allowed to participate in boththe switch and line-haul ABT programs.However, line-haul credits could not beused to meet the switch standards, andvice versa.EPA is proposing that ABT credits beweighted according to a locomotive’suseful life, if specified as work, or acombination of horsepower (hp) anduseful life if the useful life is defined asmiles. This is consistent with theAgency’s ABT program for on-highwayheavy-duty engines. EPA is consideringrestricting the exchange of creditsbetween locomotives above 2000 hp andbelow 2000 hp to prevent creditsgenerated by higher powered enginefamilies from being used to allow lowerpowered switch locomotive enginefamilies to remain essentiallyuncontrolled. Reducing emissions fromswitch locomotives is a significantconcern given that switch locomotivesare more likely to operate exclusively inurban areas, and EPA is concerned thatallowing free exchange of creditsbetween high and low poweredlocomotive engine families would notachieve such reductions. The Agencyrequests comment on whether it shouldprohibit or restrict credit exchangebetween locomotives above and below2000 hp.Consistent with the ABT program foron-highway heavy-duty engines, thelocomotive ABT program is proposed tobe limited to NO X and PM emissionsonly. EPA does not believe that theproposed CO, HC and smoke standardsare so stringent that they should beincluded in the ABT program. Also, TheABT program is proposed to beapplicable to the duty-cycle emissionsonly. EPA believes that extending theABT program to include the individualnotch caps would result in a programthat is too complex to be practical.Individual notch caps would beadjusted for locomotives whichparticipate in the ABT program byprorating them on the basis of the ratioof the standard and the FEL. Averaging,banking and trading of credits would belimited to locomotive engines subject tothe same set of standards (i.e., Tier 0,Tier I, Tier II). For example, creditsgenerated on a Tier I locomotive couldnot be used towards a Tier IIlocomotive’s compliance. The Agencyrequests comment on whether it shouldallow some degree of credit use acrossdifferent sets of standards and, if so, forhow long, and what effect if any thisshould have on the level of thestandards. For example, should EPAallow Tier I credits to be used towardthe first year (or more) of Tier IIcompliance?EPA is also proposing to exclude fromthe ABT program Tier 0 locomotivescertified pursuant to the 33 percent NO Xreduction option discussed in the abovesection on emission standards. As wasdiscussed previously, the 33 percentNO X reduction option is being proposeddue to the potential difficulties ofcertifying certain Tier 0 engine familiesunder the proposed ABT program.Additionally, the Agency is proposingthat a remanufacturer who certifies aTier 0 engine family under this optionnot be allowed to include any of itsother Tier 0 engine families in theaveraging, banking and trading program,and requests comment on this proposedprohibition.As was previously discussed, theAgency is proposing that enginefamilies which contain passengerlocomotives equipped with a singleengine for both traction power and hotelpower be required to meet both the linehauland switch duty-cycle standardsboth when providing traction poweronly, and when providing both tractionpower and hotel power. For thepurposes of ABT, EPA is proposing thata single FEL for each pollutant bedeclared for such engine families basedon the mode of operation of the higheremission rate. These FELs would coverthe locomotive in both power modes.The ABT program raises a uniqueissue for remanufactures of locomotivesand locomotive engines. A manufacturerof freshly manufactured locomotivescan plan its year’s production inadvance with the ABT program in mind.However, a remanufacturer is much lessable to plan for the complexities of theprogram due to the greater number ofengine families, the fact that more thanone entity could remanufacture a givenengine family, the larger number ofcustomers for remanufacture kits thanfor freshly manufactured locomotives,the inability to predict how manyengines will be remanufactured in agiven year, and other factors. To accountfor this situation, EPA is proposing thata locomotive or locomotive enginesubject to the Tier I or Tier II standards,when remanufactured, must meet thestandards and/or FELs it was certified asmeeting when it was originallymanufactured (or, in the case of Tier 0locomotives and locomotive engines,when it was first remanufacturedfollowing the effective date of theseproposed standards). The Agency isrequesting comment on several aspectsof this provision. First, should EPAallow a remanufacturer to generatecredits by certifying a remanufacture ata level below the locomotive’s originalFELs? Second, should the Agencyconsider simply ignoring thelocomotive’s original FELs, and institutean averaging, banking and tradingprogram for remanufacturedlocomotives and locomotive enginesunder which credits would be generatedon the basis of reductions beyond theremanufacture standards (as applicable),rather than on the basis of reductionsbeyond any FELs the locomotive orlocomotive engine was previouslycertified as meeting? Finally, should theAgency place any restrictions on theexchange of credits betweenremanufactured and freshlymanufactured locomotives?As was previously mentioned, EPA isproposing to weight ABT creditsaccording to useful life, and power (ifuseful life is expressed in miles). Thisraises a unique situation for thetreatment of Tier 0 locomotives, whoseuseful lives can be expressed as eitherMW-hr (if equipped with a MW-hrmeter) or miles (if not equipped with aMW-hr meter). These two definitions ofuseful life for Tier 0 locomotives resultin a situation where credits based onone definition are not interchangeablewith credits based on the otherdefinition, and there is no reliable wayto correlate between the two (i.e., thereis no standard relationship that wouldallow accurate conversion from oneform to the other). The Agency isproposing that separate averaging setsbe established for Tier 0 locomotives,one for those whose useful life isdefined in MW-hr and one for thosewhose useful life is defined in miles, inorder to deal with incompatible creditcalculations. Credit use would berestricted to within each of the two sets.The Agency requests comment on thisapproach, as well as two other optionsit considered. The first alternative has aparallel in other mobile source ABTprograms such as those for on-highwayheavy-duty engines and nonroadcompression ignition engines over 37kW. In those programs, when aparticipating engine family has enginesof more than one power (hp) rating, themanufacturer is required to generatecredits based on the lowest hp rating inan engine family, but can only usecredits based on the highest hp rating inan engine family. Using a similarapproach for locomotives, an estimatedrange of conversion factors to equateMW-hr and mileage would beestablished. When generating or usingcredits, the endpoints of the rangewould be used in a conservative fashionto minimize credit generation andmaximize credit usage. The secondalternative EPA considered was simply

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6381to require that all Tier 0 locomotives beequipped with MW-hr meters, thusresulting in a single useful lifedefinition (MW-hrs) for Tier 0locomotives, and a single category ofcredits for Tier 0 locomotives.The leadtime the Agency is proposingfor compliance with today’s emissionsstandards is intended to allow all enginefamilies to be able to comply. EPArecognizes that some engine familiesmay be able to comply prior to theeffective date of the proposed standards.However, EPA expects that theseproposed regulations will be finalized inDecember of 1997, by which time themanufacturers are expected to havefinalized their 1998 and 1999production plans. Thus, the Agencydoes not believe it would be practical torequire a phase-in of the proposedstandards prior to 2000 across the entireindustry, but would like to encouragethe early introduction of cleanerlocomotives. Thus, EPA is proposing toallow manufacturers andremanufacturers to begin bankingcredits for locomotives and locomotiveengines as early as one year prior to theeffective date of the standard, (i.e., the1999 model year). EPA is proposingthat, for early banking, manufacturersand remanufacturers could receive NO Xand/or PM emission credits for enginescertified to FELs below the NO X and/orPM standards which take effect in 2000.The NO X and PM credits would becalculated based on the differencebetween the FEL and the correspondingemission standard for the appropriateduty-cycle. The Agency requestscomment on whether it should furtherencourage the early introduction ofcleaner locomotives and locomotiveengines by giving credits for earlycertification in excess of what would begenerated relative to the applicablestandards. For example, should alocomotive which is certified as meetingthe Tier I standards in 1999 be givencredit relative to the Tier 0 standards,given that it would otherwise not haveto meet any standards initially, and onlythe Tier 0 standards at remanufacture?EPA recognizes that credits generatedearly could be used in later years andthat there may be little net benefit in thelong term from such an approach, butnonetheless sees a benefit inencouraging earlier emissionsreductions.Consistent with the current ABTprogram for nonroad engines over 37kW, credits are proposed to have a threeyear lifetime with no annualdiscounting. The Agency requestscomment on the proposed three yearcredit life, as well as an infinite creditlife. The Agency also requests commenton the proposal that credits not bediscounted with time, as well as annualdiscounting rates of up to 20 percent.Participation in the proposedlocomotive ABT program would bevoluntary. For those manufacturers andremanufacturers who choose to utilizethe program, compliance forparticipating engine families would beevaluated in two ways. First,compliance of individual enginefamilies with their FELs would bedetermined and enforced in the samemanner as compliance with theemission standards in the absence of anaveraging, banking and trading program.Each engine family must certify to theFEL (or FELs, as applicable), and theFEL would be treated as the emissionlimit for certification, production-lineand in-use testing for each engine in thefamily. Second, the final number ofcredits available to the manufacturer orremanufacturer at the end of a modelyear after considering themanufacturer’s or remanufacturer’s useof credits from averaging, banking andtrading must be greater than or equal tozero.When credits are generated andtraded in the same model year, EPAproposes to make both buyers andsellers of credits potentially liable forany credit shortfalls, except in caseswhere fraud is involved. This provisionis consistent with other mobile sourceABT programs. The certificates of bothparties issued for locomotives andlocomotive engines involved in theviolating trading transaction could bevoided ab initio (i.e., back to date ofissue) if the engine family or familiesexceed emission standards as a result ofa credit shortfall.The integrity of the proposedlocomotive averaging, banking andtrading program depends on accuraterecordkeeping and reporting bymanufacturers and remanufacturers, andeffective tracking and auditing by EPA.Failure of a manufacturer orremanufacturer to maintain the requiredrecords would result in the certificatesfor the affected engine family or familiesbeing voided retroactively. Violations ofreporting requirements could result in amanufacturer or remanufacturer beingsubject to civil penalties as authorizedby sections 213 and 205 of the Clean AirAct.EPA requests comment on all aspectsof the proposed averaging, banking andtrading program. Specific comment isrequested as to whether the programshould be limited to just NO X and PM,as proposed, or whether the otherregulated pollutants should be included.Also, the Agency requests comment onthe various restrictions (averaging sets,etc.) proposed for this program.C. Compliance AssuranceSection 213(d) of the Clean Air Act,which applies to EPA’s proposedemissions standards for locomotives,provides that such standards ‘‘shall beenforced in the same manner asstandards prescribed under section(202)’’ of the Act (applicable to newmotor vehicles and new motor vehicleengines). This provision also grants EPAdiscretion to revise the regulationsimplementing certification, in-usetesting and recall if appropriate forlocomotives and other nonroad vehiclesand engines. EPA uses severalmechanisms to enforce its motor vehicleemissions standards, includingcertification, production line testing, inusetesting and recall. This sectioncovers the various aspects of theseproposed compliance programs forlocomotives. A discussion of theproposed definition of locomotiveengine family is presented first,followed by discussions of the threemain compliance programs(certification, production line testingand in-use testing).C.1. Engine Family DefinitionEPA defines engine family for allother mobile sources as a group ofengines expected to have similaremissions characteristics throughouttheir useful lives. The engine familyconcept facilitates more efficientcertification of engines or vehicles byallowing those with similar emissionscharacteristics to be grouped together,thus reducing testing costs. In definingengine family for locomotives andlocomotive engines, the Agency soughtto balance the economic advantage of abroad definition that would minimizetesting and certification costs, and theenvironmental advantage of a narrowdefinition that would better assure thatthe testing of an engine family wouldaccurately represent all engines in thatfamily. The Agency is proposing todefine engine family for locomotivesusing many of the same parameterswhich are currently used to define onhighwayand nonroad engine families.These parameters include aspects ofboth the physical design of the engine(e.g., combustion chamberconfiguration, cylinder bore and stroke)as well as operating characteristics (e.g.,fuel injection pressure and rate,turbocharger and inlet air coolingcharacteristics). A complete list of theparameters is included in section 92.010of the proposed regulations.While the proposed locomotiveengine family definition uses many of

6382 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesthe same parameters as engine familydefinitions adopted by EPA for otherclasses of mobile sources, the enginefamily definition proposed here forlocomotives is somewhat more narrowlydefined, especially for Tier I and Tier II.Characteristics such as fuel injectionpressures and turbocharger andaftercooler performance are included inthis definition.EPA does not believe that the aboveoutlined approach to defining enginefamily will result in an excessivenumber of engine families. For Tier Iand Tier II the Agency expects that amanufacturer may only have a singleengine family in a given model year.However, the Agency is requestingcomment on whether it should allow forthe combining of small Tier 0 enginefamilies into a single engine family inorder to reduce the testing burdenimposed by the Tier 0 standards.Comments should address the size ofthe engine families which canparticipate, as well as the justificationfor allowing them to be classified as asingle engine family and recommendedcriteria for separating families.C.2. Engine Family CertificationCertification is the process whereby amanufacturer or remanufacturer obtainsa certificate of conformity for aparticular engine family of locomotives.A certificate of conformity must beobtained before a manufacturer orremanufacturer may lawfully offer forsale or otherwise introduce (orreintroduce) into commerce newlocomotives and new locomotiveengines. The CAA establishes an annualcertification requirement for newvehicles and engines, including newlocomotives and new locomotiveengines. 14 Under the proposedregulations, a separate certificate mustbe obtained for each engine family.Applications must be submitted everyyear, even when the engine family doesnot change from the previous certificate,although representative test data couldbe reused in the succeeding year’sapplication in order to minimize thetesting burden.As discussed in the followingparagraphs, EPA is proposing thatlocomotives (rather than engines) betested for demonstration of compliancewith the applicable emissionsstandards. EPA is also proposing anexception to this requirement whichwould allow test data from a14 Section 206 of the Clean Air Act requirescertification on a yearly basis. This has beeninterpreted to mean certification for each modelyear, as defined in section 202(b)(3)(A)(i) of theCAA. Section 206 applies to locomotives, pursuantto section 213(d) of the Act.development engine to be used forcertification, rather than requiringtesting of a pre-production prototypelocomotive. Nevertheless, it is the actuallocomotive, not the engine, for which acertificate of conformity would beissued, and the Agency is proposing thatlocomotives, not engines, be testedduring production line and in-usetesting programs. These programs arediscussed later in this notice. The onlyexception to the proposed requirementthat a certificate of conformity be issuedfor locomotives, rather than engines, isin the case of engines which are sold forpurposes of repowering existinglocomotives, as previously discussed.This exception is not proposed to beextended to locomotive engines whichare sold to locomotive manufacturers foruse in freshly manufactured chassis.The Agency is also proposing toprohibit defeat devices which senseoperation outside of the normalcertification test conditions and reducethe ability of the engine to controlemissions under non-test conditions.Finally, EPA is proposing thatmanufacturers and remanufacturers oflocomotives be required to specify arange for adjustable parameters whichcan affect emissions such that thelocomotives will comply with theapplicable standards with theparameters set anywhere within theirspecified range. These provisions arediscussed in the following paragraphs.Under EPA’s current motor vehicleprogram, the certification processincludes an up-front showing ofemissions durability. This is donethrough an emissions durability vehiclewhich is operated more or lesscontinually to accumulate mileagerepresentative of in-use operation. Thus,a motor vehicle’s ability to meet theemission standards throughout itsuseful life is demonstrated as part of theinitial certification process, althoughunder somewhat artificial conditions.With locomotives, which are built tooperate continually and have very longuseful lives, this type of acceleratedusage is not feasible. Such ademonstration would take several yearsto complete, compared to severalmonths for on-highway passenger cars,and could require more than $1 millionin fuel. Thus, including a durabilityshowing in the initial certificationprocess is not appropriate in light of thecost and time involved in making sucha showing. The Agency is, therefore,proposing no durability demonstrationbe required for certification. However, amanufacturer or remanufacturer muststill estimate in-use emissionsdeterioration as part of the certificationprocess (through engineering evaluationor other means), but need not do so byoperating a locomotive for its entireuseful life. Compliance over the fulluseful life will be ensured by theproduction line and in-use testingprograms (discussed in the followingsections), which EPA considersextremely important aspects of theproposed program to control emissionsfrom locomotives. The Agency isconsidering, and requests comment on,whether it should develop optionalassigned deterioration factors based onthe initial results of the in-use testingprogram (discussed later).EPA believes that, in order toaccurately measure locomotiveemissions, the locomotive, not just theengine, should be tested. However, EPArecognizes that the locomotivemanufacturing industry is unusual inthe way it develops new products.Typically, a manufacturer will have asingle engine mounted on adynamometer which may remain therefor years. This development engineserves as a test bed for changes in theengine’s design. Given the relativelysmall volume of locomotives andlocomotive engines manufactured,combined with their very high per-unitcost, the Agency is proposing that as anoption to certification testing of acomplete locomotive, test data from thisdevelopment engine be allowed to besubmitted for certification. This is incontrast to other EPA mobile sourceprograms where a pre-productionprototype engine or vehicle is used togenerate emissions data. As a conditionof certifying a locomotive using datafrom a locomotive engine rather than acomplete locomotive, a manufacturer orremanufacturer must accept liability fora certificate suspension and/or recallaction based on production line or inusetesting of locomotives. Additionally,for engine families which are certifiedusing development engine data, one ofthe first five locomotives manufacturedwill be tested as part of the productionline testing program, which is discussedlater.This development engine would berequired to be tested at power pointswhich correspond to the actual notchesof the locomotive the engine will beused in. In general, the certificationtesting is the only time that EPAproposes that the engine, rather than thelocomotive, could be tested. Forproduction line and in-use testing(discussed next), EPA proposes that theactual locomotives be tested in order toassure that the locomotive engine isbeing operated at conditions thatrepresent those in a locomotive (e.g.,intake air and coolant temperatures,

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6383power at throttle notches). As isdiscussed in the section on productionline testing, a waiver from therequirement that locomotives (notengines) be tested under the productionline testing program will be available forthose manufacturers andremanufacturers which onlymanufacture or remanufacture enginesused to repower existing locomotives.While EPA is proposing to allow datafrom a development engine to be usedfor certification testing, the Agency isaware that parts of this engine may havebeen in operation for some time whenthe engine is tested. Thus, the data usedfor certification may not accuratelyreflect the emissions performance of afreshly manufactured engine. Theapplication for certification wouldinclude a demonstration, which couldbe based on good engineeringjudgement, that the locomotive orlocomotive engine will meet theapplicable emission standardsthroughout its useful life. Thus, themanufacturer or remanufacturer wouldbe required to use engineeringjudgement or test data to develop adeterioration factor (df), subject to EPAapproval, for the development enginewhich would account for any expectedemissions deterioration. As part of theapplication for certification, EPAproposes to require the applicant to alsoprovide a df, also subject to EPAapproval and based on engineeringjudgement or test data, which could beapplied to a freshly manufactured unitto give its emissions rate at the end ofits useful life. This df might be differentthan the one generated for use with thedevelopment engine data, and it wouldbe used for production line testing ofnew locomotives and locomotiveengines.When no significant changes to anengine family occur from one modelyear to the next, EPA proposes to allowmanufacturers and remanufacturers theflexibility to submit emission test dataused to certify the engine family inprevious years in lieu of actual testingfor current year certification. This canbe done to certify an engine familywhich is the same as, or substantiallysimilar to (as determined by theAdministrator), the previously certifiedengine family, provided these data showthat the test engine would comply withthe applicable regulations. This allowsmanufacturers the ability to ‘‘carryover’’ test data from the same enginefamily from one model year to another.The proposed remanufacturerequirements for locomotives raise aunique question regarding who shouldbe required (or allowed) to hold thecertificate of conformity for aremanufactured locomotive enginefamily. Section 206 of the Act, whichapplies to locomotives pursuant tosection 213(d), states that theAdministrator shall test new vehiclesand engines submitted by amanufacturer to determine compliancewith applicable emissions standardsand shall issue a certificate ofconformity if the vehicle or engineconforms to EPA regulations. Section203(a)(1) prohibits manufacturers fromintroducing into commerce newvehicles and engines that are notcovered by a certificate of conformityissued by EPA. Because section 213(d)states that EPA’s locomotive emissionsstandards shall be enforced in the samemanner as the federal motor vehicleemissions standards, it is appropriate toapply the prohibition againstintroduction into commerce without avalid certificate to manufacturers of newlocomotives and new engines used inlocomotives. Since EPA proposes todefine remanufactured locomotives asnew, these provisions apply to bothremanufactured and freshlymanufactured locomotives. Section 216defines ‘‘manufacturer’’ as any personengaged in the manufacturing orassembling of new nonroad vehicles ornew nonroad engines. This definitionenvisions manufacturing of a newvehicle or engine, at least in some cases,as being something other than simplyassembling the new vehicle or engine.EPA has considered theremanufacturing process forlocomotives and engines to determinewhich entity or entities should beconsidered a manufacturer for purposesof compliance with emissionsstandards. For remanufacturedlocomotives and engines, severaldifferent entities may be ‘‘engaged in themanufacturing or assembling’’ of thenew locomotive or engine, potentiallyresulting in multiple manufacturers of aremanufactured locomotive or engine. Arailroad company may remanufacture itslocomotives or engines itself. A railroadmay otherwise play a significant role inthe process of design, production, orinstallation of parts in theremanufacturing process. A third partymay install the remanufacturing kit.Such kits, in turn, could be produced bya different entity. All of these parties areinvolved in the remanufacturing processto some extent, and can therefore beconsidered to be ‘‘engaged in themanufacturing or assembling’’ of theresulting new locomotive or engine.This is significantly different from themotor vehicle industry, in that no singleentity conducts the entire process ofmanufacturing a new vehicle or engine.The entity that makes theremanufacturing kit, containing partsused to remanufacture locomotives orengines, can be considered amanufacturer of the new locomotive orengine because such entity actuallyproduces the components that willconstitute the remanufacturedlocomotive or engine. The installer ofthe remanufacturing kit, who may ormay not be a different entity, can beconsidered a manufacturer of theremanufactured locomotive or enginebecause such entity performs theinstallation of the remanufacturing kit toresult in a new locomotive or engine.Finally, the railroad company thatremanufactures its own engine, or isotherwise involved to any significantdegree in the remanufacturing process,such as hire another entity to install aremanufacturing kit according to therailroad’s specifications, can beconsidered a manufacturer of theresulting new locomotive or engine,because the railroad plays a significantrole in determining the specific mannerin which the locomotive or engine willbe remanufactured. Because any of theseentities could be considered theremanufacturer, the Agency isproposing that any of them could holdthe certificate of conformity. TheAgency requests comment on its legalauthority to call a railroad amanufacturer in cases where therailroad is in no way involved in theremanufacturing of its locomotives.It is possible that, given the numberof entities that could be engaged inmanufacturing or assembling aremanufactured locomotive enginefamily, there will be cases where thecertificate holder will be an entity otherthan the installer (e.g., the entity whichdesigns the system or manufactures thecomponents). In such cases thecertificate holder would be required, asa condition of the certificate ofconformity under section 206(a) of theAct, to provide to the installer alongwith a remanufacture kit (which wouldinclude the necessary components or acomponent list including specificationsfor the components) instructions for theproper installation and calibration ofthose components, as well as any otherinstructions or calibrations required forthat remanufactured engine family tomeet the applicable emissionsstandards. Specific provisions for howremanufacture kits would be handledwith respect to production line testingand liability are discussed later in thisnotice.The Agency requests comment onwhether it should require emissiontesting for remanufacturers certifyingkits that are equivalent to kits

6384 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulespreviously certified by otherremanufacturers. Would there be anybenefit to such emission testing, and ifnot, would it therefore be unreasonableto require it? EPA is concerned,however, that if it were to allow suchcertification, that it would be unfair tothe original certificate holder that wouldhave been required to perform theemission testing. One way to addressthis concern would involve not allowingsuch certification until several yearsafter the original certificate holder hadobtained the certificate; thereby givingthe original certificate holder time torecover its investment. This also raisesan issue of whether EPA would haveauthority under section 206(a) of the Actto refuse to issue a certificate based onthis reason. EPA therefore requestscomment on whether certification ofequivalent kits without testing shouldonly be allowed for kits that wereoriginally certified at least five yearsprevious.As described above, the process ofremanufacturing an existing locomotiveor engine to result in a new locomotiveor engine is unique to the locomotiveindustry, and is not common practicefor other mobile sources. Pursuant tosection 213(d), EPA has discretion tomodify its regulations implementingsections 206 and 207 of the CAA as theAgency determines is appropriate forlocomotives. EPA has analyzed thecurrent industry practice ofremanufacturing existing locomotivesand engines, as well as the technicalaspects of remanufacturing, and isconsidering an approach to certificationof remanufactured locomotives andengines under which the entity thatowns the locomotive or engine beingremanufactured (generally a railroadcompany) would be primarilyresponsible for meeting the obligationsof the manufacturer of such locomotiveor engine to meet the Tier 0 standards.As stated above, a railroad companythat hires another entity to install aremanufacturing kit according to therailroad’s specifications can beconsidered to be engaged in themanufacturing or assembling of theresulting new locomotive or engine, ascan the entity hired to install the kit. Insuch a case, both the railroad and theinstaller would be subject to theobligations and prohibitions that applyto manufacturers of new vehicles andengines. To simplify the certificationand enforcement process, EPA isconsidering specifying by regulationthat the owner of the locomotive orengine being remanufactured shall beconsidered the primary manufacturer ofthe remanufactured locomotive orengine, and, as such, shall be the entitythat EPA will look to for compliancewith certification and enforcementrequirements relating to itsremanufactured locomotives andengines. EPA believes that it isappropriate to specify the owner of theremanufactured locomotive or engine asthe primary manufacturer, rather thanthe installer of the kit, because theformer entity has the greatest degree ofcontrol over the manner in which theexisting locomotive or engine isremanufactured; the railroad providesthe specifications that theremanufactured engine must meet andmaintains ownership of the locomotive,or physical control in the case of aleased locomotive. The installer simplyfollows the directions provided by theowner; while installation of theremanufacturing kit renders the installera manufacturer of a new locomotive orengine under the CAA definition, EPAwould not expect to seek recourseagainst the installer as the manufacturerof the remanufactured locomotive orengine (nor against any other entitiesthat meet the definition of amanufacturer) unless the owner of suchengine failed to meet its obligations asa manufacturer. However, if the primarymanufacturer failed to meet certainrequirements, such as failing to obtain acertificate prior to introducing theremanufactured engine into commerce,then all parties who meet the definitionof manufacturer, with regard to suchengines would be considered to be inviolation of section 203(a)(1) of the Act,not just the primary manufacturer.EPA believes that such an approachcould potentially have much less impacton the existing markets for parts andremanufacturing for these locomotives.EPA also believes that such an approachwould ensure compliance with theproposed emission standards equivalentto that of the proposed remanufacturerbased certification process previouslydiscussed. EPA is concerned, however,that there could be unforeseen problemsassociated with attempting to establisha program that is fundamentallydifferent from all other mobile sourceprograms. The Agency does not believethat there is the same potential fornegative market impacts for theremanufacture of locomotives originallybuilt after the effective date of this ruledue to the fact that those locomotiveswould slowly be introduced into thefleet, and thus the remanufacturingmarket for them would develop slowlyas they aged. Nonetheless, EPA alsorequests comments on whether arailroad-based certification programshould be established for theremanufacture of Tier I and Tier IIlocomotives.Under the railroad-based certificationprogram being considered, thecertification requirements would belargely the same as those that are beingproposed under the remanufacturerbased certification approach.Locomotives and locomotive engineswould still be grouped together inengine families, certification test datawould still be required from arepresentative worst-case configuration,and small numbers of locomotiveswould still be audited on the productionline and tested in-use. The maindifference would be that the railroadswould be primarily responsible forsubmitting an application forcertification and conducting all of theproduction line auditing and in-usetesting, and would be liable for theemissions performance.Under this approach, railroads wouldbe allowed to purchase kits frommanufacturers, or any other suppliers,that could be applied to engines duringremanufacture to achieve the necessaryemissions reductions. Railroads wouldalso be allowed to use emissions testdata collected by a kit supplier forcertification. Moreover, the railroadscould even make commercialarrangements to hold the kit supplierliable for in-use emission problems.Thus, the railroads could choose tocertify in a manner that would bepractically very similar to the manner inwhich it would be handled under theremanufacturer-based approach that isbeing proposed. Also, the smallestrailroads would still be able to beexempted from the proposedcompliance requirements, as discussedlater in the railroad requirementssection.EPA is also proposing to reduce thereporting burden associated with theapplication for certification. EPAbelieves that it is appropriate to requiremanufacturers and remanufacturers tocollect and maintain certificationapplication information, but that itshould not be necessary for them tosubmit this information in all casesunless specifically requested. Theauthority, as proposed, to modify whatinformation must actually be submittedversus maintained will allow EPA toexercise some flexibility in designingand implementing the certificationprocess for locomotives and locomotiveengines. When the Agency exercises itsauthority to modify the informationsubmission requirements, it willprovide manufacturers andremanufacturers with a guidancedocument, similar to the manufacturerguidance issued under the on-highway

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6385program, that explains themodification(s). These modifications tothe information submissionrequirements will in no way change theactual requirements of the regulations interms of the emissions standards, testprocedures, etc. Manufacturers andremanufacturers must retain recordsthat comprise the certificationapplication whether or not EPA requiresthat all such records be submitted to theAgency at the time of certification. TheAdministrator would retain the right toreview records at any time and at anyplace she designates.As is the case for other regulatednonroad and on-highway vehicles andengines, the proposed certificationregulations make it illegal for anymanufacturer, remanufacturer, or anyother person to use a device on alocomotive or locomotive engine whichsenses operation outside normalemission test conditions and reducesthe ability of the emission controlsystem to control the engine’s emissionsthrough, for example, the optimizationof fuel economy at the expense ofemissions performance. Such ‘‘defeat’’devices are specifically prohibited formotor vehicles under section 203 of theAct. Section 213(d) of the Act directsthe Agency to enforce the locomotivestandards in the same manner as itenforces motor vehicle standards. EPAconsiders the current motor vehicleprograms’ prohibition against the use ofdefeat devices to be an essential tool inensuring in-use compliance withemissions standards. For this reason,lack of a comparable prohibition forlocomotives could result in a real andsignificant risk that locomotives will notcomply with applicable standardsduring actual operation.Moreover, there is no indication inthe Act that Congress intended toprohibit defeat devices for motorvehicles and engines, but to allow suchpractices for nonroad vehicles andengines. In fact, the overall structure ofthe nonroad vehicle and engineprovisions of the Act, as well as theexplicit reference to enforcement insection 213(d), support an approach toenforcement of the emissions standardsfor such vehicles and engines (includinglocomotives) comparable to theapproach used for motor vehicleenforcement. Therefore, EPA isproposing in the certificationregulations an explicit prohibitionagainst defeat devices applicable tolocomotives subject to the federalstandards. Since the use of defeatdevices effectively renders the specifiedtest procedures for certification,production line, and in-use testinginadequate to predict in-use emissions,EPA would reserve the right to test acertification test locomotive or engine,or require the manufacturer orremanufacturer to perform such testingover a modified test procedure if EPAhas reason to believe a defeat device isbeing used by a manufacturer orremanufacturer on a particularlocomotive or locomotive engine. EPAsolicits comments on this proposedprovision.EPA regulations applicable to onhighwayvehicles contain provisionswhich allow for testing with anyadjustable parameter set anywherewithin its adjustable range. The purposeof these provisions is to ensure thatvariation in parameters whichmechanics or vehicle operators canadjust using low cost tools, when setanywhere within the adjustable range,would not cause the vehicle to exceedemissions standards. Productiontolerances on such large engines, as wellas the need to grind smooth, plate, orotherwise process certain parts duringremanufacture in such a way that theirphysical dimensions change, result inthe need for locomotive adjustableparameters to have much wider rangesof adjustability than those of onhighwayvehicles. An engine which isdesigned to be remanufacturednumerous times throughout its servicelife needs to be manufactured such thatsome of its parameters have physicallyadjustable ranges which are much largerthan their functional ranges when theengine is running in order to account forthe change in dimension of parts whichare processed in some way duringremanufacture, as described above.Requiring that a locomotive be able todemonstrate compliance withapplicable emissions standards with itsparameters adjusted anywhere withintheir adjustable range is not reasonable.However, correct setting of adjustableparameters (e.g., injection timing) iscritical for good emissions performance.EPA is proposing that manufacturersand remanufacturers specify a tolerancerange for each adjustable parameterwithin which compliance withemissions standards will be achieved.Any locomotives which are inspectedand found to have adjustable parametersset outside of the range specified by themanufacturer or remanufacturer will beconsidered to have been tampered with,and the owner/operator of suchlocomotives will be subject to tamperingpenalties, as discussed below in thetampering section.EPA is authorized under section 217of the Clean Air Act to establish fees torecover compliance program costsassociated with sections 206 and 207 ofthe Act. Sections 206 and 207 apply tolocomotives and locomotive enginespursuant to section 213(d) of the Act.Therefore, EPA has authority toestablish fees for locomotive andlocomotive engine testing pursuant tosection 217. EPA proposes to establishfees for this locomotive complianceprogram at some future time after theprogram is in place and the associatedcosts to EPA can be determined.C.3. Production Line Testing ProgramEPA is proposing a production linetesting (PLT) program pursuant to theAgency’s authority to implement andenforce the locomotive emissionsstandards. Section 213(d) subjects thenonroad (including locomotive)standards to the provisions of section206 of the Act, with such modificationsthat the Administrator deemsappropriate to the regulationsimplementing section 206, and directsEPA to enforce the nonroad standards inthe same manner as the Agency enforcesmotor vehicle standards.Section 206(a) provides EPA authorityto issue certificates of conformity withapplicable emissions standards tovehicles that demonstrate compliancewith such standards. Section 206(b)authorizes testing of new vehicles andengines being manufactured todetermine whether such vehicles andengines actually comply with thecertificate of conformity (i.e., testing ofvehicles and engines as they come offthe production line). If the results ofsuch testing show that all or part of therelevant vehicles or engines do notcomply with the certificate, EPA maysuspend or revoke the certificate inwhole or in part. Section 206(b)(1)provides that such testing may beconducted directly by the Agency, or bythe manufacturer in accordance withconditions specified by the Agency.Pursuant to its authority undersection 206, as applied to locomotiveemissions standards according tosection 213(d), EPA is proposing thatmanufacturers and, in some cases,remanufacturers of locomotives performproduction line testing of newlymanufactured and remanufacturedlocomotives. The PLT program wouldbe an emission compliance program inwhich manufacturers would be requiredto test locomotives as they leave thepoint where the manufacture iscompleted. The objective of the PLTprogram is to allow manufacturers,remanufacturers and EPA to determine,with reasonable certainty, whethercertification designs have beentranslated into production locomotivesthat meet applicable standards and/orFELs from the beginning, and beforeexcess emissions are generated in-use.

6386 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed RulesEPA believes that a PLT program isnecessary to verify that new locomotivesand new locomotive engines complywith applicable regulations. Thisprogram is especially important giventhat EPA is proposing to allowcertification of freshly manufacturedlocomotives and locomotive enginesbased on data from a developmentengine, rather than a pre-productionprototype locomotive. The Agency isconcerned that testing conditions duringengine testing (percent power atnotches, air and coolant temperatures,etc.) may not accurately reflect actualoperation in a locomotive, resulting inemissions which may not accuratelyreflect actual locomotive emissions. It isfor this reason that EPA is proposingthat one of the first five freshlymanufactured locomotives produced betested as part of the PLT program ifdevelopment engine test data is used forcertification. EPA is proposing differentPLT programs for freshly manufacturedand remanufactured locomotives andlocomotive engines. As discussed in thefollowing paragraphs, the Agency isproposing that the PLT program forfreshly manufactured units be based onactual testing, while the PLT programfor remanufactured units would bebased on an audit of the remanufacture(e.g., assuring that the correct parts areused and they are installed properly),with EPA having the ability to requiretesting if in-use data indicates a possibleproblem with production.Manufacturers of freshlymanufactured locomotives would berequired to demonstrate thatlocomotives randomly selected by themmeet applicable emissions standardsand requirements. All PLT emissionresults and quarterly production figureswould be required to be reportedelectronically to EPA each quarter. EPAwould review PLT data and theprocedures used in acquiring the data toassess the validity andrepresentativeness of eachmanufacturer’s PLT program.The proposed program for freshlymanufactured locomotives assures thatlocomotives from each engine familywill be tested periodically and that theircompliance will be continuouslymonitored. The frequency of testingwould depend on an engine family’sproduction volume, with greatlyreduced testing for small volume enginefamilies, and a cap on the total numberof tests in a given year for larger enginefamilies. In general, testing will beperformed on locomotives. However,manufacturers who only manufacturelocomotive engines can perform PLTtesting on engines provided thoseengines are only used to repowerexisting locomotives. If any enginesproduced by an engine manufacturer areused for locomotives with freshlymanufactured chassis, the Agency canrequire that some PLT testing be doneon a locomotive, rather than allowing allPLT testing to be done on engines.EPA recognizes the need to develop aPLT scheme that does not impose anunreasonable burden on themanufacturers and remanufacturers.While EPA believes that it hasdeveloped a PLT program which takesinto account the circumstances of thisindustry, it also understands thatalternative plans may be developed thatbetter account for the individual needsof a manufacturer or remanufacturer.Thus, provisions are proposed to allowa manufacturer or remanufacturer tosubmit an alternative plan for a PLTprogram, subject to approval of theAdministrator. A manufacturer’spetition to use an alternative planshould address the need for thealternative, and should includejustifications for the number andrepresentativeness of locomotivestested, as well as having specificprovisions regarding what constitutes aPLT failure for an engine family.Under the proposed PLT program,manufacturers would select locomotivesfrom each engine family at a one percentsampling rate for emissions testing. EPAhas the right to reject any locomotivesselected by the manufacturers if itdetermines that such locomotives arenot representative of actual production.Manufacturers and remanufacturerswould be required to conduct testing inaccordance with the applicable federaltesting procedures for locomotives.Tests must be distributed evenlythroughout the model year, to the extentpossible.The required sample size for anengine family would be the lesser of fivetests per year or one percent of projectedannual production. For engine familieswith production of less than 100, aminimum of one test per year per enginefamily would be required. Thesenumbers were chosen to minimize thetesting burden on the manufacturers butstill allow an adequate testing sample todetermine conformity with theapplicable requirements. Manufacturerscould elect to test additionallocomotives. Manufacturers would berequired to submit quarterly reports toEPA summarizing locomotive testresults, test procedures, and events suchas the date, time, and location of eachtest. Quarterly reporting will allow EPAto continually monitor the PLT data,and is consistent with current reportingrequirements in the PLT program of themarine engine regulations and on thevoluntary assembly line test program foron-highway vehicles and engines. If notesting is performed during a quarter, noreport would be required.Under this testing scheme, if alocomotive fails a production line test,the manufacturer would test twoadditional locomotives out of the nextfifteen produced in that engine family inaccordance with the applicable federaltesting procedures for locomotives.When the average of the three testresults, for any pollutant, are greaterthan the applicable duty-cycle, FEL, ornotch standard for any pollutant, themanufacturer fails the PLT for thatengine family. In all cases, individuallocomotives which failed a test in thePLT program would be required to bebrought into compliance.This program is different than theapproach that EPA has traditionallyused for mobile sources, such as onhighwaymotor vehicles and nonroadmarine engines. The more traditionalapproach used for assuring that theengines are produced as designed forother mobile sources is called SelectiveEnforcement Auditing (SEA). In the SEAprogram, EPA audits the emissions ofnew production engines by requiringmanufacturers to test engines pulled offthe production line on short notice. Thisspot checking approach relies largely onthe deterrent effect: The premise is thatmanufacturers would design theirengines and production processes andtake other steps necessary to make suretheir engines are produced as designedand thereby avoid the penaltiesassociated with failing SEA tests, shouldEPA unexpectedly conduct an SEA.In the marine engine SEA program,EPA employs a statistical procedureknown as the Cumulative Sum(CumSum) Procedure that enablesmanufacturers to select engines atappropriate sampling rates for emissiontesting and will determine whetherproduction line engines are complyingon average with emission standards. Foran engine family to experience a failureunder this approach, the CumSumstatistic, which is based on previousemissions test results, must reach anappropriate action limit. Under theproposed PLT program, for a locomotiveengine family to experience a failure,the average of any pollutant for threeconsecutive tests must be greater thanthe applicable standard or FEL. Theprocedure used for marine engines isappropriate for the marine industrywhich has a much higher total annualproduction than the locomotiveindustry. This procedure could provevery burdensome for the locomotiveindustry, so EPA feels it is appropriateto design a production line testing

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6387program that is more suitable for theirannual production volumes.EPA has taken a different approach inthe locomotive production line testingprogram: This program implements amore flexibly organized testing regimethat acts as a quality control methodthat manufacturers will utilize andmonitor to assure compliance.Manufacturers will continue to takesteps to produce engines withinstatistical tolerances and assurecompliance aided by the quality controldata generated by PLT which willidentify poor quality in real time.In the proposed PLT program, theAdministrator could suspend or revokethe manufacturer’s certificate ofconformity in whole or in part fifteendays after an EPA noncompliancedetermination for an engine family thatfails the PLT, or if the locomotivemanufacturer’s submittal reveals thatthe PLT tests were not performed inaccordance with the applicable testingprocedure. During the fifteen day periodfollowing a determination ofnoncompliance, EPA would coordinatewith the manufacturer to facilitate theapproval of the required production lineremedy in order to eliminate the needto halt production, to the greatest extentpossible. The manufacturer must thenaddress (i.e., bring into compliance,remove from service, etc.) thelocomotives produced prior to thesuspension or revocation of thecertificate of conformity. EPA couldreinstate the certificate of conformitysubsequent to a suspension, or reissueone subsequent to a revocation, after themanufacturer demonstrates (through itsPLT program) that improvements,modifications, or replacement hadbrought the locomotive and/or enginefamily into compliance. The proposedregulations include hearing provisionswhich provide a mechanism to resolvedisputes between EPA andmanufacturers regarding a suspension orrevocation decision based onnoncompliance with the PLT. It isimportant to point out that the Agencywould retain the legal authority toinspect and test locomotives andlocomotive engines should suchproblems arise in the PLT program.The Agency requests comment on allaspects of this proposed PLT program.Specifically, EPA requests comment onwhether it should select the individuallocomotives to be tested, or whether thisshould be done by the manufacturer,with the selection subject to EPAapproval. Also, the Agency requestscomment on whether manufacturerswhich only manufacture locomotiveengines (rather than completelocomotives) and whose engines only gotoward the repowering of existinglocomotives should be allowed to doPLT testing on locomotive engines, asproposed, or whether such enginesshould be required to be installed inlocomotives prior to PLT testing.Comments in support of requiringtesting of a locomotive in this situationshould address logistical issues such ashow much mileage should be allowed inorder to get the locomotive to a suitabletesting site.During the development of today’sproposal, the locomotive andlocomotive engine manufacturersdeveloped an alternative PLT program.Citing cost and time concerns withrunning a PLT program based on the fullfederal test procedure (FTP), as justdescribed, they proposed a programbased on a short test. This short testwould only test locomotives at notchesfive and eight, rather than at all notchesas in the full FTP. It would also utilizeless accurate measurement equipment,and would not require the same level oftraining for those running the test as theproposed FTP would. EPA solicitspublic comment on this approach, andparticularly on the liability that wouldbe associated with a failure of such ashort test, and whether the Agencycould take appropriate enforcementaction based on failure of a productionline test which is different than the testused for initial certification. The Agencyalso requests commenters to addresswhether a less rigorous PLT programwould be appropriate in light of a strongin-use testing program.The Agency is proposing a separateprogram for assuring the productionquality of remanufactured locomotives.Under this proposed program, thecertificate holder, as a condition of thecertificate, would be required to auditits remanufacture of locomotives for theuse of the proper parts, their properinstallation, and all proper calibrationsas a condition of the certificate ofconformity. The certificate holderwould be required to perform theseaudits on 5% of its annual production.For certificate holders which sell theirkits for installation by others, the auditswould be required to be spread outproportionally among every entityinstalling them. The Agency recognizesthat it may be difficult for aremanufacturer to audit kit installationsfrom a variety of installers locatedthroughout the country. Thus, EPA isproposing to allow a remanufacturedlocomotive subject to an audit to operateup to 10,000 miles prior to the audit.This will allow for audits at sites otherthan where the installation occurs, aswell as providing the flexibility in thetiming of the audits (i.e., not having toaudit a locomotive the moment itcompletes remanufacture). A case ofuninstalled, misinstalled, misadjustedor incorrect parts would constitute afailure, and additional locomotiveswould be required to be audited.Actions in the event of an audit failurewould be determined on a case-by-casebasis, depending on whether the failureis considered tampering, causing oftampering, inappropriate parts in kit,etc. EPA would retain the right to order,on a case-by-case basis, a PLT testingprogram for remanufacturedlocomotives in the same manner as thePLT program for freshly manufacturedlocomotives if in-use testing or kitaudits showed evidence ofnoncompliance. EPA requests commenton the impacts of this proposed auditprogram for remanufacturedlocomotives on small businesses, andwhether it should consider anexemption from this requirement forsmall businesses.C.4. In-Use Testing ProgramA critical element in the success ofthe proposed locomotive program isensuring that manufacturers,remanufacturers, and upgraders producenew locomotives that continue to meetemission standards beyond certificationand production stages, during actualoperation and use. EPA is proposing toadopt an in-use testing programpursuant to the Agency’s authority toimplement and enforce the locomotiveemissions standards, and pursuant to itsauthority to collect information fromentities subject to the Act’srequirements.EPA believes that the best way toensure that the in-use emissionsreductions expected to result fromimplementation of today’s proposedstandards are actually achieved is toperform in-use testing on a number oflocomotives every year. This isespecially important in the absence ofan upfront durability showing. TheAgency is proposing an in-usecompliance program with two distinctcomponents. EPA is first proposing aprogram to be performed by themanufacturers and remanufacturersaimed primarily at testing locomotivesfrom all engine families under the fullFTP. Second, the Agency is proposing torequire that Class I railroads annuallytest 10 percent of their locomotiveswhich have met or exceeded their usefullives using a modified version of theFTP, as discussed in the test proceduressection. The purpose of this secondcomponent is to assure that locomotiveuseful life periods are appropriate andto assure states that locomotives arecontinuing to meet applicable emissions

6388 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesstandards for the time period duringwhich certain state standards arepreempted beyond useful life, asdescribed later in this notice. Each ofthese two components of the proposedin-use testing program are discussed inmore detail in the following paragraphs.The first major component of theproposed in-use testing programincludes requirements that apply tomanufacturers and remanufacturers.EPA is proposing to requiremanufacturers and remanufacturers totest emissions from in-use locomotivespursuant to its authority under section208 of the Act. This provision applies tothe locomotive and locomotive engineemissions standards as provided insection 213(d). Section 208 requiresmanufacturers to submit informationand conduct tests that EPA mayreasonably require to determine whethersuch manufacturer is in compliancewith Title II of the Act and itsimplementing regulations, or tootherwise carry out the provisions ofTitle II. The proposed testing program isdesigned to minimize the burden onindustry, while providing a strongincentive for manufacturers andremanufacturers to build engines thatmeet standards beyond the certificationand production stages, when in actualuse.Under the proposed in-use testingscheme, manufacturers andremanufacturers will be required to testin-use locomotives from one enginefamily per year, using the full FTP. TheAgency is proposing one engine familyper year in order to limit the testingburden on manufacturers andremanufacturers. EPA will specify theengine family to be tested each year,with selection based on criteria such asproduction quantity, past emissionperformance (including performance inthe proposed railroad test program), andengine and emission control technology.All in-use testing is proposed to beperformed on locomotives, with noallowances for engine testing (except forengines used for repowering, and thenonly after locomotive testing has beenperformed). In order to limit the testingburden for small engine families, the inusetesting requirement would not applyto engine families with production ofless than ten locomotives per year,except where there is evidence of in-usefailures. EPA will providemanufacturers and remanufacturerssuitable advance notice about whichengine families are to be tested in anygiven year. EPA would have theauthority to waive this in-use testingrequirement for a given manufacturer orremanufacturer based on evidence ofconsistent in-use compliance. Thiswaiver would not be available for amanufacturer or remanufacturer that hasnot yet demonstrated the durability ofeach of its engine families (i.e., has oneor more engine families that have notbeen tested in-use), or if there isevidence, from railroad or other testing,that one of its engine families may notbe complying in-use. EPA expects thatafter this program has been in place forseveral years, the in-use testing burdenwill be much smaller, as long as in-usefailures were very infrequent.The Agency is proposing that alllocomotives tested under themanufacturer and remanufacturer in-usetesting program will have reached atleast 75 percent of their useful lives.While testing of locomotives will belimited to between 75 and 100 percentof their useful lives, actual repair in theevent of a determination ofnoncompliance under section 207(c) ofthe Act, however, would not be limitedby useful life. For example, compliancetesting of an engine family might belimited to 75 to 100 percent of its usefullife; however, any resulting remedyrepair would be required to be appliedto all locomotives of that family,regardless of whether the locomotiveshad exceeded their useful lives. This isconsistent with EPA’s recall policy foron-highway vehicles and engines andlarge compression-ignition nonroadengines. 15 Further, EPA proposes that itmay require that any remedy in theevent of a nonconformity extend tolocomotives of the same engine family,but different model years, that werecertified using the proposedcertification carry over provisions. Suchan extension of the remedy to othermodel years is proposed to be limited totwo model years before and one modelyear after the model year of thenonconforming engine family. Such aprovision would thus limit the liabilityin the event of a nonconformity to fourmodel years’ production.Under EPA’s proposed testingprogram, a manufacturer orremanufacturer would be required totest in-use locomotives from an enginefamily specified by EPA when thatfamily reached an appropriate age. TheAgency is proposing that an appropriateage to begin in-use testing would be 75percent of a locomotive’s useful life.EPA has chosen 75 percent of useful lifein order to balance the need toaccurately assess in-use emissionsperformance, which argues for testinglate in useful life, with the desire tomaximize the benefits of any remedialaction in the event of an in-use failure,15 See Center for Auto Safety v. EPA, 747 F.2d 1[D.C. Cir. 1984].which argues for testing earlier in usefullife. The in-use test program is intendedto assess in-use emissions deterioration,not production quality (which isassessed in the production line testingprogram). Thus, it is most appropriate totest later in a locomotive’s useful life,rather than earlier, to ensure that testresults reflect actual in-usedeterioration, which tends to increasewith age. However, testing too late maypresent two problems. First, the later inuseful life the testing is done, the moredifficult it may be to find wellmaintainedlocomotives to test, sincemany may be remanufactured before theend of useful life. Second, testingextremely late in useful life wouldminimize the benefits achieved fromany remedial action taken in the eventan in-use nonconformity is identified.Thus, EPA believes that testing at 75percent of useful life strikes a balancebetween these different issues. EPArequests comment on whether a lowerage or range (e.g., 50 to 75 percent ofuseful life) would be more appropriatefor such testing, including commenters’reasons for suggesting different ages.To achieve the Agency’s goal ofestablishing a strong enforcementprogram while minimizing the burdenon manufacturers, EPA is proposing asampling process for the selection oflocomotives for in-use testing which isdesigned to provide adequate data forthe Agency to use as a basis forcompliance decisions, while expeditingtesting of engine families found to emitbelow the standard. This proposedselection process to achieve this goal isdescribed in the following paragraphs.The number of locomotives of atargeted family to be tested by amanufacturer or remanufacturer wouldbe determined by the following method:1. A minimum of two locomotives peryear for the specified family after itreaches the minimum age specified,provided that no locomotive fails anystandard. For each failing locomotive,two more locomotives would be testedup to a maximum of 10 locomotivestested.2. If the following conditions are met,only one locomotive per family per yearmust be tested: (1) The engine familyhas been previously tested under step 1above; (2) the engine family has notchanged significantly from thepreviously tested family (i.e., has beencertified using carryover emission data);and (3) EPA has not informed themanufacturer of an emission concernwith that family. If that locomotive failsfor any pollutant, testing must beconducted as outlined in step 1 above,up to a maximum of ten locomotives.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6389A manufacturer or remanufacturercould test more locomotives than theminimum above or could concede thatthe engine family failed to comply withapplicable standards before reachinglocomotive number 10. EPA wouldconsider failure rates, average emissionlevels, and the existence of any defectsin tested locomotives, among otherthings in determining whether to pursueremedial action. EPA may order a recallbefore testing reaches the maximumnumber of locomotives.In EPA’s motor vehicle complianceprogram, EPA determines the schedulefor testing engine families and conductsthe testing itself. EPA recognizes that itwould reduce the burden of testing toafford maximum flexibility indetermining the test schedules for inusetesting programs to locomotivemanufacturers and remanufacturers sothat such programs could becoordinated with the schedules of therailroads whose locomotives are to betested (e.g., schedules for maintenanceand safety inspections). For this reason,EPA is proposing to allowmanufacturers and remanufacturers toset their own schedule for in-use testing.However, EPA could require that in-usetests be distributed throughout the yearin order to prevent all testing for theyear from being performed at timeswhen the weather is most favorable forlow emissions results.The Agency recognizes thatlocomotive manufacturers andremanufacturers may have difficultyprocuring locomotives for in-use testingdue to the fact that they are in revenuegeneratingservice. Therefore, EPA isproposing to allow manufacturers andremanufacturers twelve months after thereceipt of testing notification tocomplete the testing of an engine family.(Testing by the Agency of an enginefamily in the motor vehicle program isusually completed within a three-monthperiod.) The Agency believes thatproviding manufacturers andremanufacturers with twelve months tocomplete this testing provides themsignificant flexibility in conductingtheir test programs and adequatelyaddresses any difficulties which wouldarise during the locomotiveprocurement and testing, and requestscomment on this provision.Furthermore, the Agency is willing toconsider extensions to this requirementwhen the manufacturers orremanufacturers present circumstanceswhich warrant such extensions.Test locomotives would be required tobe randomly selected and to have amaintenance and use historyrepresentative of a properly maintainedand operated locomotive. To complywith this requirement a manufacturer orremanufacturer would question the enduser regarding the accumulated usage,maintenance and operating conditionsof the test locomotive. Manufacturers orremanufacturers could, with EPAapproval, delete locomotives from theirtest sample and replace them withothers if they could document abuse ormalmaintenance that might significantlyaffect emissions durability. Themanufacturer or remanufacturer woulddocument reasons for deletion in its testreport to EPA. The manufacturer orremanufacturer may perform minimalmaintenance on a test locomotive. Onevalid emission test conducted under thefederal test procedure established forlocomotives would be required for eachselected locomotive.EPA is proposing to requirelocomotive manufacturers andremanufacturers to submit to theAdministrator, within three months ofcompletion of testing, all emissiontesting results generated from the in-usetesting program. EPA envisions thatmanufacturers and remanufacturers willsimply provide quarterly statements ofall emission results obtained during theprevious quarter, including a summarytable of any engine family that hascompleted testing during that quarter.At the Administrator’s request, amanufacturer or remanufacturer wouldbe required to provide documents usedin the locomotive procurement process,including criteria used in theprocurement screening process andinformation from the end user(s) relatedto use and maintenance of the selectedlocomotives, and information aboutlocomotives, if any, that were deletedfrom the program.If an in-use nonconformity is found tooccur in an engine family, EPA willwork with the manufacturer orremanufacturer to implement a remedialaction on a voluntary basis. If themanufacturer or remanufacturer doesnot implement a remedial action, theAdministrator may order one pursuantto section 207(c) of the Act. Under thissection, as applied to locomotivesaccording to section 213(d), theAdministrator has authority to requiremanufacturers or remanufacturers tosubmit a plan to remedy applicablelocomotives or locomotive engines ifEPA determines that a substantialnumber of a class or category ofproperly maintained and usedlocomotives or locomotive engines donot conform with the requirementsprescribed under section 213 of the Act.Other requirements applicable in theevent of a determination under section207(c) of the Act include submittal ofthe manufacturer’s remedial plan forEPA approval, procedures fornotification of locomotive owners,submittal of quarterly reports on theprogress of the recall campaign, andprocedures to be followed in the eventthat the manufacturer requests a publichearing to contest the Administrator’sfinding of nonconformity. If adetermination of nonconformity withthe requirements of section 207(c) of theAct is made, the manufacturer orremanufacturer would not have theoption of an alternate remedial action,and an actual recall would be required.EPA requests comment regarding thecircumstances under which alternativesto conventional recall should beconsidered as a voluntary action, priorto EPA making the formal determinationof nonconformity. EPA contemplatesthat recall of locomotives will be theprimary method for addressing in-usenonconformities. However, the Agencyrecognizes that in some cases, the actualrecall and repair of locomotives couldimpose severe financial hardship on amanufacturer or remanufacturer if thenecessary repair was extremely complexand expensive, and could also impactrailroads when locomotives are requiredto be taken out of service for thoserepairs. In such cases, and assumingthat the Administrator had not yetrendered a determination ofnonconformity, alternatives totraditional recall would be stronglyconsidered. These alternatives would berequired to have the same or greaterenvironmental benefit as conventionalrecall and to provide equivalentincentives to manufacturers andremanufacturers to produce locomotiveswhich durably and reliably controlemissions. EPA requests comment onhow manufacturers or remanufacturerswho have repeated nonconformitiesshould be handled as compared to thosewho have only occasionalnonconformities. The Agency invitescomment on the factors the Agencyshould consider in evaluating proposedalternatives.EPA recognizes the need to develop atesting program to provide assurancethat in-use locomotives are meetingemissions standards while taking intoaccount the burden of in-use testing onrailroads and locomotive manufacturersand remanufacturers. EPA requestscomments on its proposed in-use testingprogram as well as specific proposals forin-use locomotive test schemes that willaddress the concerns described above,and possible alternative designs for inusetesting programs (such asindependent third party testing paid forby manufacturers and/orremanufacturers) or other effectiveenforcement mechanisms. However, any

6390 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesalternatives must produce a compliancescheme that provides EPA with anenforceable program which providessubstantial incentive to manufacturersand remanufacturers to produce clean,durable locomotives.EPA envisions the second majorcomponent of the proposed in-usecompliance program, the railroad in-usetest program, as a screening programwhereby relatively large numbers oflocomotives would be tested. Section114 of the Act provides EPA authorityto collect information, require records tobe kept, and inspect and monitoremissions. Pursuant to its authorityunder this provision, EPA proposes anin-use testing program that applies tocertain owners and operators oflocomotives covered by the proposedemissions standards. Section 114 states,in relevant part, that, for the purposesof ‘‘carrying out any provisions of (theAct),’’ EPA may require any person whoowns or operates any emission source toestablish and maintain records, sampleemissions (according to specificationsprescribed by the Administrator), and toprovide ‘‘such other information as theAdministrator may reasonablyrequire.’’ 16The proposed in-use testing programis necessary to ensure that locomotiveswill remain in reasonable compliancewith emissions standards during theperiod of preemption beyond theiruseful lives in order to ensure that theiremissions do not significantly increaseduring such period of preemption, whencertain state standards would beprohibited. Railroad operators areclearly owners or operators of anemissions source, and therefore,pursuant to section 114, EPA hasauthority to require railroad operators tosample the emissions from theirlocomotives, to report the results ofsuch testing to EPA, and to provideother information that can be reasonablyrequired. In addition to providingauthority to require such in-use testing,section 114 explicitly authorizes EPA torequire that such testing be performedaccording to ‘‘such procedures ormethods, at such locations, at suchinterval, during such periods and insuch manner as the Administrator shallprescribe.’’ EPA solicits public commenton its authority to require railroadoperators to conduct in-use testingaccording to the requirements specifiedbelow.16 An exemption from Section 114 authority isprovided for carrying out provisions of Title II ofthe CAA with respect to manufacturers of newmotor vehicles and new motor vehicles engines.The proposed in-use testing program would notimpose any testing requirements on suchmanufacturers.This railroad operator in-use testingprogram would be intended to evaluatethe emissions performance oflocomotives which have reached orexceeded their useful lives, as definedby federal regulations. The proposedrailroad in-use testing program wouldapply at the end of useful life, where themanufacturer/remanufacturer in-usetesting program leaves off. The data willserve to indirectly evaluate emissionsperformance at the end of useful life aswell as provide information aboutemissions during the time period forwhich many state standards orrequirements would be preemptedbecause of their expected effect on howmanufacturers and remanufacturersdesign new locomotives and newlocomotive engines. The tests would becarried out on 10 percent of Class Irailroad locomotives which havereached the end of their full useful liveseach year. The number of tests a givenrailroad would have to perform for agiven year would be determined basedon the number of locomotives thatrailroad has that have reached the endof their useful lives at the beginning ofthat year. However, the actuallocomotives tested would be randomlyselected throughout the year from anythat have reached the end of their usefullives, not necessarily only from thosethat were counted at the beginning ofthe year to determine the number oftests required (i.e., they could includelocomotives which reached the end oftheir useful lives during that year). EPAproposes that it have the authority tolower the number of tests required if thetesting costs are substantially higherthan EPA estimates or if the testingshows that in-use locomotives haveconsistently good emissionsperformance beyond their useful lives.Testing is proposed to be limited toClass I railroads because they operatemost of the locomotives, and the coststo smaller railroads of conducting in-usetests would be very high and wouldlikely provide information that merelyduplicates that received from Class Irailroads.The locomotives tested would berandomly selected by the railroads, andthe tests could be performed inconjunction with a Federal RailroadAdministration inspection in order tominimize downtime. Testing of anylocomotive will not take place until ithas reached the end of its useful life.This is because the manufacturer andremanufacturer in-use testing programwould provide for testing in-uselocomotives up to the end of useful life.The testing, to be performed at allnotches, would be done using fieldquality measurement equipment. NO X,CO, CO 2 and HC concentrations areproposed to be measured, as well assmoke opacity. These concentrationswill be compared to the concentrationsmeasured during certification testing.EPA recognizes that effective HCmeasurement of diesel engine exhaustrequires a heated flame ionizationdetector (HFID) as opposed to astandard, or unheated FID. Such unitsare more expensive and more difficult tomaintain than unheated FIDs, makingthem less suitable for use as fieldquality equipment. The Agency isrequesting comment on whether therequirement to use an HFID isproblematic, and whether therequirement for HC measurementshould therefore be dropped. If so,would this compromise theeffectiveness of the in-use short test?The Agency proposes that therailroads be required to submit quarterlyreports summarizing all emissionstesting performed. If a particular enginefamily had consistent problems in allthe railroads’ fleets then it would likelybe considered a problem with the designor manufacture of the locomotives.Since the engines tested under thisproposed program would be past theiruseful lives, no direct enforcementaction could be taken against themanufacturer or remanufacturer in theevent of a failure. However, EPA coulduse this information to target enginefamilies to be tested in themanufacturer/remanufacturer in-usetesting program. If the failures werelimited to one railroad’s fleet then itwould suggest the possibility oftampering or malmaintenance, whichcould be enforceable under thetampering prohibition, discussed laterin this notice.The Agency is considering, as anoption, an alternative in-use testprogram proposed by the railroads.Under this option, the railroads wouldperform testing using the full FTP (withthe exception of PM measurement)instead of the test procedure describedabove. However, tests would beperformed at a much lower samplingrate (e.g., one percent) than the tenpercent the Agency is proposing. EPArequests comment on this alternative inusetesting scheme. EPA also requestscomment on a second alternativewhereby a smoke test would be usedwith the number of locomotives testedbeing much greater than the ten percentin the proposed railroad in-use testingprogram. EPA specifically requestscomment on a program in which theAgency would require that everylocomotive covered by today’s proposedstandards be tested annually by its

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6391owner/operator for smoke emissions.Such a requirement would applythroughout a locomotive’s useful life, aswell as beyond it, in contrast to thepreviously discussed railroad testingprograms, which only require testingafter a locomotive has reached the endof its useful life. Under such a program,the railroads would be required tomaintain the test result records andmake them available to EPA uponrequest. Finally, EPA requests commenton combinations of the previouslydiscussed options, as well as otheralternative in-use testing schemes.The Agency specifically requestscomments on the merits of replacing theproposed two-component (i.e.,manufacturer and railroad) in-usetesting program with a unified programthat is conducted entirely by therailroads. Such a program couldpotentially be significantly moreconvenient for all parties involved,especially for certificate holders that donot have their own emission testingfacilities. On the other hand, such aprogram could be unreasonablyburdensome to the railroads.Furthermore, manufacturers havehistorically been very skeptical of thequality of emission testing performed bythird parties, and thus might challengeany EPA finding of nonconformitybased on such data. Finally, if theAgency does not finalize a unified inusetesting program, should it createprovisions that would specifically allowit to be adopted voluntarily by therailroads?D. Test ProceduresDue to the fundamental similaritybetween the emissions components oflocomotive engines and on-highwayheavy-duty diesel engines, the testprocedures being proposed today arebased on the test procedures previouslyestablished for on-highway heavy-dutydiesel engines in 40 CFR part 86subparts D and N. Specifically, the rawsampling procedures and many of theinstrument calibration procedures arebased on subpart D, and the diluteparticulate sampling procedures andgeneral test procedures are based onsubpart N. The most significant aspectsof the proposed test procedures aredescribed below. Also, as with EPA’stest procedures for other engines, theregulations would allow, with advanceEPA approval, alternate test proceduresdemonstrated to yield equivalent orsuperior results.D.1. Federal Test Procedure (FTP) forLocomotivesEPA proposes to use a steady-statetest procedure to measure gaseous andparticulate emissions from locomotives;that is, a procedure whereinmeasurements of gaseous andparticulate emissions are performedwith the engine at a series of steadystatespeed and load conditions.Measurement of smoke would beperformed during both steady-stateoperations and during periods of engineaccelerations between notches.Specifically, the engine would bestarted, if not already running, andwarmed up to normal operatingtemperature in accordance with warmupprocedures for in-servicelocomotives as specified by themanufacturer. For locomotive testing,the engine would remain in thelocomotive chassis, and the poweroutput would be dissipated as heat fromresistive load banks (internal orexternal). The engine would beconsidered to be warmed up, and readyfor emissions testing when coolant andlubricant temperatures areapproximately at the mid-points of thenormal in-service operatingtemperatures for these materials asspecified by the manufacturer. After theengine has reached normal operatingtemperature, the engine would beoperated at full power (i.e., highestpower notch) for 5 minutes, thenreturned to idle, or low idle if soequipped. The 5-minute period at fullpower is intended to ensure that theengine is at a realistic operatingtemperature, and to improve testrepeatability. Measurement of exhaustemissions, fuel consumption, inlet andcooling air temperature, power output,etc. would then begin, and wouldcontinue through each higher poweroperating mode to maximum power. Inthe event of test equipment failureduring data acquisition, testing may beresumed by repeating the last test modefor which valid data was collected,provided the engine is at normaloperating temperature. The minimumduration of the initial test point (idle orlow idle), and each test point whenpower is being increased is 6 minutes,with the exception of the maximumpower point, where the minimumduration of operation is 15 minutes.Concentrations of gaseous exhaustpollutants are proposed to be measuredby drawing samples of the raw exhaustto chemical analyzers; achemiluminescence analyzer for NO X, aheated flame ionization detector (HFID)for HC, and nondispersive infrared(NDIR) detector for CO and CO 2. Smokewould be measured with a smokeopacity meter, and particulates wouldbe measured by drawing a dilutedsample of the exhaust through a filterand weighing the mass of particulatecollected. The Agency is not proposingto establish dilute sampling proceduresfor the total exhaust stream for gaseousand particulate emissions because it isnot necessary to dilute the total exhauststream prior to sampling for HC, CO 2,CO, NO X, and particulate during steadystate operations. In addition, theequipment that would be required fordilute sampling is very large andexpensive. Not including suchprovisions would not preclude the useof dilute sampling as an alternativeprocedure. EPA requests commentsregarding the need for dilute samplingprocedures. In order to ensure goodreliability of test results, EPA is alsoproposing calibration and verificationrequirements similar to those applicableto on-highway heavy-duty engines, andrequests comments regarding theproposed methods and frequency ofthese requirements. It should also benoted that the Agency is in the processof making minor technical revisions tothe particulate measurement proceduresof 40 CFR 86, and that many of thesetechnical amendments would berelevant to measurement of particulateemissions from locomotives. Theseamendments are expected to befinalized later this year. The Agencywill incorporate these changes in thefinal rule for locomotives, asappropriate.The Agency is proposing that theNMHC, alcohol and aldehydemeasurement procedures that arecurrently applicable to on-highwaynatural gas- and methanol-fueledengines (40 CFR part 86) be used fornatural gas- and alcohol-fueledlocomotives. EPA recognizes, however,the possibility of unforeseen problemsthat could result during the use of suchprocedures with locomotive engines,especially with alcohol-fueledlocomotives (which currently do notexist). Among the potential problemsare the lack of information on whetherthe specifications for dilute alcohol andaldehyde sample temperatures and flowrates are appropriate for locomotives, aswell as the complete lack of suchspecifications for raw exhaust. At thistime, EPA believes that it is appropriateto specify the on-highway procedures inthe absence of definitiveness ofpotential problems, but may reconsideralcohol and aldehyde sampling issueson a case-by-case basis, should alcoholfueledlocomotives come into use.EPA’s experience in testing engines isthat it is difficult to accurately measureengine power at extremely low levels.Thus, EPA is considering, and requestscomment on, assigning engine powerlevels for idle and dynamic brake

6392 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesmodes, expressed as a percent of thelocomotive’s rated power (e.g., 0.2% atidle and 1.0% at dynamic brake), andnot requiring that it be measured. Theseassigned levels, rather than measuredlevels, would be used in the emissionscalculations. This approach wouldalleviate concerns expressed by industryabout the ability to accurately measureengine power output during idle anddynamic brake operation. This wouldalso provide a regulatory incentive toreduce fuel consumption in these twomodes since the engine power used inthe calculations for these modes wouldalways be the same. This would in turnreduce total mass emissions. EPArequests comment on all aspects of thisoption, including what levels would beappropriate for the assigned powerlevels. The Agency also requestscomments as to whether a similarapproach should be used to provide anincentive for the development of anautomatic shutdown mechanism thatcould shut off an engine automaticallyafter some extended period of idling.One such approach would be to reducethe weighting factor for the idleemission rate, for engines equippedwith automatic shutdown mechanisms,but use the higher power weightingfactor that is specified in the proposedregulations. This approach wouldaccount for the emissions benefits of ashutdown mechanism whereas theproposed test procedures do not.EPA is proposing that test conditionssuch as ambient test temperature andpressure be fully representative of inuseconditions. Specifically, the Agencyis proposing that locomotives complywith emissions standards when tested attemperatures from 45° F to 105° F andat both sea level and high altitudeconditions (i.e., up to 7,000 feet abovesea level). The Agency is not proposingthat the test conditions includetemperatures below 45° F because theAgency does not believe that there aresignificant benefits from such arequirement for diesel locomotives ascompared to the benefits fromcontrolling cold temperature emissionsfrom gasoline-fueled vehicles (whereEPA does currently have coldtemperature requirements) since dieselengines are not associated with lowtemperature emissions problems.The Agency is not proposing specificcorrection factors that would be used toaccount for the effects of ambient testconditions, such as temperature orhumidity, on emission rates. In existingmobile source programs, EPA doesrequire that NO X emission rates becorrected to account for the effect ofambient humidity. (Water present in theintake air is known to lead to lower NO Xemissions, as it absorbs energy from thecombustion process and decreases peakcombustion temperatures.) EPAconsidered using the NO X-humiditycorrection factor that is currently beingused for highway and general nonroaddiesel engines (40 CFR parts 86 and 89),but concluded that the data upon whichthat correction factor was based is notadequate for this rulemaking. Inparticular, EPA has concerns about theapplicability of data from older precontrolhighway engines to current andfuture locomotives that incorporateNO X-reduction technologies. Moreimportantly, however, the data isinappropriate as a basis for suchcorrection factors for locomotivesbecause the range of test conditionsbeing proposed for locomotives is muchbroader than was used in the collectionof that data. EPA is in the process ofdeveloping revised correction factors forinclusion in the final rule and will placeany relevant information in the docketas soon as it is available. These wouldbe used to correct emission rates totypical ambient summer conditions of86 °F and 60 grains of water per poundof dry air. EPA requests comments onthe need for any correction factors,especially a NO X correction factor, andwhether proposed the conditions towhich emissions would be corrected areappropriate. Commenters supporting theuse of correction factors are encouragedto include test data that could be usedto develop meaningful correction factorsfor future locomotives.The Agency is proposing test fuelspecifications for compliance testing(certification, PLT and manufacturer/remanufacturer in-use testing) which areconsistent with test fuel specificationsfor on-highway heavy-duty enginecertification testing, with the exceptionof the sulfur specification. In the case ofthe sulfur specification, EPA isproposing a lower limit of 0.3 weightpercent, 17 and is proposing that there beno upper bound for the sulfur level.This lower limit is intended toapproximate worst case in-useconditions; in those cases where in-uselocomotives are operated on low sulfuron-highway fuel, particulate emissionsentering the atmosphere can beexpected to be lower than levelsmeasured when using the certificationtest fuel. EPA is taking this approachbecause there is no reason to believethat in-use locomotives will use onlylow sulfur on-highway fuel, especiallygiven the potential price differencesbetween low and high sulfur diesel17 Typical untreated (high sulfur) nonroad dieselfuel contains about 0.2–0.5 weight percent sulfur.fuels, and potential availabilityproblems in some areas of the country.Since the proposed test for therailroad in-use testing program is notthe proposed FTP, and railroad in-usetesting carries no liability with it, thereis less of a need to use the fuel specifiedfor certification for this railroad in-usetesting. Given the cost andinconvenience of using a specific fuelfor in-use testing, EPA is not proposingany fuel specifications for in-userailroad testing, and will allow therailroad testing to be done whatever fuelis in the locomotive’s tank at the timeof testing.The Agency recognizes that thepotential exists for future locomotives toinclude additional power notches, oreven continuously variable throttles,and is proposing alternate testingrequirements for such locomotives.Using the proposed FTP for suchlocomotives would result in anemissions measurement that does notaccurately reflect their in-use emissionsperformance because it would not be areasonable representation of their in-useoperation. Thus, locomotives havingadditional notches would be tested ateach notch, and the mass emission ratesfor the additional notches would beaveraged with the nearest ‘‘standard’’notch. Locomotives havingcontinuously variable throttles would betested at idle, dynamic brake, and 15power levels assigned by theAdministrator (including full power),with average emission rates for twopower levels (excluding full power)assigned to the nearest ‘‘standard’’notch. The 15 power levels proposedrepresent one level for full power andtwo, to be averaged, for each of theseven intermediate power levels usedon current locomotives. TheAdministrator would retain theauthority to prescribe other proceduresfor alternate throttle/powerconfigurations.D.2. FTP for EnginesThe proposed test procedures areintended primarily for the testing oflocomotives, rather than locomotiveengines. However, EPA does recognizethat engine testing will be reasonable insome cases, such as data collection froma development engine. For these cases,the engine would be mounted on astand, with its crankshaft attached to anelectric dynamometer. Because theAgency believes that it is critical thatengine testing be as representative ofactual locomotive operation as canpractically be achieved, it is proposingthat important operating conditionssuch as engine speed, engine load, andthe temperature of the charge air

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6393entering the cylinder be the same as ina locomotive in use (within a reasonabletolerance limit).D.3. Short Test for LocomotivesThe Agency is also proposing a shorttest to be used by the railroads for inusetesting. This test procedure wouldbe similar to the FTP test, but would notrequire measurement of the fuel flowrate and engine power output (whichrequire mechanical work on thelocomotive), or particulate emissions(which requires a fairly expensivesampling system). Also, less preciseanalytical equipment would be allowed.These allowances are all included tominimize testing time and cost. This testwould not allow direct calculation ofthe mass emission rates, but rather,would be limited to measurement ofconcentrations which would becompared to concentrationmeasurements made during certificationtesting. If the fuel flow rate and poweroutput of the engine are both assumedto be the same as measured atcertification, however, approximatemass emission rates could bedetermined.E. Railroad RequirementsHistorically, EPA has not adoptedspecific federal requirements for endusers of regulated mobile source enginesand vehicles. However, there are somefactors unique to the railroad industryand to the proposed regulation oflocomotives that require the railroads totake a more active role in assuringcompliance with today’s proposedstandards. These characteristics includethe proposed broad preemption of stateregulation, the industry practice ofperiodically remanufacturinglocomotives and the proposed definitionof such locomotives as new, and theunique relationship between thelocomotive manufacturers and therailroads.As discussed in the section oncompliance, EPA is proposing two inusetesting programs for locomotives:one conducted by manufacturers andremanufacturers, and another conductedby railroads. For the first program,manufacturers and remanufacturerswould need to obtain test locomotivesfrom the railroads. EPA expects that therailroads will cooperate with themanufacturers in order to providelocomotives for this testing. The Agencyrecognizes that the railroads have astrong financial interest in keeping theirlocomotives in revenue service andminimizing scheduling disruptions, andthat this could make it difficult formanufacturers to procure locomotivesfor in-use testing. Thus, as wasmentioned in the in-use testing programdiscussion, EPA is proposing arelatively long period of time in whichthe in-use testing can be done, as wellas a fairly small number of locomotivesrequired to be tested, in order tominimize such disruptions. EPA expectsthe railroads to provide reasonableassistance to the manufacturers andremanufacturers in support of the in-usetesting program. However, if amanufacturer or remanufacturer isunable to obtain a sufficient number oflocomotives for testing, the Agency mayrequire that the railroads do the testingthemselves, under the authority ofsection 114 of the Act. In the secondprogram, the railroads will be requiredto conduct their own in-use testing, asdiscussed above in the section on in-usetesting programs.EPA is proposing additionalprovisions to avoid unnecessaryburdens on smaller railroads. First, thein-use testing requirement would applyonly to Class I railroads. The potentialbenefits of obtaining extensive in-usetest data from non-Class I railroads donot justify the costs that would beincurred if each railroad was required tomaintain an emissions testing facility,especially in light of the fact that theinformation provided by the non-Class Irailroads would be duplicative of thatprovided by the Class I railroads. EPAis also proposing to exempt the smallestrailroads (as defined later in theparagraph) from compliance with theTier 0 standards for locomotives thathave never been brought intocompliance. More specifically, theserailroads would be allowed to rebuildtheir existing locomotives andlocomotives that they purchased afterthe effective date of the Tier 0 standardsaccording to their current practice,provided such locomotives were notoriginally manufactured or previouslyremanufactured to comply with federalemission standards. This exemptionwould allow these railroads to avoid thecosts of converting a pre-existing,noncomplying locomotive into onewhich complies with the Tier 0standards. All locomotives alreadycertified to the Tier 0 standards, eitherby that railroad or a previous owner,would be required to remain incompliance with EPA regulations eachsubsequent time that they areremanufactured, since this would bemuch less expensive than converting anoncomplying locomotive into onewhich complies with the Tier 0standards. As is discussed in the RSD,the cost of remanufacturing alocomotive so that it complies with theTier 0 standards is much greater the firsttime it is brought into compliance ascompared to subsequent remanufacturesdue to the one-time costs associatedwith the installation of such things ascharge air cooling systems. The Agencybelieves that such an exemption isappropriate since the emissions impactof such an exemption would beminimal. As discussed in the RSD, suchan exemption would likely amount toless than one percent of emissionsinitially, and would decrease andeventually disappear as the fleet turnsover to Tier I and Tier II locomotives.EPA is proposing that this exemptionwould be limited to railroads that have500 or fewer employees and are notowned by companies that the SmallBusiness Administration would notclassify as small businesses, andrequests comments as to whether thiscriteria is appropriate, and whethersome other criterion, such as annualrevenue, should be used. The Agencyrequests comment on how it shouldtreat holding companies which ownsmall railroads with respect to thisexemption. All railroads takingadvantage of this exemption would alsobe exempted from the reportingrequirements listed above. The Agencyrequests comment on how suchexempted locomotives should be treatedwith respect to the preemption ofcertain state standards or requirements,as discussed later in the preemptionsection.EPA is proposing that any locomotiveoperator that knowingly fails to properlymaintain (as defined by EPA at the timeof certification) a locomotive subject tothis regulation would be subject to civilpenalties for tampering. EPA isproposing that locomotive operatorsshould be required to perform aminimum amount of maintenancespecified by manufacturers andremanufacturers for components thatcritically affect emissions performance.EPA is proposing to limit the frequencyand type of maintenance that could berequired by manufacturers andremanufacturers, and to make suchrequirements subject to theAdministrator’s approval. Examples ofthe type of maintenance that could berequired are replacement of fuelinjectors and air filters, and cleaning ofturbochargers. The Agency believes thatthis requirement is appropriate giventhe high standards of maintenance andrepair observed in the railroad industry,the reasonable expectation bylocomotive manufacturers andremanufacturers that this maintenancewill be done, and the importance ofsuch maintenance for ensuring properemissions performance.

6394 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed RulesThe Agency recognizes that, whilemany railroads own the locomotivesthat they operate, there is also asubstantial amount of leasing oflocomotives within the railroadindustry. The Agency is proposing thatthe railroad requirements described inthis section apply to the railroads (i.e.,the locomotive operators), but requestscomment on whether theserequirements would more appropriatelybe applied to the locomotive owners incases where the owner an operator arenot the same entity.F. MiscellaneousF.1. Liability for RemanufacturedLocomotives and Locomotive EnginesAs was previously discussed in theengine family certification section, EPAexpects that in some cases locomotivesand locomotive engines may beremanufactured using a remanufacturekit that was developed andmanufactured by one entity butinstalled by another. In these cases, it ismost likely that the kit manufacturerwill be the certificate holder. 18 Forexample, one of the primary locomotivemanufacturers could sell aremanufacture kit (to possibly include acollection of replacement parts or partsspecifications, along with installationand maintenance instructions) to arailroad that would use it toremanufacture one of its locomotiveengines. EPA believes it is critical toclearly define which entity would thenbe liable for the emissions performanceof that remanufactured locomotiveengine. As a starting point, the Agencyconsidered how it handles theinstallation of aftermarket alternativefuel conversion systems for on-highwayvehicles. 19 With such conversions, EPAholds the certificate holder liable for thein-use performance of the vehicles. EPAis proposing a similar presumptiveliability approach for locomotiveremanufacturing. Specifically, EPA isproposing that the primary liability forthe in-use emissions performance of aremanufactured locomotive orlocomotive engine would be with thecertificate holder. In cases where thecertificate holder and installer areseparate entities, the certificate holderwould be required to provide adequateinstallation instructions with the kit.Since the primary liability would bepresumed to apply to the certificateholder, the certificate holder would alsohave an incentive to ensure that the kitswere being properly installed.Ultimately, the installer would be liablefor improper installation under theproposed tampering prohibitions. Itshould be noted that such an installerwould still be considered to be aremanufacturer, and thus would also bepotentially liable under other provisionsof this part and of the Act. The Agencyrequests comment on this proposedliability scheme for remanufacturedlocomotives and locomotive engines.F.2. Defect ReportingEPA is proposing that a manufactureror remanufacturer of locomotives orlocomotive engines be required to file adefect information report whenever themanufacturer or remanufactureridentifies the existence of a specificemission-related defect in a locomotive,or locomotive engine. These proposedreporting requirements are similar instructure to the requirements found inthe on-highway and nonroad over 37kW programs for compression ignitionengines, 20 except that EPA proposes thata report be filed when a singlelocomotive, rather than 25 (as in the onhighwayand over 37 kW programs) isfound to be defective. During therulemaking in which the defectreporting requirements (including thethreshold of 25) were adopted for onhighwayvehicles and engines (42 FR28123), the Agency considered a lowerthreshold, but decided that it would betoo burdensome. However, there arethree reasons why a lower thresholdwould be appropriate for locomotives.First, since reliability is a very criticalconcern for locomotive purchasers,locomotives and locomotive enginestend to be very carefully manufactured.As such, the number of emission-relateddefects that would actually occur isexpected to be small. Second, thenumber of locomotives produced undera single certificate will be much smallerfor locomotives than for most onhighwayor nonroad engine families.While 25 would be a very small fractionof a light-duty engine family of 100,000vehicles, it could be one-quarter or moreof the annual production volume of alocomotive engine family. Finally, giventhe size of locomotive engines (30 to 40times the horsepower of a typical lightdutyvehicle), and their long servicelives (up to one million miles betweenrebuilds), the environmental impact ofeven a single defective engine couldeasily be much more significant than 25defective light-duty vehicles.18 For the purposes of this discussion, EPA isproposing that the certificate holder for aremanufacture kit be termed the remanufacturer.The entity which installs the remanufacture kitwould be termed the installer. The remanufacturercan also be the installer.19 59 FR 48472, Sept. 21, 1994 and 59 FR 50042,Sept. 30, 1994. 20 40 CFR part 89, subpart T.F.3. Importation of NonconformingLocomotivesEPA is proposing to prohibit theimportation of locomotives andlocomotive engines that are originallymanufactured after the effective date ofthis rule, but are not covered by acertificate of conformity, except asprovided below. The proposedprohibition is similar to existingregulations for the importation ofnonconforming motor vehicles, motorvehicle engines (on-highway program),large (over 37 kW) compression-ignitionnonroad engines and other regulatedmobile sources.Under EPA’s current motor vehicleregulations, Independent CommercialImporters (ICIs) are allowed to importuncertified vehicles and engines intothe U.S. but are required to comply withthe same requirements that areapplicable to motor vehiclemanufacturers (e.g., certification,testing, labeling, warranty, recall,maintaining records). EPA provides foran ICI program for motor vehicles andmotor vehicle engines becausesignificant importation of such vehiclesand engines occurs. EPA does notanticipate, however, any importation ofnonconforming locomotives andlocomotive engines. Therefore, an ICIprogram is not necessary forlocomotives or locomotive engines, andEPA is not proposing such a program.This proposal includes certainexemptions to the prohibition onimporting nonconforming locomotivesand locomotive engines under theauthority of section 203(b) of the Act.These include temporary importationexemptions for repairs and alterations,testing, precertification, display,national security, and certainlocomotives and locomotive enginesshown to be identical, in all materialrespects, to their corresponding UnitedStates certified versions. In previousrulemakings, EPA has provided for anexemption for motor vehicles andengines greater than 20 originalproduction years old. However, EPA isnot proposing a similar exemption forlocomotives and locomotive engines.Since it is normal industry practice forlocomotives to be in service for morethan 40 years, these older locomotivesconstitute a large fraction of the in-usefleet, much larger than do motorvehicles over 20 years old. The Agencyis proposing emission standards thatwill apply to all locomotives originallymanufactured on or after January 1,1973 when those locomotives andlocomotive engines are remanufactured,including those more than 20 originalproduction years old. It would be

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6395inappropriate for EPA to allow theimportation of nonconforminglocomotives simply because they aremore than 20 years old. EPA requestscomment on the absence of such anexemption.Importation regulations are issued byboth EPA and the United StatesDepartment of the Treasury (CustomsService). The citation for United StatesCustoms Service, Department ofTreasury regulations governing importrequirements is reserved. The citationwill be inserted upon promulgation bythe United States Customs Service of theapplicable regulations.F.4. TamperingEPA is proposing provisions thatwould prohibit any person fromtampering with any locomotive orlocomotive engine emission-relatedcomponent or system installed on or ina locomotive or locomotive engine inaccordance with EPA regulations. Theseprovisions would help ensure that inuselocomotive engines remain incertified configurations and continue tocomply with the applicable emissionstandards. All persons would beprohibited from removing or renderinginoperative any emission-related deviceor element of design installed on or ina locomotive or locomotive engine.These provisions would include aprohibition on the adjustment of engineparameters such as injection timingoutside of the specified ranges.Knowingly failing to maintainemissions-critical components wouldalso be considered tampering. Themanufacturing, sale, and installation ofa component intended for use with alocomotive or locomotive engine, wherea principal effect of the component is tobypass, defeat, or render inoperative anemission-related device or element ofdesign of the locomotive or locomotiveengine would also be prohibited.EPA expects that the implementationof these provisions would be generallysimilar to the implementation ofexisting on-highway tamperingprovisions. 21 The prohibition oftampering would extend beyond alocomotive’s useful life, until thelocomotive or engine is scrapped. Theprohibition on tampering would beginonce a locomotive becomes subject totoday’s proposed regulations, either bybeing freshly manufactured or by beingremanufactured. Thus, any replacementof parts (including complete rebuilds)which cause a locomotive to exceedapplicable standards or FELS, or anyadjustments to the engine outside of therange specified in the application forcertification (such as changing injectiontiming) would be considered tamperingeven if performed beyond thelocomotive’s useful life.F.5. Nonconformance PenaltiesPursuant to section 206(g)(1) of theCAA, the on-highway heavy-dutyengine emission compliance programprovides that, in certain cases, enginemanufacturers whose engines cannotmeet emission standards may receive acertificate of conformity and continue tosell their engines provided they pay anonconformance penalty (NCP). EPAhas concluded that the use of NCPs isnot warranted for locomotives andlocomotive engines. NCPs are designedto provide relief for enginemanufacturers who are technologydeveloping laggards in the emissioncontrol technology needed to meettechnology forcing standards. 22 Basedon the levels of the standards proposedin this NPRM, EPA has concluded thatthere will be no locomotive orlocomotive engine manufacturers orremanufacturers that are unable todevelop the necessary emission controltechnology to bring their locomotivesand locomotive engines into emissioncompliance. Thus, the Agency is notproposing any NCPs. EPA requestscomment on the possibility of therebeing a manufacturer or remanufacturerthat would be unable to comply withthe proposed standards.F.6. Emission WarrantyEPA is proposing an emissionwarranty period for all locomotive andlocomotive engine emission-relatedparts equivalent to the full useful life ofthe locomotive or locomotive engine.Specifically, the manufacturer orremanufacturer must warrant that thelocomotive, locomotive engine, orremanufacture kit is designed, built andequipped to conform, at the time of saleor time of return to service followingremanufacture, with all applicableregulations, and that it is free fromdefects that would cause nonconformityin use. The warranty is not required,however, to cover normal maintenancesuch as cleaning or replacing fuelinjectors. EPA requests comment onhow to treat the unscheduledmaintenance of other components, suchas power assemblies or turbochargers,that are often replaced during the usefullife of a locomotive. These warrantyprovisions are authorized by section207(a) of the Act, which applies to thelocomotive standards pursuant to21 Office of Enforcement and General Counsel;Mobile Source Enforcement Memorandum No. 1A,June 25, 1974. 22 See 40 CFR 86.1103–87.section 213(d). EPA is not proposingany regulations at this time undersection 207(b) of the Act, which directsEPA to establish special test proceduresfor on-highway vehicles and engine, ifcertain conditions are met, to ascertainwhether vehicles and engines complywith applicable federal emissionsstandards for their useful life. If theAgency were to establish testprocedures under this provisions,manufacturers would be required towarrant that their vehicles and engineswould pass such tests. Furthermore,EPA believes that states would not bepreempted from establishing an in-useemissions testing program forlocomotives based on the performancewarranty provisions of section 207,provided that it used federally-specifiedtest procedures and pass/fail criteria. Insuch a situation, compliance with theperformance warranty based on statetesting would in effect be a federalrequirement.While a shorter warranty period maybe adequate to ensure gross failures toperformance systems and componentsdo not occur, longer warranty periodsare necessary to guard against emissioncontrol system failures. The warrantyperiod must be of sufficient length togive the manufacturer or remanufacturerproper incentive to provide durableemission control equipment. EPArequests comments on theappropriateness of the length of thewarranty period. The proposed warrantyperiods ensure the locomotive orlocomotive engine manufacturer orremanufacturer has sufficient incentiveto build emission-related systems thatwork and last. Further, it gives thelocomotive or locomotive engine owner/operator the incentive to get emissionrelatedsystem failures repaired, sincefailures to the emission control systemmight not always affect the ability of alocomotive or locomotive engine tocontinue to work. Should the warrantyperiod be too short, a large number ofnoncomplying locomotives andlocomotive engines could continue toproduce excess emissions. EPA requestscomment on how it should integratethese warranty provisions with theproposed required maintenanceprovisions.An advisory parts list issued by EPAon July 15, 1991 gives manufacturersnotice of EPA’s current view concerningthe emission-related parts that arecovered by warranty under section207(a). Given the similarity between thebasic design of locomotive engines withthat of other diesel engines, EPA intendsto apply an updated version of this listto locomotives and locomotive engines.

6396 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed RulesA copy of this list is in the docket forthis rulemaking.F.7. Locomotives From Canada andMexicoThis proposal applies to newlocomotives and locomotive engineswhich are sold or introduced intocommerce in the United States. TheAgency is concerned about thepossibility of nonconforminglocomotives from Canada and/or Mexicooperating extensively within the U.S.,under the ownership of either a U.S. orforeign railroad. EPA requests commenton EPA’s legal authority to limit suchactivity. Comments should addresswhether EPA should limit exportexemptions of nonconforminglocomotives, since locomotives used inCanada and Mexico are often producedin the U.S, and whether the Agencywould have the authority to do so. EPAis also seeking to address this issue withthe North American AutomotiveStandards Council by exploring thepotential for Canada and Mexico toadopt the same emissions standards forlocomotives that EPA ultimately adopts.The Agency believes that the mosteffective solution to this potentialproblem would be for the Canadian andMexican governments to adoptcomparable (or identical) standards andother requirements for locomotives.F.8. Aftermarket PartsAs is the case for on-highway vehiclesand engines, there is currently anaftermarket parts market for locomotiveparts. For on-highway vehicles andengines, the Agency currently has a twofoldapproach to assuring thataftermarket parts do not degrade theemissions performance of a certifiedvehicle or engine configuration. First,there is a voluntary aftermarket partscertification procedure contained in 40CFR part 85, subpart V, which allowsaftermarket parts manufacturers tocertify the emissions performance oftheir parts. Second, for those partswhich are not certified under thisvoluntary program the Agency appliesthe principles of EPA Mobile SourceEnforcement Memorandum No. 1A,which outlines the Agency’s position ontampering with respect to the use ofreplacement components on certifiedvehicles and engines. 23 EPA isproposing that this approach toaftermarket parts be extended tolocomotive parts as well, and requestscomment on whether this approach issufficient to assure the proper emissions23 June 25, 1974. Available in the public docketfor this rulemaking. 24 40 CFR 86.094–17performance of locomotives whichutilize aftermarket parts.The Agency is also requestingcomments on whether it shouldestablish provisions that would allowsuppliers of aftermarket parts and partsremanufacturers to sell some emissionrelatedparts for locomotiveremanufacturing without being part of acertified remanufacture kit. Suchprovisions could create an exemptionwhich would allow Class II and Class IIIrailroads to have their locomotivesremanufactured without a certificate ofcompliance, provided that theremanufacture resulted in thelocomotive being returned to apreviously certified configuration. IfEPA were to establish such anallowance, should it limit it based onthe size of the railroad, the size of thesupplier or remanufacturer, or thenumber of such remanufacturesperformed annually? What, if any,reporting and recordkeepingrequirements would be necessary toensure compliance with the provisions?Finally, what would be the economicand environmental impacts of suchprovisions? EPA also requests commenton a streamlined certification programfor modified kits. Such a program wouldallow an entity to apply for a modifiedcertificate which would allow the use ofparts other than those included in acertified kit. Such a certificate wouldonly be granted with the permission ofthe original certificate holder, and theholder of the modified certificate wouldthen assume all liability for locomotivesremanufactured under the modifiedcertificate. EPA requests comment onthis and any other options for thestreamlined certification ofremanufactured locomotives.F.9. Onboard DiagnosticsEPA has recently establishedregulations 24 that require light-dutyvehicles to be equipped with onboarddiagnostic (OBD) systems that indicateto the operator any occurrence ofspecific emission control failures. WhileEPA has not included any suchprovisions in the regulations beingproposed today, it is requestingcomment on the potential and need forsuch diagnostics for locomotives. EPAbelieves that it would be inappropriateto require that such systems beretrofitted to existing locomotives due tothe cost, but that it may be appropriateto require them on freshly manufacturedlocomotives (Tier I and Tier II), whichare expected to have advanced onboardcomputer displays for other purposes.Commenters are encourage to addressthe following issues, as well as anyother relevant issues: (1) The extent towhich easily measured parameters suchas engine exhaust temperature orpressure drop across an air filtercorrelate with emissions performance;(2) the feasibility of monitoring injectiontiming; (3) how such OBD systemsshould be considered with respect torequired maintenance; and (4) the extentto which advanced OBD systems affectthe appropriate frequency of in-usetesting.G. PreemptionEPA is proposing to define throughregulation those state or local standardsor requirements that are preemptedpursuant to section 209(e)(1)(B) of theClean Air Act. Section 209(e) directsEPA to promulgate regulations toimplement that subsection. Toimplement section 209(e), andspecifically section 209(e)(1)(B), it isappropriate for EPA to interpret theseprovisions in light of other provisions inthe statute as well as relevant case lawand circumstances specific tolocomotives. EPA believes thatestablishing regulations to define thescope of preemption under section209(e)(1)(B) and providing EPA’sinterpretation of the statute andimplementing regulation would provideclear guidelines to states, 25 and certaintyto industry. EPA believes that becauseof the interstate nature of locomotivetravel and the fact that regulation oflocomotives is generally national inscope, it is especially important toprovide clarity and certainty to theindustry and states regardingpreemption of state and local emissioncontrol regulation of locomotives.Under the regulations proposed today,states would be preempted fromadopting and enforcing standards orother requirements relating to thecontrol of emissions from newlocomotives and new engines used inlocomotives. The proposed regulationdefines the period of time following themanufacture or remanufacture of alocomotive or engine during whichcertain state controls would beexplicitly preempted under this criteria.This preemption period would bedefined as the useful life plus 25percent. EPA’s rationale for choosingthis preemption period is describedlater in this section.EPA believes that section 209(e)(1)(B)and the regulations proposed todaywould preempt states from adopting inuseregulations relating to the control ofemissions that would be expected to25 The term ‘‘states’’ when used in this sectionincludes both state and local governments.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6397affect how a manufacturer designs anew locomotive or new locomotiveengine (including both freshlymanufactured and remanufacturedunits). 26 Such state regulation would beconsidered as ‘‘relating to the control ofemissions from (new locomotives orlocomotive engines)’’ and would bepreempted. This interpretationappropriately implements Congressionalintent, in the unique circumstancesapplicable to locomotives. It is alsoconsistent with the case law interpretinga similar provision that applies to statemotor vehicle controls.In Allway Taxi v. City of New York 27 ,the court discussed the scope of federalpreemption under section 209(a), whichprohibits state or local standardsrelating to the control of emissions fromnew motor vehicles, and noted that thedefinition of ‘‘new motor vehicle’’ insection 216 of the Clean Air Act‘‘reveals a clear Congressional intent topreclude states and localities fromsetting their own exhaust emissioncontrol standards only with respect tothe manufacture and distribution of newautomobiles.’’ 28 The court concludedthat while Congress did not preemptstates from regulating the use ormovement of motor vehicles after theyare no longer new, a state or locality isnot free to impose its own emissioncontrol standards on motor vehicles thatare no longer new where that wouldcircumvent the Congressional purposeof preventing obstruction to interstatecommerce.In an earlier rulemaking action, EPAdiscussed the application of the AllwayTaxi case to non-road vehicles andengines other than locomotives, andstated that the Agency expected theprinciples of Allway Taxi to apply tostate adoption of emission controls onnon-road vehicles and engines after theyare no longer new. See 59 FR 36969,36973 (July 20, 1994). In that notice,EPA stated that the Agency expected thesame reasoning and policy would alsoapply to locomotives, although theimplementation of that policy woulddepend on the ultimate definition of‘‘new locomotive.’’ EPA today proposesto apply the same principles to stateregulation of emissions fromlocomotives; however, because ofcompelling factual and policyconsiderations relating to regulation oflocomotives as compared to regulation26 The proposed approach is intended to addressreal and concrete effects, whether or not large;however, it is not intended to address speculativeor trivial effects.27 Allway Taxi, Inc. v. City of New York, 340F.Supp. 1120 (S.D.N.Y.), aff’d, 468 F.2d. 624 (2d.Cir. 1972).28 340 F.Supp. at 1124.of motor vehicles and other nonroadvehicles and engines, theimplementation of these principleswould be expected to differ to asignificant degree.In the context of motor vehicleregulation, the Allway Taxi court notedthat a state’s imposition of its ownemission control requirementsimmediately after a new motor vehicleis purchased by an ultimate consumerand registered would be ‘‘an obviouscircumvention of the Clean Air Act andwould defeat the Congressional purpose(in preempting states from regulatingemissions from new motor vehicles) ofpreventing obstruction to interstatecommerce.’’ 29 However, states mayimpose emission control standards aftersome period of time following the saleof a motor vehicle, provided that thosestandards would not require a vehiclemanufacturer to redesign a new motorvehicle. The court stated that suchrequirements, such as standardsdirected primarily at intrastate activitieswhere the burden of compliance doesnot effectively impact manufacturersand distributors, cause only minimalinterference with interstate commerce. 30Applying this analysis to stateregulation of locomotives, section209(e)(1)(B) and the regulationsproposed today would preempt statesfrom adopting in-use regulationsrelating to the control of emissions thatwould be expected to affect how amanufacturer designs a new locomotiveor new locomotive engine (includingboth freshly manufactured andremanufactured engines). Such a statestandard would be considered as‘‘relating to the control of emissionsfrom [new locomotives or locomotiveengines]’’ and would be preempted. Thepractical effect of applying theprinciples of Allway Taxi tolocomotives is different than for othermobile sources because of the nature ofthe relationship between locomotivemanufacturers and their customers(railroad operators). Emission relatedrequirements imposed on railroads canreasonably be expected to have a verysignificant effect on locomotivemanufacturers and remanufacturers.This is especially true of the Class Irailroads which purchase nearly all ofthe freshly manufactured locomotives.With so few primary customers,manufacturers and remanufacturersmust be very responsive to changes indesign requested by these railroads.Although there are significantly morenon-Class I railroads than there areClass I railroads, their number is still29 Id.30 Id.fairly small. Therefore, staterequirements on railroads are muchmore likely to effect changes in howmanufacturers and remanufacturersdesign new locomotives and newlocomotive engines than would similarrequirements on end users of othermobile sources, such as automobileowners. The fact that locomotiveengines become new again when theyare remanufactured will also have aneffect on how the principles of AllwayTaxi are applied. EPA solicits commenton this interpretation of Allway Taxi asapplied to locomotive regulation.In addition to the unique factualcircumstances surrounding locomotives,there are compelling policy reasons thatsupport uniform, national regulation oflocomotive emissions. The legislativehistory of section 209(e) indicates thatCongress intended a broad preemptionof any state regulation of emissions fromnew locomotives or new locomotiveengines, in large part because of thesignificant interstate commerceconcerns raised by state-by-stateregulation of locomotives. The Housebill would have preempted states fromregulating emissions from all newnonroad engines and vehicles. 31 Bycontrast, the Senate bill contained nopreemption of state regulation ofnonroad engines. 32 In conference, theHouse and Senate agreed to limit theHouse bill’s broad preemption, andprohibited state standards and otherrequirements for only two categories ofnonroad vehicles and engines: new farmand construction equipment of 175 hpor less, and new locomotives. 33 Thefollowing statement made by Rep.Dingell during the House debate on theSenate bill indicates Congress’ concernthat state regulation of locomotives inparticular could result in a disruption ofinterstate commerce:With regard to (new locomotives and newengines used in locomotives), we balancedthe need to control emissions from newlocomotives against our belief that Stateefforts to regulate locomotive emissions oroperations would impose an unconstitutionalburden on interstate commerce. 34The legislative history of section209(e) does not contain a similarstatement regarding any other categoryof nonroad vehicles, indicating31 2 A Legislative History of the 1990 Clean AirAct Amendments of 1990 at 3092 (1993).32 3 A Legislative History of the Clean Air ActAmendments of 1990 at 4370 (1993).33 California was permitted to promulgate andenforce state standards and other requirements forother nonroad engines, if it received authorizationfrom EPA. Other states could then promulgatestandards identical to California’s for these otherengines.34 1 Legislative History of Clean Air ActAmendments of 1990 at 1126 (1993).

6398 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed RulesCongress’ specific concern with theinterstate commerce burden that couldresult from state regulation of newlocomotives. Therefore, EPA believesthat it is appropriate and reasonable tointerpret section 209(e)(1)(B) aspreempting states from adopting anyregulation that affects how amanufacturer designs (or produces) newlocomotives or new locomotive engines(including remanufactured engines).This will implement the Congressionalintent that interstate operation oflocomotives not be burdened by suchstate emissions regulations. 35 EPA isproposing a regulatory provision thatcodifies this approach in today’s notice,and solicits comment on this issue.EPA recognizes that certainty withrespect to when state controls would bepreempted would be advantageous tostates and localities, as well as toindustry; therefore, EPA is proposing todefine the time period of preemptionunder section 209(e)(1)(B) moreexplicitly than in previous rules, forpurposes of locomotives and locomotiveengines. During this time, given therelationship between manufacturers andrailroads, a broad range of potential inusecontrols would be expected to affecthow a manufacturer designs or producesnew engines, and would be preemptedduring this time period. Those controlsare discussed later in this section.EPA believes that a period ofpreemption similar to but slightly longerthan the useful life of the locomotive isappropriate (where useful life isapproximately the average life of alocomotive between rebuilds and is alsothe period that locomotives would berequired to remain in compliance withfederal emissions standards). Thisapproach would effectively provide therailroads with some flexibility withrespect to scheduling when eachlocomotive is to be remanufactured, andit is consistent with the criteria forpreemption, as discussed in thefollowing paragraphs. To balance theneed for such flexibility with EPA’sconcerns about emissions reductions theAgency is proposing that the period ofpreemption be 25 percent longer thanthe applicable useful life of alocomotive. For example, for alocomotive with a useful life of 30,000MW-hr which reached the end of itsuseful life after 50 months of service,this period would be 7,500 MW-hr orabout 12.5 months of additional service(assuming the same rate of use). Basedon an analysis of current35 The Commerce Clause of the U.S. Constitutionis, of course, an additional limitation on stateauthority that is independent of federal preemptionunder the Clean Air Act. The regulations proposedtoday are based on section 209 of the Act.remanufacturing practices (see RSD),EPA believes that this approach wouldallow industry to largely continue itscurrent remanufacturing practices. TheAgency also requests comment on analternative approach to the period ofpreemption whereby a single period ofpreemption (defined in years, miles, orwork done) would apply to alllocomotives, irrespective of their usefullives.It is important to note that the Agencyexpects that emission performance willnot suddenly degrade at the end of alocomotive’s useful life, but rather thatany deterioration which does occurwould generally be gradual. In fact,given the rigorous compliance programwhich is being proposed, EPA expectsthat most locomotives will be designedand built such that those that areoperated within this 25 percent windowwould generally remain in compliancewith the applicable emissionsstandards. Moreover, as was discussedpreviously, the Agency specificationsfor useful life are based on average timebetween remanufacturing events. If amajority of locomotives were beingoperated significantly longer than theiruseful lives, the proposed regulationswould require that manufacturers andremanufacturers begin to specify longeruseful lives.EPA believes that certain categories ofpotential state requirements would bepreempted under the proposedapproach, including numericalemissions standards for newlocomotives, fleet average standards,certification requirements (such astesting), aftermarket (retrofit) equipmentrequirements, and in-use testing.Numerical emissions standards andcertification testing requirements fornew locomotives and new locomotiveengines are clearly standards or otherrequirements that are explicitlypreempted by section 209(e)(1). EPAbelieves that a state fleet averagestandard would also be preempted sinceEPA expects that requiring compliancewith any such standard would in effectban the sale or production of certainnew locomotives or new locomotiveengines (including remanufacturedlocomotives that are new) for use in astate. Given the logistical challenges ofoperating an interstate locomotive fleet,the only practical way in which arailroad could comply would be toremanufacture all of its locomotives tocomply with the fleet standard. Thiswould effectively establish a stateemissions standard for new locomotivesin violation of section 209(e)(1).Because of the unique factualcircumstances surrounding locomotives,a state retrofit requirement that appliedduring the time period between eachremanufacture (or between an engine’soriginal manufacture and firstremanufacture) would be preemptedbecause such a requirement wouldaffect the design, manufacture and/orremanufacture of new locomotives.Most retrofit requirements would affectengine performance, and thus lead todesign changes. For example, theinstallation of a catalyst-type add-onsystem would require the originalmanufacturer or remanufacturer todesign the locomotive and/or enginedifferently to account for the resultingincrease in exhaust back pressure.Moreover, aftermarket devices (such asengine heaters, selective reductioncatalysts, particulate traps, and exhaustgas recirculation (EGR)) would take upa significant amount of space in alocomotive; therefore, a stateaftermarket equipment requirement onlocomotives would be expected to causethe original manufacturer orremanufacturer to redesign thelocomotive differently at the time it isfirst manufactured, or duringremanufacturing, to account for the lateraddition of the aftermarket equipment.It is important to note that space is acritical issue for locomotivemanufacturers and remanufacturersbecause rail systems operate with verytight specifications for width, height,and length. The width and height of alocomotive must be small enough topass through tunnels and other suchrestrictions, while the length must beshort enough to allow the locomotive tonegotiate curves in existing tracks. EPAbelieves that retrofit equipment thatstates could require on non-newlocomotives would also be preemptedunder the criteria described above. Thisis especially true given the uniquecircumstances associated withlocomotives and locomotive engines. Aretrofit requirement that would havelittle or no effect on the originalmanufacture of a locomotive orlocomotive engine could have asignificant effect on the remanufactureof that locomotive or engine. Given thatthe definition of new locomotive andnew locomotive engine includesremanufactured locomotives andengines, retrofit requirements onlocomotives and locomotive engines aremore likely to have an effect on newlocomotives and locomotive enginesthan would similar requirements onmotor vehicles and other nonroadengines.As with retrofit requirements, EPAbelieves that states would be preemptedfrom adopting or enforcing non-federalin-use emissions testing programs.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6399Given the unique circumstances of thisindustry, especially the extent to whichrailroads can influence locomotivedesign, EPA expects that manufacturersof new locomotives would be compelledby their customers to design andproduce their locomotives to complywith any state in-use emissionsstandards, amounting to a control onemissions from new locomotives. Inmaking this determination, the Agencyconsidered potential state in-use testingprograms in three groups: (1) Thosewhich would hold locomotives tostandards other than the federalstandards; (2) those which would holdlocomotives to the same numericalstandards, but used different testprocedures; and (3) those which wouldreplicate the federal in-use testingprogram.Under the proposed approach, stateswould be preempted from adopting anyemissions standards for in-uselocomotives. Since there is little that alocomotive operator can do to reduceemissions from in-use locomotiveengines, the action needed to complywith an in-use emission standard wouldin effect need to be taken by themanufacturer or remanufacturer of theengine. Any meaningful attempt by astate to achieve emission reductionsthrough in-use emission standardswould be expected to require someactions to comply. As described above,this would necessarily affect themanufacturers and/or remanufacturers.This would apply to all state testprograms designed to enforce anynonfederal standards, and would alsohold true for state test programs usingnonfederal test procedures, since bothwould have the practical effect ofimpacting locomotive design.However, EPA is not sure whetherstates are preempted from adopting anin-use test program to enforce thefederal standards. A duplicative stateprogram would increase the totalnumber of in-use locomotive emissiontests conducted each year; the greaterthe number of states that adopt such aprogram, the greater the number of inusetests. Given the relatively smallnumber of new engines produced eachyear, and the small total number of inuselocomotives, the proliferation ofsuch duplicative programs couldeffectively require manufacturers toinclude larger compliance margins inthe design of their engines to deal withthis unknown risk. This is becausemanufacturers recognize that, givenmanufacturing, facility, product and testvariability, measured emissions willvary from locomotive to locomotive andthere will always be a nonzeroprobability of in-use failure. However,the more testing that is conducted, thegreater likelihood that at least onefailure would be identified. In responseto this probability and the customers’desire that no failures occur in use,manufacturers might feel compelled todesign their locomotives such that theaverage emissions rate is far enoughbelow the level of the standard that therisk of their locomotives failing an inusetest program approaches zero. Thiscould affect the original locomotiveengine design because achieving loweraverage levels means that loweremission targets are necessary.Nevertheless, EPA is not sure that thesearguments justify a categoricalpreemption of state testing oflocomotives in-use using the federal testprocedure. EPA requests comment onthis position.Based on the limited ability ofoperators to reduce emissions, therelationship between operators and newlocomotive manufacturers orremanufacturers, the expectation thatstates would only adopt in-use emissionstandards that would require additionalreductions, and the potential impact ofin-use testing on interstate commerce,EPA believes that nonfederal state inusetesting programs should bepreempted as they would amount toemission standards for the manufactureror remanufacturer of new locomotiveengines. This combination of factorsappears unique to this industry, andEPA would not expect the samepreemption result to apply under othercircumstances. The Agency continues tobelieve that state in-use testingprograms for motor vehicles and othernonroad engines, including inspectionand maintenance (I/M) programs, arenot preempted under the Act.This discussion of state controls thatwould be preempted under theregulation proposed today is notintended to be exclusive. Any statecontrol that would affect how amanufacturer designs or produces new(including remanufactured) locomotivesor locomotive engines would bepreempted. EPA believes that section209(e)(1)(B) and the regulationsproposed today should be interpretedbroadly in this context, in recognition ofthe unique circumstances affecting thisindustry as described above, includingthe impact on interstate commerce ofstate emissions controls on locomotives.EPA believes this is consistent with thetext of section 209(e)(1)(B), thelegislative history, and the applicablecase law. The Agency believes that anystate control within the specificcategories described above would act asan emission standard or requirement fornew locomotives or engines and shouldbe preempted. EPA invites comment onthis view, including whether regulatoryprovisions should be included to allowstates to show that a specific controldoes not affect how a manufacturer orremanufacturer designs a newlocomotive or engine, and wouldtherefore not be preempted.It is important to note that certaincategories of potential staterequirements would also be prohibitedunder the proposed regulations becausethey would require operators to makeadjustments to a locomotive that wouldconstitute tampering under the Act andthe proposed regulations. Under section203(a)(3) of the Act, tampering includesactions that can reasonably be expectedto contribute to an increase in emissionsof a regulated pollutant. For example, astate requirement to alter the fuelinjection system or air intake system ofa locomotive to achieve NO X reductionsis likely to cause increased PM andsmoke emissions. Therefore, it is highlylikely that a railroad operator could notcomply with the state requirementwithout making an adjustment to itslocomotive that can reasonably beexpected to result in an increase inemissions of a regulated pollutant, andwould therefore be violating the federalprohibition against tampering. In suchcases where it would be impossible tocomply with the state requirementwithout violating a federal prohibition,the federal law would preempt the statelaw. For this reason, such staterequirements would be prohibitedunder the proposed national rule.VI. Emission Reduction TechnologyThis rulemaking will be the first timelocomotives and locomotive engineshave been subject to EPA regulation forthe pollutants of HC, CO, NO X, PM andsmoke. Much of this discussion of theemission reduction technologies isbased on EPA’s experience regulatingsimilar but smaller diesel engines usedin highway trucks since the 1970’s.While many of the emission controltechnologies for highway trucks areapplicable to locomotives andlocomotive engines, the design andoperation of locomotives andlocomotive engines may preclude theeffective use of some of thesetechnologies. The following paragraphsdiscuss the emission control strategiesthat EPA believes are likely to beavailable to comply with today’sproposed standards. These emissioncontrol strategies are consideredseparately for the three levels ofproposed standards (i.e., Tier 0, Tier Iand Tier II standards).Technologies EPA believes could beused to comply with the proposed

6400 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rulesemission standards are listed in TableVI–1. As is discussed below, EPA hasestimated which of these technologiesare most likely to be employed bymanufacturers and remanufacturers tomeet today’s proposed standards. Theseestimates are for purposes of calculatingcost-effectiveness and appropriate levelsof control only; they are not mandatedcontrol strategies. EPA developed theseestimates based on its past experiencewith on-highway diesel engines, as wellas numerous discussions withmanufacturers and railroads. Anextended discussion of thesetechnologies and their potential toreduce emissions from locomotives isincluded in the RSD.TABLE VI 1.—EMISSION REDUCTION TECHNOLOGIESNO X Reduction StrategiesAir Handling ..............................................................................................Fuel Delivery Systems ..............................................................................Electronic Control Systems ......................................................................Combustion chamber design ....................................................................Aftertreatment ...........................................................................................Turbocharging.Air to liquid charge air cooling.Air to air charge air cooling.Turbo compounding.Exhaust Gas Recirculation (EGR).Compression Ratio, Closed crankcase.Injection pressure and Nozzle Design.Reoptimized injection timing.Increased injection rate.Injection rate shaping.Electronic controls.Geometry, swirl.Reduction catalyst.Chemical Addition.Combustion chamber design ....................................................................Fuel delivery Systems ..............................................................................Aftertreatment ...........................................................................................Smoke Control ..........................................................................................Lubricants .................................................................................................PM and Smoke Reduction Strategies 1Increased swirl.Reduced crevice volume.Ceramic materials.Increased injection pressure.Limit sac volume.Trap or catalytic oxidizer.Limiter on rate of increase of fueling.Synthetic oils.Reduction in engine oil consumption.1 Most technologies that reduce particulate emissions will also reduce HC, CO and smoke to some extent.A. Tier 0 StandardsEPA expects that locomotivescurrently equipped with turbochargedengines will most likely employimproved fuel injection, enhancedcharge air cooling, and to some extentretarding of injection timing to reduceNO X emissions to below the level of theproposed standards. (Note: the proposedTier 0 standards would not requireemission reductions in HC, CO, or PMcompared to current, uncontrolledlevels. The Tier 0 standards for HC, COand PM are essentially caps to preventlarge increases in those emissionscompared to current levels.) Wherepractical and cost-effective, some of thepre-2000 locomotives may be equippedwith electronic controls as a means ofavoiding a loss in fuel efficiencyresulting from injection timing retard.Improved fuel injection is expected toinclude injection rate changes,modifications to the spray patterns, anda reduction in injector sac volume.There may also be some smallmodifications to the piston design.Additionally, some models may requireenhanced smoke controls to limit smokeduring increases in engine power. In thecase of naturally aspirated engines,modified/improved fuel injection andsome retarding of injection timing areexpected to be the control strategies ofchoice. The addition of electroniccontrols may also be employed.B. Tier I StandardsThe proposed Tier I emissionstandards will require an approximately48 percent reduction in NO X emissionsfrom current levels, and may requiresome small reductions in HC, CO, andPM emissions (actual reductions willdepend upon the size of the compliancemargins that manufacturers choose toinclude in their designs). Theselocomotives can be expected toincorporate the technologies as outlinedabove for the Tier 0 standards, inconjunction with or superseded by thefollowing additional technologies.Engine combustion temperatures willneed to be reduced further; additionalimprovements in charge air cooling cantherefore be expected. This couldrequire a charge air cooling systemusing a separate coolant as the coolingmedium. To achieve additionalreductions, engine manufacturers areexpected to employ a comprehensiveemission management system consistingof optimized engine fuel injectionstrategies through electronic controls.Changes in the configuration of thecombustion chamber and piston ringlocation may begin to appear in enginescomplying with the Tier I standards.C. Tier II StandardsThe proposed Tier II emissionstandards will require more than a 60percent reduction in NO X emissions and50 percent reduction in PM and HCemissions from current levels, withsmaller, but significant, reductions inCO emissions. EPA’s current estimate ofthe technologies that will be used tocomply with these emission standardsincludes continued improvement incharge air cooling, fuel management(including the introduction of ‘‘rateshaping’’), and combustion chamberconfiguration, in conjunction with anoptimized electronic control system. Itis uncertain, at this time, whether someform of exhaust gas recirculation (EGR)or reduced oil consumption will also benecessary.EPA requests comment on itsviewpoints and expectations expressedin this section. Commenters areencouraged to direct their commentstoward a description of the technologiesthey believe would be necessary to meetthe standards discussed above.Commenters should address issues offeasibility, durability and costs of thetechnologies they believe will berequired.

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6401VII. BenefitsThis section contains a brief summaryof the emission benefits expected fromthe proposed national locomotive andlocomotive engine rulemaking. Thecomplete analysis of the expectedbenefits is contained in the RSD. Theprimary focus of this rulemaking is onreducing NO X and PM emissions. Thereare also reductions in HC and CO.The benefits analysis was performedin three steps. First, the baselinelocomotive fleet composition, emissionsrates and total inventory weredetermined. Second, future fleetcomposition was projected, from whichpercentage emissions reductions for thefleet were calculated for NO X and PM.Finally, those percent reductions wereapplied to the baseline fleet emissionsinventories to arrive at mass emissionsreductions for the fleet. Table VII–1contains a summary of both the fleetpercentage and mass reductions for bothNO X and PM. In addition to the NO Xand PM benefits shown in Table VII–1,today’s proposed regulations providereductions in HC and CO. EPAestimated those reductions bycalculating the ratios of the proposedHC and CO emissions standard percentreductions to the PM standardreductions, and applying those ratios tothe PM benefits previously calculated.EPA estimated that by 2040 theproposed regulations will result in totalreductions of 274924 metric tons of HCand 240075 metric tons of CO. Thesetotal HC and CO reductions amount toaverage annual reductions of 6705metric tons of HC and 5855 metric tonsof CO per year. EPA requests commenton all aspects of this benefits analysis.TABLE VII–1.—NATIONWIDE EMISSION REDUCTIONS OF NO X and PM Compared to 1990 BASELINE LEVELS[Metric tons per year]NO XPMYearPercentreductionMassreductionPercentreductionMassreduction2000 .................................................................................................................. 6.7 65,538 0.0 02005 .................................................................................................................. 35.7 348,022 1.2 2912010 .................................................................................................................. 39.2 382,361 7.3 1,7472020 .................................................................................................................. 46.2 451,038 19.3 4,6572040 .................................................................................................................. 59.7 581,934 42.4 10,224VIII. CostsThis section contains a summary ofEPA’s estimate of costs associated withthe proposed national locomotiverulemaking. In general, the Agency useda conservative approach to estimatingcosts by using the higher end of any costranges that were developed for specificcost components. Costs are presentedfor Tier 0, Tier I and Tier II locomotiveson a per locomotive basis. Costcomponents consist of initial equipmentcosts, which include the one-timehardware costs associated with meetingthe standards (i.e., hardware, such asaftercoolers, which are required to meetthe standards initially, but are nottypically replaced duringremanufacture), as well as research anddevelopment costs; remanufacturingcosts; fuel economy costs; 36 andcertification, production line and in-usetesting costs. These per locomotive costsare presented in Tables VIII–1 throughVIII–3. Overall program costs andaverage annual program costs calculatedfrom the per locomotive costs andprojections of future locomotive fleetcomposition, and based on a forty-oneyear time period, are presented in TableVIII–4. Where applicable, costs arepresented in actual and discountedformat. A complete discussion of themethodology EPA used in calculatingthese costs is contained in the RSD. EPArequests comment on all aspects of thiscosts analysis, and especiallyencourages information and estimatesfrom manufacturers andremanufacturers regarding the potentialcosts of compliance with the proposedregulations.TABLE VIII–1.—COST PER LOCOMOTIVE—TIER 0 STANDARDSCost component Cost CommentsInitial Equipment ............................................... $75,000 ............................................................. Occurs in year 1.Remanufacture .................................................. 3,000 ................................................................. $1000 per remanufacture (average of 3 overlifetime).Fuel ................................................................... 0 ........................................................................ Total lifetime cost.Testing:Cert ............................................................ 125 .................................................................... Occurs in year 1.Prod Line ................................................... 20 ...................................................................... Occurs in year 1.In-use ......................................................... 10 FTP .............................................................. Occurs in years 1–40.115 Short Test .................................................. (Average of 17).Total Cost ........................................... 80,270 ............................................................... xlTABLE VIII–2.—COST PER LOCOMOTIVE—TIER I STANDARDSCost component Cost CommentsInitial Equipment ........................................... $100,000 ...................................................... Occurs in year 1.36 The fuel economy estimates used in thisanalysis are worst case. Based on EPA’s experiencein regulating on-highway diesel engines,compliance with emission standards often improvesfuel economy, especially in cases where electroniccontrol systems are utilized.

6402 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed RulesTABLE VIII–2.—COST PER LOCOMOTIVE—TIER I STANDARDS—ContinuedCost component Cost CommentsRemanufacture ............................................. 12,000 .......................................................... $2000 in Years 6, 12, 18, 24, 36.Fuel ............................................................... 0 ................................................................... Total lifetime cost.Testing:Cert ........................................................ 378 ............................................................... Occurs in year 1.Prod Line ............................................... 238 ............................................................... Occurs in year 1.In-use ..................................................... 10 Full FTP ..................................................115 Short Test .............................................Occurs in years 1–40.Total Cost ....................................... 117,616TABLE VIII–3.—COST PER LOCOMOTIVE—TIER II STANDARDSCost component Cost CommentsInitial Equipment ............................................... $200,000 1 ......................................................... Occurs in year 1.Remanufacture .................................................. 18,000 ............................................................... $3000 in Years 6,12,18,24,30,36.Fuel ................................................................... 42,500 ............................................................... Total lifetime cost.Testing:Cert ............................................................ 703 1 .................................................................. Occurs in year 1.Prod Line ................................................... 281 .................................................................... Occurs in year 1.In-use ......................................................... 10 Full FTP .......................................................115 Short Test ..................................................Occurs in years 1–40.Total Cost ........................................... 266,484 11 For first five years of production, assuming the research, development and certification costs are recovered in five years. Total costs woulddrop to $85,781 per locomotive after five years.TABLE VIII–4.—SUMMARY OF 41YEAR TOTAL LOCOMOTIVE PROGRAMCOSTS[millions]Actual NPV 1Tier 0 ......................... $1,526 $1,193Tier I .......................... 286 211Tier II ......................... 1,301 428Average Annual ........ 76 45Total ................... 3,113 1,8311 The NPV costs are based on a seven percentdiscount rate. A three percent rate wouldyield an average annual cost of $58 millionand a total cost of $2,360 million.IX. Cost-EffectivenessThe costs for NO X or PM reductionsare difficult to assign to a singlepollutant due to the relationshipbetween NO X and PM emissiongeneration. EPA computed costeffectivenessfor this rulemaking usingonly the NO X reductions, and using thecombined NO X and PM reductions.Costs presented below are for allreductions. It should be rememberedthat there would also be some emissionreductions in HC and CO that would beachieved from the same technology thatis used for NO X and PM control,TABLE IX–1.—COST EFFECTIVENESSenhancing the benefits of the programwithout significantly impacting the cost.The following table (Table IX–1)summarizes the costs and emissionbenefits of the national locomotiverulemaking. Costs and emission benefitswere computed over a 41 year programrun. 37 In computing costs, EPA hasgenerally used conservative estimateswhich are fairly consistent with themanufacturers’ own cost estimates. EPAtherefore believes this analysis to be aworst-case scenario in terms of cost toindustry.NO XNO X + PMTotal Emission Reductions (millions metric tons) ............................................................................................................ 17.83 18.02Total Costs (million $) ...................................................................................................................................................... 3,113 3,113Annual Emission Reductions (millions metric tons) ......................................................................................................... 0.43 0.44Annual Costs (millions $) ................................................................................................................................................. 76 76Cost Effectiveness($/ton) ................................................................................................................................................. 175 173X. Public ParticipationA. Comments and the Public DocketEPA desires full public participationin arriving at final rulemakingdecisions. EPA solicits comments on allaspects of today’s proposal from allinterested parties. Wherever applicable,full supporting data and detailed37 EPA used a 41-year program run to moreaccurately reflect lifetime costs associated withanalyses should also be submitted toallow EPA to make maximum use of thecomments. Commenters are especiallyencouraged to provide specificsuggestions for changes to any aspects ofthe proposal that they believe need to bemodified or improved. All commentsshould be directed to the EPA Airlocomotives and locomotive engines, which havelong lives (40 years or more).Docket Section, Docket No. A–94–31(see ADDRESSES).Commenters desiring to submitproprietary information forconsideration should clearly distinguishsuch information from other commentsto the greatest extent possible and labelit ‘‘Confidential Business Information.’’Submissions containing such

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6403proprietary information should be sentdirectly to the contact person listedabove, and not to the public docket, toinsure that proprietary information isnot inadvertently placed in the docket.If a commenter wants EPA to base thefinal rule in part on a submissionlabeled as confidential businessinformation, then a nonconfidentialversion of the document whichsummarizes the key data or informationshould be sent to the docket.Information covered by a claim ofconfidentiality will be disclosed by EPAonly to the extent allowed and by theprocedures set forth in 40 CFR part 2.If no claim of confidentialityaccompanies the submission when it isreceived by EPA, it may be madeavailable to the public without furthernotice to the commenter.B. Public HearingAny person desiring to presenttestimony regarding this proposal at thepublic hearing (see DATES) should, ifpossible, notify the contact person listedabove of such intent at least seven daysprior to the day of the hearing to allowfor orderly scheduling of the testimony.The contact person should also beprovided an estimate of the timerequired for the presentation of thetestimony and notification of any needfor audio/visual equipment.It is suggested that sufficient copies ofthe statement or material to bepresented be brought to the hearing fordistribution to the audience. Inaddition, it will be helpful for EPA toreceive an advance copy of anystatement or material to be presented atthe hearing prior to the scheduledhearing date, in order for EPA staff togive such material full consideration.Such advance copies should besubmitted to the contact person listedabove.The official record of the hearing willbe kept open for 30 days following thehearing to allow submission of rebuttaland supplementary testimony. All suchsubmittals should be directed to theEPA Air Docket Section, Docket No. A–94–31 (see ADDRESSES)XI. Administrative Designation andRegulatory Assessment RequirementsA. Executive Order 12866Under Executive Order 12866 (58 FR51735, October 4, 1993) the Agencymust determine whether the regulatoryaction is ‘‘significant’’ and thereforesubject to OMB review and therequirements of the Executive Order.The Order defines ‘‘significantregulatory action’’ as one that is likelyto result in a rule that may: (1) Have anannual effect on the economy of $100million or more or adversely affect in amaterial way the economy, a sector ofthe economy, productivity, competition,jobs, the environment, public health orsafety, or State, local, or tribalgovernment or communities; (2) create aserious inconsistency or otherwiseinterfere with action taken or plannedby another agency; (3) materially alterthe budgetary impact of entitlements,grants, user fees, or loan programs or therights and obligations of recipientsthereof; or (4) raise novel legal or policyissues arising out of legal mandates, thePresident’s priorities, or the principlesset forth in the Executive Order.Pursuant to the terms of ExecutiveOrder 12866, EPA has determined thatthis is a ‘‘significant regulatory action’’within the meaning of the ExecutiveOrder. EPA has submitted this action toOMB for review. Changes made inresponse to OMB suggestions orrecommendations will be documentedin the public record.B. Regulatory FlexibilityThe Regulatory Flexibility Act(RFA) 38 generally requires an agency toconduct a regulatory flexibility analysisof any rule subject to notice andcomment rulemaking requirementsunless the agency certifies that the rulewill not have a significant economicimpact on a substantial number of smallentities. Small entities include smallbusinesses, small not-for-profitenterprises, and small governmentaljurisdictions. This proposal would nothave a significant impact on asubstantial number of small entities.The Agency has identified two types ofsmall entities which could potentiallybe impacted by this proposal: Smallbusinesses involved in locomotiveremanufacturing and small short linerailroads. EPA believes that, whiletoday’s proposal could potentially affectboth of these groups, the impacts wouldbe minimal or nonexistent for thefollowing reasons.In the case of small remanufacturingbusinesses, the proposed rulesgoverning remanufacturing oflocomotives or locomotive enginesrequire that any remanufacture of post-1972 locomotives or engines (exceptthose exempted from the remanufacturerequirements, as discussed in the nextparagraph) be done such that theresultant locomotive or locomotiveengine is in a configuration certified asmeeting applicable emissions standards.The certification of a remanufacturedlocomotive or engine configuration hastwo cost components associated with it.38 5 U.S.C. 605(b).The first is the cost of developing andmanufacturing the requisite emissioncontrol technology. The second is thecost of emission testing associated withcompliance. Small remanufacturingbusinesses often do not do their ownresearch and development for thetechnology they use, but insteadpurchase the hardware from largerfirms. It is expected that today’sproposed requirements will not changethis practice, and that these small firmswill enter into contractual agreementswith larger firms. Under such anarrangement the larger firms willcontinue to do the development workand will be the certificate holder for aparticular engine family and, as thecertificate holder, would be responsiblefor providing an emissions warranty andconducting the PLT and in-use testingprograms, as required by the proposedregulations. This type of arrangement isexpected to resolve the issue oftechnology development andmanufacturing costs for smallremanufacturing businesses. TheAgency requests comments regardingwhether additional provisions should beestablished to minimize market shiftsthat could adversely affect smallbusinesses that either manufacture orremanufacture parts for locomotiveremanufacturing.In the case of the small railroads, theAgency believes that the amount ofleadtime provided in today’s proposalshould allow for sufficient advanceplanning to minimize the impacts. First,these small railroads do not tend topurchase freshly manufacturedlocomotives, but instead purchase usedlocomotives from the Class I railroads.For this reason the costs associated withthe compliance of freshly manufacturedlocomotives would not be borne by thesmall railroads. Additionally, thesesmall railroads will likely have severalyears following the effective date oftoday’s proposed standards before anyused locomotives they purchase will beremanufactured, and thus required tocomply with these standards.Furthermore, the Agency proposes toallow an exemption for railroads with500 employees or less from the Tier 0standards, as discussed earlier in thisnotice. Finally, the Agency is proposingthat the railroad in-use test programonly apply to Class I railroads, thusexempting all small railroads from thistesting requirement. In developing thisproposed regulation, EPA has tailoredthe requirements so as to minimize oreliminate the effects on small entities.Therefore, I certify that this action willnot have a significant economic impact

6404 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Ruleson a substantial number of smallentities.C. Paperwork Reduction ActThe information collectionrequirements in this proposed rule willbe submitted for approval to the Officeof Management and Budget (OMB)under the Paperwork Reduction Act, 44U.S.C 3501 et seq. An InformationCollection Request has been prepared byEPA (ICR No. 1800.01) and a copy maybe obtained from Sandy Farmer, OPPERegulatory Information Division, U.S.Environmental Protection Agency(2137), 401 M St., SW., Washington, DC20460 or by calling (202) 260–2740.The information being collected is tobe used by EPA to certify newlocomotives and new locomotiveengines in compliance with applicableemissions standards, and to assure thatlocomotives and locomotive enginescomply with applicable emissionsstandards when produced and in-use.The annual public reporting andrecordkeeping burden for this collectionof information is estimated to average494 hours per response, with collectionrequired quarterly or annually(depending on what portion of theprogram the collection is in responseto). The estimated number ofrespondents is 20 and the estimatednumber of responses is 126. The totalannualized capital/startup cost is $1.8million. Burden means the total time,effort, or financial resources expendedby persons to generate, maintain, retain,or disclose or provide information to orfor a Federal agency. This includes thetime needed to review instructions;develop, acquire, install, and utilizetechnology and systems for the purposesof collecting, validating, and verifyinginformation, processing andmaintaining information, and disclosingand providing information; adjustingthe existing ways to comply with anypreviously applicable instructions andrequirements; train personnel to be ableto respond to a collection ofinformation; search data sources;complete and review the collection ofinformation; and transmit or otherwisedisclose the information.An agency may not conduct orsponsor, and a person is not required torespond to a collection of informationunless it displays a currently valid OMBcontrol number. The OMB controlnumbers for EPA’s regulations aredisplayed in 40 CFR part 9 and 48 CFRChapter 15.Comments are requested on theAgency’s need for this information, theaccuracy of the provided burdenestimates, and any suggested methodsfor minimizing respondent burden,including through the use of automatedcollection techniques. Send commentson the ICR to the Director, OPPERegulatory Information Division, U.S.Environmental Protection Agency(2137), 401 M St., SW, Washington, DC20460, and to the Office of Informationand Regulatory Affairs, Office ofManagement and Budget, 725 17th St.,NW, Washington, DC 20503, marked‘‘Attention: Desk Officer for EPA.’’Include the ICR number in anycorrespondence. Since OMB is requiredto make a decision concerning the ICRbetween 30 and 60 days after February11, 1997, a comment to OMB is bestassured of having its full effect if OMBreceives it by March 13, 1997. The finalrule will respond to any OMB or publiccomments on the information collectionrequirements contained in this proposal.D. Unfunded Mandates Reform ActTitle II of the Unfunded MandatesReform Act of 1995 (UMRA), Pub. L.104–4, establishes requirements forFederal agencies to assess the effects oftheir regulatory actions on State, local,and tribal governments and the privatesector. Under section 202 of the UMRA,EPA generally must prepare a writtenstatement, including a cost-benefitanalysis, for proposed and final ruleswith ‘‘Federal mandates’’ that mayresult in expenditures to State, local,and tribal governments, in the aggregate,or to the private sector, of $100 millionor more in any one year. Beforepromulgating an EPA rule for which awritten statement is needed, section 205of the UMRA generally requires EPA toidentify and consider a reasonablenumber of regulatory alternatives andadopt the least costly, most costeffectiveor least burdensome alternativethat achieves the objectives of the rule.The provisions of section 205 do notapply when they are inconsistent withapplicable law. Moreover, section 205allows EPA to adopt an alternative otherthan the least costly, most cost-effectiveor least burdensome alternative if theAdministrator publishes with the finalrule an explanation why that alternativewas not adopted. Before EPA establishesany regulatory requirements that maysignificantly or uniquely affect smallgovernments, including tribalgovernments, it must have developedunder section 203 of the UMRA a smallgovernment agency plan. The plan mustprovide for notifying potentiallyaffected small governments, enablingofficials of affected small governmentsto have meaningful and timely input inthe development of EPA regulatoryproposals with significant Federalintergovernmental mandates, andinforming, educating, and advisingsmall governments on compliance withthe regulatory requirements.Today’s rule contains no Federalmandates (under the regulatoryprovisions of Title II of the UMRA) forState, local, or tribal governmentsbecause the rule imposes no enforceableduty on any State, local or tribalgovernments. Nothing in the proposedprogram would significantly or uniquelyaffect small governments. EPA hasdetermined that this rule containsfederal mandates that may result inexpenditures of $100 millon or more inany one year for the private sector. EPAbelieves that the proposed programrepresents the least costly, most costeffective approach to achieving the airquality goals of the proposed rule. EPAhas performed the required analysesunder Executive Order 12866 whichcontains identical analyticalrequirements.XII. Copies of Rulemaking DocumentsThe preamble, draft regulatorylanguage and draft Regulatory SupportDocument (RSD) are available in thepublic docket as described under‘‘ADDRESSES’’ above and are alsoavailable electronically on theTechnology Transfer Network (TTN),which is an electronic bulletin boardsystem (BBS) operated by EPA’s Officeof Air Quality Planning and Standardsand via the internet. The service is freeof charge, except for the cost of thephone call.A. Technology Transfer Network (TTN)Users are able to access and downloadTTN files on their first call using apersonal computer and modem per thefollowing information.TTN BBS: 919–541–5742 (1200–14400bps, no parity, 8 data bits, 1 stop bit)Voice Helpline: 919–541–5384Also accessible via Internet: TELNETttnbbs.rtpnc.epa.gov Off-line:Mondays from 8:00 AM to 12:00 NoonETA user who has not called TTNpreviously will first be required toanswer some basic informationalquestions for registration purposes.After completing the registrationprocess, proceed through the followingmenu choices from the Top Menu toaccess information on this rulemaking. GATEWAY TO TTN TECHNICALAREAS (Bulletin Boards) OMS—Mobile SourcesInformation Rulemaking & Reporting Non-Road File area #3 * * * LocomotiveEmission StandardsAt this point, the system will list allavailable files in the chosen category in

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Proposed Rules6405reverse chronological order with briefdescriptions. To download a file, selecta transfer protocol that is supported bythe terminal software on your owncomputer, then set your own software toreceive the file using that same protocol.If unfamiliar with handlingcompressed (i.e. ZIP’ed) files, go to theTTN top menu, System Utilities(Command: 1) for information and thenecessary program to download in orderto unZIP the files of interest afterdownloading to your computer. Aftergetting the files you want onto yourcomputer, you can quit the TTN BBSwith the oodbye command.Please note that due to differencesbetween the software used to developthe document and the software intowhich the document may bedownloaded, changes in format, pagelength, etc. may occur.B. InternetRulemaking documents may be foundon the internet as follows:World Wide Webhttp://www.epa.gov/omswwwFTPftp://ftp.epa.gov Then CD to the/pub/gopher/OMS/directoryGophergopher://gopher.epa.gov:70/11/Offices/Air/OMSAlternatively, go to the main EPAgopher, and follow the menus:gopher.epa.govEPA Offices and RegionsOffice of Air and RadiationOffice of Mobile SourcesList of Subjects40 CFR Part 85Environmental protection, Airpollution control, Railroads.40 CFR Part 89Environmental protection,Administrative practice and procedure,Air pollution control, Nonroad sourcepollution.40 CFR Part 92Environmental protection,Administrative practice and procedure,Air pollution control, Railroads,Reporting and recordkeepingrequirements.Dated: January 31, 1997.Carol M. Browner,Administrator.[FR Doc. 97–3223 Filed 2–10–97; 8:45 am]BILLING CODE 6560–50–P

federal registerTuesdayFebruary 11, 1997Part IVSocial SecurityAdministration20 CFR Parts 404 and 416Supplemental Security Income;Determining Disability for a Child UnderAge 18; Interim Final Rules With Requestfor Comments6407

6408 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsSOCIAL SECURITY ADMINISTRATION20 CFR Parts 404 and 416[Regulations Nos. 4 and 16]RIN 0960-AE57Supplemental Security Income;Determining Disability for a ChildUnder Age 18; Interim Final Rules WithRequest for CommentsAGENCY: Social Security Administration.ACTION: Interim final rules with requestfor comments.SUMMARY: These rules implement thechildhood disability provisions ofsections 211 and 212 of Public Law104–193, the Personal Responsibilityand Work Opportunity ReconciliationAct of 1996 that provide a newdefinition of disability for children (i.e.,individuals under age 18), mandatechanges to the evaluation process forchildren’s disability claims andcontinuing disability reviews (CDRs),and require that disabilityredeterminations be performed for 18-year-olds eligible as children in themonth before they attain age 18.DATES: These rules are effectivebeginning April 14, 1997. To be surethat your comments are considered, wemust receive them no later than April14, 1997.ADDRESSES: Comments should besubmitted in writing to theCommissioner of Social Security, P.O.Box 1585, Baltimore, MD 21235; sent bytelefax to (410) 966–2830; sent by E-mailto ‘‘regulations@ssa.gov’’; or deliveredto the Division of Regulations andRulings, Social Security Administration,3–B–1 Operations Building, 6401Security Boulevard, Baltimore, MD21235, between 8:00 a.m. and 4:30 p.m.on regular business days. Commentsmay be inspected during these samehours by making arrangements with thecontact person shown below.FOR FURTHER INFORMATION CONTACT:Daniel T. Bridgewater, Legal Assistant,Division of Regulations and Rulings,Social Security Administration, 6401Security Boulevard, Baltimore, MD21235, (410) 965–3298 for informationabout these rules. For information oneligibility or claiming benefits, call ournational toll-free number, 1–800–772–1213.SUPPLEMENTARY INFORMATION:HistoryPrior to the enactment of Public Law104–193 on August 22, 1996, the Actdefined childhood disability in relationto the definition of disability for adults.The definition of disability for adults insection 1614(a)(3) of the Act is aninability ‘‘to engage in any substantialgainful activity by reason of anymedically determinable physical ormental impairment which can beexpected to result in death or which haslasted or can be expected to last for acontinuous period of not less thantwelve months.’’ Prior to August 22,1996, the definition of disability forchildren (i.e., individuals under the ageof 18) was contained in a parentheticalstatement at the end of section1614(a)(3)(A): A child was considereddisabled for purposes of eligibility forSSI if he or she ‘‘* * * suffer[ed] fromany medically determinable physical ormental impairment of comparableseverity’’ to an impairment(s) thatwould make an adult disabled.Social Security Administration (SSA)regulations at 20 CFR 416.920 set out afive-step sequential evaluation processfor determining the disability of adults:1. Whether the adult is engaging insubstantial gainful activity;2. Whether, in the absence ofsubstantial gainful activity, theindividual’s medically determinableimpairment or combination ofimpairments is ‘‘severe;’’3. Whether, if the impairment(s) issevere, it meets or medically equals theseverity of a listing in the Listing ofImpairments in appendix 1 of subpart Pof 20 CFR part 404 (the Listing);4. Whether, if the impairment(s) issevere but does not meet or equal theseverity of a listing, the individualretains the capacity to do his or her pastrelevant work, considering his or herresidual functional capacity; and5. Whether, if past relevant work isprecluded, the individual retains thecapacity to do any other kind of workwhich exists in significant numbers inthe national economy, considering theindividual’s residual functional capacityand the vocational factors of age,education and work experience.Until 1990, if a child was notengaging in substantial gainful activityand his or her impairment(s) met thestatutory duration requirement, a child’sclaim for SSI benefits based ondisability was decided based onwhether or not the child’s impairment(s)met or equaled the severity of a listing,as in the third step of the process foradults. We did not provide additionalevaluation steps for children as we didfor adults because it was inappropriateto apply the vocational rules we usedfor adults whose impairments do notmeet or equal the severity of a listedimpairment to childhood claims.Sullivan v. ZebleyOn February 20, 1990, in the case ofSullivan v. Zebley, 493 U.S. 521 (1990),the Supreme Court decided that the‘‘listings-only’’ approach SSA had usedto deny claims for SSI benefits based onchildhood disability did not carry outthe ‘‘comparable severity’’ standard intitle XVI of the Act. This was becausethe listings did not provide for anassessment of a child’s overallfunctional impairment. The Court heldthat, under the comparable severitystandard, children claiming SSI benefitsbased on disability were entitled to anassessment as part of the disabilitydetermination process, comparable toadults who have impairments that donot meet or equal the severity of alisting and who receive such anindividualized assessment. The Courtfound that, whereas adults who are notfound to be disabled under the Listingstill have the opportunity to show thatthey are disabled at the last step of thesequential evaluation process, nosimilar opportunity existed for children.The Court concluded that, although thevocational analysis we use in claimsfiled by adults is inapplicable to claimsfor SSI benefits based on disability filedby children, this does not mean that afunctional analysis could not be appliedto children’s claims.The Court also addressed variousaspects of the way in which weemployed the Listing in evaluatingchildhood disability claims. The Courtstated that the policies for establishingwhether a child’s impairment(s) wasequivalent in severity to a listedimpairment ‘‘exclude[d] claimants whohave unlisted impairments orcombinations of impairments that donot fulfill all the criteria for any onelisted impairment.’’ The Court was alsoconcerned that all claimants be given anopportunity for an assessment of theirfunctional limitations, including theeffects of their symptoms, inestablishing medical equivalence.The Childhood Rules That ResultedFrom ZebleyAs a result of the Zebley decision, werevised the rules we used to evaluatechildhood disability claims under SSI.The rules were first published in theFederal Register on February 11, 1991(56 FR 5534) as a final rule with arequest for comments. Followingconsideration of public comments, wepublished a final rule in the FederalRegister on September 9, 1993 (58 FR47532).In § 416.924(a) of the prior rules, wedefined the term ‘‘comparable severity’’in terms of the impact of an impairment

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6409or a combination of impairments on achild’s ability to functionindependently, appropriately, andeffectively in an age-appropriatemanner. The rules also provided thateach child whose impairment(s) did notmeet or medically or functionally equalthe requirements for any listing wouldhave an ‘‘individualized functionalassessment’’ (IFA), an evaluation of theimpact of the child’s impairment(s) onhis or her overall ability to functionindependently, appropriately, andeffectively in an age-appropriatemanner.In fact, the rules provided three stepsat which we would consider a child’sfunctioning. At each of these steps, weconsidered the impact of all of thechild’s medically determinableimpairments on his or her functioningand considered all relevant evidence,including the effects of the individual’ssymptoms and the side effects ofmedication. We considered the nature ofthe impairment(s), the child’s age, thechild’s ability to be tested given his orher age, the child’s ability to performage-appropriate daily activities, andother relevant factors.First, we added a ‘‘severeimpairment’’ step for children toparallel step 2 of the adult sequentialevaluation process. At this step, thethreshold for further evaluation waswhether a child had more than a slightabnormality or a combination of slightabnormalities that caused more thanminimal limitation in a child’s ability tofunction independently, appropriately,and effectively in an age-appropriatemanner.Second, at step 3 of the sequentialevaluation process, we expanded therules for determining equivalence to theListing. The new ‘‘functionalequivalence’’ rule was intended, amongother things, to address the SupremeCourt’s concerns about our use of theListing in childhood cases. Functionalequivalence provided that, if a child’simpairment(s) did not meet or medicallyequal the severity of any listedimpairment, we would assess the child’sfunctional limitations and comparethose limitations with the disablingfunctional consequences of any listedimpairment, without regard to whetherthe listed impairment chosen forcomparison was medically ‘‘related’’ tothe child’s impairment(s); for example,functional equivalence permitscomparison of the functional limitationscaused by a physical impairment withthe functional limitations establishingdisability in the mental disorderslistings.Last, for those children whoseimpairments were not of listing-levelseverity, the rules resulting from theZebley decision included an entirelynew fourth step in the sequentialevaluation process for children. At thisstep, we used the IFA to assess whethera child’s severe impairment(s), whilenot of listing-level severity, wasnonetheless of ‘‘comparable severity’’ toan impairment(s) that would disable anadult.The IFA addressed the functionalimpact of a child’s impairment(s) inbroad areas of functioning, which wecalled domains and behaviors, such ascognition, communication, and motorabilities. These domains and behaviorswere intended to encompass and reflectall the things that a child may do at anyparticular age, and were, therefore,intended to include all of a child’sfunctioning.If an IFA showed that a child’simpairment(s) substantially reduced hisor her ability to function independently,appropriately, and effectively in an ageappropriatemanner, and theimpairment(s) met the durationrequirement, we found theimpairment(s) to be of comparableseverity to an impairment that wouldresult in disability in an adult, and thechild would, therefore, be considereddisabled. If the impairment(s) did notsubstantially reduce the child’s abilityto function independently,appropriately, and effectively in an ageappropriatemanner, or if it did not meetthe duration requirement, we found thechild was not disabled. For mostchildren, the rules provided examples ofhow ‘‘marked’’ and ‘‘moderate’’limitations in the domains andbehaviors would indicate whether therewas a substantial reduction infunctioning; for example, ‘‘moderate’’limitations in three domains wouldgenerally, though not invariably, resultin a finding of disability.Summary of the Childhood DisabilityProvisions of Public Law 104–193Public Law 104–193 provides a newstatutory definition of disability forchildren claiming SSI benefits anddirects us to make significant changes inthe way we evaluate childhooddisability claims. Under the new law, achild’s impairment or combination ofimpairments must cause more seriousimpairment-related limitations than theold law and our prior regulationsrequired.Section 211(a) of Public Law 104–193amended section 1614(a)(3) of the Act toprovide a definition of disability forchildren separate from that for adults.The ‘‘comparable severity’’ criterion inthe Act was repealed and replaced withthe following definition:(C)(i) An individual under the age of 18shall be considered disabled for the purposesof this title if that individual has a medicallydeterminable physical or mental impairment,which results in marked and severefunctional limitations, and which can beexpected to result in death or which haslasted or can be expected to last for acontinuous period of not less than 12months.(ii) Notwithstanding clause (i), noindividual under the age of 18 who engagesin substantial gainful activity (determined inaccordance with regulations prescribedpursuant to subparagraph (E)) may beconsidered to be disabled.The conference report thataccompanied Public Law 104–193further explained:The conferees intend that only needychildren with severe disabilities be eligiblefor SSI, and the Listing of Impairments andother current disability determinationregulations as modified by these provisionsproperly reflect the severity of disabilitycontemplated by the new statutorydefinition. In those areas of the Listing thatinvolve domains of functioning, theconferees expect no less than two markedlimitations as the standard for qualification.The conferees are also aware that SSA usesthe term ‘‘severe’’ to often mean ‘‘other thanminor’’ in an initial screening procedure fordisability determination and in other places.The conferees, however, use the term‘‘severe’’ in its common sense meaning.H.R. Conf. Rep. No. 725, 104th Cong.,2d Sess. 328 (1996), reprinted in 1996U.S. Code, Cong. and Ad. News 2649,2716. The House report contains similarlanguage. See H.R. Rep. No. 651, 104thCong., 2d Sess. 1385 (1996), reprinted in1996 U.S. Code, Cong. and Ad. News2183, 2444.Further provisions concerningchildhood disability adjudication aresummarized below with references tothe relevant sections of Public Law 104–193.• The Commissioner was directed toremove references to maladaptivebehavior in the personal/behavioraldomain from listings 112.00C2 and112.02B2c(2) of the childhood mentaldisorders listings (Section 211(b) (1)).• The Commissioner was directed todiscontinue the IFA for children in 20CFR 416.924d and 416.924e (Section211(b) (2)).• Within 1 year after the date ofenactment, we must redetermine theeligibility of individuals under the ageof 18 who were eligible for SSI based ondisability as of August 22, 1996, andwhose eligibility may terminate byreason of the new law. The cases are tobe redetermined using the eligibilitycriteria for new applicants. The medicalimprovement review standard in section1614(a) (4) of the Act and 20 CFR416.994a, used in CDRs, shall not apply

6410 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsto these redeterminations (Section211(d) (2)).• The medical improvement reviewstandard for determining continuingeligibility for children was revised toconform to the new definition ofdisability for children (Section 211(c)).• Not less frequently than once every3 years, we must conduct a CDR for anychildhood disability recipient eligibleby reason of an impairment(s) which islikely to improve. At the option of theCommissioner, we may also perform aCDR with respect to those individualsunder age 18 whose impairments areunlikely to improve (Section 212(a)).• We must redetermine the eligibilityof individuals who were eligible for SSIbased on disability in the month beforethe month in which they attained age 18using the rules for determining initialeligibility for adults. We will do theredetermination during the 1-yearperiod beginning on the individual’s18th birthday. The medicalimprovement review standard used inCDRs does not apply to theseredeterminations (Section 212(b)).• We must conduct a CDR not laterthan 12 months after the birth of thechild for any child whose low birthweight is a contributing factor materialto our determination that the child wasdisabled (Section 212(c)).• At the time of a CDR, a child’srepresentative payee shall presentevidence that the child is and has beenreceiving treatment to the extentconsidered medically necessary andavailable for the disabling impairment.If a payee refuses without good cause toprovide such evidence, we may selectanother representative payee, or paybenefits directly to the child, if wedetermine that it is appropriate and inthe best interests of the child (Section212(a)).These rules implement all of theprovisions of sections 211 and 212 ofPublic Law 104–193, with the exceptionof section 211(d)(2). Because Public Law104–193 repealed the ‘‘comparableseverity’’ disability standard forchildren, and eliminated use of the IFA,step 4 of our prior sequential evaluationprocess (the comparable severity step)has been removed. To be found disabledunder these rules, an individual underage 18 must have ‘‘marked and severefunctional limitations,’’ which meansthat his or her impairment orcombination of impairments must meet,or medically equal or functionallyequal, the severity of a listedimpairment.Summary of Specific RevisionsThese interim final rules revise ourprior rules for deciding initial eligibilityand continuing eligibility for childrenclaiming SSI benefits based ondisability. They also provide rules forredetermining the eligibility ofindividuals who attain age 18 and whowere eligible for SSI based on disabilityin the month before the month in whichthey attained age 18.The major changes to the rules areexplained below. In addition, we haveadded, removed, and revised languagethroughout subpart I of 20 CFR part 416to remove references to the ‘‘comparableseverity’’ standard and our priorregulatory definition of disabilityinterpreting that standard. Since theseare only conforming changes to complywith the new law, we have notsummarized each of them in thissummary.These rules do not address everyaspect of the evaluation of disability ofchildren and of individuals who haveattained age 18. They implementprimarily those changes required byPublic Law 104–193. Therefore, theymust be read in the context of all ourother relevant rules for determiningdisability.Appendix 1 to Subpart P of Part 404—Listings 112.00C and 112.02B2Public Law 104–193 mandatesremoval of references to ‘‘maladaptivebehaviors’’ in listings 112.00C2 and112.02B2c(2) in the childhood mentaldisorders section of the Listing ofImpairments. Listing 112.00C explainsthe severity criteria we use to evaluatea mental impairment in most of ourchildhood mental disorder listings.These severity criteria are often referredto as the ‘‘paragraph B’’ criteria becausethey are found in paragraph B of mostof the listings to which they apply.Listing 112.02B2c(2) was a particularparagraph B criterion for persistent,serious maladaptive behaviors inchildren aged 3 to 18. Pursuant toPublic Law 104–193, we have removedall references to ‘‘maladaptivebehaviors’’ in listing 112.00C anddeleted all of prior listing 112.02B2c(2);we have also redesignated the‘‘personal/behavioral’’ area as the areaof ‘‘personal function.’’ For this reason,we also removed the reference to‘‘activities of daily living’’ from formerlisting 112.02B2c(1), which we nowdesignate as listing 112.02B2c because itis the only paragraph remaining.The area of personal function nowpertains only to self-care; that is, theability to help oneself and to cooperatewith others in taking care of personalneeds, health, and safety (e.g., feeding,dressing, toileting, bathing, followingmedication regimes, and followingsafety precautions). Further, we haveclarified the description of the socialarea of functioning to make it clearerthat many impairment-relatedbehavioral problems (including thosepreviously considered in the priorpersonal/behavioral area) are likely tohave their most significant effects on achild’s social functioning.In addition, we revised the fourth areaof function from ‘‘concentration,persistence, and pace’’ to‘‘concentration, persistence, or pace.’’This is a technical correction to conformthe language of this section to the rulesin listings 112.00C3 and 112.02B2d,which have always read ‘‘deficiencies ofconcentration, persistence, or pace.’’ Wemade a corresponding change in listing112.00C4, which also used the word‘‘and.’’ We also made severalclarifications in listing 112.00C2b. Thechanges are not substantive and are onlyintended to parallel the adult mentallisting 12.00C2 with appropriatelanguage for children.Section 416.635 Responsibilities of aRepresentative Payee.We revised this section to providethat, in cases in which the beneficiaryis an individual under age 18 (includingcases in which the beneficiary is anindividual whose low birth weight is acontributing factor material to ourdetermination that the individual isdisabled), the representative payee isresponsible for ensuring that thebeneficiary is and has been receivingtreatment to the extent consideredmedically necessary and available forthe condition that was the basis forproviding benefits.Section 416.902 General Definitionsand Terms for This SubpartWe have added four new definitions.First, we explain that a disabilityredetermination (see § 416.987) is aredetermination of eligibility based ondisability using the rules for newapplicants appropriate to theindividual’s age, except the rulespertaining to performance of substantialgainful activity. Second, we explain thatthe term impairment(s) means ‘‘amedically determinable physical ormental impairment or a combination ofmedically determinable physical ormental impairments.’’Third, we explain that the termmarked and severe functionallimitations, when used as a phrase,means the standard of disability in theAct for children claiming SSI benefits,and is a level of severity that meets ormedically or functionally equals therequirements of a listing. We explainthat the separate words Marked andsevere are also terms used throughout

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6411this subpart, but the meanings of thesewords in the phrase marked and severefunctional limitations is not the same astheir meanings when used separately.The meaning of the phrase marked andsevere functional limitations derivesdirectly from the legislative history ofPublic Law 104–193, quoted in the‘‘Summary of the Childhood DisabilityProvisions of Public Law 104–193,’’above. Since the meanings of theseparate terms marked and severepredate enactment of Public Law 104–193, they are touched on in this sectionto minimize any confusion from thenew law’s use of the same words, usedin combination with a differentmeaning. Finally, we defineCommissioner to mean theCommissioner of Social Security.Section 416.906 Basic Definition ofDisability for ChildrenWe have revised this section toreplace the prior ‘‘comparable severity’’standard with the new ‘‘marked andsevere functional limitations’’ standardfor childhood disability. We also addedthe statutory provision that anindividual under age 18 who files a newclaim and who is engaging insubstantial gainful activity will not beconsidered disabled. For clarity, weadded language specifying ourlongstanding policy that we considerthe effects of combined impairments inassessing whether a child is disabled.Section 416.911 Definition ofDisabling ImpairmentUnder the Act and our regulations,individuals who file new applicationsfor benefits based on disability and whoare engaging in substantial gainfulactivity are found not disabled.However, after a disabled individual iseligible for SSI, the Act and ourregulations permit some individuals totry to work without losing eligibility. Arecipient of SSI benefits who begins orreturns to work despite a ‘‘disablingimpairment’’ may be found eligible forspecial SSI cash benefits and for specialSSI eligibility status under §§ 416.260 ff.of our regulations.Section 416.911 provides thedefinition of the term ‘‘disablingimpairment’’ for such cases. We haveredesignated all but the last sentence ofprior § 416.911, which was applicableonly to adults, as paragraph (a)(1), andadded a paragraph (b)(1) to define‘‘disabling impairment’’ for children.Final paragraph (a)(2) takes account ofthe new rules in § 416.987 for thedisability redeterminations required bysection 212(b) of Public Law 104–193.Consistent with this section of the newlaw, the rules explain that, for disabilityredetermination cases of individualswho are age 18, and who were eligiblefor SSI benefits based on a disability forthe month before the month in whichthey attained age 18, a disablingimpairment is one that meets the criteriafor initial eligibility set forth in§§ 416.920(c) through (f) for adults. Thisis because the new law specifies thatthese disability redeterminations shallapply the eligibility criteria for newapplicants, and not the medicalimprovement review standardprovisions of section 1614(a)(4) of theAct applicable to CDRs. However, step1 of the sequential evaluation processfor new claims (the substantial gainfulactivity step) will not apply. Forindividuals affected by this provisionwho have a disabling impairment, andwho are working, we will apply therules in §§ 416.260 ff. We redesignatedas paragraph (c) the last sentence ofprior § 416.911, which provides thatearnings are not considered in deemingwhether a recipient has a disablingimpairment(s), because it applies toboth adults and children.Section 416.919n Informing theExamining Physician or Psychologist ofExamination Scheduling, ReportContent, and Signature RequirementsWe have amended § 416.919n(c)(6),which concerns the opinion of aconsulting physician or psychologistabout an individual’s ability to functiondespite his or her impairment(s), to adda discussion specific to childhood casesto make it clear that the provisionapplies to both adults and children.Section 416.924 How We DetermineDisability for ChildrenWe have extensively revised thissection, which provides the sequentialevaluation process for childhooddisability claims, to conform to theprovisions of Public law 104–193.We have deleted former paragraphs(a) and (f). Prior paragraph (a) definedcomparable severity and prior paragraph(f) discussed the IFA. We redesignatedprior paragraphs (b) through (e) as (a)through (d), and revised them asexplained below. We added a newparagraph (e) to explain what we will dowhen children become adults (i.e., theyattain age 18) after they file theirapplications for SSI benefits based ondisability but before we make adetermination or decision. Weredesignated prior paragraph (g) asparagraph (f), but it is otherwiseunchanged. Also, we added a newparagraph (g).In final § 416.924, the new sequentialevaluation process for determininginitial eligibility is:1. Whether the child is engaging insubstantial gainful activity;2. If not, whether the child has amedically determinable impairment orcombination of impairments that issevere; and3. If the child’s impairment(s) issevere, whether it meets or medicallyequals the requirements of a listing, orwhether the functional limitationscaused by the impairment(s) are thesame as the disabling functionallimitations of any listing and, therefore,functionally equivalent to such listing.As in the prior sequential evaluationprocess, we will follow the steps inorder. If a determination or decision canbe made at a step, we will stop; if not,we will proceed to the next step.New § 416.924(a), ‘‘Steps inevaluating disability,’’ retains basicguidance from prior § 416.924(b) that isunaffected by the new law. It continuesto provide that we will consider allrelevant evidence in a child’s caserecord, that we will consider allimpairments for which we haveevidence and their combined effects,and that we will evaluate anylimitations in a child’s functioning thatresult from a child’s symptoms,including pain. We have removed thereference to the prior IFA step and mademinor revisions to reflect the newstatutory standard and the newsequence of evaluation. Becausemeeting or equaling the severity of alisting is now the last step of thesequence, we have emphasized theimportance of the step by specifyingthat a child will be disabled if his or herimpairment(s) meets, medically equals,or functionally equals the severity ofany listing. We also changed referencesto the ‘‘ability to function’’ to‘‘functioning’’ in order to conform to thenew statutory definition of disability,which is now expressed in terms of‘‘marked and severe functionallimitations.’’Final paragraphs (b) through (d)provide more detail on the sequentialevaluation steps outlined in paragraph(a). Final paragraph (b), ‘‘If you areworking,’’ is the same as prior paragraph(c). A child who files a new application,and who is engaging in substantialgainful activity, will be found notdisabled as required by the statute. Finalparagraph (c), ‘‘You must have a severeimpairment(s),’’ is substantively thesame as prior paragraph (d), but revisedto reflect the new law. At step two of thesequential process, we will continue toevaluate whether a child has a ‘‘severe’’impairment or combination ofimpairments. We now provide that if achild has a slight abnormality or acombination of slight abnormalities that

6412 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationscauses no more than minimal functionallimitations, we will find that the childdoes not have a severe impairment and,therefore, is not disabled. The phrase‘‘minimal functional limitations’’replaces the phrase from our prior rules‘‘minimal limitation in your ability tofunction, independently, appropriately,and effectively in an age-appropriatemanner,’’ which, as noted above, wasderived from the prior statutorydefinition of disability.Final paragraph (d) ‘‘Yourimpairment(s) must meet, medicallyequal, or functionally equal in severitya listed impairment in appendix 1,’’explains that an impairment(s) causesmarked and severe functionallimitations if it meets, medically equalsor functionally equals the severity of alisted impairment. Thus, if a child’simpairment(s) meets, medically equals,or functionally equals in severity alisting (and meets the durationrequirement), we will find the childdisabled. If a child’s impairment(s) doesnot meet or medically equal orfunctionally equal in severity anylisting, or does not meet the durationrequirement, we will find the child notdisabled. We have removed thelanguage from prior paragraph (e) thatsaid a child’s claim would not be deniedbecause his or her impairment(s) wasnot of listing-level severity.We added a new paragraph (e), ‘‘Ifyou attain age 18 after you file yourdisability application but before wemake a determination or decision,’’ toexplain what we will do in such cases.We will use the rules for determiningdisability in adults when an individualwhom we found disabled prior toattaining age 18 attains age 18. (We havealways used the adult disability rulesbeginning at age 18 when we find thatan individual was not disabled prior toattaining age 18 to see if the individualbecame disabled at a later date.)Therefore, final paragraph (e) explainsthat, for the period during which theindividual is under age 18, we will usethe disability rules in § 416.924, but forthe period starting with the day theindividual attains age 18, we will usethe disability rules for adults filing newclaims in § 416.920.Except for redesignating priorparagraph (g) as final paragraph (f),‘‘Basic considerations,’’ has not beenchanged. We will continue to considerall relevant medical and nonmedicalevidence in a child’s case record.Finally, we have added a newparagraph (g) to explain that, when wemake an initial or reconsidereddetermination whether you are disabledor when we make an initialdetermination about whether yourdisability continues under section416.994a, we will complete a standardform, Form SSA–538, ChildhoodDisability Evaluation Form. The newform is designed to guide ouradjudicators through the new sequentialevaluation process and emphasizes therequirements for establishing functionalequivalence. In new paragraph (g), wealso explain that disability hearingofficers, administrative law judges, andthe administrative appeals judges on theAppeals Council (when the AppealsCouncil makes a decision) will notcomplete the form. This is because theseadjudicators issue decisions withdetailed rationales and findings thatwill already reflect the steps of the newsequential evaluation process.Section 416.924a Age as a Factor ofEvaluation in Childhood DisabilityMost of the guidance in our priorrules on consideration of age inchildhood disability cases has not beenchanged by Public Law 104–193. Wehave revised this section to conform tothe ‘‘marked and severe functionallimitations’’ disability standard. Asunder our prior rules, we will considerthe child’s age in determining whetherhe or she has a severe impairment(s).When evaluating whether theimpairment(s) meets, medically equals,or functionally equals the severity of alisting, we will consider the child’s ageif the listing we consider uses agecategories. We have deleted priorparagraphs (a)(4) and (b), whichaddressed issues related to the IFA.We redesignated prior paragraph (c),‘‘Correcting chronological age ofpremature infants,’’ and prior paragraph(d), ‘‘Age and the impact of severeimpairments on younger children andolder adolescents,’’ as final paragraphs(b) and (c) and made changes to conformto the new definition of disability; wedeleted prior paragraph (d)(4)(ii)because it was based on the prior‘‘comparable severity’’ standard.Section 416.924bChildrenFunctioning inThis section discusses some of theterms we use to describe or evaluatefunctioning in children, including ageappropriateactivities, developmentalmilestones, activities of daily living, andwork-related activities. We retained thediscussions of these terms withappropriate conforming changes. Wealso clarified the explanations of the lastthree terms, which were described inour prior rules as ‘‘the most importantindicators of functional limitations’’ in,respectively, infants up to attainment ofage 3, children aged 3 to attainment ofage 16, and older adolescents aged 16 toattainment of age 18. In the interim finalrules, we describe these functions asbeing ‘‘most important as indicators offunctional limitations,’’ because theemphasis should be on whatever agegroups for which these indicators offunctional limitations are mostappropriate.Although we deleted prior paragraph(b)(5) because it described the domainsand behaviors used in performing anIFA under our prior rules, considerationof functional limitations remains anintegral part of the childhood disabilityevaluation process. For example, final§ 416.926a describes areas offunctioning we will consider when weevaluate whether a child’simpairment(s) is functionally equivalentin severity to a listing.Section 416.924cWill ConsiderOther Factors WeAs under our prior rules, when weevaluate whether a child’simpairment(s) is disabling, we willconsider all relevant factors, such as theeffects of medications, the setting inwhich the child lives, the child’s needfor assistive devices, and the child’sfunctioning in school. However, asthroughout these interim final rules, wehave revised this section to conform tothe statutory ‘‘marked and severefunctional limitations’’ standard.Section 416.924d IndividualizedFunctional Assessment for ChildrenSection 416.924e Guidelines forDetermining Disability Using theIndividualized Functional AssessmentWe deleted both of these sections asrequired by section 211(b)(2) of PublicLaw 104–193.Section 416.925 Listing ofImpairments in Appendix 1 of SubpartP of Part 404 of This ChapterWe have revised paragraph (a) of thissection, ‘‘Purpose of the Listing ofImpairments,’’ to explain that, forchildren, the Listing of Impairmentsdescribes impairments that areconsidered severe enough to result inmarked and severe functionallimitations. We revised paragraph (b)(2),which explains the purpose of thechildhood listings in part B of theListing, to explain that the level ofseverity of the impairments listed inpart B is intended to be the same as thatexpressed in the functional severitycriteria of the childhood mentaldisorders listings (see 112.01 ff.).Therefore, in general, a child’simpairment(s) is of ‘‘listing-levelseverity’’ if it results in markedlimitations in two broad areas offunctioning, or extreme limitations in

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6413one such area. However, we also explainthat when we decide whether a child’simpairment(s) meets the requirementsfor any listed impairment, we willdecide that the impairment is of‘‘listing-level severity’’ even if it doesnot result in marked limitations in twobroad areas of functioning, or extremelimitations in one such area, if thelisting that we apply does not requiresuch limitations to establish that animpairment(s) is disabling. We alsoexplain that we define the terms‘‘marked’’ and ‘‘extreme’’ as they applyto children in § 416.926a.Section 416.926 Medical Equivalencefor Adults and ChildrenIn these interim final rules, we movedthe rules for deciding whether a child’simpairment(s) is medically equivalentin severity to any listing into the samesection as the rules for deciding medicalequivalence of impairments in adults,reserving § 416.926a for functionalequivalence. To make this clear, werevised the heading of final § 416.926 toreflect the inclusion of children. Wealso revised final paragraph (a), ‘‘Howmedical equivalence is determined,’’ byreplacing the explanation of how wedetermine medical equivalence withprovisions from prior § 416.926a. Wealso incorporated and revised the lastsentence of prior § 416.926a(a),explaining that we consider all relevantevidence in the case record when wedecide the issue of medical equivalencebecause it remains applicable to bothadults and children.We decided to use the provisions offormer § 416.926a(b) to explain our rulesfor determining medical equivalence forboth adults and children. This is not asubstantive change, but a clearerstatement of our longstanding policy onmedical equivalence than waspreviously included in prior§ 416.926(a), as it was clarified forchildren in prior § 416.926a(b). Thismerely allows us to address only oncein our regulations the policy of medicalequivalence, which is and always hasbeen the same for adults and children.(Although some of the text of§ 416.929(a) will differ from the text of§ 404.1526(a), both sections, which arein chapter III of title 20 of the Code ofFederal Regulations, will continue toprovide the same substantive rules.)We have also added a new paragraph(d), ‘‘Responsibility for determiningmedical equivalence,’’ to address ourlongstanding policy of who isresponsible for determining medicalequivalence for adults and children.Section 416.926a FunctionalEquivalence for ChildrenAlthough Public Law 104–193discontinued the use of the IFA, thelegislation nevertheless emphasized thatwe were still to continue evaluating thefunctioning of children in our disabilityassessments, as shown by the newsstatutory definition of disability,‘‘marked and severe functionallimitations.’’Moreover, in the legislative history,the conferees stated:* * * Where appropriate, the confereesremind SSA of the importance of the use offunctional equivalence disabilitydetermination procedures.* * * [T]he conferees do not intend tosuggest by this definition of childhooddisability that every child need be especiallyevaluated for functional limitations, or thatthis definition creates a supposition for anysuch examination. * * * Nonetheless, theconferees do not intend to limit the use offunctional information, if reflecting sufficientseverity and is otherwise appropriate.H.R. Conf. Rep. No. 725, 104th Cong,2d Sess. 328 (1996), reprinted in 1996U.S. Code, Cong. and Ad. News 2649,2716. The House Report also containedsimilar language about the importanceof functional information. See H.R. Rep.No. 651, 104th Cong., 2d Sess. 1385–1386 (1996), reprinted in 1996 U.S.Code, Cong. and Ad. News 2183, 2444–2445.Thus, even though it eliminated theIFA, Congress directed us to continue toevaluate a child’s functional limitationswhere appropriate, albeit using a higherlevel of severity than under the formerIFA. Congress also explicitly endorsedour functional equivalence policy as ameans for evaluating impairments thatwould not meet or medically equal anyof our listings and without which someneedy children with severe disabilitieswould not be eligible.Therefore, we are retaining our priorpolicies on determining functionalequivalence. Because the changes madeby Public Law 104–193 make thefunctional equivalence provision thatlast point of adjudication in a child’sclaim and, therefore, critical to theoutcome of many cases, we are alsoclarifying these rules.When we published the prior rules inthe Federal Register on September 9,1993, we chose not to adopt a numberof public comments about our policy of‘‘functional equivalence.’’ Somecommenters on the 1993 rules thoughtthat, because the functional equivalencepolicy was unfamiliar, it was importantthat we provide as much detail aspossible in the regulations so that alladjudicators would understand andapply the new rules in the same way.Several commenters also said that§ 416.926a should explain the ‘‘thoughtprocesses’’ an adjudicator could employto make a finding of functionalequivalence; otherwise, the policy offunctional equivalence might be underutilized.One suggestion was that weincorporate into the rules the moredetailed instructions in our operatingmanuals and training guides. Onecommenter suggested that we provideseparate headings for medicalequivalence and functional equivalenceto highlight their differences and thenovelty of the functional equivalencepolicy.Although we did not adopt thecomments in 1993, we have madechanges in these rules that respond tosome of the earlier concerns of 1993 toreflect the increased importance of thefunctional equivalence policy under thenew law.First, as noted in the explanation of§ 416.926, we have separated thediscussion of medical equivalence forchildren from the discussion offunctional equivalence for children. Wehave also incorporated some of the moredetailed explanations from ouroperating manuals regarding theapplication of functional equivalence.Final paragraph (a), ‘‘General,’’ andfinal paragraph (b), ‘‘How we determinefunctional equivalence,’’ now include,in reorganized form, the rules forfunctional equivalence previously in§ 416.926a(a) and (b)(3). As alreadyindicated, we moved prior (b)(1) and(b)(2), which explained medicalequivalence, to § 416.926. Because ofthe reorganization, we deleted thesecond sentence from prior paragraph(b)(3) (‘‘If you have more than oneimpairment, we will consider thecombined effects of all yourimpairments on your overallfunctioning.’’) because it would havebeen redundant.In final paragraph (b), we alsoincluded some of the more detailedguidelines concerning functionalequivalence that commenters on the1993 childhood disability rulesrequested that we include in theregulations, and that we believe arenecessitated by the new definition ofdisability. This paragraph explains thatthere are several methods fordetermining functional equivalence, andthat we may use any one of them todetermine whether an impairment isfunctionally equivalent in severity to alisting. Subparagraphs then explain thevarious methods that we may employ todetermine functional equivalence. Weexplain that there is no set order inwhich we must apply these methodsand that, when we find that an

6414 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsimpairment(s) is functionally equivalentto a listed impairment, we will use anymethod that is appropriate to, or bestdescribes, a child’s impairment(s) andfunctional limitations. However, weexplain that will consider all of themethods before we decide that animpairment(s) is not functionallyequivalent in severity to any listedimpairment and refer to final§ 416.924(g), which explains how wewill use the new Childhood DisabilityEvaluation Form, Form SSA–538, at theinitial and reconsideration levels.In (b)(1), we explain the first methodwe may use. An impairment(s) may befunctionally equivalent in severity to alisted impairment because of extremelimitations in one specific function,such as walking or talking, or based ona combination or more than one, butless medically severe, specificfunctional limitations, such as walkingand talking. In (b)(2), we explain that animpairment(s) may be functionallyequivalent to a listed impairment if itcauses functional limitations in broadareas of development or functioning(e.g., in motor or social functioning) thatare equivalent in severity to thedisabling functional limitations inlisting 112.12 or listing 112.02. (Theareas of functioning in which animpairment(s) may be evaluate arediscussed in paragraph (c), describedbelow.) In (b)(3), we explain that animpairment(s) may be functionallyequivalent to a listed impairment if it ischronic and characterized by frequentepisodes of illness or attacks, or byexacerbations and remissions. In suchcases, we may compare a child’sfunctional limitations to those in anylisting for a chronic impairment withsimilar episodic criteria. In (b)(4), weexplain that an impairment(s) may befunctionally equivalent to a listedimpairment if it requires treatment overa long period of time (at least a year)and the treatment itself (e.g., multiplesurgeries) causes marked and severefunctional limitations, or if thecombined effects of limitations causedby ongoing treatment and limitationscaused by the impairment(s) result inmarked and severe functionallimitations.In final paragraph (c), ‘‘Board areas ofdevelopment or functioning,’’ weexplain that listing 112.12, for infants(especially infants who are too young totest) and listing 112.02 are the listingswe will use for comparison when weuse this method of functionalequivalence. However, when wedetermine functional equivalence basedon broad functional limitations, we willevaluate the functional effects of animpairment(s) in several areas ofdevelopment or functioning specified inthis paragraph of § 416.926a instead ofreferring to the listings themselves. Wealso explain that we describe the areasof functioning in general terms in (c)(4)and in more detail for specific agegroups in (c)(5). If we find ‘‘markedlimitations’’ in two areas ofdevelopment or functioning, or‘‘extreme limitations’’ in one area, wewill find that an impairment(s) isfunctionally equivalent to listing 112.12or listing 112.02. Even though thelistings we use for reference are mentaldisorder listings, this evaluation may bedone for a physical impairment(s) or fora combination of physical and mentalimpairments. We define the terms‘‘marked limitations’’ and ‘‘extremelimitations’’ in (c)(3).In (c)(1), we explain how we use theareas of development or functioning: Weconsider the extent of functionallimitations in the areas affected by animpairment(s) and how limitations inone area affect development orfunctioning in other areas. Thus, whena physical impairment(s) producesglobal limitations (i.e., limitations in themotor area and at least one other area),those limitations must be evaluated inall relevant areas. We also makereference to new areas of motordevelopment and functioning we haveadded to ensure appropriateconsideration of physical impairments.In (c)(2), ‘‘Other considerations,’’ weexplain that we will consider allinformation in the case record that willhelp us determine the effect of animpairment(s) on a child’s physical andmental functioning. We will considerthe nature of the impairment(s), thechild’s age, the child’s ability to betested given his or her age, the child’sneed for help from others (and whethersuch need is age-appropriate), and otherrelevant factors.In (c)(3), we define the terms‘‘marked’’ and ‘‘extreme’’ limitations.The definitions are not new, but arebased on longstanding policy in theregulations and interpretations we haveused in our internal instructions andtraining. In (c)(4) and (c)(5), we describethe areas of development or functioningthat may be addressed in adetermination of functionalequivalence, including the new areas ofmotor development and motorfunctioning and the revised ‘‘personal’’area of functioning. The descriptions arebased on our prior descriptions andchanges mandated by Public Law 104–193, and contain several clarificationsbased on our experience evaluatingfunctional equivalence in children since1991.Final paragraph (d), ‘‘Examples ofimpairments that are functionallyequivalent in severity to a listedimpairment,’’ is substantively the sameas prior paragraph (d), ‘‘Examples ofimpairments of children that arefunctionally equivalent to the listings.’’We made minor editorial changes forclarity and, as throughout the rules, toconform the language to the changes inthe law. We also updated examples (1)and (11) to remove examples ofcardiovascular impairments that arenow listed impairments and, therefore,no longer examples of equivalence. Wechanged example (4) to delete referenceto a ‘‘marked inability to stand andwalk’’ because the limitation describedis actually ‘‘extreme.’’ We changedexample (5) to show how the area ofmotor functioning may be used. We alsoclarified the primary purpose ofexample (10), which is primarily forchildren who are too young to test andfor whom a diagnosis and other medicalfindings may be difficult to specify.Section 416.927 Evaluating MedicalOpinions About Your Impairment(s) orDisabilityWe have added a description of the‘‘marked and severe functionallimitations’’ standard for children toparagraph (a), ‘‘General,’’ which alreadyincluded a description of the disabilitystandard for adults.Section 416.929 How We EvaluateSymptoms, Including PainThroughout this section, we havereplaced references to a child’s ability to‘‘function independently, appropriately,and effectively in an age-appropriatemanner’’ with references to the child’s‘‘functioning.’’ The rules for evaluatinga child’s symptoms are otherwiseunchanged by the new law.Section 416.930 Need To FollowPrescribed TreatmentThis section explains that, in order toreceive benefits, an individual mustfollow treatment prescribed by his orher physician if the treatment canrestore his or her ability to work; i.e., ifthe treatment could end the individual’sdisability. We have added parallellanguage explaining that a child mustfollow prescribed treatment if thetreatment can reduce his or herfunctional limitations so that they areno longer ‘‘marked and severe.’’Section 416.987 DisabilityRedeterminations for Individuals WhoAttain Age 18This section is new. It provides rulesfor disability redeterminations

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6415mandated by section 212(b) of PublicLaw 104–193.In paragraphs (a)(1) and (a)(2), weexplain that Public Law 104–193requires these redeterminations andthat, when we do these disabilityredeterminations, we generally will usethe rules for adults filing new claims,not the rules we use for CDRs.In paragraph (a)(3) we explain that wewill notify individuals before we begina disability redetermination. Inparagraph (a)(4) we explain that we willnotify the individual in writing of theresults of the redetermination andexplain the individual’s rights inconnection with our notice of disabilityredetermination.Paragraph (b) concerns a group ofrecipients who are subject to disabilityredeterminations under section 212(b)of the new law: individuals who becameeligible by reason of disability prior toattaining age 18, and who were eligiblefor SSI benefits based on disability forthe month before the month in whichthey attained age 18. Paragraphs (b)(1)through (b)(7) of this section providethat, during the 1-year period beginningon the individual’s eighteenth birthday,we will redetermine the eligibility ofthese individuals using the rules in§§ 416.920 (c) through (f), and not therules in § 416.920(b) or § 416.994; i.e.,we will decide whether an individual isdisabled using the rules for adults filingnew claims, except the rule that says anindividual engaging in substantialgainful activity will be found notdisabled. If an individual age 18 or olderhas a ‘‘disabling impairment’’ as definedin § 416.911 and is working, we willapply the rules for special SSI eligibilityin §§ 416.920ff. We also provide thateligibility will end if we find that theindividual is not disabled and describethe month in which we may find anindividual not disabled. Finally, weexplain that, if we find an individual isnot disabled, the last month for whichbenefits can be paid is the secondmonth after the month in which theindividual was determined not to bedisabled.Section 416.990 When and How OftenWe Will Conduct a Continuing DisabilityReviewIn paragraph (b), ‘‘When we willconduct a continuing disability review,’’we have added a new paragraph (b)(11),mandated by Public Law 104–193. Thenew paragraph provides that we will doa CDR by a child’s first birthday if thechild’s low birth weight is acontributing factor material to thedetermination that the child is disabled;i.e., whether we would have found thechild disabled if we had not consideredthe child’s low birth weight.In paragraph (c), ‘‘Definitions,’’ wehave revised the definition of apermanent impairment, medicalimprovement not expected, to explainthat for a child, such an impairment isone that is unlikely to improve to thepoint that the child’s functionallimitations will no longer be markedand severe.Section 416.994a How We WillDetermine Whether Your DisabilityContinues or Ends, and Whether YouAre and Have Been Receiving TreatmentThat Is Medically Necessary andAvailable, Disabled ChildrenWe revised this section extensively tocomport with provisions in Public Law104–193 in two ways:• To revise the medical improvementreview standard (MIRS) used inconducting a CDR, and• To add rules that, at the time of aCDR, a child’s representative payeemust show evidence that the child isand has been receiving treatment that ismedically necessary and available forthe condition that was the basis forproviding SSI benefits.The new evaluation sequence forapplying the medical improvementreview standard in a CDR is:1. Has there been medicalimprovement in the impairment(s) onwhich eligibility was based? If there hasbeen no medical improvement, we willfind that the child is still disabled,unless certain exceptions apply.2. If there has been medicalimprovement, does the impairment(s)the child had at the time of our mostrecent favorable medical determinationor decision still meet, medically equal,or functionally equal the severity of thelisting that it met or equalled at the timeof the prior determination or decision?If that impairment(s) still meets orequals the severity of that listedimpairment as it was written at thattime, we will find the child stilldisabled, unless certain exceptionsapply.3. If that impairment(s) does not stillmeet or equal the severity of that listedimpairment as it was written at thattime, is the child now disabled, takinginto consideration all currentimpairments.Because the childhood disabilitystandard is no longer linked to the adultstandard of inability to work, there is nolonger a step to assess whether anymedical improvement is ‘‘related to theability to work.’’In paragraph (a)(1), we changed theoutline of the sequential evaluationprocess for CDRs in childhood disabilitycases to reflect the new sequence ofevaluation. The sequence outlined inparagraph (a)(1) and discussed in moredetail in paragraphs (b)(1) through (b)(3)differs significantly from the sequenceunder our prior rules. In our prior rules,the first step of the CDR evaluationprocess for children requiredconsideration of whether the child’simpairment(s) met, or was equivalent inseverity to, a listing. However, the newstatutory definition of disability forchildren—‘‘marked and severefunctional limitations’’—means a levelof severity that meets or is medically orfunctionally equivalent in severity tothe severity of a listing. Thus, if we werefirst to consider whether the child’simpairment(s) is of listing-level severity,we would also be deciding whether thatimpairment(s) is disabling. In thoseinstances in which the impairment(s) isfound neither to meet nor to beequivalent in severity to any listing, webelieve it would be difficult for anadjudicator to then fairly consider theissue of medical improvement, becausethe adjudicator would already haveconcluded that the child is not disabled.Section 1614(a)(4)(B) of the Act statesthat, with some exceptions, disabilitycan be found to have ceased only ifthere is ‘‘substantial evidence whichdemonstrates that there has beenmedical improvement * * * and that[the] impairment or combination ofimpairments no longer results inmarked and severe functionallimitations.’’Thus, to ensure proper considerationof the issue of medical improvement, wehave placed that issue first in thesequence. If there has been no medicalimprovement, we will generally findthat the child is still disabled. There areexceptions to this rule, set forth in finalparagraphs (e) and (f) of this section anddiscussed below.Under our prior rules, pursuant to theMIRS provisions in the Act at that time,if there had been medical improvement,we considered whether theimprovement was related to the abilityto work (which we defined forchildhood cases as meaning the medicalimprovement resulted in an increase inability to function independently,appropriately, and effectively in an ageappropriatemanner.) However, theMIRS as revised by Public Law 104–193contains no provision for a ‘‘related tothe ability to work’’ step for childrenand, thus, limits the application of thisprovision to individuals age 18 or over.Accordingly, we have deleted that stepfrom our rules (paragraph (d) of ourprior rules).If there has been medicalimprovement, the next step under these

6416 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsrules (discussed in detail in paragraph(b)(2)) is to consider whether theimpairment(s) that we considered at thetime of our most recent favorabledetermination or decision still meets, oris still equivalent in severity to, thelisting that it met or was equivalent inseverity to at that time, as that listingthen appeared, even if that listing hassince been revised or removed from theListing. If that impairment(s) would stillmeet or equal in severity that listing, wewill find the child still disabled, subjectto certain exceptions discussed inparagraphs (e) and (f) of this section anddiscussed below.If that impairment(s) would not nowmeet or equal in severity that listing, wewill then consider whether the child iscurrently disabled, taking into accountall current impairments, including anythe child did not have or that we did notconsider at the time of our most recentfavorable determination or decision.At this step (discussed in detail inparagraph (b)(3)), we first considerwhether the child has a severeimpairment or combination ofimpairments considering all currentimpairments. If the child does not, wewill find the child not disabled. If so,we then consider whether the child’scurrent impairment(s) meets, or ismedically equivalent or functionallyequivalent in severity to, any listing inthe Listing of Impairments. If so, thechild continues to be disabled; if not,the child is not disabled.We will not always follow these stepsin order. In final paragraph (b), weadded language explaining that we mayskip steps in the sequence if it is clearthis would lead to a more promptfinding that disability continues. Wewill not skip any steps unless it is clearthat a continuance will result. Forexample, we might not consider theissue of medical improvement if it isobvious on the face of the evidence thata current impairment meets the severityof a listed impairment.Final paragraph (c) discussed what wemean by ‘‘medical improvement’’; i.e.,any decrease in the severity of themedical impairment(s) which waspresent at the time of our most recentfavorable determination or decision.This paragraph is largely the sameunder our prior rules, but we haveadded language to make it clear that wewill disregard minor changes in theindividual’s signs, symptoms, andlaboratory findings that obviously donot represent medical improvement andcould not result in a finding that theindividual’s disability has ended. Thisis a longstanding procedure we haveused in cases in which there istechnically medical improvementbecause there is some very slightimprovement in a sign, symptom, orlaboratory finding (e.g., a change in IQfrom 61 to 62) but it is clear that theoutcome will not change.Final paragraph (d), largelyunchanged from prior paragraph (e),explains what we will do if we cannotfind the prior file. First, we willdetermine whether the child is currentlydisabled. If not, we will decide whetherto attempt reconstruction of thoseportions of the missing file that wererelevant to our most recent favorabledetermination or decision, so as to allowa decision whether there has beenmedical improvement since that time. Ifwe do not or cannot reconstruct the file,we will not find medical improvement.Paragraph (e) concerns ‘‘the firstgroup of exceptions to medicalimprovement.’’ The law provideslimited situations in which disabilitycan be found to have ended even thoughmedical improvement has not occurred,if the child’s impairment(s) no longerresults in marked and severe functionallimitations. Two of the exceptions inour prior rules—the ‘‘advances inmedical or vocational therapy ortechnology’’ exception and the‘‘vocational therapy’’ exception—havebeen limited by Public Law 104–193 toindividuals who have attained age 18.The third exception is still applicable: Achild’s disability may be found to haveceased if substantial evidence showsthat, based on new or improveddiagnostic techniques or evaluations,the child’s impairment(s) is not asdisabling as it was considered to be atthe time of the most recent favorabledetermination or decision. We haverevised this exception to conform to thenew definition of disability for children.Final paragraph (f), largely unchangedfrom prior paragraph (g), concerns ‘‘thesecond group of exceptions to medicalimprovement.’’ These exceptionsinclude such issues as fraud and failureto cooperate in obtaining evidence. Ifone of these exceptions applies, we mayfind that disability ceases withoutfinding medical improvement or thatthe child is currently disabled. We haverevised the language concerning theseexceptions to conform to the newdefinition of disability for children.Final paragraph (g) (prior paragraph(h)) concerns the month we will find achild no longer disabled. We revised thelanguage slightly to conform to the newdefinition of disability for children.Final paragraph (h) (prior paragraph,(i)) provides that, before we stopbenefits, we will provide an opportunityfor an appeal, and gives a reference tothe rules on appeals; it is unchangedfrom our prior rules.Final paragraph (i) is new; itimplements provisions in Public Law104–193 requiring that, if a child has arepresentative payee, that payee mustpresent evidence at the time of a CDRshowing that the child is and has beenreceiving treatment to the extentconsidered medically necessary andavailable for the condition(s) that wasthe basis for providing SSI benefits,unless we determine such evidencewould be inappropriate or unnecessary,considering the nature of the child’simpairment(s). If the payee refuseswithout good cause to provide evidence,and it is in the best interests of thechild, we will determine if anotherpayee should be selected or if the childshould receive benefits directly.In paragraph (i)(1), we explain that‘‘medically necessary’’ treatment meanstreatment that is expected to improve orrestore the individual’s functioning andthat was prescribed by a ‘‘treatingsource’’ as defined in § 416.902. If thechild does not have a treating source,we will decide whether there ismedically necessary treatment thatcould have been prescribed by a treatingsource. In paragraph (i)(2), we list somefactors we will consider in evaluatingwhether medically necessary treatmentis available; e.g., the location ofinstitutions or facilities that couldprovide treatment, the availability andcost of transportation to such places, theavailability of local communityresources that would provide freetreatment.In paragraph (i)(3), we explain that wewill not require a payee to show proofof treatment if we decide that thedisabling impairment(s) is not amenableto treatment. In paragraph (i)(4), weexplain that if the representative payeerefuses without good cause to provideevidence of treatment, we will, if it is inthe child’s best interests, remove thepayee and determine if another payeeshould be selected or if the child shouldreceive benefits directly. We furtherexplain that when we consider whethera representative payee had good cause,we will consider factors such as theacceptable reasons for failure to followprescribed treatment in § 416.930(c) andother factors similar to those describinggood cause for missing deadlines in§ 416.1411.Finally, in paragraph (i)(5) we explainthat the requirements of paragraph (i) donot apply to a child who is receiving SSIpayments directly. This is because thetreatment provision in Public Law 104–193 applies only to children who haverepresentative payees. However, wehave also included a reminder that thefailure-to-follow-prescribed-treatmentrules in § 416.930 continue to apply to

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6417children who do not have representativepayees.Other ChangesSections that have been changed onlyso that their language will conform tothe new definition of disability forchildren, or to provide references tonew or revised rules, include listingssections 103.00, 104.00, 112.00, and114.00, and §§ 416.901, 416.912,416.913, and 416.919a.Electronic VersionThe electronic file of this document isavailable on the Federal Bulletin Board(FBB) at 9:00 A.M. on the date ofpublication in the Federal Register. Todownload the file, modem dial (202)512–1387. The FBB instructions willexplain how to download the file andthe fee. This file is in WordPerfect andwill remain on the FBB during thecomment period.Regulatory ProceduresPursuant to section 702(a)(5) of theAct, 42 U.S.C. 902(a)(5), the SocialSecurity Administration follows theAdministrative Procedure Act (APA)rulemaking procedures specified in 5U.S.C. 553 in the development of itsregulations. The APA providesexceptions to its Notice of ProposedRulemaking (NPRM) procedures whenan agency finds that there is good causefor dispensing with such procedures onthe basis that they are impracticable,unnecessary, or contrary to the publicinterest. In the case of these interimfinal rules, we have determined thatunder 5 U.S.C. 553(b)(B), good causeexists for waiving the NPRMprocedures.Public Law 104–193 was signed intolaw on August 22, 1996. Sections 211and 212 of the law were effective uponenactment (or with respect to benefitsfor months beginning on or afterenactment) without regard to whetherregulations have been issued. Inaddition, section 215 requires theCommissioner to issue regulationsnecessary to carry out the amendmentsmade by sections 211 and 212, whichare the subject of these interim finalrules, within 3 months after the date ofenactment. Accordingly, to issue theserules as an NPRM would have delayedissuance of final rules until well past 3months after enactment.In light of the Congressional mandatethat we issue regulations needed tocarry out these statutory provisions asexpeditiously as possible (see H.R. Rep.No. 651, 104th Cong., 2d Sess. 1392(1996), reprinted in 1996 U.S. Code,Cong. and Ad. News 2183, 2451), webelieve good cause exists for waiver ofthe NPRM procedures under the APAsince issuance of proposed rules wouldbe impracticable and contrary toCongressional intent. In light of theshort statutory deadline in which toprescribe regulations under section 215of Public Law 104–193, we find that useof the NPRM process is impracticable.Moreover, some of the changes in theserules are technical ones to conform ourrules to the new definition of disabilityfor children. The technical changesmade by these rules are minor and donot represent discretionary policy.Accordingly, we find that prior noticeand comment are unnecessary withrespect to these rules. However, eventhough we are issuing these rules asinterim final regulations, we arerequesting public comments and willissue revised rules if necessary.Executive Order 12866These interim final rules reflect andimplement the disability provisions ofsections 211 and 212 of Public law 104–193. This is a major rule as defined insection 251 of Public Law 104–121, 5U.S.C. 804. The Office of Managementand Budget (OMB) has reviewed theseinterim final rules and determined thatthey meet the criteria for a significantregulatory action under Executive Order12866. Therefore, we prepared andsubmitted to OMB, separately fromthese interim final rules, an assessmentof the potential costs and benefits of thisregulatory action. This assessment isavailable for review by members of thepublic.The potential costs and benefits forthe policies reflected in these interimfinal rules follow:Program SavingsIt is estimated that due to the legislation there would be reduced program outlays resulting in the following savings(in millions of dollars) to the SSI program (over $4.7 billion total in a 6-year period):FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 Total¥$120 ¥$715 ¥$945 ¥$1,075 ¥$905 ¥$1,010 ¥$4,775This is the amount we expect to spend (in millions of dollars) on SSI childhood disability benefits:FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 Total$5,425 $5,285 $5,475 $6,300 $5,715 $6,505 $34,705Note: Annual numbers may not add to total due to rounding.It is also estimated that there will be reduced Medicaid program outlays (Federal share) resulting in the followingsavings (in millions of dollars) over a 6-year period:FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 Total¥10 ¥85 ¥110 ¥125 ¥125 ¥135 ¥590There will also be reduced Medicaid program outlays for States.Administrative Costs and SavingsThe administrative cost of conducting the medical redeterminations of the children who might be affected by thenew childhood disability standards is expected to be $185 million in FY 1997 and $130 million in FY 1998. Forthis regulation, the administrative cost of redetermining disability in SSI childhood recipients is assumed to be sameas the cost of a full medical CDR for these individuals, including the additional appellate costs.From FYs 1999–2002, the ongoing Federal workyear savings are from fewer recipients on the rolls, i.e., from thosechildren currently receiving benefits who will be terminated and from those children who will be denied under the

6418 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsstricter standards. There will be net savings of approximately $12 million annually beginning with FY99. These savingswill result from fewer income and resource redeterminations, representative payee actions, and maintenance of therolls activities. The ongoing State workyear costs are for additional hearings, as well as medical reviews from additionalreconsiderations, resulting from the stricter childhood disability standard.Estimated administrative costs ($ in millions, rounded to the nearest $5 million) and workyears (rounded to thenearest 50) are:FY1997 FY1998 FY1999 FY2000 FY2001 FY2002 Total............................................................................. $185 $130 ¥$10 ¥$10 ¥$10 ¥$10 $265WorkyearsFederal .................................................................... 900 650 ¥250 ¥250 ¥250 ¥250 550State ........................................................................ 1,200 1,250 150 150 150 150 3,050Total ................................................................. 2,100 1,900 ¥100 ¥100 ¥100 ¥100 3,550Note: Annual numbers may not add to total due to rounding.Reductions in SSI Recipients (in thousands):We expect benefit eligibility for a total of 135,000 of those children receiving benefits at date of enactment willbe terminated as a result of these changes in the law. The following figures show the estimated annual effect ofthe legislation on projected numbers of recipients of Federal SSI benefits:FY1997 FY1998 FY1999 FY2000 FY2001 FY2002Current recipients .................................................................................................. ¥10 ¥95 ¥110 ¥95 ¥80 ¥70New awards .......................................................................................................... ¥10 ¥35 ¥50 ¥70 ¥80 ¥90Total ............................................................................................................... ¥20 ¥130 ¥160 ¥165 ¥160 ¥160With the reductions in SSI recipients shown above, we estimate the average number of disabled children (in thousands)in payment status after implementation of these interim final rules will be:FY1997 FY1998 FY1999 FY2000 FY2001 FY20021,010 950 955 990 1,015 1,040Note: Annual numbers may not add to total due to rounding.Regulatory Flexibility ActWe certify that these interim finalrules will not have a significanteconomic impact on a substantialnumber of small entities since this ruleaffects only individuals. Therefore, aregulatory flexibility analysis asprovided in Public Law 96–354, theRegulatory Flexibility Act, as amendedby Public Law 104–121 is not required.Paperwork Reduction ActThese interim final rules contain anew information collection requirementin Part 416, section 416.924(g). Asrequired by 44 U.S.C. 3507, as amendedby section 2 of the Paperwork ReductionAct of 1995, we have requested underemergency procedures, and OMB hasapproved, under OMB #0960–0568, theinformation collection requirementscontained in section 416.924(g).(Catalog of Federal Domestic Assistance:Program Nos. 96.001 Social Security-Disability Insurance; 96.006 SupplementalSecurity Income.)List of Subjects20 CFR Part 404Administrative practice andprocedure, Blind, Disability benefits,Old-Age, Survivors, and DisabilityInsurance, Reporting and recordkeepingrequirements, Social Security.20 CFR Part 416Administrative practice andprocedure, Aged, Blind, Disabilitybenefits, Public assistance programs,Reporting and recordkeepingrequirements, Supplemental SecurityIncome (SSI).Dated: February 5, 1997.Shirley S. Chater,Commissioner of Social Security.For the reasons set out in thepreamble, 20 CFR chapter III isamended as follows:PART 404—FEDERAL OLD-AGE,SURVIVORS AND DISABILITYINSURANCE (1950– )Subpart P—[Amended]1. The authority citation for subpart Pof part 404 is revised to read as follows:Authority: Secs. 202, 205(a), (b), and (d)–(h), 216(i), 221(a) and (i), 222(c), 223, 225,and 702(a)(5) of the Social Security Act (42U.S.C. 402, 405(a), (b), and (d)–(h), 416(i),421(a) and (i), 422(c), 423, 425, and902(a)(5)); sec. 211(b), Pub. L. 104–193, 110Stat. 2105, 2189.Appendix 1 to Subpart P—[Amended]2. Part B of Appendix 1 (Listing ofImpairments) of subpart P to part 404 isamended by revising the third sentenceof the second undesignated paragraph of103.00A, the fourth undesignatedparagraph of 103.00A, the fourthsentence of the fifth undesignatedparagraph of 104.00A, the sixthundesignated paragraph of 104.00A, thelast sentence of the last undesignatedparagraph of 104.00C, the first threesentences of the eighth undesignatedparagraph of 112.00A, the thirdsentence of the first paragraph of

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6419112.00C, the first sentence of 112.00C2.introductory text 112.00C2.b.,112.00C2.c., the heading of 112.00C2.d.,112.00C4 and the undesignatedparagraph under it, and 112.02B2.c.introductory text to read as follows:Appendix 1 to Subpart P—Listing ofImpairments* * * * *Part B* * * * *103.00 Respiratory SystemA. * * ** * * * ** * * Even if a child does not showthat his or her impairment meets thecriteria of these listings, the child mayhave an impairment(s) that is medicallyor functionally equivalent in severity toone of the listed impairments. * * ** * * * *It must be remembered that theselistings are only examples of commonrespiratory disorders that are severeenough to find a child disabled. Whena child has a medically determinableimpairment that is not listed, animpairment that does not meet therequirements of a listing, or acombination of impairments no one ofwhich meets the requirements of alisting, we will make a determinationwhether the child’s impairment(s) ismedically or functionally equivalent inseverity to the criteria of a listing. (See§§ 404.1526, 416.926, and 416.926a.)* * * * *104.00 Cardiovascular SystemA. Introduction* * * * ** * * Even though a child who doesnot receive treatment may not be able toshow an impairment that meets thecriteria of these listings, the child mayhave an impairment(s) that is medicallyor functionally equivalent in severity toone of the listed impairments.Indeed, it must be remembered thatthese listings are only examples ofcommon cardiovascular disorders thatare severe enough to find a childdisabled. When a child has a medicallydeterminable impairment that is notlisted, an impairment that does not meetthe requirements of a listing, or acombination of impairments no one ofwhich meets the requirements of alisting, we will make a determinationwhether the child’s impairment(s) ismedically or functionally equivalent inseverity to the criteria of a listing. (See§§ 404.1526, 416.926, and 416.926a.)* * * * *C. Treatment and Relationship Status* * * * ** * * (See § 404.1594 or § 416.994a,as appropriate, for our rules on medicalimprovement and whether anindividual is no longer disabled.)112.00 Mental DisordersA. * * ** * * * *It must be remembered that theselistings are only examples of commonmental disorders that are severe enoughto find a child disabled. When a childhas a medically determinableimpairment that is not listed, animpairment that does not meet therequirements of a listing, or acombination of impairments no one ofwhich meets the requirements of alisting, we will make a determinationwhether the child’s impairment(s) ismedically or functionally equivalent inseverity to the criteria of a listing. (See§§ 404.1526, 416.926, and 416.926a.)* * ** * * * *C. * * * The functional areas that weconsider are: Motor function; cognitive/communicative function; socialfunction; personal function; andconcentration, persistence, or pace.* * *1. * * *2. Preschool children (age 3 toattainment of age 6). For the age groupsincluding preschool children throughadolescence, the functional areas usedto measure severity are: (a) Cognitive/communicative function, (b) socialfunction, (c) personal function, and (d)deficiencies of concentration,persistence, or pace resulting infrequent failure to complete tasks in atimely manner. * * *a. * * *b. Social function. Social functioningrefers to a child’s capacity to form andmaintain relationships with parents,other adults, and peers. Socialfunctioning includes the ability to getalong with others (e.g., family members,neighborhood friends, classmates,teachers). Impaired social functioningmay be caused by inappropriateexternalized actions (e.g., running away,physical aggression—but not selfinjuriousactions, which are evaluatedin the personal area of functioning), orinappropriate internalized actions (e.g.,social isolation, avoidance ofinterpersonal activities, mutism). Itsseverity must be documented in termsof intensity, frequency, and duration,and shown to be beyond what might bereasonably expected for age. Strength insocial functioning may be documentedby such things as the child’s ability torespond to and initiate social interactionwith others, to sustain relationships,and to participate in group activities.Cooperative behaviors, consideration forothers, awareness of others’ feelings,and social maturity, appropriate to achild’s age, also need to be considered.Social functioning in play and schoolmay involve interactions with adults,including responding appropriately topersons in authority (e.g., teachers,coaches) or cooperative behaviorsinvolving other children. Socialfunctioning is observed not only athome but also in preschool programs.c. Personal function. Personalfunctioning in preschool childrenpertains to self-care; i.e., personal needs,health, and safety (feeding, dressing,toileting, bathing; maintaining personalhygiene, proper nutrition, sleep, healthhabits; adhering to medication ortherapy regimens; following safetyprecautions). Development of self-careskills is measured in terms of the child’sincreasing ability to help himself/herselfand to cooperate with others in takingcare of these needs. Impaired ability inthis area is manifested by failure todevelop such skills, failure to use them,or self-injurious actions. This functionmay be documented by a standardizedtest of adaptive behavior or by a carefuldescription of the full range of self-careactivities. These activities are oftenobserved not only at home but also inpreschool programs.d. Concentration, persistence, or pace.* * ** * * * *4. Adolescents (age 12 to attainmentof age 18). Functional criteria parallel tothose for primary school children(cognitive/communicative; social;personal; and concentration,persistence, or pace) are the measure ofseverity for this age group. Testinginstruments appropriate to adolescentsshould be used where indicated.Comparable findings of disruption ofsocial function must consider thecapacity to form appropriate, stable, andlasting relationships. If information isavailable about cooperative workingrelationships in school or at part-time orfull-time work, or about the ability towork as a member of a group, it shouldbe considered when assessing thechild’s social functioning. Markedlyimpoverished social contact, isolation,withdrawal, and inappropriate orbizarre behavior under the stress ofsocializing with others also constitutecomparable findings. (Note that selfinjuriousactions are evaluated in thepersonal area of functioning.)a. Personal functioning in adolescentspertains to self-care. It is measured in

6420 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsthe same terms as for younger children,the focus, however, being on theadolescent’s ability to take care of his orher own personal needs, health, andsafety without assistance. Impairedability in this area is manifested byfailure to take care of these needs or byself-injurious actions. This function maybe documented by a standardized test ofadaptive behavior or by carefuldescriptions of the full range of self-careactivities.b. In adolescents, the intent of thefunctional criterion described inparagraph B2d is the same as in primaryschool children, However, otherevidence of this functional impairmentmay also be available, such as fromevidence of the child’s performance inwok or work-like settings.* * * * *112.01 Category of Impairments,Mental112.02 Organic Mental Disorders:* * * * *B. * * ** * * * *2. * * *c. Marked impairment in ageappropriatepersonal functioning,documented by history and medicalfindings (including consideration ofinformation from parents or otherindividuals who have knowledge of thechild, when such information is neededand available) and including, ifnecessary, appropriate standardizedtests; or* * * * *3. Part B of Appendix 1 (Listing ofImpairments) of subpart P to part 404 isamended by revising 114.00D6 andremoving the last sentence of the secondundesignated paragraph under114.00D6.114.00 Immune System* * * * *D. * * *6. Evaluation of HIV infection inchildren. The criteria in 114.08 do notdescribe the full spectrum of diseases orconditions manifested by children withHIV infection. As in any case,consideration must be given to whethera child’s impairment(s) meets,medically equals, or functionally equalsthe severity of any other listing inappendix 1 of subpart P; e.g., aneoplastic disorder listed in 113.00ff.(See §§ 404.1526, 416.926, and416.926a.) Although 114.08 includescross-references to other listings for themore common manifestations of HIVinfection, additional listings may alsoapply.* * * * *PART 416—SUPPLEMENTALSECURITY INCOME FOR THE AGED,BLIND, AND DISABLEDSubpart F—[Amended]4. The authority citation for subpart Fof part 416 continues to read as follows:Authority: Secs. 702(a)(5), 1631(a)(2) and(d)(1) of the Social Security Act (42 U.S.C.902(a)(5) and 1383(a)(2) and (d)(1)).5. Section 416.635 is amended byrevising paragraphs (c) and (d) andadding paragraph (e) to read as follows:§ 416.635 Responsibilities of arepresentative payee.* * * * *(c) Submit to us, upon our request, awritten report accounting for thebenefits received;(d) Notify us of any change in his orher circumstances that would affectperformance of the payeeresponsibilities; and(e) In cases in which the beneficiaryis an individual under age 18 (includingcases in which the beneficiary is anindividual whose low birth weight is acontributing factor material to ourdetermination that the individual isdisabled), ensure that the beneficiary isand has been receiving treatment to theextent considered medically necessaryand available for the condition that wasthe basis for providing benefits (See§ 416.994a(i).)Subpart I—[Amended]6. The authority citation for subpart Iof part 416 continues to read as follows:Authority: Secs. 702(a)(5), 1611, 1614,1619, 1631(a), (c), and (d)(1), and 1633 of theSocial Security Act (42 U.S.C. 902(a)(5),1382, 1382c, 1382h, 1383(a), (c), and (d)(1),and 1383b); secs. 4(c) and 5, 6(c)–(e), 14(a)and 15, Pub. L. 98–460, 98 Stat. 1794, 1801,1802, and 1808 (42 U.S.C. 421 note, 423 note,1382h note).7. Section 416.901 is amended byrevising paragraphs (e), (f)(2), and (f)(6)as follows:§ 416.901 Scope of subpart.* * * * *(e) Our general rules on evaluatingdisability for children filing newapplications are stated in § 416.924.(f) * * ** * * * *(2) What we mean by the termsmedical equivalence and functionalequivalence and how we determinemedical equivalence (and functionalequivalence if you are a child);* * * * *(6) The effect on your benefits if youfail to follow treatment that is expectedto restore your ability to work or, if youare a child, to reduce your functionallimitations to the point that they are nolonger marked and severe, and how weapply the rule in § 416.930.* * * * *7. Section 416.902 is amended byadding four new definitions between thedefinitions for ‘‘Child’’ and ‘‘Medicalsources’’ to read as follows:§ 416.902 General definitions and termsfor this subpart.* * * * *Commissioner means theCommissioner of Social Security.Disability redetermination means aredetermination of your eligibility basedon disability using the rules for newapplicants appropriate to your age,except the rules pertaining toperformance of substantial gainfulactivity. For individuals who areworking and for whom a disabilityredetermination is required, we willapply the rules in §§ 416.260 ff. Inconducting a disability redetermination,we will not use the rules fordetermining whether disabilitycontinues set forth in § 416.994 or§ 416.994a. (See § 416.987.)Impairment(s) means a medicallydeterminable physical or mentalimpairment or a combination ofmedically determinable physical ormental impairments.Marked and severe functionallimitations, when used as a phrase,means the standard of disability in theSocial Security Act for childrenclaiming SSI benefits based on disabilityand is a level of severity that meets ormedically or functionally equals theseverity of a listing in the Listing ofImpairments in appendix 1 of subpart Pof part 404 (the Listing). See §§ 416.906,416.924, and 416.926a. The words‘‘marked’’ and ‘‘severe’’ are also separateterms used throughout this subpart todescribe measures of functionallimitations; the term ‘‘marked’’ is alsoused in the listings. See §§ 416.924 and416.926a. The meaning of the words‘‘marked’’ and ‘‘severe’’ when used aspart of the term Marked and severefunctional limitations is not the same asthe meaning of the separate terms‘‘marked’’ and ‘‘severe’’ used elsewherein 20 CFR 404 and 416. (See§§ 416.924(c) and 416.926a(c).)* * * * *8. Section 416.906 is revised to readas follows:

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6421§ 416.906 Basic definition of disability forchildren.If you are under age 18, we willconsider you disabled if you have amedically determinable physical ormental impairment or combination ofimpairments that causes marked andsevere functional limitations, and thatcan be expected to cause death or thathas lasted or can be expected to last fora continuous period of not less than 12months. Notwithstanding the precedingsentence, if you file a new applicationfor benefits and you are engaging insubstantial gainful activity, we will notconsider you disabled. We discuss ourrules for determining disability inchildren who file new applications in§§ 416.924 through 416.924c and§§ 416.925 through 416.926a.9. Section 416.911 is revised to readas follows:§ 416.911 Definition of disablingimpairment.(a) If you are an adult:(1) A disabling impairment is animpairment (or combination ofimpairments) which, of itself, is sosevere that it meets or equals a set ofcriteria in the Listing of Impairments inappendix 1 of subpart P of part 404 ofthis chapter or which, when consideredwith your age, education and workexperience, would result in a findingthat you are disabled under § 416.994,unless the disability redeterminationrules in § 416.987(b) apply to you.(2) If the disability redeterminationrules in § 416.987 apply to you, adisabling impairment is an impairmentor combination of impairments thatmeets the requirements in §§ 416.920(c)through (f).(b) If you are a child, a disablingimpairment is an impairment (orcombination of impairments) thatcauses marked and severe functionallimitations. This means that theimpairment or combination ofimpairments:(1) Must meet or medically orfunctionally equal the requirements of alisting in the Listing of Impairments inappendix 1 of subpart P of part 404 ofthis chapter, or(2) Would result in a finding that youare disabled under § 416.994a.(c) In determining whether you havea disabling impairment, earnings are notconsidered.10. Section 416.912 is amended byrevising paragraphs (a) and (c)(6) to readas follows:§ 416.912 Evidence of your impairment.(a) General. In general, you have toprove to us that you are blind ordisabled. This means that you mustfurnish medical and other evidence thatwe can use to reach conclusions aboutyour medical impairment(s). If materialto the determination whether you areblind or disabled, medical and otherevidence must be furnished about theeffects of your impairment(s) on yourability to work, or if you are a child, onyour functioning, on a sustained basis.We will consider only impairment(s)you say you have or about which wereceive evidence.* * * * *(c) * * *(6) Any other factors showing howyour impairment(s) affects your abilityto work, or, if you are a child, yourfunctioning. In §§ 416.960 through416.969, we discuss in more detail theevidence we need when we considervocational factors.* * * * *11. Section 416.913 is amended byrevising paragraph (c)(3) to read asfollows:§ 416.913 Medical evidence of yourimpairment.* * * * *(c) * * *(3) If you are a child, the medicalsource’s opinion about your functionallimitations in learning, motorfunctioning, performing self-careactivities, communicating, socializing,and completing tasks (and, if you are anewborn or young infant from birth toage 1, responsiveness to stimuli).* * * * *12. Section 416.919a is amended byrevising paragraph (b)(5) to read asfollows:§ 416.919a When we will purchase aconsultative examination and how we willuse it.* * * * *(b) * * *(5) There is an indication of a changein your condition that is likely to affectyour ability to work, or, if you are achild, your functioning, but the currentseverity of your impairment is notestablished.13. Section 416.919n is amended byrevising the fifth sentence of paragraph(b) and paragraph (c)(6) to read asfollows:§ 416.919n Informing the examiningphysician or psychologist of examinationscheduling, report content, and signaturerequirements.* * * * *(b) * * * The medical report must becomplete enough to help us determinethe nature, severity, and duration of theimpairment, and your residualfunctional capacity (if you are an adult)or your functioning (if you are a child).* * *(c) * * *(6) A statement about what you canstill d0 despite your impairment(s),unless the claim is based on statutoryblindness. If you are an adult, thisstatement should describe the opinionof the consultative physician orpsychologist about your ability, despiteyour impairment(s), to do work-relatedactivities such as sitting, standing,walking, lifting, carrying, handlingobjects, hearing, speaking, and traveling;and, in cases of mental impairment(s),the opinion of the consultativephysician or psychologist about yourability to understand, to carry out andremember instructions, and to respondappropriately to supervision, coworkersand work pressures in a work setting. Ifyou are a child, this statement shoulddescribe the opinion of the consultativephysician or psychologist about yourfunctional limitations in learning, motorfunctioning, performing self-careactivities, communicating, socializing,and completing tasks (and, if you are anewborn or young infant from birth toage 1, responsiveness to stimuli); and* * * * *14. Section 416.924 is amended byremoving paragraphs (a) and (f),redesignating paragraphs (b) through (e)as (a) through (d), adding newparagraphs (e) and (g), redesignatingprior paragraph (g) as paragraph (f), andby revising newly designatedparagraphs (a), (c), and (d) to read asfollows:§ 416.924 How we determine disability forchildren.(a) Steps in evaluating disability. Weconsider all relevant evidence in yourcase record when we make adetermination or decision whether youare disabled. If you allege more than oneimpairment, we will evaluate all theimpairments for which we haveevidence. Thus, we will consider thecombined effects of all yourimpairments upon your overall healthand functioning. We will also evaluateany limitations in your functioning thatresult from your symptoms, includingpain (see § 416.929). When you file anew application for benefits, we use theevaluation process set forth in (b)through (d) of this section. We follow aset order to determine whether you aredisabled. If you are doing substantialgainful activity, we will determine thatyou are not disabled and not reviewyour claim further. If you are not doingsubstantial gainful activity, we willconsider your physical or mentalimpairment(s) first to see if you have animpairment or combination of

6422 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsimpairments that is severe. If yourimpairment(s) is not severe, we willdetermine that you are not disabled andnot review your claim further. If yourimpairment(s) is severe, we will reviewyour claim further to see if you have animpairment(s) that meets, medicallyequals, or functionally equals in severityany impairment that is listed inappendix 1 of subpart P of part 404 ofthis chapter. If you have such animpairment(s), and it meets the durationrequirement, we will find that you aredisabled. If you do not have such animpairment(s), or if it does not meet theduration requirement, we will find thatyou are not disabled.* * * * *(c) You must have a severeimpairment(s). If your impairment(s) isa slight abnormality or a combination ofslight abnormalities that causes no morethan minimal functional limitations, wewill find that you do not have a severeimpairment(s) and are, therefore, notdisabled.(d) Your impairment(s) must meet,medically equal, or functionally equalin severity a listed impairment inappendix 1. An impairment(s) causesmarked and severe functionallimitations if it meets or medicallyequals in severity the set of criteria foran impairment listed in the Listing ofImpairments in appendix 1 of subpart Pof part 404 of this chapter, or if it isfunctionally equal in severity to a listedimpairment.(1) Therefore, if you have animpairment(s) that is listed in appendix1, or is medically or functionally equalin severity to a listed impairment, andthat meets the duration requirement, wewill find you disabled.(2) If your impairment(s) does notmeet the duration requirement, or doesnot meet, medically equal, orfunctionally equal in severity a listedimpairment, we will find that you arenot disabled.(3) We explain our rules for decidingwhether an impairment(s) meets alisting in § 416.925. Our rules for howwe decide whether an impairment(s)medically equals a listing are set forthin § 416.926. Our rules for decidingwhether an impairment(s) functionallyequals a listing are set forth in§ 416.926a.(e) If you attain age 18 after you fileyour disability application but before wemake a determination or decision. Forthe period during which you are underage 18, we will evaluate whether youare disabled using the rules in thissection. For the period starting with theday you attain age 18, we will evaluatewhether you are disabled using thedisability rules we use for adults filingnew claims, in § 416.920.* * * * *(g) How we will explain our findings.When we make an initial orreconsidered determination whetheryou are disabled under this section orwhether your disability continues under§ 416.994a (except when a disabilityhearing officer makes thereconsideration determination), we willcomplete a standard form, Form SSA–538, Childhood Disability EvaluationForm. The form outlines the steps of thesequential evaluation process forindividuals who have not attained age18. In these cases, the State agencymedical or psychological consultant (see§ 416.1016) or other designee of theCommissioner has overall responsibilityfor the content of the form and mustsign the form to attest that it is completeand that he or she is responsible for itscontent, including the findings of factand any discussion of supportingevidence. Disability hearing officers,administrative law judges, and theadministrative appeals judges on theAppeals Council (when the AppealsCouncil makes a decision) will notcomplete the form but will indicatetheir findings at each step of thesequential evaluation process in theirdeterminations or decisions.15. Section 416.924a is amended byremoving paragraph (a)(4), redesignatingparagraph (a)(5) as paragraph (a)(4),removing paragraph (b), redesignatingparagraphs (c) and (d) as paragraphs (b)and (c), revising the third sentence ofparagraph (a) introductory text, revisingparagraph (a)(2), revising the firstsentence of paragraph (a)(3), revising thefirst sentence of redesignated paragraph(b) introductory text, and revisingredesignated paragraphs (c)(1) and (c)(4)to read as follows:§ 416.924a Age as a factor of evaluation inchildhood disability.(a) * * * However, your age is alwaysan important factor when we decidewhether your impairment(s) is severe(see § 416.924(c)). * * *(2) The Listing of Impairments inappendix 1 of subpart P of part 404 ofthis chapter contains examples ofimpairments that we consider of suchsignificance that they cause marked andsevere functional limitations. Therefore,we will usually decide whether yourimpairment meets a listing withoutgiving special consideration to your age.However, several listings are dividedinto age categories. If the listingappropriate for evaluating yourimpairment includes such agecategories, we will evaluate yourimpairment under the criteria for yourage when we decide whether yourimpairment meets that listing.(3) When we compare an unlistedimpairment with a listed impairment todetermine whether you have animpairment(s) that medically orfunctionally equals the severity of alisting, the way in which we consideryour age will depend on the listing weuse for comparison. * * *(b) Correcting chronological age ofpremature infants. We generally usechronological age (that is, a child’s agebased on birth date) when we decidewhether, or the extent to which, aphysical or mental impairment orcombination of impairments causesfunctional limitations. * * ** * * * *(c) * * *(1) We recognize that how a particularchild adapts to an impairment(s)depends on many factors (e.g., thenature and severity of theimpairment(s), the child’s temperament,the quality of adult intervention, andthe child’s age at onset of theimpairment(s)). By adapting to animpairment, we mean the child’s abilityto learn those skills, habits, or behaviorsthat allow the child to compensate forthe impairment(s) and, thus, to functionas well as possible despite theimpairment(s). Therefore, our disabilitydetermination will consider how youare adapting to your impairment(s) andthe extent to which you are able tofunction as set forth in this section and§§ 416.924 and 416.924c.* * * * *(4) As children approach adulthood—that is, by about age 16—the functionalabilities, skills, and behaviors that areappropriate for them are those that arealso appropriate for adults. Olderadolescents generally also share withthe youngest adults the same abilities toadapt to work-related activities despitea severe impairment(s). By the age ofadolescence, children have developedbasic physical skills and behaviors, sothat impairments occurring inadolescence may not have thecumulative interactive effects onfunctioning that impairments occurringin infancy and early childhood do.(However, as set forth in paragraph(c)(1) of this section, we also recognizethat adolescents may experience avariety of impairments with differenteffects on their functioning. Forinstance, a child born with adegenerative disorder will experience aworsening of its effects as he or shegrows older so that functioning may bemore limited for the older child than itis for a younger child with the sameillness or disorder.)

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations642316. Section 416.924b is amended byrevising paragraph (a), the secondsentences in paragraphs (b)(2) and(b)(3), and paragraph (b)(4), and byremoving paragraph (b)(5) to read asfollows:§ 416.924b Functioning in children.(a) General. When we evaluatewhether your impairment(s) is severeand, if so, whether it causes marked andsevere functional limitations, we willconsider all of your mental and physicallimitations that result from yourimpairment(s).(b) * * *(2) * * * Ordinarily, failures toachieve developmental milestones aremost important as indicators ofimpaired functioning from birth untilthe attainment of age 3, although theymay be used to evaluate older children,especially preschool children.(3) * * * Ordinarily, activities ofdaily living are most important asindicators of functional limitations inchildren aged 3 to attainment of age 16,although they may be used to evaluatechildren younger than age 3.(4) Work-related activities. The termwork-related activities refers to thosephysical and mental activities that areassociated with, or related to, activitiesin the workplace, as manifested in aperson’s activities in contexts such asschool, work, vocational programs, andorganized activities. Ordinarily,inability to perform work-relatedactivities is most important as anindicator of functional limitations inadolescents aged 16 to attainment of age18.17. Section 416.924c is revised toread:§ 416.924c Other factors we will consider.(a) General. When we evaluatewhether your impairment(s) is severe,and if so, whether it causes marked andsevere functional limitations, we willconsider all factors that are relevant tothe evaluation of the effects of yourimpairment(s) on your functioning, suchas the effects of your medications, thesetting in which you live, your need forassistive devices, and your functioningin school. Therefore, when we assessyour functional limitations, we willconsider all evidence from medical andnonmedical sources—such as yourparents, teachers, and other people whoknow you—that can help us tounderstand how your impairment(s)affects your functioning. Some of thefactors we will consider include, but arenot limited to, the factors in paragraphs(b) through (g) of this section.(b) Chronic illness. If you have achronic impairment(s) that ischaracterized by episodes ofexacerbation (worsening) or remission(improvement), we will consider thefrequency and severity of your episodesof exacerbation and your periods ofremission as factors in ourdetermination whether you have asevere impairment(s) and, if so, whetherit meets or medically or functionallyequals in severity any listing, and istherefore disabling. For instance, if yourequire repeated hospitalizations, orfrequent outpatient care with supportivetherapy for a chronic impairment(s), wewill consider this need for treatment inour determination. When we determinewhether you are disabled, we willconsider how the level of treatment youneed for your chronic illness affectsyour functioning. We will considerwhether the length and frequency ofyour hospitalizations or episodes ofexacerbation significantly interfere withyour functioning on a longitudinalbasis, or whether the frequency of youroutpatient care affects your functioning.(c) Effects of medication. We willconsider the effects of medication onyour symptoms, signs, and laboratoryfindings, including your functioning.Although medications may control themost obvious manifestations of yourcondition(s), they may or may not affectthe functional limitations imposed byyour impairment(s). If your symptomsor signs are reduced by medications, wewill consider whether any functionallimitations which may neverthelesspersist are marked and severe, even ifthere is apparent improvement from themedications. We will also considerwhether your medications create anyside effects which cause or contribute toyour functional limitations.(d) Effects of structured or highlysupportive settings. Children withserious impairments may spend muchof their time in structured or highlysupportive settings. A structured orhighly supportive setting may be yourown home, in which family membersmake extraordinary adjustments toaccommodate your impairment(s); oryour classroom at school, whether aregular class in which you areaccommodated or a special classroom;or a residential facility or school whereyou live for a period of time. Childrenwith chronic impairments alsocommonly have their lives structured insuch a way as to minimize stress andreduce their symptoms or signs ofimpairment; others may continue tohave persistent pain, fatigue, decreasedenergy, or other symptoms or signs,though at a lesser level of severity. Suchchildren may be more impaired in theiroverall functioning than their symptomsand signs would indicate. Therefore, ifyour symptoms or signs are controlledor reduced by the environment in whichyou live, we will consider yourfunctioning outside of this highlystructured setting.(e) Adaptations. We will consider thenature and extent of any otheradaptations that are made for you inorder to enable you to function. Suchadaptations may include assistivedevices, appliances, or technology.Some adaptations may enable you tofunction normally, or almost normally(e.g., eyeglasses, hearing aids). Othersmay increase your functioning, eventhough you may still have functionallimitations (e.g., ankle-foot orthoses,hand or foot splints, and speciallyadapted or custom-made tools, utensils,or devices for self-care activities such asbathing, feeding, toileting, anddressing). When we evaluate youroverall functioning with an adaptation,we will consider the degree to whichthe adaptation enables you to functionand any functional limitations thatnevertheless persist.(f) Time spent in therapy. You mayneed frequent and ongoing therapy fromone or more kinds of health careprofessionals in order to maintain orimprove your functional status. Therapymay include occupational, physical, orspeech and language therapy, specialnursing services, psychotherapy, orpsychosocial counseling. Frequenttherapy, although intended to improveyour functioning in some ways, mayalso interfere with your functioning inother ways. If you receive frequenttherapy at school during a normalschool day, it may or may not interferesignificantly with your functioning. Ifyou must frequently interrupt youractivities at school or at home fortherapy, these interruptions mayinterfere with your functioning. We willconsider the frequency of any therapythat you must have, how long you haveneeded the therapy or will need thetherapy, and whether it interferes withyour functioning.(g) School attendance. (1) Schoolrecords and information from people atschool who know you or who haveexamined you, such as teachers andschool psychologists, psychiatrists, ortherapists, may be important sources ofinformation about your impairment(s)and its effect on your functioning. If youattend school, we will consider thisevidence when it is relevant andavailable to us.(2) The fact that you are able to attendschool will not, in itself, be anindication that you are not disabled. Wewill consider the circumstances of yourschool attendance, such as yourfunctioning in a regular classroom

6424 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationssetting. Likewise, the fact that you arein a special education classroom setting,or that you are not in such a setting, willnot in itself establish your actuallimitations or abilities. We will considerthe fact of such placement or lack ofplacement in the context of theremainder of the evidence in your caserecord.(3) However, if you are unable toattend school on a regular basis becauseof your impairment(s), we will considerthis when we determine whether youare disabled.(h) Treatment and intervention, ingeneral. With adequate treatment orintervention, some children not onlyhave their symptoms and signs reduced,but also maintain, return to or achievea level of functioning that is notdisabling. Treatment or interventionmay prevent, eliminate, or reducefunctional limitations; if suchlimitations were disabling in theabsence of treatment or intervention,treatment or intervention may eliminatethem or reduce them so that they are notdisabling. We will, therefore, evaluatethe effects of your treatment orintervention to determine the actualoutcome of the treatment or interventionin your particular case.18. Section 416.924d is removed.19. Section 416.924e is removed.20. Section 416.925 is amended byrevising paragraph (a) and adding fivesentences to the end of paragraph (b)(2)to read as follows:§ 416.925 Listing of Impairments inappendix 1 of subpart P of part 404 of thischapter.(a) Purpose of the Listing ofImpairments. The Listing ofImpairments describes, for each of themajor body systems, impairments thatare considered severe enough to preventan adult from doing any gainful activityor, for a child, that causes marked andsevere functional limitations. Most ofthe listed impairments are permanent orexpected to result in death, or a specificstatement of duration is made. For allothers, the evidence must show that theimpairment has lasted or is expected tolast for a continuous period of at least12 months.(b) * * *(2) * * * Although the severitycriteria in Part B of the Listing ofImpairments are expressed in differentways for different impairments, thelevel of severity for impairments listedin part B is intended to be the same asthat expressed in the functional severitycriteria of the childhood mentaldisorders listings. (See listings 112.01 ff.of appendix 1 of subpart P of part 404of this chapter.) Therefore, in general, achild’s impairment(s) is of ‘‘listing-levelseverity’’ if it causes marked limitationsin two broad areas of functioning orextreme limitations in one such area.(See § 416.926a for definition of theterms marked and extreme as they applyto children.) However, when we decidewhether your impairment(s) meets therequirements for any listed impairment,we will decide that your impairment isof ‘‘listing-level severity’’ even if it doesnot result in marked limitations in twobroad areas of functioning, or extremelimitations in one such area, if thelisting that we apply does not requiresuch limitations to establish that animpairment(s) is disabling.* * * * *21. Section 416.926 is amended byrevising the section heading, paragraph(a), the last sentence of paragraph (b),and the first sentence of paragraph (c),and by adding paragraph (d) to read asfollows:§ 416.926 Medical equivalence for adultsand children.(a) How medical equivalence isdetermined. We will decide that yourimpairment(s) is medically equivalent toa listed impairment in appendix 1 ofsubpart P of part 404 of this chapter ifthe medical findings are at least equalin severity and duration to the listedfindings. We will compare thesymptoms, signs, and laboratoryfindings about your impairment(s), asshown in the medical evidence we haveabout your claim, with thecorresponding medical criteria shownfor any listed impairment. When wemake a finding regarding medicalequivalence, we will consider allrelevant evidence in your case record.Medical equivalence can be found intwo ways:(1) If you have an impairment that isdescribed in the Listing of Impairmentsin appendix 1 of subpart P of part 404of this chapter, but:(i) You do not exhibit one or more ofthe medical findings specified in theparticular listing, or(ii) You exhibit all of the medicalfindings, but one or more of the findingsis not as severe as specified in thelisting, we will nevertheless find thatyour impairment is medicallyequivalent to that listing if you haveother medical findings related to yourimpairment that are at least of equalmedical significance.(2) If you have an impairment that isnot described in the Listing ofImpairments in appendix 1, or you havea combination of impairments, no one ofwhich meets or is medically equivalentto a listing, we will compare yourmedical findings with those for closelyanalogous listed impairments. If themedical findings related to yourimpairment(s) are at least of equalmedical significance to those of a listedimpairment, we will find that yourimpairment(s) is medically equivalent tothe analogous listing.(b) * * * We will also consider themedical opinion given by one or moremedical or psychological consultantsdesignated by the Commissioner indeciding medical equivalence. (See§ 416.1016.)(c) Who is a designated medical orpsychological consultant. A medical orpsychological consultant designated bythe Commissioner includes any medicalor psychological consultant employedor engaged to make medical judgmentsby the Social Security Administration,the Railroad Retirement Board, or aState agency authorized to makedisability determinations. * * *(d) Responsibility for determiningmedical equivalence. In cases where theState agency or other designee of theCommissioner makes the initial orreconsideration disabilitydetermination, a State agency medicalor psychological consultant or otherdesignee of the Commissioner (see§ 416.1016) has the overallresponsibility for determining medicalequivalence. For cases in the disabilityhearing process or otherwise decided bya disability hearing officer, theresponsibility for determining medicalequivalence rests with either thedisability hearing officer or, if thedisability hearing officer’sreconsideration determination ischanged under § 416.1418, with theAssociate Commissioner for Disabilityor his or her delegate. For cases at theAdministrative Law Judge or AppealsCouncil level, the responsibility fordeciding medical equivalence rests withthe Administrative Law Judge orAppeals Council.22. Section 416.926a is revised to readas follows:§ 416.926a Functional equivalence forchildren(a) General. If your impairment orcombination of impairments does notmeet, or is not medically equivalent inseverity to, any listed impairment inappendix 1 of subpart P of part 404 ofthis chapter, we will assess allfunctional limitations caused by yourimpairment(s), i.e., what you cannot dobecause of your impairment(s), todetermine if your impairment(s) isfunctionally equivalent in severity toany listed impairment. While allpossible impairments are not addressedwithin the Listing of Impairments,within the listed impairments are all the

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6425physical and mental functionallimitations, i.e., what a child cannot doas a result of an impairment, thatproduce marked and severe functionallimitations. If the functionallimitation(s) caused by yourimpairment(s) is the same as thedisabling functional limitation(s) causedby a listed impairment, we will find thatyour impairment(s) is equivalent inseverity to that listed impairment, evenif your impairment(s) is not medicallyrelated to the listed impairment. Whenwe make a determination or decisionusing this rule, the primary focus willbe on whether your functionallimitations are disabling, as long asthere is a direct, medically determinablecause for these limitations. As with anydisabling impairment, the durationrequirement must also be met (see§§ 416.909 and 416.924(a)).(b) How we determine functionalequivalence. We will compare anyfunctional limitations resulting fromyour impairment(s) with the disablingfunctional limitations of any listedimpairment in part A or part B of theListing that includes the samefunctional limitations. The listing weuse for comparison need not bemedically related to your impairment(s).In paragraphs (b)(1) through (b)(4) ofthis section we explain the methods wemay use to decide that yourimpairment(s) is functionally equivalentin severity to a listing. There is no setorder in which we must consider thesemethods and we may not consider themall if we find that your impairment(s) isfunctionally equivalent in severity to alisted impairment. We will use anymethod that is appropriate to, or bestdescribes, your impairment(s) andfunctional limitations. However, we willconsider all of the methods before wedetermine that your impairment(s) isnot functionally equivalent in severityto any listed impairment. At the initialand reconsideration levels (except whena disability hearing officer makes thereconsideration determination), we willalso complete a standard form, FormSSA–538, Childhood DisabilityEvaluation Form, to show how wedetermined whether your impairment(s)is functionally equivalent in severity toa listed impairment. (See § 416.924(g).)(1) Limitation of specific functions.We may find that your impairment(s) isfunctionally equivalent in severity to alisted impairment because of extremelimitation of one specific function, suchas walking or talking. (See paragraph (c)of this section for an explanation of theterm ‘‘extreme.’’) Some listings alsoinclude criteria requiring limitation ofmore than one specific function, such aslimitations in walking and talking; eachlimitation in itself is not enough toshow disability, but the combination oflimitations establishes marked andsevere functional limitations. If youhave a limitation of a combination ofspecific functions that are the same asthose in such a listed impairment, wewill find that your impairment(s) isfunctionally equivalent in severity tothat listing.(2) Broad areas of development orfunctioning. Instead of looking atlimitation of specific functions, we mayevaluate the effects of yourimpairment(s) in broad areas ofdevelopment or functioning, such associal functioning, motor functioning, orpersonal functioning (i.e., self-care) anddetermine if your functional limitationsare equivalent in severity to thedisabling functional limitations inlisting 112.12 or listing 112.02. If youhave extreme limitations in one area offunctioning or marked limitation in twoareas of functioning, we will find thatyour impairment(s) is functionallyequivalent in severity to a listedimpairment. We explain the broad areasof development or functioning weconsider and what the terms ‘‘extreme’’and ‘‘marked’’ mean in paragraph (c) ofthis section.(3) Episodic impairments. If you havea chronic impairment(s) that ischaracterized by frequent illnesses orattacks, or be exacerbations andremissions, we may evaluate yourfunctional limitations using themethods in paragraphs (b)(1) and (b)(2)of this section. However, yourfunctional limitations may vary and wemay not be able to use the methods inparagraphs (b)(1) and (b)(2) of thissection. Instead, we may compare yourfunctional limitation(s) to those in anylisting for a chronic impairment withsimilar episodic criteria to determine ifyour impairment(s) has such a seriousimpact on your functioning over timethat it is functionally equivalent inseverity to one of those listings.Limitations that are characteristic ofepisodic impairments are notnecessarily related to a single, specificfunction. Episodes of disablingfunctional limitations may occur withspecified frequency despite treatment. Ifyour episodic impairment(s) producesdisabling functional limitations that arethe same as the disabling functionallimitations of a listed impairment withsimilar episodic criteria, we will findthat you are disabled even though youmay be able to function adequatelybetween episodes.(4) Limitations related to treatment ormedication effects. Some impairmentsrequire treatment over a long period oftime (i.e., at least a year) and thetreatment itself (e.g., multiple surgeries)causes marked and severe functionallimitations. Marked and severefunctional limitations may also resultfrom the combined effects of limitationscaused by ongoing treatment andlimitations caused by an impairment(s).In many cases, we will be able toevaluate such limitations using themethods for evaluating specificfunctions or broad areas of developmentor functioning in paragraphs (b)(1) and(b)(2) of this section. But we may alsocompare your functional limitations(s)to criteria in listings based on treatment(including side effects of medication)that is itself disabling or that contributesto functional limitations. If treatment ofyour impairment(s) produces functionallimitations that are the same as thedisabling functional limitations of alisted impairment, we will find thatyour impairment(s) is functionallyequivalent in severity to that listing.(c) Broad areas of development orfunctioning. When we determinefunctional equivalence based on broadareas of development or functioning, wewill evaluate the functional effects ofyour impairment(s) in several areas ofdevelopment or functioning todetermine if your functional limitationsare equivalent in severity to thedisabling functional limitations oflisting 112.12 or listing 112.02.However, instead of referring to theareas of development or functioning inthose listings, we will refer to the areasof development or functioningdescribed in paragraphs (c)(4) and (c)(5)of this section. (We describe the areas ingeneral terms in paragraph (c)(4) andthen in detail as they apply to specificage groups in paragraph (c)(5).) If youhave marked limitations in two areas ofdevelopment or functioning, or extremelimitation in one area, we will find thatyour impairment(s) is functionallyequivalent in severity to listing 112.12or listing 112.02, even if yourimpairment(s) is a physicalimpairment(s) or a combination ofphysical and mental impairments. Weexplain the meaning of the terms‘‘marked limitation’’ and ‘‘extremelimitation’’ in paragraph (c)(3) of thissection.(1) How we use the areas ofdevelopment or functioning. (i) Whenwe make a finding about functionalequivalence, we will consider the extentof your functional limitations in theareas affected by your impairment(s).We will also consider how yourlimitation(s) in one area affects yourdevelopment or functioning in otherareas.(ii) In some children, some physicalimpairments will be evaluated most

6426 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsappropriately only in the areas of motordevelopment or motor functioning. Inothers, the effects will be more global.If you have a physical impairment(s)that causes a functional limitation(s) notaddressed solely in the area of motordevelopment or motor functioning, wewill consider the effects of yourimpairment in all relevant areas inwhich you have limitations from theimpairment(s). A physicalimpairment(s) may cause limitations inany or all of the areas of developmentor functioning.(2) Other considerations. When weassess your functioning, we willconsider all information in your caserecord that can help us determine theeffect of your impairment(s) on yourphysical and mental functioning. Wewill consider the nature of yourimpairment(s), your age, your ability tobe tested given your age, and otherrelevant factors (see §§ 416.924a through416.924c). We will consider whetherany help that you need from others toenable you to do any particular activity(e.g., dressing) is appropriate to yourage.(3) Definitions of ‘‘marked’’ and‘‘extreme’’ limitations—(i) Markedlimitation means—(A) Whenstandardized tests are used as themeasure of functional abilities, a validscore that is two standard deviations ormore below the norm for the test (butless than three standard deviations); or(B) For children from birth toattainment of age 3, functioning at morethan one-half but not more than twothirdsof chronological age; or(C) For children from age 3 toattainment of age 18, ‘‘more thanmoderate’’ and ‘‘less than extreme.’’Marked limitation may arise whenseveral activities or functions arelimited or even when only one islimited as long as the degree oflimitation is such as to interfereseriously with the child’s functioning.(ii) Extreme limitation means— (A)When standardized tests are used as themeasure of functional abilities, a validscore that is three standard deviations ormore below the norm for the test; or(B) For children from birth toattainment of age 3, functioning at onehalfchronological age or less; or(C) For children from birth toattainment of age 18, no meaningfulfunctioning in a given area. There maybe extreme limitation when severalactivities or functions are limited oreven when only one is limited.(4) Areas of development orfunctioning. The following are the areasof development or functioning that maybe addressed in a finding of functionalequivalence.(i) Cognition/communication: Theability or inability to learn, understand,and solve problems through intuition,perception, verbal and nonverbalreasoning, and the application ofacquired knowledge; the ability to retainand recall information, images, events,and procedures during the process ofthinking. The ability or inability tocomprehend and produce language (e.g.,vocabulary and grammar) in order tocommunicate (e.g., to respond, as inanswering questions, followingdirections, acknowledging thecomments of others; to request, as indemanding action, meeting needs,seeking information, requestingclarification, initiating interaction; tocomment, as in sharing information,expressing feelings, and ideas,providing explanations, describingevents, maintaining interaction, usinghearing that is adequate forconversation, and using speech(articulation, voice, and fluency) that isintelligible.(ii) Motor: The ability or inability touse gross and fine motor skills to relateto the physical environment and serveone’s physical purposes. It involvesgeneral mobility, balance, and theability to perform age-appropriatephysical activities involved in play,physical education, sports, andphysically related daily activities otherthan self-care (see Personal area).(iii) Social: The ability or inability toform and maintain relationships withother individuals and with groups; e.g.,parents, siblings, neighborhoodchildren, classmates, teachers. Ability ismanifested in responding to andinitiating social interaction with others,sustaining relationships, andparticipating in group activities. Itinvolves cooperative behaviors,consideration for others, awareness ofothers’ feelings, and social maturityappropriate to a child’s age. Ability isalso manifested in the absence ofinappropriate externalized actions (e.g.,running away, physical aggression—butnot self-injurious actions, which areevaluated in the personal area offunctioning), and the absence ofinappropriate internalized actions (e.g.,social isolation, avoidance ofinterpersonal activities, mutism). Socialfunctioning in play, school, and worksituations may involve interactions withadults, including respondingappropriately to persons in authority(e.g., teachers, coaches, employers) orcooperative behaviors involving otherchildren.(iv) Responsiveness to stimuli (birth toage 1 only): The ability or inability torespond appropriately to stimulation(visual, auditory, tactile, vestibular,proprioceptive).(v) Personal (age 3 to age 18 only):The ability or inability to help yourselfand to cooperate with others in takingcare of your personal needs, health, andsafety (e.g., feeding, dressing, toileting,bathing; maintaining personal hygiene,proper nutrition, sleep, health habits;adhering to medication or therapyregimens; following safety precautions).(vi) Concentration, persistence, orpace (age 3 to age 18 only): The abilityor inability to attend to, and sustainconcentration on, an activity or task,such as playing, reading, or practicing asport, and the ability to perform theactivity or complete the task at areasonable pace.(5) Descriptions for specific agegroups—(i) Newborns and young infants(birth to attainment of age 1) Childrenin this age group are evaluated in termsof four areas of development. Thefollowing are general descriptions ofdevelopment typical of this age group.(A) Cognitive/communicativedevelopment (birth to attainment of age1): Your ability or inability to showinterest in, and actively seek interactionwith, your environment, first randomly,then through trial-and-error, and finallywith deliberate and purposeful intent.Your ability or inability to firstrecognize, and then attach meaning to,routine situations and events andgradually to everyday sounds andeventually to familiar words. Yourability or inability to vocalize, bothimitatively and spontaneously, usingvowels and later consonants, first inisolation, and then in increasinglylonger babbling strings.(B) Motor development (birth toattainment of age 1): Your ability orinability to explore and manipulate yourenvironment by moving your body andby using your hands; e.g., byincreasingly controlling position andmovement of head, sitting with support,creeping or crawling, pulling tostanding position, walking with handheld, standing alone briefly, wavingsmall rattle, reaching for or graspingobjects, transferring toys, picking upsmall objects, attempting to scribble.(C) Social development (birth toattainment of age 1): Your ability orinability to form and maintain intimaterelationships, and to respond to, andeventually initiate reciprocalinteractions with, your primarycaregivers (e.g., through games such aspat-a-cake, peek-a-boo, so big). Yourability or inability to begin to regulatethe behavior of others throughintentional behavior (e.g., gestures,vocalizations). Your ability or inabilityto recognize and produce a variety of

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6427emotional cues (e.g., facial expressions,vocal tone changes).(D) Responsiveness to stimuli (birth toattainment of age 1): Your ability orinability to form patterns of selfregulation,i.e., to recognize internalcues (e.g., hunger, pain), and to organizeexternal experiences (e.g., light, sound,temperature, movement), and to regulateyour reactions to them (e.g., brighteningin response to sights and sounds,enjoying being touched or stroked orheld, enjoying gentle movement inspace (‘‘rock-a-bye-baby’’)).(ii) Older infants and toddlers (age 1to attainment of age 3): Children in thisage group are evaluated in terms of threeareas of development. The following aregeneral descriptions of developmenttypical of this age group.(A) Cognitive/communicativedevelopment (age 1 to attainment of age3): Your ability or inability tounderstand by responding toincreasingly complex requests,instructions, and questions; to refer toyourself and things around you bypointing and eventually by naming; toform concepts and to solve simpleproblems through purposefulexperimentation (e.g., disassemblingtoys), imitation (immediate anddelayed), and constructive play (e.g.,putting things in and out of containers,building with blocks, exploring spaces);to demonstrate your knowledge ofobjects, actions, and situations you haveencountered through pretend playactivities; to spontaneouslycommunicate your wishes or needs byusing gestures, an increasing number ofintelligible words, and eventuallygrammatically correct simple sentencesand questions with increasingly richand broad vocabulary.(B) Motor development (age 1 toattainment of age 3): Your ability orinability to move in your environmentusing your body with steadilyincreasing dexterity and independencefrom support by others, and yourincreasing ability to manipulate smallobjects and to use your hands to do, orto get, something that you want or need.(C) Social development (age 1 toattainment of age 3): Your ability orinability to exhibit normal dependenceupon, and intimacy with, your primarycaregivers, as well as increasingindependence from them; to initiate andrespond to a variety of emotional cues;to regulate and organize emotions andbehaviors. Your ability or inability to beinterested in initiating and maintaininginteractions with others, first duringbrief, yet frequent encounters, andgradually increasing to longer, sustainedones. Your ability or inability to showinterest in, initially watch, then playalongside, and eventually interact withsimilarly aged peers.(iii) Preschool children (age 3 toattainment of age 6). Children in thisage group are evaluated in terms of fiveareas of development. The following aregeneral descriptions of developmenttypical of this age group.(A) Cognitive/communicativedevelopment (age 3 to attainment of age6): Your ability or inability to learn,understand, and solve problems throughintuition, perception, verbal andnonverbal reasoning, and theapplication of acquired knowledge; yourability or inability to retain and recallinformation, images, events, andprocedures during the process ofthinking (as in the development ofreadiness skills for formal learning (e.g.,learning letters, shapes, colors) andskills for daily living (e.g., putting toysin proper places)). Your ability orinability to communicate by expressingyour needs, feelings, and preferences; bytelling, requesting, predicting, andrelating information; by describingactions and functions; by providingexplanations; by following and givingdirections; and by engaging inconversation in a spontaneous,interactive, and increasingly intelligiblemanner, using increasingly complexvocabulary and grammar.(B) Motor development (age 3 toattainment of age 6): Your ability orinability to move and use your arms andlegs in increasingly more intricate andcoordinated activity, and your ability orinability to use your hands withincreasing coordination to manipulatesmall objects during play (e.g., drawing,using building blocks, constructingpuzzles) and physically related dailyactivities other than self-care (seePersonal area).(C) Social development (age 3 toattainment of age 6): Your ability orinability to initiate social exchanges, toorganize and regulate your emotionsand behaviors, and to respond to yoursocial environment through appropriateand increasingly complex interactions,such as showing affection, sharing, andhelping; your ability to relate tocaregivers with increasingindependence, to choose your ownfriends, and to play cooperatively withother children, one-at-a-time or in agroup.(D) Personal development (age 3 toattainment of age 6): Your ability orinability to help yourself and tocooperate with others in taking care ofyour personal needs, health, and safety(e.g., bathing, dressing, maintainingsleep habits, crossing the street with anadult).(E) Concentration, persistence, orpace (age 3 to attainment of age 6): Yourability or inability to engage in anactivity, and to sustain the activity fora period of time at a reasonable pace(e.g., playing a simple board game).(iv) School-age children (age 6 toattainment of age 12). Children in thisage group are evaluated in terms of fiveareas of functioning. The following aregeneral descriptions of functioningtypical of this age group.(A) Cognitive/communicativefunctioning (age 6 to attainment of age12): Your ability or inability to learn,understand, and solve problems throughintuition, perception, verbal andnonverbal reasoning, and theapplication of acquired knowledge; theability to retain and recall information,images, events, and procedures duringthe process of thinking, as in formallearning situations (e.g., reading, classdiscussions) and in daily living (e.g.,telling time, making change). Yourability or inability to comprehend andproduce language (e.g., vocabulary,grammar) in order to communicate insocial conversation (e.g., to expressfeelings, meet needs, seek information,describe events, share stories), and inlearning situations (e.g., to exchangeinformation and ideas with peers andfamily or with groups such as yourschool classes) in a spontaneous,interactive, sustained, and intelligiblemanner, using increasingly complexvocabulary and grammar.(B) Motor functioning (age 6 toattainment of age 12): Your ability orinability to use fine and gross motorskills in order to engage in the physicalactivities involved in normal mobility,school work, play, physical education,sports, and other physically relateddaily activities other than self-care (seePersonal area).(C) Social functioning (age 6 toattainment of age 12): Your ability orinability to play alone, with anotherchild, and in a group; to initiate anddevelop friendships; to respond to yoursocial environments throughappropriate and increasingly complexinterpersonal behaviors, such asempathizing with others and toleratingdifferences; and to relate appropriatelyto individuals and in group situations(e.g., siblings, parents or caregivers,peers, teachers, school classes,neighborhood groups).(D) Personal functioning (age 6 toattainment of age 12): Your ability orinability to help yourself and tocooperate with others in taking care ofyour personal needs, health, and safety(e.g., eating, dressing, maintainingpersonal hygiene, following safetyprecautions).

6428 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations(E) Concentration, persistence, orpace (age 6 to attainment of age 12):Your ability or inability to engage in anactivity, and to sustain the activity fora period of time and at a reasonablepace.(v) Adolescents (age 12 to attainmentof age 18): Children in this age group areevaluated in terms of five areas offunctioning. The following are generaldescriptions of functioning typical ofthis age group.(A) Cognitive/communicativefunctioning (age 12 to attainment of age18): Your ability or inability to learn,understand, and solve problems throughintuition, perception, verbal andnonverbal reasoning, and theapplication of acquired knowledge; theability or inability to retain and recallinformation, images, events, andprocedures during the process ofthinking, as in formal learningsituations (e.g., composition, classroomdiscussion) and in daily living (e.g.,using the post office, using publictransportation). Your ability or inabilityto comprehend and produce language(e.g., vocabulary, grammar) in order tocommunicate in conversation (e.g., toexpress feelings, meet needs, seekinformation, describe events, tellstories), and in learning situations (e.g.,to obtain and convey information andideas) both spontaneously andinteractively, in all communicationenvironments (e.g., home, classroom,game fields, extra-curricular activities,job), and with all communicationpartners (e.g., parents, siblings, peers,school classes, teachers, employers).(B) Motor functioning (age 12 toattainment of age 18): Your ability orinability to use fine and gross motorskills in order to engage in the physicalactivities involved in normal mobility,school work, play, physical education,sports, and other physically relateddaily activities other than self-care (seePersonal area).(C) Social functioning (age 12 toattainment of age 18): Your ability orinability to initiate and developfriendships, to relate appropriately toindividual peers and adults and to peerand adult groups, and to reconcileconflicts between yourself and peers orfamily members or other adults outsideyour family.(D) Personal functioning (age 12 toattainment of age 18): Your ability orinability to help yourself in taking careof your personal needs, health, andsafety (e.g., dressing, bathing, doinglaundry, adhering to medication ortherapy regiments).(E) Concentration, persistence, orpace (age 12 to attainment of age 18):Your ability or inability to engage in anactivity, and to sustain the activity fora period of time and at a reasonablepace.(d) Examples of impairments that arefunctionally equivalent in severity to alisted impairment. The following aresome examples of impairment andlimitations that are functionallyequivalent to listings. Findings ofequivalence based on the disablingfunctional limits of a child’simpairment(s) are not limited to theexamples in this paragraph (d), becausethese examples do not describe allpossible effects of impairments thatmight be found to be functionallyequivalent in severity to a listedimpairment. As with any disablingimpairment, the duration requirementmust also be met (see §§ 416.909 and416.924(a)).(1) Documented need for major organtransplant (e.g., liver).(2) Any condition that is disabling atthe time of onset, requiring a series ofstaged surgical procedures within 12months after onset as a life-savingmeasure or for salvage or restoration offunction, and such major function is notrestored or is not expected to be restoredwithin 12 months after onset of thecondition.(3) Frequent need for a life-sustainingdevice (e.g., central venous alimentatincatheter), at home or elsewhere.(4) Ambulation possible only withobligatory bilateral upper limbassistance.(5) Any physical impairment(s) orcombination of physical and mentalimpairments causing marked restrictionof age-appropriate personal functioningand marked restriction in motorfunctioning.(6) Any physical impairment(s) orcombination of physical and mentalimpairments causing complete inabilityto function independently outside thearea of one’s home within ageappropriatenorms.(7) Requirement for 24-hour-a-daysupervision for medical (includingpsychological) reasons.(8) Infants weighing less than 1200grams at birth, until attainment of 1 yearof age.(9) Infants weighing at least 1200 butless than 2000 grams at birth, and whoare small for gestational age, untilattainment of 1 year of age. (Small forgestational age means a birth weightthat is at or more than 2 standarddeviations below the mean or that isbelow the 3rd growth percentile for thegestational age of the infant.)(10) In an infant who has not attainedage 1 year, and who may be too youngto test, any limitations caused by aphysical impairment(s) or acombination of physical and mentalimpairments that causes the samefunctional limitations in listing 112.12.(11) Major congenital organdysfunction which could be expected toresult in death within the first year oflife without surgical correction, and theimpairment is expected to be disabling(because of residual impairmentfollowing surgery, or the recovery timerequired, or both) until attainment of 1year of age.(12) Gastrostomy in a child who hasnot attained age 3.(e) Responsibility for determiningfunctional equivalence. In cases wherethe State agency or other designee of theCommissioner makes the initial orreconsideration disabilitydetermination, a State agency medicalor psychological consultant or otherdesignee of the Commissioner (see§ 416.1016) has the overallresponsibility for determiningfunctional equivalence. For cases in thedisability hearing process or otherwisedecided by a disability hearing officer,the responsibility for determiningfunctional equivalence rests with eitherthe disability hearing officer or, if thedisability hearing officer’sreconsideration determination ischanged under § 416.1418, with theAssociate Commissioner for Disabilityor his or her delegate. For cases at theAdministrative Law Judge or AppealsCouncil level, the responsibility fordeciding functional equivalence restswith the Administrative Law Judge orAppeals Council.23. Section 416.927 is amended byrevising paragraph (a)(1) to read asfollows:§ 416.927 Evaluating medical opinionsabout your impairment(s) or disability.(a) General. (1) If you are an adult,you can only be found disabled if youare unable to do any substantial gainfulactivity by reason of any medicallydeterminable physical or mentalimpairment which can be expected toresult in death or which has lasted orcan be expected to last for a continuousperiod of not less than 12 months. (See§ 416.905.) If you are a child, you canbe found disabled only if you have amedically determinable physical ormental impairment(s) that causesmarked and severe functionallimitations and that can be expected toresult in death or that has lasted or canbe expected to last for a continuousperiod of not less than 12 months. (See§ 416.906.)* * * * *24. Section 416.929 is amended byrevising the fourth, fifth, and lastsentences of paragraph (a), the heading

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6429of paragraph (c), the first and lastsentences of paragraph (c)(1), the secondsentence of paragraph (c)(2), the headingand the first and last sentences ofparagraph (c)(4), the reference at the endof paragraph (d)(1), the sixth and ninthsentences of paragraph (d)(3), andparagraph (d)(4) to read as follows:§ 416.929 How we evaluate symptoms,including pain.(a) * * * These include statements orreports from you, your treating orexamining physician or psychologist,and others about your medical history,diagnosis, prescribed treatment, dailyactivities, efforts to work, and any otherevidence showing how yourimpairment(s) and any relatedsymptoms affect your ability to work (orif you are a child, your functioning). Wewill consider all of your statementsabout your symptoms, such as pain, andany description you, your physician,your psychologist, or other persons mayprovide about how the symptoms affectyour activities of daily living and yourability to work (or if you are a child,your functioning). * * * We will thendetermine the extent to which youralleged functional limitations andrestrictions due to pain or othersymptoms can reasonably be acceptedas consistent with the medical signs andlaboratory findings and other evidenceto decide how your symptoms affectyour ability to work (or if you are achild, your functioning).* * * * *(c) * * * (1) General. When themedical signs or laboratory findingsshow that you have a medicallydeterminable impairment(s) that couldreasonably be expected to produce yoursymptoms, such as pain, we must thenevaluate the intensity and persistence ofyour symptoms so that we candetermine how your symptoms limityour capacity for work or, if you are achild, your functioning. * * *Paragraphs (c)(2) through (c)(4) of thissection explain further how we evaluatethe intensity and persistence of yoursymptoms and how we determine theextent to which your symptoms limityour capacity for work (or, if you are achild, your functioning) when themedical signs or laboratory findingsshow that you have a medicallydeterminable impairment(s) that couldreasonably be expected to produce yoursymptoms, such as pain.(2) * * * Objective medical evidenceof this type is a useful indicator to assistus in making reasonable conclusionsabout the intensity and persistence ofyour symptoms and the effect thosesymptoms, such as pain, may have onyour ability to work or, if you are achild, your functioning. * * ** * * * *(4) How we determine the extent towhich symptoms, such as pain, affectyour capacity to perform basic workactivities, or, if you are a child, yourfunctioning). In determining the extentto which your symptoms, such as pain,affect your capacity to perform basicwork activities (or if you are a child,your functioning), we consider all of theavailable evidence described inparagraphs (c)(1) through (c)(3) of thissection. * * * Your symptoms,including pain, will be determined todiminish your capacity for basic workactivities (or, if you are a child, yourfunctioning) to the extent that youralleged functional limitations andrestrictions due to symptoms, such aspain, can reasonably be accepted asconsistent with the objective medicalevidence and other evidence.(d) * * *(1) * * * (See § 416.920(c) for adultsand § 416.924(c) for children.)* * * * *(3) * * * (If you are a child and wecannot find equivalence based onmedical evidence only, we will considerpain and other symptoms under§ 416.926(a)(b)(3) in determiningwhether you have an impairment(s) thatcauses overall functional limitationsthat are the same as the disablinglimitations of a listed impairment.)* * * If they are not, we will considerthe impact of your symptoms on yourresidual functional capacity if you arean adult.* * *(4) Impact of symptoms (includingpain) on residual functional capacity or,if you are a child, on your functioning.If you have a medically determinablesevere physical or mentalimpairment(s), but your impairment(s)does not meet or equal an impairmentlisted in appendix 1 of subpart P of part404 of this chapter, we will consider theimpact of your impairment(s) and anyrelated symptoms, including pain, oryour residual functional capacity, if youare an adult, or, on your functioning ifyou are a child. (See §§ 416.945 and416.924a through 416.924e.)25. Section 416.930 is amended byrevising paragraph (a) to read as follows:§ 416.930 Need to follow prescribedtreatment.(a) What treatment you must follow.In order to get benefits, you must followtreatment prescribed by your physicianif this treatment can restore your abilityto work, or, if you are a child, if thetreatment can reduce your functionallimitations so that they are no longermarked and severe.* * * * *26. Section 416.987 and anundesignated center heading are addedto 20 CFR part 416, subpart I to read asfollows:Disability Redeterminations forIndividuals Who Attain Age 18§ 416.987 Disability redeterminations forindividuals who attain age 18.(a)(1) Public Law 104–193, ThePersonal Responsibility and WorkOpportunity Reconciliation Act of 1996,requires that the individuals describedin paragraph (b) of this section musthave their eligibility redetermined.(2) For these individuals, subject tothe provisions of paragraphs (b)(2) and(b)(3) of this section, we will use therules for new applicants; we will notuse the rules for determining whetherdisability continues set out in § 416.994.If you are an individual affected by theprovisions of this section, we may findthat you are not now disabled eventhough we previously found that youwere disabled.(3) Before we begin your disabilityredetermination, we will notify you thatwe are redetermining your eligibility forpayments, why we are redeterminingyour eligibility, which disability ruleswe will apply, that our review couldresult in a finding that your SSIpayments based on disability could beterminated, that you have the right tosubmit medical and other evidence forour consideration during theredetermination, and that when wemake our determination, we will notifyyou of our determination, your right toappeal the determination, and your rightto request continuation of benefitsduring appeal.(4) We will notify you in writing ofthe results of the disabilityredetermination. The notice will tellyou what our determination is, thereasons for our determination and yourright to request reconsideration of thedetermination. If our determinationshows that we should stop your SSIpayments based on disability, the noticewill also tell you of your right to requestthat your benefits continue during anyappeal. The results of an initialdisability redetermination are bindingunless you request a reconsiderationwithin the stated time period, or werevise the initial determination.(b)(1) We will redetermine theeligibility of individuals(i) Who became eligible for SSIbenefits by reason of disability prior toattaining age 18, and

6430 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations(ii) Who also were eligible for suchbenefits for the month before the monthin which they attained age 18.(2) When we make this determination,we will apply the rules in§§ 416.920(c)–(f); we will not apply therules in § 416.920(b) or § 416.994.(3) If you are an individual affected bythe provisions of this section, and youare disabled under § 416.920 (d) or (f),and you are working, we will apply therules in §§ 416.260 ff.(4) We will initiate this disabilityredetermination during the 1-yearperiod beginning on your 18th birthday.(5) If we find that you are not disabledunder the rules in § 416.920 (except§ 416.920(b)), your eligibility will end.The month in which we will find younot disabled is explained in paragraph(b)(6) of this section; the month yourbenefits will stop is explained inparagraph (b)(7) of this section.(6) If the evidence shows that you arenot disabled, we will find that yourdisability ended in the earliest of:(i) The month the evidence shows thatyou are not disabled under the rules setout in this section, but not earlier thanthe month in which we mail you anotice saying that you are not disabled.(ii) The first month in which youfailed without good cause to followprescribed treatment under the rules in§ 416.930.(iii) The first month in which youfailed without good cause to do what weasked. Section 416.1411 explains thefactors we will consider and how wewill determine generally whether youhave good cause for failure to cooperate.In addition, § 416.918 discusses how wedetermine whether you have good causefor failing to attend a consultativeexamination.27. Section 416.990 is amended byrevising paragraphs (b)(9) and (b)(10),adding paragraph (b)(11), and revisingthe first and second sentences of thedefinition of Permanent impairment inparagraph (c) to read as follows:§ 416.990 When and how often we willconduct a continuing disability review.* * * * *(b) * * *(9) Evidence we receive raises aquestion whether your disability orblindness continues;(10) You have been scheduled for avocational reexamination diary review;or(11) By your first birthday, if you area child whose low birth weight was acontributing factor material to ourdetermination that you were disabled;i.e., whether we would have found youdisabled if we had not considered yourlow birth weight.(c) * * *Permanent impairment—medicalimprovement not expected—refers to acase in which any medical improvementin a person’s impairment(s) is notexpected. This means an extremelysevere condition determined on thebasis of our experience in administeringthe disability programs to be at leaststatic, but more likely to beprogressively disabling either by itselfor by reason of impairmentcomplications, and unlikely to improveso as to permit the individual to engagein substantial gainful activity or, if youare a child, unlikely to improve to thepoint that you will no longer havemarked and severe functionallimitations. * * ** * * * *28. Section 416.994a is amended byremoving paragraphs (b)(4), (b)(5), (c)(4),(d) (f)(1), and (f)(2), redesignatingparagraphs (e) through (i) as paragraphs(d) through (h), redesignatingparagraphs (f)(3) and (f)(4) as paragraphs(e)(1) and (e)(2), adding paragraph (i),revising the section heading andparagraphs (a)(1), revising the firstsentence of the introductory text toparagraph (b), adding two sentencesbetween the first and second sentencesof the introductory text to paragraph (b),revising paragraphs (b)(1) through (b)(3),adding one sentence between the firstand second sentences of theintroductory text to paragraph (c),revising the third and fourth sentencesof redesignated paragraph (d), revisingthe introductory text to redesignatedparagraph (e), revising paragraph (e)(1),revising the second sentence of theintroductory text to redesignatedparagraph (f), and revising paragraphs(f)(4) and (g)(5) to read as follows:§ 416.994a How we will determine whetheryour disability continues or ends, andwhether you are and have been receivingtreatment that is medically necessary andavailable, disabled children.(a) * * *(1) We will first consider whetherthere has been medical improvement inyour impairment(s). We define ‘‘medicalimprovement’’ in paragraph (c) of thissection. If there has been no medicalimprovement, we will find you are stilldisabled unless one of the exceptions inparagraphs (e) or (f) of this sectionapplies. If there has been medicalimprovement, we will consider whetherthe impairments(s) you had at the timeof our most recent favorabledetermination or decision now meets ormedically or functionally equals theseverity of the listing it met or equalledat that time. If so, we will find you arestill disabled, unless one of theexceptions in paragraphs (e) or (f) of thissection applies. If not, we will considerwhether your current impairment(s) aredisabling under the rules in § 416.924.These steps are described in more detailin paragraph (b) of this section. Evenwhere medical improvement or anexception applies, in most cases, wewill find that your disability has endedonly if we also find that you are notcurrently disabled.* * * * *(b) Sequence of evaluation. To ensurethat disability reviews are carried out ina uniform manner, that decisions ofcontinuing disability can be made in themost expeditious and administrativelyefficient way, and that any decisions tostop disability benefits are madeobjectively, neutrally, and are fullydocumented, we follow specific steps indetermining whether your disabilitycontinues. However, we may skip stepsin the sequence if it is clear this wouldlead to a more prompt finding that yourdisability continues. For example, wemight not consider the issue of medicalimprovement if it is obvious on the faceof the evidence that a currentimpairment meets the severity of alisted impairment. * * *(1) Has there been medicalimprovement in your condition(s)? Wewill determine whether there has beenmedical improvement in theimpairment(s) you had at the time of ourmost recent favorable determination ordecision. (The term medicalimprovement is defined in paragraph (c)of this section.) If there has been nomedical improvement, we will find thatyour disability continues, unless one ofthe exceptions to medical improvementdescribed in paragraph (e) or (f) of thissection applies.(i) If one of the first group ofexceptions to medical improvementapplies, we will proceed to step 3.(ii) If one of the second group ofexceptions to medical improvementapplies, we may find that your disabilityhas ended.(2) Does your impairment(s) still meetor equal the severity of the listedimpairment that it met or equaledbefore? If there has been medicalimprovement, we will consider whetherthe impairment(s) that we considered atthe time of our most recent favorabledetermination or decision still meets orequals the severity of the listedimpairment it met or equalled at thattime. In making this decision, we willconsider the current severity of theimpairment(s) present and documentedat the time of our most recent favorabledetermination or decision, and the samelisting section used to make that

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6431determination or decision as it waswritten at that time, even if it has sincebeen revised or removed from theListing of Impairments. If thatimpairment(s) does not still meet orequal the severity of that listedimpairment, we will proceed to the nextstep. If that impairment(s) still meets orequals the severity of that listedimpairment as it was written at thattime, we will find that you are stilldisabled, unless one of the exceptions tomedical improvement described inparagraphs (e) or (f) of this sectionapplies.(i) If one of the first group ofexceptions to medical improvementapplies, we will proceed to step 3.(ii) If one of the second group ofexceptions to medical improvementapplies, we may find that your disabilityhas ended.(3) Are you currently disabled? Ifthere has been medical improvement inthe impairment(s) that we considered atthe time of our most recent favorabledetermination or decision, and if thatimpairment(s) no longer meets or equalsthe severity of the listed impairmentthat it met or equaled at that time, wewill consider whether you are disabledunder the rules in §§ 416.924(c) and (d).In determining whether you arecurrently disabled, we will consider allimpairments you now have, includingyou did not have at the time of our mostrecent favorable determination ordecision, or that we did not consider atthat time. The steps in determiningcurrent disability are summarized asfollows:(i) Do you have a severe impairmentor combination of impairment? If therehas been medical improvement in yourimpairment(s), or if one of the firstgroup of exceptions applies, we willdetermine whether your currentimpairment(s) is severe, as defined in§ 416.924(c). If your impairment(s) isnot severe, we will find that yourdisability has ended. If yourimpairment(s) is severe, we will thenconsider whether it meets or medicallyequals the severity of a listedimpairment.(ii) Does your impairment(s) meet ormedically equal the severity of anyimpairment listed in appendix 1 ofsubpart P of part 404 of this chapter? Ifyour current impairment(s) meets ormedically equals the severity of anylisted impairment, as described in§§ 416.925 and 416.926, we will findthat your disability continues. If not, wewill consider whether it functionallyequals the severity of a listedimpairment.(iii) Does your impairment(s)functionally equal the severity of anylisted impairment? If your currentimpairment(s) functionally equals theseverity of any listed impairment, asdescribed in § 416.926a, we will findthat your disability continues. If not, wewill find that your disability has ended.(c) * * * Although the decrease inseverity may be of any quantity ordegree, we will disregard minor changesin your signs, symptoms, and laboratoryfindings that obviously do not representmedical improvement and could notresult in a finding that your disabilityhas ended.* * * * *(d) * * * If so, your benefits willcontinue unless one of the second groupof exceptions applies (see paragraph (f)of this section). If not, we willdetermine whether an attempt should bemade to reconstruct those portions ofthe missing file that were relevant to ourmost recent favorable determination ordecision (e.g., school records, medicalevidence from treating sources, and theresults of consultative examination).* * *(e) First group of exceptions tomedical improvement. The law providescertain limited situations when yourdisability can be found to have endedeven though medical improvement hasnot occurred, if your impairment(s) nolonger results in marked and severefunctional limitations. These exceptionsto medical improvement are intended toprovide a way of finding that a personis no longer disabled in those situationswhere, even though there has been nodecrease in severity of theimpairment(s), evidence shows that theperson should no longer be considereddisabled or never should have beenconsidered disabled. If one of theseexceptions applies, we must also showthat your impairment(s) does not nowresult in marked and severe functionallimitations, before we can find you areno longer disabled, taking all yourcurrent impairments into account, notjust those that existed at the time of ourmost recent favorable determination ordecision. The evidence we gather willserve as the basis for the finding that anexception applies.(1) Substantial evidence shows that,based on new or improved diagnostictechniques or evaluations, yourimpairment(s) is not as disabling as itwas considered to be at the time of themost recent favorable decision.Changing methodologies and advancesin medical and other diagnostictechniques or evaluations have givenrise to, and will continue to give rise to,improved methods for determining thecauses of (i.e., diagnosing) andmeasuring and documenting the effectsof various impairment on children andtheir functioning. Where, by such newor improved methods, substantialevidence shows that your impairment(s)is not as severe as was determined at thetime of our most recent favorabledecision, such evidence may serve as abasis for a finding that you are no longerdisabled, provided that you do notcurrently have an impairment(s) thatmeets or equals the severity of any listedimpairment, and therefore results inmarked and severe functionallimitations.* * * * *(f) * * * In these situations, thedetermination or decision will be madewithout a finding that you havedemonstrated medical improvement orthat you are currently not disabledunder the rules in § 416.924. * * *(4) You fail to follow prescribedtreatment which would be expected toimprove your impairment(s) so that it nolonger results in marked and severefunctional limitations. If treatment hasbeen prescribed for you which would beexpected to improve your impairment(s)so that it no longer results in markedand severe functional limitations, youmust follow that treatment in order to bepaid benefits.(g) * * *(5) The first month in which you weretold by your physician that you couldreturn to normal activities, providedthere is no substantial conflict betweenyour physician’s and your statementsregarding your awareness of yourcapacity, and the earlier date issupported by substantial evidence; or* * * * *(i) Requirement for treatment that ismedically necessary and available. Ifyou have a representative payee, therepresentative payee must, at the time ofthe continuing disability review, presentevidence demonstrating that you areand have been receiving treatment, tothe extent considered medicallynecessary and available, for thecondition(s) that was the basis forproviding you with SSI benefits, unlesswe determine that requiring yourrepresentative payee to provide suchevidence would be inappropriate orunnecessary considering the nature ofyour impairment(s). If yourrepresentative payee refuses withoutgood cause to comply with thisrequirement, and if we decide that it isin your best interests, we may pay yourbenefits to another representative payeeor to you directly.(1) What we mean by treatment thatis medically necessary. Treatment that ismedically necessary means treatmentthat is expected to improve or restore

6432 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationsyour functioning and that wasprescribed by a treating source, asdefined in § 416.902. If you do not havea treating source, we will decidewhether there is treatment that ismedically necessary that could havebeen prescribed by a treating source.The treatment may include (but is notlimited to)—(i) Medical management;(ii) Psychiatric, psychological, orpsychosocial counseling;(iii) Physical therapy; and(iv) Home therapy, such asadministering oxygen or givinginjections.(2) How we will consider whethermedically necessary treatment isavailable. When we decide whethermedically necessary treatment isavailable, we will consider such thingsas (but not limited)—(i) The location of an institution orfacility or place where treatment,services, or resources could be providedto you in relationship to where youreside;(ii) The availability and cost oftransportation for you and your payee tothe place of treatment;(iii) Your general health, includingyour ability to travel for the treatment;(iv) The capacity of an institution orfacility to accept you for appropriatetreatment;(v) The cost of any necessarymedications or treatments that are notpaid for by Medicaid or another insureror source; and(vi) The availability of localcommunity resources (e.g., clinics,charitable organizations, publicassistance agencies) that would providefree treatment or funds to covertreatment.(3) When we will not require evidenceof treatment that is medically necessaryand available. We will not require yourrepresentative payee to present evidencethat you are and have been receivingtreatment if we find that thecondition(s) that was the basis forproviding you benefits is not amenableto treatment.(4) Removal of a payee who does notprovide evidence that a child is and hasbeen receiving treatment that ismedically necessary and available. Ifyour representative payee refuseswithout good cause to provide evidencethat you are and have been receivingtreatment that is medically necessaryand available, we may, if it is in yourbest interests, suspend payment ofbenefits to the representative payee, andpay benefits to another payee or to you.When we decide whether yourrepresentative payee had good cause, wewill consider factors such as theacceptable reasons for failure to followprescribed treatment in § 416.930(c) andother factors similar to those describinggood cause for missing deadlines in§ 416.1411.(5) If you do not have a representativepayee. If you do not have arepresentative payee and we make yourpayments directly to you, the provisionsof this paragraph do not apply to you.However, we may still decide that youare failing to follow prescribedtreatment under the provisions of§ 416.930, if the requirements of thatsection are met.29. Section 416.998 is revised to readas follows:§ 416.998 If you become disabled byanother impairment(s).If a new severe impairment(s) beginsin or before the month in which yourlast impairment(s) ends, we will findthat your disability is continuing. Thenew impairment(s) need not beexpected to last 12 months or to resultin death, but it must be severe enoughto keep you from doing substantialgainful activity, or severe enough so thatyou are still disabled under § 416.994,or, if you are a child, to result in markedand severe functional limitations.[FR Doc. 97–3317 Filed 2–10–97; 8:45 am]BILLING CODE 4190–29–M

federal registerTuesdayFebruary 11, 1997Part VDepartment of LaborOccupational Safety and HealthAdministration29 CFR Part 1904Reporting Occupational Injury and IllnessData to OSHA; Final Rule6433

6434 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsDEPARTMENT OF LABOROccupational Safety and HealthAdministration29 CFR Part 1904[Docket No. R–02]RIN 1218–AB24Reporting Occupational Injury andIllness Data to OSHA; Final RuleAGENCY: Occupational Safety and HealthAdministration (OSHA), U.S.Department of Labor.ACTION: Final rule.SUMMARY: This final rule amends 29CFR Part 1904 by adding section1904.17. Section 1904.17 requiresemployers to report information toOSHA contained in records thatemployers are required to create andmaintain pursuant to Part 1904, and thenumber of workers they employed andhours their employees worked duringdesignated periods.Section 1904.17 will clarify OSHA’sauthority to collect establishmentspecificdata by mail for use in agencyself-evaluation, deployment of agencyresources, periodic reassessment ofexisting regulations and standards, andrulemaking.Section 1904.17 was proposed (assection 1904.13) as part of acomprehensive proposal to revise Part1904. 61 FR 4030 (Feb. 2, 1996). OSHAhas determined, however, to take finalagency action with respect to section1904.17 at this time, and to take finalaction on the remaining Part 1904issues, including other records accessissues, at a later date.DATES: This final regulation will becomeeffective on March 13, 1997. However,affected parties do not have to complywith the information collectionrequirements until the Departmentpublishes in the Federal Register thecontrol numbers assigned by the Officeof Management and Budget (OMB) tothese information collectionrequirements. Publication of the controlnumbers notifies the public that OMBhas approved these informationcollection requirements under thePaperwork Reduction Act of 1995.FOR FURTHER INFORMATION CONTACT:Bonne Friedman, U.S. Department ofLabor, Occupational Safety and HealthAdministration, Office of Informationand Consumer Affairs, Room N–3647,200 Constitution Avenue, NW.,Washington, DC 20210, phone (202)219–8148. For electronic copies ofdocuments, contact the Labor NewsBulletin Board at (202) 219–4784, orOSHA’s WebPage on the Internet athttp://www.osha.gov/. For newsreleases, fact sheets, and other shortdocuments, contact OSHA FAX at (900)555–3400 at $1.50 per minute.SUPPLEMENTARY INFORMATION:I. BackgroundIn 1971, OSHA issued theoccupational injury and illnessrecording and reporting regulation, 29CFR Part 1904. Part 1904 includesregulations pertaining to criteria fordetermining whether an occupationalinjury or illness should be recorded, andprovisions that require employers togive employees and OSHA access tosuch records. It also provides forcollection by the Bureau of LaborStatistics (BLS) of data to be used in anoccupational injury and illnessstatistical program administered by BLS.1904.20, 1904.21, and 1904.22.In 1990, the Secretary of Labortransferred some of BLS’s statisticgatheringfunctions to OSHA. 55 FR9033 (Mar. 9, 1990). BLS retainsresponsibility for conducting its AnnualSurvey of Occupational Injuries andIllnesses and will continue to issue datathat is aggregated by SIC group. ButOSHA will also be responsible foradministering a national recordkeepingsystem for occupational injuries andillnesses whose data will be sitespecific.OSHA’s February 1996 proposal torevise Part 1904 sought, among otherthings, to reflect OSHA’s new statisticsgatheringresponsibilities. OSHAproposed to replace sections 1904.20,1904.21, and 1904.22 with a singlereporting provision at 1904.13, whichwould apply to both BLS and OSHAcollections of information by mail orother remote transmittal.OSHA received 449 written commentsand held six days of public meetings.Approximately 124 comments and twooral presentations specifically addressedproposed section 1904.13.On further consideration, OSHAdetermined that BLS and OSHA needseparate provisions for collection of databy mail. Thus, a single provisionapplicable to both agencies would notbe appropriate, and a new provisionspecifically addressed to OSHAreporting requirements and proceduresshould be developed. OSHA furtherdetermined to take final action onproposed 1904.13 at this time, and totake final action with respect to theremainder of the proposed revisions ofPart 1904 at a later date.This final rule revises the proposedsection 1904.13 and renumbers it assection 1904.17, the next availablenumber in Part 1904. This final ruledoes not modify or delete the existingregulations at 1904.13, 1904.20,1904.21, or 1904.22.II. Explanation of the Final RuleOSHA has long had in effect rulespertaining to OSHA access to certaininformation. Section 1904.7 requiresemployers ‘‘to provide, upon request,records provided for in §§ 1904.2,1904.4, and 1904.5 [OSHA-requiredinjury and illness logs and forms] forinspection and copying by anyrepresentative of the Secretary of Labor.* * *’’ Section 1910.1020 requiresemployers to give OSHA and employeesthe right and opportunity to examineand copy exposure and medical records.Some standards contain requirementsfor OSHA and employee access toexposure and monitoring data requiredto be created and maintained by thoseparticular standards. E.g., 29 CFR1910.1001(m)(5)(I) and (ii) (requiringthat OSHA and employee be givenaccess to asbestos exposure monitoringand medical surveillance records).Section 1904.17 establishes aprocedural mechanism for conduct of anannual survey of ten or more employersby mail or other remote transmittal.Information covered by section 1904.17is information contained in recordsrequired to be created and maintainedpursuant to Part 1904, the number ofworkers the respondent employed andthe number of hours worked by itsemployees during designated periods.The rule also specifies that both therequest and the response will be madeby mail or other remote transmittal.Thus, it is more limited than existingrecords-access provisions that use termssuch as ‘‘permit access to’’ or ‘‘makeavailable’’ and therefore permit OSHAto collect information by on-site recordreviews as well as via mail response.The mail-in provision also permitsOSHA to coordinate its annual surveywith the BLS annual survey. Inconducting its 1995 and 1996 annualsurveys (1995 data was collected in1996, 1996 data will be collected in1997) OSHA provided employers with acarbon-pack form that the employercould complete, separate, and return—one copy to BLS and another to OSHA.OSHA intends to continue this practiceor an equivalent means of avoidingduplicate reporting burdens foremployers.The requests for data reports may bemade directly by OSHA, or may be sentto employers by a designee of theAgency, such as a state governmentalagency, a government contractor, oranother Federal agency such as theNational Institute for Occupational

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6435Safety and Health (NIOSH). Designatingothers to exercise this authority willpermit a variety of collection methods tobe used, depending on which method isthe most effective, efficient, and costeffective for the government.Employers who are normally exemptfrom keeping injury and illness recordsunder 29 CFR 1904.15 and 29 CFR1904.16 may be notified by OSHA thatthey will be required to participate in aparticular information collection under1904.17(a). OSHA will notify theseemployers in writing in advance of theyear for which injury and illness recordswill be required. OSHA does not expect,in the near term, to take action against§ 1904.15 and 16 exempt employersbased on survey non-response under§ 1904.17.III. Issues1. Use of DataAs explained above and in theproposal, site-specific data reportedpursuant to section 1904.13 (nowsection 1904.17) will be used for avariety of purposes: injury/illnesssurveillance; development ofinformation for promulgating, revisingor evaluating OSHA’s safety and healthstandards; evaluating the effectivenessof OSHA’s enforcement, training andvoluntary programs; public information;and for directing OSHA’s programactivities, including scheduledworkplace inspections and nonenforcementprograms, such as targetedmailings of safety and healthinformation to employers.Many commenters acknowledgedOSHA’s need for a reportingrequirement or affirmatively stated theyhad no objections to it. (Ex. 15: 80, 184,239, 313, 341, 359, 384, 418, 449)However, some commenters who hadno objection to the principle of areporting requirement, expressedconcern about the uses to which thedata would be put. (Ex. 15: 117, 181,304) The National Federation ofIndependent Business argued, forexample, that the data should be usedfor compliance efforts only:NFIB strongly objects to this provisionunless it is expanded to provide adequatesafeguards to prevent abuses of writtenrequests, especially for reasons other thanOSHA compliance—i.e., research,surveillance, or public information. In fact,NFIB questions the need for OSHA to haveaccess to data for non-compliance reasons atall. This is another instance where it appearsas if OSHA has overstepped its legislativebounds and is attempting to transform arecordkeeping/compliance system into acomprehensive research system ofoccupational safety and health statistics.(Ex. 15: 304, p. 25)Others contended that the data shouldbe used for statistical purposes only. Seee.g., Heat Transfer Equipment Company(Ex. 15: 117)(‘‘rules must be in placethat the information will be used forstatistical purposes only and not as amethod for determining individualaudits and retribution’’).The OSH Act directs OSHA to operatea broad program to assure safe andhealthy workplace conditions in themajority of America’s workplaces,nearly 6,000,000 individual workplaceestablishments employingapproximately 100,000,000 workers. Avital component of this broad programinvolves the effective use of informationto provide for the purposes discussed inthe introduction to the OSH Act: forworkplace safety and healthenforcement, research, information,education, and training. 29 U.S.C. 651.Section 24 of the Act, 29 U.S.C. 673,directs the Secretary of Labor, inconsultation with the Secretary ofHealth and Human Services, to developand maintain a program of collection,compilation, and analysis ofoccupational safety and health statistics.Section 8(c) also directs the Secretary ofLabor, in cooperation with the Secretaryof Health and Human Services, toprescribe regulations requiringemployers to maintain accurate recordsof, and to make periodic reports on,work-related deaths, injuries, andillnesses.Additionally, the GovernmentPerformance and Results Act of1993(GPRA)(31 U.S.C. 1101) requiresFederal agencies to implement aprogram of strategic planning, developsystematic measures of performance toassess the impact of individualgovernment programs, and produceannual performance reports.OSHA believes that collecting injury,illness and employment data fromemployers to meet these responsibilitiesrepresents the most appropriate policy.OSHA also needs establishment-specificdata to better target its programactivities, including workplaceinspections and non-enforcementinformation and incentive programs, tothe more hazardous workplaces. Givenbudget and personnel constraints,OSHA and the 23 states with OSHAapprovedworkplace safety and healthplans are unable to work directly withall of these workplaces. In fiscal year1996, OSHA and the States conductedenforcement inspections atapproximately 80,000 workplaces(unpublished OSHA analysis of FY 1996inspection data). At this rate, 75 yearswould be needed to inspect all ofAmerica’s workplaces.Several independent reportsconcerning occupational injury andillness recordkeeping and occupationalsafety and health policy havedocumented and supported OSHA’sneed for establishment-specific data. Ina 1987 report, Counting Injuries andIllnesses in the Workplace: Proposals fora Better System, published by theNational Research Council (NRC), thePanel on Occupational Safety andHealth Statistics recognized OSHA’sneed for access to individualestablishment data:The Occupational Safety and HealthAdministration should be able to obtainindividual establishment data and that thismight be achieved through the developmentof an administrative data system, such as thatmaintained, for example, by the InternalRevenue Service.(Ex. 4, p. 10)The panel believed that this datacould be used to improve OSHA’senforcement program:It could provide systematic detailed datathat the current program does not nowprovide; it could give OSHA more effectiveways of using its inspection resources toreduce workplace injuries; and it couldprovide a more systematic bases formonitoring the quality of recordkeeping andreporting.(Ex. 4, p. 113)The NRC Panel further suggested thatan administrative data system based onthe OSHA 200 logs could provide avaluable database for other uses as well,including standard setting, enforcement,program evaluation, and research. (Ex.4, p. 113)In a 1989 report, the KeystoneNational Policy Dialogue on Work-Related Illness and InjuryRecordkeeping, a group of industry,labor, government and academicrepresentatives with an interest inoccupational injury and illness datastated:The Dialogue group agreed that injury andillness statistics from recordkeeping can andshould be used to target (prioritize)enforcement/compliance activity at OSHA.* * * * *The data should be usable for macropurposes by SIC codes (high risk—low risk)as well as in a performance oriented microtargeting of workplace visits. OSHA needs toconserve its resources and should be able todecide upon which industries andworkplaces should receive the mostattention. However, statistics alone shouldnot be used to exempt any site frominspection. The records and rates at the sitelevel should be used in decision making inconjunction with a review of site programsand spot check inspections.(Ex. 5, p. 35)In a 1990 report, Options forImproving Safety and Health in the

6436 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsWorkplace, the General AccountingOffice (GAO) discussed an option forimproving the use of inspectionresources by targeting inspectionactivity with the use of establishmentspecificinjury and illness data:OSHA could focus its enforcement, as wellas education and training efforts, onemployers with high injury and illness ratesin industries known to be hazardous.(Ex. 36, p. 32)OSHA believes that it can improve theeffectiveness and efficiency of itsprograms by focusing its resources onemployers and workplaces that areexperiencing serious, ongoingworkplace safety and health problemsreflected by high rates of workplaceinjuries and illnesses. At the same time,data that shows workplaces with goodsafety and health records reflected bylow injury and illness rates would allowOSHA to have greater flexibility inworking cooperatively and inpartnership with safer workplaces.These programs include enforcementprograms as well as non-enforcementprograms that encourage employers tovoluntarily implement effective safetyand health programs that protectworkers from death, injury and illness.2. The Use of Alternative Data SourcesSeveral commenters suggested thatthe Agency use data from existing datasources, such as state workers’compensation agencies, insurancecompanies, hospitals or OSHAinspection files instead of collectinginformation from employers. (Ex. 15: 2,28, 58, 63, 97, 184, 195, 289, 327, 341,374, 444) For example, Mr. Alex F.Gimble, CSP observed:Since similar data are readily availablefrom other sources, such as the NationalSafety Council, insurance carriers, etc., whynot use these statistics, rather than gothrough this duplication of effort at taxpayerexpense? Another approach would be toutilize data collected by OSHA and StatePlan compliance officers during site visitsover the past 25 years.(Ex. 15: 28)Several commenters suggested thatOSHA use injury and illness data fromworkers’ compensation systems. Thecomments of the American Health CareAssociation (AHCA) are representative:AHCA encourages OSHA to consider theuse of workers’ compensation data in lieu ofproposed OSHA 300 and 301 forms. Pursuingthe enactment of legislation that would allowOSHA access to every state’s workers’compensation data would eliminate the needfor employers to maintain two sets of records,provide OSHA with necessary safety andhealth data, and ease administrative and costburdens now associated with recordkeepingfor employers in every industry across thecountry.(Ex. 15: 341)Ms. Diantha M. Goo recommendedthe use of data from treatment facilities:The accuracy and usefulness of OSHA’sreporting system would be vastly improvedif it were to shift responsibility fromemployers (who have a vested interest inconcealment) to the emergency rooms ofhospitals and clinics. Hospitals areaccustomed to reporting requirements, usethe correct terminology in describing theaccident and its subsequent treatment andare computerized.(Ex. 15: 327)OSHA believes that injury and illnessinformation compiled pursuant to Part1904, plus employment figures, will bemuch more reliable and suited toOSHA’s needs than any availablealternative. While many State workers’compensation programs voluntarilyprovide injury and illness data to OSHAfor various purposes, others do not. Andthe data vary widely from state to state.Differing workers’ compensation lawsand administrative systems result inlarge variations in content, format,accessibility and computerization.Often, workers’ compensation databasesdo not include injury and illness datafrom employers who elect to self-insure.Additionally, most workers’compensation databases do not includeinformation on the number of workersemployed or the number of hoursworked by employees, and incidencerates of occupational injury and illnesscannot be computed. Workers’compensation data are also based oninsurance accounts, and not on thesafety and health experience ofindividual workplaces. As a result, anindividual account often reflects theexperience of several workplacesinvolved in differing business activities.Only a survey of every member of aselected set of employers about aselected set of data gathered in arelatively short time can tell OSHAwhich members of the group have thehighest or lowest illness and injuryrates, how the injury and illness ratesare distributed over the field, and thetypes of injuries and illnesses beingexperienced in that field, etc. As moresurveys are conducted over time, areliable historical record will emerge.While OSHA does not believe thatalternate source data are satisfactorysubstitutes for the information coveredby 1904.17, the agency does recognizethey have value. To the extentinformation from workers’compensation programs, BLS, insurancecompanies, trade associations, etc., areavailable and appropriate for OSHA’spurposes, OSHA intends to continue touse them to supplement its own datasystems and assess the quality of itsown data. However, consistent with theCongressional mandate of the OSH Act,OSHA needs to maintain its ownrecordkeeping system and to gather thedata for it through a reportingrequirement.3. Scope IssuesMany commenters objected to thebreadth of the proposed regulatory text,arguing that it would give the Secretaryunfettered discretion to demand anyinformation related to the Act’spurposes, at any time, for virtually anyreason. (Ex. 25, 58X, 15: 55, 80, 102,124, 135, 144, 158, 162, 165, 193, 206,207, 209, 211, 212, 220, 228, 239, 240,243, 252, 255, 257, 258, 261, 264, 267,274, 275, 276, 286, 293, 305, 306, 309,313, 341, 348, 351, 368, 375, 389, 397,406, 420, 427) A comment by theNational Association of Manufacturerssums up the point of view expressed bymany others:It is one thing to have an objectivelyidentified set of employers that must make anannual filing of a census-type survey on anon-discriminatory basis; it is another to givean enforcement agency the authority—at itssole whim or discretion—to selectivelyrequire one or more employers to file reportsthat an entire class of employers is requiredto maintain. It is one thing to have anobjectively identified set of information orrecords that must be included in an annualfiling; it is another to give an enforcementagency the authority—at its sole whim ordiscretion—to selectively require one or moreemployers to generate and file reportscontaining whatever information the agencyidentifies so long as it can be described as‘‘regarding [the employer’s] activities relatingto this [OSH] Act.’’(Ex. 25, 15: 305)It was not OSHA’s intention toexercise unfettered discretion to collectany data related to the Act. It was,however, OSHA’s intention to create areliable mechanism for routinizedcollections, by mail or other remotetransmittal, of a limited class ofinformation without unduly burdeningemployers. Consistent with that goal,and in light of the comments of record,the final reporting rule is carefullycircumscribed. The rule authorizes anannual survey—which, because it willgo to more than ten employers, will besubject to the Paperwork Reduction Act(PRA) (See 42 U.S.C. 3502 et seq. and5 CFR part 1320)—concerninginformation contained in recordsrequired to be created and maintainedby Part 1904 plus employment figures.The rule specifies the time withinwhich responses are to be provided toOSHA. Employers will be able todetermine which employers are withinthe survey group and what informationwill be collected each year before the

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6437survey begins because that informationwill be made available to the publicunder a Federal Register notice pursuantto the PRA. Once a survey has receivedan OMB control number under the PRA,any substantive or material modificationwould require a new PRA clearance. Asindicated in Section IX of this preambleentitled ‘‘Paperwork Reduction Act of1995’’ the OMB control number for thecurrent annual survey form is 1218–0209. (Section 1904.17 defines the classof information and respondents subjectto survey under the rule. The set ofemployers and information (from withinthe covered class) to be targeted in eachyear is fixed as each survey is designed.)One commenter was concerned thatthe proposed rule could apply toinformation dating back ‘‘decades,’’creating substantial burdens foremployers. (Ex: 15:395, p. 67) Since thefinal rule establishes an annual surveyof information in Part 1904 records,which are required to be kept no morethan five years, plus employmentinformation, it presents no issues about‘‘decades-long’’ records.A number of commenters argued thatas proposed, section 1904.13 violatedFourth Amendment guarantees againstunreasonable searches. (Ex. 15:154, 174,193, 215, 258, 305, 318, 346, 375, 390,395, 397) Most of these commentersreferred to Marshall v. Barlow’s, Inc.,436 U.S. 305 (1978), McLaughlin v.Kings Island, 849 F.2d 990 (6th Cir.1988), and Brock v. Emerson Electric Co,834 F.2d 994 (11th Cir. 1987).Barlow’s concerned the questionwhether OSHA must have a warrant toinspect a work site if the employer doesnot give consent. Kings Island andEmerson Electric concerned on-siterecords inspections by complianceofficers. Section 1904.17 is a reportingrequirement; no entry of premises orcompliance officer decision making isinvolved. Thus, these decisions providelittle if any support to the commenter’ssweeping Fourth Amendmentobjections. See, Donovan v. Lone Steer,Inc., 464 U.S. 408, 414 (1984)(reasonableness of a subpoena is not tobe determined on the basis of physicalentry law, because subpoena requestsfor information involve no entry intononpublic areas).Moreover, in its final form the rule isextremely narrow in scope and leavesthe agency with limited discretion.Section 1904.17 is restricted to a limitedclass of information. This information ishighly relevant to accomplishment ofOSHA’s mission. The reporting is doneby mail or other remote transmittal,without any intrusion into theemployer’s premises by OSHA, and isnot unduly burdensome. Much of theinjury and illness information to bereported is taken from recordsemployers are already required tocreate, maintain, post, and provide toworkers and government officials onrequest, which means that the employerhas a reduced expectation of privacy inthe information. Employment figures arecritical to OSHA’s ability to evaluate theinjury and illness data, whereas they arenot information that employers mayexpect to keep secret from thegovernment. In addition, as explainedearlier, there is no substitute for a largebody of site-specific informationgathered by the survey method. Theresults of the surveys will be uniquelyuseful to OSHA in meeting Congress’mandate to use reporting requirementsand build an effective statisticalprogram around them.Some commenters argued that theFourth Amendment requires OSHA touse a subpoena or warrant to getinformation from employers who do notprovide it voluntarily. Since theproposed reporting rule made noexplicit provision for enforcement viasubpoena or warrant, they contendedthat the rule was constitutionallydeficient. ‘‘Production may not becompelled without a search warrant,administrative subpoena or otherappropriate vehicle.’’ (National BeerWholesalers Association. Ex. 15:215.)‘‘The Fourth Amendment * * *requires OSHA to obtain a subpoena orwarrant prior to obtaining access to anyof the information identified inproposed * * * 1904.13.’’ (TheFertilizer Institute. Ex. 15: 154.) ‘‘Theproposed rules make no provision for asubpoena or warrant and appear tocontemplate that OSHA will useneither. * * * These provisions, to theextent they purport to authorizeinspections of records without a warrantor subpoena, violate the FourthAmendment.’’ (American Iron and SteelInstitute. Ex. 15:395.)Certainly, under many circumstancesemployers can force OSHA to secure awarrant or subpoena enforcement orderbefore giving OSHA access to workplaceinjury and illness data. Thesecommenters, however, appear to bearguing that including a subpoena orwarrant enforcement mechanism in thetext of the rule is necessary toadequately protect their FourthAmendment right to privacy. This is notso. The Fourth Amendment protectsagainst ‘‘unreasonable’’ intrusions bythe government into private places andthings. Reporting rules that do notincorporate subpoena or warrantprocedures are not ‘‘unreasonable’’ perse. See e.g., California Bankers Ass’n v.Shultz, 416 U.S. 21, 67 (1974)(upholding reporting regulation issuedunder the Bank Secrecy Act of 1970 thatdid not provide for subpoenas orwarrants where the ‘‘information wassufficiently described and limited innature and sufficiently related to atenable Congressional determination’’that the information would have a highdegree of usefulness in criminal, tax, orregulatory investigations orproceedings). For example, OSHA haslong required employers to reportpromptly all fatal workplace accidents.The totality of circumstancessurrounding a warrantless or‘‘subpoena-less’’ reporting requirementor administrative investigationdetermines its reasonableness. Forexample, in McLaughlin v. A.B. Chance,842 F.2d at 727 (4th Cir. 1988), theFourth Circuit upheld a records accesscitation against an employer whorefused an OSHA inspector access to itsOSHA Logs and Forms on the groundthat it had a right to insist on a warrantor subpoena. The court upheld thecitation because a summary of theinformation was posted annually on theemployee bulletin board, thusdiminishing the employer’s argumentthat it has a reasonable expectation ofprivacy in the information, and theinspector was lawfully on the premisesto investigate a safety complaint. In NewYork v. Burger, 482 U.S. 691, 702–703(1987), the Supreme Court noted thatagencies may gather informationwithout a warrant, subpoena, or consentif the information would serve asubstantial governmental interest, awarrantless (or subpoena-less)inspection is necessary to further theregulatory scheme, and the agency actspursuant to an inspection program thatis limited in time, place, and scope. TheBurger court went on to uphold awarrantless inspection of records duringan administrative inspection of businesspremises. Consider also the Kings Islandand Emerson Electric decisions’ concernabout the inspector’s broad fielddiscretion. Kings Island (noting thatunder Burger a warrantless or subpoenalessinspection of records might bereasonable, but concluding that the factsof the case did not satisfy Burgeranalysis); Emerson Electric (noting thatunder California Bankers an agency maygain access to information without asubpoena or warrant but concludingthat facts of that case were notcomparable to those reviewed inCalifornia Bankers).It is not OSHA’s intention to resolve,in this rulemaking, the question of theprocedures the Fourth Amendment mayrequire to enforce the regulatoryobligation. Not only are FourthAmmendment issues ultimately for

6438 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulationscourts, not agencies to resolve, suchissues are rarely suitable for judgementin the abstract. If for example, OSHAwere at some future time to issue acitation for nonresponse to a surveyquestionaire, the Fourth Amendmentevaluation would depend on all theparticulars of the case. (While theparticipation in the OSHA DataCollection Initiative is mandatory,OSHA has made a policy decision thatit will not issue citations for the failureto respond to the first survey conductedunder authority of this rule, which willcollect data for calendar year 1996; nordoes OSHA intend to issue citations forthe 1995 survey already conducted.OSHA will take into consideration itsexperience with the Data CollectionInitiatives when developing policy forfuture years. However, thenonrespondents to the 1995 and 1996survey instrument may be subject to anon-site records inspection by an OSHAcompliance officer or issued anadministrative subpoena.)Further analysis under the principlesset forth in the Burger decision mustawait a specific application of 1904.17when the particulars of the informationrequest are known. OSHA has, however,structured the final rule to respond toconcerns expressed in the case law andto limit its own discretion and eliminatediscretion of officials in the field.Section 1904.17 surveys are constrainedfirst by the regulatory text—the surveysoccur no more than once per year, theyinvolve ten or more employers coveredby the Act, they are limited to injuryand illness information contained inrecords created and maintainedpursuant to Part 1904 and toemployment and hours worked, they areaccomplished by mail or other remotetransmittal, and respondents have atleast thirty days to respond. The datafrom within the covered field and theset of employers or establishments to becanvassed for each survey aredefinitively fixed during the PaperworkReduction Act clearance process and areavailable to the public in connectionwith Federal Register notices publishedduring the clearance process.Employers will have ampleopportunity to test the FourthAmendment reasonableness of anysurvey with which they are faced.Under any follow-up scenario—warrantrecords inspection, subpoena demand ornotice of a 1904.17 violation—employers would have advance noticethat a response was required, and wouldhave an opportunity to provide thesurvey data in order to avoid legalprocess. Employers faced with a surveythat they consider an infringement ofFourth Amendment rights of privacymay refuse to respond and raiseobjections in a warrant enforcement orsubpoena proceeding or as a defense ifthey are issued citations by OSHA.Under the Act, employers are entitled tocontest citations and receive anadministrative hearing, administrativereview of the hearing officer’s decision,and federal court of appeals review. 29U.S.C. 659(c), 660(a).Some commenters asserted that usingreported information for enforcementtargeting would violate their privilegeagainst self-incrimination. (Ex. 15:203,397) These commenters did not explainhow the privilege against selfincriminationwould be implicated inthe reporting requirement or cite anysupporting authorities. OSHA wouldpoint out, that the privilege against selfincriminationderives from the FifthAmendment and pertains to criminalproceedings. It has long been settledthat the privilege cannot be invoked toresist the disclosure needed for aregulatory purpose unrelated to theenforcement of criminal laws even if acriminal proceeding is a possibleconsequence of an administrativeinvestigation. See, for example, Shapirov. United States, 335 U.S. 1, 32–33(1948) (Fifth Amendment not violatedby regulation requiring individuals tokeep and produce records ‘‘oftransactions which are the appropriatesubjects of governmental regulation’’).4. OSHA’s Statutory Authority ToCollect Data With a Reporting RuleSome commenters argued that theproposed reporting rule was notconsistent with Sections 8(c) and 24(e)of the Act. Sections 8(c)(2) directs that‘‘the Secretary of Labor * * * shallprescribe regulations requiringemployers to maintain accurate recordsof, and to make periodic reports on,work-related deaths, injuries andillnesses other than minor injuries* * *.’’ 29 U.S.C. 657(c)(2). Section24(e) provides that ‘‘[o]n the basis of therecords made and kept pursuant tosection 8(c) of this Act, employers shallfile such reports with the Secretary ashe shall prescribe by regulation * * *.’’29 U.S.C. 673(e).These commenters argued that theproposed rule merely reiterated theSecretary’s entire range of statutoryauthority to collect information and didnot itself prescribe anything, much lesslimit itself to the injury and illnessrecords mentioned in section 8(c)(2).Moreover, some claimed, it left thecompliance officer in the field withunfettered discretion to decide whatinformation to demand. (Ex. 15: 154,313, 352, 353, 358, 375, 397.)There are several responses to bemade on this point. First, OSHA has hadthe ability to access injury and illnessrecords for many years and is simplyclarifying its authority to collect theinformation through the mail. Second isthe fact that the final rule is extremelynarrow and specific about theinformation it covers and how thatinformation is to be gathered. Third,compliance officers do not implementthe rule; the agency implements it byconducting large annual surveys, bymail, requesting information within thescope of the rule from employer orestablishment groups whose responsesthe agency judges to be necessary inmeeting its multiple responsibilities.Finally, the final rule fits within theterms of Section 8(c).5. Time Allowed for Employers To FileReportsThe proposed rule would haverequired employers to submit data toOSHA, when OSHA sends them awritten request for records, within 21calendar days of receiving the request.Several commenters provided remarkson the 21 calendar day limitation. (Ex.15: 65, 127, 347, 405)Some comments supported the 21 daytime frame as a reasonable time foremployers to comply with a request forinformation. (Ex. 15: 347, 405) Forexample, the Westinghouse Company(Ex. 15: 405, P. 4) stated: ‘‘This changeis acceptable and the time limitationsappear reasonable.’OSHA also received comments statingthat 21 calendar days is too short a timeframe for reporting, and that longertimes should be adopted in the finalrule. (Ex. 15: 65, 127) For example, theAluminum Company of America (Alcoa)remarked:Alcoa believes this is too short andrestrictive a time frame given current stafflevels and resource demands on employersand their health and safety professionals.* * * OSHA should provide 30 daysadvanced notification (for planningpurposes) and 21 days for response followingthe advanced notification to the specificemployers to be surveyed.(Ex. 15: 65)The Laboratory Corporation ofAmerica stated:Reports to be required of employersmentioned in 29 CFR 1904.13 should behandled in one of two ways. The content ofthe reports needs to be established inadvance and a specific date for a deadline forsubmission provided. Alternatively, if thereport content has not yet been established,then a period of time longer than 21 days isneeded for response. A period of 45 to 60days is suggested. Unless the informationrequested is known in advance to employers,it will take time to communicate and collect

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6439this data in a multi-state, multi-locationoperation. Either of these two options wouldgive more appropriate time for more accurateinformation to be compiled for these types ofemployers.(Ex. 15:127 P. 2)Other comments supported the 21 dayrequirement, but suggested that theSecretary maintain some flexibility anddiscretion to provide more than 21 daysfor a specific request.The American Petroleum Institute(API), for example, observed:Twenty-one days should be the minimumtime allowed for employers to respond tosuch requests.Recommended language: The employershall file the requested reports with theSecretary within 21 calendar days of receiptof the request, unless the Secretary allowsmore than 21 days.(Ex. 15:375 P. b25)In light of these comments, OSHA hasincreased the reporting time to 30calendar days in this final rule. OSHAbelieves that the 21 day time frame maybe too short for some employers tocomply with the request, but believesthat 45 or 60 days is too long a timeframe for a relatively simple request forsummary information contained inexisting records. A longer deadlinewould make it more difficult for OSHAto collect data in a timely fashion, or toconduct quality control measures suchas follow-up mailings and phone calls toverify questionable or erroneous data.Additionally, OSHA agrees that thetime frame in the rule should be aminimum time that can be lengthened atthe discretion of OSHA. In other words,the final rule requires employers to filereports within 30 calendar days ofreceipt of the request, unless the writteninstructions contained in the requestspecifically allow more than 30 calendardays.6. Reporting With ComputersOSHA received several comments onthe potential role of computers inreporting data to OSHA. (Ex. 15: 011,163, 184, 390, 402) The OSHA DataCompany (Ex. 15: 011) suggested thatcomputer reporting should be amandatory feature of the data collectionsystem, remarking: ‘‘We suggest thatrecordkeeping in computer readableformat should be mandatory and datashould be submitted to OSHA in thatformat.’’Other commenters suggested thatcomputer reporting be allowed andencouraged (Ex. 15: 163, 184, 390, 402).The comments of US West Inc. arerepresentative of these comments:US West requests that OSHA move toimplement systems that will allow employersto electronically provide data, such as thedata requested in the BLS Survey ofOccupational Injuries and Illnesses. Such amethod will be more effective, in terms ofreceiving consistently formatted data, andwill be more cost efficient for both employersand the Department of Labor.(Ex. 15–184)OSHA believes that there is enormouspotential for reducing collection burdenon both employers and the government,while improving data quality andconsistency, by allowing employers tosubmit data through computerizedreporting systems. However, OSHA doesnot believe that computerized reportingsystems should be mandatory for allemployers. Mandatory computersystems could actually increase theburden on those employers who do nothave computer systems and on thoseemployers who have computer systemsthat do not provide simple electroniccommunications options.OSHA intends to implement, as soonas possible, options for individual datacollection projects that will allowemployers to submit data eitherelectronically or through paper forms.For those data collections wherecomputerized submission of data is anoption, OSHA will include instructionsfor computerized submissions in theinstructions accompanying the requestfor information.7. Miscellaneous IssuesOSHA also received comments on avariety of issues that the Agencybelieves are worthy of discussion, asfollows.A. The Ability of OSHA To Designate itsCollection Authority to Another Entity.The Proposed Rule Did Not IndicateThat a Designee Could CollectInformation for the AgencyOften, OSHA and the Bureau of LaborStatistics have used grants to the statesand independent governmentcontractors to collect data on behalf ofthe Department of Labor. Thesearrangements allow the Department tocollect information using a variety ofadministrative options that areadvantageous to the Federal governmentand do not increase the burden onrespondents. One commenter suggested:‘‘Data should continue to be collectedthrough state agencies.’’ (Ex. 15: 41)In order to maintain the Agency’sflexibility to collect data via grants tothe states, or to use governmentcontractors, and to be able to collectdata through cooperative interagencyefforts with the Department of Healthand Human Services, OSHA hasmodified the final rule to requireemployers to submit information toeither OSHA or OSHA’s designee.B. Unfair Effect on Specific IndustrySectorsSeveral commenters raised concernsover what they regarded as potentiallyunfair effects of the data collection onsmaller employers, smallestablishments, and employers who relyheavily on part time employees (Ex. 15:304, 384, 424, 449). Another commenterwas concerned that OSHA wouldattempt to compare data from thelongshoring industry to that of otherindustries and argued that suchcomparisons would be invalid becauselongshoring is subject to a differentworkers’ compensation insurancesystem than other industry sectors (Ex.15: 95).Several commenters expressedconcern over a perceived andpotentially unfair effect of datacollections on smaller employers,arguing that the same small number ofcases would result in a higher incidencerate for a smaller employer than for alarger employer, or that a smallemployer may have a high rate for onlyone year and may have had no cases formany years before and after the year forwhich the information is collected. (Ex.15: 304, 384, 449) For example, theAkzo Nobel Corporation observed:We support this concept, but cautionOSHA about using data from only one year,especially for small sites where a singlemedical case in a plant of 20 employees willgive a total recordable rate of about 5. Wewould consider that a ‘‘high’’ rate, possiblytargetable by OSHA, but it might be the firstOSHA recordable incident in 3 or 5 years.Caution is advised.(Ex. 15: 384)United Parcel Service (UPS) (Ex. 15:424, p. 9) expressed a concern about thepossible effect on firms who rely heavilyon part-time labor, stating:The agency’s current practice ofdetermining injury rates as a ratio to hoursworked, rather than to employees, has theconsequence of inflating injury and illnessrates for companies with more workers perhour worked: at least when an outside limitof an 8-hour workday is established, thelikelihood, per hour, of injury decreaseswhen more hours are worked. To put itanother way, the more workers who work per8-hour day, the more likely those hours willgenerate discrete employee complaints.Therefore, OSHA’s current practices alreadydistort the apparent safety of workplacesrelying heavily on part-time labor.The Pacific Maritime Association (Ex.15: 95, p. 10) expressed a concern thatinjury and illness reports would notprovide an accurate comparison withother industries because the longshoringindustry is covered by a separateworkers’ compensation system, stating:

6440 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsAnother very importantrecommendation concerns theinequities of comparing an industrycovered by the Long Shore and HarborWorkers Act compensation programwith those covered by Workers’Compensation. Compensation providedby the Long shore program is muchmore generous than Workers’Compensation and may encourageindividuals to remain on compensationlonger. This disparity between the twosystems is not often acknowledgedparticularly when injury incident andseverity rates are used to identify highhazard industries. It is recommendedthat OSHA recognize the impact of theLong shore compensation byestablishing a specific category foremployees who are covered by the Longshore Act. For an example, SIC 4491,Long shoring, may be used as a specificcategory where employer incident andseverity rates may be compared.These objections are premature, asthey relate to certain possible uses ofdata, not to usefulness for all purposes,and not to the Agency’s authority tocollect the data in the first instance.Moreover, as the comments themselvesmade clear, when the time comes forusing survey data, it will be possible tofactor in special circumstances forsubgroups of employers. For example,small employer data could be adjustedto omit smaller employers with only oneinjury from any analysis of the data.In regards to the longshoring industry,OSHA has traditionally performedseparate analyses of broader databasesto prepare employer lists specific to thelongshoring industry. OSHA recognizesthe unique qualities of this industry, hasdeveloped separate standards formaritime industries, includinglongshoring, and normally performsspecialized investigations forlongshoring facilities. The problemswith data from the longshoring industrycan be solved by continuing to look atthis industry in a way that does notcompare these employers to employersin other industries.In general, OSHA believes thatdifferent approaches to the use of datacan effectively deal with differencesamong different subpopulations ofemployers, depending on the uniquequalities of those subpopulations.OSHA will continue to tailor its analysisof data when these unique situations areencountered.C. Data Quality IssuesSeveral commenters discussed thepossible adverse impacts on the qualityof the data if reporting is required. (Ex.15: 50, 122, 176, 273, 301, 310, 374, 401,414). Mr. George R. Cook, CCC-A (Ex.15: 50) remarked:If the OSHA Form 300 is to be used toprioritize compliance visits, it is felt thispolicy will add undue pressure forcompanies to keep entries off the Form.The Laborers’ Health & Safety Fund ofNorth America (Ex. 15: 310) observed:The premise of employers self-reportinginjuries and illnesses to an agency whichmay inspect them based on that data is aprescription for mis-reporting.The Chemical ManufacturersAssociation (CMA) remarked:CMA supports targeting of inspections inorder for OSHA to better use its resources,but cautions OSHA to carefully consider itsapproach. CMA is concerned that OSHAcarefully consider the relationship betweentargeting and OSHA’s ability to collectaccurate and credible data. Valid datacollection and analysis are the cornerstone ofeffective targeting.CMA recognizes that currently OSHA isnot collecting adequate data to targeteffectively. It is important that OSHA reviewexisting data sources, examine existingtargeting programs (e.g. Maine 200) andrevise its data collection mechanisms.However, the Administration must carefullyevaluate the context in which that data hasbeen collected, as well as identifycharacteristic flaws in such programs.(Ex. 15: 301, p. 16)The quality of any data collected fromemployers is an ongoing concern for theAgency. OSHA agrees that misreporting,whether intentional or unintentional,can affect the value of the collected dataand any conclusions drawn from thatdata. Misreporting is not, however, aninsoluble problem. Controls areavailable for assuring a reasonablequality of data for use by OSHA, as wellas employers and workers. For example,OSHA is implementing a quality controlinitiative for the current collection ofinjury and illness records data requiredby Part 1904 that will include threecomponents; outreach and training forthe regulated community to reduceunintentional errors, error screening andfollow-back procedures to correct orverify questionable data reported to theagency, and, under certaincircumstances, on-site recordsinspections. OSHA is also planning touse other sources of data, e.g., workers’compensation records and inspectionhistories, when available, forcomparison purposes as an externalcheck on records validity.D. Effect on Existing AuthorityNothing in Section 1904.17 affects theSecretary’s general investigatoryauthority under Section 8 of the Act orhis broad rulemaking authority underSection 8(g)(2).IV. Economic AnalysisSection 1904.17 applies to allemployers within OSHA jurisdiction,including those in general industry,construction, shipyard employment,long shoring, marine terminals, andagriculture. OSHA has determined thatthe Section 1904.17 regulation does notrequire the Agency to develop a FinalEconomic Analysis because it is not a‘‘significant regulatory action’’ asdefined by section 3(f)(1) of ExecutiveOrder (E.O.) 12866. This provision ofthe E.O. covers a regulatory action thatis likely to result in a rule that may:(1) Have an annual effect on theeconomy of $100 million or more oradversely affect in a material way theeconomy, a sector of the economy,productivity, competition, jobs, theenvironment, public health or safety, orState, local, or tribal governments orcommunities.Pursuant to this section 1904.17individual data collections conductedunder this regulation will requireemployers to assemble data and filereports to OSHA. To provide employerswith examples illustrative of the kindsof costs and paperwork burdenspotentially associated with such datacollections, the following paragraphsdescribe the costs and burden hoursassociated with two recent Agency datacollection efforts. The examples choseninclude the two recent data collectioninitiatives undertaken by OSHA in 1995and 1996.The impact analyses developed forthe 1995 and 1996 data collectionsinitiatives were published in theFederal Register (60 FR 35231; 61 FR38227, respectively). OSHA estimatedthat employers responding to those datacollection efforts would be required tospend an estimated $6.95 per response,based on 30 minutes of clerical time at$13.90 per hour. OSHA believes thatmost firms will assign the survey formto a personnel or payroll clerk with anaverage wage of $13.90 per hour. Thisfigure is based on a wage rate withbenefits for a secretary-typist fromEmployment and Earnings, January1996, U.S. Department of Labor, Bureauof Labor Statistics (OSHA has recentlyupdated its wage rate data with morecurrent statistics). The informationcollected from employers in the 1995and 1996 data collection initiatives wassummary information from theestablishment’s OSHA Log and Form200, in addition to information on thenumber of workers employed and thenumber of hours worked by theseemployees in the applicable calendaryear. Approximately 70,000 employerswere targeted in each of these data

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and Regulations6441collection initiatives, for a total burdenestimate of 35,000 hours, or $486,500.OSHA anticipates that future datacollection initiatives conducted undersection 1904.17 will impose similarburdens—approximately 30 minutes ofclerical time per respondent—and willtherefore not impose a substantialburden on any employer.The record contains many commentsabout the burden of recordingemployment and hours workedinformation on the OSHA Log—somefavorable but more unfavorable.However, the negative commentersprovided no empirical basis by whichtheir burden claims could be quantified.In the absence of such data, OSHAturned to the long experience BLS hasaccumulated while collecting thesesame types of data for statisticalpurposes. For over 25 years, until theBLS injury and illness survey wasrevised to collect additional data fromemployers, the BLS collected dataidentical to the data collected by OSHAin 1996. BLS estimated that completionof its pre-1992 surveys required one halfhour of time. A 1992 BLS test conductedon 92 respondents completing only part1 of the BLS survey form (equivalent tothe OSHA form) measured the averagerespondents completion time at 30.55minutes.The occupational injury and illnessinformation from the OSHA records isrequired by regulation and is easilytransferred to the OSHA survey form.The information on employment andhours worked by employees is generallyeasy to obtain from payroll systems foremployees who are paid on an hourlybasis, and can be estimated for salariedemployees. The survey forms used byOSHA provide the employer withinstructions and worksheets to make thecalculations as easy as possible. In manycases, the employment and hoursworked data are already being reportedto unemployment insurance andworkers’ compensation agencies andcan easily be transferred to the OSHAsurvey form.As discussed above, OSHA hasconcluded that promulgation of thisregulation, in and of itself, imposes fewif any economic costs on potentiallyaffected firms. Individual datacollections conducted under thisregulation will be subject to OMBreview under the procedures specifiedby the Paperwork Reduction Act of1995. Employers will thus have anopportunity to comment on any burdensimposed by such data collections whenthey are carried out in the future.OSHA has determined that this rule isa significant regulatory action as definedby 3(f)(4) of E.O. 12866. This provisionof the E.O. covers a regulatory actionthat is likely to result in a rule that may:(4) Raise novel legal or policy issuesarising out of legal mandates, thePresident’s priorities, or the principlesset forth in the Executive Order.V. Regulatory Flexibility ActOSHA is required by the RegulatoryFlexibility Act, as amended in 1996, toassess whether its regulations will havea significant impact on a substantialnumber of small entities. As explainedin the Economic Analysis section of thispreamble, above, this regulation (section1904.17, Annual OSHA Injury andIllness Survey of Ten or MoreEmployers) imposes few, if any costs onaffected employers, although future datacollection efforts conducted under thisregulation may impose minimal costand paperwork burdens on thoseemployers affected by a given datacollection effort. OSHA will carefullyassess the impacts of individual datacollections on employers, includingsmall employers, at the time such effortsare initiated. Pursuant to the RegulatoryFlexibility Act, OSHA thus certifies thatsection 1904.17 will not have asignificant impact on a substantialnumber of small entities.VI. Environmental ImpactsThe provisions of this final regulationhave been reviewed in accordance withthe requirements of the NationalEnvironmental Policy Act (NEPA) of1969 (42 U.S.C. 432, et seq.), theCouncil on Environmental Quality(CEQ) NEPA regulations [40 CFR part1500], and OSHA’s DOL Procedures [29CFR part 11]. As a result of this review,OSHA has determined that this finalrule will have no significant effect onair, water, or soil quality, plant oranimal life, use of land, or other aspectsof the environment.VII. FederalismThis rule has been reviewed inaccordance with Executive Order 12612(52 FR 41685), regarding Federalism.Because this rulemaking action involvesa ‘‘regulation’’ issued under § 8 of theOSH Act, and not a ‘‘standard’’ issuedunder § 6 of the Act, the rule does notpreempt State law, see 29 U.S.C. 667 (a).VIII. State PlansThe 25 States and territories withtheir own OSHA approved occupationalsafety and health plans are: Alaska,Arizona, California, Hawaii, Indiana,Iowa, Kentucky, Maryland, Michigan,Minnesota, Nevada, New Mexico, NorthCarolina, Oregon, Puerto Rico, SouthCarolina, Tennessee, Utah, Vermont,Virginia, Virgin Islands, Washington,and Wyoming; Connecticut and NewYork have state plans covering state andlocal Government employees only.Section 18(c)(7) of the OSH Actrequires employers in state plan statesto ‘‘make reports to the Secretary in thesame manner and to the same extent asif the plan were not in effect.’’ Today’samendment to 29 CFR part 1904 relatesto periodic data surveys which federalOSHA will conduct in all states,including those which administerapproved state plans; accordingly, stateswith state plans are not required toadopt a comparable regulation. In stateplan states, the data collected by thefederal OSHA survey will be sharedwith the states for use in administeringtheir plans, and also provide relevantinformation for OSHA’s use inmonitoring the state plan as required bysection 18(f). Because OSHA’snationwide data survey is not an issuecurrently addressed by any of the stateplans, OSHA’s authority to implementthe survey is not affected either byoperational agreements with state planstates or by the granting of finalapproval under section 18(e). OSHA’sauthority under the Act, to takeappropriate enforcement action whennecessary to compel responses to thesurvey and to assure the accuracy of thedata submitted by employers, will beexercised in consultation with the statein state plan states. The states may alsoexercise such authority under state lawor regulation.IX. Paperwork Reduction Act of 1995This final regulation containsinformation collection requirements. Asrequired by the Paperwork ReductionAct of 1995, the U.S. Department ofLabor has submitted a copy of thesesections to OMB for its review. (44U.S.C. 3501 et seq., and 5 CFR part1320.Separately, the Department of Laborhas received renewed approval for theAnnual Survey Form under thePaperwork Reduction Act (OMB number1218–0209)List of Subjects in 29 CFR Part 1904Reports by employers, occupationalinjuries and illnesses, OccupationalSafety and Health, Occupational Safetyand Health Administration,Recordkeeping, Reporting.AuthorityThis document was prepared underthe direction of Greg Watchman, ActingAssistant Secretary of Labor forOccupational Safety and Health, U.S.Department of Labor, 200 ConstitutionAvenue, NW., Washington, DC 20210.

6442 Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Rules and RegulationsAccordingly, pursuant to sections 8and 24 of the Occupational Safety andHealth Act of 1970 (29 U.S.C. 657, 673),Secretary of Labor’s Order No. 1–90 (55FR 9033), and 5 U.S.C. 553, 29 CFR part1904 is hereby amended by adding§ 1904.17 as set forth below.Signed in Washington, D.C., this 7th day of1997.Greg Watchman,Acting Assistant Secretary of Labor.PART 1904—[AMENDED]1. The authority citation for Part 1904is revised to read as follows:Authority: Secs. 8, 24, Occupational Safetyand Health Act of 1970 (29 U.S.C. 657, 673),Secretary of Labor’s Order No. 12–71 (36 FR8754), 8–76 (41 FR 25059), 9–83 (48 FR35736), 1–90 (55 FR 9033) or 6–96 (62 FR111), as applicable.Section 1904.7, 1904.8 and 1904.17 arealso issued under 5 U.S.C. 553.2. Section 1904.17 immediatelyfollowing 1904.16 is added to read asfollows:§ 1904.17 Annual OSHA Injury and IllnessSurvey of Ten or More Employers.(a) Each employer shall, upon receiptof OSHA’s Annual Survey Form, reportto OSHA or OSHA’s designee thenumber of workers it employed andnumber of hours worked by itsemployees for periods designated in theSurvey Form and such information asOSHA may request from recordsrequired to be created and maintainedpursuant to 29 CFR part 1904.(b) Survey reports shall be sent toOSHA by mail or other means describedin the Survey Form within 30 calendardays, or the time stated in the SurveyForm, whichever is longer.(c) Employers exempted from keepinginjury and illness records under§§ 1904.15 and 1904.16 shall maintaininjury and illness records required by§§ 1904.2 and 1904.4, and make SurveyReports pursuant to this Section, uponbeing notified in writing by OSHA, inadvance of the year for which injury andillness records will be required, that theemployer has been selected toparticipate in an information collection.(d) Nothing in any State planapproved under Section 18 of the Actshall affect the duties of employers tocomply with this section.(e) Nothing in this section shall affectOSHA’s exercise of its statutoryauthorities to investigate conditionsrelated to occupational safety andhealth.[FR Doc. 97–3495 Filed 2–10–97; 8:45 am]BILLING CODE 4510–26–P

Reader AidsFederal RegisterVol. 62, No. 28Tuesday, February 11, 1997iCUSTOMER SERVICE AND INFORMATIONCFR PARTS AFFECTED DURING FEBRUARYFederal Register/Code of Federal RegulationsGeneral Information, indexes and other findingaids202–523–5227LawsFor additional information 523–5227Presidential DocumentsExecutive orders and proclamations 523–5227The United States Government Manual 523–5227Other ServicesElectronic and on-line services (voice) 523–4534Privacy Act Compilation 523–3187TDD for the hearing impaired 523–5229ELECTRONIC BULLETIN BOARDFree Electronic Bulletin Board service for Public Law numbers,Federal Register finding aids, and list of documents on publicinspection. 202–275–0920FAX-ON-DEMANDYou may access our Fax-On-Demand service. You only need a faxmachine and there is no charge for the service except for longdistance telephone charges the user may incur. The list ofdocuments on public inspection and the daily Federal Register’stable of contents are available using this service. The documentnumbers are 7050-Public Inspection list and 7051-Table ofContents list. The public inspection list will be updatedimmediately for documents filed on an emergency basis.NOTE: YOU WILL ONLY GET A LISTING OF DOCUMENTS ONFILE AND NOT THE ACTUAL DOCUMENT. Documents onpublic inspection may be viewed and copied in our office locatedat 800 North Capitol Street, N.W., Suite 700. The Fax-On-Demandtelephone number is: 301–713–6905FEDERAL REGISTER PAGES AND DATES, FEBRUARY4895–5138............................. 35139–5292............................. 45293–5518............................. 55519–5740............................. 65741–5902............................. 75903–6098.............................106099–6442.............................11At the end of each month, the Office of the Federal Registerpublishes separately a List of CFR Sections Affected (LSA), whichlists parts and sections affected by documents published sincethe revision date of each title.3 CFRExecutive Order:12961 (Continued byEO 13034)......................513713034.................................5137Proclamations:6970...................................52876971...................................52915 CFRProposed Rules:293.....................................5174351.....................................5174430.....................................5174531.....................................5174900.....................................49407 CFR210.....................................5519226.....................................5519319.....................................5293401.....................................5903433.....................................6099457...........................5903, 6099984.....................................6110Proposed Rules:401.....................................6134457.....................................6134956.....................................5933980.....................................61389 CFR78.......................................590791.......................................552094.......................................5741381.....................................5131391.....................................6111Proposed Rules:201.....................................593510 CFR71.......................................5907Proposed Rules:430.....................................5782835.....................................5883960.....................................494112 CFR304.....................................4895701.....................................5315Proposed Rules:226.....................................5183312.....................................6139328.....................................614213 CFRProposed Rules:107.....................................614714 CFR39 .......4899, 4900, 4902, 4904,4906, 4908, 5143, 5145,5742, 5743, 5744, 5746,5748, 5752, 575371 .......5147, 5148, 5149, 5150,5755, 5756, 575797.............................5151, 5154Proposed Rules:21.......................................507623.......................................555225.......................................507639 .......4941, 4944, 5186, 5350,5783, 5785, 578771 .......5074, 5188, 5194, 5195,5937, 5938, 593991.......................................5076119.....................................5076121.....................................5076125.....................................5076135...........................5076, 5788300.....................................5094302.....................................509415 CFR744.....................................491016 CFR305.....................................5316423.....................................57241507...................................491017 CFR15.......................................612218.......................................612219.......................................6122210.....................................6044228.....................................6044229.....................................6044239.....................................6044240.....................................6044249.....................................604418 CFR157.....................................5913284.....................................5521Proposed Rules:153.....................................594020 CFR404...........................6114, 6408416.....................................640821 CFR520 ................5318, 5319, 5525522...........................5319, 55261309...................................59141310...................................59141313...................................5914Proposed Rules:Ch I ....................................570024 CFR18.......................................6096

iiFederal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Reader Aids26 CFRProposed Rules:1.........................................535529 CFR215.....................................6090220.....................................6090401.....................................6090402.....................................6090403.....................................6090404.....................................6090405.....................................6090406.....................................6090408.....................................6090409.....................................6090417.....................................6090451.....................................6090452.....................................6090453.....................................6090457.....................................6090458.....................................6090459.....................................60901904...................................643430 CFR250...........................5320, 5329936.....................................6041Proposed Rules:56.......................................555457.......................................555462.......................................555470.......................................555471.......................................5554206.....................................5355208.....................................5355251.....................................614932 CFR255.....................................5332340.....................................5332Proposed Rules:247.....................................494733 CFR117.....................................5155165...........................5157, 5526404.....................................5917407.....................................5917Proposed Rules:154.....................................5356155.....................................535634 CFR350.....................................5712351.....................................5712352.....................................5712353.....................................5712355.....................................5712357.....................................5712360.....................................5712361.....................................6308363.....................................6308376.....................................6308379.....................................5684380.....................................630836 CFRProposed Rules:223.....................................594938 CFR3.........................................552817.......................................612136.......................................553040 CFR52 ..................6126, 6127, 6129180...........................4911, 5333721.....................................5157Proposed Rules:52 .......5357, 5361, 5555, 6159,616063.......................................507472.......................................537073.......................................537074.......................................537075.......................................537077.......................................537078.......................................537081.......................................555585.......................................636689.......................................636692.......................................6366180.....................................5370300...........................5949, 5950721...........................5196, 616041 CFRCh. 301 ..............................604142 CFRProposed Rules:68a.....................................595343 CFR4700...................................5338Proposed Rules:3500...................................53733510...................................53733520...................................53733530...................................53733540...................................53733550...................................53733560...................................53733570...................................537344 CFR64.............................4915, 553465.......................................573470.......................................573472.......................................5734Proposed Rules:206.....................................595746 CFR349.....................................5158502.....................................6132510.....................................6132Proposed Rules:10.......................................519712.......................................519715.......................................519747 CFR1...............................4917, 575725.......................................592443.............................5160, 553553.......................................507461.......................................575763.......................................516064.............................5160, 553565.......................................516073.............................5339, 577874.............................4920, 533978.......................................4920101.....................................4920Proposed Rules:25.......................................495926.......................................495936.............................5373, 595751.............................5373, 595761.............................5373, 595763.......................................496569.............................5373, 595773 .......4959, 5788, 5789, 5790,579176.......................................4959100.....................................495948 CFR212.....................................5779225.....................................5779244.....................................5779252.....................................5779570.....................................51661552...................................534749 CFR578.....................................51671142...................................51701186...................................51711310...................................5171Proposed Rules:Ch. XI.................................5792395.....................................616150 CFR17.............................4925, 5542679...........................5781, 6132Proposed Rules:17.............................5199, 5560648.....................................5375660.....................................5792

Federal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Reader AidsiiiREMINDERSThe items in this list wereeditorially compiled as an aidto Federal Register users.Inclusion or exclusion fromthis list has no legalsignificance.RULES GOING INTOEFFECT TODAYAGRICULTUREDEPARTMENTFood Safety and InspectionServiceMeat and poultry inspection:Voluntary inspection feeincreases and laboratoryservices fee reduction;correction; published 2-11-97FEDERAL MARITIMECOMMISSIONOcean freight forwarders,marine terminal operations,and passenger vessels:Drug traffickers andpossessors; denial ofFederal benefits;published 2-11-97TRANSPORTATIONDEPARTMENTFederal AviationAdministrationAirworthiness directives:McDonnell Douglas;published 1-27-97COMMENTS DUE NEXTWEEKAGRICULTUREDEPARTMENTAgricultural MarketingServiceGrapes grown in California;comments due by 2-18-97;published 1-17-97Olives grown in California;comments due by 2-18-97;published 1-17-97AGRICULTUREDEPARTMENTFood and Consumer ServiceFood stamp program:Anticipating income andreporting changes;comments due by 2-18-97; published 12-17-96AGRICULTUREDEPARTMENTFood Safety and InspectionServiceMeat and poultry inspection:Pathogen reduction; hazardanalysis and criticalcontrol point (HACCP)systemsPotentially hazardousfoods; transportationand storagerequirements; commentsdue by 2-20-97;published 11-22-96COMMERCE DEPARTMENTNational Oceanic andAtmospheric AdministrationFishery conservation andmanagement:Alaska; fisheries ofExclusive EconomicZone—Bering Sea and AleutianIslands groundfish;comments due by 2-18-97; published 1-2-97Atlantic shark; commentsdue by 2-18-97; published12-27-96Caribbean, Gulf, and SouthAtlantic fisheries--South Atlantic shrimp;comments due by 2-20-97; published 1-6-97COMMODITY FUTURESTRADING COMMISSIONCommission records andinformation; openCommission meetings;comments due by 2-18-97;published 12-19-96DEFENSE DEPARTMENTFederal Acquisition Regulation(FAR):Contractor qualifications;‘‘manufacturer’’ or ‘‘regulardealer’’ requirement;comments due by 2-18-97; published 12-20-96Cost accounting standards;inapplicability to contractsand subcontracts forcommercial items;comments due by 2-18-97; published 12-20-96Data Universal NumberingSystem; use as primarycontractor identification;comments due by 2-18-97; published 12-20-96Local government lobbyingcosts; comments due by2-18-97; published 12-20-96Minority small business andcapital ownershipdevelopment program;comments due by 2-18-97; published 12-20-96DEFENSE DEPARTMENTEngineers CorpsDanger zones and restrictedareas:Persons subject torestrictions; clarification;comments due by 2-18-97; published 12-20-96EDUCATION DEPARTMENTPostsecondary education:Student assistance generalprovisions--Compliance audits andfinancial responsibilitystandards; commentsdue by 2-18-97;published 12-18-96ENERGY DEPARTMENTOccupational radiationprotection:Primary standardsamendments; commentsdue by 2-18-97; published12-23-96ENERGY DEPARTMENTFederal Energy RegulatoryCommissionNatural Gas Policy Act:Interstate natural gaspipelines--Business practicestandards; commentsdue by 2-21-97;published 1-8-97ENVIRONMENTALPROTECTION AGENCYAir programs:Ambient air qualitystandards, national--Ozone and particulatematter; comments dueby 2-18-97; published12-13-96Ozone and particulatematter; comments dueby 2-18-97; published12-13-96Ozone and particulatematter; comments dueby 2-18-97; published12-13-96Ozone and particulatematter, and regionalhaze programdevelopment; commentsdue by 2-18-97;published 12-13-96Particulate matter;comments due by 2-18-97; published 12-13-96Air quality implementationplans; approval andpromulgation; variousStates:California; comments due by2-21-97; published 1-22-97Colorado; comments due by2-18-97; published 1-17-97Florida; comments due by2-18-97; published 1-17-97Illinois; comments due by 2-20-97; published 1-21-97Indiana; comments due by2-18-97; published 1-17-97Kentucky; comments due by2-20-97; published 1-21-97New Jersey; comments dueby 2-18-97; published 1-17-97Pennsylvania; commentsdue by 2-21-97; published1-22-97Air quality implementationplans; √A√approval andpromulgation; variousStates; air quality planningpurposes; designation ofareas:California; comments due by2-18-97; published 1-17-97Pesticides; tolerances in food,animal feeds, and rawagricultural commodities:Sodium bicarbonate, etc.;comments due by 2-21-97; published 12-23-96Superfund program:National oil and hazardoussubstances contingencyplan--National priorities listupdate; comments dueby 2-21-97; published12-23-96FARM CREDITADMINISTRATIONFarm credit system:Funding and fiscal affairs,loan policies andoperations, and fundingoperations--Book-entry procedures forsecurities; commentsdue by 2-18-97;published 12-20-96FEDERALCOMMUNICATIONSCOMMISSIONRadio stations; table ofassignments:Alaska; comments due by2-18-97; published 1-3-97Idaho; comments due by 2-18-97; published 1-3-97Minnesota; comments dueby 2-18-97; published 1-3-97New Mexico; comments dueby 2-18-97; published 1-3-97FEDERAL RESERVESYSTEMElectronic fund transfers(Regulation E):Electronic benefit transferprograms; exemption;comments due by 2-19-97; published 1-22-97HEALTH AND HUMANSERVICES DEPARTMENTFood and DrugAdministrationAnimal drugs, feeds, andrelated products:Animal proteins prohibited inruminant feed; comments

ivFederal Register / Vol. 62, No. 28 / Tuesday, February 11, 1997 / Reader Aidsdue by 2-18-97; published1-3-97Food for human consumption:Potentially hazardous foods;transportation and storagerequirements; commentsdue by 2-20-97; published11-22-96INTERIOR DEPARTMENTLand Management BureauPublic administrativeprocedures:Introduction and generalguidance; public landrecords; comments dueby 2-21-97; published 12-23-96Wilderness management;comments due by 2-18-97;published 12-19-96INTERIOR DEPARTMENTFish and Wildlife ServiceEndangered and threatenedspecies:Hoffmann’s rock-cress, etc.(16 plant taxa fromNorthern Channel Islands,CA); comments due by 2-21-97; published 1-22-97INTERIOR DEPARTMENTMinerals ManagementServiceOuter Continental Shelf; oil,gas, and sulphur operations:Civil penalty program;comments due by 2-19-97; published 12-19-96Safety and pollutionprevention equipment;quality assurance;comments due by 2-18-97; published 12-18-96JUSTICE DEPARTMENTDrug EnforcementAdministrationFreight forwarding facilities forDEA distributor registrants;establishment; commentsdue by 2-18-97; published12-18-96LABOR DEPARTMENTMine Safety and HealthAdministrationCoal mine safety and health:Occupational noiseexposure; comments dueby 2-18-97; published 12-17-96NATIONAL AERONAUTICSAND SPACEADMINISTRATIONAcquisition regulations:Contractors and offerors--Non-statutory certificationrequirements removed;comments due by 2-18-97; published 12-18-96OFFICE OF MANAGEMENTAND BUDGETManagement and BudgetOfficeOMB personnel as witnessesin litigation; release ofofficial information andtestimony; comments due by2-18-97; published 12-17-96PENSION BENEFITGUARANTY CORPORATIONPremium payments:Submission of recordsrelating to premium filings;comments due by 2-18-97; published 12-17-96PERSONNEL MANAGEMENTOFFICERetirement:Civil Service RetirementSystem--Decisions appealed toMerit SystemsProtection Board;comments due by 2-18-97; published 12-19-96SOCIAL SECURITYADMINISTRATIONSupplemental security income:Aged, blind, and disabled--Dedicated accounts andinstallment payments forpast-due benefits;comments due by 2-18-97; published 12-20-96TRANSPORTATIONDEPARTMENTCoast GuardMerchant marine officers andseamen:Commercial vesselpersonnel; chemical drugand alcohol testingprograms; drug testing inforeign waters; commentsdue by 2-18-97; published12-18-96Uninspected vessels:Commerical fishing industryregulationsCorrection; comments dueby 2-20-97; published12-27-96TRANSPORTATIONDEPARTMENTFederal AviationAdministrationAirworthiness directives:Aerospace Technologies ofAustralia Pty Ltd.;comments due by 2-21-97; published 12-10-96Airbus; comments due by 2-18-97; published 1-7-97Bell; comments due by 2-21-97; published 12-23-96Boeing; comments due by2-18-97; published 1-7-97Burkhardt Grob Luft-undRaumfahrt; comments dueby 2-21-97; published 12-23-96Fokker; comments due by2-18-97; published 12-19-96Jetstream; comments dueby 2-18-97; published 1-8-97Raytheon; comments due by2-21-97; published 12-23-96Class E airspace; commentsdue by 2-18-97; published1-8-97Class E airspace; correction;comments due by 2-18-97;published 1-8-97TRANSPORTATIONDEPARTMENTNational Highway TrafficSafety AdministrationFuel economy standards:Passenger automobiles; lowvolume manufacturerexemptions; commentsdue by 2-21-97; published12-23-96Motor vehicle safetystandards:Occupant crash protection--Occupant protectionstandard and smart airbags; technicalworkshop; commentsdue by 2-21-97;published 1-21-97

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